Flutter Entertainment plc  ## The scale of the leader, ## with the mindset ##  ## innovative, diverse ## distinctive  ## Our strategic roadmap Strategic report ## Leading betting and ## gaming into the future ### Leveraging our scale and technology, we are setting the standard globally for market ### leading, entertaining and innovative experiences for millions of customers. ### Growing today’s businesses ## Grow Invest Build ### our businesses to win in the US on our network and invest ###  for leadership positions ### across international markets Get detailed insights on our strategy on page 18 ### Creating the future ### Take early positions to realise the potential of future spaces Read more about our strategy on page 18 ### Powered by key enablers S e p l e ### a t o m e ### c u s e r ### C s d S ## C Positive ### o ### s ### m ## P Impact e a ### r m u t ### o g a ## d u Plan a d ### u n e ### i l d ### c t l ### i o n ### t e a ### a s C t n h d g i t s e n c i h r n e o m l o o g y s t C u Learn about our Positive Impact Plan on page 34 Annual Report & Accounts 2021 Flutter Entertainment plc 1 Inside the report ![img-0.jpeg](img-0.jpeg) # We are the global player ![img-1.jpeg](img-1.jpeg) # Strategic report 1 Our strategic roadmap 3 2021 highlights 4 At a glance 6 Investment case 8 Chair's statement 10 Chief Executive Officer's review 16 Markets 18 Strategy 28 Key performance indicators 32 Business model 34 Key enablers 38 Stakeholder engagement 44 Sustainability 69 Operating and financial review 84 Managing and understanding our principal risks 92 Viability statement # Corporate governance 94 Introduction to governance 96 Board of Directors 100 Executive leadership team 102 Chair's introduction 104 Board activities 106 Leadership and purpose 108 Engaging with a broad range of stakeholders 110 Division of responsibilities 112 Composition, succession and evaluation 116 Nomination Committee report 120 Workforce Engagement Committee report 124 Audit Committee report 132 Risk and Sustainability Committee report 136 Directors' remuneration report 2021 155 Directors' report # Financial statements 163 Statement of Directors' Responsibilities 164 Independent Auditor's Report 171 Consolidated Income Statement 172 Consolidated Statement of Other Comprehensive Income 173 Consolidated Statement of Financial Position 174 Consolidated Statement of Cash Flows 175 Consolidated Statement of Changes in Equity 177 Notes to the Consolidated Financial Statements 243 Company Statement of Financial Position 244 Company Statement of Changes in Equity 246 Notes to the Company Financial Statements 260 Five year financial summary (unaudited) 261 ESG supplementary information 267 Shareholder information 2 Flutter Entertainment plc Annual Report & Accounts 2021 ![img-2.jpeg](img-2.jpeg) ## Highlights Strategic report ## Performance highlights | Reported revenue (£m) | | Pro forma revenue (£m)* | | | --- | --- | --- | --- | | +37% | | +17% | | | 2021 | 6,036 | 2021 | 6,036 | | 2020 | 4,414 | 2020 | 5,264 | | 2019 | 2,140 | 2019 | 4,144 | | Reported EBITDA (£m) | | Pro forma adjusted EBITDA (£m)* | | | -6% | | -18% | | | 2021 | 723 | 2021 | 1,001 | | 2020 | 772 | 2020 | 1,231 | | 2019 | 408 | 2019 | 1,089 | | Reported basic EPS (pence) | | Pro forma adjusted EPS (pence) | | | (236.5)p | | 253.0p | | | 2021 | (236.5) | 2021 | 253.0 | | 2020 | 29.3 | 2020 | 496.6 | | 2019 | 180.2 | 2019 | 415.7 | | Average monthly players (millions) | | Leverage ratio (net debt/pro forma adjusted EBITDA) | | | +23% | | 2.6x | | | 2021 | 7.6 | 2021 | 2.6x | | 2020 | 6.2 | 2020 | 2.3x | | 2019 | 5.3 | 2019 | 3.5x | * Pro forma numbers presented show the Group’s financials with prior acquisitions included for a full 12-month period in each year. This includes the TSG merger in May 2020 and the Adjarabet acquisition in February 2019. Junglee acquired in January 2021 and Singular acquired in September 2021 have been included on a reported basis due to materiality. Adjusted measures exclude items that are separately disclosed as they are (i) not part of the usual business activity of the Group; (ii) items that are volatile in nature; and (iii) purchase price accounting amortisation of acquired intangibles (non-cash). To see our company performance please go to page 28 Annual Report & Accounts 2021 Flutter Entertainment plc 3 ## At a glance ## Building a ##  ## Flutter is the parent company for a range of ## international brands and operations, including ## FanDuel, Sky Betting & Gaming, Sportsbet, ## PokerStars, Paddy Power, Tombola, Betfair, ##  * We are leading betting and gaming Global footprint into the future by offering some of the most innovative brands in our industry. For us, it’s all about bringing entertainment to life for millions of customers in a safe, responsible and sustainable way. | The size and scale of our global | | | UK&I | | --- | --- | --- | --- | | activities mean we have been able | | | Our sports betting and gaming brands | | to invest to make sure our corporate | | | are some of the most popular in the | | functions support the Group and our |  | | UK&I market. Sky Betting & Gaming, | | refreshed strategy. | | |       | | | | UK&I: 35% | leading innovation to millions of | Our strategy is based on four key customers   pillars to: US: 23% Although the brands mostly operate online, 1) Grow our gold medal businesses in Australia: 21% this division also includes 625 Paddy core markets; International: 20%       & Ireland. 2) Invest to win in the US; * Based on Group net revenue for the year       ended 31 December 2021. | 3) Build on our network and invest | acquisition of one of the UK’s leading | | --- | --- | | for leadership positions across |     | | international markets; and | completed in January 2022. | | 4) Create the future by taking early |  page 16 | positions to realise potential of future spaces. Following our successful merger with The Stars Group (“TSG”), we ## reorganised the business at the £2.1bn beginning of 2021 into the four revenue divisions set out here. We now report against these divisions and refer to them throughout this report. ## 3.2m average monthly players 4 Flutter Entertainment plc Annual Report & Accounts 2021 ## Our offices Strategic report ## US Australia International Our US division consists of FanDuel, FOX The Sportsbet brand is the market leader We operate in a number of territories Bet, TVG, PokerStars US and Stardust in online sports betting across Australia.        Casino. We offer a diverse set of online It’s innovative, easy to use products and      and retail sportsbooks, online gaming, outstanding personalised value combine online poker site. The division also     to create a leading customer proposition. includes Betfair International, Adjarabet on horse racing and TV broadcasting Sportsbet’s strategy is centred on and Junglee Games. products. FanDuel is the market leading            online sportsbook and casino operator product, value and marketing. the acquisition of Italy’s leading online in the rapidly expanding US market and  page 16              to complete in Q2 2022. advantage of this opportunity. Flutter International operates under licence  page 17 in 21 territories across the globe and has customers in more than 100 countries.  page 17 ## £1.4bn £1.3bn £1.3bn revenue revenue revenue ## 1.6m 1.0m 1.9m average monthly players average monthly players average monthly players Annual Report & Accounts 2021 Flutter Entertainment plc 5 ## Investment case ## Our unique ## investment thesis ##  ## operator, Flutter has an unparalleled portfolio of premium ## brands in a sector with a long runway of future growth. ## Significant market  ##   The global online betting and gaming market has a significant Flutter has a proven track record of setting and delivering on runway of future growth with a clear pathway for the expansion its strategic priorities. Having delivered on the objectives laid of additional regulated markets such as additional states in the  US and increased online penetration. Even after the acceleration for the coming years with a refreshed four pillar strategy for brought about by the Covid-19 pandemic, just 25%, or £75bn, success. As a responsible operator the Group recognises  the key role that sustainability plays in enabling this strategy and the compound annual growth of   ESG strategy. The introduction of our Group-wide Positive   migration. In the next two years we expect the regulation of to set the sustainability agenda for the industry and make a markets such as Brazil, Canada and the Netherlands to positive contribution across three key areas: our customers, increase the International addressable market. New market our colleagues and our communities. Our Positive Impact developments will also expand the size of the opportunity.   r key risks.  Read more about our corporate and ESG strategy on  strong, diverse portfolio of brands in all geographies. Read more about the market opportunity on ## Our ## Positive ##  ##   ## global market US market opportunity Plan. 6 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ##   ##   ##   with a compound annual growth rate in total shareholder Because we operate in a lot of markets and offer a broad range  of products, we are well balanced when it comes to regulation Read more about our performance on and external environmental pressures. It allows us to benefit from local tailwinds and reduce the impact of local headwinds. The positive impact of regulation in markets that are opening up, such as the US, helps to reduce the impact of adverse local regulatory costs in more mature markets. As an operator of scale we benefit from the “flywheel” effect which enables organic growth while investing to secure and defend our gold ## medal positions.  Read more about scale and the flywheel as an enabler of our strategy Annual shareholder return on over the last five years Annual Report & Accounts 2021 Flutter Entertainment plc  ## Chair’s statement ##  ## customers ##  ## Strong corporate governance supports ## our continued strategy execution, business ## resilience and contribution to the societies ## in which we operate.  Flutter Entertainment plc Annual Report & Accounts 2021 # Dear Shareholder ## Introduction During 2021, the Covid-19 pandemic continued to pose challenges, particularly in the first quarter of the year. We continued to protect the wellbeing of our workforce and customers with measures in place to safeguard our customers' safety, and initiatives to support colleague wellbeing. I have continued to be impressed by the dedication, commitment and resilience shown by our workforce throughout our businesses during these challenging and uncertain times. ## Sustainability During 2021, our Risk Committee was repurposed as the Risk and Sustainability Committee, strengthening our governance arrangements for oversight of sustainability matters on behalf of the Board, whilst continuing to monitor material risks that impact our business and our reputation. We have recently launched our Group sustainability strategy, our 'Positive Impact Plan', a comprehensive and challenging strategy which demonstrates that Flutter is setting a clear agenda for positive change. The 'Positive Impact Plan' sets targets to be achieved by Flutter by 2030, under the three pillars of 'Play Well', 'Work Better' and 'Do More'. 'Play Well' extends our commitment in safer gambling by providing customers with a positive, entertaining and safe experience. 'Work Better' aims to build a more diverse and inclusive workforce in our business that is reflective of our communities. 'Do More' allows us to build on our long history of community support by aligning community support with a set of key strategic priorities that allow us to use the expertise and experience within our business to support our communities. 'Do More' will particularly focus on sport, health and wellbeing, and tech for good. In addition to the core pillars outlined above, the 'Positive Impact Plan' also sets out our strategy for reducing our environmental impact. We have begun to report on how the impacts of climate change could affect our business in line with the Task-Force on Climate Related Disclosure recommendations. Further information on Our Positive Impact Plan is set out on page 45. ## People and culture As a diverse international Group, we recognise the critical role our workforce plays in our success. In June, the Board approved the establishment of the Workforce Engagement Committee, a Board-level committee with responsibility for workforce engagement and oversight of our people and culture across the Group. While it was not possible to physically meet with our colleagues during 2021, we intend to undertake a number of site visits at a number of the Group's international locations during 2022 and beyond. This will provide the Board with an opportunity to meet with colleagues and listen to their views, ideas and matters of concern. Further details on the Workforce Engagement Committee are set out on pages 120 to 123. 'Play Well' extends our commitment in safer gambling by providing customers with a positive, entertaining and safe experience. ## Strategy During the year, the Group completed the acquisitions of Junglee Games and Singular, and the divestment of the Oldschecker business. The Board also approved the acquisitions of Tombola which completed in January 2022 and Sisal which is expected to complete in early 2022. These transactions align with the Group's strategy of investing to build leadership positions in regulated markets globally. The Board approved a new integrated corporate strategy in 2021, refreshing the Group's strategic priorities. Further information on our corporate strategy is set out on pages 18 to 27. ## Board change As part of the Board's ongoing refreshment and succession planning, a number of Board changes took place during the year. Divyesh/Davel Gadha and Peter Rigby stood down from the Board following the conclusion of the 2021 AGM. As Executive Chair of The Stars Group, Inc., Davel led the challenging turnaround of the Stars business. He was critical in pursuing the opportunity for the merger with Flutter, while ensuring that his shareholders were appropriately represented and rewarded. He leaves a strong and enduring legacy. Peter has been a stalwart of the Betfair, Paddy Power and legacy Flutter boards during his seven years tenure as Director. He has made significant contributions to Flutter's progress through his Chairing of the Risk Committee and subsequently the Remuneration Committee. We thank Dave and Peter for their substantial contributions to the Flutter Board and legacy Boards. Nancy Dubuc joined the Flutter Board following the conclusion of the AGM on 29 April 2021. Holly Keller Koeppel joined the Board on 13 May 2021. Abt Rafiq joined the Board on 10 December 2021. We welcome each of Nancy, Holly and Abt as Independent Non-Executive Directors. Their distinct individual expertise is contributing strongly to Board discussions. I am pleased to report that as a result of these Board changes we have exceeded our target of 33% female representation on the Board. We have also achieved our target of at least one member of ethnicity on the Board whilst simultaneously boosting the Board's digital expertise. The Board will continue to review our Board diversity targets during 2022. Michael Cawley will not be seeking re-election at the 2022 AGM and will step down from the Board at the conclusion of that meeting. Michael joined the Paddy Power plc Board in July 2013 and has spent the last six years chairing the Audit Committee. Holly Keller Koeppel will replace Michael as Chair of the Audit Committee with effect from the conclusion of the AGM on 28 April 2022. Zillah Byng-Thorne will seek re-election at the AGM. Zillah will step down from the Board before the 2023 AGM, having served nine years on the Board. Dave Lazzarato will replace Zillah as Chair of the Risk and Sustainability Committee with effect from the conclusion of the AGM on 28 April 2022. Zillah will continue to be a member of the Risk and Sustainability Committee. I want to thank Michael and Zillah for their exceptional contribution to the Board over their tenure. As 2022 unfolds with many Covid restrictions being removed, I look forward to the opportunity of meeting with our employees, shareholders and communities in person over the next 12 months. Thank you for your continued support of Flutter. Gary McGann Chair 14 March 2022 Annual Report & Accounts 2021 Flutter Entertainment plc 8 50 years of service ## Chief Executive Officer’s review ## Positive ## progress ## in 2021 ## We delivered on our key strategic objectives ## and made meaningful improvements to the ## sustainable nature of our earnings base. 10 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report 1,2,3,4,5 Business review Refreshed four pillar strategy 2021 was a year of strong progress for Flutter. The Group The scale and geographic footprint of Flutter has been transformed delivered pro forma revenue growth of 17% driven by an increase  in our recreational player base of 23%, with reported revenue  increasing 37%. Flutter delivered Adjusted EBITDA of just over significantly expanded our international footprint with the   EBITDA reduced 6%). Excellent growth and operating leverage  in Australia was more than offset by a combination of factors   We are now refreshing our strategy, including establishing more  clearly defined sustainability goals. This refreshed strategy is  designed to help us defend our number one positions in existing    potential opportunities. Our revised four pill  1. Grow gold medal positions in core markets by maintaining  focus on growing our recreational customer base, continuing  to extend our product and brand leadership positions and  leveraging our local scale to drive efficiency 6 in Q4 . The benefits of our superior product offering and scale  2. Invest to win in the US by     iGaming proposition to establish a clear podium position and and Australia, we retained our gold medal positions and in Q4, we continuing to exploit the flywheel to maintain leadership  3. Build on our network and invest for leadership across  international markets by continuing to revitalise the      betting through our multi-brand portfolio and buying l in Italy.  We made meaningful progress in improving the sustainability which Flutter can further develop of our earnings. During 2021 we introduced enhanced safer 4. Take early positions to realise future potential in future gambling measures across the Group, continuing to re-shape by continuing to nurture an innovative mindset,  identifying adjacent opportunities to reinforce and future- revenue from higher value cohorts reduced by more than  50% since 2019. The significant investment we have made    future growth is showing encouraging signs of progress. Our the best iGaming experience available in virtual reality    during Q4 2021.  scale. While each is crucial to delivering our goals and objectives, we particularly recognise the importance of being a responsible global leader in the sector, placing sustainability at the heart of what we do through the launch of our new sustainability strategy, our Positive Impact Plan. Annual Report & Accounts 2021 Flutter Entertainment plc 11 ## Chief Executive Officer’s review continued Flutter’s new sustainability strategy, our Positive Safer gambling progress in 2021 and launch of the Impact Plan Flutter “Play Well” strategy  During 2021 we further enhanced our safer gambling measures  across the Group, investing over £45m in advertising, research, foundations, the Positive Impact Plan brings together the    areas; our customers, colleagues and communities, creating a slots games and brands and a ban on credit card deposits in consistent global approach that supports our overall corporate  strategy. This ensures that our divisions get greater access to aff  • New customers: are now subject to tailored monitoring in the also being empowered to innovate and respond effectively to initial period post registration, with thresholds dependent on their local contexts and deliver local initiatives that have the  maximum impact. for younger customers with this set to be rolled out for all The Positive Impact Plan focuses on three areas of sustainability under 25s across our other brands this year.  • Ongoing monitoring: we made various enhancements to our  • Help customers play well and monitor customer behaviour. We issued approximately  7 5.3m automated communications to customers encouraging 50% by 2026) safer gambling awareness and positive play during 2021. • Empower colleagues to work better  representative of the places in which we l  • do more  the lives of 10 million people sed on age. Further information in relation to our Positive Impact Plan can • Backstops: annual thresholds are being put in place across  on page 44. all brands to ensure that customers are protected where our new customer and/or ongoing monitoring controls do not trigger an engagement. These ensure that at a particular level of spend, customer activity is reviewed with support provided whe   ## Our new sustainability in place and we continue to utilise our proprietary technology  ## strategy will ensure we deliver  partnered with the American Gaming Association and ## local initiatives that have the announced its partnership with Craig Carton in promoting positive play in the growing ## maximum impact. 12 Flutter Entertainment plc Annual Report & Accounts 2021 # Play Well strategy Extending our leadership in safer gambling, our new Play Well strategy builds on the progress we have made in recent years within each of our divisions, bringing it together in an overarching set of universal principles and guidelines. With a presence across a multitude of regulatory environments and cultures, we know there is no "one-size-fits-all" solution to promoting safer gambling. Instead there are universal principles we can employ across our divisions, leveraging global scale, capability and expertise to provide players with the tools, information and support they need to Play Well. In 2022, we are introducing locally tailored Play Well metrics, directly linked to colleague bonuses for each of our divisions. These metrics have been developed on a divisional basis to ensure that each business is focused on the initiatives that will support and promote their local safer gambling strategies, taking into account individual markets and contexts, whilst being consistent with our global Play Well principles. In addition to division specific targets, we have also set ourselves an ambitious Group goal to have 73% of our online customers using safer gambling tools by 2030, with over 50% doing so within five years. (2021: 34.7%) # 2021 review # US In the US, our business has significantly expanded in scale during 2021, as we leveraged the "flywheel effect" to accelerate growth. With revenue of $1.9bn, 47% more than our next nearest online competitor, our advantage is compounding, providing us with the additional firepower required to continue to invest heavily in both product and customer acquisition. Since launching our first online sportsbook in the summer of 2018, we have now acquired over 3.9 million sports betting and gaming customers. At our 2021 interim earnings announcement we outlined the key drivers of our success in the US and during the second half we made further enhancements across a number of these areas. # Product We continued to innovate on product by expanding the breadth of our proprietary and market leading Game Game Parlay™ ("SGP") product. We now provide players with the ability to ill combine SGPs on multiple different games into a single bet... (i) place a SGP in-play on certain sports, and (ii) place a SGP on college football. We have now completed development of in-house pricing for college basketball, increasing the proportion of our handle that is priced in-house to 80%. The combination of better pricing accuracy and a greater proportion of handle coming from higher margin parlay products means that we generated 340 basis points more in gross margin than our competitors during Q4 (Q2: 300 basis points higher). In gaming we are increasingly focused on improving our overall customer proposition to establish a clear podium position. Following a period of significant focus on sports we have scaled up our gaming team by adding nearly 100 colleagues, including the addition of gaming experts from around the Group. We continued to make incremental product improvements by enhancing how we communicate with and reward casino players, while also making gaming more accessible for sportsbook players. # The FanDuel brand The FanDuel brand continues to resonate strongly with sports bettors. We have the leading share of voice in the market, with a focus on ensuring high levels of brand visibility throughout the year, not just during seasonal peaks. We have recently added and/or extended several key partnerships, including the NFL, NBA and with Pat MacAfee, looking in important assets for multiple years. We invested over $1bn in promotions, sales and marketing across our US business in 2021. These competitive advantages have enabled us to consolidate our combined overall leadership position in the US online market, a market which has grown by over 120% since Q4 2020: - Our sports-betting share in Q4 was 40%! - Our online gaming share in Q4 was 20%! - Our overall online market share in Q4 was 31%! This leading revenue share is moving FanDuel closer to a position of profitability. In 2021 FanDuel became the first large scale online brand to generate a positive in-year contribution from sports betting and gaming in the US. FanDuel generated contribution of 69m ($14m) in 2021, with the positive contribution from more mature states (such as New Jersey, Pennsylvania, Indiana and Illinois) more than offsetting the material investment in large states newly launched in 2021 (Michigan, Virginia, Arizona and Connecticut). Encouragingly, as we expand into further new states, we are seeing faster adoption rates for online sports betting. This results in bigger initial losses in the early months post a state launch as we acquire more customers. However, when combined with better retention rates and our product mix advantages, we now expect new states to generate positive contribution after 12 to 24 months post launch, in contrast to the 18 to 30 month guidance we provided in 2019. Such guidance excludes a higher tax state such as New York. Based on our current expectations relating to the timing of new state regulation in 2022 and 2023, we remain confident that our US business will be EBITDA profitable in 2023. The timing of regulatory developments and new state launches can be difficult to predict and any variance to our expectations across these two years could affect the timing of profitability being reached, particularly if an unexpected large state such as California launches in 2023. Our online sportsbook is currently available in 14 states following successful launches in New York and Louisiana in early 2022. In New York, we have already acquired over 400,000 new sports betting customers since launch. # UK & Ireland In 2021 we maintained our leadership position of the UK and Ireland online markets with a 29% market share (2020: 29%), driven by a focus on recreational customer growth. Our total AMPs increased by 25%, resulting in online revenue growth of 3%. The relative lower rate of revenue growth reflected several key factors including challenging Covid comparatives, adverse sports results and a general slowdown in the UK online market, particularly in Q4. Annual Report & Accounts 2021 Platter Entertainment plc 13 Strategy Report Chief Executive Officer's review continued # 2021 review continued # UK & Ireland continued Despite a more challenging environment we continued to innovate on product. During the year we leveraged Group technology, pricing and risk management capabilities to launch 'Popular Bet builder' on our Paddy Power sportsbook. On the gaming side we saw good retention driven by the launch of Sky Vegas live, the rollout of PokerStars gaming content across both Paddy Power and Sky Vegas brands (via the Group Gaming Network) and the continued benefit from our daily prize mechanics across all three brands. An unprecedented run of customer-friendly sports results in 2021 cost the division £232m in revenue year-on-year (before adjusting for recycling), £149m of which was in Q4 alone. In addition, relaxation of Covid-related restrictions led to customers spending a greater proportion of leisure time on other activities. A combination of the factors above resulted in us observing materially lower levels of customer recycling than we have seen historically during the fourth quarter. Safer gambling improvements in 2021, together with the other changes implemented in recent years, have resulted in our player base becoming more recreational. For example, since H2 2019, we have reduced revenue coming from higher value bands by more than 55%. While it is challenging to quantify exactly what the cost of new safer gambling measures have been (because we cannot be definitive on how all player behaviour has changed in response), our best estimate is that the total revenue impact in 2021 alone was in excess of £90m. While we recognise that the improvements we have made, and continue to make, will impact near term growth, they will better position the business longer-term. As we assess the outlook for longer term customer economics, we are also reviewing the cost base of the business to ensure that it is appropriate going forward. The UK Government's review of the Gambling Act is ongoing and we are hopeful that we will get improved visibility on the future shape of the industry in Q2 in the form of the government's White Paper publication. While this document should provide some clarity on the shape of future changes, we believe that the impacts will ultimately be phased over the coming years. In Ireland, the legislative process to establish a gambling regulatory authority has commenced which we welcome. # Australia Sportsbet delivered another excellent performance, clearly displaying the benefits that can be derived from attaining significant local scale. In 2021, Sportsbet had over one million AHPs, an increase of 60% on 2019. This has resulted in a 7 percentage point increase in online market share in this period, to 50% in 2021. We continue to win in our key battlegrounds of product, value and marketing. In Q4, we launched 'Bet returns for SGM' which combines the great customer experience of our personalised generosity offering with our market leading Same Game Multi product. This followed our highly successful 'Bet with Mates' product which launched in H1. In H2, over 60% of the Australian population experienced the reintroduction of Covid related restrictions, which had been removed for most of H1.1. As trading conditions normalise in 2022, we will continue to invest in offering outstanding value for money to retain leisure spend from migrated players. As outlined at our September investor day (here), the medium-term outlook for Sportsbet remains compelling, with growth likely to be driven by the growing financial maturity of our existing player base as well as the continued conversion of non-betting sports fans and retail gamers. Sportsbet continues to provide a template for what can be achieved in other international markets as we look to leverage the Group's scale. # International As expected, the easing of Covid restrictions during 2021 resulted in a reduction in revenues in our international division, with the normalisation of customer engagement following elevated levels in 2020. In addition, the pro-active compliance measures we introduced following the TSG merger and the adverse changes to regulation in both Germany and the Netherlands created headwinds for the business. Positively, underlying growth in key markets of focus such as Brazil, Canada and Georgia during 2021 has been encouraging. At the time of the TSG merger we identified various improvements required to position the business for future success and to correct for historic underinvestment in certain key areas. While much of this investment was foreseen, a number of unexpected headwinds have materially impacted revenues (e.g. adverse FX movements, Dutch regulation, and alignment of PokerStars' standards of compliance with those of Flutter). As such, the last two years has seen a significant reshaping of the international division. We have materially reduced the division's risk profile, albeit at a lower level of profitability. We have developed a clear growth strategy with an emphasis on key geographical markets, supplemented by the acquisition of Junglee and the recently announced acquisition of Sisal. We significantly increased investment in order to revitalise PokerStars and have rebased the business, delivering: - A stabilised poker market share via an improved customer proposition and the launch of our new PokerStars reward scheme in October, which resonated well with customers. Stabilising our poker customer base is crucial for cross-sell into casino. - An improved product mix through investment in direct casino acquisition with the launch of our 'Epic Downtime' PokerStars Casino campaign. We continued to broaden our gaming content, leveraging our three Flutter in-house gaming studios. Over 45% of Q4 PokerStars' gaming revenues came from casino products (Q4 2019: 39%). The scale and geographic footprint of Flutter has been transformed since we set our original strategy in 2018 and so we refreshed our objectives to help us defend and deliver our gold medal positions. 14 Flutter Entertainment plc Annual Report & Accounts 2021 • An improved regulatory profile with 63% of International  Strategic report       delivering lower levels of profitability in the short-term, is the £1.6bn. The transaction is expected to complete in Q2 2022 right approach to put the business on a more stable footing once all necessary regulatory approvals have been received. ture growth.   near term. However, the Group continues to generate significant   progress. On an organic basis, stripping out the adverse remains committed to its medium-term leverage target of impacts of regulatory changes, the International division has  delivered compound annual double digit revenue growth since once leverage returns to these levels.  Other updates • Italy: As previously disclosed, the Group is in a legal arbitration   brand, which will propel Flutter into a leadership position in Italy  • Georgia and Armenia:  this, both sides have continued active discussions to determine countries due to  whether an agreement can be reached. While those discussions EBITDA almost doubling year-on-year have been productive and have advanced materially, it remains • Canada: unclear at this time as to whether agreement can be concluded. d regulation As a result, the arbitration is proceeding in parallel with a hearing  • Brazil:  agreement in the interim, this hearing will proceed and we expect tment in H1 will result in a binding decision by the arbitrator in Q3 2022. • India:  ts position.  positive regulat Peter Jackson Chief Executive Officer  14 March 2022  where we find businesses with strategic moats around them.  pages 78 and 79   capabilities, we believe the International division is in an excellent position to capitalise on the opportunities across the 9 Capital structure and balance sheet update 10 At 31 December 2021, the Group had gross debt of £3,599m and a net debt position of £2,647m, representing a leverage ratio  the pe •  reduced the effective cost of debt and increased availab •  enterprise value of £135m •  Annual Report & Accounts 2021 Flutter Entertainment plc 15 ## Markets ## Fast growing ## global opportunity ### The global online betting and gaming market has a significant runway of future growth, with ### more countries and US states expected to regulate in the years ahead. Just 25%, or £75bn, ### of this £302bn global market in 2021 is currently online (2019: 13%) with compound annual ### growth of the online channel expected to exceed 10% over the next five years to 2026. ## UK and Ireland Australia The UK market is the largest regulated market in Europe. The Australian sports betting market is fully regulated Between the UK and Ireland, the total addressable market and was worth an estimated $7.9bn in 2021, with online (“TAM”) was estimated to be c. £9.9bn in 2021. While more accounting for 87% of the market. The market has seen a mature than many other European markets, the UK and continuous benefit from a customer shift to online, which Ireland online market has continued to exhibit strong accelerated over the last two years due to Covid-related levels of growth, having delivered c. 9% compound annual restrictions in retail. Pre-2020, the online market had been growth over the last five years. The majority of this growth growing at approximately 14% per annum with future has been at the recreational/more casual end of the growth rates dependent on (i) the number of migrated market. Online penetration of the overall market continues retail customers that choose to remain online, and (ii) to rise, sitting at approximately 86% today. The migration conversion of avid sports fans who don’t currently bet with of customers from offline channels to online accelerated any bookmaker. Online gaming products such as casino during the Covid-19 pandemic as retail venues were and poker are not currently permitted in Australia. temporarily closed. Sportsbet had an estimated 50% share of the online In the near term, regulatory changes and safer gambling market during 2021 and enjoyed multi-year market share initiatives being introduced by operators will likely lead gains through (i) the structural shift in betting patterns to slower market growth in 2022/23. However, over the given Sportsbet’s strength in both non-racing sports medium term we expect the recreational customer and fixed odds sports betting, (ii) capturing a significant segment to continue to drive further growth in the total portion of customers who migrated from retail to online, online addressable market. As the leading operator in and (iii) leading the market across our three strategic the UK and Ireland, Flutter have implemented several pillars of product, value and marketing. More detail on the proactive measures over the last three years to ensure Australian market can be found in the Sportsbet investor our customer base is increasingly recreationally focused, day presentation, which was held in September 2021 and positioning the Group well ahead of any regulatory change. /investors. We enjoyed a c. 29% share of the UK online sports and gaming market in 2021 and our recreational brands are well placed to capture future online migration and growth both in the near and longer term. UK and Ireland market, GGR (£bn) Australian sports betting market, GGR ($bn) Online CAGR: 9% 10.7 10.8 Online CAGR: 21% 7.9 10.1 10.3 9.9 | | | | 66% | 76% | | 6.9 | 87% | | --- | --- | --- | --- | --- | --- | --- | --- | | 9.1 | | 65% | | | | | | | | 63% | | | | 86% | | | 86% 60% 5.4 5.1 4.8 4.5 71% 67% 62% 58% | 40% | 37% | 35% | 34% | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 24% | | 42% | 38% | | | | | | | | | | | | | | 33% | 29% | | | | | | | | | 14% | | | | | 14% | 13% | 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 RetailRetail OnlineOnline 16 Flutter Entertainment plc Annual Report & Accounts 2021 FANDUEL NFT OFFICIAL PARTNER OF THE NFT # GET INTO # VICTORY # FORMATION ![img-3.jpeg](img-3.jpeg) ## International The International division operates in over 300 different countries, in both regulated and unregulated markets with select case study markets outlined below: confining to provide the division with an addressable market size of c. £26bn. Many of these jurisdictions, such as Latin America and Eastern Europe, have strong underlying growth prospects. These case study markets are expected to have an online compound annual growth rate of 10% over the medium term as countries such as Brazil, Canada and the Netherlands continue to regulate. The International division has leadership positions in a number of these markets through brands including PokerStars, AdjaraNet, Betfair and Junglew. The Group also announced the acquisition of Sisal in December 2021 which will provide the business with a gold medal position in Italy. We will continue to use our experience in both direct customer acquisition and cross-selling techniques in markets where we enjoy a strong leadership position in one product vertical to expand our existing customer base efficiently. The global scale of the Group together and the local focus achieved through podium positions organically or through acquisition, makes us well placed for long-term future growth. International case study markets, GGR ($bn) ![img-4.jpeg](img-4.jpeg) ## US The US is the single biggest market opportunity for Flutter. FanDuel has continued to see positive legislative momentum, resulting in its online sportsbook now being available in 14 states and online gaming being available in five states. In 2021, these states generated $7.0bn in online GGR, with $3.3bn in sports betting and $3.7bn in gaming. Our brands had a market share of 40% in sports betting and 20% in gaming in Q4 2021. We expect the TAM for its products in the US to be over $20bn by 2025 from: - maturing of existing sports betting and gaming states; - expansion of sports betting to cover over 63% of the US population, currently 34%; - expansion of online gaming to cover over 16% of the US population, currently 11%; and - ongoing revenue contributions from retail sportsbooks, online horse wagering, daily fantasy sports and poker. There is further significant potential for the TAM to exceed $34bn as states continue to grow beyond 2025, particularly if California and Florida regulate our products and FanDuel can expand into Canada. US market, GGR ($bn) ![img-5.jpeg](img-5.jpeg) Annual Report & Accounts 2021 Flutter Entertainment plc 17 Loretta Johnston ## Strategy ## The scale of the leader, ## with the mindset of ## a challenger   since we set our four-pillar strategy in 2018. The first pillar of that           opportunities. These new priorities, set out across four pillars         Junglee in 2021. Finally, the fourth pillar of the 2018 strategy  ## Powered by key enablers  ng provider. S Links to principal risks: e p l e ### a t o m e ### c u s e r ### C s d S | 1  | | | | --- | --- | --- | | 2  | | | | 3  | | | | 4  | | | | 5  | C | Positive | ### o ### s |  | | | m | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 6 | P | | | | | Impact | | | | e | | a | | | r | | m | | | | | | | u | | t | | | o | | | | | | | | | g | | a | | 7  | | | | u | | | | | | | | d | | | d | | | | | | Plan | | a | | | | | | | u | | n | | | | | e | | | | | | | | | i | | | | | l | | d | | |  | | c | | | t | | | | l | | | | | 8 | | | | | i | | | o | | | n | | | | | t | | | e | | | | | | a | | | | | a | | | s | | | C | | | | | t 9  n h d g i | | | t | | | | | | | | s | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | |  | e | | | | | | | | n | | 10 | | | c | | | | | | i | | | | | | h | | | | | | r | | | | | | n | | | | | | e | | | | | | | o | | | | m | | | | | | | | l | o | | | o | | | | | | | | | g y | | s t | | | | | | | | | | | C | u | | | | 18 Flutter Entertainment plc Annual Report & Accounts 2021 Read more on page 20 ##  Strategic report | Focusing on growing our | What it means | 2021 performance | | --- | --- | --- | | recreational customer base | • Maintaining a laser focus | •  | | efficiently, using local scale to | on growing our recreational | d Australia | | unlock synergistic benefits | c | | •  across our core markets •   ip positions Triple Step” • Leveraging our local scale to •  Links to principal risks: drive efficiency across our synergies during 2021 1 2 3 4 5 6 7 8 9 10  Read more on page 22 ## Invest to win in the US | Building on the gold medal | What it means | 2021 performance | | --- | --- | --- | |  | • Solidifying FanDuel’s | • Maintained #1 position through | | will extend our leadership | leadership position as the #1 | product leadership with 40% Q4 | | position and continue to win |  |  |  | •  | • Achieved significant scale | | --- | --- | |  | at nearly 50% larger than | | pod |  | | •  | •  | Links to principal risks:   1 2 3 4 5 6 7 8 9 10 positive EBITDA in 2023  ## Build on our network and invest for leadership Read more on page 24 ##  | Buying and building podium | What it means | 2021 performance | | --- | --- | --- | | positions across our | •  | •  | | international markets, we will |  | followin | combine global scale with local •  •  presence to deliver sustainable cross-sell and direct   growth and maximise the casino products •  network benefits of our poker d portfolio •  and exchange products  •  Links to principal risks:   1 2 3 4 5 6 7 8 9 10  that Flutter can further develop Read more on page 26 ## Creating the future Take early positions to realise   the potential of future spaces     We will continue to nurture an   innovative mindset to identify   adjacent opportunities to grow   our customer base and position   the Group for growth in a   continuously evolving of our people, the strength  entertainment space. of our products, the diversity    Links to principal risks:   1 2 3 4 5 6 7 8 9 10 always supported. Annual Report & Accounts 2021 Flutter Entertainment plc 19 ## Growing today’s businesses ## Grow ## our gold medal ## businesses in ## core markets ### Our core markets remain a crucial pillar of our strategy. ### We will retain our challenger mindset and continue to ### invest in our brand and product propositions to extend ### our leadership position and grow our recreational ### customer base efficiently, leveraging local scale. 20 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## 4.2m customers in our core markets ## Building on our ##  ## 29%  2021 UK online market share        ## 50% 2. Our scale will position the Group well to 2021 Australian online market share    leading product innovations such as our    product advantage.    with the sharing of innovation and c  page 18 21 ## Growing today’s businesses continued ## to win in the US ### Since the repeal of PASPA in 2018, FanDuel has ###  ###  ###  22 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report US revenue ($bn) ## Extending our 1.9 2 year CAGR: 97% ## leadership position  win as each new state opens up, solidifying our   0.9  positions of scale in all states and have the 0.5 leading product in   proposition and drive increased personalisation 2019 2020 2021    3. FanDuel Group is the largest online sports and  scale advantage to drive the flywheel and invest   to drive further revenue growth and operating   there are no significant variances versus out  regulation.  page 18 ## 9 gold medal positions 23 ## on our network and invest ## for leadership positions across ## international markets ### As a global group our strength lies in combining global ### scale and local knowledge. Using these advantages ### we will extend our leadership position internationally ### through building and buying podium positions in ### regulated markets to maximise the network benefits ### of our poker and exchange products. 24 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Building the framework ## for future growth    ##  19%  growth in customer base since 2019   n the world.   ## 56%   of gaming revenue from  casino products around the world.     difficult.  page 18 Annual Report & Accounts 2021 Flutter Entertainment plc 25 ## Create the future ## spaces and ##  ### Our scale is global but we think and act like a challenger. ### This means always exploring ways to broaden our ### customer base, push the boundaries of what is possible ### and lay the foundations for future growth. 26 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Taking early positions ## and driving innovation ## 4x  growth in daily average users of iGaming experience   how they engage with other aspects of the wider                in revenue in 2020. 2021 growth in daily players and  is off to a strong start too.  page 18 Jul 4 at  ••• May 24 at 5.04 AM ••• Just wow Amazing game             Annual Report & Accounts 2021 Flutter Entertainment plc 27       ## Key performance indicators ## Measuring our progress ### Tracking our key performance indicators (KPIs) helps us make better decisions, set the ### right goals and measure our progress in achieving our strategic ambitions. ## Financial indicators Reported revenue (£m) Pro forma revenue (£m) Reported EBITDA (£m) Pro forma adjusted EBITDA (£m) ## +37% +17% -6% -18% 2021 2021 2021 2021 6,036 6,036 723 1,001 2020 2020 2020 2020 4,414 5,264 772 1,231 | Definition: | Definition: | Definition: | Definition: | Definition: | | --- | --- | --- | --- | --- | | Net revenue refers to the total amount staked or wagered by | Reported EBITDA refers to total earnings before interest, tax, | Adjusted free cash flow (“FCF”) refers to | Leverage ratio is calculated as net debt | Total shareholder return (“TSR”) refers to | | customers after deducting amounts paid out to customers, | depreciation and amortisation generated from our operations. | net cash flows from operating activities of | divided by trailing 12-month pro forma | the total return accruing to shareholders | | ts, and VAT. | Adjusted EBITDA is EBITDA before deducting Separately | the Group after capital expenditure, lease | adjusted EBITDA. Net debt comprises | during the year. This will reflect the total | | | Disclosed Items (“ SDIs”). | liability payments and working capital | the principal outstanding balance of | share price return as well as any cash | | | | movements and before deduction of the | borrowings, accrued interest on those | returns, including, for example, ordinary | | | | cash element of separately disclosed | borrowings and derivatives held for | dividends, special dividends and share | | | | items (“SDIs”). | hedging debt instruments less cash and | buy-back programmes. | cash equivalents. | Why we measure it: | Why we measure it: | Why we measure it: | Why we measure it: | Why we measure it: | | --- | --- | --- | --- | --- | | This measures our ability to effectively and sustainably build | This measures the profitability of our business driven by our | This measures our ability to generate | The Board has set a medium-term | This measures the effectiveness with | | brand equity and grow market share in key markets across our | investment choices and our ability to effectively manage costs | cash, which we can then use to fund | leverage ratio target of 1–2 times which | which Flutter achieves long-term value | | c portfolio. | and leverage scale. | future investment in the business, both | we believe is appropriate for a group | for our shareholders in line with Group | | | | organic and acquisitive, and to fund | operating in our sector. | strategy. Relative TSR is also used as | | | | potential dividends to our shareholders. | | the sole performance measure for | the Executive Directors’ Long Term Incentive Plan. | Performance: | Performance: | Performance: | Performance: | Performance: | | --- | --- | --- | --- | --- | | Reported revenue increased 37% reflecting a full 12 months |  | The decline in Adjusted FCF reflects | The leverage ratio increased to 2.6x | TSR declined in 2021 following a strong | | contribution from TSG and continued strong AMP momentum | increasing £81m to £243m and once-off costs associated | lower Adjusted EBITDA in 2021, ii) a more | as strong Adjusted FCF generation of | performance in 2020. Gaming stocks | | d Australia. |  | favourable working capital movement | £625m was offset by non-operating cash | were weaker in Q4 following a re-rating | | | Australia growth. | in the prior year due to significant | flows including the Kentucky settlement |  | Pro forma revenue increased 17% driven by pro forma AMP | | | growth in the business, and iii) increased | and share purchases. Adjusted EBITDA | continued strong momentum and high | | --- | --- | --- | --- | --- | | growth of 23% from expansion of our recreational base |  | | | | | | | Capex primarily to fund expansion into | was lower in 2021 which also drove an | market share. Five year TSR is 6.2%. | |  |  | | | | | | | mor | increase in the ratio. | | | addition | challenging comparatives due to prior year Covid and sports | | | | results benefits, combined with regulatory headwinds. Australia had another excellent year. 28 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Financial indicators  Leverage ratio (net debt/adjusted EBITDA) Total shareholder return (%) ## £625m 2.6x (23)% 2021 20212021 2.6 (23)625 2020 20202020 2.3 671,151 | Definition: | Definition: | Definition: | Definition: | Definition: | | --- | --- | --- | --- | --- | | Net revenue refers to the total amount staked or wagered by | Reported EBITDA refers to total earnings before interest, tax, | Adjusted free cash flow (“FCF”) refers to | Leverage ratio is calculated as net debt | Total shareholder return (“TSR”) refers to | | customers after deducting amounts paid out to customers, | depreciation and amortisation generated from our operations. | net cash flows from operating activities of | divided by trailing 12-month pro forma | the total return accruing to shareholders | | ts, and VAT. | Adjusted EBITDA is EBITDA before deducting Separately | the Group after capital expenditure, lease | adjusted EBITDA. Net debt comprises | during the year. This will reflect the total | | | Disclosed Items (“ SDIs”). | liability payments and working capital | the principal outstanding balance of | share price return as well as any cash | | | | movements and before deduction of the | borrowings, accrued interest on those | returns, including, for example, ordinary | | | | cash element of separately disclosed | borrowings and derivatives held for | dividends, special dividends and share | | | | items (“SDIs”). | hedging debt instruments less cash and | buy-back programmes. | cash equivalents. | Why we measure it: | Why we measure it: | Why we measure it: | Why we measure it: | Why we measure it: | | --- | --- | --- | --- | --- | | This measures our ability to effectively and sustainably build | This measures the profitability of our business driven by our | This measures our ability to generate | The Board has set a medium-term | This measures the effectiveness with | | brand equity and grow market share in key markets across our | investment choices and our ability to effectively manage costs | cash, which we can then use to fund | leverage ratio target of 1–2 times which | which Flutter achieves long-term value | | c portfolio. | and leverage scale. | future investment in the business, both | we believe is appropriate for a group | for our shareholders in line with Group | | | | organic and acquisitive, and to fund | operating in our sector. | strategy. Relative TSR is also used as | | | | potential dividends to our shareholders. | | the sole performance measure for | the Executive Directors’ Long Term Incentive Plan. | Performance: | Performance: | Performance: | Performance: | Performance: | | --- | --- | --- | --- | --- | | Reported revenue increased 37% reflecting a full 12 months |  | The decline in Adjusted FCF reflects | The leverage ratio increased to 2.6x | TSR declined in 2021 following a strong | | contribution from TSG and continued strong AMP momentum | increasing £81m to £243m and once-off costs associated | lower Adjusted EBITDA in 2021, ii) a more | as strong Adjusted FCF generation of | performance in 2020. Gaming stocks | | d Australia. |  | favourable working capital movement | £625m was offset by non-operating cash | were weaker in Q4 following a re-rating | | | Australia growth. | in the prior year due to significant | flows including the Kentucky settlement |  | Pro forma revenue increased 17% driven by pro forma AMP | | | growth in the business, and iii) increased | and share purchases. Adjusted EBITDA | continued strong momentum and high | | --- | --- | --- | --- | --- | | growth of 23% from expansion of our recreational base |  | | | | | | | Capex primarily to fund expansion into | was lower in 2021 which also drove an | market share. Five year TSR is 6.2%. | |  |  | | | | | | | mor | increase in the ratio. | | | addition | challenging comparatives due to prior year Covid and sports | | | | results benefits, combined with regulatory headwinds. Australia had another excellent year. Annual Report & Accounts 2021 Flutter Entertainment plc 29 ## Key performance indicators continued ## Measuring our progress ## continued ## Non-financial indicators Average monthly players (m) Colleagues engagement (%) Technology availability (%) ## +23% 80% 99.30% 2021 2021 2021 7.6 80.0 99.30 2020 2020 2020 6.2 81.0 99.73 Definition: Definition: Definition: Definition: Monthly players are the total number of Colleague engagement is measured as a Technology availability is the proportion Global Play Well goal measured as the players who have placed and/or wagered weighted average of the various regular of time during the year when our technology % of active online customers who use a stake and/or contributed to rake or employee engagement survey scores platforms were fully available to a safer gambling (Play Well) tools in the tournament fees during the month. across the Group which include metrics our customers. specified reporting period. Average Monthly Players (“AMPs”) are the for employee satisfaction and well-being. average of the monthly players over the reporting period. Why we measure it: Why we measure it: Why we measure it: Why we measure it: This measures changes in the size of our Colleague engagement is a key enabler This measures the reliability, scalability We believe there are universal principles customer database which is a key driver of of our strategy and performance and is at and flexibility of our technology platforms we can employ, leveraging our global long-term growth, particularly in markets the centre of everything we do. which are key drivers of our ability to scale and expertise to provide players which remain in investment mode. continuously innovate and provide with tools, information and support to best-in-class products to our millions enable an entertaining, safe experience. of customers. The Play Well goal measures our progress on this. | Performance: | Performance: | Performance: | Performance: | | --- | --- | --- | --- | | AMPs increased 23% in 2021 reflecting | Employee engagement remains high at | Technology availability remains very | We have set ourselves an ambitious | | continued expansion of our recreational | 8.0 in 2021 as we continue to prioritise | high at 99.3% despite being impacted | Group target to have 75% of our | |  | development of our people. See more in | by outages with third party providers | customers using safer gambling tools | | Australia, along with further expansion of | our People section from page 52 and the | in the current year. We migrated our | od at 34.7%. | | our sports and gaming busines | Colleagues section of our Positive Impact |  | | | | Plan on page 45. | platform in 2021. | | 30 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Non-financial indicators Play Well global goal (%) * 2021 measure excludes Junglee, Adjarabet and Tombola. We will continue to evolve our Play  ## * the strategy evolves. ## 34.7%  Taxonomy Regulation and Art. 10 (2) of the Art. 2021 34.7 8 Delegated Act, “Disclosures Delegated Act”  page 265 2020 n/a Definition: Definition: Definition: Definition: Monthly players are the total number of Colleague engagement is measured as a Technology availability is the proportion Global Play Well goal measured as the players who have placed and/or wagered weighted average of the various regular of time during the year when our technology % of active online customers who use a stake and/or contributed to rake or employee engagement survey scores platforms were fully available to a safer gambling (Play Well) tools in the tournament fees during the month. across the Group which include metrics our customers. specified reporting period. Average Monthly Players (“AMPs”) are the for employee satisfaction and well-being. average of the monthly players over the reporting period. Why we measure it: Why we measure it: Why we measure it: Why we measure it: This measures changes in the size of our Colleague engagement is a key enabler This measures the reliability, scalability We believe there are universal principles customer database which is a key driver of of our strategy and performance and is at and flexibility of our technology platforms we can employ, leveraging our global long-term growth, particularly in markets the centre of everything we do. which are key drivers of our ability to scale and expertise to provide players which remain in investment mode. continuously innovate and provide with tools, information and support to best-in-class products to our millions enable an entertaining, safe experience. of customers. The Play Well goal measures our progress on this. | Performance: | Performance: | Performance: | Performance: | | --- | --- | --- | --- | | AMPs increased 23% in 2021 reflecting | Employee engagement remains high at | Technology availability remains very | We have set ourselves an ambitious | | continued expansion of our recreational | 8.0 in 2021 as we continue to prioritise | high at 99.3% despite being impacted | Group target to have 75% of our | |  | development of our people. See more in | by outages with third party providers | customers using safer gambling tools | | Australia, along with further expansion of | our People section from page 52 and the | in the current year. We migrated our | od at 34.7%. | | our sports and gaming busines | Colleagues section of our Positive Impact |  | | | | Plan on page 45. | platform in 2021. | | Annual Report & Accounts 2021 Flutter Entertainment plc 31 ## Business model ## How we generate revenue Sports betting Gaming Peer to Peer Traditional bookmaking Games of chance such as We make a commission from where we make a margin from online casino, bingo and products where customers bets placed by customers on machine gaming terminals. play/bet against each other. the outcome of events The games involve This includes Poker, Betfair customers betting “against Exchange, DFS and TVG the house” and we generate pooled wagering a margin Higher volatility Medium volatility Lower volatility Free to play Customers enter competitions at no cost to win prizes, e.g. Sky Super 6. Some of these customers play real money products over time. Gross gaming revenue Less: Customer promotions Net revenue Less: Cost of sales Gross profit Less: Marketing costs Contribution Less: Other operating costs EBITDA 32 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## How we enable value creation ## b y k e y e n ## e d a ## e r b l ## w e r ## o s ## P ## S ## e p ## l e ## a e ## c d ## S ### s t o m e ### u r s ### C ## C Positive ### o ### s ## m Impact ### e ## P a ## m u t ## r g ## o u Plan a ### a ### n e ## d i l d ### t l ## u i e o ## d ### s C ## c n ## t a ## a t ## n h ## d g ## i ## t s ## e ## c i n ## h r ## n e ## o m ## l o o ## g s t ## y u ## C Flutter operates a divisional management and operating structure across its markets.  ve markets. ## The value we create Taxes Total shareholder return Sport and community Sports levies  | | 1 | | 1 | | | | --- | --- | --- | --- | --- | --- | |  | | 6.2% | | £3.7m | £374m | | 1 Figure includes betting and gaming | |  | | | | |  | | cember 2016. | | | | other taxes. Annual Report & Accounts 2021 Flutter Entertainment plc 33 ## Powered by key enablers ## Our ## Positive ## Impact ## Plan ###  ### we do and setting the agenda for positive change in our industry is key to our ### long-term success. Our new Positive Impact Plan introduced in 2021, is the ### next step in our ongoing commitment to making a positive difference across ###  ###  ###  ### setting out short, medium and long-term targets for positive impact. Read more on page 45 34 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Working with ## communities to ## do more ## Empowering  our local experience in the communities ## colleagues to in which we operate is key to the   ## work better  Our teams challenge norms, explore  ideas, champion our customers and have already made around the world   for the industry. At Flutter a key   communities. people and our Work Better strategy Read more on our Do More strategy ## Helping  on page 56 policies and create work spaces that ## customers empower our people to perform at  the colleagues who work in Flutter ## play well having a safe space for expression and creativity. We have always led the industry when  Read more on our Work Better strategy on the first operator to introduce proprietary technology in 2015 to  proactively intervene to prevent harm  We have introduced a targeted Play  the insights learned from the progress we have already made to define key  divisions to tailor to their specific   upport them. Read more on our Play Well strategy on page 48 Annual Report & Accounts 2021 Flutter Entertainment plc 35 ## Powered by key enablers continued ## Our four key enablers power ## our business and help us to ## deliver on our strategy. ## Scale Speed ###  The volatility and pace of our market ###  demands agility. That’s why we always think ###  like a challenger, even when we are a leader.   local presence required to create personalised and tailored        liquidity position, this dual-scale approach positions us to win in technology or emerging adjacencies. We will purposely in local markets. This scale gets our “flywheel” going which prioritise speed over efficiency to further our strategy and   medal positions.  Enhanced Higher customer revenue Value creation proposition growth compounds as we continue to invest for growth Increased Greater ## 34% scale and operating  leverage of US population now to invest have access to FanDuel  36 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Product and Customer ## technology insights and data ### We have a long heritage in providing our  ### customers with innovative products  ###  where they are. ### technology platforms. We had 18m customers interact with our portfolio of sports   relationship with each of our customers is crucial to our        effectively. We leverage customer insight to inform decision advantage and rolling out market leading customer favourites making throughout all areas of the organisation including   Ireland and Bet with Mates in Australia. Our three in-house and technology development, how we deploy our marketing gaming studios are continuously developing cutting edge and promotional strategies and even how we structure content for our customers with further titles added in 2021.   our customers. at innovative new ways to engage our gaming customers with the launch of new products such as Paddy’s Wonder Wheel  | 4,500 | 700 | 18m | | --- | --- | --- | | technologists | pricing and risk | customers interact | |  | management experts |  |  Annual Report & Accounts 2021 Flutter Entertainment plc 37 ## Stakeholder engagement ## Engaging ##  ## stakeholders ### The Directors continue to act in a way that ### promotes the success of the Company for ### the benefit of shareholders and all of our ### many stakeholders.    of the Companies Act 2014 of Ireland rather than the 2006   decision-making processes as detailed in this section of the  understand the impact of our decisions on all our stakeholders nd concerns. Links to strategy: Maximise profitable growth in core markets Maintain and grow US leadership position Attain podium positions in international markets Grow business in rest of world 38 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Shareholders and investors How we engaged • The AGM was held on 29 April 2021. Due to restrictions on travel and gatherings of people in place in Ireland at the time of the meeting, shareholders participated in the meeting virtually and submitted questions to •  topics, including talent retention and succession planning at both Board  and sustainability. There was a big focus on safer gambling, integration and transformation post-merger with TSG and the performance and growth of Flutter as a whole. • Regular engagement with our shareholders happens through a comprehensive programme defined by the Investor Relations team. This includes continuous engagement with institutional shareholders and sell-side analysts during the year through meetings, conference calls and video calls. • All Directors are available to meet with institutional investors on request.  on matters. • The Executive Directors presented and met with our largest shareholders and analysts following release of the full year and half year results as well as quarterly trading updates during the year. • A virtual investor event in September 2021 on the Sportsbet brand in Australia set out a comprehensive overview of areas of the business for the benefit of shareholders and sell-side analysts. • The Board received regular analysts’ commentary and reports and received presentations from corporate brokers. •  areholders. Outcomes • Investors welcomed our comprehensive communications programme to keep them updated on our financial position, performance, business perspectives and risk. • Shareholders and sell-side analysts also welcomed the in-depth analysis of the US and Australian businesses provided as part of the Interim Results issued in August 2021 and the Sportsbet investor day held in September 2021. • The feedback we got on safer gambling initiatives and commitments and wider ESG matters helped inform the Group’s Play Well safer gambling strategy and Positive Impact Plan. ## • Our engagement with shareholders provided an understanding of the rationale We are committed for a negative vote against the resolution to allot shares at our 2021 AGM. ## to maintaining Links to strategy ## constructive ## dialogue with ## shareholders and ## ensuring that ## we have a deep ## understanding ##  Annual Report & Accounts 2021 Flutter Entertainment plc 39 ## Stakeholder engagement continued ## Colleagues How we engaged • We are passionate about keeping our colleagues informed and engaged  and transparently. This year we brought together colleagues from across the globe as we ran a number of live streamed events with our Executive team. We also held regular Town Halls across the Group throughout the year, both at a Group and divisional level where colleagues were able to speak directly to Board members and ask questions. Our individual teams also have their own local communications events and activities. As well as updates about strategy, trading and performance, we take time to focus on important topics such as wellbeing, diversity and inclusion. • We invest in new ways to support two-way communication across the Group including internal social networking sites, email and divisional intranet sites.  also helps to overcome the challenge of a global workforce. We encourage collaboration across the Group and use platforms that foster our community culture to share knowledge and experience. • We want all colleagues to feel they have a voice and have a regular opportunity to share their opinions, so throughout the year we gather feedback from across the Group through staff surveys covering a range of topics. • We held four Employee Voice Forums during the year, supported by three designated Non-Executive Directors. Outcomes • We increased various health and safety measures to protect our colleagues from the continued pandemic, including conducting risk assessments and dedicating significant time and resources to ensure our people were equipped to work from home in the most effective and seamless way possible. • We introduced wellbeing initiatives to support colleagues working from home including virtual fitness classes, activity challenges and engaging external speakers for motivation and inspiration. We encouraged time away from screens with Zoom-free afternoons and checking in with each other. • We created a Gift of Shares equivalent to £1,000 for all employees across the Group as a one-off thank you for their continued efforts during the pandemic in 2020. Employees were able to cash in their shares on our vesting date in November 2021 or retain them to become a shareholder in Flutter. Links to strategy ## We’re committed ## to growing talent ## from within the ## Flutter Group ## and ensuring that ## we support our ##  ##  40 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ## Customers ##  How we engaged ## the strength and •  Through regular communication and advertising, we engage with our ## reach of our leading customers on various topics, notably safer gambling, where we continually educate our customers about the tools we have in place to keep ##  them protected. ## • Our numerous brands engage with our customers on a daily basis. This is through difference to the our betting and gaming platforms online, our marketing communications, our ## retail stores and our customer service channels.  • We always try to understand our customer needs. We engage with our customers through feedback channels, engage in research and obtain insights into our customers’ thoughts and experiences. Outcomes • We continue to lead on customer safety across the business. For example, in the UK & Ireland we recently announced measures to enhance the protection of under-25s as part of our risk based “Triple Step” approach to affordability. • The way we communicate with customers continues to evolve. We always look to keep these communications innovative, engaging and informative irrespective of the service channel. This is done in a way that is unique to the brand that the customer uses. • Understanding our customer needs helps us develop experiences that are intuitive and easy to use. For our UK brands this has meant improving the betting experience of our customers through product enhancements, such as: a) revamped InPlay and Bet Builder products, b) making our in-house studio content available across all gaming brands. • We conducted an industry-first advertising campaign in Australia to encourage customers to set deposit limits before they bet. • We embarked on a more progressive push into real-time support and are moving away from legacy email predominance. We have also cut the long wait times and backlogs that occurred durin Links to strategy Links to strategy: Maximise profitable growth in core markets Maintain and grow US leadership position Attain podium positions in international markets Grow business in rest of world Annual Report & Accounts 2021 Flutter Entertainment plc 41 Stakeholder engagement continued # Communities # How we engaged - We engage with communities by supporting a variety of charitable initiatives across our global divisions on an ongoing basis. - We support projects that use sport and games to make a difference in communities. - We are able to use the strength and reach of our leading brands to make a difference to the causes we support. - We had regular dialogue with sporting bodies, where sporting events were held behind closed doors. # Outcomes - We contributed £100m across media rights, levies, marketing and sponsorship to support horse racing in the UK & Ireland. - We supported various community causes throughout 2021 and continued to offer assistance where needed for Covid-19. This included a £100,000 contribution to our charity partner. Americanes to help with medical supplies in India and a donation of oxygen tanks and PPE to a local hospital there. We also provided extra support to our many employees based in India. - We contributed to local communities and global organisations through charitable donations. These included the work by our local charity committees which, through staff volunteers, donated over £200,000 to smaller charities around our office locations. - Using the monies we received through the business rates relief system for our shops in England during 2020/21, we set up the £4.79m "Clubs in Crisis" fund to support local clubs delivering positive social outcomes. Hundreds of grassroots sports clubs across the UK received grants via our donation to Made by Sport. - We donated £150,000 to our charity partner Right To Play and in addition once again sponsored its annual Sports Quiz which raised over £500,000. - We launched a new partnership with the charity Missing People, donating £150,000 and using the power of our brands to raise awareness. - £750,000 was contributed by FanDue to United Negro College Fund in partnership with Washington Football Team. - Through Sportobet's partnership with the NRL, $265,000 AUD was donated to Men of League Foundation's Mose Masoe Appeal. # Links to strategy # Links to strategy: - Maximize profitable growth in core markets - Maintain and grow US leadership position - Attain podium positions in international markets - Grow business in rest of world 42 Flutter Entertainment plc Annual Report & Accounts 2021 # Suppliers # How we engaged - We worked with our suppliers to enhance our risk framework to help us manage suppliers more holistically across the entire lifecycle of their relationship with us. - We trialled some new tools to help manage the end-to-end supplier lifecycle from onboarding to termination. This includes structured business and quality reviews and managed terminations. # Outcomes - Developed and implemented a set of new global minimum standards to standardise our approach to supplier performance and managing supplier risk exposure across the goods and services we procure. - The rollout of tools strengthens the controls around spend governance in areas such as contract pre-approval and spend authorisation. - A new toolkit to enhance and standardise business and quality reviews and supplier exits. - We created risk heatmaps for key suppliers for our business divisions, which will continue into 2022. - We implemented the new global minimum standards for anti-battery and corruption across more areas of the business. # Links to strategy ![img-6.jpeg](img-6.jpeg) Strategic report ## Government and regulators How we engaged • The UK Government launched its Gambling Act Review in December 2020 with the publication of its call for evidence, which we welcomed publicly. During the year, we engaged with a wide range of MPs, peers and other interested stakeholders, to discuss the Review and our own proactive policy initiatives. • Sportsbet has a leading role in engaging with policymakers and the community sector, including supporting the development of measures to prohibit the use of credit cards in online wagering. • FanDuel worked effectively with state regulators   ompetitors. • Our International division has been heavily involved in ongoing regulatory developments across multiple markets across the globe in 2021 both directly and through industry associations such as the European Gaming and Betting Association (“EGBA”). Outcomes • In March, we provided the UK Government with extensive evidence within our own submission, while also contributing to the industry submission drafted  • In August, Sportsbet and other members of Responsible Wagering Australia announced plans for a technical solution to deliver the credit card reform and would seek the assistance of banks and payment processing providers to support the initiative. •  Louisiana, Michigan, Virginia and New York. In Virginia, FanDuel was the first operator approved to launch, while launching at the same time as with other operators in nd Virginia. • In the International division we have seen positive regulatory developments in a number of markets,   officials has led to federal legislation being passed in  provinces to regulate single event sports betting. • We continue to evaluate a number of upcoming licensing opportunities and hopes to enter the Netherlands ## Our International division market with a licence in the course of 2022. ##  Links to strategy ## in ongoing regulatory ## developments across ##  ##  Annual Report & Accounts 2021 Flutter Entertainment plc 43 ## Sustainability ## Our approach ## to sustainability ## We are committed to contributing positively to our ## customers, colleagues and communities. Our Positive ## Impact Plan builds on the strong foundations laid by each ## of our divisions, using our global scale and placing us at the ## heart of meaningful change. Peter Jackson Chief Executive Officer We’re on a mission to lead betting and gaming into the future. Being a responsible leader means making sure we always do the right thing for our customers, colleagues and communities and the environment too. For years, our individual divisions and brands have been doing great work in these areas. We are now embarking on an even more ambitious journey, with big goals made possible by the global scale of Flutter. This year we are launching Flutter’s first sustainability strategy, our Positive Impact Plan. It’s the start of an exciting new chapter in the Group’s history, built on the passionate and committed work of our teams across all of our divisions. The new strategy brings these achievements together and gives our diverse portfolio of brands better access to the insight, skills and capabilities of the wider Group to support local initiatives and create the biggest impact. Our Positive Impact Plan aligns us with leading global practices and standards and gives us a launchpad for our Group-wide safer gambling and diversity and inclusion strategies. It’s a global approach to sustainability that supports our corporate strategy and employee value proposition while empowering our divisions to innovate and respond effectively to their  We know we’ve got more to do. Our approach will continue to evolve in response to changes in our markets, technological developments and continued collaboration with our stakeholders.   44 Flutter Entertainment plc Annual Report & Accounts 2021 s t o m e r u s C ### C Positive o Strategic report s ### m Impact e m u g ### u Plan a n e i l l t i e o s C ## Our Positive Impact Plan ## Framework and 2030 goals ### We’ve worked hard to ensure we make a positive impact on our customers, colleagues, and the ### communities in which we operate. Our Positive Impact Plan brings all our hard work together ### under a set of ambitious goals that challenge us to always do better. With our global scale, we can ###  ### as the needs of our stakeholders evolve. Strategic focus ## Customers - Play Well ### To have 75% of our active online customers using one or more of our Play Well ###  Read more on page 48  | Colleagues - Work Better | | | Communities - Do More | | | | --- | --- | --- | --- | --- | --- | | | To create and build teams that represent | | | To improve the lives of 10 million people | | | | the locations in which we live and work, | | using the power of sport and play, the skills | | | | |  | | | of our colleagues and the reach of our | | | | |  | | |  | Read more on   ## Environment – Reduce Our Environmental and Climate Impact Business ethics Anti-corruption   and integrity and AML and management (tax, levies) Read more on  Capabilities Measurement, reporting and performance Governance and organisation  k management  performance Annual Report & Accounts 2021 Flutter Entertainment plc 45 ## Sustainability continued ## Our Positive Impact Plan ## Progress and shorter term goals ###  ## Helping customers  Working with ## play well colleagues to communities to ##  ##     We established a global We developed and We invested over ## safer gambling launched  working group and developed our first global Diversity, Equity in community projects and our global Play Well strategy  schemes to leverage our global scale and support local safer In UK&I and Group functions we We delivered more than  introduced a development fund of ##  ## We invested £1,000 per to support thousands of employee to support continued grassroots clubs, reaching ## £45 million career development  in developing and promoting through our partnership with safer gambling across our   Goals Goals Goals • Measure difference in sentiment • All employees globally to have  across different demographics by the option to do two days’ • targeting a 2% reduction in the end of 2022 volunteering per year the proportion of revenue from • All divisions to report on pay customers who  performance, progression •  and retention across different revenue from customers with demographics by the end of 2023 deposit limits in place to 15% • Achieve 40% of women in our top •  leadership roles by the end of 2026 customers applying a deposit limit, cooling off period or stake limit to 36.5% • FanDuel – all employees to complete training in March, all new customers to receive responsible gambling messaging and signposts to tools within  ##  • ro emissions •   end of 2023 • Move all our energy tariffs to renewable energy tariffs by the end of 2030  Flutter Entertainment plc Annual Report & Accounts 2021 ##  Strategic report ### Our global portfolio of brands takes us directly into communities and homes all over the ### world, and we take that responsibility very seriously. We want to always do the right thing ### for all of our stakeholders. That starts by evaluating which issues matter most to our ###   We created a comprehensive list of the 31 material ##  Working with leading sustainability consultants Accenture, issues that impact our global business – using peer we went through four steps to identify the most important      addressing them.   agency metrics. sources and reporting standards to ensure its accuracy and relevance, and that it comprehensively reflects every aspect  Using established reporting frameworks including ##  of the things we need to be aware of as well as the potential  opportunities that are open to us. We will regularly revisit this produced a materiality heatmap, shortlisting 15 issues.  reporting processes.  ##   team and divisions to help us prioritise these 15 issues. issues, supported by roadmaps. We will report our progress nual Report. Finally, we combined our interview insights with publicly ##  available information and internal insights to produce  Materiality analysis of top 15 issues We used our materiality analysis to decide on the  key pillars of our strategy (customers, colleagues   foundations   nvironmental foundations which include environmental.  fer gambling  Jobs & skills Very high Diversity, equity & inclusion Data protection & management     Responsible marketing & advertising y laundering Importance to stakeholders action & use Responsible sourcing Waste l technology Medium High Medium High Very high Impact on the business  Annual Report & Accounts 2021 Flutter Entertainment plc 47 ## Sustainability continued ## Helping customers ## play well  ##  As a global operator, we work across 100 countries, with a ##   ### We know every customer is different. We want  there are universal principles we can use,leveraging our global ###   ### every time they play, and have tools and  ### support to look after their financial and mental This is what our Play Well strategy is all about. It’s not solely focused on identifying and addressing risky behaviour and ### wellbeing too. They can count on us to always unsafe play, although of course this is massively important for ### promote safe and enjoyable play, whether in  that comes into contact with one of our brands, with the aim of ###  preventing play becoming potentially harmful.  It is based on our industry leading levels of customer insight, and that create loyalty amongst our customers is what we love. our continuing passion to do the right thing by our customers.  more than providing entertainment. We need to always work A Play Well culture hard to understand their needs, build trust and provide products  that are customer centric. Our work on safer gambling is a huge unique cultural norms, customer preferences and regulatory part of this. environments. Implementing Play Well effectively means using our global scale to support local progress and empower our teams to create strategies that meet players where they are. Play Well is a philosophy and a culture which puts our customers at its heart. Learn more about how we engage with our customers on page 41. 48 Flutter Entertainment plc Annual Report & Accounts 2021 ## Play Well principles ## 1 4 Strategic report Lead progress Promote positive play  Support and protect We’re investing in We promote sustainable We have better We want to support research, innovation and entertainment. conversations with our customers in every collaboration. our customers. possible way we can. We develop platforms We listen to customers, and products designed We combine technology We recognise some  to support a safe and and data with a personalised people need targeted and critics to develop trusted customer approach to effectively support or intervention to new ideas. We want to  interact where we see signs stop falling into negative define what a positive play empower and assist of potential harm. We help play habits. We support  players to play positively, customers pause, reflect customers through robust lead the way in providing it.  and make positive choices. internal infrastructures,  partnerships and funding wherever you play. new initiatives.   Over the last 12 months we have developed our Play Well Our International division will be measuring the percentage of strategy and during 2022 will be introducing a new global internal customers that apply a deposit limit, game and stake limits and reporting structure which has been developed by a working cool offs/time outs. We are targeting 36.5% of active customers  using these tools in 2022. global business. This will make us more consistent at measuring  and communicating progress on our safer gambling initiatives Our UK&I brands will continue to use the transactional risk while recognising the different levels of regulatory maturity  across our local markets. It will also enable us to develop proportion of net gambling revenue earned from customers who increasingly sophisticated goals and metrics, rooted in robust are at risk. We are targeting a 2% year on year reduction in this data and insight, to ensure we continually drive progress in this revenue for 2022, on a like for like basis. critical area. We’ll use our global insight to support our brands and divisions US  FanDuel will introduce a new responsible gaming measure for leading the conversation around safer gambling in their markets. the first time in 2022, focusing on establishing appropriate mechanisms to promote and embed responsible gaming tools. As we continue to grow our culture of safer gambling across The targets are as follows:  proposition to encourage even more engagement, insights and • All FanDuel employees will complete responsible gaming ideas from every part of our organisation. training during March 2022. • All new FanDuel customers will receive responsible gaming Measuring our progress messaging within 30 days of downloading the FanDuel app. We’ve also established our first global Play Well goal. We want •    y end 2026. notifications. That’s not all, in 2022 we are introducing annual divisional Play Well metrics which will be directly linked to a percentage of  variable remuneration for each of our divisions. These metrics We will develop the metrics we use and the way we measure and have been developed to ensure that each division supports  and promotes their local safer gambling strategies, taking develop our reward and bonus offerings in line with our strategic  priorities. Linking our work and commitment to safer gambling consistent with our Play Well principles and supporting our  y Well goal. key objective. This will help us develop better products, tools and risk analysis models in order to continue offering our customers Australia industry leading support and protections.  Play Well builds on the substantial work we have done so far in revenue that comes from customers with deposit limits in place, safer gambling, and our strategy will evolve as we identify gaps with a target of 15% and respond to changes in regulation and customer preferences. This is a collective journey, powered by our colleagues and in collaboration with our stakeholders. Annual Report & Accounts 2021 Flutter Entertainment plc 49 ## Sustainability continued The work we are already doing We have a strong track record of developing industry ## 1 ey markets. ## Lead progress During 2021 we directly invested over £45m to support and ## promote safe play across our global operations. We increased We are leading progress  ##  in technology, developed marketing campaigns to raise awareness and educate, and made significant contributions to research,  education and treatment across our markets. we also work with the rest of our industry to create a stronger culture around safer gambling.   divisions.     ard member.   ## It’s the collective ambition of our   ## members to be top of the class in terms resource to support this important consultation process. Flutter ## of industry responsibility, and Flutter’s  key initiatives, such as developing a more consistent approach ## membership strengthens our omer spend. ## commitment and position. In Ireland, we took the initiative to voluntarily implement a ban dvertising.  In Australia, we proactively lobbied for a ban on credit cards and are involved in the development and design of new national consumer protection measures including updated activity n register. In addition, we sponsored and attended the renowned 2021   share knowledge and best practice to drive positive change e gambling. 50 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report ##  ## Promote positive play I want to use my experience and ## We are promoting positive platform to shine a meaningful ##   ## communication and features gambling. FanDuel shared the same ##   gambling in the Australian market. In 2021, the brand invested ## transparently with me for the sole  ## campaign which encourages customers to set deposit limits     leading universities, the campaign led to an increase of 65% of for FanDuel customers setting their first deposit limit when compared to the  ed by 480%.  ## 4   ## Support and protect ®  ## We are supporting and  ## commitment of its media inventory to promote Have   In UK&I, our new policy further strengths the tools and  ##   £500 per month net deposit limit for all customers under the ##  age of 25 will be in place across all our UK&I brands by the end ## We are innovating to effectively  behaviours to ensure that everyone has the tools to play well, ##  and that those who may need additional support always have it.  Our policy is part of several important steps the industry has  taken to better protect younger players in 2021. Other measures would be its first national responsible gaming ambassador. include avoiding the targeting of under 25s in paid for social  media channels, using specific age markers on data models, WFAN 101.9 FM will help FanDuel strengthen its efforts around developing bespoke thresholds based on age, and ensuring advocacy, prevention awareness and content development gambling ads appearing on search engines make it clear that on the topic. they are for those aged 18 and over. In addition, in the UK, we continued to develop our customer  interaction programme and are seeing positive results. in Australia. We take care to decrease our marketing and  communications for any customers with a heightened risk score. are regulating their play following our interactions with     team. In addition, we are seeing positive trends in relation to  our TRI, which is calculated by reference to the proportion of   only block FanDuel sites but all other real money gaming sites nth period.  on up to 15 devices. Annual Report & Accounts 2021 Flutter Entertainment plc 51 ## Sustainability continued ##  ## work better Our success and global scale are built on embracing diversity. ## Promoting a dynamic Our brands bring together people and insights from all over ##  the world and their hard work and creativity ensures millions We work hard to make sure that each of our   customers are having fun and are supported. It’s market positions depends on our ability to create workplaces the passion of our people that powers our brands to that engage and enable our people by always providing a safe    globally and increasing its frequency, so we have a scalable way to feedback. championing our customers and setting the pace in our industry. We know that when our colleagues Throughout 2021 we have listened and learned from our people and taken important steps to achieve our strategic goals in feel included and represented at work, they will  work better, with better outcomes for our business, changes in our workplaces.   Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report   2021/22 saw us launch our global diversity, equity and inclusion   bring about lasting change across our entire portfolio. Our focus  is both behavioural change and structural inclusion, and we have  set three primary target areas: always met.  The strategy is made up of three distinct phases. Our training will equip our leaders and colleagues with the skills   translate it into positive action. We’ll also work closely with brands The aim of the first phase is for each brand to understand its internal to create behavioural nudges and reinforcing mechanisms to reality and identify its greatest opportunities and challenges. This embed the training throughout the employee began in 2021 and will continue across 2022 as we work towards our Creating lasting change ur business. To effectively address structural inclusion, we’ll use    I outcomes. Include by Peakon Reviewing our talent processes   shows our local and global leadership teams how our colleagues  are feeling and simplifies the process of getting their feedback. hiring and training processes and look at new ways and spaces   ommunities. strategies. Global Diversity, Equity and Inclusion Benchmarks  (“GDEIB”)   and set standards. To do this we will: tool codifies best practice and is an additional tool to help us •  determine and drive our strategy. we have in every other part of the business; • develop and communicate clear metrics, goals and outcomes; •  reviews; and ## No two people share exactly the • share accountability by ensuring all leaders can access the information they need to listen, learn and act. ##   ## the potential barriers they face look  ## different depending on who they are. It’s effective Flutter, one that is more reflective of the communities we work in and the world around us. It’s essential that we continue ## important when we design experiences to hold ourselves accountable and we have set ourselves clear ## at work that we don’t create them under goals to help us realise our ambitions in this space. ## the assumption that we’re all the same. nd Diversity Annual Report & Accounts 2021 Flutter Entertainment plc  ## Sustainability continued  Creating a culture of allyship  Create and build teams that reflect the communities international consultant, speaker and facilitator on diversity  and inclusion, HR, strategy, leadership and culture. Huma is the To get there, we’ve set ourselves several shorter term goals: founder of the Privilege Project. • Our ambition is that by the end of 2026, 40% of our top  leadership roles will be held by women. How we’ll measure it is understood, to remove barriers and create a more just world. our progress in gender diversity and equity will include areas  such as pay, recruitment, retention, advancement and how they manifest and what impacts they have on people with representation. c statuses. •  and actions to ensure we attract, retain and grow talent from    an inclusive and equitable  and brave conversations, deep dive into topics, and ideate on • Our equity goal is that by the end of 2023, all our divisions will solutions for the future of work. Ultimately, it will help to ensure be measuring and reporting on pay performance, progression our leaders become better allies to drive social change. and retention across different diversity demographics. • For inclusion, we will measure the difference in colleague engagement across different diversity demographics by the end of 2022. These will continue to evolve as we improve our data and ##  The Luminary Programme  We are aware that the gaming industry is lacking in ear on year: diversity. We have made movements in our business to address this and further reflect the diversity of the We made significant progress during 2021 in relation to the customers we serve. The Luminary programme was on page 119. sponsored by our CEO Peter Jackson, which shows the commitment of our Executive leadership and Board to champion change, challenge the status quo and always look to advance our strategy and product offering. We are committed to creating more opportunities at senior leadership level for our divisions to embrace diversification of skill, behaviours, background and thought and this programme serves to deliver on all areas of diversification. Flutter is striving to be challenged as much as challenger and this programme allows the successful individual to diversify their own experiences across the Group. Luminary is an 18 month rotational program comprising of two nine month rotations, each rotation taking place in a different continent (ideally) but certainly in  There are three clear components of this programme: • Diversifying skill, thought & background • A clear strategy for improving our succession planning agenda • Capability mapping across our organisations towards the skills for the future 54 Flutter Entertainment plc Annual Report & Accounts 2021 FastFutures Designed to facilitate hybrid working, the £15 million Leeds space Strategic report We are proud to be one of the founding investors of FastFutures,  a programme built to bridge the gap between education and  employment. The free programme helps young people from all  backgrounds build the skills they need to thrive in an increasingly site includes a range of accessibility and sustainable features, digital workplace. Over 80 mentors from across our brands  provided the support and encouragement needed to help work environment healthier for colleagues. learners harness new workplace skills. The building’s features include:  •  trained 4,500 young people from diverse backgrounds in the resource and time for IT colleagues; transferable digital business skills that employers need today •  and into the future. Learners consistently report feeling more inclusive meetings between those working remotely and in confident and more employable and most begin to secure more the office; interviews within weeks. Around half have found employment graduating. • electric car charging points in the basement; and •   ola bottles.   The new Dublin office is also designed to allow people to work     improvements in our products and continue to delight new and for those spending their day there, while agile lounges and returning customers.  everything they need to work effectively. As well as more space, We give our colleagues opportunities to try new things, take the office features a natural aspiration mechanism to ensure on new challenges and build a rewarding career with Flutter. great air flow throughout the building as well as a free gym and  and classes. contributes to higher rates of talent retention. These plans include training through a range of online learning platforms atures are: as well as practical development opportunities such as job • energy efficient design;  • beehives on the roof, creating honey served in the canteen;   • gender neutral toilets; eir careers. • ouse events;  • Ireland’s first frictionless shop open to everyone in the estate;  • subsidised canteen; and part of our organisation. • free underground car parking. Attractive remuneration and rewards  We want to reward the creativity and passion of our people  and attract and retain the best talent our industry has to offer. support future hybrid ways of working and attract new talent.   and rewards we offer are attractive and fair. places to work in 2022. This includes the opening of the new   £1,000 in Flutter shares, which vested in November 2021, and   on for our colleagues to acknowledge the hard work and dedication they showed in the face of disruption and uncertainty due to We continued to provide support and assistance to all our   a bonus for achieving the brand’s goal of reaching two million not seek or receive any government support during this time, customers in the market. through the Furlough scheme or other means. Making the most of our new office spaces During 2021, we focused on supporting our employees to deliver  hybrid working has allowed us to focus on what employees need from an office location in order to do their best work. We’ve opened innovative and sustainable office spaces in Leeds and Dublin. Annual Report & Accounts 2021 Flutter Entertainment plc 55 ## Sustainability continued ##  ## do more  ## Maximising the positive  ##  figure represents an overall increase of our contribution year  ### Our Positive Impact Plan builds on our  ### long history of community support. of the Positive Impact Plan we will be better able to use our ###  global scale as a group to go further than we ever have before.  ###  volunteering from 2022. ### and stakeholders to create better futures Our colleagues share a drive to do the right thing, and it is their ### for the places where we live, work and play.  successful. We will draw on their insight to help us identify opportunities to drive positive change in all our markets.  ## Adjarabet Corporate Social  pages 57 to 59 ## Responsibility Award Our priorities for community investment  We have aligned our charitable and community support with a      sport, health and wellbeing, and technology for good. for its continued support of communities and sporting groups acro Adjarabet has a strong record of helping and supporting   Media Union to promote better integration of people with disabilities in society, through sport, creativity and involvement in social projects. ## Sport Adjarabet employees shared their innovation and technology skills with local communities (Product Tank   and office programmes. ## Technology Health and ## for good wellbeing r Adjarabet.  Flutter Entertainment plc Annual Report & Accounts 2021 Here are some of the great things we achieved during 2021/22: Strategic report ## Sport Made by Sport/Cash4Clubs         more than 1,600 grants to support thousands of grassroots clubs, reaching over 250,000 young people. These grants are helping the clubs to recover from the pandemic and continue to help young people develop vital communication, employability and life skills to build stronger communities.  100 members this organisation uses hillwalking and other ## outdoor activities as a way to bring people from different Clubs in Crisis – Boots and Beards backgrounds together, help them build their leadership skills   lifestyle.  and, more broadly, the minority ethnic population Right To Play living   This includes poorer levels of social engagement, £2.5m has been donated to the charity, including £196,000 in engagement with the outdoor environment and physical/ 2021, through corporate, colleague and customer support.   The charity uses sport and play to help young people stay to improve the mental health of young members of the in education in some of the world’s poorest countries and it  reaches over two million children a year through its work. disproportionately affected   London. This year’s event featured a charity poker event hosted  night to help its mission to empower and support vulnerable children around the world. Racing Welfare  which supports people who work in the racing industry. The brand donated £30,000 this year as part of the organisation’s Racing Britannia Stakes    £1.25m, of which Flutter contributed over £450,000. This funding  armed forces charities. Washington University/United College Negro  As part of its ongoing partnership with the Washington Football       those seeking assistance for technology, housing, food security, asian-pakistani-hiking-group-trail-blazing-scotlands-mounatins  Annual Report & Accounts 2021 Flutter Entertainment plc 57 ## Sustainability continued ## Health and wellbeing Technology for good Save Her Seat Women Who Code It is often the case that sport, health and wellbeing are tied We have developed a new partnership with Women Who together in the initiatives we support, and this is definitely the   technology careers. Our talent acquisition team will be working   into education, many of whom had to drop out of schooling as a roles across our brands.  Missing People an online tournament in November 2021. Another initiative is raising awareness for the thousands of Macmillan people who are currently missing across the UK. Through    donated £150,000 and are using the reach of our brands to raise two years has raised £210,000, with £146,000 being raised in awareness of the issue, including campaign content featuring 2021. All the money goes to support people living with cancer.     hours, allowing the organisation to handle 11,250 calls from media channels, highlighting the number of people missing. people affected by cancer.   special deck of cards created with the kings, queens and jacks   partnership, it sponsored the Million Dollar Lunch to raise that takes users to a dedicated website. Included in the film are  real cases of missing people. and lockdown, the event was held virtually this year through  $100,000 AUD towards the cause, contributing to the total of  support childhood cancer research, clinical trials, clinical care and family support. Orange Sky   running since 2014.  These two charities fund medical research and provide support for families affected by motor neurone disease.  th the AFL.  https://www.youtube.com/  watch?v=qK6BWWs6aYA&t=16s  in 2021 the Try July campaign was relaunched. We asked NRL players to provide us a post try celebration for which we donate money to charity. Try celebrations have a rich history in the NRL    international player Mose and his family after a tragic end to his  towards the Appeal. 58 Flutter Entertainment plc Annual Report & Accounts 2021 support childhood cancer research, clinical trials, clinical care and   ![img-7.jpeg](img-7.jpeg) Strategic report # Alpha Hub Through our Alpha Hub programme, we are connecting with the most innovative and exciting start-ups to explore ways we can support them in their journey as well as supporting our own commercial and sustainability goals. The programme started by looking at new approaches to safer gambling but has also given us a chance to mentor and provide feedback to support some really exciting companies in their early stages. We'll expand Alpha Hub in 2022, engaging a new crop of start-ups across a variety of areas, leveraging our depth of expertise and global reach to help them grow. # Holberton School Australia scholarships Sport label provides scholarships to support women in technology including Career Switcher Scholarships and Indigenous Scholarships offered to Aboriginals or Torres Strait Islanders. # FastFutures As a founding investor of FastFutures, we've supported the training of over 4,500 young people from a range of backgrounds since 2020. The programme is designed to provide participants with the skills and knowledge they need to forge an amazing career in increasingly digital workspaces. In 2021 we gave a £200,000 donation and have committed to a further £300,000 in 2022. Over 80 people from our brands also actively support and mentor participants, helping to share their insight and experience of creating digital experiences that excite, entertain and support huge numbers of customers every year. # Employees # Local charity committees There are currently seven charity committees across our office locations which in total have received over £200,000 to support local causes. Run entirely by staff volunteers the projects supported have been diverse. Here are a few examples. In Malta, the committee has continued its long-term partnership with the charity "Inspire", which provides support to people with various disabilities. This year the committee funded the build of two sensory quiet rooms that help children with autism. In the Isle of Man, the committee continued to support the annual "Relay for Life" in aid of Cancer Research UK. This 24-hour walking challenge attracts hundreds of people every year. This year through our support they raised over £100,000 which brings the Isle of Man total in the last 10 years to over £1m. In India, our colleagues faced a very difficult time due to Covid-19 and as part of the support there, we funded oxygen tanks and wheelchairs for our local hospital. Colleagues can also apply for Flutter to match donations of up to £500 for their fundraising activities and this year we have provided over £15,000 worth of matched fundraising to support charities that our staff are passionate about. # Emergency support Our divisions have a long history of providing support at times of crisis, and we have continued to provide emergency support to our local communities during 2021, responding proactively and collaborating with aid organisations to help to respond to crises. # Americares We first partnered with Americares in 2019 following the devastation that Hurricane Dorian left behind. In 2021 we worked with the charity to provide emergency relief in India which saw a huge rise in Covid-19 cases. We contributed £100,000 to provide PPE and other provisions. # CARE International We have donated over £2m to CARE International since 2014 to help them provide disaster relief to communities around the world. We have an ongoing relationship with them, regularly consulting on response efforts needed for international emergencies which will continue throughout 2022. Annual Report & Accounts 2021 Flutter Entertainment plc 39 ## Sustainability continued  to include a statement in this Annual Report and Financial ##    ### We are committed to playing our part in  ###    ### reducing our environmental impact.  the following: The environment is a significant foundation of our Positive  •  included within the shortlist of 15 issues identified through our     strategy  2021, we signed up to the UN Race to Zero campaign, confirming • disclosing the metrics and targets used to assess and manage    and targe   advance of 2050. a summary reference table included on page 263. During 2021 We are making progress in a number of areas, like continuing with we carried out a review of our wider sustainability strategy where our renewable energy tariffs within our UK retail and data centre climate change was identified as a material issue. In addition, our operations and optimising energy consumption within our data standard risk management process has identified climate risk    development of the sustainability strategy and the identification data. We have also enhanced our own internal governance of of climate change as an emerging risk is to complete a granular sustainability issues, including climate, carbon, energy, waste  on page 66. materiality of those risks to the business. This is something we are committed to doing in 2022 (strategy pillar Recommendation ##   This year we started work to further our understanding of how  the impacts of climate change could affect our business, using   take in order to be able to make those disclosures in the future, recommendations to frame our update on climate matters  with the support of a leading accountancy firm. As outlined by to make those disclosures, are set out in the section below.   How our leadership approaches climate change integrated within the four pillars of governance, strategy, risk  management and metrics and targets. This is the first year we  have used this framework to support our reporting, and we are and responsibilities for various aspects have been delegated committed to ensuring that we continue to improve the maturity  disclosures.   and prioritisation of sustainability issues, including those related to climate change. Flutter is currently determining     formally ratified in February 2022. The TOR reflects the Risk   to provide oversight for sustainability strategy and ongoing risk management. The increasing collaboration of the Risk and  on assurance over sustainability matters, including those which   and opportunities and their impact on Flutter, we will facilitate climate change awareness training sessions in 2022.  updates regarding the newly developed Positive Impact Plan which includes consideration of climate change. This strategy     Flutter Entertainment plc Annual Report & Accounts 2021  impact is relatively low. Our data centres, offices, retail units Strategic report business and an indication of the work being completed as and business travel are the main sources of our emissions.  Within our real estate portfolio, our data centres are the actions. This is discussed in further detail on page 61. most energy intensive. We‘ve had success in optimising    reduce the energy consumption across the global data  centre estate. We’re also working to replicate the success  of achieving high environmental and energy standards in governance framework and cadence for climate matters our flagship offices across our corporate real estate and to within Flutter. apply similar environmental standards across our property portfolio. We plan to address and report on our progress in Our divisions will, with support and guidance from the ng periods.  sustainability governance structure, be responsible for setting In terms of energy, to meet our 2030 renewable energy local environmental and climate change priorities, managing and  delivering environmental and climate change initiatives as well of renewable energy beyond our UK retail and data  centre operations. related performance. We are reviewing opportunities to further Following our Race to Zero commitment we will be reviewing   working group roles, responsibilities and reporting requirements commitment, identifying actions to be undertaken and within the divisions of ensuring that our strategic objectives are aligned with the transition to a low carbon economy. Any financial impact Our plan for making our business and strategy arising from the identification of the actions required to  meet these commitments will be carefully considered and  reported on in line with accounting standards. when formulating strategy and the way we do business. Through our sustainability strategy development, we identified a shortlist 2. The environment’s impact on Flutter: We do this through   climate change. This assessment followed the general principles management framework (discussed below and in the Risk  Management section on page discussed on pages 84 to 91.  The process was completed independently of the standard  biannual risk assessment updates as it was a specific initial review    on the concept of double materiality, there are two angles from geophysical disasters due to climate action failure, which which climate change has been considered within Flutter: represents a threat to human life and major disruption to our  1. Our impact on our environment: This focus has led to a her events. number of positive climate change initiatives including a  During 2022 we will complete a granular review of our climate  change risks and opportunities. As part of this, we will look  at the different geographies and business models utilised well before 2050. This commitment and how we will achieve  it is discussed further in the Metrics section below. We are ppropriate. predominantly an online business and so our environmental ## We joined the Race to Zero, ## committing to set science-based ## targets to reach net zero emissions. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Sustainability continued Our plan for making our business and strategy  continued  ## related risks and opportunities to look at the potential impact on We will complete scenario analysis on our business model and strategy under various risk factors. ## the most material climate change risks Once we’ve completed our specific work on climate change ## and opportunities identified and will risks and opportunities, and based on the materiality of those ## areas, we’ll begin integrating climate change within our financial integrate the results into our strategic planning and risk management framework and improving the ## considerations where relevant. processes for identification, monitoring and escalation. Understanding our climate-related risks and  opportunities (risk management) our divisions are proactive in identifying potential transition   change in our broader risk management framework. In February  2022, the risk management framework was adjusted to include  climate change as a specific risk to be addressed within the   related issues in the coming year to ensure that they have the include climate risk.  The standard risk assessment process, including the risk  governance structure, is discussed on pages 84 to 91 of  this report. identification approach.    will be embedded in the divisions where the risks are considered process discussed in the Risk section of this report on page 85.  As a result, it is monitored to follow its evolution over time and to   opportunities and completing scenario analysis.   Measuring our progress (Metrics and Targets)  registers. During 2022, we’ll link our climate mitigation targets to the         environmental data systems and processes so that they are able scanning process and we plan to report on this area in more to capture accurate and reliable emissions data. As with previous detail in 2022. reporting periods, we adopt a financial control boundary to ur business.  Flutter Entertainment plc Annual Report & Accounts 2021   Strategic report gas reporting and calculation methodologies and to assist us   material difference is identified. Furthermore, we have obtained, commitment. In 2021 we completed significant work in closing for the first time, assurance over emissions data, included   on this page marked with   our assurance programme in future reporting periods as we further work is needed to analyse the impact of those gaps continue to enhance our data management and reporting. on the prior three years’ reporting. In 2022, we will continue to Our priorities for the next reporting period refine our reporting processes and improve the quality of our comparative figures. • The main focus is to build homogeneous, comprehensive and granular data gathering processes across all operations and  geographies to ensure that we are collecting accurate and   2 comprehensive data.   • Once the improved data gathering and validation process  is in place, we will also focus on setting and reporting on  relevant targets. (“KPIs •  Reporting year change risk identification process, we’ll develop key metrics to 2021 2020 2019 portunities.  e 854 483 1,668 • We’ll complete scenario analysis on the most material climate 2   e 10,288 10,152  change risk and opportunities identified and will integrate the 2   2 e 3,853 5,883 12,351 results into our strategic considerations where relevant.    2 e 14,995 16,519 25,815 •   6,036 4,414 2,140 consider incorporating related performance metrics as part  2 e 2.48  12.06  policies in the future.  • We will finalise the forming of an environmental working group    a focus of coordinating carbon, energy and environmental reported in 2020, we acknowledge that a number of known initiatives across the group.   and will apply these improvements to previous reporting periods. |  | | Waste | Water | | --- | --- | --- | --- | | Our total UK energy consumption | | We support the principles of | We operate in regions where | |  | | circular economy and implement | increasing temperatures, through | | (6,096tCO | e with an intensity of | these principles where possible | climate change, will impact the | 2 1.01 tCO  in our operations. As a business availability of potable water. 2 of fuel, natural gas and electricity. with large technology operations, Droughts and wildfires have We track and monitor energy- e-waste is the largest impact increased in their severity in optimising initiatives to ensure  some of these regions where we continue to focus on energy estate following.  efficiency alongside switching Our waste data gaps were not We have improved our data to low and zero-carbon energy reduced to a sufficient level to collection of water usage across choices. The following examples allow reporting and have been our real estate portfolios. are initiatives in the short to omitted in this years’ reporting. However, our water data gaps medium term which will be We have introduced initiatives were not reduced to a sufficient  with our suppliers to reduce the level to allow reporting and  amount of e-waste produced. have been omitted in this years’ • switching our energy tariffs to  reporting. We will continue to renewable energy; and understand how to sustainably research and implement methods manage and reduce the e-waste to optimise our water usage • ensuring all new real that is produced by our data across our operations in 2022. estate leases are BREEAM, centres globally. LEED or similar. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Sustainability continued ## Building a culture ## where we operate ## responsibly, ##  ## Business integrity ##  ###  ###  ###  ### everyone with whom they come into contact with mutual dignity and respect. It outlines ###  ### modern slavery. We also have in place procedures, management systems and internal ### controls to prevent and detect bribery and corruption.  Whistleblowing  A whistleblower hotline and a formalised Whistleblowing Policy employees are required to undertake annual, detailed mandatory are in place to encourage employees to raise issues regarding  possible improprieties in matters of financial reporting,  ethical or policy violations, or other matters on a confidential and corruption, and information security. All of our employees basis. Targeted communications have also been issued to all who interact with customers are also rigorously trained in how to  monitor and recognise behaviour that could indicate someone retaliation against any employee who makes a report as well as to  ensure there is clear visibility of the whistleblowing options which where appropriate. are available to them. Anti-Money Laundering and sanctions training Anti-bribery and corruption At Flutter, we are collectively responsible for ensuring that  our products and systems are not used to launder money. fairly and honestly in the jurisdictions in which it operates and We are rigorous in ensuring that we do not do business with  persons, entities or jurisdictions that are subject to financial  sanctions. As part of that commitment, we avoid pursuing  business opportunities that require us to compromise those facilitation payments throughout its global operations. standards. Our employees and management take these We have in place policies, procedures, training, management obligations seriously and through training, we have implemented systems and internal controls across Flutter to prevent and appropriate policies and procedures to help ensure that our  products and systems are not used to launder money and diligence to be carried out on individuals and companies which constantly remind ourselves of our role in contributing to the will perform services for or on behalf of Flutter. These obligations integrity of the global financial system.  policies and procedures which all employees are required to adhere to. This also includes guidance on receiving and offering gifts and hospitality involving any public official.  Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report Modern Slavery Statement We understand that modern slavery is a global threat that imposes an intolerable burden on those affected by it. As a  ## A culture that does not  ## same commitment from our employees, contractors, suppliers tolerate harassment, and business partners. ## discrimination, In 2021, we continued to develop our policies and procedures  ## victimisation or bullying. effectively screen our suppliers for any instances of forced  and deepen the screening to account for the global nature of our supply chain and will continue to be proactive in monitoring our business for breaches. in full at: statement/. Human rights Health and safety We are committed to upholding the United Nations’ Universal  Declaration of Human Rights. We are proud to support human We are committed to ensuring the wellbeing and safety of our rights through our policies which require employees to behave employees and customers in all our corporate offices and retail ethically and to respect the human rights of our employees and betting shops, and ensure that our policies and procedures other stakeholders in the business. comply with relevant local safety, health and welfare at work legislation, as appropriate.  We are committed to equal opportunities and diversity in our  workplace and will not tolerate harassment, discrimination, ensure we maintain one consistent approach to health and victimisation or bullying. We recruit, employ and promote safety management within the worldwide organisation. Key employees based on their qualifications and abilities. Our   Roadmap, which has resulted in the development of global of equality of opportunity and treatment in our employment policies, standards and procedures which will drive compliance on page 53. within the brands, regions and countries where we operate and ultimately an improved safety culture across our operations.  orientation, marital or civil partner status, gender reassignment, Utilising our iLearn online training platform and through race, religion or belief, colour, nationality, ethnic or national focused campaigns, we are providing our teams with the origin, disability or age, pregnancy, trade union membership, tools, understanding and capability to carry out their activities  and roles safely and in compliance with both legal and to accommodate the requirements of an individual’s religion, industry standards. culture and domestic responsibilities. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Sustainability continued ##  ##  ### The launch of our Positive Impact Plan has led us to revise our governance ### structures around sustainability to ensure accountability and facilitate ###  ###  ###  A focus on Sustainability at board level Our growing sustainability team  In 2021, we continued to build an industry leading team  by recruiting additional senior resources and developing a     of the implementation and evaluation of the Positive Impact  Plan and any associated risk management. This is in line with overall responsibility for the development and governance of    and reporting of Flutter’s sustainability activities. It is helping us    functions and divisions in order to effectively implement the  Positive Impact Plan. has been established, to provide dedicated oversight to this critical area.         ement team.  including senior leaders from relevant functions and each of our operating divisions, to develop and implement our Positive Impact Plan, driving collaboration and alignment around key   ## Through the three core pillars ## of our Positive Impact Plan, ## supported by our revised ## governance structures, we will ## continue to lead positive and ## meaningful change in our industry.  ial Director  Flutter Entertainment plc Annual Report & Accounts 2021 ##  Strategic report Provide oversight ## Board Risk and Sustainability Committee Safer gambling sub-committee  approve strategy ##  and ambitions Mobilise strategy ## Sustainability Working Group*  * Working group comprises functional leads plus representatives from each division. Various workstreams workstreams deliver sustainability strategy and projects   Assure   strategy performance     performance  ## Governance ##     Allocate analyse data resources Quarterly reporting-external ratings and internal pulse surveys Annual Report & Accounts 2021 Flutter Entertainment plc  ## Sustainability continued ##  Scope   We have maintained our independence and confirm that we have to perform a ‘limited assurance engagement,’ as defined by    referred to as the engagement, to report on Flutter’s selected for Accountants, and have the required competencies and   engagement.   the year ended 31 December 2021.  Other than as described in the preceding paragraph, which  sets out the scope of our engagement, we did not perform  assurance procedures on the remaining information included in of quality control including documented policies and procedures  regarding compliance with ethical requirements, professional this information. standards and applicable legal and regulatory requirements.  Criteria applied by Flutter Procedures performed in a limited assurance engagement      ect Matter. of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been  obtained had a reasonable assurance engagement been  performed. Our procedures were designed to obtain a limited  level of assurance on which to base our conclusion and do not  provide all the evidence that would be required to provide a establishing and maintaining internal controls, maintaining reasonable level of assurance. adequate records and making estimates that are relevant to Although we considered the effectiveness of management’s the preparation of the subject matter, such that it is free from  material misstatement, whether due to fraud or error. procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not  include testing controls or performing procedures relating to  checking aggregation or calculation of data within IT systems. ve obtained. A limited assurance engagement consists of making enquiries, We planned and performed our engagement in accordance with   Matter and related information, and applying analytical and other  appropriate procedures.  agreed with Flutter on 26 January 2022. The nature, timing, and Our procedures included:  • Interviewed management to understand the key processes, including an assessment of the risk of material misstatement, systems and controls in place for the preparation of the whether due to fraud or error. ect Matter.  • Performed a review of the data management systems, tested following criteria: reasonableness of conversion factors applied, reviewed  •  ect Matter. been included and that boundary definitions have been • Agreed sample selection to supporting documentation and appropriately interpreted and applied. lculations. •  • ject Matter.  to the data. • Reviewed the Report for the appropriate presentation of the  • Accuracy: Whether the data has been accurately collated assumptions relating to the data presented. by Flutter management, and whether there is supporting information for the data reported by operations to We also performed such other procedures as we considered Flutter management. necessary in the circumstances. We believe that the evidence obtained is sufficient and appropriate Conclusion to provide a basis for our limited assurance conclusions.  We do not accept or assume any responsibility for any other aware of any material modifications that should be made to the purpose or to any other person or organisation. Any reliance any  such third party may place on the Report is entirely at its own risk. for it to be in accordance with t Ernst & Young Dublin, Ireland 14 March 2022  Flutter Entertainment plc Annual Report & Accounts 2021 ## Operating and financial review Strategic report ## Recreational ## customer ## growth ## drove top line momentum. Operating leverage ## in Australia was partly offset by challenging ## comparatives, International regulatory changes, ## UK & Ireland safer gambling measures and ## customer friendly sports results. Annual Report & Accounts 2021 Flutter Entertainment plc 69 Operating and financial review continued # Operating and financial review$^{1-3, 9-12}$ # Pro forma review # Group | | FY 2021 £m | FY 2020 £m | Change % | CC Change % | | --- | --- | --- | --- | --- | | **Unrealized Adjusted Pro forma** | | | | | | **Average monthly players ('000s)** | **7,619** | 6,174 | +25% | | | Sports revenue | 3,774 | 3,000 | +26% | +27% | | Gaming revenue | 2,262 | 2,264 | —% | +8% | | **Total revenue** | **6,056** | 5,264 | +15% | +17% | | Cost of sales | (2,262) | (1,782) | +27% | +29% | | Cost of sales as a % of net revenue | 37.5% | 33.8% | +360bps | +390bps | | **Gross profit** | **3,774** | 3,483 | +8% | +11% | | Sales and marketing | (1,508) | (1,130) | +33% | +38% | | **Contribution** | **2,266** | 2,353 | -4% | -2% | | Other operating costs | (1,164) | (1,000) | +16% | +19% | | Corporate costs | (101) | (121) | -17% | -13% | | **Adjusted EBITDA^{1,2}** | **1,001** | 1,231 | -19% | -18% | | Adjusted EBITDA margin % | (4.6%) | 23.4% | -680bps | -700bps | | Depreciation and amortization | (255) | (241) | +6% | +7% | | **Adjusted operating profit** | **746** | 990 | -21% | -24% | | **Adjusted basic earnings per share** | **252.7p** | 496.6p | -49% | | | **Net debt at period end** | **2,647** | 2,814 | -6% | | Note: Further information with TSG completed on 5 May 2020. The pro forma financial review is under TSG for a full 12-month period in both 2020 and 2021. Janglee, acquired in January 2021 and Singular acquired in September have been included on a reported basis due to nationality. A full analysis of the Group's reported performance can be found on page 75. A resuscitation of the Group's pro forma performance to the Group's consolidated income statement is included at Appendix 2 on page 80. In 2021 pro forma revenue grew 17% to £6.0bn driven by AMP growth of 23% to 7.6m. This player growth was driven by the expansion of our recreational base in the UK and Ireland, and Australia, along with the regulation of sports betting and gaming in further US states. Sports revenue increased 27% to £3.8bn, with expansion into four additional US states and continued strong momentum in Australia. Sports net revenue margin declined 100 basis points year-on-year due to less favourable sports results in the UK and Ireland. Gaming revenue increased 4%, with growth in the US partly offset by tougher comparatives in our international division as a result of the elevated levels of player engagement during the lockdown period of Q2 2020. Cost of sales as a percentage of net revenue increased by 350 basis points to 37.5% with a greater proportion of revenue coming from the US where direct costs are higher. Additionally, the increase in regulated revenue also led to higher gaming taxes. Sales and marketing costs grew by 38%, mainly reflecting a doubling of US investment to support significant new customer acquisition. US expansion is also the key driver of the year-on-year increase in other operating costs. For Group ex-US, other operating costs increased by just 2%. Corporate costs remain tightly controlled, benefiting from the realisation of £19m in merger related synergies. In total, merger related cost synergies of £115m were delivered in 2021, ahead of the £96m expected in year due a faster realisation in most divisions. We remain on track to deliver synergies of £170m by 2023. Adjusted EBITDA was £1.0bn with the US investment-led loss increasing by £81m to £243m. For Group ex-US, adjusted EBITDA was 10% lower as strong top line growth and operating leverage in Australia was more than offset by the various factors referenced above that impacted our international and UK & Ireland divisions. The Adjusted effective tax rate for the Group was 26.8% (2020: 13.2%) driven by the geographic mix of profits during the year as US losses increased where no deferred tax benefit was recognised, and the proportion of profits in higher tax jurisdictions such as Australia also increased. Excluding the US, the Adjusted effective tax rate was 18.5% (2020: 10.4%). Adjusted basic EPS reduced from 497p to 253p reflecting the increased tax charge in the current period and a higher share count in 2021. Our acquisition of the additional stake in FanDuel in December 2020 was mainly settled via the issuance of shares directly to Fastball and through an equity raise. Net debt as at 31 December 2021 of £2.647m was 6% lower than the prior year despite the free cash flow generated by the operating activities of the Group being used to pay expenses such as the settlement of a historic legal case with the Commonwealth of Kentucky and the purchase of shares for FanDuel incentive schemes. A full analysis of the Group's reported performance can be found at page 75. 70 Platter Entertainment plc Annual Report & Accounts 2021 # UK & Ireland | Unaudited Adjusted Performa | UK & Ireland Total | | | UK & Ireland Online | | | UK & Ireland Retail | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FY 2021 mn | FY 2020 mn | Change % | FY 2021 mn | FY 2020 mn | Change % | FY 2021 mn | FY 2020 mn | Change % | | Average monthly players ('000s) | | | | 3,153 | 2,532 | +28% | | | | | Sport/shook dollars | 11,376 | 9,400 | +21% | 10,475 | 8,401 | +25% | 904 | 998 | -9% | | Sportshook net revenue margin | 9.9% | 12.0% | -250bps | 9.7% | 11.7% | -200bps | 12.6% | 14.3% | -170bps | | Sports revenue | 1,282 | 1,286 | —% | 1,168 | 1,143 | +2% | 114 | 143 | -20% | | Gaming revenue | 781 | 743 | +6% | 721 | 686 | +5% | 60 | 57 | +5% | | Total revenue | 2,063 | 2,029 | +2% | 1,889 | 1,829 | +3% | 174 | 200 | -13% | | Cost of sales | (621) | (577) | +8% | (581) | (554) | +9% | (40) | (44) | -9% | | Cost of sales as a % of net revenue | 30.1% | 28.5% | +170bps | 30.8% | 29.2% | +360bps | 22.9% | 21.4% | +200bps | | Gross profit | 1,442 | 1,451 | -1% | 1,308 | 1,295 | +1% | 134 | 156 | -14% | | Sales and marketing | (391) | (375) | +4% | (384) | (369) | +4% | (6) | (6) | -2% | | Contribution | 1,051 | 1,077 | -2% | 923 | 927 | —% | 128 | 150 | -15% | | Other operating costs | (435) | (446) | -2% | (298) | (298) | —% | (138) | (148) | -7% | | Adjusted EBITDA^{1,2} | 616 | 630 | -2% | 626 | 629 | —% | (10) | 2 | -647% | | Adjusted EBITDA margin | 29.9% | 32.3% | -320bps | 33.1% | 34.4% | -230bps | (5.6%) | 0.9% | -650bps | | Depreciation and amortisation | (126) | (119) | +5% | (85) | (77) | +11% | (41) | (43) | -4% | | Adjusted^{3} operating profit | 490 | 511 | -4% | 541 | 552 | -2% | (50) | (41) | +23% | The UK & Ireland division operates Paddy Power, Beillier and Sky Betting & Gaming brands online, as well as retail operations in the UK and Ireland. ## UK & Ireland Online Performance during 2021 was driven by several factors: - Good AMP volumes, especially in gaming, albeit with a reduction in customer engagement levels (during Q4 in particular) versus the elevated levels seen in prior Covid affected periods - A higher volume of sporting events compared with the prior year which contributed to 25% growth in staking - Net revenue margin 120 basis points below expected margin (2020: 270 basis points favourable) resulted in an adverse 280 basis point sports results impact. This equates to a £232m year-on-year impact in revenue before adjusting for customer recycling (Q4: £149m) - A lower level of recycling compared with historic trends - New safer gambling measures which impacted revenue by £95m, £37m of which related to Q4$^{1,2}$ AMP growth of 25% translated into a revenue increase of just 3% due to the significant swing in sports results year-on-year. Given the complexity of Covid comparatives, a year-on-two-year comparison provides a cleaner view of growth, with compound annual revenue and AMP growth of +12% and +13% respectively since 2019. Adjusting for safer gambling impacts in 2021 and the impact of adverse sports results, the equivalent revenue CAGR would be 15%. Sports revenue increased by 2%, with staking growth of 25% offset by net revenue margins which were 200 basis points lower year-on-year at 9.7% due to adverse sports results. Increased penetration of higher margin "Betbuilder" products and enhancements to our pricing and risk management capabilities both helped to structurally increase our expected margin, helping to partly mitigate the adverse sports results. Online gaming revenue grew by 5% during the year reflecting good customer engagement across our brands, with AMPs up 22% despite the market slowing in Q4. AMP growth exceeded revenue growth, demonstrating how the changes to safer gambling measures are reducing average revenue per user ('ARPU'), as well as the increased recreational nature of the customer base. Cost of sales as a percentage of revenue increased by 160 basis points to 50.8% reflecting increased streaming costs and a higher effective tax rate due to increased promotional spend during the year. Sales and marketing increased by 4% reflecting increased investment ahead of the European football championships and increased spend on safer gambling campaigns which was partly offset by synergy benefits realised during the year. Sales and marketing as a percentage of revenue increased in H2 although absolute spend was down due to the sports results impact on top line. Other operating costs were flat year-on-year. We experienced some inflationary pressures in employee pay and made incremental investment in safer gambling capabilities and research, education and training (RET) funding. These were offset by the sale of Oddschecker at the end of August, resulting in a reduction in associated operating costs. Online EBITDA was flat year-on-year at £626m. ## UK & Ireland Retail Retail revenue declined by 13% in 2021, reflecting the impact of Covid related shop closures and social distancing restrictions that were in place during the year. Both estates remained shut throughout Q1, with our UK shops re-opening in April and our Irish shops re-opening in May. Revenue in the second half of the year was approximately 85% of 2019 levels, with a stronger performance in the UK than in Ireland. In the UK we have been pleased with footfall. Revenue performance in H2 was in line with that of 2019, benefiting in particular from a strong gaming performance, with gaming revenues 13% higher than 2019. In Ireland by contrast, revenue in H2 remained at just 87% of 2019 levels, with performance reflecting a higher level of societal caution in relation to Covid. Other operating costs declined by 7% to £138m, despite the Group continuing to fund all staff costs without accessing offered government supports. The business incurred a £19m Adjusted EBITDA loss for the year, with EBITDA of £29m in H2. Annual Report & Accounts 2021 Platter Entertainment plc 71 Strategic Report Operating and financial review continued # Operating and financial review¹⁻³,⁹⁻¹² continued Pro forma review continued Australia⁴ | Unaudited Adjusted Pro forma | FY 2021 (m) | FY 2020 (m) | Change % | CC Change % | | --- | --- | --- | --- | --- | | **Average monthly players ('000s)** | **1,008** | 794 | +27% | +27% | | **Sportsbook stakes** | **11,702** | 9,713 | +20% | +20% | | Sportsbook net revenue margin | 11.1% | 11.1% | —bps | —bps | | **Total revenue** | **1,294** | 1,075 | +20% | +20% | | Cost of sales | (656) | (520) | +22% | +22% | | Cost of sales as a % of net revenue | 49.2% | 48.4% | +800bps | +800bps | | **Gross profit** | **658** | 555 | +16% | +16% | | Sales and marketing | (119) | (129) | —8% | —8% | | **Contribution** | **539** | 426 | +26% | +26% | | Other operating costs | (102) | (108) | —5% | —6% | | **Adjusted EBITDA⁵,⁶** | **437** | 318 | +37% | +37% | | Adjusted EBITDA margin | 33.7% | 29.6% | +4200bps | +4200bps | | Depreciation and amortisation | (26) | (30) | —26% | —17% | | **Adjusted operating profit** | **411** | 288 | +43% | +42% | Australia encompassed Sportsbelt, which offers online sports betting, in 2021 following the migration to a single brand in September 2020. Sportsbelt grew. Adjusted EBITDA by 37% in 2021 to 6437m delivering another excellent performance. Our Australian division's scale has been transformed over the last two years with compound annual Adjusted EBITDA growth of 64% since 2019. This has been driven by: - Compound growth of 38% in revenue and 27% in customers to over one million AMPs. Our market leading product and value propositions have resonated strongly with both existing players and those that migrated from retail during Covid. - Realisation of over £30m in synergy benefits from the merger with TSG which, when combined with our efficient operating model, reduced operating costs as a % of revenue by 15 percentage points to 17.1% in 2021. In 2021, Sportsbelt delivered player growth of 27% which drove a 20% increase in both sportsbook stakes and revenue. Strong retention of the players that migrated online during 2020 and further benefit from Covid-related restrictions re-introduced in the second half of 2021 were key contributors to this growth. Sportsbook net revenue margin was in line with the prior year at 11.1%, with both periods benefiting from circa 60 basis points of favourable sports results above expectations. In 2021, improvements to our structural margin from changes in bet mix were offset by an increase in personalised generosity to attract and retain players. Sales and marketing declined by 9%, or 280 basis points as a percentage of revenue, benefiting from synergies associated with operating a single brand in Australia from September 2020. In absolute terms, spend has remained near pre-merger levels for the combined brands, reflecting continued significant investment in the Sportsbelt brand to maintain its market leading position. Other operating costs declined by 6% due to merger related synergies. These cost efficiencies continue to deliver excellent operating leverage, with Adjusted EBITDA as a % of revenue increasing 420 basis points to 33.7%. 72 Platter Entertainment plc Annual Report & Accounts 2021 # International¹ | | FY 2021 R% | FY 2020 R% | Change % | EC Change % | | --- | --- | --- | --- | --- | | Unaudited Adjusted Pro forma | | | | | | Average monthly players ('000s) | 1,901 | 1,938 | -2% | | | Sportsbook stakes | 1,592 | 1,568 | +16% | +21% | | Sportsbook net revenue margin | 8.7% | 8.5% | +205pts | +205pts | | Sports revenue | 220 | 180 | +22% | +26% | | Gaming revenue | 1,068 | 1,285 | -17% | -13% | | Total revenue | 1,288 | 1,465 | -12% | -8% | | Cost of sales | (392) | (365) | +7% | +22% | | Cost of sales as a % of net revenue | 30.4% | 24.9% | +350bps | +350bps | | Gross profit | 897 | 1,100 | -29% | -34% | | Sales and marketing | (335) | (279) | +20% | +27% | | Contribution | 562 | 822 | -32% | -28% | | Other operating costs | (270) | (248) | +9% | +9% | | Adjusted EBITDA¹,² | 292 | 524 | -49% | -46% | | Adjusted EBITDA margin | 22.7% | 39.2% | -1,850bps | -1,850bps | | Depreciation and amortisation | (52) | (50) | +4% | +6% | | Adjusted operating profit | 240 | 524 | -54% | -51% | ¹International includes PokerStars, Adjarabes, Betfair and Junglee brands which offer online poker, casino, sports betting, vymmy and daily fantasy products. Excludes PokerStars US business and Betfair UK and reward operations. Our International division delivered revenues of €1.3bn. 8% lower than the prior year (H1 -11%, H2 -4%). AMPs were down 2% year-on-year (Q1 -2%, Q4: flat) with Adjusted EBITDA of €292m. Several key factors contributed to these results: - Challenging prior year comparatives as a result of the extended Covid related lockdowns: we previously disclosed that the revenue uplift in H1 2020 was estimated to be €205m with a benefit in H1 2021 of approximately €50m - Compliance changes introduced following the merger with TSG continued to impact year-on-year growth in the first half of the year (guided annualised contribution impact of €65m) - German and Dutch regulatory changes which we previously indicated would reduce contribution by €85m in 2021 (guided annualised contribution impact of €140m) - An improved revenue mix with a greater proportion coming from regulated markets and casino products – both have higher associated direct costs - Increased investment across both Betfair and PokerStars to improve the customer proposition and increase brand awareness - The addition of Junglee to the division, currently in investment phase, which generated an EBITDA loss of €3m and added 4 percentage points to revenue growth. Excluding the impact of Covid and the regulatory headwinds referenced above, revenue would have increased by 14%. Gaming revenue was 15% lower for the year. In H2 it declined by 5% (casino +15%, poker -25%) with casino and poker growth being impacted by 10 and 8 percentage points respectively from regulatory changes. Q4 was the first quarter to reflect all previously guided regulatory headwinds, with the division delivering €258m in Q4 gaming revenue. Underlying casino growth of 26% in H2 was driven by (i) an increased emphasis on direct casino acquisition (e.g. the PokerStars '7m in' campaign launched in the UK) (ii) further improvements to our proprietary casino content (iii) a strong performance in our key markets and (iv) the addition of Junglee to the portfolio which added approximately 9 percentage points to casino growth. The underlying decline of 17% in poker during H2 reflected a reduction in engagement from customers acquired during the lockdown spike of Q2 2020 as well as investment in the PokerStars reward scheme which had an approximate 2 percentage point impact on growth and regulatory impacts outlined above. Sports revenue of €220m increased by 26% (H1: +62%, H2: flat) benefiting from an increase in sports fixtures year-on-year, particularly in H1 2021. Improvements made to our pricing and risk management capabilities continued to benefit our expected sportsbook margins in H2 which was partially offset by an adverse year-on-year swing in sports results leading to an increase of 20 basis points in net revenue margin. Cost of sales in H2 increased by 390bps to 31.6% due to (i) the introduction of gaming taxes in Germany from 1 July, (ii) an increased proportion of revenues coming from regulated markets and (iii) a change in product mix, with casino products incurring a higher associated revenue share cost and tax rate. Sales and marketing increased by 27% during 2021, reflecting the period of underinvestment in H1 2020. The year-on-year increase is attributable to (i) Betfair spend in LADAR, primarily Brazil (ii) the addition of Junglee (iii) marketing spend to revitalise the PokerStars brand and (iv) investment in direct casino acquisition. Spend in H2 was flat year-on-year. Other operating costs increased by 9% in 2021. Similar to sales and marketing, this increase reflected a period of underinvestment in H1 2020. The year-on-year increase primarily related to growth in headcount as we invested to stabilise and improve our capabilities across product, technology and customer operations. In H2 other operating costs (excluding Junglee) were broadly flat versus the first half. Annual Report & Accounts 2021 Platter Entertainment plc 73 Strategy Report Operating and financial review continued # Operating and financial review 1-3 8-12 continued # Pro forma review continued # US4 | | FY 2021 £m | FY 2020 £m | Change % | CC Change US$ | | --- | --- | --- | --- | --- | | Unrealized Adjusted Pro forma | | | | | | **Average monthly players ('000s)** | **1,557** | **910** | **+73%** | **+167%** | | **Sportsbook stakes** | **11,284** | **4,411** | **+256%** | **+167%** | | Sportsbook net revenue margin | 6.3% | 4.6% | +270bps | +270bps | | Sports revenue | 978 | 458 | +113% | +126% | | Gaming revenue | 413 | 237 | +74% | +87% | | **Total revenue** | **1,391** | **695** | **+100%** | **+113%** | | Cost of sales | (614) | (319) | +92% | +104% | | Cost of sales as a % of net revenue | 44.1% | 46.0% | +290bps | +290bps | | **Gross profit** | **778** | **376** | **+107%** | **+123%** | | Sales and marketing | (663) | (343) | +85% | +102% | | **Contribution** | **115** | **28** | **+350%** | **+385%** | | Other operating costs | (357) | (198) | +83% | +90% | | **Adjusted EBITDA 1-3** | **(243)** | **(170)** | **+43%** | **+50%** | | Adjusted EBITDA margin | (17.5%) | (24.4%) | +7000bps | +7300bps | | Depreciation and amortisation | (47) | (37) | +28% | +35% | | **Adjusted operating profit** | **(289)** | **(207)** | **+40%** | **+47%** | The US division includes FanDuel, FOX Bet, TVG, PokerStars and Starburst brands, offering regulated real money and free-to-play sports betting, casino, poker, daily fantasy sports and online racing wagering products to customers across various states in the US. Revenue grew by 113% to £1.4bn ($1.9bn) in 2021, with 94% attributable to FanDuel Group. Strong player acquisition and retention saw player volumes increase by 73% to 1.6m, with just under two million AMPs in Q4. Sports revenue grew by 126%, with a 266% increase in sportsbook and 11% growth in TVG/daily fantasy sports combined. The substantial year-on-year growth in sportsbook was due to: - Player growth: Sportsbook AMPs were 180% higher in 2021 - Ongoing growth from more mature states: Continued strong growth from the four pre-2020 states where revenue more than doubled - New states: A full year benefit from the four states that opened during 2020 and the addition of four new states in 2021 (Michigan, Virginia, Arizona and Connecticut) - Structural growth in expected margin: Sportsbook net revenue margin increased by 170 basis points to 6.3% with 130 basis points from expansion of our expected margin. This structural margin improvement is due to a higher share of stakes coming from our market-leading parlay products. Favourable sports results added 50 basis points to margin year-on-year (or 130 basis points to our expected margin of 5.0% in 2021) Gaming revenue grew by 87% to £413m ($568m) driven by a 116% increase in AMPs. We launched in three new casino states in 2021 (Michigan, West Virginia and Connecticut), bringing our casino footprint to 5 US states. Cost of sales as a percentage of net revenue declined 190 basis points due to (i) a reduction in the percentage of gross revenue (which is the tax base in most states) spent on customer promotions (ii) migration of our sports betting business to the Group's proprietary betting platform during 2021 and (iii) a higher proportion of revenue coming from lower tax states. Sales and marketing doubled year-on-year to £663m as we continued to invest materially to acquire and retain customers although sales and marketing as a percentage of revenue declined by 270 basis points. This is due to continued investment discipline to maximise returns, and the greater maturity of the business. While marketing investment in pre-2021 states continued to increase, it declined as a proportion of revenue. Other operating costs also declined by 270 basis points as a percentage of revenue. This was despite significant expansion of our product and technology headcount as well as ongoing expenses associated with efforts to pass sports betting legislation in additional states. The US division made an Adjusted EBITDA loss of £243m ($155m). 74 Flutter Entertainment plc Annual Report & Accounts 2021 # Statutory review(1) Group | £m | FY 2021 | FY 2020 | Change % | | --- | --- | --- | --- | | Sports revenue | 3,774 | 2,725 | +38% | | Gaming revenue | 2,262 | 1,688 | +34% | | Total revenue | 6,036 | 4,414 | +37% | | Cost of sales | (2,310) | (1,542) | +60% | | Cost of sales as a % of net revenue | 38.3% | 34.9% | +340bp | | Gross profit | 3,727 | 2,872 | +30% | | Operating costs | (3,003) | (2,101) | +43% | | EBITDA | 723 | 772 | -6% | | EBITDA margin % | 12.0% | 17.5% | -350bp | | Amortisation of acquisition related intangibles | (543) | (452) | | | Depreciation and amortisation | (254) | (215) | +19% | | Impairment | — | (23) | +26% | | Gain on disposal | 12 | — | 0 | | Operating (loss)/ profit | (63) | 104 | 0 | | | | | -160% | | Net finance expense | (226) | (152) | +121% | | (Loss)/ profit before tax | (286) | 1 | | | Taxation | (134) | (36) | +241% | | Loss after tax | (412) | (35) | | | Basic earnings/ (loss) per share | (236.5p) | 29.3p | | | Diluted earnings per share | (236.5p) | 28.5p | | | Net current liabilities | (112) | (121) | | | Net assets/ (liabilities) | 10,288 | 10,996 | | | Net cash from operating activities | 686 | 998 | -33% | Note: Putter is combination with TSG completed on 3 May 2020. Reported financials include TSG included for 241 days post-completion in 2020 and for the full year 2021. Jungles, acquired in January 2021 and Singular acquired in September have been included in 2021 from the data of completion. A full analysis of the Group's pro forma performance can be found at pages 70 to 74. A reconciliation of the Group's pro forma performance to the Group's consolidated income statement is included at Appendix 3. In 2021 reported revenue grew 37% year-on-year when compared to 2020. The primary driver of the strong year-on-year growth in 2021 was the completion of Flutter's acquisition of TSG on 5 May 2020. The prior year comparatives above include the results of TSG from the date of completion with the results for 2021 consolidated for the full year. Further expansion of our market leading US online business to 12 states in 2021 from 6m 2020, strong growth in Australia and a normalised sporting calendar following widespread cancellations in 2020 also contributed to the year-on-year performance. Sports revenue increased by 38% to £3.8bn, benefitting from (i) the impact of the acquisition of TSG during the prior year, (ii) Covid related sports fixture cancellations in the prior year, (iii) our US expansion into four additional states and (iv) continued strong momentum in Australia in 2021. Gaming revenue increased 34%, reflecting (i) the addition of the PokerStars and Sky Vegas businesses in May 2020 and (ii) good organic gaming growth in our FanDuet, Adjarabet, Paddy Power and Betfair businesses partly offset by challenging Covid related comparatives. Cost of sales as a percentage of net revenue increased by 349 basis points to 38.3% with a higher proportion of revenue now coming from the US where direct costs are higher. A changing product/geographical revenue mix in International also contributed to this increase. Operating costs increased 40% driven by growth in sales and marketing costs and investment in operations, mainly reflecting the impact of the TSG acquisition, the settlement of the historic legal case regarding Kentucky and a doubling of US investment to support significant new customer acquisition. Reported EBITDA reduced by 6% to £723m driven by the increase in costs outlined above, regulatory changes impacting the UK & Ireland and international divisions as well as further expansion in the US where increased investment losses were incurred when compared with the prior year. The Group incurred a loss after tax of £412m reflecting (i) an increase in depreciation and amortisation due to the acquisition of TSG in the prior year (ii) increased financing costs of £226m which also reflect the cost of refinancing part of the Group's debt during 2021 and (iii) an increased tax charge of £124m incorporating a deferred tax charge in respect of the UK's main corporate tax rate change from 19% to 25% applicable from 1 April 2023. See Note 6 of the financial statements for more details. When combined with the increased US losses, the Group had a basic loss per share of 236.5p in 2021 compared to basic earnings per share of 29.3p in 2020. Net current liabilities reduced from £521m at 31 December 2020 to £112m at 31 December 2021 mainly due to increased cash balances following the refinancing of borrowings in July 2021 which increased general liquidity overall. As in previous years, the Group operates regularly in a net current liability position due to the Group's operating model whereby it receives payments for nearly all revenues in advance with material cost items paid in arrears. Net assets reduced in the year from £11.0bn to £10.3bn due to a reported loss after tax of £412m as outlined above, the foreign currency translation impact of goodwill and intangible assets and the purchase of shares by the Employee Benefit Trust to settle US employee incentive schemes. Net cash from operating activities reduced from £998m to £686m driven by the settlement of the Kentucky proceedings of £254m including associated legal costs. Other factors included a lower working capital increase compared to the prior year partially offset by the growth in the business due to the TSG acquisition. A full analysis of the Group's pro forma performance (as though TSG was part of the Group for both periods in full) can be found at pages 70 to 74. Annual Report & Accounts 2021: Flutter Entertainment plc 75 Strategic report Operating and financial review continued # Operating and financial review$^{1-3, 8-12}$ continued # Separately disclosed items | | FY 2021 £m | FY 2020 £m | | --- | --- | --- | | Amortisation of acquisition related intangible assets | (543) | (432) | | Kentucky settlement and associated legal costs | (163) | — | | Transaction fees and associated costs | (22) | (33) | | Restructuring and integration initiatives | (45) | (96) | | Germany and Greece tax expense | (47) | — | | Disposal of Oddschecker Global Media | 12 | — | | Impairment | — | (23) | | VAT refund | — | 11 | | **Operating profit impact of separately disclosed items** | **(809)** | **(573)** | | Financial income | — | 79 | | Financial expense | (100) | (71) | | **Profit before tax impact of separately disclosed items** | **(909)** | **(565)** | | Tax credit on separately disclosed items | 43 | 58 | | **Total separately disclosed items** | **(866)** | **(507)** | Separately disclosed items do not relate to business as usual activity of the Group. Items that are volatile in nature or non-cash purchase price accounting amortisation and therefore are excluded from Adjusted profits. Amortisation of acquisition related intangible assets increased to £543m mainly due to the May 2020 combination with TSG, resulting in a full twelve month charge in 2021. The Kentucky costs relate to the full and final settlement of a historic case taken by the Commonwealth of Kentucky against certain subsidiaries of TSG for $300m, with $180m already provided for, along with associated legal fees (£163m). Restructuring and integration costs primarily relate to the integration with TSG. The Greece and German tax expense relates to historic cases in both countries. The German tax assessment related to the Betfair Exchange which operated in Germany until November 2012. The assessment is a multiple of the German revenue generated by the Exchange but the German Federal Tax Court dismissed the Group's appeal in September 2021. The Greek tax authorities case against Paddy Power relates to a period when it was operating under an interim licence between 2012-14. Whilst the Group will continue to appeal these verdicts in both Germany and Greece, once-off expenses of £34m and £13m respectively (including interest and penalties) has been recognised. Financial expense relates to repayment of the Group's Senior Notes in 2021 and additional fees from other repayment and refinancing activities associated with the Group's debt. The Senior Notes related expense includes settlement of the embedded derivative asset arising from the redemption option on the Senior Notes and the premium payable on repayment. The tax credit of £45m has arisen primarily on recognition of a deferred tax asset on an internal transfer of intangibles of £68m, acquisition related intangible amortisation of £59m and the tax effect of other separately identifiable items of £20m, offset by a tax rate change on acquisition related intangible assets as result of the increase in the UK's main corporation tax rate from 19% to 25% from 1 April 2023 of £104m as outlined in Note 6 to the financial statements. 76 Platter Entertainment plc Annual Report & Accounts 2021 # Cash flow and financial position | Pro forma | 31 2021 £m | 31 2020 £m | | --- | --- | --- | | Adjusted EBITDA | 1,081 | 1,231 | | Capex | (308) | (252) | | Working capital | 119 | 310 | | Corporation tax | (138) | (93) | | Lease liabilities paid | (48) | (46) | | Adjusted free cash flow | 625 | 1,151 | | Cash flow from separately disclosed items | (61) | (120) | | Free cash flow | 563 | 1,031 | | Interest cost | (140) | (177) | | Other borrowing costs | (37) | (24) | | Settlement of swaps | (68) | (36) | | Amounts paid in respect of Kentucky settlement | (234) | — | | Purchase of shares by the Employee Benefit Trust ("EBT") | (181) | — | | Acquisitions and disposals | 73 | — | | Other | (13) | 22 | | Proceeds from equity raise | — | 1,921 | | Acquisition of further interest in FanDuel | — | (1,546) | | Cash transferred in acquisitions/disposals | 4 | — | | Net (decrease)/increase in cash | (33) | 1,192 | | Net debt* at start of year | (2,814) | (3,827) | | Foreign currency exchange translation | (5) | (20) | | Change in fair value of hedging derivatives | 225 | (199) | | Net debt* as at 31 December | (2,647) | (2,814) | The Group had Adjusted free cash flow of £625m in 2021, down from £1,131m in the prior year. The movement reflects (i) lower Adjusted EBITDA in 2021, (ii) a more favourable working capital movement in the prior year due to significant growth in the business which partially unwound in 2021, and (iii) increased Capex primarily to fund expansion into more US states. Capital expenditure of £308m, reflects continued US investment as we expand into more US states. 2021 includes the upfront fee of (£22m) $25m for New York market access. We continue to materially invest in our online products across all regions. Corporate tax payments were higher than the prior period due to the change in the geographic mix of profits during the year. Working capital in the current year benefitted from the continued growth of our US business. The large working capital increase in 2020 was due to the enhanced scale of the Group and the timing of some gaming tax and product fee payments. This increase partially unwound in 2021. Cash flow from SDIs of £61m principally relates to restructuring and integration costs in relation to the combination with TSG. Interest costs were £37m lower than in 2020 on a pro forma basis due to the (i) repayment of debt following the Group's equity raise in May 2020 and (ii) reduction in the weighted average cost of debt following the May 2020 debt repayment and further refinancing of debt in July 2021. During the period the Group incurred cash costs of £234m in relation to the settlement with the Commonwealth of Kentucky for a historic legal case with subsidiaries of TSG and includes associated legal fees. The Employee Benefit Trust purchased £181m in Flutter shares to settle US employee incentive schemes that were put in place at the time of the original FanDuel acquisition to incentivise value creation in FanDuel. The acquisitions and disposal relate to the acquisition of Junglee Games and Singular along with the disposal of Oodschecker during the period. As at 31 December 2021, the Group had net debt of £2,647m, excluding customer balances, representing a leverage ratio of 2.6x times¹. The Group continues to hedge the impact of currency fluctuations on its leverage ratio through cross currency swap agreements. Changes in the fair value of these hedging derivatives are reflected in net debt. ### Current trading/outlook In the first 7 weeks to 20 February, Group revenue was in line with our expectations. Total Group revenue increased 2% year on year, reflecting strong comparatives in the first 7 weeks of 2021, which benefited from very favourable sports results. Across H1 2021 the Group also benefited from favourable sports results, with group gross win margin 120 basis points above expected levels. In contrast, H2 margins were in line with expectations. As a result, we expect that Flutter's revenue growth in 2022 will accelerate as the year progresses, assuming expected sports results. This trend will also reflect the phasing of safer gambling measures introduced in 2021. In Russia and Ukraine, we are continuing to monitor the situation closely. Since completion of our merger with TSG, Flutter has materially reduced its exposure to the Russian online market. In 2021, Russia accounted for £41m in contribution. In addition, Ukraine represented contribution of £19m. Annual Report & Accounts 2021 Flutter Entertainment plc 77 Strategic report Operating and financial review continued # Footnotes 1. 'Adjusted' measures exclude items that are separately disclosed as they are. (In respect of the usual business activity of the Group (2) items that are whether mature and (4) purchase price accounting amortisation of acquired intangibles (non-cash). Therefore, they have been reported as 'separately disclosed items (SESs)' (see note 6 to the financial statements). 2. EBITDA is defined as profit for the period before depreciation, amortisation, impairment, gain on disposal, financial income, financial expense and taxation and is a non-GAAP measure. This measure is used internally to evaluate performance, to establish strategic goals and to allocate resources. The directors also consider the measure to be commonly reported and widely used by investors as an indicator of operating performance and ability to incur and service debt, and as a valuation matrix. It is a non-GAAP financial measure and is not prepared in accordance with IFRS and, as not uniformly defined terms, it may not be comparable with measures used by other companies to the extent they do not follow the same methodology used by the Group. Non-GAAP measures should not be viewed in isolation, nor considered as a substitute for measures reported in accordance with IFRS. All of the adjustments shown have been taken from the financial statements. 3. Flutter's combination with TSG completed on 3 May 2020. Pro forma numbers show the Group's financials with TSG included for a full 12-month period in 2020. Junglee, acquired in January 2021 and Singular acquired in September 2021, have not been included on a pro forma basis. See Appendix 2 for a reconciliation of pro forma results to statutory results. 4. Growth rates in the commentary are in local or constant currency; except reported numbers which are in nominal currency. 5. Average Monthly Players represent the average number of players who have placed and/or wagered a stake and/or contributed to raise or tournament fees during the month in the reporting period. AMP numbers do not include Junglee in 2020 or 2021 to allow for better comparability of underlying player growth for International and Group. 6. Online sportsbook market share is the GDR market share of FanDuel and FOX Bet for Q4 2021 in the states in which FanDuel was increased on published gaming in the region. During Q4 2021 FanDuel was live in 1.2 states, Arizona (AZ), Colorado (CO), Connecticut (CT), Illinois (IL), Indiana (IN), Iowa (IA), Michigan (MN), New Jersey (NJ), Pennsylvania (PA), Tennessee (TN), Virginia (VA) and West Virginia (WV). During 2021 FOX Bet was live in 4 states, CO, NJ, PA and PA. Market share does not include Arizona for December as the data has yet to be released. Online gaming market share reflects the combined CT, NY, NJ, PA and WV market share of our gaming brands. 7. Global Play Well goal measured as the % of active online customers who use a safer gambling Play Well tool in the specified reporting period. Active players are defined as any players who have placed and/or wagered a stake and/or contributed to raise or tournament fees during the month in the reporting period. A safer gambling tool is any tool that a customer has used for Flutter has applied to a customer in the reporting period that helps to promote safer gambling. For the purposes of the 2021 measure, Adjutabet and Junglee have been excluded. We will look to align with AMP reporting and work on expanding to include further brands as appropriate as we end in our Play Well strategy. # Appendix 1: Divisional Key Performance Indicators FY 2021 Unaudited pro forma¹ | £m | UK & Ireland | | | Australia | | | | --- | --- | --- | --- | --- | --- | --- | | | FY 2021 | FY 2020 | CC % Change | FY 2021 | FY 2020 | CC % Change | | **Average monthly players² (000's)** | **3,153** | 2,532 | +25% | **1,008** | 794 | +27% | | Sportsbook salaries | 11,378 | 9,400 | +22% | 11,702 | 9,713 | +20% | | Sportsbook net revenue margin | 9.9% | 12.0% | -210bps | 11.1% | 11.2% | -6bps | | Sports revenue | 1,282 | 1,286 | 0% | 1,294 | 1,075 | +20% | | Gaming revenue | 781 | 743 | +5% | 0 | 0 | 0% | | **Total revenue** | **2,065** | 2,029 | +2% | **1,294** | 1,075 | +20% | | Cost of Sales | (621) | (577) | +8% | (636) | (520) | +22% | | Cost of sales as % of net revenue | 30.2% | 28.3% | +270bps | 49.2% | 48.4% | +80bps | | **Gross Profit** | **1,442** | 1,451 | 0% | **658** | 555 | +18% | | Sales & marketing | (391) | (171) | +5% | (119) | (129) | -9% | | **Contribution** | **1,051** | 1,077 | -2% | **539** | 426 | +26% | | Other operating costs | (435) | (446) | -1% | (102) | (108) | -6% | | Corporate costs | | | | | | | | **Adjusted EBITDA** | **616** | 630 | -3% | **437** | 318 | +37% | | Adjusted EBITDA margin | 29.9% | 31.1% | -160bps | 33.7% | 29.6% | +420bps | | Depreciation & amortisation | (126) | (119) | +6% | (26) | (30) | -17% | | **Adjusted operating profit/(loss)** | **490** | 511 | -5% | **411** | 288 | +42% | 1. Flutter's combination with TSG completed on 3 May 2020. Pro forma numbers show the Group's financials with TSG included for a full 12-month period in 2020. Junglee, acquired in January 2021 and Singular acquired in September 2021, have not been included on a pro forma basis. See Appendix 2 for a reconciliation of pro forma results to statutory results. 2. Constant currency ("cc") growth is calculated by reconstituting the non-steering denominated component of 2020 at 2021 exchange rates (see Appendix 4). Growth rates in the commentary are in local or constant currency. 3. Average Monthly Players represent the average number of players who have placed and/or wagered a stake and/or contributed to raise or tournament fees during the month in the reporting period. AMP numbers do not include Junglee in 2020 or 2021 to allow for better comparability of underlying player growth for International and Group. 78 Flutter Entertainment plc Annual Report & Accounts 2021 8 Total NGR online market share in the UK and Ireland based on internal estimates. Total NGR online market share of Sportuled based on competition reporting and internal estimates. 9 Net debt is the principal amount of borrowings plus associated accrued interest, minus cash & cash equivalent to plus minus carrying value of debt-related derivatives. Leverage is calculated using pro forma Adjusted EBITDA for the appropriate 12-month period. The leverage ratio is calculated using pro forma Adjusted EBITDA for the 12-month period to 11 December 2021. 10. Includes the gross value of derivatives. 11. Reported figures represent the IFRS reported statutory numbers. Where amounts have been normalised for SDIs they are labelled as Adjusted. 12 Constant currency ("cc") growth is calculated by recanalating the non-sterling denominated component of 2020 at 2021 exchange rates (see Appendix 4). Growth rates in the commentary are initial or constant currency. 13. Quantified safer gambling impacts are an approximate measure of the revenue estimated to have been lost due to changes in safer gambling measures during 2021. Due to the complexity of disaggregating from volatility in net win margins. Good related behaviour and the wider market environment this amount does not yet include the effect of the changes on customer behaviour. | | International | | | US | | | Group | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FY 2021 | FY 2020 | CC % Change | FY 2021 | FY 2020 | CC % Change | FY 2021 | FY 2020 | CC % Change | | 1,901 | 1,938 | -2% | | 1,557 | 910 | +71% | 7,619 | 6,174 | +23% | | 1,592 | 1,368 | +21% | | 11,264 | 4,411 | +167% | 35,954 | 24,892 | +46% | | 8.7% | 8.5% | +200bps | | 6.3% | 4.6% | +170bps | 9.1% | 10.1% | -200bps | | 220 | 180 | +26% | | 978 | 458 | +126% | 3,774 | 3,000 | +27% | | 1,068 | 1,285 | -13% | | 413 | 237 | +87% | 2,262 | 2,264 | +4% | | 1,288 | 1,465 | -8% | | 1,391 | 695 | +115% | 6,056 | 5,264 | +17% | | (392) | (365) | +12% | | (614) | (319) | +104% | (2,262) | (1,782) | +29% | | 30.4% | 24.9% | +550bps | | 44.1% | 46.0% | -390bps | 37.5% | 33.8% | +350bps | | 897 | 1,100 | -14% | | 778 | 376 | +121% | 3,774 | 3,483 | +11% | | (335) | (279) | +27% | | (663) | (348) | +102% | (1,508) | (1,130) | +38% | | 562 | 822 | -28% | | 111 | 28 | +583% | 2,266 | 2,353 | -2% | | (270) | (248) | +9% | | (357) | (198) | +92% | (1,164) | (1,000) | +19% | | | | | | | | | (101) | (121) | -13% | | 292 | 574 | -46% | | (243) | (170) | +50% | 1,001 | 1,231 | -18% | | 22.7% | 39.2% | -1,580bps | | (17.5%) | (24.4%) | +730bps | 16.6% | 23.4% | -700bps | | (52) | (50) | +6% | | (47) | (37) | +33% | (255) | (241) | +7% | | 240 | 624 | -51% | | (289) | (207) | +47% | 746 | 990 | -24% | Strategic report Annual Report & Accounts 2021 Platter Entertainment plc 78 Operating and financial review continued # **Appendix 2: Reconciliation of pro forma results to statutory results** The merger of Flutter and TSG completed on 5 May 2020, with the merger accounted for as an acquisition of TSG by Flutter on that date. The statutory results reflect this accounting treatment. Pro forma results for the Group are prepared as if Flutter and TSG had always been merged and are included in these preliminary results, as they best represent the Group's underlying performance. The difference between the statutory and pro forma results is inclusion of the results of TSG in the period prior to completion as per the table below. Junglee, which was acquired in January 2021 and Singular acquired in September, have been included in reported figures but not on a pro forma basis due to materiality. | £m | Pro forma adjusted results | | TSG results pre-merger completion* | | Separately disclosed items | | Statutory results | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FY 2021 | FY 2020 | FY 2021 | FY 2020 | FY 2021 | FY 2020 | FY 2021 | FY 2020 | | Sports revenue | 3,774 | 3,000 | | 275 | | | 3,774 | 2,725 | | Gaming revenue | 2,262 | 2,264 | | 592 | | 16 | 2,262 | 1,688 | | **Total revenue** | **6,036** | **5,264** | **—** | **866** | **—** | **16** | **6,036** | **4,414** | | Cost of sales | (2,262) | (1,782) | | (243) | (47) | (3) | (2,310) | (1,542) | | Cost of sales as a % of net revenue | 37.5% | 33.8% | | | | | 38.3% | 34.9% | | **Gross profit** | **3,774** | **3,483** | **—** | **624** | **(47)** | **13** | **3,727** | **2,872** | | Sales and marketing | (1,508) | (1,130) | | (139) | | | (1,508) | (991) | | **Contribution** | **2,266** | **2,555** | **—** | **484** | **(47)** | **13** | **2,219** | **1,881** | | Other operating costs | (1,164) | (1,000) | | (113) | (163) | | (1,328) | (887) | | Corporate costs | (101) | (121) | | (29) | (67) | (131) | (168) | (222) | | **EBITDA** | **1,001** | **1,231** | **—** | **342** | **(278)** | **(118)** | **723** | **772** | | EBITDA margin | 16.6% | 23.4% | | | | | 12.0% | 17.5% | | Depreciation and amortisation | (255) | (240) | | (28) | (531) | (455) | (786) | (668) | | **Operating profit** | **746** | **990** | **—** | **314** | **(809)** | **(573)** | **(63)** | **104** | | Net finance expense | (126) | (177) | | (67) | (100) | 7 | (226) | (102) | | **Profit/(loss) before tax** | **620** | **813** | **—** | **247** | **(909)** | **(565)** | **(288)** | **1** | The following table reconciles pro forma Adjusted revenue and EBITDA by division to revenue from external customers (before VAT refund for FY 2020) and Adjusted EBITDA as disclosed in the Financial Statements (Note 5). | £m | Pro forma adjusted results | | TSG results pre-merger completion* | | Statutory results | | | --- | --- | --- | --- | --- | --- | --- | | | FY 2021 | FY 2020 | FY 2021 | FY 2020 | FY 2021 | FY 2020 | | **Revenue by division** | | | | | | | | UK & Ireland | 2,063 | 2,029 | — | 290 | 2,063 | 1,739 | | Australia | 1,294 | 1,075 | — | 87 | 1,294 | 989 | | International | 1,288 | 1,465 | — | 468 | 1,288 | 907 | | US | 1,391 | 695 | — | 22 | 1,391 | 673 | | **Adjusted EBITDA by division** | | | | | | | | UK & Ireland | 616 | 630 | — | 118 | 616 | 513 | | Australia | 437 | 318 | — | 11 | 437 | 307 | | International | 292 | 574 | — | 264 | 292 | 310 | | US | (243) | (170) | — | (22) | (243) | (148) | | Corporate costs | (101) | (121) | — | (30) | (101) | (92) | * Note the adjustments to reflect the exclusion of TSG results prior to the merger also include any transactions that are now deemed to be intercompany as a result of the merger. 80 Flutter Entertainment plc Annual Report & Accounts 2021 # Appendix 3: Reconciliation of pro forma to statutory earnings per share The merger of Flutter and TSG completed on 1 May 2020, with the merger accounted for as an acquisition of TSG by Flutter on that date. The statutory results reflect this accounting treatment. Pro forma results for the Group are prepared as if Flutter and TSG had always been merged. The difference between the statutory and pro forma results is the inclusion of the results of TSG in the period prior to completion as per the table below. The calculation of earnings per share also requires an adjustment to the assumed number of shares outstanding in the period as set out in the table below. | £m | Pro forma adjusted results | | TSG results pre-merger completed^{1} | | Separately devised items^{2} | | Statutory results | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FY 2020 | FY 2020 | FY 2021 | FY 2020 | FY 2021 | FY 2020 | FY 2021 | FY 2020 | | Profit for EPS calculation | 444 | 756 | | (234) | (860) | (484) | (416) | 38 | | Weighted average number of shares ('000s) | 175,780 | 152,163 | | (22,605) | | | 175,780 | 129,358 | | Adjusted basic EPS (pence) | 253 | 497 | | | | | (237) | 29 | 1. TSG pre-acquisition profit of £234m is comprised of £114m operating profit, £67m interest expense and £15m taxation charge. 2. Assumes the issuance of £1,316,088 Flutter ordinary shares as consideration of the acquisition of The Stars Group on 1 May 2020 occurred on 1 January 2020, and the issuance of $19,239 Flutter ordinary shares as consideration for the acquisition of the remaining 20% of the outstanding share capital of TSG Australia on 11 May 2020 occurred on 1 January 2020. 3. See note 8 of the financial statements. Annual Report & Accounts 2021 Flutter Entertainment plc 81 Strategic report Operating and financial review continued # **Appendix 4: Reconciliation of pro forma growth rates to pro forma constant currency growth rates** Constant currency ('cc') growth is calculated by retranslating non-sterling denominated component of FY 2020 at FY 2021 exchange rates as per the table below. | FY | FY 2021 | FY 2020 | % Change | FY 2020 FY impact | FY 2020 CC | CC % Change | | --- | --- | --- | --- | --- | --- | --- | | Sports revenue | 3,774 | 3,000 | +26% | (31) | 2,969 | +27% | | Gaming revenue | 2,262 | 2,264 | -0% | (78) | 2,186 | +4% | | **Total revenue** | **6,056** | **5,264** | **+15%** | **(109)** | **5,155** | **+17%** | | Cost of sales | (2,262) | (1,782) | +27% | 32 | (1,749) | +29% | | Cost of sales as a % of net revenue | 37.5% | 33.8% | +360bps | | 33.9% | +360bps | | **Gross profit** | **3,774** | **3,483** | **+8%** | **(77)** | **3,406** | **+11%** | | Sales and marketing | (1,508) | (1,130) | +33% | 35 | (1,095) | +38% | | **Contribution** | **2,266** | **2,353** | **-4%** | **(42)** | **2,311** | **-2%** | | Other operating costs | (1,164) | (1,000) | +16% | 21 | (979) | +19% | | Corporate costs | (101) | (121) | -17% | 5 | (116) | -13% | | **Adjusted EBITDA** | **1,001** | **1,231** | **-19%** | **(16)** | **1,215** | **-18%** | | Adjusted EBITDA margin | 16.6% | 25.4% | -880bps | | 25.6% | -700bps | | Depreciation and amortization | (255) | (241) | +6% | 4 | (238) | +7% | | **Adjusted operating profit** | **746** | **990** | **-25%** | **(12)** | **978** | **-24%** | | **Revenue by division** | | | | | | | | UK & Ireland | 2,063 | 2,029 | +2% | (6) | 2,022 | +2% | | Australia | 1,294 | 1,075 | +20% | 5 | 1,081 | +20% | | International | 1,288 | 1,465 | -12% | (67) | 1,398 | -8% | | US | 1,391 | 695 | +100% | (41) | 654 | +113% | | **Adjusted EBITDA by division** | | | | | | | | UK & Ireland | 616 | 630 | -2% | 6 | 636 | -3% | | Australia | 437 | 318 | +37% | 1 | 520 | +37% | | International | 292 | 574 | -49% | (36) | 537 | -46% | | US | (243) | (170) | +43% | 8 | (162) | +50% | | Corporate costs | (101) | (121) | -17% | 5 | (116) | -13% | 82 Platter Entertainment plc Annual Report & Accounts 2021 # Appendix 5: Reconciliation of pro forma cash flow to reported statutory cash flow In the operating and financial review the cash flow has been presented on a pro forma net cash basis. The merger of Flutter and TSG completed on 5 May 2020, with the merger accounted for as an acquisition of TSG by Flutter on that date. The statutory cash flow reflects the treatment while the pro forma cash flow is prepared as if Flutter and TSG had always been merged. The difference between the net cash basis and the reported cash flow is the inclusion of borrowings to determine a net cash position. | £m | Pro forma cash flow | | TSG results pre-merger completion | | Adjustment to include borrowings | | Statutory cash flow | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | | Adjusted EBITDA^{1} | 1,001 | 1,231 | | 342 | | | 1,001 | 889 | | Capex^{2} | (308) | (252) | | (33) | | | (308) | (219) | | Working capital^{3} | 119 | 310 | | (8) | | | 119 | 318 | | Corporation tax | (138) | (95) | | (5) | | | (138) | (89) | | Lease liabilities paid | (48) | (46) | | (5) | | | (48) | (41) | | Adjusted free cash flow | 625 | 1,151 | — | 293 | — | — | 625 | 858 | | Cash flow from separately disclosed items^{4} | (61) | (120) | | | | | (61) | (120) | | Free cash flow | 563 | 1,031 | — | 293 | — | — | 563 | 738 | | Interest cost^{5} | (140) | (177) | | (64) | | | (140) | (113) | | Other borrowing costs^{6} | (57) | (24) | | | | | (57) | (24) | | Settlement of swaps | (68) | (36) | | | | | (68) | (36) | | Amounts paid in respect of Kentucky settlement | (234) | — | | | | | (234) | — | | Purchase of shares by the EBT | (181) | — | | | | | (181) | — | | Acquisitions and disposals^{6} | 75 | — | | | | | 75 | — | | Other | (13) | 22 | | 6 | | | (13) | 16 | | Proceeds from equity raises | — | 1,921 | | | | | — | 1,921 | | Acquisition of further interest in FarDuel | — | (1,546) | | | | | — | (1,546) | | Net amounts repaid on borrowings^{6} | | | | | 416 | (923) | 416 | (923) | | Cash acquired in business combinations^{6} | 4 | — | | | | 445 | 4 | 445 | | Net increase/(decrease) in cash | (53) | 1,192 | — | 235 | 416 | (478) | 363 | 479 | | Net (debt)/cash at start of year^{7} | (2,814) | (3,827) | (3,328) | (3,563) | 89 | 372 | 605 | 108 | | Foreign currency exchange translation | (5) | (20) | | | (10) | 37 | (15) | 17 | | Change in fair value of hedging derivatives | 225 | (359) | | | (225) | 199 | — | — | | Net debt as at 31 December^{8} | (2,647) | (2,814) | (3,328) | (3,328) | 271 | 89 | 952 | 605 | 1. Adjusted EBITDA includes the following line items in the statutory cash flow. Profit for the period, separately disclosed items, tax expense, financial income, financial expense and depreciation and amortisation. 2. Capex includes purchase of property, plant and equipment, purchase of intangible assets, capitalised internal development expenditure, lease incentive received and payment of contingent deferred consideration. 3. Working capital includes (increase) decrease in trade and other receivables, increase in trade, other payables and provisions, employee equity-settled share-based payments expense before separately disclosed items, loss / (gain) on disposal of assets and investments and foreign currency exchange loss/(gain). 4. Cash flow from separately disclosed items relates to transaction fees, along with restructuring and integration costs. 5. Interest and other borrowing costs includes interest paid, interest received and fees in respect of borrowing facilities. 6. The combination of acquisition and disposals of (£73m) and cash acquired in business combinations (£4m) reconciles to the statutory cash flow amounts for disposal of assets (£127m) offset by purchase of abusiness net of cash acquired. 7. Other includes proceeds from the issue of shares on exercise of employee options, dividends paid to non-controlling interest, release of cash from restricted cash, lease interest paid and other. 8. Net amounts repaid on borrowings includes repayment of USD First Lien Term Loan 8, full settlement of the Senior Notys and additional debt drawdown on GBP First Lien Term Loan A and USD First Lien Term Loan B. 9. Net debt comprises principal outstanding balance of borrowings, accrued interest on those borrowings, cash and cash equivalents and derivatives held for hedging debt instruments. Jonathan Hill Chief Financial Officer 14 March 2022 Financial Review Annual Report & Accounts 2021 Flutter Entertainment plc 93 ## Risks ## Understanding ## and managing our ## principal risks Risk-informed decisions lie at the heart of our ability to continue Through 2021, we have strengthened and built upon our strong evolving the business and prepare for the future. Robust risk foundations of risk management, such as the redesigned risk management drives better performance and commercial governance structures put in place in the prior year. We have outcomes, protects our people and our brands, and supports continued to enhance our risk processes, capabilities and our desire to grow a sustainable and resilient business. structures in all our divisions through working closely with the divisional Chief Risk Officers and at Group level, with a focus Our risk management teams empower people to make informed on ensuring our top-down and bottom-up risks are identified, decisions that fuel growth and drive commercial success. assessed and being proactively monitored and managed. We do this by: We also developed a three-year strategy for risk, with a clear vision, principles and roadmap to act as our guiding compass • helping people consider what might affect across the Group. successful outcomes; • balancing the pros and cons of actions and decisions; Risk management framework • identifying and avoiding risks early; Our framework, embedded across the divisions and Group, ensures a standardised and aligned approach of identification, • speeding up, not slowing down decision making; and management and reporting of risks and sets out a structured • partnering, empowering and defending the business. and consistent approach to threats and opportunities throughout all of our operations. Our risk management framework is reinforced by integrated processes which harness the collective risk insights and information of the Group.  our bottom-up and top-down risk perspectives, ensuring transparency of threats, opportunities and controls in the context of individually and collectively held strategic objectives. 84 Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report 2021 highlights | Framework maturity | Horizon scanning | The Task Force on Climate-related | | --- | --- | --- | | A key priority for 2021 was the top to | We established a robust process | Financial Disclosures (“TCFD”) | | bottom risk identification, assessment | collating emerging risk perspectives, | We recognise that climate | | and review of our divisions, brands | informed by divisions, relevant |  | | and functions, with over 1,000 risks | corporate subject matter experts | (e.g. extreme weather events affecting | | identified, assessed and under | and leadership, to provide a | sporting events) and transition-related | | management across the divisions | Group-wide view. | (e.g. stakeholder perception) risks and | | and the Group. | | opportunities for our business. As part | We define an emerging risk is a of our commitment to operate ethically Enterprise and Divisional Risk potentially significant threat with and sustainably, we take a risk-based Committees covered over 50 key risk and an uncertain impact restricting our collaborative and strategic approach to compliance topics and themes, and we ability to confidently define a strategy climate change. We are aligning internal continued to invest in risk and compliance and build capabilities to significantly processes with the recommendations resources, with over 100 people in place influence the materiality of the of the TCFD. across our four divisions and the Group. risk. Examples include accelerated digitalisation and technological  advances, and climate change. d  Time horizon C o m g y m e o l o & r c h n S t r i a e c a t l T e g i c i c R m e o g n l u o a l a c t t E n o - e r o m y i , c n T o o a S i r x l, v & a n Current L c i E e t & g li material risks a o l P Risk management processes Enhancing our risk framework for 2022 Given the dynamic nature of risk and the agility of our Looking ahead to 2022, some of the key areas of focus for risk business, our enhanced framework operates as a management include the following: business process at all levels of Flutter. Integration with strategy and performance, in addition to ongoing risk Risk strategy management processes, will ensure robust and effective Further embedding and building upon the enhanced risk risk management to support in maximising the performance processes, capabilities and governance structures within of our brands, our divisions and the Group as a whole. the divisions and at Group level to ensure efficient reporting, escalation and communication lines, complemented with page 89 clear accountability for risks. Aligned assurance Identify Alignment of assurance activities across the Group by our three lines, and mapping these processes to provide Assess integrated risk insights and reporting. GRC technology Integrated governance, risk and compliance (“GRC”) Risk technology will automate routine compliance, risk and Management governance processes and workflows to enable more Continuous review efficient and effective reporting and collaboration. Mitigate Monitor and report Annual Report & Accounts 2021 Flutter Entertainment plc 85 ## Risks continued ## Risk governance structure Our risk governance within the Group enables agile decision making, easy escalation of material matters and transparent reporting. We deploy the Three Lines Model to support the Board in its responsibilities for risk management. Clarity of ownership and responsibility is pervasive throughout the Group, supported by our robust governance structure. Board The Board has overall responsibility for overseeing the Group’s internal control    Other Committees Risk and Sustainability Audit Committee Committees include: The Nomination The Audit Committee has Committee Committee, The Remuneration responsibility for ensuring the integrity The Risk and Sustainability Committee Committee and the Market Disclosure of the Group’s financial reporting and has responsibility for ensuring our Committee. Each Committee Chair internal control and risk management first and second line functions are formally reports to the Board following systems, as well as reviewing the work performing their roles in managing risk their meetings and makes any of the Internal Audit function and across the divisions and the Group. In recommendations to the Board in line considering the reports presented addition, it is responsible for overseeing with their Terms of Reference. Refer to by the external auditor. On an annual the Group sustainability strategy, and the Governance section on page 106 basis, the Audit Committee performs monitoring and providing challenge on for further information. an effectiveness review of the the principal and emerging risks facing  the Group. Executive Committee Executive Risk Committee Day-to-day management of the business and operations. Chaired by the Chief Legal Officer and Group Commercial Execution of the strategy is delegated to the Chief Executive Director, this Committee has the responsibility for identifying, Officer and the Executive Committee. assessing, monitoring and challenging material risks and taking advantage of opportunities for the Group. Divisional Risk Committees Chaired by the local Chief Risk Officer, or equivalent, the main objectives of these Committees are to ensure proper alignment of risk management with the strategy, performance and sustainability of each division. First line Second line Third line Executive Management and Divisional Advisory and Oversight Group Internal Audit team with Operational teams in our divisions functions with responsibility for: responsibility for:  • oversight on reporting risk, control • providing independent challenge • risk ownership: know their quality and emerging risks; and assurance that risks are businesses, know their processes appropriately managed; • providing guidance and subject and hence know their risks; matter expertise to first line in • systematic evaluation and • decision making driven by risk/ relation to risk management monitoring of controls including reward trade-offs; practices; and internal control framework and operational effectiveness of • establishing and developing • maintaining of divisional policy controls; and the divisional risk and control  environment; • identifying efficiencies and process Our Group functions including improvement opportunities. • managing risk events and decisions Group Legal & Commercial, Group within appetite; and Technology, Group Finance and Group People reinforce and complement the • identifying and quantifying risks. divisional second lines, and provide further advisory, assurance and oversight capabilities.  Flutter Entertainment plc Annual Report & Accounts 2021 Strategic report 1. Identify risks i s k g o v e r n a n c e R Our robust methodology identifies material and emerging risks across i s k c u l t u r e R ider Group. 2. Assess and quantify risks Analyse risks and controls and evaluate 1. Identify  and other impacts, as well as the 2. Assess likelihood of occurrence. 3. Develop action plans to  ### Risk Risk owners assess effectiveness and ### adequacy of controls. If additional Management mitigation is required, these are ### Framework identified and actions plans detailed es assigned. 5. Continuous 3. Mitigate review 4. Monitor and reassess risk post mitigation and report Management is responsible for 4. Monitor monitoring controls and progress of and report actions to manage principal risks and is supported through the Group’s internal audit and assurance programmes which evaluate the design and effectiveness of controls. 5. Continuous review The risk management process is continuous and evolving; principal and emerging risks are reported to both the Board Risk and Sustainability and Audit Committees, and more regularly through the Executive and Divisional Risk Committees. Annual Report & Accounts 2021 Flutter Entertainment plc 87 ## Risks continued Key: ## Identifying our principal risks Impact: Impact on the business if the risk materialises. The principal risks and uncertainties which are considered to have a material impact on the Group’s future performance, Likelihood: Likelihood of occurrence of the risk in the next three years after taking into account mitigation activities by the business. sustainability and strategic objectives are set out on the following pages. These were identified through risk assessments across  the Group and from each of the divisions at a point in time and will continue to be monitored. Both external and internal risk  factors in the current and medium-term time periods have  been considered. This process also complements our Group 1 horizon scan. Links to strategy: This is not an exhaustive and extensive analysis of all risks which may affect the Group. Additional risks and uncertainties Maximise profitable growth in core market currently deemed to be less material, or not presently known to Maintain and grow US leadership position management, may also have an effect on the performance and strategic objectives of the Group. Attain podium positions in international market Grow business in rest of world Principal risk/ Why we need How we manage Residual impact/ uncertainty  and mitigate the risk likelihood Changing legal, regulatory, tax and licensing landscape Links to strategy: Risk category: The complex • We have dedicated internal and external Legal, Regulatory, Impact: • External dynamics and constantly Compliance and Tax teams covering all regions with changing regulatory responsibility for working with, and advising management on Future Trend: environments in any upcoming regulatory changes, to set appropriate policies, Likelihood: • Stable which we operate, processes and controls to adapt and ensure compliance. Risk owner: in terms of multiple • Improved regulatory profile with an increased proportion of • CLO jurisdictions, tax revenues coming from regulated markets and a continuous regimes and licensing focus on reducing exposure to higher risk jurisdictions. obligations, can • For material markets, we invest significantly in external make it commercially counsel advice to conduct ongoing monitoring and to challenging for the us to guide and support strategic decision making and planning operate, or impact our associated with these markets. ability to grow at pace. • We invest continuously in the flexibility of our in-house technology which is key for entering or remaining in markets, and allowing for adaptability and flexibility of  • Flutter and its divisions have dedicated Corporate Affairs teams and hold memberships with associations and industry groups working with regulators and governments to influence and drive proportionate, transparent and reasonable regulation and taxation in all markets. Cyber resilience Links to strategy: Risk category: We are dependent • We invest significantly in cyber security resources, Impact: • Cyber and business on technology to capabilities and technologies, and works with a variety resilience support its products, of external security specialists to ensure security business activities and arrangements and systems are appropriate for our evolving Likelihood: Future Trend: customer operations. threat and continue to follow leading practice. • Stable Cyber maturity and • The Group Chief Information Security Officer works with Risk owner: capabilities across our the Group and divisional information security teams to • CIO expanding Group vary devise and advance our strategy for cyber security, enhance and may increase the our control assurance capabilities and governance.  • The Flutter cyber security team owns and reports on the attack vectors or Group-wide cyber policy detailing our key cyber topics internal threats, which and control standards, with periodic review and approval, could lead to financial in addition to internal and external annual assessment of loss, data breaches, security maturity. regulatory action and reputational damage. • Flutter cyber assurance framework established, with risk assessments ongoing to provide assurance that security controls implemented protect against key risk topics. 1 While not a principal risk, we recognise the area of climate change is evolving quickly. It is currently monitored as an emerging risk. This will be reassessed in 2022 following the completion of a focused bottom-up risk assessment. 88 Flutter Entertainment plc Annual Report & Accounts 2021 Principal risk/ Why we need How we manage Residual impact/ Strategic report uncertainty  and mitigate the risk likelihood US growth execution and competition Links to strategy: Risk category: The successful • We continue to establish and maintain strong commercial Impact: • Strategy execution of the relationships with our market access partners and strategic  media partners to secure access to new markets and Future Trend:  maintain growth. Likelihood: • Stable across its brands • We continue to invest in people, product and brands to Risk owner:  acquire further market share and to maintain the agility, • CEO(s)  scalability and leading market positions for our products.  • In addition, we also have dedicated external advisers, internal expertise and resources to support with the monitoring and assessment of the US competitive landscape to take appropriate actions. • We continue to develop our in-house technology stack, including the adoption of our proprietary global betting platform for the provision of sports betting, to continuously improve our offering and meet evolving stakeholder needs. • Our dedicated US Legal, Risk and Compliance teams work closely with the business teams to monitor ongoing compliance across multiple jurisdictions to continuously improve our processes and controls to ensure compliance with our federal and state obligations. International technology transformation Links to strategy: Risk category: Challenges to • Full restructure by CIO and key new leadership roles in Impact: • Technology transform, expand and International Technology function, recruiting externally and scale our capabilities, leveraging internal talent from other brands and divisions. Future Trend: given variances in legacy Likelihood: • Decreasing • Full review of the International division’s technology risk entities, which may lead profile with clear plans and structures in place to improve, Risk owner: to lower than desired using a risk-based approach. • CEO(s) resilience, reliability and • Our revised technology strategy has been defined to product agility. support significant market growth and expansion. • We continue to invest in resources, software and hardware to address themed strategic initiatives, which address stability, process, people and technology. • Focused support from external advisers, strategic  transformation delivery. Global talent acquisition Links to strategy: Risk category: Acquisition of key talent, • Our employee value proposition has been amplified for Impact: • People senior management all our brands to to attract the right talent, with the skills, and leadership positions capabilities and experience for Flutter. Future Trend: across the Group, Likelihood: • Increasing • Dedicated workstreams led by the Group CPO function to and their successful align processes and identify talent acquisition partners to Risk owner: retention, to satisfy support internal teams to build a pipeline and attract the • CPO(s) the needs of our best talent for the Group going forward. growing organisation is • Flutter launched its vision, purpose and values, in alignment  with divisional perspectives, supported by playbooks, strategic objectives. talkshops and toolkits. Surveys continue to be conducted  colleague engagement levels Group wide. • We conduct extensive market research and benchmarking to ensure that the Group maintains an attractive employee value proposition. • The Group and divisional CPOs address our talent matters in a prioritised manner and build capability to address gaps and facilitate talent mobility. Annual Report & Accounts 2021 Flutter Entertainment plc 89 ## Risks continued Key: Links to strategy: Impact: Impact on the business if the risk materialises. Maximise profitable growth in core market Likelihood: Likelihood of occurrence of the risk in the next three years after taking into account mitigation activities by the business. Maintain and grow US leadership position  Attain podium positions in international market  Grow business in rest of world  Principal risk/ Why we need How we manage Residual impact/ uncertainty  and mitigate the risk likelihood Compliance with existing legal, regulatory and licensing landscape Links to strategy: Risk category: The interpretation and • For the jurisdictions in which we hold a licence, dedicated Impact: • Legal ongoing compliance Divisional Compliance teams work closely with the business with complex and teams to monitor ongoing compliance and continuously Future Trend: multiple regulatory and enhance our processes and controls to ensure compliance Likelihood: • Stable legislative requirements with regulatory frameworks and licence requirements. Risk owner: applicable to the • We have a number of Group-led overarching policies and • CLO Group’s activities in compliance programmes to govern processes across the markets in which divisions and thereby ensure compliance with applicable it operates underpins laws and regulations. the sustainability • Detailed policy and procedures across each division ensure and reputation of local regulatory requirements are documented, monitored  and reviewed periodically. • Annual compliance training, including Anti-Bribery and Corruption (“ABC”), Data Protection (“DP”) and Anti-Money Laundering (“AML”), is mandatory for all staff, as well as regular, targeted training and awareness sessions. • Divisional and Group management provide periodic legal and regulatory updates through established governance forums at both divisional and Group level Committees. Global talent management and retention Links to strategy: Risk category: The people who • Flutter Workforce Engagement Committee established Impact: • People work within Flutter to ensure the Group has a culture that underpins its vision, are key to our the values and strategy, and to provide an employee voice to Future Trend: success. Insufficient the Board. Likelihood: • Increasing management and • The Remuneration Committee and wider reward Risk owner: retention of key programmes review the structures in place for our people • CPO(s) individuals may impact with the objective to incentivise, motivate and retain talent our ability to deliver to support the delivery of the Group’s long-term strategy. on our strategic and • We communicate through different platforms to operational objectives. underscore key career development opportunities, highlight employee recognition programmes and bring attention to strategic programmes such as DEI. • Regular engagement surveys take place for all colleagues to ensure we understand the values and behaviours that are important to staff and the brands they support. • The Group and divisional CPO functions continue to drive health and wellbeing initiatives as part of our dynamic Future Ways of Working approach.  Flutter Entertainment plc Annual Report & Accounts 2021 Principal risk/ Why we need How we manage Residual impact/ Strategic report uncertainty  and mitigate the risk likelihood Third parties and key suppliers Links to strategy: Risk category: Across our divisions • Strategic and critical suppliers are subject to regular Impact: • Cyber and business and Group, we place business and quality reviews to ensure ongoing relationship resilience reliance upon certain and performance management. critical suppliers of Likelihood: Future Trend: • The Group Procurement and Third Party Assurance technology, marketing, • Stable  sports content and critical suppliers and ensure continuity of critical services. Risk owner: media which are • CEO(s) • As part of our procurement processes, we employ fundamental to our dedicated resources supplemented by subject matter business and product expertise within risk, compliance, legal and technology offerings. The effective assurance to protect and enhance value, demonstrate management of critical our high standards of corporate integrity, and reinforce third party relationships, organisational resilience. performance and regulatory expectations • Where possible, we limit reliance on a single supplier to is key to our strategic reduce potential single point of failure. objectives. Safer gambling strategy Links to strategy: Risk category: Safer gambling • Our safer gambling strategy informs everything from how Impact: • Sustainability underpins every we identify and interact with at-risk customers through to element of the our how we communicate to our broad group of stakeholders Future Trend: strategy. We want and how we encourage safer gambling tool usage. Likelihood: • Stable to demonstrate • We leverage and share policies, processes and practices Risk owner: consistency and global across the ever expanding Group to enhance the strategic • CLO alignment with our safer approach to safer gambling and demonstrate our gambling strategy to commitment to ESG. protect our customers • A leading range of tools are provided on all our brand sites who are at risk of the to support customers in managing their spend and play, potential negative and we are continually working to improve and enhance our effects of gambling tools and site content to enable us to identify and interact and ensure we grow our with at-risk customers. business sustainably. • We work closely with leading external third parties to facilitate internal teams to enhance our understanding, and capabilities in relation to identification of problem gambling through the use of artificial intelligence. • We invest significantly in improvements for tackling the problem through donations to research, treatment and education initiatives, as well as through driving collaboration across the industry with other operators, charities and regulatory bodies. Technology resilience – availability and stability Links to strategy: Risk category: We have a critical • We invest in our proprietary technology and resources to Impact: • Technology dependency on our in- improve IT resilience, eliminate single points of failure and house technology, and drive better performance. Future Trend: on certain material third Likelihood: • Decreasing • We have established a standard scale to better compare parties, to maintain the the IT disaster recovery resilience levels in each division and Risk owner: stability and availability ensure adequate improvement plans are developed and • CIO of our customer-facing tracked to mitigate any material risks. products, as well as • We have dedicated resources to develop, enhance and test the ability to recover our disaster recovery capability for our key products across in a timely manner all our brands of the Group. from severe disruption with minimal impact • Key global metrics on critical systems and platforms which on our customers are regularly monitored and reported on identify any  potential emerging issues on our brands or customer-facing technologies. • We have a defined formal incident management process   improve our proprietary technology stack and incident response processes. Annual Report & Accounts 2021 Flutter Entertainment plc 91 ## Viability statement ## Managing our business ## for the longer term Assessment of prospects ## Longer-term viability The Directors carried out a robust assessment of our current The Board, taking into consideration the Group’s principal position and the principal risks facing the Group, including risks and uncertainties, including emerging risks, assessed the those which would threaten its strategy, business model, future long-term viability of the Group in line with the requirements of performance, solvency or liquidity. the 2018 UK Corporate Governance Code. Its conclusions are outlined below. Current position  Viability assessment: period Flutter continues to deem a three-year timeframe appropriate  for the assessment of the Group’s viability, having had regard to: Strategy and business model • the Board’s strategic planning horizon and associated page 18 principal risks; page 32 • the possible impact of future regulatory change and the pace of technological change, as well as variations in industry and Principal risks commercial dynamics; and page 28 • the performance period for the Group’s Long Term pages 84 to 91 Incentive Plan. The Board’s consideration of the long-term prospects of Overall, a three-year timeframe is deemed to achieve a suitable the Group is an extension of the strategic planning process. balance between long and near-term influences. This includes regular budget reviews as part of the internal reporting cycle, financial forecasting and performance reviews, Viability assessment: approach a comprehensive enterprise risk management assessment and The viability of the Group is assessed against strategic plans and scenario planning involving our principal risks and uncertainties. projections, and considers cash flows, committed funding and Our business strategy is to deliver sustainable value for liquidity positions, forecast future funding requirements and our stakeholders by maintaining long-term financial and other key financial ratios. operational discipline. The Directors’ assessment and stress testing have been made Viability statement with reference to the strong cash generation capabilities of Based on their assessment of prospects and viability, the the Group, its committed debt facilities, including its £482m Directors confirm that they have a reasonable expectation that committed revolving credit facility which expires in May 2025, the Group will continue to operate and meet its liabilities, as they  fall due, for the next three years to December 2024. and how they are managed, as detailed on pages 84 to 91. The Directors also assessed the potential financial and operational impacts, in severe but plausible scenarios, of the principal risks and uncertainties and the likely degree of effectiveness of current and available mitigating actions. 92 Flutter Entertainment plc Annual Report & Accounts 2021 ## Assessment of viability Strategic report Long-term plans are the three-year forecasts, used to calculate cash position and headroom Headroom is calculated using cash, cash equivalents and other available facilities at year end Sensitivity analysis Principal risks Assessment of the level of decline in performance that the Severe but plausible scenarios modelled to quantify the Group could withstand, were a grey or black swan event to occur cash impact of principal risk(s) materialising over the viability assessment period | | Scenario group 1 | Scenario group 2 | | Scenario group 3 | | --- | --- | --- | --- | --- | | Change in external dynamics | | One-off expense | | Combined scenarios | | Impact of variations in market | | Impact of a potential large | Quantification of the cash impact | | | dynamics or regulatory change | | event, fine and/or penalty |  | | multiple risks materialise across one or more markets, over the viability A) Changes to legal, regulatory, A) Cyber resilience   B) Existing compliance with legal, B) US growth execution and regulatory and licensing landscape competition C) IT resilience – availability and stability Principal risks Viability results from comparing the cash impact of severe but plausible scenarios on the available headroom, considering additional liquidity options ## Assessment of prospects Outlook, strategy and business model Outlook of possible long-term scenarios expected in the industry and the Group’s current position to face them Assessment of the principal risks that may influence the Group’s long-term prospects Articulation of the main levers in the Group’s strategy and business model ensuring the sustainability of value creation Long-term viability statement The Directors confirm that they have reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year viability assessment period Annual Report & Accounts 2021 Flutter Entertainment plc 93 ## Governance ## Introduction to ##  strategy by: • ensuring accountability and responsibility •   •  •  internal controls •  e Directors •   approval. These include decisions on the Group’s strategy,     corporate   ### The Company is subject to the principles ##  ### and provisions of the 2018 UK Corporate  ### Governance Code (the “Code”). For the year  ### ended 31 December 2021, the Company  ### fully complied with the provisions set out   ### in the Code as detailed on page 95, except  ### for Provision 38, an explanation for which  was also held in person, during which the Board approved a ### is provided on page 162. A summary of e strategy. ### the system of governance adopted by the  ### Company is set out on pages 94 to 162.   ##   As the business grows and develops internationally, our  governance will be increasingly scrutinised. Good corporate     inductions.     ng process. 94 Flutter Entertainment plc Annual Report & Accounts 2021 ## UK Corporate Governance Code ##  ##      le success. governance and regularly review our governance structures             ganisation. Governance  behaviours. The Board assess its approach to corporate governance.    ##         decisio  ng process.      ##            al adviser. succession plans.         and its    This report sets out the operations and activities   ##         l controls.         stor bodies.  laundering.   website,   ##   Remuneration  Gary McGann Chair  14 March 2022  appropriately incentivising the relevant p  Annual Report & Accounts 2021 Flutter Entertainment plc 95 ##  ##  ##   A  N  Re  Ri  W   Gary McGann  Peter Jackson (UK)   appointment       N Re   •  •  international reach within a highly regulated industry •   •                      None.      Jonathan Hill  Zillah Byng-Thorne (UK)    Director      A Ri   •  •   •  •    digital business       Group plc.    Price Waterhouse in London.     None.     Flutter Entertainment plc Annual Report & Accounts 2021 ### Non-Executive Directors’ skills    M&A and                 Governance Michael Cawley  Nancy Dubuc (US)   Director Director       A Ri N Re W   •  •   •  •                    Nancy holds a BSc.       Nancy Cruickshank (UK) Andrew Higginson (UK)  Senior Independent Director Director       N Re Ri N W   •  •  •  •                           Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued  A  N  Re  Ri  W   Holly Keller Koeppel (US) Alfred F Hurley, Jr (US)   Director Director       A Ri N N Re   •  •  and energy •  •                                 Richard Flint (UK) David Lazzarato (CA)    Director      Ri W A Ri   •  •   •  •                           None.    Flutter Entertainment plc Annual Report & Accounts 2021 Mary Turner (CA) Edward Traynor   Director      A Re Governance   •  •      •                 She holds an honours BSc and is a Chartered Accountant.  None.    Atif Rafiq (US)  Director     ## •    Male: 64.3% •  Female: 35.7%                Annual Report & Accounts 2021 Flutter Entertainment plc 99 ##  ##  ##  ## The Executive ## Committee is ## responsible for ##  Peter Jackson Jonathan Hill ## strategy, fulfilling     ## strategic and ## sustainability ## objectives, driving ## robust financial ## performance, ## and ensuring ## a supportive ## business culture. Paul Cutter Barni Evans           brands to share technology, insights  and best practices that enable us to strategies that help deliver the best product,     responsiveness.  Paddy Power.  Flutter Entertainment plc Annual Report & Accounts 2021 Governance Conor Grant Amy Howe Pádraig Ó Ríordáin                     sustainability strategy, the Positive               Ian Proctor Dan Taylor                      Paddy Power online and retail businesses.    Annual Report & Accounts 2021 Flutter Entertainment plc  ##   ard changes.  ## Good corporate governance   ## and an inclusive culture   ## are the foundations of  ##    ## and strategy. during this period.                                  the Group.  ainability.  This report sets out our progress in governance areas including       culture throughout the Group.                                Group, and to ensure it is aligned with strategy and our purpose.  Flutter Entertainment plc Annual Report & Accounts 2021  ###  The Board’s role in shaping strategy    and divisions.     •  The Board approved a new integrated corporate strategy in   •      • inal Results Governance     • on strategy  June  •      •      •     • ate strategy     •  o   •      • ing strategy  •       to allot and issue new shares. While the Board does not have this report.    sustsainabil shareholder approval prior to issuing any shares in connection               areholders.  consulted with shareholders and understands that certain Gary McGann  Chair  14 March 2022  tober 2021.     intensive opportunities. Annual Report & Accounts 2021 Flutter Entertainment plc  ##  ##  ##  ##   •  •     and people. • Approved the 2022 budget. • Held strategy sessions on the Group’s strategic •  opportunities and challenges and as a result, the strategy   •  by the Board.  •  • Received updates on investor views, shareholder relations,      with investors. strategic priorities. • Reviewed and approved the going concern and •  viability  •  provided with updates on progress in relation to integration approved the Dividend Policy, including continued suspension  synergies.  • Considered changes in regulation and regulatory   •   its publication on our website. •  regulators and other regulatory and legislative bodies. ##     •  • sity Policy • Business presentation: Sportsbet divisional update divisional update • eview update •  •  •  and investor relations update •  reserve and reduction in share capital  •  • Legal, regulatory and cap •  ance update  • Legal, regulatory and •  ing concern ance update Board •  •  •  governan ession plans •  evaluation •  interest, independence and    Flutter Entertainment plc Annual Report & Accounts 2021   Governance •  •    obligations.  •  •  2020 Annual Report and Accounts.  and culture. •   • n structure. ttee Chairs. •  •   the Group.  evaluation. • The Group Chair engaged with investors on governance,   •   •   •    its •  ng strategy. •  Sustainabilit •  de policies.  ##  • 2022 Budget  •  corporate strategy, sustainability strategy and safer gambling strategy. The     regulator, as well as wider ESG matters such as climate and TCFD reporting and •   a Executive Directors with the execution of our strategy, focus on the attraction •  and retention of talented staff, succession planning, increase the diversity of     •   Slave  •   experience.  objectives at our AGM, which will be held on Thursday 28 April 2022 at 11.00 am  Dublin Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued ##  ### Board ###  ### Executive Committee Day-to-day management of the business and operations.  ## Nomination Committee Audit Committee        ernal audit. and diversity.   ##  Remuneration Committee              the Group.     ##      o the Board.  ##    Authority’s Listing Rules and Disclosure Guidance and Transparency Rules.     Flutter Entertainment plc Annual Report & Accounts 2021              concerns about the Group or a proposed action, these are   occasions in 2021.    independent thought and challenging constructive debate.      Governance                  the Group.      Director with the Group. The Chair and the Board consider that           with the wider business is encouraged in order to develop a         to discharge their responsibilities. Attendance at Board and     conducted according to the guidance set out in the Code and     as necessary.       The Board holds at least one dedicated strategy day with the throughout 2021. While site visits are actively encouraged, these              responsibilities.                  rectorships. e Directors. Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued ##  ##       reported on its activities to each Boa                  investor presentations and results presentations, and the Board       visits were not possible during 2021 due to continuing travel        activities is set out below. ##     •  • Q1 2021 trading update • ading update  • Annual Gene •   •  settl   •  •   th investors •  results release   •  • Analysts and investor presentation   • Sportsbet investor day   • ary Results  •  •   resentations  Flutter Entertainment plc Annual Report & Accounts 2021 Governance                  with the Code. The Board will continue to engage with                        shareholders to understand the reasons behind their votes    understands that certain overseas institutional investors have    new shares.               issue new shares. While the Board does not have any current      approval prior to issuing any shares in connection with new the resolutions and voting turnout   Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued ##  ##  ##  ###  ###   •  •  the Chair with the annual Board evaluation. to the Board, acting independently and constructively • Provides advice and support to the Chair and is available to challenging decisions. other Directors as necessary. •    •  •   on innovation. appropriate an •  •  •   with and supported by the Board. •  •  with the Group’s D  • ion Policy.  •  •   to culture.  •   •  •      with its values.  •    •   •  Directors is   • With the Board, ensures that the Group’s culture is aligned with  its purpose, values and strategy. capi •  •     •   ransactions.    ing process. •  •    the Group.  Directors. •  • Advises the Board on legal and corporate governance  procedures. their •  •  with continuous Board education a  •  shareholders an reviews the governance processes, including the Board and    •  • Provides advice to all Directors and supports the activities      Flutter Entertainment plc Annual Report & Accounts 2021 ## Summary of matters reserved for the Board - • Agreeing the long-term strategic goals and overall business and commercial strategy - • Ensuring our purpose and values are aligned to the Group's culture - • Evaluating and managing of risks impacting our reputation and setting the Group's risk appetite - • Approving of budgets, major capital projects, contracts and corporate actions, including significant mergers, acquisitions and divestments - • Overseeing of financial reporting and internal controls, and approval of financial reports and announcements and market relevant announcements - • Ensuring compliance with statutory and regulatory requirements, including corporate governance and Listing Rule requirements - • Approving appointments to the Board and ensuring sufficient succession plans are in place, including having regard to the Board Diversity Policy - • Determining the remuneration framework for Executives having regard to wider workforce remuneration arrangements - • Overseeing of environmental, social and governance matters including approval of the Group's priorities, plans and targets in respect of ESG and climate and a review of performance in conjunction with the Risk and Sustainability Committee ### 2021 Board meetings attendance | | Week(s) discussed eligible to consult | % of meetings attended | | --- | --- | --- | | Gary McGann | 9/9 | 100% | | Peter Jackson | 9/9 | 100% | | Jonathan Hill | 9/9 | 100% | | Zillah Byng-Thorne | 9/9 | 100% | | Michael Cawley | 9/9 | 100% | | Nancy Cruickshank | 9/9 | 100% | | Nancy Dubuc^{1} | 5/5 | 100% | | Richard Flint | 9/9 | 100% | | Dave Gadha^{2} | 4/4 | 100% | | Andrew Higginson | 9/9 | 100% | | Alfred Hurley | 9/9 | 100% | | Holly Keller Koeppel^{3} | 5/5 | 100% | | David Lazzarato | 9/9 | 100% | | Atif Rafiq^{4} | 1/1 | 100% | | Peter Rigby^{5,6} | 5/4 | 75% | | Mary Turner | 9/9 | 100% | 1. 1. Comprises scheduled and unscheduled meetings. 2. 2. Appointed on 29 April 2021. 3. 3. Resigned with effect from 29 April 2021. 4. 4. Appointed on 15 May 2021. 5. 5. Appointed on 10 December 2021. 6. 6. Peter Rigby was unable to attend one meeting due to a conflict previously notified to the Chair. In addition to the formal Board meetings held throughout the year, the Chair meets with the Non-Executive Directors without the presence of Executive Directors at the start of each Board meeting. In addition, during the year, the Senior Independent Director held a meeting of Non-Executive Directors without the presence of the Chair to discuss his performance. Read more on the Workforce Engagement Committee on page 125 ### Independence The Board is committed to ensuring that it continues to comprise a majority of independent Non-Executive Directors who objectively challenge management. The Nomination Committee has carried out its annual assessment of independence of each of the Non-Executive Directors, taking into account the circumstances set out in the Code, especially whether the Directors are independent in character and judgement and free from relationships or circumstances which are likely to affect, or could appear to affect, the Directors' judgement. Until October 2018, Richard Flint held the position of Executive Chair of Sky Betting & Gaming. Richard also has in place a consultancy agreement for the provision of consultancy services for Flutter Plc. The fee for these consultancy services is £250,000 per annum. Further details are set out in Note 31 to the Financial Statements. The Board has determined that for this reason Richard Flint did not meet the independence criteria as set out in the Code for the year ended 31 December 2021. The Board is satisfied that all other Non-Executive Directors remain independent for the purposes of the Code. Read more on Directors' biographies on page 96 to 98 ### Conflicts of interest Formal procedures are in place for managing conflicts of interest, which include an annual confirmation by all Directors. Directors must give advance notice of any actual or potential conflicts of interest to the Company Secretary and the Board should they arise. In the case of a conflict, the relevant Director would be excluded from discussions on matter related to the conflict and cannot vote in respect of any matters in which they have an interest. These are formally considered on an annual basis by the Board alongside any other appointments held by Directors. Before accepting any external appointments, Directors must discuss the time commitment and their ability to continue to effectively contribute to the Board with the Chair, who will consider any additional commitments, prior to reporting to all Board members. Annual Report & Accounts 2021 Flutter Entertainment plc 111 Governance ## continued ##  ##  ##  ##  ##               page   believes that it has an appropriate balance, is diverse and  continues to operate                                   the Group. De     Directors to contribute to discussions on technical and     Having served nine years on the Board, including Chairing the            agen           as a whole.   Flutter Entertainment plc Annual Report & Accounts 2021 ### Governance in action: Director induction and development       during 2021. Governance Governance Culture, Divisions and  and internal people and Technology Strategy brands regulatory control reward   •  •  •  Sportsbet •   •   nd integrity • Divisional • d corruption •  • Regulatory and licensing • Sustainability •   • d structures • HR oper • People strategy • Leadership •  • Diversity and culture • Talent attraction and retention  • Corporate governance  •  • ternal Audit  • Technolo • Global ope •  •  • Cyber security  • Corporate strategy •  Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued          appropriate.   into this process.     evaluation considered:  •       •     •     •   culture and values acros  •    Board Diversity Policy. •   Boar       out below.     the Board. Actions were agreed with the Board and progress against  during 2022. 2020 evaluation actions Progress       deci  Strategy:       NED only sessions:        releva      and debate. site visits during 2021 due to ongoing travel restrictions.    and debate.      the Group.    Succession, diversity and inclusion:       re diverse. approved the Board Diversity Policy during the year.  Flutter Entertainment plc Annual Report & Accounts 2021 ##  Year 3 (2021) Year 1     (2019) Board evaluation and review against  review and areas  Director appraisal       review Governance Year 2 (2020)   raised and any new issues arising 2021 Board evaluation process Results and conclusions Focus areas Questionnaires              governance. One-to-one interviews        Despite this, there is a strong cohesive relationship   between Directors and debate is appropriate.   the Board.       an ability and willingness to challenge, particularly the  Board Committees             ttee Chair.     Chief Executive Officer     operationally and  new corporate strategy, and discussed with the other Directors. continue to lead innovation. Executive Directors Continue to drive synergies  across the Group, develop  outstanding year having delivered strong   ial results.  having also discussed with the other Directors. integration Chair |  |  | |  | | | --- | --- | --- | --- | --- | |  |  | |  | | |  |  | |  | | |  |  | |  | | | |  | | and awareness, to incorporate | | | |  | |  | | | |  | | site visits. | | | | | Annual Report & Accounts 2021 Flutter Entertainment plc | |  | ## Nomination Committee report ##  ##  ##  ## The Committee supports ##  ## effective governance ## structures are in place ##  ## its Committees have an ## appropriate balance of  ##  •  • ession plans •  implementation of action plans  • Considered succession plans for senior management  • rsity Policy    • d diversity   •  strategy introduced across the business and ensure progress  the Board.  our culture  • Continue to review and enhance succession planning at both  gement level  • Continued implementation of the recommendations arising from  evaluations  |  | | | | |  | | --- | --- | --- | --- | --- | --- | | | | | | Attended / |  | | Committee members | 1 | Date appointed | eligible to attend | | |  Gary McGann (Chair)² Jul 2015 6/6    May 2019 5/6 4 | Nancy Dubuc | | Jun 2021 4/4 | | | --- | --- | --- | --- | | | 5 | |   | | Dave Gadhia | | May 2020 2/2 | |  that role. 6 Andrew Higginson Feb 2020 6/6   April 2021. | Alfred Hurley | | May 2020 6/6 |   | | --- | --- | --- | --- | | | 4 | |  the Chair. | | Holly Keller Koeppel | | Jun 2021 4/4 | |   5  May 2020 2/2  April 2021.  April 2021.  Flutter Entertainment plc Annual Report & Accounts 2021 ##     •  • Approved the updated Board •   Diversity Policy  rev •  eness review •   • ion planning   •  •  • Reviewed Board succession planning  reporting disclosures  Pa •  •  • Approved govern  nt positions Governance  All employees* The Board Diversity Policy sets out our approach to diversity  Male: 10,784 – 64%  Female: 6,029 – 36%    ## 16,813    ##      Board and, when possible, should be appropriately balanced. Senior management*   Male: 290 – 79%  Female: 77 – 21%   ##  367     ##       ccordingly.       is balance.     on the Board. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Nomination Committee report continued  Gender    Male: 64.29% – 9  Female: 35.71% – 5     ector roles: •  ##    Length of tenure • diversity in all respects, including age, nationality, gender,   0 to 3 years – 6 st 3 to 6 years – 3 •  6 to 9 years – 3  e priority.    C ##    the Board. Balance of independence     Directors* – 11   Non-Executive Directors – 1  Executive Directors – 2     board level. independent on  ##    Flutter Entertainment plc Annual Report & Accounts 2021 Governance    The Board’s succession plan is a continuous process and      tenure, independence, diversity, including gender and ethnicity,          re leaders. Se                 with digital        e Directors.                Director ap     Gary McGann  candidates. Nomination Committee Chair  14 March 2022    in best practice in this area to help reset our diversit  Annual Report & Accounts 2021 Flutter Entertainment plc  ##  ## Committed to ##  ##  ##  ## Committee with clearly defined ## purposes and structure that ## provides reverse mentoring ## for Directors to learn from ##    •  • Subject to the lifting of Covid-19 travel restrictions, implement  a programme of employee engagement in our major locations  designed to allow the Committee to understand and monitor culture •  •   initiatives and matters of concern for t  •  he Committee and monitor the effectiveness of engagement mechanisms, • Developed the dual purpose and identified the focus for  the Committee • Continue to engage with management on oversight of • Learnt how the Group People function provides oversight on   action plans overarching principles adopted across each of the Group divisions •  •  able success engagement mechanisms | •  |  | | | | | | | --- | --- | --- | --- | --- | --- | --- | |  | | | | | | Attended / | | Technology function | Committee members | 1 | Date appointed | | eligible to attend | | | •  | Mary Turner (Chair) | | | Jun 2021 3/3 | | |   Jun 2021 3/3 implementation of the associated action plans • Learnt how management and employees were preparing for, and Nancy Dubuc Jun 2021 3/3 ost-Covid-19  Jun 2021 3/3 •  matters affecting Flutter 1. All members were appointed on 15 June 2021 and are Non-Executive Directors. •  with management on the launch of a new culture narrative  Flutter Entertainment plc Annual Report & Accounts 2021 ##  ## 16,500+ 60+   ## 60+ 23   Governance                       o the Board.            uring 2022.          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     our brands.       Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued          be underpinned by three core principles:       2. providing independent advice and support on strategic  d      business leaders to update on progress.       h division.     To listen to and understand the views,     es include: consider these views, interests and  concerns during Board discussions and      and underpin a sustainable and  l business.       ensure that the culture, policy, practices es include: and behaviours across the Group   are aligned to our purpose, values and strategy.         ir progress.  Flutter Entertainment plc Annual Report & Accounts 2021 Governance                  Group have a place where they belong and are clear on the things   listening tool was also launched in 2021 to strengthen the   A healthy corporate culture is one in which our values, behaviours            actions and in which attitudes and behaviours are consistent with                ne through: continue to be an evolving area. •   • the way in which those decisions ar  •   those decisions.             s possible. Mary Turner    14 March 2022  Annual Report & Accounts 2021 Flutter Entertainment plc  Audit Committee report # Monitoring the integrity of our system of internal controls ![img-8.jpeg](img-8.jpeg) “ The Audit Committee provides oversight of the financial reporting and disclosure process, ensuring quality of our audit process and integrity of our system of internal controls. ## Summary - Reviewed the significant financial judgements made during the year - Conducted a review of the 2021 Annual Report and Financial Statements to confirm that it was fair, balanced and capable of being understood by shareholders - Conducted a review of our external auditors and proposed the reappointment of KPMG for the year ending 31 December 2022 - Approved the Group's 2021 Internal Audit Plan and oversight of the Group Internal Audit function - Approved the updated Group Treasury Policy - Oversight of the Internal Controls team, a second line function with responsibility for financial controls - Commenced preparations for the external audit tender in readiness for 2022 ## Key focus for next year - Continue to provide oversight of integration of financial reporting systems across the Group - Support the delivery of a comprehensive internal audit programme - Provide continued monitoring of the closure of management actions - Monitor changes in regulatory reporting requirements - Oversee the process for external audit tender ## 2021 meeting attendance | Committee members | Date appointed | Attended eligible to attend | | --- | --- | --- | | Michael Cawley (Chair) | Jul 2014 (Member: Jul 2013) | 6/6 | | Zillah Byng-Thorne | Feb 2016 | 6/6 | | Nancy Cruickshank* | May 2020 | 3/3 | | Holly Keller-Koeppe* | Jun 2021 | 3/3 | | David Lazzarato | May 2020 | 6/6 | | Mary Turner | May 2020 | 6/6 | 1. All members were Independent Non-Executive Directors. 2. Excludes annual joint Audit and Risk and Sustainability Committees meeting on 9 December 2021. Excludes an Audit Committee workshop held in June 2021. 3. Rotated off Committee on 15 June 2021. 4. Appointed Committee member with effect from 15 June 2021. 124 Platter Entertainment plc Annual Report & Accounts 2021               lso reviews:  litigation. •       s  •  Governance    al auditor.      dit Charter.                al controls.        and provides support      audit. We assessed the Group’s viability in line with the Code      d the Code.           in which the Group operates.    o               its duties.      solvency o     such occurrence.    the Group. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Audit Committee report continued ### Fair, balanced and understandable  •  n included? ### 5 Recommendation •  to Board   •  ### 1 ### 4  reporting?   Committee Review •  Review l reporting?  •   | | | 3 | | 2 | | | --- | --- | --- | --- | --- | --- | |  | | |  | |  | |  | | |  | |  | | |  | |  | | |  the other? •  areholders?  •  whether, in its opinion, the 2021 Annual Report and with appropriate  •      nd strategy.    •    its report?    , including: •  •  the report?  •   throughout th  •   whole story?    •         •    and strategy.  particular prese •            the disclosures.  Flutter Entertainment plc Annual Report & Accounts 2021 ##    •  •    •  •  preparation •  attestation • trols update • derstandable •  Plan update •   preparation  •  •   •  • eness review asury Policy Governance • it services • ading update •  • er reporting •    •  •  • l reporting  • udit Charter  •   • process plan ##        Action Revenue recognition     ciliations.       s accounts.   relation to the Group’s   appropriate controls and processes in place across the Group to ensure ted revenue. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Audit Committee report continued      the business.                     e business.    during 2021. over what period we have done so, why this period is considered              it Charter.                s approach.     reviewed and agreed by th 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Directors being present.              Governance                                   this role.     Audit Plan’s scope and approach. Annual Report & Accounts 2021 Flutter Entertainment plc  ## Audit Committee report continued  continued         • Audit Plan including • ittee Chair •  •   •    an •  collated centrally by  • and culture and Treasury  shared with the •  •     Accounting  •  and resources and Reporting   •  accounting and •     ternal Audit   and how these are • inance Leads act  c •   •  ial Controls  deliverables • Group T  • Response to challenge • General Counsel and  by the Audi ny Secretary as auditor be proposed • Relationship with • Deputy to shareholders at ternal Audit ny Secretary        nd appointed      itive tender    reappointed  ternal audit  1                       the auditor’s independence and the procedures put in place                 overse    in advance.     Flutter Entertainment plc Annual Report & Accounts 2021              continues to operate         Michael Cawley  Audit Committee Chair  14 March 2022 Governance       as a whole. ###      Qualification Resources and expertise  the auditor.   dependence. Independence Non-audit and objectivity services  it partners.    evaluation. Planning and  Quality  organisation   Annual Report & Accounts 2021 Flutter Entertainment plc  ##  ##  ##  ## our reputation ## Safer gambling is ## fundamental to every ##  ## strategy and brand ## sustainability.   •  • ESG strategy  •  matters including approval of a new Group ESG strategy, review   gambling regulator, and continue to sponsor the promotion of safer approval of Modern Slavery statement gambling standards across the Group and industry •  • Monitor and mitigate cyber security threats and data prote of a new Group safer gambling strategy, monitoring of regulatory • Monitor external regulatory environment and licensing   Assurance Statements • ty suppliers • Monitored cyber security threats, oversight of implementation of •  Group cyber security strategy and policy and held deep dive cyber of the Group Securit • Ensure crisis management plans are in place and fit for purpose •    monitoring Group r Attended / Committee members 1 Date appointed eligible to attend • Monitored compliance activities, including anti-money laundering and counter terrorist financing, anti-bribery and corruption policies,  Jan 2018 5/5 whistleblowing arrangements and Code of Ethics Michael Cawley Feb 2016 5/5 • ading limits  May 2019 5/5 • Monitored material litigation and legal matters | •  protection |  | May 2020 5/5 | | --- | --- | --- | | •  |  | May 2020 2/2 | | |  | Jun 2021 3/3 | | | David Lazzarato | May 2020 5/5 | | |  | Feb 2016 2/2 | 1. All members are Non-Executive Directors.   meeting held on 9 December 2021.  April 2021. 4. Appointed Committee member on 15 June 2021.  Flutter Entertainment plc Annual Report & Accounts 2021       legal obligations and considered the processes in place to      nd privacy.        nitiatives.     Governance     Group’s strategy and brand sustainability. The Board considers   ry training. behaving responsibly as a business and we continue to enhance       controls are there to prevent bribery and corruption occurring,      the Board.         propriately.    the opportunity to receive updates on the progress being      and beyond.  ### s t o m e ### u r s ### C ##  ## Sustainability Committee ##  ## C Positive ## governance arrangements o ### s ### m ## Impact e ## for oversight of sustainability m u ### g ## u Plan a ### n e ### i l l ## matters, whilst continuing to t ### i e o ### s C ##  ## impact our reputation. Annual Report & Accounts 2021 Flutter Entertainment plc  ## continued ### Governance in action ##  ##  ##    • Legal and regulatory including  ation update  •  , including: g Act Review •  • High value cus  •  •  reporting disclosures •  •  acros   •   •  •    • processes in place to ensure security is built in to product  •  • tools and processes in place to ensure the Group is protected against insider iance update threat including data  • and testing.  • Legal and regulatory update  •  and trading  • g Act Review  •   • People  •   • tigation log  •   throughout 2022.  •  and Sustainability  • Legal and regulatory updates • Ri • ing strategy • Cyber security strategy •  •   • Divisional updates  Flutter Entertainment plc Annual Report & Accounts 2021             accept to achieve our strategic              Governance                    Zillah Byng-Thorne   considered. 14 March 2022        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   nd approval.  Annual Report & Accounts 2021 Flutter Entertainment plc  Directors' remuneration report 2021 # Remuneration Committee ## Chair's Statement ![img-9.jpeg](img-9.jpeg) Committee to Chair in the year - Extensive discussions on the appropriateness of remuneration for Executive Directors - Consultation with shareholders on proposed remuneration arrangements for 2022 - Reviewed and approved relevant annual bonus outturn and LTIP vesting levels - Reviewed and approved LTIP awards across Flutter, below Executive Director level Priorities for 2022 - Continue to keep abreast of changes in UK corporate governance and best practice - Monitor the outcome of the UK Gambling Act review and its impact upon Flutter's remuneration arrangements - Ensure that remuneration opportunities remain appropriate to attract and retain key talent - Oversee below: Board reward strategy and structure, ensuring that it remains agile and fit for purpose across all divisions - Continue ongoing engagement with shareholders - Consider and set incentive plan targets that are appropriately stretching - Review the existing Remuneration Policy and any proposed changes to it ahead of the shareholder vote at the 2023 AGM The Committee's Terms of Reference are reviewed annually and are available at: www.flutter.com/investors How this Directors' Remuneration Report is structured As an Irish-incorporated company, Flutter Entertainment plc is not subject to the UK's remuneration reporting requirements; however, our preference is for our remuneration policies, practices and reporting to reflect best practice corporate governance for a FTSE 100 company. Accordingly, since 2015 the Committee has complied with the reporting regulations on a voluntary basis. - This Remuneration Committee Chair's Statement on pages 136 to 139 provides context for the decisions made by the Committee in the year, and the proposed approach to implementing the policy in the upcoming year. It also summarises the remuneration outcomes for Executive Directors. A "Remuneration at a Glance" page is included after this section. - The Annual Report on Remuneration, which runs from pages 141 to 150, details the remuneration arrangements and outcomes in place in the year under review. - A summary of the Remuneration Policy, which was approved by shareholders at the 2020 AGM, is shown on pages 151 to 154. For clarity, remuneration is reported in pound sterling, in line with the Group's reporting currency. Where relevant, remuneration is converted to pound sterling from euros, to simplify reporting. 136 Flutter Entertainment plc Annual Report & Accounts 2021 2021 meeting attendance Other attendees Attended / The Chief Executive Officer, Chief Financial Officer, 1 | Committee members | |  | | eligible to attend | |  | | --- | --- | --- | --- | --- | --- | --- | | Peter Rigby (Chair | | | Jan 2018 | | 3/3 |  | | until 29 April) | (member: Feb 2016) | | | | |  |  Andrew Higginson Apr 2022 8/8 advisers, attended some or all of the meetings by invitation (Chair from 29 April) (member: Feb 2020) but are not members. Individuals are not present when their  June 2021 4/4 own remuneration is discussed. Alfred Hurley  8/8   Jul 2015 8/8 e Committee.   7/8   o that role. 2. Appointed Committee member on 15 June 2021.   commitment, which had been notified in advance. Governance In recent years, Flutter has transformed into a global industry   that offers a blend of sector expertise with experience in scaling organisation than when the current Executive team joined, with  a significant shift even since I joined the Board just two years highlighted how competitive the market is for proven executives in ago. This change is reflected in our growth across many of this space. This gives us a challenge on compensation with current   scale, both organically and through acquisition, and our growth  continues apace. significant changes to the current package, we are exposed in our ability to both:  global effects of the Covid-19 pandemic, which continue to • ectors; and impact parts of our business as well as the wider environment, • recruit future Executives, where we will need access to the we have continued to sharpen our strategy and shape the highest calibre of talent from the global market, including business to capitalise on the vast opportunities that lie ahead. arketplace. This is particularly true in the US however we continue to make  progress in all our divisions. commitment of the existing Executive team, it is important that The transformation of our business over recent years means we pay the established management team fairly in the context of that we operate in a very different global marketplace for talent the current size and complexity of the company and the market  in which we operate, as well as having regard of their success in arrangements. In light of this development and the remuneration growing the business to date. If and when it becomes necessary challenges it presents, the Committee conducted a detailed to recruit at this level, we will need to have an established  pay structure in place that demonstrates we are able to pay discussed the findings extensively with shareholders. competitively against the talent markets from which we wish al markets. Context for considering change Last year continued our trend of multiple strong years of In this context we developed proposals to address the issues performance. In recent years, Flutter has transformed as a set out above and incentivise our Executive team to continue to  create exceptional levels of value for our shareholders and other Flutter has: stakeholders alike. These comprised two components: • completed a strategic combination with The Stars • an uplift to salary levels for the CEO and CFO, to bring their salaries in line with other UK-listed business of similar size •  and scale; and of the exceptional opportunity in the US market, such that we are the clear market leaders; and • a new long-term incentive focussed on continued strong growth, with higher opportunity levels for outstanding performance. • thoroughly executed on our strategy in core markets, extending market share through both organic growth and key Our analysis showed that the combination of these changes strategic acquisitions including Adjarabet, Junglee, Singular, would position remuneration at the upper quartile compared Tombola and the upcoming acquisition of Sisal.  to similar US-listed business, which we judged to be an Our evolution has brought us much closer to the US both appropriate outcome. operationally and in respect of competition for talent. The US market represents the fastest growing area of our business In the last quarter of 2021, we consulted with shareholders today, and the most attractive market opportunity in the sector. representing around two-thirds of our share capital. They universally  recognised the issues we had identified and were supportive  of change, and most endorsed the size of the change required. in 19 states. It is anticipated that the US will become our largest  market in revenue terms by 2023, notwithstanding expected we took into account as we refined them. growth in other markets. Annual Report & Accounts 2021 Flutter Entertainment plc 137 Directors' remuneration report 2021 continued ## Remuneration Committee Chair's Statement continued However, in the period immediately before finally agreeing these proposals, the external environment changed markedly. Valuations in the global technology sector receded in the early part of the year and, in late February and early March, this was accelerated by significant changes in the geopolitical environment. The Committee judged that, in light of a significant fall in the value of shareholders' investments in Flutter, it was no longer appropriate to proceed with the full package of change we had intended. We therefore decided not to make changes to our long-term incentives for 2022, continuing instead with the structure we have used since 2020. However, we believe it remains appropriate to implement the intended changes to the Executive Directors' salaries to partly bridge the gap to the competitive positioning we identified. Over the coming year, we will re-evaluate whether the proposed long-term incentive plan we developed this year should form part of a new Remuneration Policy, to be put before shareholders at next year's AGM. Our existing Remuneration Policy was approved by shareholders at the 2020 AGM and is therefore ordinarily due for renewal in 2023. We will consider what is right for the business over the course of 2022 as Flutter develops and the broader macroeconomic environment evolves. ### Changes to total salary Current total salary levels are positioned towards the lower end of the UK market for companies of a similar size. In order to address this, total salaries will be increased, effective 1 March 2022 as follows: | | 1 March 2021 | 1 March 2022^{1} | % increase | | --- | --- | --- | --- | | Peter Jackson | £927,000 | £1,370,000 | 26% | | Jonathan Hill | €884,220 | | | | | £596,946 | £715,000 | 20% | 1. Both Executive Directors will have UK contract to going forward and, as such, both will have their salaries set in GBP. Whilst these increases are materially higher than the average increase across the rest of our UK workforce, they are required to achieve the required market positioning. As outlined above, we believe that these increases are necessary to ensure that the Executive Director total packages are representative of Flutter's business context, and are more competitive in both the current UK market and the wider US and international digital markets in which we operate. The process we undertook in reviewing the salaries is also in line with the approach that we take for the wider workforce i.e. if an individual's role and responsibility significantly increases as a result of growth in the size of the business they manage, or the market value of the role shifts significantly, we would review their salary and remuneration levels to ensure that they remained appropriate within this new context. Whilst we considered taking a phased approach to increases, following internal discussions, and discussions with shareholders, we ultimately decided that it would be more appropriate to make the increases in one go. We believe that the Executive Directors are already delivering value now, and therefore aligning their reward to this now is deemed important. Our decision not to implement the new long-term incentive, which would have further enhanced our competitive position, cemented this decision. ### 2021 performance outcomes #### Business context As noted on the previous pages, 2021 was another strong financial year for Flutter: we continued our strong momentum across all divisions, whilst progressing with the integration of our businesses and growing our leadership positions in core markets. In the context of another challenging and uncertain year, with lockdowns extending into 2021 to various degrees across our respective markets, we were able to successfully navigate this situation through our diversification. Each of our divisions played an important part in helping to deliver on our key strategic objectives. We retained gold medal positions in our core markets of UK and Australia, whilst continuing to win in the US, with FanDuel remaining the clear market leader in online sportsbook. We also supplemented our International division with the acquisition of Junglee in India and announced the acquisition of Skati in Italy, subject to competition clearance. Importantly, we continued to lead and innovate in respect of our safer gambling and wider ESG agenda. Not only did we establish and develop our overall ESG strategy, as well as our global safer gambling and DEI strategies, we have actively started tracking and measuring our progress in many of these areas across all parts of our business, and developed and committed to plans to significantly enhance reporting during 2022. We included safer gambling targets for two of our divisions in our 2021 annual bonus plan, and are pleased that we are including all of our divisions in our 2022 annual bonus plan. We believe it is our responsibility to lead from the front and, as such, we have disclosed our safer gambling targets on a prospective basis. Full details around the measures and associated targets are set out on page 146. Whilst safer gambling is clearly an area which is extremely important in determining the sustainable future success of our business, we are also actively considering how our remuneration framework will interact with, support and incentivise our wider ESG agenda. 136 Flutter Entertainment plc Annual Report & Accounts 2021 Annual bonus The strong performance of our brands resulted in an annual bonus pay-out close to maximum, at 99.9% (2020: 98.4%). The 2021   ng targets.  uncertainties in many of the markets in which we operate, the Committee considered the level of annual bonus pay-out to be    146 to 154. 2019 LTIP  Governance     outcome in this report. Nonetheless, this element will not vest until July 2023, subject to the Committee being satisfied that the value has not decreased below the level required for the measure to pay out at maximum. The relative TSR element of the 2019 LTIP has well exceeded the upper end of the stretching performance range, and so the overall vesting of the plan is expected to be 100% TIP: 100%).  period to objectively determine that full vesting was warranted. The Committee considered that: • Flutter’s TSR performance over the period was 3.7 times the median of our comparator group (99.6% versus 26.7%). • The current business is significantly larger, more diverse in scale and scope and, crucially, far more sustainable over the long-term  acquisitions of Adjarabet, Junglee, Singular and Tombola, and organic growth through exceptional leadership have also contributed. • These achievements are all in the context of a global pandemic, which the Committee believes was extremely successfully navigated by the current management team. •  make Effectiveness of the Committee The operation, performance and effectiveness of the Committee is monitored throughout the year, and also specifically reviewed as part of the internal evaluation process. All feedback received is used to improve the Committee’s effectiveness. I am pleased on page 114. Looking ahead I would like to thank my predecessor, Peter Rigby, for his immense contribution to this Committee over the course of the last five  ming years.   icy review.  Remuneration Committee Chair 14 March 2022 Annual Report & Accounts 2021 Flutter Entertainment plc 139 Directors' remuneration report 2021 continued ## Remuneration at a glance 2021 outturns 2021 annual bonus outcome | 100% | Group EBIT (ex. US$) (65%) | | --- | --- | | 100% | US Value (25%) | | 99.8% | Safer gambling (10%) | | 99.8% | Total | 2019 LTIP ![img-10.jpeg](img-10.jpeg) Overall, the bonus outturn for the CEO is 284.6% of salary and for the CFO is 284.7% of salary. Half of this will be deferred under the DSIP, 50% for 3 and 50% for 4 years. The 2019 LTIP is estimated to vest in full. The TSR element will vest in March 2022 and the US Value element will vest in July 2023. 2021 single total remuneration figures Peter Jackson, Chief Executive Officer ![img-11.jpeg](img-11.jpeg) Jonathan Hill, Chief Financial Officer ![img-12.jpeg](img-12.jpeg) Salary Benefits Pension Annual bonus Long-term incentive plan Other Balance of fixed versus variable pay Peter Jackson, Chief Executive Officer ![img-13.jpeg](img-13.jpeg) Jonathan Hill, Chief Financial Officer ![img-14.jpeg](img-14.jpeg) Structure of Executive Directors' pay ![img-15.jpeg](img-15.jpeg) 140 Flutter Entertainment plc Annual Report & Accounts 2021 # Annual Report on Remuneration The Committee believes that the existing Remuneration Policy operated as intended during 2021. This section provides details of remuneration outcomes for the financial year ended 31 December 2021 for Executive Directors and Non-Executive Directors who served during 2021, as well as how the Remuneration Policy will be implemented in 2022. ## The Remuneration Committee's responsibilities Set out below is a summary of the Committee's key responsibilities: - setting the Remuneration Policy for the Executive Directors; - engaging with shareholders in respect of the Remuneration Policy for Executive Directors and its implementation as appropriate; - reviewing the wider workforce remuneration and related policies, the alignment of incentives and rewards with culture and taking these into account when setting the policy for Executive Director remuneration; - supporting the Board in determining whether reward-related employee policies and practices are in line with the Group's culture, strategy and values; - ensuring that the Remuneration Policy and reward decisions incentivise and retain talent, and support the delivery of our long-term strategy; - considering the appropriateness of the Remuneration Policy when reviewed against the rest of the organisation; - ensuring that the remuneration framework remains effective in attracting and retaining colleagues in our industry; - determining the terms of employment for Executive Directors, members of the Executive Committee and the Company Secretary, including remuneration, recruitment and termination arrangements; - approving the measures and targets for incentive plans for Executive Directors, the Executive Committee and the Company Secretary; and - assessing the appropriateness of and achievement against performance targets relating to incentive plans. The Directors' biographies of the current members of the Committee are given on pages 16 to 69. The Remuneration Committee's focus in 2021 | Overall remuneration | - Reviewing and approving total remuneration of the Executive Directors and members of the Executive Committee - Reviewing the Remuneration Policy approved by shareholders in 2020 in the context of the current business and extensively discussing potential changes to it - Discussing the feedback received from shareholders in respect of remuneration arrangements for 2022 | | --- | --- | | Total salary | - Reviewing current total salary levels in the context of both the current size and scope of the business, as well as their impact on total pay, and subsequently approving increases for both the Chief Executive Officer and Chief Financial Officer | | Annual bonus | - Determining and approving bonus outcomes in respect of 2020 performance - Reviewing and approving performance measures and targets for 2021 bonus - Reviewing forecasted 2021 bonus outcome - Reviewing and considering the 2022 annual bonus structure and performance measures, including the appropriateness of expanding the salary gambling element of the bonus plan - Reviewing and approving an additional bonus for all Sport start colleagues, to recognise and reward the exceptional performance of the division | | Long-term incentives | - Reviewing the TSR performance measures and targets for the 2021 LTIP awards - Approving 2021 incentive plan grants for Executive Directors, the Executive Committee and Company Secretary - Approving overall quantum of awards for 2021 share incentives for all employees - Receiving updates on the performance of the long-term incentive in place across the Group - Approving the vesting of the 2018 LTIP, including the US Value element, which vested later in the year - Reviewing and approving the vesting of the FanDuel Value Creation Plan - Reviewing and approving the structure of other division-specific incentive plans and share award grants, including for Executive Committee members - Approving new long-term incentive arrangements for FanDuel employees | | Governance | - Reviewing and approving the 2020 Directors' Remuneration Report - Reviewing the annual Remuneration Committee calendar - Reviewing and updating the Committee's Terms of Reference - Assessing dilution from share plans against recommended limits, and use of Employee Benefit Trust - Reviewing the Flutter grinder pay gap and CEO pay ratio disclosure - Approving the 2021 Shareware grant, and receiving an update on A Gift of Shares award made to all employees in 2020 | | Changes to the Executive Committee | - Reviewing and approving the fewer arrangements for the outgoing FanDuel CEO - Reviewing and approving the remuneration package and employment terms for the incoming FanDuel CEO | | Shareholder consultation | - Extensive engagement with shareholders on proposed changes to both Executive Director salaries and Remuneration Policy for 2022 | Annual Report & Accounts 2021 Flutter Entertainment plc 141 Governance ## Directors’ remuneration report 2021 continued Shareholder voting at shareholder meetings ## Annual Report on Remuneration The following shows the results of the advisory votes on the ## continued Annual Statement and Annual Report on Remuneration and the | External advisers | Remuneration Policy at the 2020 an | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | PwC are the Committee’s remuneration advisers. They were | | | | | | | Tot al | Votes | | appointed by the Committee in 2017 following a competitive | | | For Against | | | votes cast | | withheld | | tender process. They provide independent commentary and | Annual Report on | | | | | | | | | advice, together with updates on legislative requirements | Remuneration | 70,293,675 | | 12,870,333 | | | | | | and market practice to assist the Committee with its |  | (84.52%) | | | (15.48%) 83,164,008 214,537 | | | | | decision-making. | Remuneration | 53,240,152 | | 3,012,332 | | | | | | |  | (94.64%) | | | (5.36%) 56,254,924 2,440 | | | | PwC report directly to the Committee, and are a signatory to, and abide by the Code of Conduct for Remuneration Consultants  (which can be found at www.remunerationconsultantsgroup. year are provided in each year’s Annual Report and Accounts. com). The Committee undertakes due diligence periodically page 39 to ensure that the remuneration advisers remain independent  Single figure of total remuneration for Executive objective. The Committee is satisfied that any conflicts are Directors (audited) appropriately managed. The table below sets out the single figures of total remuneration The fees paid to PwC in respect of work carried out for the  Committee in 2021 totalled £217,000 and were based on an  agreed fee for business-as-usual support (with additional work   member of the Board in this capacity. Please refer to notes below reporting requirements and also provided tax advice to the the table for full details of how the figures are calculated. uring 2021 . The Committee also seeks internal advice and support from the    appropriate. Peter Jackson Jonathan Hill¹ 2021 2020 2021 2020  £’000  £’000  923 840 594 569  7 10 14 15  138 126 89 85 Fixed pay 1,068 976 697 669 Annual bonus 2,626 2,355 1,572 1,483  4,706 4,596 2,523 2,145  4 479 — 133 Variable pay 7,337 7,430 4,095 3,761 Total 8,404 8,406 4,792 4,430  ancial year (2021: £1 = €1.1630; 2020: £1 = €1.1052). 2. Total salary: represents the total amount earned for the relevant financial year. Peter Jackson’s total salary at the start of the year was £900,000. This was  3. Benefits comprise private medical insurance, life assurance and income protection.   prospective entitlement to a defined benefit pension. 5. The Committee used its discretion to replace the EPS and Revenue elements of both the 2018 and 2019 LTIPs with a Relative TSR measure. As dividends are added at the time of vesting, for the 2019 LTIP they will be included when this figure is updated in next year’s report. For the 2018 LTIP, these have been included. For Peter Jackson, £2.5m of the 2019 LTIP (or 53%) is attributable to share price growth, whilst for Jonathan Hill £1.3m of this (or 53%) is attributable to share price growth. For Peter Jackson, £2.2m of the 2018 LTIP is attributable to share price growth, whilst for Jonathan Hill £1.2m of this is attributable ice growth. 6. Other includes the value of the buyout options for both Peter Jackson and Jonathan Hill which vested during 2020. For 2021, it also includes the value te of grant. 142 Flutter Entertainment plc Annual Report & Accounts 2021 2021 annual bonus (audited)    element relative to the targets set: | | | | 1 | | | Bonus | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Performance targets | | | | | | | Bonus outcome | | | | | | | | outcome | | Bonus | | | | | | | | Actual | (% of | outcome | | | |  | Threshold Targ et  Peter Jackson Jonathan Hill | | | performance | | element) | (% of max) | | |  65% £852.8m £916.9m £962.8m £1,035.7m 100% 65.0% Net revenue from all verticals in existing states 25% $971.6m $1,214.5m $1,457.4m $1,617.9m 100% 25.0% Safer gambling: 10% 1% 4% 8% 7.7% Governance 2 UK&I TRI score 5% reduction reduction reduction reduction 97. 5% 4.9% Sportsbet reduction of net 10% 15% 20% 33% 2  5% reduction reduction reduction reduction 100% 5.0% 3 Total 99.9% £2,625,970 £1,572,340 1. Awards pay out on a straight-line basis between the points shown. 2. In 2020, we introduced safer gambling bonus targets for our PPB business. In 2021 we were able to extend this to include both our UK&I and Sportsbet divisions. For the UK&I this measure was Transactional Risk Indicator (TRI) score, which measures aggregated margin for customers who apply either . In Sportsbet we measured the reduction ctive model. 3. Converted from euros to pound sterling at the 12 month average exchange rate over the financial year of £1 = €1.1630. In line with market practice and as with in previous years, the bonus targets have been adjusted for exchange rate movements over rency basis. Prior to approving the annual bonus outcomes, the Committee discussed whether or not the proposed outcome was considered to be fair and reasonable in the context of the Company’s overall business performance over the year. Following the discussion, te and fair.   ost-vesting. 2019 LTIP (audited)  As disclosed in last year’s Report, the Committee decided to replace EPS and Revenue measures with relative TSR over the full performance period, and retain the US Value measure (which was unaffected by the merger). The TSR element of the 2019 LTIP is due    i.e. continued employment except for those reasons set out in the Policy for Payments for Loss of Office section. Targ et s Outcome | | | % of maximum | | % of award eligible | | | | --- | --- | --- | --- | --- | --- | --- | | Performance measure Threshold (25% vesting)  Actual performance | | | achieved | | for vesting | | | | 1 | | | 1 | | | | US Value measure (25%) 30% growth ($1.04bn) 90% growth ($1.52bn)  | | |  | | | 100% | 2 TSR relative to FTSE 31-130   99.6% 100% 100% median (26.7%) upper quartile (73.5%) Total vesting (% of max) 100% 1. Currently expected to be significantly above the maximum 90% growth required, and we have therefore estimated the outcome to be 100%. 2. TSR relative to the FTSE 31-130 (excluding housebuilders, real estate investment trusts and natural resources companies). Number of % of total Number of Executive Director Award type  shares awarded award vesting shares vesting   2 Peter Jackson Nil-cost options 11/03/2019 37,983 100% 37,983 £4,706,212 Jonathan Hill Nil-cost options 11/03/2019 20,361 100% 20,361 £2,522,792 appropriate. 2. As the award vests after the publication of this report, the value for reporting purposes is based on the average share price over three months to  rice growth. Annual Report & Accounts 2021 Flutter Entertainment plc 143 ## Directors’ remuneration report 2021 continued ## Annual Report on Remuneration continued 2018 LTIP update (audited)   also included dividends, where relevant, which were only calculated at the time of vesting: 3-month average share Estimated value of Share price on Actual value of LTIP Executive Director Number of shares  LTIP 2018 awards  vesting¹ 2018 awards Peter Jackson 27,261 £136.18 £3,712,458 1,837 £157.95 £4,596,029 Jonathan Hill 14,181 £1,931,197 703 £144.10 £2,144,784 1. Jonathan Hill joined in October 2018 and his award was granted, and therefore also vested, later than Peter Jackson’s.   following table: 1 2  Face value (%)  Number of shares Vesting at threshold  Peter Jackson   — £4,493 155 n/a  LTI P Nil-cost options 180% of total salary £1,668,561 9,969 25%   Nil-cost options 50% of net bonus £1,177,316 7,034 n/a   Jonathan Hill LTI P Nil-cost options 150% of total salary  5,337 25%  3  Nil-cost options 50% of net bonus £703,142 4,201 n/a    te of grant.   of two years. 3. The value of the award was calculated using the three-day average exchange rate prior to the date of grant, which was £1 = €1.1657. ral period. The LTIP awards will vest subject to the achievement of TSR performance, as per the vesting schedule below: Below threshold (nil vesting)  1  1 2 Relative TSR Below median growth   1. Awards vest on a straight-line basis between the points shown. 2. TSR relative to the FTSE 100 (excluding housebuilders, real estate investment trusts and natural resources companies) over the period 1 January 2021 cember 2023. Single figure of total remuneration for Non-Executive Directors (audited)  cember 2021: Fees (£’000) 1  Board Committee membership 2021 2020 2 Zillah Byng-Thorne Audit, Risk (Chair) 112 100  Audit (Chair), Risk 114 104 3 Nancy Cruickshank  90 81 4   65 — 5 Richard Flint  340 303 6 |  | | Risk, Nomination 26 53 | | | --- | --- | --- | --- | | | 7 | | 4 | | Andrew Higginson | | Nomination, Remuneration (Chair | ) 134 101 | Alfred Hurley Nomination, Remuneration 90 53 8 Holly Koeppel Audit, Risk, Nomination 62 —  Audit, Risk 90 53 9 2  Nomination (Chair ), Remuneration, Chair of the Board 477 407 10 Atif Rafiq Risk 6 — 6 | Peter Rigby | | Remuneration (Chair), Nomination 33 97 | | | --- | --- | --- | --- | | | 11 | | 3 | |  | |  | ) 99 53 | 144 Flutter Entertainment plc Annual Report & Accounts 2021 1. Fees for Non-Executive Directors are pro-rated according to their appointment date or date of role change where appropriate. Fees are paid in euros but have been shown here in pounds sterling for consultancy. 2. The Risk Committee was repossessed as the Risk and Sustainability Committee on 10 December 2021. 3. Nancy Oulke drank not a lot of the Audit Committee and was appointed as a member of the Nomination Committee and Workforce Engagement Committee on 16 June 2021. 4. Nancy Oulke was appointed to the Board on 29 April 2021, and was appointed as a member of the Nomination Committee, Workforce Engagement Committee and Remuneration Committee on 16 June 2021. 5. Richard Pritchard is consultancy agreement with Platter to provide additional advice and guidance and received additional fees in respect of this. He was appointed as a member of the Workforce Engagement Committee on 15 June 2021. 6. Divyesh David Godfrey and Peter Pigby stepped down from the Board following the 2021 AGM on 23 April 2021. 7. Andrew Higginson was appointed Chair of Remuneration Committee on 29 April 2021. 8. Holly Poeppel was appointed to the Board on 15 May 2021, and was appointed as a member of the Audit Committee, Risk Committee and Nomination Committee on 15 June 2021. 9. No fees were paid to Board Chair for chairing Nomination Committee. 10. Alif Pariz was appointed to the Board and as a member of the Risk and Sustainability Committee on 10 December 2021. 11. Mary Turner was appointed Chair of Workforce Engagement Committee on 15 June 2021. ## Implementation of Remuneration Policy for 2022 ### Total salary The Committee has approved the following total salaries for the Executive Directors, effective 1 March 2022. As noted in the Remuneration Committee Chair's Statement, these increases are higher than the average increases awarded to our UK colleagues in order to address significant issues around market competitiveness. Total salaries for Peter Jackson and Jonathan Hill are split between a salary in respect of their employment and payment of Board fees in respect of their roles as Directors. | | 1 March 2021 | 1 March 2022 | % increase | | --- | --- | --- | --- | | Peter Jackson | €927,000 | €1,170,000 | 26% | | Jonathan Hill^{1} | €694,220 | | | | | €596,946 | €715,000 | 20% | 1. Converted from a rural to pound sterling at the 12-month average exchange rate over the financial year of £1 = €1.1052. Both Executive Directors will have UK contracts going forward and, as such, both will have their salaries set in GBP. ### Pension and benefits The Executive Directors will receive a cash supplement in lieu of pension contribution of 15% of total salary in 2022. They will also receive benefits in line with the Remuneration Policy. From 1 January 2023 these will reduce to the level applying to the wider workforce in the country in which an Executive Director is based. Currently, both are based in the UK where this is 5% of total salary. ### Annual bonus The maximum annual bonus opportunity for the CEO and CFO in 2021 will remain at 285% of total salary and 265% of total salary respectively. As in previous years, the Committee has determined that financial performance targets will not be disclosed on a prospective basis for reasons of commercial sensitivity but will be disclosed retrospectively in next year's Annual Report on Remuneration. However, we believe that, where possible, targets should be disclosed externally to ensure that our shareholders can hold us accountable and, as such, we have disclosed our Safer Gambling metrics prospectively. Details are set out on the next page. The performance measures for the 2022 bonus are as follows: | | Weighting | | --- | --- | | Group EBIT (excluding US) | 60% | | FanDust Net revenue from all verticals in existing states | 30% | | Safer gambling | 10% | Half of any bonus earned will be paid in cash, with the remaining half deferred into shares under the DSIP, vesting 30% after three years and 30% after four years from grant, subject to continued employment and a revenue underpin of 2% growth per annum. Awards are eligible to receive dividend equivalents. Matus and clawback provisions apply to the annual bonus and DSIP both prior to vesting and for a period of two years post-vesting. We will review the Group EBIT (excluding US) targets during the year in the context of the acquisition of Sisal. Given its materiality, the Committee intends to adjust the targets to take account of Sisal, however it will determine the exact approach depending on when the deal closes. Annual Report & Accounts 2021 Platter Entertainment plc 143 Governance Directors' remuneration report 2021 continued # Incentivising Safer Gambling At Flutter, we recognise that the future success of our industry is predicated on getting safer gambling right. In 2022, as part of our Positive Impact Plan, we launched our first global safer gambling strategy, Play Well, as detailed on page 46. This strategy enables us to leverage the depth and breadth of our global expertise in safer gambling, to support the continued evolution of our divisional safer gambling strategies which are tailored to customers across our various markets. As our divisions operate within different regulatory and societal contexts, with varying levels of maturity with regards to being able to measure safer gambling, we have taken the approach of considering safer gambling on a divisional basis for the purposes of setting bonus targets. This allows us to set targets which are meaningful, linked to divisional strategy, and which can really drive change tailored to helping to keep our customers safe in the context in which those customers operate. In 2021, we challenged all divisions to determine suitable bonus metrics around safer gambling to include in the 2022 bonus. We are pleased that all divisions were able to set meaningful and robust targets which they defined, refined and tested in 2021, ready to implement in 2022. The following targets have been included in each of our divisional bonus plans as well as in the Group plan, thereby aligning each employee's bonus outturn with strategic gambling objectives for their division. The goals all support safer gambling tool usage, which is the focus of our overarching global safer gambling goal (see page 46). Each division takes a slightly different approach to measurement, and they all have differing starting points in terms of the level of safer gambling maturity in the markets in which they operate. Notwithstanding, we believe that there is an equivalent level of stretch contained in each division's targets. ## UK&I **Measure:** If an actional Risk Indicator score, which measures the % of revenue from customers who self-exclude (either directly with a Flutter brand or via GAINS TOP) in the year as a proportion of total revenue for that year (target is a reduction year-on-year on a like-for-like basis). **Rationale:** Retaining the Tiff score, which was used to measure "at risk" revenue generated by the UK&I division's online brands for 2021, targets are shown as a % reduction from 2021 on a like-for-like basis. In addition, we will be measuring revenue identified from new initiatives in 2022. Including from Paddy Power Retail and as a consequence of any sharing of self-exclusion data for which we do not have comparative data. **Targets:** | Threshold | Target | Maximum | | --- | --- | --- | | 7% reduction components 2021 | 2% reduction components 2021 | 4% reduction components 2021 | ## Sportsbet **Measure:** % of net revenue from customers with a deposit limit. **Rationale:** This is considered a more proactive measure than the one used in 2021; it measures affirmative action on safer gambling taken by the team rather than being reactive. **Targets:** | Threshold | Target | Maximum | | --- | --- | --- | | 13.5% | 20% | 26.5% | ## International **Measure:** % of customers applying a deposit limit, cooling-off period or stake limit. **Rationale:** Like the Sportsbet measure, this is considered to be proactive rather than reactive, measuring preventative actions taken on safer gambling. **Targets:** | Threshold | Target | Maximum | | --- | --- | --- | | 13.5% | 20.5% | 26.5% | ## FanDuel Safer gambling has been introduced for the first time into the FanDuel bonus plan. As the US is our most nascent market, we are working hard to build out our safer gambling tools and capabilities. For 2022 we have decided to measure safer gambling based on a basket of measures. | Measure | Threshold | Target | Maximum | | --- | --- | --- | --- | | Employee making completion (30%) | 90% | 96% | 100% | | New customer first impressions (40%) | 31 Dec 2022 | 8 Sept 2022 (NFL, less off) | 1 July 2022 | | RO impressions for all customers aged 21-25 (40%) | 31 Dec 2022 | 8 Sept 2022 (NFL, less off) | 1 July 2022 | The two customer impressions measures have been designed to reach customers (either new customers or those aged between 21-25) with Safer Gaming messaging through in-app messaging and interstitials. 146 Flutter Entertainment plc Annual Report & Accounts 2021 # Annual Report on Remuneration continued # LTIP The 2022 LTIP award grant levels are in line with the Remuneration Policy, as set out below: | | Face value at date of award (£) | Face value at date of award (% of total salary) | | --- | --- | --- | | Peter Jackson | 2,108,000 | 180% of salary | | Jonathan Hill | 1,072,500 | 150% of salary | The awards will vest based on Relative TSR performance. The proposed targets are the same as for 2021, and are set out in the table below: | | Below threshold (in sterling) | Threshold (25% sterling) | Maximum (100% sterling) | | --- | --- | --- | --- | | Relative TSR^{1} | Below median growth | Growth in line with median | Growth in line with upper quartile | 1. Awards vest on a straight-line basis between the points shown. 2. TSR relative to the FTSE 100 (excluding hospitalisations, real estate investment trusts and natural resources companies). # Save As You Earn ("SAVE") Executive Directors are eligible to participate in the plan with the same terms as all other UK employees if an invitation to enter a savings contract is offered during the year. # Chair and Non-Executive Director fees During the year, we reviewed both Non-Executive Director and Chair fees, the latter of which had not been increased since it was originally set at the time of the merger between Paddy Power and Betfair in 2016. The previous and current fees, which took effect from 1 June 2021, are set out in the table below: | | 1 January 2021 | 1 June 2021 | | --- | --- | --- | | Base fee | | | | Chair | €450,000 | €630,000 | | Base Non-Executive Director fee | €90,000 | €115,000 | | Additional fees | | | | Senior Independent Director | €15,000 | €30,000 | | Audit Committee Chair | €25,000 | €30,000 | | Remuneration Committee Chair | €25,000 | €30,000 | | Risk and Sustainability Committee Chair | €20,000 | €30,000 | | Nomination Committee Chair | €20,000 | €20,000 | | Workforce Engagement Committee Chair | — | €20,000 | 1. If the Board Chair holds the position of Nomination Committee Chair, no additional fee will be paid for the Nomination Committee role. 2. The Workforce Engagement Committee was established during the year. The fees for the role of the Chair of the Committee will be reviewed in 12 months, taking into account the evolution of the Committee's remit and responsibilities. # Percentage change in Directors' remuneration compared with other employees The table below shows the percentage change in the Chief Executive Officer's remuneration from the prior year compared with the average percentage change in remuneration for all other employees. To provide a relevant comparison, the analysis includes only salaried corporate office UK and Ireland employees and is based on a consistent set of employees. The Committee considers this to be the most appropriate comparator group. | | Percentage change in 2021 compared with 2020 | | | Percentage change in 2020 compared with 2019 | | | | --- | --- | --- | --- | --- | --- | --- | | | Base salary fee | Taxable benefits | Annual bonus | Base salary fee | Taxable benefits | Annual bonus | | Peter Jackson | 3.0% | -12.8% | 11.5% | 21.6% | 39.4% | 141.9% | | Jonathan Hill | 3.0% | -8.6% | 6.0% | 21.6% | -78.3% | 131.9% | | Zillah Byng-Thorne | 19% | — | — | -3% | — | — | | Michael Cawley | 15% | — | — | 0% | — | — | | Nancy Cruickshank | 16% | — | — | 59% | — | — | | Richard Flinn | 77% | — | — | — | — | — | | Elizabeth David Gadhia^{1} | 90% | — | — | — | — | — | | Andrew Higginson | 59% | — | — | 397% | — | — | | Alfred Hurley | 77% | — | — | — | — | — | | Holly Koeppel | — | — | — | — | — | — | | David Lazzaretti | 77% | — | — | — | — | — | | Gary McGann | 23% | — | — | 0% | — | — | | Peter Rigby | -65% | — | — | 18% | — | — | | Atif Rafiq | — | — | — | — | — | — | | Mary Turner | 96% | — | — | — | — | — | | Corporate office UKM employees | 12.7% | -0.6% | 7.9% | 10.8% | 20.2% | 56.3% | 1. Both Non-Executive Directors stopped down from the Board in April 2021. Annual Report & Accounts 2021 Platter Entertainment plc 147 Governance Directors' remuneration report 2021 continued ## Annual Report on Remuneration continued ### Relative importance of spend on pay The table below shows the percentage change in total employee pay expenditure and shareholder distributions (i.e. dividends and return of capital) from the financial year ended 31 December 2020 to the financial year ended 31 December 2021. | | 2021 BHI | 2020 BHI | % change | | --- | --- | --- | --- | | Dividends | — | — | — | | Share buybacks | — | — | — | | Total shareholder distributions | — | — | — | | Employee remuneration | €1,049.1 | €856.6 | 22% | ### CEO pay ratio disclosure The CEO pay ratios for our UK employees in respect of 2021 and previous years are as follows: | Financial year | Calculation method | CEO pay £'000 | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio | | --- | --- | --- | --- | --- | --- | | 2021 | A | 8,404 | 346.1 | 214.1 | 122.1 | | 2020 | A | 7,322 | 340.1 | 198.1 | 114.1 | | 2019 | A | 2,099 | 107.1 | 89.1 | 54.1 | | 2018 | A | 1,664 | 113.1 | 92.1 | 54.1 | The total pay and benefits of each employee at the 25th, 50th and 75th percentile is as follows: | | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio | | --- | --- | --- | --- | | Total pay and benefits | €24,281 | €19,327 | €69,146 | | Salary | €20,376 | €11,080 | €52,333 | The pay and benefits of employees were calculated in line with the single total figure of remuneration methodology. We have used calculation method A (which is the most comprehensive). As such, we have used actual pay and benefits from 1 January to 31 December 2021 for any employee who was employed as at 1 October 2021. Joiners, leavers and part-time employees' earnings have been annualised on a full-time equivalent ("FTE") basis, excluding any payments of a one-off nature, with FTE calculations based on 40 hours per week. Those on unpaid leave for more than 30 days have been excluded from the analysis. For annual bonus payments, bonuses calculated for the 2021 year and to be paid in 2022 have been used. Benefits included in the calculation are employer pension/er cash in lieu received and the benefit in kind/PIUD value of any taxable benefits. The ratio is broadly consistent with last year. There was a strong level of bonus payout across all UKB/ employees, however as the CEO has a higher bonus opportunity than others, this has had a greater impact on his number and has therefore led to a small increase in the pay ratio. Both salary and total pay and benefits for the wider employee workforce have increased since last year: median salary levels are 7% higher than the levels disclosed in last year's report, and the median total pay and benefits are 4% higher, which is consistent with pay and progression policies for UK employees. 148 Platter Entertainment plc Annual Report & Accounts 2021 Directors’ shareholdings (audited)  their interests with those of our shareholders. As part of our approved Remuneration Policy, the holdings that the CEO and CFO are required to build and maintain are 300% of salary and 200% of salary respectively. Shareholding requirements may be met through both beneficially owned shares and vested but unexercised options net of notional tax. Those subject to continued employment or performance assessment are not included.   requirement for two years post-departure.    LTIP awards. Governance Share options subject to | | | | Share options | | Share options | | continued | | Share options | | Shareholding | | Current | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Beneficially | | | | subject to | | vested but | employment | | exercised in the | | requirement | shareholding | | | Requirement | | | |  | 1 | performance | | | unexercised | | only | | year | (% of salary) |  | | 2 | | met? | 3 Peter Jackson 7,561 62,615 29,427 9,145 15,238 300% 275% No Jonathan Hill 1,728 34,003 18,206 5,729 — 200% 206%  Zillah Byng-Thorne 1,287 — — — — — — —  3,660 — — — — — — — Nancy Cruickshank — — — — — — — —  — — — — — — — — Richard Flint 24,134 — — — — — — — Holly Koeppel — — — — — — — — Andrew Higginson — — — — — — — — Alfred Hurley 2,960 — 14,358 — — — — —  2,708 — 8,291 — — — — —  3,314 — — — — — — — Atif Rafiq — — — — — — — —  4,296 — 7,0 96 — — — — — 1. Includes shares held by the individual and those held by persons closely associated with them.  cember 2021. 3. Peter Jackson exercised 15,238 options during the year, realising a gain of £2.17m. Annual Report & Accounts 2021 Flutter Entertainment plc 149 Directors' remuneration report 2021 continued ## Annual Report on Remuneration continued ### Pay for performance The graph below shows the TSB performance (share price plus dividends paid) of Flutter Entertainment plc$^{1}$ compared with the performance of the FTSE 100 Index over the 30-year period to 31 December 2021, assuming a nominal £300 investment in Paddy Power plc$^{2}$ and the FTSE 100 Index at the start of the timeframe. This index has been selected because the Company believes that the FTSE 100 provides a relevant and appropriate broad market comparator index for the combined entity and includes companies of a similar size. ![img-16.jpeg](img-16.jpeg) 1. Paddy Power plc changed its name to Paddy Power Belfair plc on completion of the merger of Paddy Power plc and Belfair Group plc on 2 February 2018. In 2019, Paddy Power Belfair plc was renamed Flutter Entertainment plc. ### Change in Chief Executive Officer's single total figure of remuneration | | 2012 Patrick Kennedy | 2013 Patrick Kennedy | 2014 Patrick Kennedy | 2015 Andy McCue | 2016 Andy McCue | 2017 Breen Corcoran | 2018 Breen Corcoran | 2019 Breen Corcoran | 2020 Peter Jackson | 2021 Peter Jackson | 2022 Peter Jackson | 2023 Peter Jackson | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CEO single figure of remuneration (£ 000) | 6,534 | 6,752 | 6,450 | 2,701 | 2,109 | 1,557 | 3,233 | 295 | 1,664 | 2,099 | 8,406 | 8,404 | | Annual bonus outcome (% of maximum) | 62% | 55% | 67% | 77% | 0%^{3} | 67% | 60% | 0%^{3} | 49% | 73% | 98% | 99% | | LTIP vesting^{4} (% of maximum) | 100% | 95%^{3} | 85%^{3} | 100% | 100% | 100% | 100% | 64% | n/a^{3} | n/a^{3} | 100% | 100% | 1. Remuneration is converted from euros to pounds sterling as appropriate, using the 12-month average exchange rate over the financial year. Patrick Kennedy and Andy McCue were paid in euros. Breen Corcoran was paid in pounds sterling, as is Peter Jackson. 2. Before retesting – note, there is no provision for retesting in respect of LTIP awards made from 2013 onwards. 3. Retesting was applied to the unvested portion of the 2011 LTIP based on performance to 31 December 2014, and as a result an additional 4.6% of the award vested in March 2015. 4. Retesting was applied to the unvested portion of the 2012 LTIP based on performance to 31 December 2015, and as a result an additional 6.0% of the award vested in March 2016. 5. Andy McCue was not eligible for a bonus in 2016 in line with the payment for loss of office. 6. Breen Corcoran was not eligible for a bonus in 2018 in line with the payment for loss of office. 7. Peter Jackson has no LTIP vestings in these years. 150 Flutter Entertainment plc Annual Report & Accounts 2021 ### Remuneration Policy  our remuneration policy for the wider workforce sections have been reproduced in the summary below. The full Remuneration Policy    Element Purpose and link to Operation and performance measures    To attract and retain  Increases (as a percentage of salary) high-calibre talent in the be reviewed at other times of the year will generally be in line with salary labour market in which in exceptional circumstances. inflation and consistent with those Governance  offered to the wider workforce.   are set with reference to individual Higher increases may be appropriate skills, experience, responsibilities,  Company performance and not limited to: performance in role. • where an individual changes role; Independent benchmarking is • where there is a material change in the conducted on a periodic basis against responsibilities or scope of the role; companies of a similar size and • where an individual is appointed on complexity, and those operating in the  same or similar sectors, although this expectation that this salary will information is used only as part of increase with experience and  performance; • where there is a need for retention; • where salaries, in the opinion of the Committee, have fallen materially below the relevant market rates; and •  increases in a material way. The Committee will review salaries if the proposed combination with The  to increases awarded at rates higher than the wider workforce level, given that it would represent a significant change in the scale and complexity   Benefits To provide market Employment-related benefits may The value of benefits may vary from competitive, cost include (but are not limited to) private year-to-year in line with variances in  medical insurance, life assurance, third-party supplier costs which are income protection, relocation, travel outside of the Company’s control, and accommodation assistance business requirements and other related to fulfilment of duties, tax changes made to wider equalisation and/or other related   are necessary for the ordinary conduct of business, the Company may meet the cost of tax on benefits. | Pension | To provide retirement | Paid as a defined contribution and/or | Contribution of up to 15% of salary | | --- | --- | --- | --- | | | benefits that are | cash supplement. |  | | | appropriately competitive | |  | | | within the relevant | | will reduce to the UK and Ireland wider | | |  | | workforce level from the start of 2023. |  during the term of this Policy, contributions will be set in line with the wider workforce level upon recruitment. Annual Report & Accounts 2021 Flutter Entertainment plc 151 ## Directors’ remuneration report 2021 continued ### Remuneration Policy continued Element Purpose and link to Operation and performance measures   Annual bonus To incentivise and reward The Committee reviews the annual Threshold performance will result in and DSIP the successful delivery of bonus prior to the start of each  annual performance financial year to ensure that the maximum opportunity.  opportunity, performance measures, For target performance, the annual provides a link to long-term targets and weightings are appropriate bonus earned is two-thirds of the value creation. and in line with the business strategy maximum opportunity. at the time.  Performance is determined by the of total salary for the CEO and 265% Committee on an annual basis by   strategic measures, or personal objectives, although the financial element will always account for at least  will be subject to a financial underpin; for 2020 this will be a revenue underpin but a different measure may be used in future years. Half of any annual bonus is paid in cash, with the remaining half deferred into  element is released 50% after three years and 50% after four years from the date of grant.   to vesting and for a period of two years   that vest. | LTI P | To attract, retain and | Annual grant of shares or nil-cost | The normal maximum opportunity is | | --- | --- | --- | --- | | | incentivise Executive | options, vesting after a minimum of | 180% of salary for the CEO and 150% | | |  | three years, subject to the achievement |  | | |  | of performance conditions. | Threshold performance will result in | | | while providing strong | |  | The Committee reviews the alignment with performance measures, targets and  weightings prior to the start of each cycle to ensure that they are appropriate. The measures and respective weightings may vary year-on-year to reflect strategic priorities, but at least 75% will always be based on financial measures (which can include TSR). Following vesting, awards are subject to a holding period of up to two years, such that the overall timeframe of the LTIP will be no less than five years.  satisfy the tax liability on exercise but must retain the net number of shares until the end of this two-year period.  the LTIP, which allow the Company to reduce or claw back awards during the  accrue and are paid on LTIP awards that vest. 152 Flutter Entertainment plc Annual Report & Accounts 2021 Element Purpose and link to Operation and performance measures   | SAYE | To facilitate share |  |  | | --- | --- | --- | --- | | | ownership and provide | Earn share plans for all employees |  | | | further alignment |  | (currently £500 and €500 per month | | |  | and in Ireland this is an Irish | for UK and Irish employees respectively). | Revenue-approved plan); the   in other countries is the equivalent    Participants are invited to save up to the monthly limit over a three-year period and use these savings to buy Governance shares in the Company at up to the maximum discount allowable in the relevant jurisdiction. | Shareholding | To create alignment |  | n/a | | --- | --- | --- | --- | | guidelines | between the interests | maintain a holding of shares in the | | | |  | Company equivalent to a minimum of | | | |  | 300% of salary for the CEO and 200% | |    guidelines are met. Shareholding guidelines may be met through both beneficially owned shares and vested but unexercised options on a notional net of tax basis. Executives are required to hold the lower of their respective shareholding guideline and the actual shareholding immediately prior to departure for two years post-departure.  Below Board level, employees receive a remuneration package that is reflective of their role and responsibilities, set by reference to internal relativities and external market data where applicable. Employees at the Executive level will typically have a greater emphasis  Element Approach   of responsibility, experience, individual performance and salary levels in comparable companies. Remuneration surveys are referenced, where appropriate, to establish market rates.   Pension and benefits Benefits and pension arrangements are tailored to local market conditions for all of our employees  Annual bonus The majority of our employees are eligible to participate in an annual bonus plan, though award sizes vary by level. Performance measures are tailored to be suitable to the nature and responsibility of the  Share plans  senior management level are also eligible to participate in share plans, which vest based on continued employment and, in some cases, are also subject to performance conditions. The timing of the vesting is dependent on geographic location.   Shareholding guidelines  Annual Report & Accounts 2021 Flutter Entertainment plc 153 ## Directors’ remuneration report 2021 continued ## Considerations of the UK Corporate Governance Code principles  rnance Code.  Remuneration arrangements should be  transparent and promote effective engagement targets, in favour of using TSR to measure with shareholders and the workforce. performance under the LTIP. This requires no adjustments and is clear and easy to understand. Overall, the deferred bonus structure is clear and transparent.  Remuneration structures should avoid The removal of multiple complex long-term complexity and their rationale and operation measures assists with simplicity. should be easy to understand.  easily understood and articulated. | Risk | Remuneration arrangements should ensure | The Committee was very conscious of this area | | --- | --- | --- | | | reputational and other risks from excessive | in designing the 2020 Remuneration Policy, | | | rewards, and behavioural risks that can arise | and took steps to mitigate potential risks. | | | from target-based incentive plans, are identified |  | | | and mitigated. |  | |  | The range of possible values of rewards to | The LTIP is performance-based, and the value | | | individual directors and any other limits or |  | | | discretions should be identified and explained | influenced by share price performance. |  the Policy.  The link between individual awards, the delivery The Policy enables meaningful and appropriate of strategy and the long-term performance of targets to be set with a significant proportion of the company should be clear. Outcomes should remuneration linked to long-term shareholder not reward poor performance.  will reflect the successful execution of our strategy. Alignment Incentive schemes should drive behaviours The measures used in our incentive structure are consistent with company purpose, values aligned with our business strategy and values. to culture and strategy.   agenda, which is a core part of Flutter’s values. 154 Flutter Entertainment plc Annual Report & Accounts 2021 # Directors' report The Directors' Report for the year ended 31 December 2021 should be read in conjunction with the other sections of this Annual Report and Financial Statements. The following sections of this Annual Report and Financial Statements are incorporated into this Directors' Report by reference for the purposes of sections 325 and 1373 of the Companies Act 2014, Regulation 21 of the European Communities (Takeover Bids Directive (2004/25/EC) Regulations 2006 (SI 255/2006), the Transparency (Directive 2004/109/EC) Regulations 2007 (SI 277/2007), the European Union (Disclosure of Non-Financial and Diversity Information by Certain Large Undertakings and Groups) Regulations 2017 (SI 360/2017) and the Disclosure and Transparency Rules of the UK Financial Conduct Authority as applicable: | Statutory, regulatory and other information | | | --- | --- | | Item | Source | | The Strategic Report, which includes a review of the development and performance of the Group, the external environment, key strategic aims, the business model and certain financial and non-financial disclosure requirements arising from EU and Irish legislation | Pages 1 to 93 | | The non-financial information statement | Page 161 of this Directors' Report | | Information on employees | Pages 52 and 55 | | The Corporate Governance Report | Pages 94 to 162 | | Information on the Company's diversity initiatives and Board Diversity Policy | Pages 52 and 55 an 116 to 119 | | The Directors' Remuneration Report, which includes information on the annual bonus, the LTIP, share options, Directors' service contracts and Directors' remuneration | Pages 116 to 154 | | Details of the Audit Committee | Pages 124 to 131 | | Details of share capital and reserves | Note 24 to the Consolidated Financial Statements on pages 223 to 225 | | Details of earnings per share | Note 11 to the Consolidated Financial Statements on page 202 | | Details of derivative financial instruments | Note 23 to the Consolidated Financial Statements on pages 219 to 223 | | The Treasury Policy and objectives of the Group | Note 27 to the Consolidated Financial Statements on pages 231 to 232 | ## Principal activities The Group is a global sports betting and gaming operator, whose headquarters are in Dublin, Ireland, employing over 16,500 people worldwide. During 2021, the Group operated across the following four divisions: - UK&I: The division operates the Paddy Power, Betfair and Sky Betting & Gaming brands online, as well as retail operations in the UK and Ireland. - Australia: Consists of Sportsbet, the market leading brand in the fast-growing Australian online betting market. - International: Includes the PokerStars, Adjarabet, Betfair and Junglee brands which collectively offer online poker, casino, and sports betting, runway and daily fantasy products. - US: The US division includes FanDuet, FOX Bet, TVG, PokerStars US and Betfair Stardust Casino brands, offering regulated real money and free-to-play sports betting, casino, poker, daily fantasy sports and online racing wagering products to customers across various states in the US. ## 2022 outlook The 2022 outlook set out in the Operating and Financial Review on pages 69 to 83 is deemed to be incorporated in this part of the Directors' Report. Annual Report & Accounts 2021 Platter Entertainment plc 133 Governance Directors' report continued # Research and development The Group performs research and development activities to ensure that it continues to be a recognised innovator in the betting at opening industry. These activities support the introduction of new products, the creation of new betting markets, improved online customer experience and the development of better processes and systems. Continued research and development contributes to the Group's future growth and profitability. Further details of our research and development activities are set out in the Strategic Report on pages 1 to 93. # Results The Group's EBITDA for 2021 of £72.5m reflects a decrease of 6% on the 2020 EBITDA of £77.2m. Overall Group operating loss for 2021 amounted to £8.5m. Further information is set out in the Consolidated Financial Statements on pages 171 to 242. Basic loss per share amounted to £2.37 compared with basic earnings per share of £0.29 in the previous year. The financial results for 2021 are set out in the Consolidated Income Statement on page 171. Total equity attributable to the Company's equity holders at 31 December 2021 amounted to £10,250.9m (2020: £10,965.1m). # Business review and key performance indicators The Strategic Report on pages 1 to 93, which includes the Chair's Statement and the Chief Executive Officer's Review, contains a review of the performance and developments of the Group during the year, including the analysis of the key performance indicators. # Principal risks and uncertainties Pursuant to section 527(1)(b) of the Companies Act 2014, Regulation 5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations 2007 and Rule 9 of the Central Bank (Investment Market Conduct) Rules 2019, the principal risks and uncertainties facing the Group are set out on pages 84 to 91 and are deemed to be incorporated in this part of the Directors' Report. # Annual General Meeting ("AGM") 2022 The Notice concerning the AGM to be held on 28 April 2022 will be sent to shareholders together with this Annual Report and Financial Statements. The Notice contains full details of the resolutions that will be put to shareholders at the AGM. It is also available on our corporate website: www.flutter.com/investors/shareholder-information/agm. # Changes to the Board of Directors Dave Gadha and Peter Rigby retired as Non-Executive Directors of the Company effective from the conclusion of the AGM on 28 April 2021 and Nancy Dubuc was appointed as a Non-Executive Director at the same date. Holly Keller Koeppel and Atif Rafiq also joined the Board as Non-Executive Directors effective from 13 May 2021 and 10 December 2021 respectively. Michael Cawley will step down as a Non-Executive Director of the Company effective from the conclusion of the AGM on 28 April 2022 and Zillah Byng-Thorne will step down as a Non-Executive Director before the 2023 AGM. In accordance with the provisions of the 2018 UK Corporate Governance Code (the "Code"), all Directors eligible for re-election should retire at each AGM and offer themselves for election or re-election (as appropriate). Accordingly, all Directors, except Michael Cawley, who will not be seeking re-election as outlined above, will retire and seek election or re-election at the AGM to be held on 28 April 2022. The Board believes that all Directors offering themselves for election or re-election continue to be effective and demonstrate commitment to the role. The names and biographies of our current Directors can be found on pages 96 to 99. # Directors' and officers' liability insurance Throughout 2021, the Group had in place Directors' and officers' liability insurance, which covered all Directors and officers. # Directors' and Company Secretary's shareholdings The Company has in place share ownership guidelines for Executive Directors to ensure that their interests are aligned with those of shareholders. For detailed information, see the Directors' Remuneration Report on pages 136 to 154. As at 2 March 2022 (being the latest practicable date before publication of this Annual Report and Financial Statements), the current Directors and the Company Secretary held the same number of beneficial interests in shares as at 31 December 2021, as set out in the table below. These shareholdings include all beneficial interests and those held by persons closely associated with them. This does not include their share awards under the Company's share schemes. The interests of the Executive Directors in the Company's share schemes as at 31 December 2021 are set out on page 149. The Company Secretary has no interest in the Company's share schemes that requires disclosure. | | 31 December 2021 (in date of resignation, if earlier) | 31 December 2020 (in date of appointment to the Company, if later) | | --- | --- | --- | | Zillah Byng-Thorne | 1,287 | 1,287 | | Michael Cawley | 3,660 | 3,660 | | Nancy Cruickshank | — | — | | Nancy Dubuc | — | — | | Divyabh (Dave) Gadha | 50,546 | 50,546 | | Richard Flint | 24,134 | 24,134 | | Andrew Higginson | — | — | | Alfred Hurley | 2,960 | 2,960 | | Jonathan Hill | 1,728 | 1,728 | | Peter Jackson | 7,561 | 7,561 | | Holly Keller Koeppel | — | — | | David Lazzarato | 2,708 | 2,708 | | Gary McGann | 3,314 | 3,314 | | Atif Rafiq | — | — | | Peter Rigby | 128 | 128 | | Mary Turner | 4,269 | 4,269 | 1. Appointed with effect from 28 April 2021. 2. Resigned with effect from 29 April 2021. 3. Appointed with effect from 13 May 2021. 4. Appointed with effect from 10 December 2021. None of the Directors nor the Company Secretary had an interest in the shares of any subsidiary undertaking of the Company or in any significant contracts of the Group. # Remuneration report The remuneration report required to be included in this Directors' Report pursuant to section 325(1) of the Companies Act 2014 is contained on pages 136 to 154 of this Annual Report and Financial Statements, which is incorporated into this Directors' Report. 136 Flutter Entertainment plc Annual Report & Accounts 2021 ## Shares ### Substantial shareholdings As at 31 December 2021 and 2 March 2022, being the latest practicable date before publication of this Annual Report and Financial Statements, the Company had been notified of the following details of interests of over 3% in the Company's ordinary share capital (excluding treasury shares): | Substantial shareholdings | Notified Holding 31 December 2021 | Notified Holding 2 March 2022 | Notified % Holding 2 March 2022 | | --- | --- | --- | --- | | The Capital Group Companies, Inc. | 26,030,020 | 26,030,020 | 14.87% | | Caledonia (Private) Investments Pty Limited | 17,959,749 | 17,959,749 | 10.26% | | BlackRock Inc. | 10,004,428 | 10,004,428 | 6.45% | | Marcus Asset Management Europe Limited | 5,422,128 | 5,422,128 | 3.09% | | Massachusetts Financial Services Company | 5,301,085 | Below disclosure threshold | | As notified by The Capital Group Companies, Inc. ("CGC"), CGC is the parent company of Capital Research and Management Company ("CRMC") and Capital Bank & Trust Company ("CB&T"). Neither CGC nor any of its affiliates owns shares of Plutter Entertainment plc for its own account. Rather, CGC has advised Plutter that the shares reported on the notification provided by CGC to the Company are owned by accounts under the discretionary investment management of one or more of the investment management companies described above. ### Corporate governance For the purposes of section 1373 of the Companies Act 2014 and Rule 7.2 of the Disclosure and Transparency Rules of the UK Financial Conduct Authority, the Corporate Governance Report on pages 94 to 162 is deemed to be incorporated into this Directors' Report and forms part of the corporate governance statement required by section 1373 of the Companies Act 2017 and Rule 7.2 of the Disclosure and Transparency Rules of the UK Financial Conduct Authority. ### Share capital, rights and obligations As at 31 December 2021, the Company's total issued share capital was €15,806,548.62, comprising 175,628,318 ordinary shares each with a nominal value of €0.09, all of which are of the same class and carry the same rights and obligations. As at 31 December 2021, no ordinary shares were held as treasury shares either directly by the Company or through Group companies or nominees. Accordingly, as at 2 March 2022 (being the latest practicable date before publication of this Annual Report and Financial Statement), the Company's total issued share capital was €15,811,296.21, comprising 175,681,069 ordinary shares. ### Rights attaching to ordinary shares Ordinary shares carry the right to dividends declared by the Company from its profits available for distribution and to the return of capital on the winding up of the Company. Ordinary shares carry the right to attend and speak at general meetings of the Company and each share has the right to one vote. With regard to the Company's ordinary shares: - (i) there are no restrictions on their transfer; - (ii) no person holds shares carrying special rights with regard to the control of the Company; - (iii) there are no shares to which a Company share scheme relates carrying rights with regard to the control of the Company; - (iv) there are no restrictions on the voting rights attaching to the Company's shares; and - (v) there are no agreements between shareholders that are known to the Company that may result in restrictions on the transfer of securities or on voting rights. ### Lock-up agreement with certain shareholders The purchase agreement entered into between the Company and Fastball Holdings LLC ("Fastball") on 3 December 2020 (the "Purchase Agreement") in relation to the acquisition of Fastball's entire 37.2% minority interest in FanDual Group Parent LLC (the "FanDual Acquisition") contains certain lock-up provisions which restricted Fastball's ability to distribute or transfer the 11,747,205 ordinary shares in the Company which Fastball received as partial consideration for the FanDual Acquisition (the "Consideration Shares") during the financial year ended 31 December 2021. Under the terms of the Purchase Agreement, subject to limited exceptions, Fastball was restricted from distributing or transferring the Consideration Shares during 2021, save that: - (a) from and after 31 March 2021, Fastball was permitted to distribute or sell up to 20% of the Consideration Shares; - (b) from and after 1 July 2021, Fastball was permitted to distribute or sell up to 50% of the Consideration Shares (inclusive of any shares distributed or sold prior to 1 July 2021); and - (c) from and after 31 December 2021, Fastball was permitted to distribute or sell up to 100% of the Consideration Shares. ### Controlling shareholders As far as known to the Directors, the Company is not directly or indirectly owned or controlled by another company or any government. Further information on the Company's share capital is set out in Note 24 to the Consolidated Financial Statements on pages 223 to 225. Annual Report & Accounts 2021 Plutter Entertainment plc 137 Governance Directors' report continued # Authority to allot new shares At the Company's AGM on 29 April 2021, shareholders authorised the Directors, by way of ordinary resolution, to allot new equity securities: - (a) up to a maximum aggregate value of €5,255,413.83 (representing 58,393,487 ordinary shares), being approximately 33.33% of the issued share capital of the Company (excluding treasury shares); and - (b) up to an maximum aggregate value of €10,510,827.66 (representing 116,786,974 ordinary shares), being approximately 66.66% of the issued share capital of the Company (excluding treasury shares), provided the allotment is made in connection with a rights issue or other pre-emptive issue in favour of holders of equity securities and less any amounts allotted pursuant to paragraph (a) above. The authority conferred at the 2021 AGM will expire at the close of the Company's AGM in 2022 or the close of business on 28 July 2022 (whichever is earlier). At the 2022 AGM, shareholders will be requested to renew this authority. Save for the allotment of shares in respect of the Group's employee share schemes, the Directors have no current intention to exercise this authority. # Disapplication of pre-emption rights At the Company's AGM on 29 April 2021, shareholders authorised the Directors, by way of special resolution, to allot new equity securities: - (a) up to a maximum aggregate value of €788,312.07 (representing 8,759,023 ordinary shares), being approximately 5% of the issued share capital of the Company (excluding treasury shares); and - (b) up to an additional maximum aggregate value of €788,312.07 (representing 8,759,023 ordinary shares), being approximately 5% of the issued share capital of the Company (excluding treasury shares), provided the proceeds of any such allotment are to be used only for the purposes of financing (or refinancing) a transaction which the Directors determine to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-emption Rights. In each case, for cash without first being required to offer them to existing shareholders of the Company. The authorities conferred at the 2021 AGM will expire at the close of the Company's AGM in 2022 or the close of business on 28 July 2022 (whichever is earlier). At the 2022 AGM, shareholders will be requested to renew this authority. Save for the allotment of shares in respect of the Group's employee share schemes, the Directors have no current intention to exercise this authority. # Purchase of own shares At the Company's AGM on 29 April 2021, shareholders authorised the Company and/or any of its subsidiaries, by way of special resolution, to make market purchases of a maximum of 17,518,046 of the Company's ordinary shares (being 10% of the issued share capital of the Company (excluding treasury shares)) at certain minimum and maximum prices specified in the resolution. The authority conferred at the 2021 AGM will expire at the close of the Company's AGM in 2022 or the close of business on 28 July 2022 (whichever is earlier). At the 2022 AGM, shareholders will be requested to renew this authority. The Board of Directors will only exercise the power to purchase shares in the future at price levels at which it considers purchases to be in the best interests of the shareholders generally after taking account of the Group's overall financial position. The Directors have no current intention to exercise this authority. # Capitalisation of merger reserve and capital reduction At the Company's AGM on 29 April 2021, shareholders approved, by way of ordinary resolution, the capitalisation of up to the entire amount standing to the credit of the Company's merger reserve account as at 31 December 2020 for the purpose of applying such sum in paying up in full one or more unissued shares in the capital of the Company to be allotted as fully paid bonus shares (the "Capitalisation") and authorised the Board of Directors to determine, on behalf of the Company, the amount of the Capitalisation and the number of shares to be issued, to determine whether or not to proceed with the Capitalisation and to implement any such Capitalisation in accordance with the provisions of Article 126 of the Company's Constitution as it saw fit. In addition, at the 2021 AGM, shareholders approved, by way of special resolution, subject to the confirmation of the Irish High Court, the reduction of the Company's company capital by up to the entire amount of the undenominated capital standing to the credit of the Company's share premium account as at 31 December 2020, together with any undenominated capital arising to the credit of the Company's share premium account as a result of implementation of Capitalisation, with the reserve arising to be treated as profits available for distribution within the meaning of section 117 of the Companies Act 2014. On 9 September 2021, the Board of Directors approved the capitalisation of £7,982,942,309.88, being the entirety of the amounts standing to the credit of Flutter's merger reserve account at 31 December 2020 in connection with the allotment, and issue of a single bonus share, resulting in the creation of undenominated capital standing to the credit of the Company's share premium account of £7,982,942,309.88, and resolved to make an application to the Irish High Court to seek confirmation of the reduction of the Company's company capital in an amount of £10,000,000,000 for such lesser amount as the High Court may determine standing to the credit of Flutter's share premium account following completion of the Capitalisation (the "Capital Reduction"). On 3 November 2021, the Irish High Court confirmed the Capital Reduction and ordered that the sum of £10,000,000,000 be transferred from the Company's share premium account to its distributable reserves account. Following completion of the Capital Reduction, the bonus share issued in connection with the Capitalisation was surrendered to the Company for nil consideration and cancelled. # Cancellation of treasury shares On 1 January 2021, the Company's total issued share capital was 177,033,508 shares, comprising: (a) 175,067,508 ordinary shares in issue each with a nominal value of €0.09, and (b) 1,965,600 ordinary shares held as treasury shares either directly by the Company or through Group companies or nominees. 116 Flutter Entertainment plc Annual Report & Accounts 2021 Ordinary shares held as treasury shares represented 1.1% of the Company's total issued share capital (including treasury shares) as at 1 January 2021. Ordinary shares held in treasury do not have any voting rights. On 28 July 2021, the Board of Directors resolved to cancel all ordinary shares held as treasury shares in accordance with sections 106 and 106(b)(a) of the Companies Act 2014. Prior to cancellation, those ordinary shares held as treasury shares through Group companies or nominees were surrendered to the Company for nil consideration. The cancellation of the ordinary shares held as treasury shares was effective on 25 August 2021. As at 31 December 2021, no ordinary shares were held as treasury shares by the Company or through Group companies or nominees. #### **Shareholders' meetings** The Company operates under the Companies Act 2014 of Ireland. Under the Companies Act 2014, the Company is required to hold a general meeting of shareholders each calendar year as its Annual General Meeting ('AGM'). Any other general meeting of shareholders held in that year is classified as an Extraordinary General Meeting ('EGM'). Not more than 15 months may elapse between the date of one AGM and the next. EGMs are convened when considered appropriate by the Board and may also be convened at the request of members holding not less than 5% of the issued share capital of the Company which carries voting rights. A shareholder or a group of shareholders holding at least 5% of the issued share capital of the Company which carries voting rights has the right to put an item on the agenda of an AGM, provided the shareholder exercises that right within the prescribed time period, or to table a draft resolution for an item on the agenda of a general meeting. No business may be transacted at any general meeting unless a quorum is present at the time when the meeting proceeds to business. Under Flutter's Constitution, two persons entitled to vote upon the business to be transacted, present in person or by proxy or as a duly authorised representative of a corporate member, constitute a quorum. Only those shareholders registered on the Company's register of members at the prescribed record date, being a date specified by the Board in relation to the relevant general meeting, are entitled to attend and vote at a general meeting. Notice of an AGM, the Form of Proxy and the Annual Report are sent to shareholders at least 20 working days before the AGM in line with the recommendations of the Code. The notice period for an EGM to consider any special resolution is 21 clear days. Subject to the approval of shareholders at the immediately preceding AGM, the Directors may also convene an EGM to consider any ordinary resolution on 14 clear days' notice. As a matter of policy, 14 clear days' notice will only be utilised to convene an EGM where the Directors believe that it is merited by the business of the meeting and the circumstances surrounding such business. While the Company's Constitution provides that resolutions may be voted on by a show of hands or on a poll, Flutter's practice is that all resolutions are voted on a poll. After each resolution has been dealt with, details are given of the level of proxy votes cast on each resolution and the numbers for, against and withheld. On a poll, the votes of shareholders present and voting at the meeting are added to the proxy votes received in advance of the meeting and the total number of votes for, against and withheld for each resolution are announced following the conclusion of the meeting. Ordinary resolutions may be passed by a simple majority of votes cast in favour, while special resolutions require a 75% majority of votes cast in favour. Any shareholder who is entitled to attend, speak and vote at a general meeting is entitled to appoint one or more proxies to attend, speak and vote on his or her behalf. A proxy need not be a member of the Company. The business of the Company is managed by the Directors who may do all such acts and things and exercise all the powers of the Company save for those powers required to be exercised by the Company in general meeting. Matters reserved to shareholders in general meetings include the election of Directors, the declaration of final dividends on the recommendation of the Directors, the fixing of the remuneration of the external auditor, amendments to the Constitution, measures to increase or reduce the ordinary share capital and the authority to issue shares. #### **Own shares held** During 2021, the Paddy Power Belfair plc Employee Benefit Trust ('EBT') transferred 1,372,056 (2020: 3,077) ordinary shares to employees under the Company's share schemes. At 31 December 2021, the EBT held 33,158 (2020: 67,520) ordinary shares in the Company, representing 0.019% (2020: 0.058%) of the total issued share capital of the Company as at that date. 1,337,894 shares were purchased into the EBT during the year ended 31 December 2021 (2020: 0). Further information is set out in Note 26 to the Consolidated Financial Statements on pages 225 to 229. #### **Outstanding options** 980,855 (2020: 767,889) awards or grants over shares were made during 2021 that would be dilutive of the Company's issued share capital. We settle outstanding awards or grants under the Company's share schemes with shares purchased in the market and through issuing new shares. The Board continues to review this as appropriate. As at 31 December 2021, there were 2,090,603 (2020: 1,842,762) options outstanding. #### **Dividends** The Board's capital management policy for the Group remains to target a leverage ratio of 1.0x to 2.0x over the medium term. The Board will continue to monitor the impact of Covid-19, and the Group's anticipated dateveraging and balance sheet position, and will decide when it is an appropriate time to reinstate a dividend. As a result, the Board did not recommend an interim dividend for 2021 (2020: £n6 or a final dividend for the year ended 31 December 2021 (2020: £n6). #### **Employees** Information on employee matters is contained on pages 52 to 55 and is deemed to be incorporated in this Directors' Report. Details of the Group's policy on the granting of options and awards under its employee share schemes and other long-term incentive schemes is contained in the Remuneration Report and on pages 138 to 154 and is deemed to be incorporated in this Directors' Report. Governance Annual Report & Accounts 2021 Flutter Entertainment plc 139 Directors' report continued # Events after the reporting date Details of events after the reporting period are set out in Note 33 on page 242 of the Consolidated Financial Statements. # Other # Political donations No political donations were made by the Company during 2021 that require disclosure in accordance with the Electoral Acts 1997 to 2002 and the Electoral (Amendment) Political Funding Act 2012. # Audit Committee The Company has established an Audit Committee, the details of which are set out on pages 124 to 131. # Articles of Association The Company's Articles of Association may only be amended by way of a special resolution approved by the shareholders. They were last amended, effective as of 19 January 2021, by way of a special resolution passed at the EGM held on that date. # Significant agreements – change of control provisions Other than as detailed below, there are no significant agreements which contain provisions entitling other parties to exercise termination or other rights in the event of a change in control of the Company. The rules of certain Company share schemes include provisions which apply in the event of a takeover or reconstruction. The Company is party to two credit agreements as follows: - a Term Loan A and Revolving Facility Agreement originally dated 11 March 2020 between, among others, the Company and Lloyds Bank plc as agent and security agent as amended and/or restated from time to time including by way of amendment agreement dated 10 December 2021 (the "TLA Agreement") and - a Term Loan B agreement originally dated 10 July 2018 between, among others, The Stars Group Inc. and Deutsche Bank AG New York Branch acting as administrative agent and collateral agent as amended and/or restated from time to time including by way of amendment agreements dated 15 June 2020 and 21 July 2021 (the "TLB Agreement"). Both the TLA Agreement and the TLB Agreement contain provisions entitling other parties to exercise certain rights to, among other things, demand prepayment of the relevant outstanding amounts in the event of a "Change of Control" (as set out and as defined in the TLA Agreement) and a "Change in Control" (as set out and as defined in the TLB Agreement). # Contractual arrangements The Group has contractual arrangements with numerous third parties in support of its business activities. In that context, disclosure in this Annual Report and Financial Statements of information about any of those third parties is not considered necessary for an understanding of the development, performance or position of the Group's businesses. # Related party transactions Internal controls are in place to ensure that any related party transactions involving Directors or their connected persons are carried out on an arm's length basis and are disclosed in the Consolidated Financial Statements. Transactions with Directors and parties related to them have been disclosed in Note 31 to the Consolidated Financial Statements on pages 239 to 240. # Funding and liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity from available cash and borrowing facilities to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. With regard to available cash, the Group's Treasury Policy sets conservative credit rating and tenor-based limits for exposures to financial counterparties. The Group performs regular cash flow projections to ensure that it has sufficient headroom available from cash and borrowing facilities to meet expected obligations over the forecasted period. The Group has entered into a Term Loan A and Revolving Credit Facility Agreement (the "TLA Agreement") comprising a term loan and Revolving Credit Facility totalling £1.4bn, with a maturity date of 5 May 2025. In November 2021, an additional lender was added to the TLA Agreement, bringing the total facility to £1.5bn, and the Group completed a drawdown of £68m under the existing terms. The Term Loan A amounts to £1.018m and the entire principal is due at maturity. The TLA Agreement also provides a multi-currency Revolving Credit Facility in an aggregate amount of £482m. The Group holds a USD term loan with an outstanding principal balance of $2.9bn (the "USD First Lien Term Loan B") and a EUR first lien term loan with an outstanding principal balance of €507m (the "EUR First Lien Term Loan B"), each with a maturity date of 23 July 2026. The USD First Lien Term Loan requires scheduled quarterly principal payments in amounts equal to 0.25% of the initial aggregate principal amount of the USD First Lien Term Loan B of US$2.938m, with the balance due at maturity. There is no amortisation on the EUR First Lien Term Loan B and the principal is due at maturity. At 31 December 2020, total borrowings were £3.6bn. During the 12 months ended 31 December 2021, the Group complied with all covenants related to its borrowings under all facilities. Further details are set out in Note 22 of the Consolidated Financial Statements on pages 217 to 219. # Viability statement The viability statement, as set out on pages 92 to 93, is deemed to be incorporated in this section of the Directors' Report. # Going concern, responsibilities and disclosure The Group reported EBITDA of £723.3m and a loss after tax of £411.8m for the year ended 31 December 2021. This includes £797.7m of non-cash depreciation and amortisation charged against profit in the year. The net cash generated from operating activities during the year ended 31 December 2021 was £685.5m. The balance sheet at 31 December 2021 reported a net current liability position of £112.5m. During 2021, the Group's various lenders consented to waive any Default or Event of Default that may have arisen by virtue of the Kentucky judgement, including any enforcement steps or actions taken by the Commonwealth of Kentucky prior to settlement. During the 12 months ended 31 December 2021, the Group is in compliance with all covenants related to its lending arrangements. The Directors have considered the available financial resources which include, at 31 December 2021, £951.7m of cash and cash equivalents and a £482.0m Revolving Credit Facility with undrawn capacity of £467.0m. Whilst there are certain loan repayments due within the next 12 months of £22.1m, the Group's lending 160 Platter Entertainment plc Annual Report & Accounts 2021 facilities primarily fall due in 2026 as set out in more detail in Company under contracts for services, who they believe have  the requisite knowledge and experience to advise the Company is well placed to manage its business risks successfully. See on compliance with its relevant obligations. ‘Managing and understanding our principal risks’ in this report Non-financial reporting more detail. In compliance with the non-financial reporting requirements set The Group’s forecasts to the year ending 31 December 2022 out in the Companies Act 2014, the European Union (Disclosure and beyond indicate that it will continue to have significant of Non-Financial and Diversity Information by Certain Large financial resources, continue to settle its debts as they fall Undertakings and Groups) Regulations 2017 (SI 360/2017) and due and operate well within its banking covenants as outlined  in Note 22 for at least a period of 12 months from the date of table below sets out certain non-financial information to provide these consolidated financial statements. 12 months from the investors and other stakeholders with an understanding of the date of these consolidated financial statements was selected Group’s development, performance, position and impact of its as the going concern period as it represents the period in which activity and where this information has been provided in this Governance the Group has prepared detailed forecasts for the majority of Statements: the period and it also reduces the degree of judgement and estimation uncertainty involved in both the forecasts and the Non-financial reporting downside scenarios. Relevant policies Reporting and additional Location of When preparing the forecasts, the Group has included the cash requirement information information¹ Page outflows associated with the post balance sheet acquisition as Environmental Sustainability Sustainability 60 to detailed in Note 33. Various downside scenarios over and above and climate and 63 those already included in the base case model on the potential matters environment impact of further reductions to cash flows due to changes in | the legal, regulatory and licencing landscape and the Group’s | Social and | Code of Ethics; | Safer Gambling | 44 to | | --- | --- | --- | --- | --- | | cyber and IT resilience have been considered in respect of | employee | Global Health | Sustainability | 63 | | these forecasts. The impact of these items involves significant | matters | and Safety DEI | Business | and | | | | Strategy | Integrity | 64 to | judgement and estimation uncertainty. Framework 65 In the event that it were necessary to draw down additional debt Human rights Code of Ethics; Business 64 to funding, the Directors have a reasonable expectation that this Modern Slavery Integrity 65 could be achieved within the confines of its existing debt facilities Statement² and financial covenant requirements. | | Anti-bribery and | Code of Ethics; | Business | 64 to | | --- | --- | --- | --- | --- | | Having given regard to the above, the Directors have a | corruption | Anti-Bribery | Integrity | 65 | | reasonable expectation that the Group has adequate resources | | and Corruption | | | | to continue in operational existence for a period of at least | | Policy | | |  Business model — Business Model 32 to financial statements, and therefore they continue to adopt the 33 going concern basis in its consolidated financial statements. Non-financial — Measuring Our   Progress 31 Risk management and internal control | The Directors confirm that, in addition to the monitoring carried | Principal risks — Understanding | | |  | | --- | --- | --- | --- | --- | | out by the Risk and Sustainability and Audit Committees under | | | and Managing |  | | their respective terms of reference, they have reviewed the | | | Our Principal | | | effectiveness of the Group’s risk management and internal | | | Risks | | | control systems as at the date of approval of the Financial | Environmentally | — Sustainability | | 60 to | | Statements. This review had regard to all material controls, | sustainable | | ESG | 63 | | including financial, operational and compliance controls that | activities | | supplementary | and | | could affect the Group’s business. Further details are set out | (Regulation (EU) | | information | 261 | | 124 to 135. |  | | | to | 266 Compliance policy statement 1 The referenced sections are deemed to be incorporated within this It is the policy of the Directors of the Company to comply Directors’ Report. with its relevant obligations (as defined in the Companies Act 2 Available on Flutter’s website, www.flutter.com. 2014). As required by section 225(2) of the Companies Act 2014, the Directors acknowledge that they are responsible for the Company’s compliance with its relevant obligations. The Directors have drawn up a compliance policy statement (as defined in section 225(3)(a) of the Companies Act 2014) and arrangements and structures are in place that are, in the Directors’ opinion, designed to secure material compliance with the Company’s relevant obligations. The Directors confirm that these arrangements and structures were reviewed during the financial year. In discharging their responsibilities under section 225, the Directors relied on the advice both of persons employed by the Company and of persons retained by the Annual Report & Accounts 2021 Flutter Entertainment plc 161 Directors' report continued # Task Force on Climate-related Financial Disclosures ("TCFD") In accordance with LR 9.8.6R (8) and LR 9.8.7, the Company is required to include a statement in this Annual Report and Financial Statements setting out whether the Company has included climate-related financial disclosures consistently with the recommendations of the Task Force on climate-related Financial Disclosures ("TCFD"). We have disclosed consistent with the TCFD recommendations except for disclosing a listing of climate-related risks and opportunities ("CROs"), embedding those CROs into our strategy and financial planning and conducting scenario analysis (strategy pillar) identifying CROs, managing those risks and integrating them into the organization's overall risk management (risk management pillar) and identifying and monitoring metrics and targets aligned to those CROs (metrics and targets pillar). Further information is set out in the Sustainability section of the Strategic Report on pages 261 to 266. # Greenhouse gas emissions Disclosures relating to the Group's greenhouse gas emissions are contained in the Sustainability section of the Strategic Report on pages 63 and 261 to 266. # Provision 38 of the UK Corporate Governance Code At the time of the introduction of provision 38 of the UK Corporate Governance Code, the Company had already signed a contract with the CEO and CFO that entitled them to an annual pension contribution equivalent to 15% of their annual total salary. This is higher than the pension contribution levels of the wider workforce which, in the UK, are currently 5% of annual salary. As a result, the Company has been non-compliant with provision 38 since its introduction. Despite the contractual obligations, the Remuneration Committee has agreed with the CEO and CFO that, from 1 January 2023, their pension contribution entitlements will reduce to the wider workforce level. The Committee has engaged with shareholders on this matter and explained the reasons why the Company has not been able to comply with provision 38 to date and assured shareholders that the Company will be fully compliant with provision 38 by 1 January 2023. # Auditor KPMG, Chartered Accountants, was appointed statutory auditor on 18 May 2018 and has been reappointed annually since that date, and pursuant to section 38(12) of the Companies Act 2014 will continue in office. Prior to 18 May 2018, KPMG LLP, the UK member firm of KPMG International, was the auditor to Flutter Entertainment plc, having served as auditor for the two financial years ended 31 December 2017. KPMG in Ireland previously served as auditor to Paddy Power plc (subsequently renamed to Flutter Entertainment plc) for 14 uninterrupted financial years. In accordance with section 38(1)(b) of the Companies Act 2014, a resolution authorising the Directors to fix the remuneration of the auditor will be proposed at the 2022 AGM. # Disclosure of information to the external auditor Each of the Directors who held office at the date of approval of this Directors' Report confirms that: (i) so far as they are aware, there is no relevant audit information of which the external auditor is unaware; and (ii) they have taken all steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the external auditor is aware of that information. # Books of account The measures which the Directors have taken to ensure that adequate accounting records are kept with the requirements of sections 281 to 285 of the Companies Act 2014 are: (i) the appointment of suitably qualified personnel; (ii) the adoption of suitable policies for recording transactions, assets and liabilities; and (iii) the appropriate use of computers and documentary systems. The Group and Company accounting records are kept at the Company's headquarters at Belfield Office Park, Beech Hill Road, Clonbleagh, Dublin 4, Ireland. # Listing Rule 9.8.4C In its Q3 2021 trading update, the Company published the following guidance in respect of the financial year ending 31 December 2021. # Outlook: - Group ex-US: Unfavourable sports results in the first 24 days of October have impacted EBITDA by around £60m. Combined with the expected £10m EBITDA impact from the Netherlands, we are revising our adjusted EBITDA expectations for 2021 to £1.24bn - £1.28bn (previous guidance: £1.27bn - £1.37bn). - US: Net revenue guidance remains unchanged at £1.28bn - £1.42bn ($1.8bn - $2.0bn) with an adjusted EBITDA loss now expected to be £250m - £275m (previous guidance: £225m - £275m). This revised EBITDA range includes a £15m impact from adverse sports results in October. The above statements represented a profit forecast for the purpose of LR 9.2.18 and replaced the Company's previous guidance as outlined in the statement. For the purposes of compliance with LR 9.8.4R (2), the Company confirms that 2021 adjusted EBITDA for the Group, excluding the US, was £1.24bn, within the range previously indicated. US net revenue was $1.9bn, within the range previously indicated, whilst the 2021 adjusted EBITDA loss in the US was £243m, exceeding the top end of the guidance previously issued by 3%. For the purposes of compliance with LR 9.8.4R (4) details of any long-term incentive schemes are included in the Directors' Remuneration Report on pages 156 to 154 and included by reference within this Directors' Report. For the purposes of compliance with LR 9.8.4R (12) and (13) – Waivers of Dividend Disclosure – the Trustee of the Employee Benefit Trust has elected to waive dividends in respect of certain holdings of Flutter shares, details of which are set out on page 225 of the Financial Statements and are included by reference within the Directors' Report. The remaining LR 9.8.4R sections are not applicable. On behalf of the Board of Directors Peter Jackson Chief Executive Officer 14 March 2022 Jonathan Hill Chief Financial Officer 14 March 2022 Flutter Entertainment plc, registered in Ireland Company number 16956 162 Flutter Entertainment plc Annual Report & Accounts 2021 ## Statement of Directors' Responsibilities In respect of the Annual Report and the Consolidated Financial Statements The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements (the "Annual Report and Accounts") in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law, the Directors are required to prepare the Group financial statements in accordance with international Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and applicable law including Article 4 of the IAS Regulation. The Directors have elected to prepare the parent Company financial statements in accordance with IFRS 101 Reduced Disclosure Framework as applied in accordance with the provisions of the Companies Act 2014. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and parent Company and the Group's profit or loss for that year. In preparing each of the Group and parent Company financial statements, the Directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; - assess the Group and Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and - use the going concern basis of accounting unless they either intend to liquidate the Group or Parent Company or to cease operations, or have no realistic alternative but to do so. The Directors are also required by the Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of the Central Bank of Ireland to include a management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group. The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements comply with the provision of the Companies Act 2014. The Directors are also responsible for taking all reasonable steps to ensure such records are kept by its subsidiaries which enable them to ensure that the financial statements of the Group comply with the provisions of the Companies Act 2014 including Article 4 of the IAS Regulation. They are responsible for such internal controls as they determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for safeguarding the assets of the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also responsible for preparing a Directors' Report that complies with the requirements of the Companies Act 2014. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group and Parent Company website (www.flutter.com). Legislation in the Republic of Ireland concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. ### Responsibility statement of the Directors in respect of the Annual Report Each of the Directors, whose names and functions are listed on pages 96 to 99 of this annual report, confirm that, to the best of each person's knowledge and belief: - the Group Financial Statements, prepared in accordance with IFRS as adopted by the European Union and the Parent Company Financial Statements prepared in accordance with IFRS 101 Reduced Disclosure Framework give a true and fair view of the assets, liabilities and financial position of the Group and Parent Company at 31 December 2021 and of the profit or loss of the Group for the year then ended; - the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face; and - the Annual Report and financial statements, taken as a whole, provides the information necessary to assess the Group's position and performance, business model and strategy, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. On behalf of the Board **Peter Jackson** Chief Executive Officer 14 March 2022 **Jonathan Hill** Chief Financial Officer Annual Report & Accounts 2021 Flutter Entertainment plc 103 Financial Statements # Independent Auditor's Report to the members of Flutter Entertainment plc ## Report on the audit of the financial statements ### Opinion We have audited the financial statements of Flutter Entertainment plc ('the Company') and its consolidated undertakings ('the Group') for the year ended 31 December 2021 set out on pages 171 to 259 contained within the reporting package 655400EG4YULJNZJ7B2-2021-12-31-en.zip, which comprise the Consolidated Income Statement, the Consolidated Statement of Other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Financial Position, the Company Statement of Changes in Equity and related notes, including the summary of significant accounting policies set out in note 3. The financial reporting framework that has been applied in the preparation of the Group financial statements is Irish Law including the Commission Delegated Regulation 2019/815 regarding the single electronic reporting format (ESEF) and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, Irish Law and FRS 101 Reduced Disclosure Framework issued in the United Kingdom by the Financial Reporting Council. In our opinion: - the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2021 and of the Group's loss for the year then ended; - the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; - the Company financial statements have been properly prepared in accordance with FRS 101 Reduced Disclosure Framework issued by the UK's Financial Reporting Council; and - the Group and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs) (Ireland) and applicable law. Our responsibilities under those standards are further described in the Auditor's Responsibilities section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee. We were reappointed as auditor to the Company by the Directors on 18 May 2018. The period of total uninterrupted engagement is the four financial years ended 31 December 2021. Prior to 18 May 2018, KPMG LLP, the UK member firm of KPMG International, was the auditor to the Company having served as auditor for the two financial years ended 31 December 2017. KPMG Ireland previously served as auditor to Paddy Power plc (subsequently renamed to Flutter Entertainment plc) for 14 uninterrupted financial years. We have fulfilled our ethical responsibilities under, and we remained independent of the Group in accordance with, ethical requirements applicable in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to public interest entities. No non-audit services prohibited by that standard were provided. ### Conclusions relating to going concern In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director's assessment of the Group and Company's ability to continue to adopt the going concern basis of accounting included considering the inherent risks to the Group and Company's business model and analysing how those risks might affect the Group and Company's financial resources or ability to continue operations over the going concern period. The sensitivity we considered most likely to adversely affect the Group and Company over this period is changes to regulatory environments in key markets which could result in a reduction in recurring income levels or an exit from certain markets. We considered various downside scenarios over the level of available financial resources indicated by the Group's financial forecasts. A key judgement in the downside scenarios is that there is a reasonable expectation that additional debt financing within the confines of the Group's existing debt facility agreements and financial covenant requirements could be raised, if required. No breach of covenants is indicated by the various downside scenarios. As such we assessed this risk to the assessment of the Group's and Company's ability to continue to adopt the going concern basis of accounting as being remote. There were no other risks identified that we considered were likely to have a material adverse effect on the Group's and Company's available financial resources over this period. We further note that both the Group and Company are in a net current liability position. As part of our assessment, we have considered the financial resources available to the Group and Company, and in particular the availability of the undrawn portion (£46/m) of the revolving credit facility for the Group, and the fact that the Company's position arises largely from intra-group balances. 164 Flutter Entertainment plc Annual Report & Accounts 2021 Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. In relation to the Group and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate Governance Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections his report. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Settlement of Kentucky litigation is a new Key Audit Matter in the current year due to the significant level of management and auditor attention focused on this matter during the year. We continue to perform procedures over acquisition accounting. However, the acquisitions were less significant this year compared to the transformative combination with The Stars Group in 2020, and so we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year. We also continue to perform procedures over tax provisioning. However, following developments in the Greek and German cases during the year, the accounting judgements are less significant, and so we have not assessed this as one of the most significant risks t this year. Financial statements In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows: Online revenue recognition (Group key audit matter) Refer to page 180 (accounting policy) and pages 193 to 196 (financial disclosures). The key audit matter How the matter was addressed in our audit The Group has a number of income streams Our procedures in relation to the IT systems included, but were not limited to, across its online operations. the following: These revenue streams are calculated and • We obtained and documented our understanding of key online revenue recorded on highly complex IT systems, processes and specifically how transactions from each online revenue stream which process a high volume of low value were initiated, processed and recorded from transaction initiation through to transactions across a large variety of different recording in the Financial Statements. sporting events and games wagered on. The • We evaluated the design and implementation of key controls, both automated accuracy and completeness of the Group’s and manual, in these processes. We also identified the key IT environments revenue recognition are highly dependent on supporting these processes. the Group IT systems; particularly there is a • We tested key controls relevant to supporting our audit approach to online significant risk that systems do not interface revenue. These included logical access controls, including user access correctly from the customer-facing systems management; user access recertification; appropriateness of privileged users through to the financial information systems. from the perspective of user access management, change management and The key audit matter is applicable for each entication. of the following online revenue streams: • As part of our evaluation of IT change management procedures we tested sportsbook, poker, gaming and exchange. controls over authorisation and testing of changes and developments to the systems and controls over job processing and scheduling (automated rocessing). • We tested the operating effectiveness of controls over customer account set-up, cash deposits and withdrawals from customer accounts. • We tested the operating effectiveness of controls over the capturing of initial bets, their allocation between different products and their processing through the system to recognition as revenue or in the appropriate customer account. Annual Report & Accounts 2021 Flutter Entertainment plc 165 ## Independent Auditor’s Report continued to the members of Flutter Entertainment plc Key audit matters: our assessment of risks of material misstatement continued The key audit matter How the matter was addressed in our audit In addition to our procedures over the IT systems, other procedures we performed which provided relevant evidence included, but were not limited to, the following: • We tested key interfaces between transaction recording systems and the General Ledger. • We traced a selection of sportsbook stakes, commission on exchange and poker and gaming transactions placed on live-betting environments from the customer-facing systems to the data warehouses and then from the data warehouses to the financial information systems to assess whether that information is passed appropriately from one system to another. • We tested a selection of sportsbook bets to verify the pay-out was correctly calculated based on the stake placed and odds offered on the individual bet. • We obtained a selection of external confirmation and/or third-party statements of the client funds held in the client trust and reconciled the bank balance confirmation/third-party statement to the customers’ betting accounts. • We assessed the appropriateness of cash transferred from the client trust accounts to corporate cash by reconciling the total revenue amounts reported by key IT systems to the amounts transferred from the client funds to corporate cash. We tested a sample of these transfers by agreeing the amounts to the relevant bank information. • We recalculated commission for a sample of customers and validated, for one customer, across the year that commission rates were charged as described in the terms and conditions for exchange transactions. • We recalculated premium charges for a sample of customers during the year, confirming such charges were applied as described in the terms and conditions for exchange transactions. • We performed substantive procedures over online revenue streams, which included reconciling cash receipts to revenue and tested the inclusion of revenue in the appropriate period. • We tested a selection of bets placed around year end for events which had occurred, ensuring the revenue was appropriately recorded in the correct period. We also tested a selection of open bets at year end ensuring the event had not yet occurred and ensured the bet was correctly recorded as an open bet at year end. Our testing identified no significant weaknesses in the design of IT general controls relating to interface of information from customer-facing systems to financial reporting systems. Through our additional testing we identified no errors in the recording of revenue transactions for the online businesses. 166 Flutter Entertainment plc Annual Report & Accounts 2021 Settlement of Kentucky litigation (Group key audit matter) Refer to page 191 to 192 (accounting policy) and page 197 (financial disclosures). The key audit matter How the matter was addressed in our audit The Group’s results for the year include a Our procedures included, but were not limited to, the following: charge of US$200m (£145.2m) arising from • We obtained an understanding of the litigation and appeals process and the the final settlement with the Commonwealth subsequent mediation process which resulted in the settlement through of Kentucky in relation to an historic legal case discussions with Group’s internal and external legal counsel. in The Stars Group. • We obtained and documented our understanding of the Group’s process for Based on management’s view and the responding to the Commonwealth of Kentucky in relation to the claim and opinion of the Group’s legal counsel and assessing the likely impact. advisers as to the likely pay-out outcomes • We considered the adequacy of the opening $100m provision as at 30 June 2021 at the time, the Group had recognised a during our half year review procedures. provision of US$100m (£73.3m) in the 2020 • We obtained the settlement agreement and vouched evidence of the financial statements to cover the outcome full payment.  litigation. • We assessed the accounting and disclosure for this transaction in the year and The full and final settlement of the litigation are satisfied that it is appropriately reflected in the financial statements. for US$300m (£216.2m) was announced on 22 September 2021. Due to the resolution of the dispute prior to year end, we have not identified a significant risk of material misstatement in relation to this assessment and the accounting does not involve judgement. However, we consider this a key audit matter due to the significance of Financial statements the judgement issued by the Commonwealth of Kentucky in 2020, the significance of the settlement amount and the significant level of management and auditor attention focused on this matter during the year.  Refer to page 251 (accounting policy) and page 254 (financial disclosures). The key audit matter How the matter was addressed in our audit The Company balance sheet includes Our procedures included, but were not limited to, the following: a £16.7bn financial asset relating to its • We obtained and documented our understanding of the process around investment in subsidiary companies. management’s assessment of the recoverability of the carrying value During the year, an internal reorganisation y companies. in the Group lead to a reallocation of net • We vouched a sample of the movements in the carrying value of investments assets between the Company’s investments. g the year. Management conducted an impairment • We evaluated management’s impairment assessment over the carrying value assessment at year end and determined bsidiaries. that one of the Company’s subsidiary’s • We assessed the adequacy of disclosures in the Company’s Financial Statements. no longer supported its carrying value on Based on evidence obtained, we found that management’s judgements were the Company’s balance sheet. The value  of this investment was impaired to its supported by the market capitalisation at year end. recoverable value. The assessment of the recoverability of the remaining investments does not involve significant judgements due to the significant value of the underlying businesses. However, we consider this a key audit matter due to the significance of the investments based the Company. Annual Report & Accounts 2021 Flutter Entertainment plc 167 ## Independent Auditor's Report continued to the members of Flutter Entertainment plc ### Our application of materiality and an overview of the scope of our audit Materiality for the Group Financial Statements as a whole was set at £4bn (2020: £30m), determined with reference to a benchmark of Group revenues, of which it represents 0.75% (2020: 0.74%). The significant increase in materiality primarily arose due to the full year impact of consolidation of The Stars Group which was acquired on 3 May 2020, along with the growth in revenues across the Group in the year, primarily in the US division. We have used Group revenues as the benchmark to set our materiality for the current year which is consistent with the prior year. For 2021 and the prior year there has been a significant amount of volatility in the Group's profit before tax result due to losses in the Group's US segment arising from ongoing investment in the business, the amortisation charge on intangibles recognised through acquisitions and other transaction-related expenditure. As a result we believe Group revenues to be the most representative benchmark for the financial performance of the Group for 2021. Materiality for the Company Financial Statements as a whole was set at £33.7bn (2020: £22.5m), determined with reference to a benchmark of total assets and chosen to be lower than materiality for the Group Financial Statements as a whole. It represents 0.2% of total assets (2020: 0.1%). We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £2.25m (2020: £1.5m), in addition to other identified misstatements that warranted reporting on qualitative grounds. In planning the audit, we applied materiality to determine that, of the Group's six reporting components, we would subject five to full scope audits for Group purposes, this is consistent with the approach in 2020. The components subject to full scope audits accounted for 96% of Group revenues (2020: 97%), 99% of Group total assets (2020: 99%) and 96% of Group profit before taxation (2020: 99%). The remaining 4% of total Group revenues and 4% of Group profit before tax are represented by one component. For this residual component, we performed analysis at an aggregated Group level and reconfirmed our assessment that there were no significant risks of material misstatement within this component. We applied materiality to assist us determine what risks were significant risks and the Group team instructed component auditors as to the significant areas to be covered by them, including the relevant risks detailed above and the information to be reported back. The Group team approved the materiality of each component, which ranged from £15m to £20m, having regard to the mix of size and risk profile of the Group across the components. The work on four of the five in-scope components was performed by component auditors in the UK, Isle of Man, Australia and the US and the remaining component and the audit of the Company was performed by the Group team. The Group team held videoconference meetings with the components to assess the audit risk and strategy. Further videoconference meetings were held throughout the audit and at the conclusion of their fieldwork to discuss the findings reported to the Group team. The Group team also attended the videoconference closing meetings for all components. The Group team also carried out a detailed review of the component audit workpapers, and we applied materiality to determine the scope and extent of that review. ### Other information The directors are responsible for the preparation of the other information presented in the Annual Report together with the financial statements. The other information comprises the information included in the Strategic Report, the Corporate Governance section, the Directors' Report and the Non-Financial Statement. The financial statements and our auditor's report thereon do not comprise part of the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. Based solely on our work on the other information undertaken during the course of the audit, we report that, in those parts of the directors' report specified for our consideration: - we have not identified material misstatements in the directors' report; - in our opinion, the information given in the directors' report is consistent with the financial statements; and - in our opinion, the directors' report has been prepared in accordance with the Companies Act 2014. ### Disclosures of principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to: - the Understanding and Managing our Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated; - the directors' confirmation within the Directors' Report on pages 160 and 161 that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; and - the directors' explanation in the Directors' Report of how they have assessed the prospects of the Group, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. 166 Flutter Entertainment plc Annual Report & Accounts 2021 ### Other corporate governance disclosures We are required to address the following items and report to you in the following circumstances: - • Fair, balanced and understandable. If we have identified material inconsistencies between the knowledge we acquired during our financial statements audit and the directors' statement that they consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. - • Report of the Audit Committee: if the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee. - • Statement of compliance with UK Corporate Governance Code: if the directors' statement does not properly disclose a departure from provisions of the UK Corporate Governance Code specified by the Listing Rules of Euronext Dublin and the UK Listing Authority for our review. - • If the directors' statement relating to Going Concern required under the Listing Rules of Euronext Dublin and the UK Listing Authority set out on pages 160 to 161 is materially inconsistent with our audit knowledge. We have nothing to report in these respects. In addition as required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Statement on pages 94 to 162, that: - • based on the work undertaken for our audit, in our opinion, the description of the main features of internal control and risk management systems in relation to the financial reporting process is consistent with the financial statements and has been prepared in accordance with the Act; - • based on our knowledge and understanding of the Company and its environment obtained in the course of our audit, we have not identified any material misstatements in that information; and - • the Corporate Governance Statement contains the information required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017. We also report that, based on work undertaken for our audit, the information required by the Act is contained in the Corporate Governance Statement. ### Directors' Remuneration Report In addition to our audit of the Financial Statements, the Directors have engaged us to audit the information in the Directors' Remuneration Report that is described as having been audited, which the Directors have voluntarily decided to prepare as if the Company were required to comply with the requirements of Schedule B to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S) 2008 No. 410) made under the UK Companies Act 2006. In our opinion the part of the Directors' Remuneration Report which we were engaged to audit has been properly prepared in accordance with Schedule B to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the UK Companies Act 2006, as if those requirements were to apply to the Company. ### Our opinions on other matters prescribed by the Companies Act 2014 are unmodified We have obtained all the information and explanations which we consider necessary for the purpose of our audit. In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the financial statements are in agreement with the accounting records. ### We have nothing to report on other matters on which we are required to report by exception The Companies Act 2014 requires us to report to you if, in our opinion: - • the disclosures of directors' remuneration and transactions required by Sections 305 to 312 of the Act are not made; - • the Company has not provided the information required by Section 1110N in relation to its remuneration report for the financial year 31 December 2020; or - • the Company has not provided the information required by section 501 to (7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 for the year ended 31 December 2020 as required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (amendment) Regulations 2018. We have nothing to report in this regard. The Listing Rules of Euronext Dublin and the UK Listing Authority require us to review: - • the Directors' Statement, set out on pages 160 to 161, in relation to going concern and longer-term viability; - • the part of the Corporate Governance Statement on page 95 relating to the Company's compliance with the provisions of the UK Corporate Governance Code and the Irish Corporate Governance Annex specified for our review; and - • certain elements of disclosures in the report to shareholders by the Board of Directors' remuneration committee. We have nothing to report in this regard. Financial Statements Annual Report & Accounts 2011 Platter Entertainment plc 169 ## Independent Auditor’s Report continued to the members of Flutter Entertainment plc Respective responsibilities and restrictions on use Directors’ responsibilities As explained more fully in their statement set out on page 163, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Company’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 they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and may involve any area of law and regulation and not just those directly affecting the financial statements. A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/Auditing- standards/International-Standards-on-Auditing-for-use-in-Ire/ Description-of-the-auditor-s-responsibilities-for. The purpose of our audit work and to whom we owe our responsibilities Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s 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 and the Company’s members, as a body, for our audit work, for our report, or for the opinions we have formed. Ryan McCarthy for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Stokes Place St. Stephen’s Green Dublin 2 14 March 2022  Flutter Entertainment plc Annual Report & Accounts 2021 # Consolidated Income Statement For the year ended 31 December 2021 | | Note | 2021 £m | 2020 £m | | --- | --- | --- | --- | | Continuing operations | | | | | Revenue | 5 | 6,036.2 | 4,413.9 | | Cost of sales | | (2,309.5) | (1,541.7) | | Gross profit | | 3,726.7 | 2,872.2 | | Operating costs excluding depreciation, amortisation, impairment and gain on disposal | | (3,003.4) | (2,100.6) | | EBITDA^{1} | | 723.3 | 771.6 | | Amortisation of acquisition-related intangible assets | | (543.3) | (452.3) | | Depreciation and amortisation of other assets | | (254.4) | (213.2) | | Impairment | | — | (22.6) | | Gain on disposal | | 11.9 | — | | Operating (loss)/profit | | (62.5) | 103.5 | | Financial income | 8 | 3.2 | 79.9 | | Financial expense | 8 | (229.1) | (182.3) | | (Loss)/profit before tax | | (288.4) | 1.1 | | Tax expense | 10 | (123.5) | (35.8) | | (Loss)/profit for the year | | (411.0) | (34.7) | | Attributable to: | | | | | Equity holders of the Company | | (415.8) | 57.9 | | Non-controlling interest | | 3.9 | (72.6) | | | | (411.0) | (34.7) | | Earnings per share | | | | | Basic | 11 | (£2.365) | £0.293 | | Diluted | 11 | (£2.365) | £0.285 | 1 EBITDA is defined as profit for the period before depreciation, amortisation, impairment, gain on disposal, financial income, financial expense and tax expense (code). It is considered by the Directors to be a key measure of the Group's financial performance. Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. Financial Statements Annual Report & Accounts 2021 Platter Entertainment plc 171 # Consolidated Statement of Other Comprehensive Income For the year ended 31 December 2021 | | 2021 £m | 2020 £m | | --- | --- | --- | | Loss for the year | (411.9) | (34.7) | | Other comprehensive (loss)/income: | | | | Items that are or may be reclassified subsequently to profit or loss: | | | | Effective portion of changes in fair value of cash flow hedges | 61.4 | (280.4) | | Fair value of cash flow hedges transferred to the income statement | (28.4) | 267.8 | | Foreign exchange gain (loss) on net investment hedges, net of tax^{1} | 68.2 | 19.6 | | Foreign exchange (loss)/gain on translation of the net assets of foreign currency denominated entities | (309.6) | 41.9 | | Debt instruments at FVOCI | (1.3) | (0.4) | | Other comprehensive (loss)/income | (209.7) | 48.5 | | Total comprehensive (loss)/income for the year | (621.6) | 13.8 | | Attributable to: | | | | Equity holders of the Company | (627.9) | 93.8 | | Non-controlling interest | 6.3 | (80.0) | | Total comprehensive (loss)/income for the year | (621.6) | 13.8 | 1. Foreign exchange gain on net investment hedges is presented including an income tax charge of £17.3m (2020: £5.1m) which relates to the tax effect on foreign exchange activities with respect to the Group's hedging activities. A corresponding tax credit of £16.3m (2020: £5.1m) is related to the same is recognised in the Consolidated Income Statement such that there is a 0.1% net impact on the Consolidated Statement of Financial Position, reflecting excess of 8 gain in 0.0, not offset by current year or prior year losses. Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. 172 Flutter Entertainment plc Annual Report & Accounts 2021 # Consolidated Statement of Financial Position As at 31 December 2021 | | Note | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | --- | | **Assets** | | | | | Property, plant and equipment | 12 | 451.4 | 361.9 | | Intangible assets | 13 | 4,875.6 | 5,527.8 | | Goodwill | 14 | 9,346.8 | 9,516.7 | | Deferred tax assets | 18 | 8.2 | 7.4 | | Non-current tax receivable | | 21.5 | 15.3 | | Investments | 16 | 5.5 | 3.0 | | Derivative financial assets | 23 | 68.0 | 16.9 | | Financial assets – restricted cash | 17 | 7.4 | 6.9 | | Other receivables | 16 | 29.3 | 75.2 | | **Total non-current assets** | | **14,813.7** | **13,531.1** | | Trade and other receivables | 16 | 203.9 | 139.5 | | Financial assets – restricted cash | 17 | 677.6 | 587.9 | | Cash and cash equivalents | 17 | 951.7 | 603.4 | | Current investments at FVOCI – customer deposits | 17 | 83.0 | 82.8 | | Current tax receivable | | 45.6 | 47.5 | | **Total current assets** | | **1,961.8** | **1,461.1** | | **Total assets** | | **16,775.5** | **16,992.2** | | **Equity** | | | | | Issued share capital and share premium | | 477.6 | 2,481.7 | | Merger reserve | 24 | — | 7,982.9 | | Treasury shares | 24 | — | (40.7) | | Shares held by Employee Benefit Trust | 24 | (4.0) | (5.8) | | Cash flow hedge reserve | 24 | 22.7 | (10.5) | | Other reserves | | (61.7) | 152.3 | | Retained earnings | | 9,816.3 | 405.0 | | **Total equity attributable to equity holders of the Parent** | | **10,250.9** | **10,965.1** | | Non-combining interest | | 37.5 | 30.8 | | **Total equity** | | **10,288.4** | **10,995.9** | | **Liabilities** | | | | | Trade and other payables | 19 | 1,096.4 | 1,033.0 | | Customer balances | | 721.0 | 643.4 | | Derivative financial liabilities | 23 | 74.0 | 150.9 | | Provisions | 20 | 71.3 | 14.3 | | Current tax payable | | 42.3 | 41.0 | | Lease liability | 21 | 47.0 | 48.3 | | Borrowings | 22 | 22.1 | 50.8 | | **Total current liabilities** | | **2,074.1** | **1,981.7** | | Trade and other payables | 19 | 19.8 | 14.6 | | Derivative financial liabilities | 23 | 55.1 | 102.3 | | Provisions | 20 | 47.8 | 145.0 | | Deferred tax liabilities | 18 | 498.0 | 500.9 | | Non-current tax payable | | 23.2 | 18.0 | | Lease liability | 21 | 217.4 | 145.7 | | Borrowings | 22 | 3,549.7 | 3,088.1 | | **Total non-current liabilities** | | **4,413.0** | **4,014.6** | | **Total liabilities** | | **6,487.1** | **5,996.3** | | **Total equity and liabilities** | | **16,775.5** | **16,992.2** | Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. On behalf of the Board Peter Jackson Chief Executive Officer 14 March 2022 Jonathan Hill Chief Financial Officer Annual Report & Accounts 2021 Platter Entertainment plc 173 Financial Statements ## Consolidated Statement of Cash Flows For the year ended 31 December 2021 | | Note | 2021 £m | 2020 £m | | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | Loss for the year | | (411.9) | (34.7) | | Tax expense | | 123.5 | 35.8 | | Financial income | | (3.2) | (79.9) | | Financial expense | | 229.1 | 182.3 | | Amortisation of acquisition related intangible assets | | 543.3 | 432.3 | | Depreciation and amortisation of other assets | | 254.4 | 213.2 | | Impairment | | — | 22.6 | | Gain on disposal | | (11.9) | (0.2) | | Separately disclosed items included within EBITDA | | 277.7 | 117.6 | | Employee equity - settled share-based payments expense | | 79.1 | 52.1 | | Foreign currency exchange loss/(gain) | | 15.7 | (31.6) | | **Cash from operations before changes in working capital** | | **1,095.8** | **909.5** | | (Increase)/decrease in trade and other receivables | | (40.5) | 18.1 | | Increase in trade, other payables and provisions | | 64.0 | 280.1 | | **Cash generated from operating activities** | | **1,119.3** | **1,207.7** | | Taxes paid | | (138.5) | (89.4) | | **Cash generated from operations, net of taxes paid** | | **980.8** | **1,118.3** | | Transaction fees, restructuring and integration costs paid | 6 | (61.2) | (119.9) | | Amounts paid in respect of Kentucky litigation | 20 | (234.1) | — | | **Net cash from operating activities** | | **685.5** | **998.4** | | **Cash flows from investing activities** | | | | | Purchase of property, plant and equipment | | (89.3) | (59.3) | | Purchase of intangible assets | | (62.4) | (53.2) | | Capitalised internal development expenditure | | (142.3) | (99.6) | | Purchase of businesses net of cash acquired | 15 | (50.7) | 445.2 | | Payment of contingent deferred consideration | 15 | (21.6) | (7.2) | | Proceeds from disposal of assets | | — | 12.5 | | Net proceeds from disposal of subsidiary | 15 | 127.1 | — | | Interest received | | 1.5 | 1.3 | | Change in restricted cash | | (0.4) | (4.8) | | Other | | (0.8) | — | | **Net cash (used in)/from investing activities** | | **(238.9)** | **234.9** | | **Cash flows from financing activities** | | | | | Proceeds from the issuance of new shares in respect of equity placement (net of issuance costs) | 24 | — | 1,920.8 | | Proceeds from the issue of shares on exercise of employee options | 24 | 13.2 | 34.3 | | Acquisition of further interest in subsidiary | | — | (1,546.0) | | Dividend paid to non-controlling interest | 24 | (18.7) | (15.2) | | Payment of lease liabilities | 21 | (47.9) | (45.7) | | Payment of lease interest | 21 | (8.4) | (5.7) | | Lease incentive received | | 7.3 | — | | Proceeds from borrowings | 22 | 1,167.7 | 950.0 | | Net amounts drawn down previous GBP Revolving Credit Facility | | — | (117.2) | | Repayment of borrowings | 22 | (751.2) | (1,756.0) | | Interest paid | | (141.9) | (114.1) | | Settlement of derivatives | | (67.9) | (35.6) | | Financing fees paid in respect of borrowing facilities | | (56.7) | (24.4) | | Ordinary shares of the Company acquired by the Employee Benefit Trust | 24 | (180.7) | — | | **Net cash used in financing activities** | | **(83.2)** | **(754.8)** | | **Net increase in cash and cash equivalents** | | **363.4** | **478.5** | | **Cash and cash equivalents at start of year** | | **603.4** | **108.1** | | **Foreign currency exchange (loss)/gain on cash and cash equivalents** | | **(15.1)** | **16.8** | | **Cash and cash equivalents at end of year** | 17 | **951.7** | **603.4** | Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. 174 Platter Entertainment plc Annual Report & Accounts 2021 ## Consolidated Statement of Changes in Equity  Total | Number | | Issued | | | | | | | | | | | | | | | equity | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | of | share | | | Shares | | | | | | | | | | | attributable | | | | | | | ordinary | | capital | | | held by | Cash | | | Foreign | | | | Share- | | | | | to | | | | | shares | | and | | | Employee | flow | | Fair | exchange | | | | based | | | shareholders | | | | Non- | | | in issue | | share | Merger | Treasury | Benefit | hedge | | value | translation | | Other | | payment | | Retained | | of the | | controlling | | Total | | millions | | premium | reserve | shares | Trust | reserve | reserve | 1 | reserve | 1 | reserves | 1 | reserve | 1 | earnings | Company | | | interest | | equity | # £m £m £m £m £m £m £m £m £m £m £m £m £m Balance at 1 January 2021 177.0 2,481 .7 7, 9 8 2 . 9 (4 0 .7) (5 .8) (1 0 . 3) (0. 4) 49.6 2.3 10 0 . 8 405.0 10, 96 5 .1 30.8 1 0,995.9 Total comprehensive income/(loss) for the year Loss for the year — — ————— ———(41 5 . 8) (41 5 . 8) 3.9 (411 . 9) Foreign exchange translation including net investment hedges — — —————(226 .6) —— —(226 .6) 2.4 (224 . 2) Effective portion of changes in fair value of cash flow hedges — — ———61. 4 — ——— — 61 . 4 — 61 . 4 Fair value of cash flow hedges transferred to the income statement — — ———(28 .4) — ——— — (28 .4) — (28 .4) Financial assets at FVOCI — — ————(1 . 3) ——— — (1 . 3) — (1. 3) Tax on foreign exchange hedging — — —————(1 7. 2) —— — (17. 2) — (1 7. 2) Total comprehensive income/(loss) for Financial statements the year — — ———33. 0 (1. 3) (243. 8) ——(41 5 . 8) (62 7 . 9) 6.3 (621.6) Transactions with owners of the Company, recognised directly in equity Shares issued on exercise of employee share options (Note 24) 0.6 13 .2 ————— ——— — 13.2 — 13.2 Cancellation of Treasury shares (2.0) (0. 2) — 4 0 .7 ——— —0.2 — (4 0 .7) ——— Merger reserve capitalisation (Note 24) — 7, 9 8 2 . 9 (7, 9 82 . 9) ———— ——— — — — — Reduction of capital (Note 24) — (10,000.0) ————— ———10,000.0 ——— Business combinations (Note 15) — — ————— ——— — —17. 1 17. 1 Ordinary shares of the Company acquired by the Employee Benefit Trust (Note 24) — — ——(18 0 . 7) —— ——— —(18 0 .7) — (18 0 . 7) Equity-settled transactions – expense recorded in the income statement — — ————— ——80.5 — 80.5 — 80. 5 Equity-settled transactions – vesting — — ——182 . 5 —— ———(182 . 5) ——— Tax on share-based payments — — ————— ——— 0.7 0 .7 — 0.7 Exercise of share options — — ————— ——(49 .6) 4 9.6 ——— Dividend paid to non-controlling interest (Note 24) — — ————— ——— — —(16 . 7) (16 .7) Total contributions by and distributions to owners of the Company (1.4) (2 , 0 0 4 .1) (7, 9 8 2 . 9) 40 .7 1.8 —— —0.2 30.9 9 , 8 2 7. 1 (8 6 . 3) 0.4 (85. 9) Balance at 31 December 2021 175.6 4 7 7. 6 ——(4. 0) 22 .7 (1 .7) (19 4 . 2) 2.5 1 31 .7 9 , 8 16 . 3 10,250.9 3 7. 5 10 , 2 8 8 . 4 1. Included in other reserves in the Statement of Financial Position. Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. Annual Report & Accounts 2021 Flutter Entertainment plc 175 # Consolidated Statement of Changes in Equity For the year ended 31 December 2020 | | Number of ordinary shares in issue (millions) | Issued share capital and stock company (m) | Range income (m) | Treasury shares (m) | Shares held by E-tron (see Berth T. et al. (m)) | Cash flow hedge income (m) | Fair value interest (m) | Foreign exchange translation reserve (m) | Other reserves (m) | Share-based payment reserve (m) | Revenues earnings (m) | Total equity attributable to shareholders' other Company (m) | Non-controlling interest (m) | Fixed equity (m) | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 January 2020 | 80.3 | 428.3 | — | (60.7) | (5.1) | 2.3 | — | (21.3) | 2.3 | 80.6 | 3,539.5 | 3,984.7 | 204.9 | 4,189.6 | | **Total comprehensive income/(loss) for the year** | | | | | | | | | | | | | | | | Loss for the year | — | — | — | — | — | — | — | — | — | — | 37.9 | 37.9 | (72.6) | (34.7) | | Foreign exchange translation including net investment hedges | — | — | — | — | — | — | — | 74.0 | — | — | — | 74.0 | (7.4) | 66.6 | | Tax on foreign exchange hedging | — | — | — | — | — | — | — | (5.1) | — | — | — | (5.1) | — | (5.1) | | Effective portion of changes in fair value of cash flow hedges | — | — | — | — | — | (280.4) | — | — | — | — | — | (280.4) | — | (280.4) | | Fair value of cash flow hedges transferred to the income statement | — | — | — | — | — | 267.8 | — | — | — | — | — | 267.8 | — | 267.8 | | Financial assets at FVOCI | — | — | — | — | — | — | (0.4) | — | — | — | — | (0.4) | — | (0.4) | | Total comprehensive income/(loss) for the year | — | — | — | — | — | (12.6) | (0.4) | 68.9 | — | — | 37.9 | 95.8 | (80.0) | 13.8 | | **Transactions with owners of the Company, recognised directly in equity** | | | | | | | | | | | | | | | | Shares issued on equity placement (net of issuance cost) (Note 24) | 26.2 | 1,933.2 | — | — | — | — | — | — | — | — | (12.4) | 1,930.8 | — | 1,930.8 | | Shares issued on exercise of employee share options (Note 24) | 2.1 | 34.3 | — | — | — | — | — | — | — | — | — | 34.3 | — | 34.3 | | Shares issued as consideration for the acquisition of TSG (Note 15) | 65.3 | 5.1 | 6,189.5 | — | — | — | — | — | — | — | — | 6,194.6 | — | 6,194.6 | | Issue of replacement options (Note 15) | — | — | — | — | — | — | — | — | — | 58.0 | — | 58.0 | — | 58.0 | | Shares issued as consideration for acquisition of TSG Australia (Note 15) | 0.8 | 79.7 | — | — | — | — | — | — | — | — | — | 79.7 | — | 79.7 | | Present value of FanDual put liability with Radbalsup to termination of option | — | — | — | — | — | — | — | — | (846.0) | — | — | (846.0) | — | (846.0) | | Unwind of put option on termination of option | — | — | — | — | — | — | — | — | 846.0 | — | — | 846.0 | — | 846.0 | | Acquisition of non-controlling interest in FanDual Group (Note 15) | 12.7 | 1.0 | 1,793.4 | — | — | — | — | 2.2 | — | — | (3,263.7) | (1,467.1) | (78.9) | (1,546.0) | | Deal loss on acquisition of FanDual | — | — | — | — | — | — | — | — | — | — | (9.3) | (9.3) | — | (9.3) | | Equity-settled transactions—expense recorded in income statement | — | — | — | — | — | — | — | — | — | 70.2 | — | 70.2 | — | 70.2 | | Equity-settled transactions—sending | — | — | — | — | 0.3 | — | — | — | — | (0.3) | — | — | — | — | | Tax on share-based payments | — | — | — | — | — | — | — | — | — | — | 5.4 | 5.4 | — | 5.4 | | Exercise of share awards | — | — | — | — | — | — | — | — | — | (107.7) | 107.7 | — | — | — | | Dividend paid to non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | — | (13.2) | (13.2) | | Dividends to shareholders | 1.3 | 0.1 | — | — | — | — | — | — | — | — | (0.1) | — | — | — | | Total contributions by and distributions to owners of the Company | 96.7 | 2,053.4 | 7,982.9 | — | (1.3) | — | — | 2.2 | — | 20.2 | (1,172.4) | 6,886.6 | (94.1) | 6,792.5 | | Balance at 31 December 2020 | 1770 | 2,481.7 | 7,982.9 | (40.7) | (5.8) | (50.3) | (0.4) | 49.6 | 2.3 | 100.8 | 405.0 | 10,965.1 | 30.8 | 10,995.9 | Notes 1 to 33 on pages 177 to 242 form an integral part of these consolidated financial statements. 176 Platter Entertainment plc Annual Report & Accounts 2021 # Notes to the Consolidated Financial Statements ## 1. General information Flutter Entertainment plc (the "Company") and its subsidiaries (together referred to as the "Group") is a global sports betting and gaming group, whose headquarters are in Dublin, Ireland. As a result of internal restructuring and integration initiatives in 2021, the Group transitioned from the five segment operating model reported in 2020 into a four segment operating model. In 2021, the Group's four reportable segments are (i) UK and Ireland ("UK&I"), which includes Sky Betting & Gaming and Paddy Power (both online and retail) and Betfair's operations in the UK and Ireland. ii) Australia, comprising Sportsbet, the market leader in the fast-growing Australian online betting market; iii) International, which includes online poker, gaming, betting, rummy and daily fantasy sport product offerings under the PokerStars, Betfair International, Adjarabet and Junglee games brands; and iv) US, which includes sports betting, daily fantasy sports, poker and gaming services under the FanDuel, TVG, FOX Bet, Stardust and PokerStars brands. On 5 May 2020, the Company completed an all-share Combination with TSG (the "Combination") through an acquisition of all of the issued product/standing share capital of TSG by the Company. The results of TSG prior to completion of the Combination are not included in these consolidated financial statements. See Note 15 for further information on the Combination. The Company is a public limited company incorporated and domiciled in the Republic of Ireland and has its primary listing on the London Stock Exchange under the symbol FLTR and a secondary listing on the Irish Stock Exchange under the symbol FLTR. The address of its registered office is set out on page 268 of this Annual Report. The consolidated financial statements of the Group for the year ended 31 December 2021 comprise the financial statements of the Company and its subsidiary undertakings and were approved for issue by the Board of Directors on 14 March 2022. ## 2. Recent accounting pronouncements ### Adoption of new accounting standards The IASB issued the following standards, policies, interpretations and amendments which were effective for the Group for the first time in the year ended 31 December 2021: - Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16: Interest Rate Benchmark Reform Phase 2; and - Amendment to IFRS 16: Covid-19 Related Rent Concessions. The adoption of the new standards and interpretations did not have a significant impact on the Group's consolidated financial statements. ### Adopted IFRS not yet applied The following IFRSs have been issued but have not been applied in these financial statements. Their adoption is not expected to have a material effect on the Group's consolidated financial statements, other than IBOR reform which is disclosed in more detail below: - Amendments to IAS 37: Onerous contracts – Cost of Fulfilling a Contract (Effective date 1 January 2022); - Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use (effective 1 January 2022); - Amendments to IFRS 1, IFRS 9 and IAS 41: Annual Improvements to IFRS Standards 2018–2020 (effective 1 January 2022); - Amendments to IFRS 3: Reference to the Conceptual Framework (effective 1 January 2022); - Amendments to IAS 1: Classification of Liabilities as Current or Non-current (effective 1 January 2023); - IFRS 17: Insurance Contracts and amendments to Insurance Contracts (effective date 1 January 2023); - IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies, (effective date 1 January 2023); - Amendments to IAS 8: Definition of Accounting Estimates (effective date 1 January 2023); - Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective date 1 January 2023); and - Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective date to be confirmed). ### IBOR reform The Company has considered the impact of interest rate benchmark reform ("IBOR reform") on its loan accounting and hedge accounting. The Company has adopted the Interest Rate Benchmark Reform – Phase 2 Amendments to IFRS 9, IAS 39 and IFRS 7 issued in August 2020 ("Phase 2 relief"). Adopting these amendments provides temporary relief from applying specific loan accounting and hedge accounting requirements for hedging relationships directly affected by IBOR reform. For loan accounting, the reliefs have the effect that the Company can update its effective interest rate for the change to the new risk-free rate without recognising an immediate gain or loss. For hedge accounting, the reliefs have the effect that IBOR reform should not generally cause hedge accounting to cease and updates to hedge documentation relating to IBOR reform will not result in a de-degradation event for existing hedge relationships. However, any hedge ineffectiveness should continue to be recorded in the income statement. Qualifying for the reliefs is contingent on the Company's transition, i.e. the new risk-free rate plus credit adjustment spread, being economically equivalent to the previous LIBOR basis. On 5 March 2021, the UK's Financial Conduct Authority (FICA) formally announced the cessation of all GBP London Interbank Offered Rate ("LIBOR") benchmark settings currently published by ICE Benchmark Administration ("IBA") immediately after 31 December 2021. In response, the Company has entered into agreements with its lenders to amend the benchmark rate referenced in the Term Loan Agreement from GBP's IBOR to GBP SONIA for any interest periods commencing on or after 1 January 2022. Annual Report & Accounts 2021 Flutter Entertainment plc 177 Financial Statements Notes to the Consolidated Financial Statements continued ## 2. Recent accounting pronouncements continued The Group's USD First Lien Term Loan® and certain of its cross-currency interest rate swaps are indexed to USD-LIBOR, and its EUR First Lien Term Loan® is indexed to EURIBOR. See Notes 22 and 23 for details of the borrowings and hedging derivatives notional amounts. The Group's monitoring and evaluating the related risks, which include interest payments on its borrowings, and amounts received on certain of its cross-currency interest rate swaps. These risks arise in connection with transitioning contracts to an alternative rate, including any resulting value transfer that may occur. Additional risk exists as the method of transitioning to an alternative reference rate may be challenging and requires agreement with the respective counterparty about how to make the transition. The table below indicates the nominal amount and carrying amount of financial instruments that will be affected by IBOR reform which are yet to transition to alternative benchmark rates. The Company has adopted the Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7 issued in September 2019 (“Phase 1 relief”) in relation to its derivatives in hedge relationships. Adopting these amendments provides temporary relief from applying specific hedge accounting requirements to hedging relationships directly affected by IBOR reform. | Current benchmark rate | Non-derivative financial liability nominal amount | Derivative instruments nominal amount | | --- | --- | --- | | USD Libor | $2.931m | $2.931m | | EURIBOR | € 50.7m | — | The reliefs have the effect that IBOR reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Furthermore, the amendments set out triggers for when the reliefs will end, which include the uncertainty arising from interest rate benchmark reform no longer being present. As illustrated above, the Company has a significant exposure to changes in the USD LIBOR benchmark. At 31 December 2021 the Company has a term loan of USD $2.931m and cross-currency interest rate swaps with a notional amount of USD $2.931m, which are indexed to USD LIBOR. The cross-currency interest rate swaps are designated in a cash flow hedge relationship hedging the USD LIBOR term loan. In assessing whether the hedges are expected to be highly effective on a forward-looking basis, the Company has assumed that the USD LIBOR interest rate on which the cash flows of its interest rate swaps and its hedged floating rate loans are based are not altered by IBOR reform. The Company anticipates that USD LIBOR will transition to SOFR and has considered an IBOR transition plan. The transition project will include changes to systems, processes, risk and valuation models, as well as managing related tax and accounting implications. The Company currently anticipates that the areas of greatest change will be amendments to the contractual terms of its LIBOR referenced floating-rate swaps and updating its hedge designation. None of the Group's cross-currency interest rate swaps have interest rate reset dates which occur after 30 June 2023, the date on which USD LIBOR is expected to be discontinued. The Group expects the EURIBOR will continue to exist as a benchmark rate for the foreseeable future. The Group will continue to apply the amendments to IFRS 9/IAS 39 until the uncertainty arising from the interest rate benchmark reforms with respect to the timing and the amount of the underlying cash flows that the Group is exposed to ends. The Group has assumed that this uncertainty will not end until the Group's contracts that reference IBORs are amended to specify the date on which the interest rate benchmark will be replaced, the cash flows of the alternative benchmark rate and the relevant spread adjustment. ## 3. Basis of preparation and summary of significant accounting policies The consolidated financial statements are prepared on the historical cost basis except for derivative financial instruments (which include betting transactions), equity securities, certain financial assets which have been designated as FVTPL, FVOCI, contingent deferred consideration and share-based payments, all of which are stated at fair value (grant date fair value in the case of share-based payments). The consolidated financial statements are presented in pounds sterling and are rounded to the nearest 0.1 million. Further to IAS Regulation (EC) 606/2002, Accounting standards adopted for use in the EU's EU law requires that the annual consolidated financial statements of the Group be prepared in accordance with International Financial Reporting Standards (“IFRS”) adopted by the European Union (“EU”). These consolidated financial statements have been prepared on the basis of IFRS adopted by the EU and effective for accounting periods ending on or after 1 January 2021. The accounting policies applied in the preparation of these consolidated financial statements have been applied consistently during the year and prior year, except as noted above and in Note 2 “Recent accounting pronouncements”. ### Going concern The Group reported EBITDA of £723.5m and a loss after tax of £411.9m for the year ended 31 December 2021. This includes £797.7m of non-cash depreciation and amortisation charged against profit in the year. The net cash generated from operating activities during the year ended 31 December 2021 was £685.5m. The balance sheet at 31 December 2021 reported a net current liability position of £112.5m. During 2021, the Group's various lenders consented to waive any Default or Event of Default that may have arisen by virtue of the Kentucky judgement, including any enforcement steps or actions taken by the Commonwealth of Kentucky prior to settlement. During the 12 months ended 31 December 2021, the Group is in compliance with all covenants related to its lending arrangements. The Directors have considered the available financial resources which include, at 31 December 2021, £951.7m of cash and cash equivalents and a £482.0m Revolving Credit Facility with undrawn capacity of £467.0m. Whilst there are certain loan repayments due within the next 12 months of £22.1m, the Group's lending facilities primarily fall due in 2026 as set out in more detail in Note 22. 178 Platter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully. See ‘Managing and understanding our principal risks’ in this report for more detail. The Group’s forecasts to the year ending 31 December 2022 and beyond indicate that it will continue to have significant financial resources, continue to settle its debts as they fall due and operate well within its banking covenants as outlined in Note 22 for at least  financial statements was selected as the going concern period as it represents the period in which the Group has prepared detailed forecasts for the majority of the period and it also reduces the degree of judgement and estimation uncertainty involved in both the forecasts and the downside scenarios. When preparing the forecasts, the Group has included the cash outflows associated with the post balance sheet acquisition as detailed in Note 33. Various downside scenarios over and above those already included in the base case model on the potential impact of further reductions to cash flows due to changes in the legal, regulatory and licencing landscape and the Group’s cyber and IT resilience have been considered in respect of these forecasts. The impact of these items involves significant judgement and estimation uncertainty. In the event that it were necessary to draw down additional debt funding, the Directors have a reasonable expectation that this could be achieved within the confines of its existing debt facilities and financial covenant requirements. Having given regard to the above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these consolidated financial statements, and therefore they continue to adopt the going concern basis in its consolidated financial statements. Basis of consolidation A subsidiary is an entity controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group’s consolidated financial statements include the accounts of the Company and its subsidiary undertakings. Intra-group balances and any Financial statements unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated on consolidation except to the extent that unrealised losses provide evidence of impairment. Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The non-controlling interests represent ownership interests entitling their holders to a proportionate share of net assets upon liquidation of the subsidiary, and may initially be measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the subsidiary’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Non-controlling interests are initially measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the subsidiary’s identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. “Total comprehensive income” is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Upon the loss of control of a subsidiary, the Group’s profit or loss on disposal is calculated as the difference between (i) the fair value of the consideration received and of any investment retained in the former subsidiary and (ii) the previous carrying amount of the assets (including any goodwill) and liabilities of the subsidiary and any non-controlling interests. Upon the Group’s acquisition of further interest in a subsidiary, the non-controlling interest is reduced by the proportionate interest acquired, with the balance between the consideration paid and interest acquired being recognised in equity. When a put option is held by a non-controlling interest in a subsidiary whereby that party can require the Group to acquire the non-controlling interest's shareholding in the subsidiary at a future date and the non-controlling interest retains present access to the results of the subsidiary, the Group applies the present access method of accounting to the arrangement, the existing shares held by the non-controlling interest are presented as a separate component of equity and the option is classified as a derivative and t and loss. When the Group has a call option over the shares held by a non-controlling interest in a subsidiary whereby the Group can require the non-controlling interest to sell its shareholding in the subsidiary at a future date, the option is classified as a derivative and is recognised as a financial instrument on inception with fair value movements recognised through profit and loss. When the settlement of a put option in cash cannot be wholly avoided, a financial liability is recognised at the present value of the amounts payable upon exercise of the option. On initial recognition, the corresponding debit relating to the financial liability is booked to equity attributable to the Company within the category “Other reserves”. Subsequent changes in the carrying amount of the financial liability that result from the remeasurement of the present value of the amount payable upon exercise of the non-controlling interest option are recognised in equity. Annual Report & Accounts 2021 Flutter Entertainment plc 179 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Revenue The services provided by the Group comprise sports betting (sportsbook, the exchange sports betting product, daily fantasy sports products and pari-mutuel betting products), fixed odds games betting, online games and casino, peer-to-peer games including online poker, online bingo and online rummy and business-to-business services. Revenue is stated exclusive of value-added tax (“VAT”). Revenue from contracts with customers is recognised when control of the Group’s services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services. The Group has concluded that it is the principal in its revenue arrangements because it controls the services before transferring them to the customer. Information about the nature and timing of the satisfaction of performance obligations pertaining to the Group’s main sources lined below:  The Group’s sportsbook betting revenues are classified as derivative financial instruments, with the exception of: a. exchange sports betting product and pari-mutuel betting products on which commission income is earned; b. peer-to-peer games on which commission income and tournament fees are earned (including daily fantasy sports); and c. business-to-business services on which fees are earned. Revenue from sportsbook betting activities represents the net gain or loss from betting activities in the year plus the gain or loss on the revaluation of open positions at year end and is stated net of the cost of customer promotions and bonuses incurred in the year. These derivatives are recognised initially at fair value and subsequently at fair value through profit or loss, within the revenue line as this represents the Group’s principal activity. Customer promotions (including free bets) and bonuses are deducted from sportsbook betting revenue. Revenue from the exchange sports betting product represents commission earned on betting activity and is recognised on the date the outcome for an event is settled. Revenue from pari-mutuel betting products represents a percentage of stake and is recognised on settlement of the event, and is stated net of customer promotions and bonuses in the year. Revenue from business-to-business services represents fees charged for the services provided in the year. Revenue from conversion margins is the revenue earned on the processing of real-money deposits and cash outs in specified currencies. Revenue from customer cross-currency deposits and withdrawals is recognised when the transaction is complete at a point in time. Revenue is recognised with reference to the underlying arrangement and agreement with the players and represents  operations. Revenue from daily fantasy sports products represents entry fees less prizes paid and player acquisition and retention incentives. Prizes are generally paid in cash or an entry fee into specific contests or tournaments. The Group earns service fees from offering fantasy sports contests (“Contests”) and fantasy sports tournaments (“Tournaments”) to users. Contests are generally completed in a single day or up to one week. Tournaments are generally completed in one week or up to several months over two to three rounds. For Contests, revenue is recognised when the contest is settled. For Tournaments, revenue is recognised over the period of the tournament as each round is completed and there is no longer a service obligation to each user that participated in the tournament. Gaming revenue Revenue from fixed odds games and the online casinos represents net winnings (“customer drop”), being amounts staked net of customer winnings, and is stated net of customer promotions and bonuses incurred in the year. Revenue from peer-to-peer games represents commission income (“rake”) and tournament fees earned from games completed n the year. Play-money gaming revenue Customers can participate in online poker tournaments and social casino games using play-money, or virtual currency. Customers can purchase additional play-money chips online to participate in the poker tournaments and social casino games. The revenue is recognised at a point in time when the customer has purchased such chips as control has been transferred to the customer and no further performance obligations exist. Once a customer has purchased such chips, they are non-refundable and non-cancellable. Other The Group sponsors certain live poker tours and events, uses its industry expertise to provide consultancy and support services to the casinos that operate the events, and has marketing arrangements for branded poker rooms at various locations around the world. The Group also provides customers with access to odds comparisons, tips and other information to assist with betting, and provides other media and advertising services, and limited content development services with revenue generated by way of affiliate commissions, revenue share arrangements and advertising income as applicable. Revenue is recognised upon satisfying  applicable. Revenue from sponsorships represents advertising campaigns for customers who become a presenting sponsor at events. Customers are generally billed prior to the campaign launch and revenue is earned over the period of the event. 180 Flutter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued Cost of sales Cost of sales includes direct costs incurred by the Group associated with revenue generation activities and principally comprises betting and gaming taxes, goods and services tax in Australia, software supplier costs, customer payment transaction fees, sporting levies and other data rights charges. Research and development Expenditure on research activities is recognised in the income statement as an expense in the year in which it is incurred. Expenditure on development activities is recognised in profit or loss as an expense in the year in which it is incurred, except in cases where necessary criteria for capitalisation are met. Such criteria include demonstrating the technical feasibility of the product and having sufficient certainty over future revenue or cost savings that will be generated from the product. The qualifying expenditure capitalised represents costs directly attributable to the development of the asset. This expenditure is capitalised from the date when it first meets the recognition criteria and until the date at which the asset is available for use. Capitalised development expenditure assets are amortised on a straight-line basis from the date they are available for use over their useful economic life. The amortisation method and the life of the commercial production are assessed annually, and the assets are tested for impairment whenever an indication exists that an asset might be impaired. Financial income Interest income is recognised on an accruals basis by reference to the principal outstanding and the effective rate of interest. Financial income includes positive changes in the fair value of embedded derivatives, positive changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains on financing instruments associated with financing activities, ineffectiveness of cash flow hedges and positive changes in the fair value of deferred contingent consideration. Financial expense Financial expense comprises interest expense on borrowings (except in respect of borrowing costs relating to qualifying assets), lease interest, interest on guarantee contracts entered into with third parties, the unwinding of the discount on provisions and Financial statements other non-current liabilities, financing-related fees not eligible for capitalisation, foreign exchange losses on financing instruments associated with financing activities, negative changes in the fair value of embedded derivatives, negative changes in the fair value of financial assets at fair value through profit or loss, ineffectiveness of cash flow hedges and negative changes in the fair value of deferred contingent consideration. Bank and credit card charges Bank and credit card charges and fees that are considered integral to the operations of the Group’s business are recognised in ‘cost of sales’ in the consolidated income statement. Bank charges and fees that are related to the Group’s financing activities are recognised in ‘financial expense’ in the consolidated income statement. Operating segment reporting Operating segments are distinguishable components of the Group that have been established based on the internal reports regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) in order to assess each segment’s performance and to allocate resources to them. Following a review during the year, the Group determined that it is the Chief Executive Officer and Chief Financial Officer jointly rather than the Board of Directors who are performing the function of CODM. Following the change in the CODM, the Group re-assessed the identification of operating segments and determined that no change was necessary other than the change outlined below which had been determined prior to the change in CODM. As a result of internal restructuring and integration initiatives, in 2021 the Group transitioned from the five segment operating model reported in 2020 to a four segment operating model. The Group has determined that its reportable segments are UK&I, Australia, International and US. The reportable segments reflect the way financial information is reviewed by the Group’s CODM. The previous reportable segments, as disclosed in the Group’s 2020 Annual Report, of PPB, PokerStars and Sky Betting & Gaming have been realigned to follow the Group’s integrated operational model and internal structure. The Group has restated the operating accordingly. Geographical segments provide services within a particular economic environment that are subject to risks and rewards that are different from those components operating in alternative economic environments. For further information on operating segments see Note 5. Functional and presentation currency IFRS requires entities to consider primary and secondary indicators when determining functional currency. Primary indicators are closely linked to the primary economic environment in which the entity operates and are given more weight. Secondary indicators provide supporting evidence to determine an entity’s functional currency. Once the functional currency of an entity is determined, it should be used consistently, unless significant changes in economic factors, events and conditions indicate that the functional currency has changed. A change in functional currency is accounted for prospectively from the date of the change by translating all items into the new functional currency using the exchange rate at the date of the change. Annual Report & Accounts 2021 Flutter Entertainment plc 181 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Based on an analysis of the primary and secondary indicators, the Company has determined its and its subsidiaries’ functional currencies. The Company’s functional currency is pound sterling. The pound sterling represents the primary currency for transactions and as such the Group has chosen to present its financial statements in pound sterling. Items included in the financial statements of each of the Group’s entities are measured using  ar (“USD”). Foreign currency transactions Transactions in foreign currencies are translated at the relevant foreign exchange rate ruling at the date of the transaction. Non-monetary assets that are carried at historical cost are not subsequently retranslated. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to functional currencies at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Gains and losses arising on the retranslation of cash and cash equivalent balances are included within ‘operating costs excluding depreciation, amortisation and impairment’ in the income statement rather than as financial income or expense, as the Directors consider that the gains or losses arising relate to operations, as the Group broadly matches its foreign currency denominated assets and liabilities to ensure that foreign exchange gains and losses are minimised. Gains and losses on retranslation of non-cash assets and liabilities with the exception of balances related to the Group’s financing arrangements are also dealt with as operating items. Gains and losses on retranslation of balances relating to the Group financing activities are dealt with as financing items. Gains and losses on foreign currency retranslation are separately analysed into their components in the statement of cash flows. For a review of the hedge accounting policies adopted by the Group, see Hedge accounting on page 187. Foreign currency translation of foreign operations To the extent that the Group’s foreign operations are considered to have functional currencies which are different from the Group’s presentation currency, the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation and long-term intra-group loans that are part of the net investment because repayment is not planned or foreseen, rting date. The revenues and expenses of these foreign operations are translated to GBP at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on translation are recognised directly in the consolidated statement of other comprehensive income and presented in the foreign currency translation reserve within equity. Income tax Income tax in the income statement comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in other comprehensive income or directly in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to the tax payable in respect of the previous year. Where uncertain tax treatments exist, the Group assesses whether it is probable that a tax authority will accept the uncertain tax treatment applied or proposed to be applied in its income tax filings. The Group assesses for each uncertain tax treatment whether it should be considered independently or whether some tax treatments should be considered together based on what the Group believes provides a better prediction of the resolution of the uncertainty. The Group considers whether it is probable that the relevant authority will accept each uncertain tax treatment, or group of uncertain tax treatments, assuming that the taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to apply to temporary differences when they reverse, based on laws that have been enacted or substantively enacted at the reporting date.  asset can be utilised. Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset to the extent that they relate to income taxes levied by the same taxation authority. 182 Flutter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued Business combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The value of acquisition is measured at the date of purchase and represents the aggregate of the fair values of assets given, liabilities incurred or assumed and any equity instruments issued by the Group in exchange for control of the acquiree and fair value of previously held equity interests. The identifiable assets and liabilities of the acquiree are recognised at their fair values at the date of acquisition. Goodwill recognised subsequent to 1 January 2004, representing the excess of purchase consideration over the fair value of net identifiable assets acquired defined in accordance with IFRS 3 Business Combinations, is capitalised. Goodwill is initially recognised as an asset at cost and is thereafter measured at cost less any accumulated impairment losses. Goodwill is not amortised but is tested for impairment annually. Any impairment in the value of goodwill is recognised in the income statement in the year in which  is recognised on subsequent purchases of equity interests in the acquiree and instead the difference between the cost of such acquisitions is recognised through retained earnings. An adjustment is also made to non-controlling interests and the foreign exchange translation reserve through retained earnings to reflect the reduced non-controlling interest. Costs relating to the acquisition of businesses that occurred since 1 January 2010 are expensed to the income statement when incurred. Costs related ed earnings. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders percentage interest in the net fair value of the assets, liabilities and contingent liabilities recognised under the proportionate interest method. Subsequently the non-controlling interests are allocated their share of results recognised in the income statement and the statement of comprehensive income. Amounts payable in respect of deferred contingent consideration are recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in the income statement within financial expense or income. Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Cost includes Financial statements expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing items and restoring the sites on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net in the income statement. Depreciation is calculated to write-off the cost less estimated residual value of property, plant and equipment on a straight-line basis over their useful lives, as follows: Land Not depreciated Buildings: Freehold 25 – 50 years Buildings: Leasehold improvements Unexpired term of the lease, except for leases with an initial term of 10 or less years, which are depreciated over the unexpired term of the lease plus the renewal length of the lease if there is an unconditional right of renewal Fixtures and fittings 3 – 10 years Computer equipment 2 – 5 years Motor vehicles 3 – 5 years Right-of-use asset Shorter of term of lease and useful life of the asset, as defined under IFRS 16 Assets in the process of construction are stated at cost less impairment losses. Depreciation of these assets begins when the assets are ready for their intended use. The residual value of property, plant and equipment, if not insignificant, is reassessed annually. Annual Report & Accounts 2021 Flutter Entertainment plc 183 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Intangible assets Intangible assets, principally comprising brands, customer relations, computer software and technology, development expenditure, licences and broadcasting and wagering rights are capitalised and amortised over their estimated useful economic lives on a straight-line basis, with the exception of customer relations which is amortised on a reducing balance basis. Brands represent the fair value of brands and trade-mark assets acquired in business combinations. Customer relations represent the fair value of customer relations acquired in business combinations. Computer software and technology includes the costs incurred in acquiring and bringing specific software programs into use and the fair value of software and technology acquired in business combinations. Maintenance costs relating to computer software programs are expensed to the income statement when incurred. Development expenditure represents internally generated costs incurred on development activities. These costs have been capitalised in accordance with the requirements of IAS 38 Intangible Assets. Licences comprise the costs of acquiring retail bookmaking licences, the rents incurred in respect of the year prior to each shop opening for business (as the existence of a premises is a pre-requisite for obtaining such licences), licences for electronic point-of-sale (“EPOS”) system software, and gambling licences including US market access payments across a number of jurisdictions globally. Broadcasting and wagering rights represent assets acquired as part of the all-share merger with Betfair Group plc in 2016 and in particular relates to the US segment. The estimated useful economic lives of intangible assets, according to which amortisation is calculated, are as follows: Brands 8 – 20 years Customer relations 4 – 20 years in reducing balance, based on estimated customer lifecycle Computer software and technology 2 – 5 years Development expenditure 3 – 5 years Licences 2 – 20 years Broadcasting and wagering rights 6 years The licences intangible assets recognised on the acquisition of the D McGranaghan Limited business in 2008, the acquisition of an additional betting shop in Northern Ireland in 2011 and the brands intangible assets recognised on the acquisition of Sportsbet Pty Limited and International All Sports Limited (“IAS”) in 2009, are considered indefinite life intangibles (see Note 13) and are therefore not amortised but rather are tested for impairment annually. For additional details regarding these assets and ee Note 13. Financial instruments Financial assets Recognition and measurement At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not measured at FVTPL (as defined below), transaction costs that are directly attributable to the acquisition of the financial asset. The Group classifies financial assets into one of the following measurement categories: a. Those to be measured subsequently at fair value through profit or loss ( “ F V T PL” ) ; b. Those to be measured subsequently through other comprehensive income (“FVOCI”); or c. Those to be measured at amortised cost. The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. Except in very limited circumstances, the classification may not be changed subsequent to initial recognition. The Group only reclassifies debt instruments when its business model for managing those assets changes. Debt instruments Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of that asset. There are three measurement categories into which the Group classifies its debt instruments: a. Amortised cost: debt instruments are measured at amortised cost if they are held within a business model with the objective of collecting the contractual cash flows and those cash flows solely represent payments of principal and interest. A gain or loss on a debt instrument that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the debt instrument is derecognised or impaired. Interest income from these debt instruments is recognised using the effective interest rate method. Cash, restricted cash and accounts receivable are classified as amortised cost. b. FVOCI: debt instruments are measured at FVOCI if they are held within a business model with the objective of either collecting the contractual cash flows or of selling the debt instrument, and those cash flows solely represent payments of principal and interest. Movements in the carrying amount are recorded in other comprehensive income, with impairment gains or losses, interest income and foreign exchange gains or losses recognised in profit or loss. When the debt instrument is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss. Bonds recorded within current investments are classified as FVOCI. 184 Flutter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued c. FVTPL: debt instruments that are not solely payments of principal and interest are classified and measured at FVTPL, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at FVOCI, as described above, debt instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch. A gain or loss on a debt instrument that is subsequently measured at FVTPL and is not part of a hedging relationship is recognised in profit or loss and presented in the consolidated income statement. Impairment of financial assets (including receivables) The Group recognises loss allowances for expected credit losses (“ECLs”) on financial assets measured at amortised cost. The Group measures loss allowances at an amount equal to lifetime ECLs, except for bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition which are measured at 12-month ECLs. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information. The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full or the financial asset is significantly past due. The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. Measurement of ECLs ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls  expects to receive). ECLs are discounted at the effective interest rate of the financial asset. Financial statements Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: a. significant financial difficulty of the third party; b. a breach of contract such as a default; c. the restructuring of a balance by the Group on terms that the Group would not consider otherwise; or d. it is probable that the third party will enter bankruptcy or other financial reorganisation. Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. ther detail. Write-off The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. However, financial assets that are written off could still amounts due. Financial liabilities Recognition and measurement Financial liabilities are classified, at initial recognition, as either financial liabilities at FVTPL or other financial liabilities. • FVTPL: Financial liabilities are classified as FVTPL if they are held for trading or are designated as FVTPL upon initial recognition  the financial liability is managed and its performance is evaluated on a fair value basis. Any gains or losses arising on remeasurement are recognised in the consolidated income statement. Derivative instruments and certain other level 3 liabilities (see Note 29) are classified as FVTPL. • Other financial liabilities: Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method calculates the amortised cost of a financial liability and allocates interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability (or a shorter period where appropriate) to the net carrying amount on initial recognition. Long-term debt is classified within other financial liabilities and is measured at amortised cost. Annual Report & Accounts 2021 Flutter Entertainment plc 185 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Debt modifications The Group may pursue amendments to its credit agreements based on, among other things, prevailing market conditions. cash flows. The accounting treatment of debt modifications depends upon whether the modified terms are substantially different than the previous terms. The terms of an amended debt agreement are considered substantially different when either: (i) the discounted present value of the cash flows under the new terms, discounted using the original effective interest rate, are at least 10% different from the discounted present value of the remaining cash flows of the original debt; or (ii) management determines that other changes to the terms of the amended agreement, such as a change in the environment in which a floating interest rate is determined, are substantially different. If the modification is considered to be substantially different, the transaction is accounted for as an extinguishment of the original debt instrument, which is derecognised and replaced by the amended debt instrument, with any unamortised costs or fees incurred on the original debt instrument recognised as part of the gain or loss on extinguishment. If the modification is not considered to be substantially different, an adjustment to the carrying amount of the original debt instrument is recorded, which is calculated as the difference between the original contractual cash flows and the modified cash flows discounted e statement. Re-estimation of cash flows Where an original contract facilitates a repricing of a fixed component of an interest rate and where the terms enable an option to prepay without significant penalty the Group will apply the policy of revising the original effective interest rate of the financial contract based on the new term that aligns the interest rates to market rates, to reflect changes in cash flow for calculation of the modification gain or loss resulting in a re-estimation of cash flows. Transaction costs Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities that are classified as FVTPL) are added to or deducted from, as applicable, the fair value of the financial instrument on initial recognition. These costs are expensed to financial expenses in the consolidated income statement over the term of the related interest-bearing financial asset or financial liability using the effective interest method. When a debt facility is retired by the Group, any remaining balance of related debt transaction costs is expensed to financial expenses in the period that the debt facility is retired. Transaction costs related to financial instruments at FVTPL are expensed when incurred. Where new transaction fees are incurred as result of the re-estimation of cash flows under the existing contract (rather than a modification of contractual terms), then any transaction fees or lender costs incurred at time of revision are included in profit or loss immediately unless the lender costs incurred form part of the market interest rate in which case they alter the effective interest rate. Any existing unamortised original lender costs that do not need to be included in the measurement of the liability such that it reflects current market rates are also taken to profit or loss immediately on re-estimation of the cash flows. Non-derivative financial instruments Other non-derivative financial instruments comprise cash and cash equivalents, restricted cash, deposits, investments, trade and other receivables and trade and other payables. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. Cash and cash equivalents for the purpose of the statement of cash flows comprise cash and call deposits with an original maturity of three months or less, money market funds, and bank overdrafts, repayable on demand, that are integral to the Group cash management. Restricted cash represents cash held by the Group but which is ring-fenced, or used as security for specific arrangements (such as cash held on the balance sheet in designated client fund accounts where certain jurisdictions require the Group to do so, or as collateral for a bank guarantee), and to which the Group has restricted access for a period of time. It includes funds held to cover monies owed to customers, as per the terms of our book making licences in various jurisdictions. Restricted cash is classified as amortised cost. Restricted cash balances are further classified as current or non-current depending on when the restriction first ends. Neither cash and cash equivalents or restricted cash include certain customer funds deposited in a stakeholder account held  customers and do not belong to and are not at the disposal of the Group. Subsequent to initial recognition, cash and cash equivalents, financial assets – restricted cash, and trade and other payables are measured at amortised cost. Trade and other receivables are stated at their nominal value as reduced by appropriate allowances for expected credit losses. 186 Flutter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued Investments are measured at fair value and changes therein, are recognised in the consolidated income statement unless the irrevocable option at initial recognition to present changes in fair value in other comprehensive income is chosen. This designation is made on an instrument by instrument basis. Fair value is determined using a discounted cash flow which requires estimation of future net operating cash flows, the time period over which they will occur, an appropriate discount rate and discounts for lack of marketability and lack of control that pertains to the minority stake. Financial assets are derecognised if the Group’s contractual right to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled. Derivatives As permitted by IFRS 9, the Group continues to apply the hedge accounting requirements of IAS 39 rather than the requirements d by IFRS 7. The Group uses derivative instruments for risk management purposes and does not use derivative instruments for speculative trading purposes (except for derivatives with respect to the Group’s sportsbook line of operations, which are transactions within the scope of IFRS 9 but reported as revenue as discussed above). All derivatives are recorded at fair value in the consolidated statements of financial position. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. For derivatives not designated as hedging instruments, the re-measurement of those derivatives each year is recognised in the consolidated income statement. Derivatives may be embedded in other financial liabilities and non-financial instruments (i.e. the host instrument). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative and the combined instrument (i.e. the embedded derivative plus the host instrument) is not held for trading or designated at fair value. These embedded Financial statements derivatives are measured at fair value with subsequent changes recognised in the consolidated income statement. A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately under IFRS 9. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at FVTPL. Sports betting open positions Amounts received from customers on sportsbook events that have not occurred by the year end are derivative financial instruments and have been designated by the Group on initial recognition as financial liabilities at fair value through profit or loss. Hedge accounting The Group designates certain derivatives as either: • hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges); or • hedges of a net investment in a foreign operation (net investment hedges). At inception of the hedge relationship, the Group formally documents how the hedging relationship meets the hedge accounting criteria. It also records the economic relationship between the hedged item and the hedging instrument, including the nature of the risk, the risk management objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship at inception and on an ongoing basis. Cash flow hedges The Group uses derivatives for cash flow hedges. The effective portion of the change in fair value of the hedging instrument is recorded in other comprehensive income and accumulated in the cash flow hedging reserve, while the ineffective portion is recognised immediately in the consolidated income statement. Gains and losses on cash flow hedges accumulated in other comprehensive income/(loss) are reclassified to the consolidated income statement in the same year the hedged item affects the consolidated income statement. If the forecast transaction is no longer expected to occur, the hedge no longer meets the criteria for hedge accounting, the hedging instrument expires or is sold, terminated or exercised, or the designation is revoked, the hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the amount accumulated e statement. Net investment hedges Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging item relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated under the heading foreign exchange translation reserve. The gain or loss relating to the ineffective portion is recognised immediately in the consolidated income statement. Gains and losses accumulated in other comprehensive income are reclassified to the consolidated income statement when the foreign operation is partially disposed of or sold. Annual Report & Accounts 2021 Flutter Entertainment plc 187 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. Significant unobservable inputs and valuation adjustments are monitored on an on-going basis. When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: a. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; b. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and c. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorised in the different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group as a lessee The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement of the lease, and any initial costs. They are then subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset, and are tested for impairment in accordance with IAS 36, Impairment of Assets (“IAS 36”). The lease liability is initially measured at the present value of the future lease payments, discounted by using the interest rate implicit  date. The Group subsequently measures the lease liability by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made. Interest on the lease liability is recognised in financial expenses within the income statement. The total amount of cash payments in relation to lease payments is separated into a principal portion and interest, presented within financing activities in the consolidated statement of cash flows. Lease payments included in the measurement of the lease liability include: a. fixed lease payments (including in-substance fixed payments), less any lease incentives; b. variable lease payments that depend on an index or rate initially measured using the index or rate at the commencement date; c. amount expected to be payable by the lessee under residual value guarantees; d. the exercise price of purchase options or the term of extension options if the lessee is reasonably certain to exercise the options; and e. Payments of penalties for terminating the lease if the lease includes an option to terminate the lease. The Group remeasures the lease liability and makes a corresponding adjustment to the related right-of-use asset whenever: a. the lease term has changed or there is a change in the assessment of exercise of a purchase or an extension option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; b. the lease payments change due to changes in an index or rate or change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or c. a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability or right-of-use asset. The related payments are recognised as an expense in the year in which the event or condition that triggers such payments occurs. As a practical expedient, IFRS 16 permits a lessee to account for any lease and associated non-lease components as a single arrangement instead of separating the non-lease components. The Group has applied this practical expedient. For short-term leases (lease term of 12 months or less) and leases of low-value assets, such as personal computers and office furniture, the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. 188 Flutter Entertainment plc Annual Report & Accounts 2021 3. Basis of preparation and summary of significant accounting policies continued The Group as a lessor The Group has a small number of properties that are sublet. At inception of a contract, the Group determines whether each lease is a finance lease or an operating lease, by reference to the transfer of all risks and rewards in connection to ownership of the underlying asset. In the case of a finance lease, the Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. When the Group is an intermediate lessor the sub leases are classified with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. Under operating leases, the Group recognises the income generated by the lease on an accrual basis over the life of the contract. Provisions Provisions represent liabilities of the Group for which the amount or timing of payment is uncertain. A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is considered probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in provisions due to the passage of time is recognised within financial expense on the consolidated income statement. Long service leave The provision for long service leave (that arises under the provisions of Australian state legislation) is measured per the requirements of IAS 19 Employee Benefits. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on Australian government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived from a contract by the Group are less than Financial statements the unavoidable costs of meeting its obligations under the terms of the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract. Gaming tax Gaming tax provisions relate to amounts provided for taxes in certain jurisdictions where the interpretation of tax legislation is uncertain. When the Group disagrees with the application of unclear tax legislation, for example when it is applied retrospectively and/ or results in a one-off disproportionate tax equivalent to many times the profit derived by the Group from its historic activities in that jurisdiction, the Group continues to challenge these interpretations. Whilst the maximum potential obligation for all ongoing cases could be greater than the recognised provision, and the outcomes  be required in respect of each claim. Management has not provided a sensitivity for this provision as the range is not considered e material. Impairment of non-financial assets The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives (such as certain licences and brands) or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash generating unit (“CGU”) is the higher of fair value less costs to sell or its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash generating unit”, or “CGU”). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.  then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Annual Report & Accounts 2021 Flutter Entertainment plc 189 ## Notes to the Consolidated Financial Statements continued 3. Basis of preparation and summary of significant accounting policies continued Employee benefits Pensions The Group operates a number of defined contribution schemes under which the Group pays fixed contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions are recognised as an expense in the income statement as the service is received. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in future payments is available. Long-term incentive bonus plans The Group accounts for obligations relating to long-term incentive bonus plans for employees at the present value of the benefit obligation at the reporting date. The service cost relating to such plans is allocated to the financial years over which service under the plan is rendered by the employee. The income statement expense represents the increase in the present value of the benefit obligation resulting from employee service in the current year, in addition to any associated finance costs where material. Share-based payments The Group operates equity-settled long-term and medium-term incentive plans for selected senior executives and other key management under which they are conditionally awarded shares or options over Company shares which vest upon the achievement of predetermined targets and/or future service periods. The fair value is measured at the award or option grant date and is spread over the period during which the employees become unconditionally entitled to the shares or options with a corresponding increase in the share-based payment reserve in equity. The fair value of the shares conditionally granted is measured using the market price of the shares at the time of grant or in the case of shares with a non-market condition measured using either a binomial or Monte Carlo valuation model. The Group also currently operates a Deferred Share Incentive Plan (“DSIP”) whereby one-third of any annual incentive payment (determined under the Annual Cash Incentive Plan) may be paid in deferred shares. Any such deferred element granted under the DSIP will vest 50% after 1 year and 50% after 2 years from the grant date and will be fair valued using the same methodology as other long and medium-term incentive plans. The two-thirds cash portion is measured on an undiscounted basis and expensed as the related service is provided. A liability is recognised for the amount expected to be paid under this cash portion if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The Group operates an equity-settled Share Save scheme (“SAYE”) for employees under which employees acquire options over Company shares at a discounted price subject to the completion of a savings contract. The fair value of share options granted is recognised as an employee cost with a corresponding increase in the share-based payment reserve in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black-Scholes model, taking into account the terms and conditions, other than non-market performance conditions, upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest for only non-market vesting and service conditions. For the FOX equity option which is treated as a contingent cash-settled share-based payment, management has made certain judgements in the recognition and measurement of liabilities in relation to this commercial agreement and associated right of FOX Sports to acquire equity, including its judgement as to the probable method of settlement. The right has been valued using  ting period. Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects within retained earnings. Shares held by Employee Benefit Trust The costs of purchases of the Company’s shares by the Employee Benefit Trust, which have been conditionally awarded to employees under the terms of the share award schemes, are shown separately as deductions from equity in the consolidated statement of financial position. Repurchase of share capital (treasury shares) When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity. The repurchased shares are classified as treasury shares and are presented as a deduction from total equity. Transaction costs relating to the purchase by the Company of its own shares are recognised directly in retained earnings. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is recognised in share premium. Where the Company purchases its own shares and subsequently cancels those shares, the cost of the shares cancelled is written off directly to retained earnings. The nominal value of the shares cancelled is transferred from share capital to undenominated capital. Dividends Dividends on ordinary shares are recognised in equity in the year in which they are approved by the Company’s shareholders, or, in the case of the interim dividend, when it has been approved by the Board of Directors and paid. 190 Flutter Entertainment plc Annual Report & Accounts 2021 ### 3. Basis of preparation and summary of significant accounting policies continued The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which include awards under share award schemes and share options granted to employees. #### Separately disclosed items Separately disclosed items are those that in management's judgement need to be disclosed by virtue of their size, incidence or if not part of the Group's normal trading activities. The separate reporting of these items helps provide a better understanding of the Group's underlying performance. Such items may include the amortisation of acquisition-related intangibles, significant restructuring and integration costs, material fees in respect of acquisitions, significant impairment of property, plant and equipment and intangible assets, disposal of subsidiaries and also significant movement in the fair value of contingent consideration. Following the acquisition of TSG, and the significant change in the Group's debt and derivatives portfolio, the Group considers items such as the gain/loss on embedded derivatives, the gain/loss on accelerated debt repayments, foreign exchange gain/losses on financial instruments associated with financing activities, and the write-off and expensing of one-off fees that do not meet the criteria for capitalisation as items that should be separately disclosed. The Group also considers significant transactions that have a material and debenting impact on the Group's effective tax rate in a given year as items that require separate disclosure. In the majority of cases, it is the material impact that these items have on the financial statements that determines whether they should be separately disclosed. Materiality is determined by assessing whether disclosing such items separately would present a reader with a better understanding of the performance of the Group. If such items were deemed to be less than material, they would not be separately disclosed. These items, usually due to their size and nature tend to be non-recurring items and would not arise on an annual basis. However, in other cases, items such as, for example, the amortisation of acquisition-related intangibles and the remeasurement of embedded derivatives, may occur over several years but are disclosed separately due to their finite life and the significantly changing amortisation profile of the assets in question in the related years. Other items such as the foreign exchange gains/losses associated with financing activities would also arise on a regular basis and can be separately disclosed due to their volatile nature. The separate disclosure of such items helps the reader better understand underlying business performance. The tax-related impact of such items is also disclosed separately. ### 4. Judgements and estimates The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected. #### Judgements In preparing these consolidated financial statements, the significant judgements in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those that applied to the consolidated financial statements as at and for the year ended 31 December 2020 and are detailed below: #### Kentucky proceedings In 2010, prior to the combination with The Stars Group ("TSG"), the Commonwealth of Kentucky filed legal proceedings against various operations including certain companies that later became subsidiaries of TSG. The suit sought recovery of alleged losses incurred by Kentucky residents playing real-money poker on the Poker Stars platform during a period between 2006 and 2011. The gross gaming revenues that TSG generated in Kentucky on the Poker Stars platform during the relevant period were approximately US$ 18m. In 2015, a Kentucky trial court judge entered judgement against two TSG Isle of Man subsidiaries, Stars Interactive Holdings (IOM) Ltd ("SIHL") and Rational Entertainment Enterprises Ltd ("REEL") and awarded damages to the Commonwealth of Kentucky of approximately US$870m plus post-judgement interest. In February 2016, in order to stay enforcement of the judgement while the matter was appealed, SIHL and REEL posted supersedeas bonds to the value of US$ 100m, on which the stay was conditioned. In 2018, the ruling against SIHL and REEL was vacated in its entirety by the Kentucky Court of Appeals. Following an appeal by the Commonwealth of Kentucky, on 17 December 2020, the Kentucky Supreme Court reinstated the full 2015 award of damages, including post-judgement interest, which combined amounted to approximately US$1.3bn, against SIHL and REEL. The interest on the judgement continued to accrue at approximately US$250,000 per day due to the application of compound interest. Annual Report & Accounts 2021 Platter Entertainment plc 191 Financial Statements ## Notes to the Consolidated Financial Statements continued 4. Judgements and estimates continued The two judgement debtors, SIHL and REEL, were Isle of Man incorporated companies, with no assets in the US. The Group took the view, based on the views of legal counsel and advisers that the judgement was unenforceable in the Isle of Man under both statute and public policy, being for multiple damages and penal in nature. The Group undertook a detailed review of what other steps Kentucky might seek to take to enforce the judgement, including against the assets of other Group companies in the US and formed the opinion that Kentucky had limited ability to enforce the full judgement. Based on the opinion of legal counsel and advisers as to the likely pay-out outcomes, the Group recognised a provision of $100m (£73.3m) as part of TSG combination fair value acquisition accounting in respect of this litigation, which reflects the value of the supersedes bond which was in place since February 2016. No liability was previously recognised by either TSG or Flutter prior to this judgement. A rehearing petition was filed before the Kentucky Supreme Court on 6 January 2021 and was subsequently denied on 25 March 2021. In May 2021, following an April 2021 order by the Kentucky trial court, the $100m (£71.1m) bonds were paid to the Commonwealth of Kentucky, in line with the provision outstanding at 31 December 2020. The Group also considered the potential operational and reputational consequence of resisting enforcement of the judgement, e.g. any impact on the Group’s ability to secure permits and licences in US states where its betting and gaming activities require State permissions. On 21 September 2021, following mediation between the parties, the Group agreed to pay an additional $200m (£145.2m) to Kentucky. In return, Kentucky released SIHL, REEL and, inter alia, all Flutter entities from any claims relating to the matters in issue in the Kentucky proceedings, and the proceedings were consequently dismissed with prejudice. The Group strongly believes that this agreement and the certainty of outcome provided is in the best interests of the Group’s shareholders. Valuation of tax assets and liabilities Whilst we maintain good communication with key tax authorities, given the global nature of our business and the complex international tax landscape, there remain areas of tax uncertainty and therefore there is a level of uncertainty with regards to the measurement of our tax assets and liabilities. Uncertainties have been measured using the best estimate of the likely outcome. ture events. Where uncertain tax treatments exist, the Group assesses whether it is probable that a tax authority will accept the uncertain tax treatment applied or proposed to be applied in its tax filings. The Group assesses each uncertain tax treatment as to whether it should be considered independently or whether some tax treatments should be considered collectively based on what the Group believes provides a better estimate of the resolution of the uncertainty. The Group considers whether it is probable that the relevant authority will accept each uncertain tax treatment, or group of uncertain tax treatments, assuming that the taxation authority will have full knowledge of all relevant information when doing so. The key judgements are in relation to intercompany transactions including the internally generated intangible asset transfer referred to in Note 6 . New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax assets and liabilities; such changes to tax assets and liabilities will impact the income tax in the period in which such a determination is made. Management uses in-house tax experts, professional firms and previous experience when assessing tax risks and the Group believes that the position for all tax assets and liabilities at 31 December 2021 is adequate based on its assessment of the range of factors outlined above but given the inherent uncertainty, it is possible that resolution of tax uncertainties may differ from the amounts provided for. FOX Corporation As announced on 2 October 2019, in order to achieve economic alignment of Flutter’s and TSG’s strategic third party relationships across their respective US businesses, concurrent with the Combination with TSG, the Group entered into an arrangement with FOX, pursuant to which FSG Services, a wholly-owned subsidiary of FOX, had an option to acquire an 18.6% equity interest in FanDuel Group at its market value in July 2021. Under the terms of the agreement an arbitration mechanism was put in place in the event of  the option. In April 2021, FOX filed an arbitration claim against the Group with respect to its option to acquire an 18.6% equity interest in FanDuel for the same price that the Group paid for the acquisition of 37.2% of FanDuel from Fastball Holdings LLC in December 2020, representing an $11.2 billion valuation for FanDuel. In the Group’s opinion this valuation would be materially favourable for FOX compared to the fair market valuation as of July 2021. An arbitrator has been appointed and the Group intends to vigorously defend its position. A ruling in the arbitration is not expected before Quarter 2, 2022.   assessment of comparable US assets, it is management’s view that there has been no increase in the market value of FanDuel since July 2021, which represents the valuation date of the option, and therefore it is determined that the value of the option is out of the cember 2021. 192 Flutter Entertainment plc Annual Report & Accounts 2021 4. Judgements and estimates continued Estimates Determining the fair value of some assets and liabilities requires estimation of the effects of uncertain future events on those assets and liabilities at the end of the reporting year. The following discussion sets forth key sources of estimation uncertainty at the end of the reporting year that management believes have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Measurement of the recoverable amounts of cash generating units containing goodwill, indefinite life licences and intangible assets The Group reviews the carrying value of goodwill for impairment annually (or more frequently if there are indications that the value of goodwill may be impaired) by comparing the carrying values of these cash generating units with their recoverable amounts  requires estimation of future net operating cash flows, the time period over which they will occur, an appropriate discount rate and  in nature.  out in the business review section of the Annu The retail cash generating units (“CGUs”) in the year were impacted by the temporary suspension of the activities of its shops, depending on local restrictions and social distancing rules during 2021. Based on the significant headroom that existed in the  further market share gains as competitors reduce the size of their respective estates, the Group is satisfied that no impairment has cember 2021. 5. Operating segments Reportable business segment information As a result of internal restructuring and integration initiatives, in 2021 the Group transitioned from the five segment operating model reported in 2020 to a four segment operating model. In 2021, the Group’s four reportable segments are: Financial statements • UK & Ireland; • Australia; • International; and • US. During the year, the Group determined that it is the Chief Executive Officer and Chief Financial Officer jointly rather than the Board of Directors who are performing the function of CODM. The reportable segments reflect the Group’s current operating model, following internal restructuring and integration initiatives undertaken by the Group following the Combination with TSG, and the way financial information is reviewed by the Group’s Chief Operating Decision Maker (the Chief Executive Officer and Chief Financial Officer jointly).  resentation. UK & Ireland The UK & Ireland (“UK&I”) segment is comprised of the operations of Sky Betting & Gaming, and Paddy Power and Betfair in the UK and Ireland. Revenues are earned from sports betting (sportsbook and the exchange sports betting product) and gaming services (games, casino, bingo and poker), as well as from Oddschecker (odds comparison website) until the disposal of Oddschecker in August 2021 (see Note 6 and Note 15). Services are provided primarily via the internet but also through licensed bookmaking sh Australia The Australia segment is comprised of the operations of the Sportsbet brand and in 2020 included the former BetEasy brand which was integrated into Sportsbet in the second half of 2020, and earns its revenues from sports betting services provided to Australian customers using primarily the internet. International The International segment is comprised of PokerStars, Betfair International, Adjarabet and Junglee Games. The International segment earns most of its revenues from poker, casino, rummy and sports betting through various brands and mainly via the internet. US The US segment is comprised of the FanDuel, TVG, FOX Bet, Stardust and PokerStars brands’ operations in the U.S and earns its revenues from sports betting, daily fantasy sports and gaming services (casino and poker) provided to US customers, using primarily the internet, with a proportion of US sports betting services also provided through a small number of retail outlets. Annual Report & Accounts 2021 Flutter Entertainment plc 193 Notes to the Consolidated Financial Statements continued # 5. Operating segments continued # Corporate Corporate administrative costs (Board, Finance, Legal, Internal Audit, HR, Property and other central functions) cannot be readily allocated to individual operating segments and are not used by the COOPI for making operating and resource allocation decisions. These are shown in the reconciliation of reportable segments to Group totals. The accounting policies in respect of operating segments reporting are the same as those described in the basis of preparation and summary of significant accounting policies set out in Note 3. The Group does not allocate income tax expense or financing income and expenses to reportable segments. Treasury management is centralised for the UK&I, Australia, International and US segments. 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. # Seasonality The Group's sportsbook revenue is driven by a combination of the timing of sporting and other events and the Group's results derived from those events. The Covid-19 pandemic which caused some postponement and cancellation of sporting events across the world has skewed results for the year and the comparative year. Gaming and other revenue is not as dependent on the sporting calendar. Reportable business segment information for the year ended 31 December 2021: | | UK&I £m | Australia £m | International £m | US £m | Corporate £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | Revenue from external customers | 2,062.9 | 1,293.5 | 1,288.4 | 1,391.4 | — | 6,036.2 | | Cost of sales before separately disclosed items | (621.2) | (635.8) | (391.6) | (613.6) | — | (2,262.2) | | **Gross profit before separately disclosed items** | **1,441.7** | **657.7** | **896.8** | **777.8** | **—** | **3,774.0** | | Operating costs excluding depreciation and amortisation before separately disclosed items | (825.8) | (221.2) | (604.6) | (1,020.7) | (100.7) | (2,773.0) | | **Adjusted EBITDA^{1} before separately disclosed items** | **615.9** | **436.5** | **292.2** | **(242.9)** | **(100.7)** | **1,001.0** | | Depreciation and amortisation before separately disclosed items | (125.7) | (25.6) | (51.8) | (46.5) | (4.8) | (254.4) | | Loss on disposal before separately disclosed items | — | — | — | — | (0.3) | (0.3) | | **Reportable segment profit/(loss) before separately disclosed items** | **490.2** | **410.9** | **240.4** | **(289.4)** | **(105.8)** | **746.3** | | Germany and Greece tax expense | — | — | (47.3) | — | — | (47.3) | | Kentucky settlement and associated legal costs | — | — | (163.1) | — | — | (163.1) | | Gain on disposal | 12.2 | — | — | — | — | 12.2 | | Amortisation of acquisition-related intangible assets | (225.9) | (20.9) | (276.4) | (20.1) | — | (545.3) | | **Reportable segment profit/(loss) after amortisation of acquisition-related intangibles** | **276.5** | **390.0** | **(246.4)** | **(309.5)** | **(105.8)** | **4.8** | | Transaction fees and associated costs^{2} | | | | | | (22.1) | | Restructuring and integration costs^{2} | | | | | | (45.2) | | **Operating loss** | | | | | | **(62.5)** | 1. Adjusted EBITDA which is a non-GAAP measure in the above segment note is defined as profit for the year before separately disclosed items, depreciation, amortisation, impairment, gain in disposal, financial income, financial expense and tax expense/credit. It is considered by the Directors to be a key measure of the Group's financial performance. 2. The Group does not allocate transaction fees and restructuring and integration costs to reportable segments. 154 Platter Entertainment plc Annual Report & Accounts 2021 ## 5. Operating segments continued Reportable business segment information for the year ended 31 December 2020$^{1}$ | Restated | UK&I £m | Australia £m | International £m | US £m | Corporate £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | | Revenue from external customers before VAT refund | 1,738.9 | 988.8 | 997.4 | 672.9 | — | 4,398.0 | | Cost of sales before separately disclosed items | (499.1) | (468.7) | (269.0) | (302.2) | — | (1,539.0) | | **Gross profit before separately disclosed items** | **1,239.8** | **520.1** | **728.4** | **370.7** | **—** | **2,859.0** | | Operating costs excluding depreciation and amortisation before separately disclosed items | (727.3) | (213.2) | (418.7) | (519.0) | (91.6) | (1,969.8) | | **Adjusted EBITDA^{2}** | **512.5** | **306.9** | **309.7** | **(148.3)** | **(91.6)** | **889.2** | | Depreciation and amortisation before separately disclosed items | (111.1) | (28.2) | (34.5) | (34.8) | (4.6) | (213.2) | | **Reportable segment profit/(loss) before separately disclosed items** | **401.4** | **278.7** | **275.2** | **(183.1)** | **(96.2)** | **676.0** | | Amortisation of acquisition-related intangible assets (Note 6) | (168.7) | (18.7) | (216.2) | (28.7) | — | (432.3) | | Impairment | (12.1) | (2.0) | (4.4) | — | (4.1) | (22.6) | | VAT refund (Note 6) | 11.2 | — | — | — | — | 11.2 | | **Reportable segment profit/(loss) after amortisation of acquisition-related intangibles and VAT refund** | **231.8** | **258.0** | **54.6** | **(211.8)** | **(100.3)** | **232.3** | | Transaction fees and associated costs^{3} | | | | | | (32.7) | | Restructuring and integration costs^{3} | | | | | | (96.1) | | **Operating profit** | | | | | | **103.3** | 1. Adjusted EBITDA which is a non-GAAP measure in the above segment note is defined as profit for the year before separately disclosed items, depreciation, amortisation, impairment, gain on disposal, financial income, financial expense and tax expense/credit. It is considered by the Directors to be a key measure of the Group's financial performance. 2. The Group does not allocate transaction fees and restructuring and integration costs to reportable segments. 3. Reportable segment split was restated to conform with current year presentation. ### Reconciliation of reportable segment information to Group totals | | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Before separately disclosed items £m | Separately disclosed items £m | Total £m | Before separately disclosed items £m | Separately disclosed items £m | Total £m | | **Gross profit** | **3,774.0** | **(47.5)** | **3,726.7** | **2,859.0** | **13.2** | **2,872.2** | | Operating costs excluding depreciation, amortisation, impairment and gain on disposal | (2,773.0) | (230.4) | (3,003.4) | (1,969.8) | (130.8) | (2,100.6) | | **EBITDA^{2}** | **1,001.0** | **(277.7)** | **723.3** | **889.2** | **(117.6)** | **771.6** | | Depreciation and amortisation | (254.4) | (543.3) | (797.7) | (213.2) | (432.3) | (645.5) | | (Loss)/gain on disposal and impairment | (0.3) | 12.2 | 11.9 | — | (22.6) | (22.6) | | **Operating (loss)/profit** | **746.3** | **(808.8)** | **(62.5)** | **676.0** | **(572.5)** | **103.5** | | Net finance costs | (126.0) | (99.9) | (225.9) | (109.8) | 7.4 | (102.4) | | **(Loss)/profit before tax** | **620.3** | **(908.7)** | **(288.4)** | **566.2** | **(565.1)** | **1.1** | | Tax expense | (166.3) | 42.8 | (123.5) | (94.2) | 58.4 | (35.8) | | **(Loss)/profit for the year** | **454.0** | **(865.9)** | **(411.9)** | **472.0** | **(506.7)** | **(34.7)** | 1. EBITDA is defined as profit for the year before depreciation, amortisation, impairment, gain on disposal, financial income, financial expense and tax expense/credit. It is considered by the Directors to be a key measure of the Group's financial performance. See Note 6 for further detail on separately disclosed items. Annual Report & Accounts 2021 Platter Entertainment plc 135 Financial Statements Notes to the Consolidated Financial Statements continued # **5. Operating segments continued** **Disaggregation of revenue under IFRS 15** Group revenue disaggregated by product line for the year ended 31 December 2021: | | UK&I £m | Australia £m | International £m | US £m | Total £m | | --- | --- | --- | --- | --- | --- | | Sports revenue^{1} | 1,281.8 | 1,293.5 | 220.2 | 978.3 | 3,773.8 | | Gaming revenue^{2} | 781.1 | — | 1,068.2 | 413.1 | 2,262.4 | | **Total Group revenue** | **2,062.9** | **1,293.5** | **1,288.4** | **1,391.4** | **6,036.2** | Group revenue disaggregated by product line for the year ended 31 December 2020$^{1}$: | | UK&I £m | Australia £m | International £m | US £m | Total £m | | --- | --- | --- | --- | --- | --- | | Sports revenue^{1} | 1,117.6 | 988.8 | 162.1 | 457.0 | 2,725.5 | | Gaming revenue^{2} | 637.2 | — | 835.3 | 215.9 | 1,688.4 | | **Total Group revenue** | **1,754.8** | **988.8** | **997.4** | **672.9** | **4,413.9** | 1. Sports revenue comprises sportsbook, exchange sports betting, daily fantasy sports and pari-mutuel betting. 2. Gaming revenue includes Games, Poker, Casino, Rummy and Bingo and in 2020 in UK&I includes the VAT refund (see Note 6). 3. Reportable segment split was restated to conform with current year presentation. # **Geographical information** Group revenue disaggregated by geographical market for the year ended 31 December 2021: | | UK&I £m | Australia £m | International £m | US £m | Total £m | | --- | --- | --- | --- | --- | --- | | UK | 1,860.1 | — | 73.7 | — | 1,933.8 | | Ireland | 194.1 | — | 6.4 | — | 200.5 | | EU (excl. Ireland)^{3} | — | — | 656.4 | — | 656.4 | | Australia | — | 1,293.5 | — | — | 1,293.5 | | US | — | — | — | 1,391.4 | 1,391.4 | | Rest of World^{4} | 8.7 | — | 551.9 | — | 560.6 | | **Total Group revenue** | **2,062.9** | **1,293.5** | **1,288.4** | **1,391.4** | **6,036.2** | 1. The EU (excl. Ireland) category includes multiple countries, that individually represent less than 4% of total Group revenue. 2. The Rest of World category includes multiple countries, that individually represent less than 2% of total Group revenue. Group revenue disaggregated by geographical market for the year ended 31 December 2020$^{1}$: | Restated | UK&I £m | Australia £m | International £m | US £m | Total £m | | --- | --- | --- | --- | --- | --- | | UK | 1,544.9 | — | 66.7 | — | 1,611.6 | | Ireland | 209.9 | — | 7.4 | — | 217.3 | | EU (excl. Ireland)^{3} | — | — | 578.6 | — | 578.6 | | Australia | — | 988.8 | — | — | 988.8 | | US | — | — | — | 672.9 | 672.9 | | Rest of World^{4} | — | — | 344.7 | — | 344.7 | | **Total Group revenue** | **1,754.8** | **988.8** | **997.4** | **672.9** | **4,413.9** | 1. The EU (excl. Ireland) category includes multiple countries that individually represent less than 4% of total Group revenue. 2. The Rest of World category includes multiple countries that individually represent less than 2% of total Group revenue. 3. Reportable segment split was restated to conform with current year presentation. Revenues are attributable to geographical location on the basis of the customers location. # **Non-current assets** Non-current assets (property, plant and equipment, intangible assets and goodwill) by geographical area are as follows: | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | UK | 8,492.3 | 8,882.6 | | Ireland | 159.9 | 154.9 | | Australia | 645.6 | 696.4 | | US | 868.5 | 856.1 | | Rest of World^{4} | 4,507.5 | 4,816.4 | | **Total** | **14,673.8** | **15,406.4** | 1. Relates mainly to goodwill and fair value adjustments on acquisition intangibles such as brand and customer relationships pertaining to PokerStars worldwide operations (reported as from the international segment) not otherwise allocated to any specific country or region. 156 Platter Entertainment plc Annual Report & Accounts 2021 ## 6. Separately disclosed items The separately disclosed items noted in Note 5 above are comprised as follows: | | 2021 £m | 2020 £m | | --- | --- | --- | | Germany and Greece tax expense | (47.3) | — | | Transaction fees and associated costs | (22.1) | (32.7) | | Restructuring and integration costs | (45.2) | (96.1) | | Kentucky settlement and associated legal costs | (163.1) | — | | VAT refund | — | 11.2 | | **EBITDA** | **(277.7)** | **(117.6)** | | Amortisation of acquisition-related intangible assets | (543.3) | (452.3) | | Disposal of Oldschecker Global Media | 12.2 | — | | Impairment | — | (22.6) | | **Operating profit impact of separately disclosed items** | **(808.8)** | **(572.5)** | | Financial income | — | 78.5 | | Financial expense | (99.9) | (71.1) | | **Profit before tax impact of separately disclosed items** | **(908.7)** | **(565.1)** | | Tax credit on separately disclosed items | 42.8 | 58.4 | | **Total separately disclosed items** | **(865.9)** | **(506.7)** | | **Attributable to:** | | | | Equity holders of the Company | (860.0) | (483.8) | | Non-controlling interest | (5.9) | (22.9) | | | **(865.9)** | **(506.7)** | ### Amortisation of acquisition-related intangible assets Non-cash amortisation of €143.1m has been incurred in the period (year ended 31 December 2020: €432.3m) as a result of intangible assets separately identified under IFRS 3 as a result of the merger with Betfair in 2016, the acquisitions of FanDuel Limited in 2018 and Adjarabet in 2019, the Combination with TSG in 2020 and the acquisitions of Junglee and Singular in 2021. ### Kentucky settlement and associated legal costs On 22 September 2021, the Group announced that the legal dispute between Flutter and the Commonwealth of Kentucky had been settled in full. The Group agreed to pay a further $200m (€145.2m) to Kentucky in addition to the $100m (€71.1m) previously forfeited to the Commonwealth as part of the supersedeas bond in the case in line with the provision outstanding at 31 December 2020. In return, Kentucky released Stark Interactive Holdings (KIM) Ltd, Rational Entertainment Enterprises Ltd and, inter alia, all Flutter entities from any claims relating to the matters in issue in the Kentucky proceedings, and the proceedings were consequently dismissed with prejudice. As a result of this settlement, costs of €165.1m (including associated legal costs of €17.9m) were incurred during the year ended 31 December 2021. See Note 4 for further details. ### Transaction fees and associated costs During the year ended 31 December 2021, €22.1m of costs were incurred relating to various acquisitions, the FOX option (see Note 4) and also as announced in May 2021 the potential US listing of a small stake of FanDuel. During the year ended 31 December 2020, €32.7m of costs were incurred primarily relating to the Combination with TSG. The costs were included as separately disclosed items as they have not been incurred in the ordinary course of business. ### Restructuring and integration costs During the year ended 31 December 2021 costs of €45.2m (year ended 31 December 2020: €96.1m) relating to incremental, one-off costs, were incurred by the Group as a result of significant restructuring and integration initiatives following the Combination with TSG. ### Germany and Greece tax expense #### Germany In 2012 Betfair was issued with a German tax assessment relating to the Betfair Exchange, which operated in Germany until November 2012. The assessment deemed that a tax liability of approximately €10.6m was payable. This represented a multiple of the revenues generated by the Exchange during the assessment period. The Group paid the €30.6m German tax assessment in 2019, with the late payment interest of approximately €10m to be paid when assessed. In September 2021 the German Federal Tax Court dismissed the Group's appeal of the tax assessment. Whilst the Group has lodged a formal complaint to the Federal Constitutional Court, it has decided to recognise the amount of the German tax assessment including the late payment interest. This has resulted in an expense of €40.6m (€34.5m) being recorded in the year in relation to the principal amount of tax and late payment interest. Financial Statements Annual Report & Accounts 2021 Flutter Entertainment plc 197 ## Notes to the Consolidated Financial Statements continued ### 6. Separately disclosed items continued #### Greece In 2019, the Group was issued with a Greek tax assessment for financial years 2012, 2013 and 2014, relating to paddy power.com's Greek-Interim licence. This assessment concluded that the Group is liable to pay €15.0m in taxes including penalties and interest. This is substantially higher (by multiples) than the total cumulative revenues ever generated by paddy power.com in Greece. Pending the outcome of its appeal, in 2019 the Group paid the total Greek tax assessment (including the penalties and interest) of €15.0m. In June 2021, the Athens Administrative Court of Appeal dismissed the Group's judicial recourses. While the Group has further appealed to the Greek Supreme Administrative Court, based on the nature of the decision received and the points of law which can be appealed, and in line with legal and tax advice it has received. It has decided to recognise the amount of the Greek assessment, of €15.0m (£12.8m) as an expense in profit or loss during the year ended 31 December 2021. The Group considers these cost as one-off costs and not as part of ongoing operations in the current year. #### Disposal of Oddschecker Global Media On 31 August 2021 the Group sold all of the shares of Oddschecker Global Media ("OGM"), a fully owned subsidiary of the Group, to Bruin Capital, in exchange for €127.1m in cash (proceeds of €141.3m net of €14.2m cash already on the balance sheet) and recorded a gain on the disposal of €12.2m (see also Note 15). There is potential for the Group to receive further consideration of up to €20m pending future events. However, it is currently not probable that further amounts will be received and therefore no contingent asset has been recorded. Prior to the disposal, the non-current assets were measured at the lower of their carrying amount and fair value less costs sell. No impairments were recognised. The assets and liabilities of OGM were included within the UK$/segment up to the date of sale. #### Impairment During the year ended 31 December 2020, the Group recognised impairments of €22.6m, €12.1m of this relates to the impairment of No-therr/related retail indefinite life licences described in more detail in Note 13. The remaining €10.3m is mainly as a result of various restructuring and integration decisions resulting from the TSG Combination with €4.4m relating to capitalised development expenditure and €6.1m relating to various property assets. No such impairments were recognised in the year ended 31 December 2021. #### VAT refund In May 2020, HMRC confirmed it would not appeal the ruling of the Upper Tier Tribunal in the cases of Rank Group Plc and Dorie Brothers (Cash/Betting Ltd/Trading as Betfred) that VAT was incorrectly applied to revenues earned from certain gaming machines prior to 2013. The Group submitted protective claims for the period and requested repayment from HMRC. In December 2020, the Group received the refund from the HMRC and recognised income net of the associated third-party costs expected to be incurred as a result of the refund. The refund of VAT due from HMRC of €15.9m has been booked as revenue with associated third-party costs of €2.7m and €2.0m recorded in the year ended 31 December 2020 in cost of sales and operating expenses respectively. #### Financial income During the year ended 31 December 2020, a gain on remeasurement of embedded derivatives of €78.5m was recorded. These gains were included as separately disclosed items due to their volatile nature and/or non-recurring nature. #### Financial expense During the year ended 31 December 2021, on repayment of the Senior Notes in 2021, the Group recorded a charge of €78.8m relating to the Senior Notes settlement. In conjunction with the repayment and refinancing, the Group incurred an additional €16.8m of fees that were not subject to capitalisation and €4.3m of fees relating to debt covenant amendments as a result of the Kentucky litigation. These charges were included as separately disclosed items due to their non-recurring nature. See also Note 8. In the year ended 31 December 2020, a loss on remeasurement of the HRTV contingent consideration of €22.2m, an FX loss on financial instrument of €12.9m, a loss of €31.0m relating to accelerated debt repayments and €5.0m relating to the expensing of one-off financing related fees not eligible for capitalisation were incurred. These losses were included as separately disclosed items due to their volatility and/or non-recurring nature. See also Note 8. #### Presentation within the Consolidated Income Statement The Germany and Greece tax expense is included in the Consolidated Income Statement within cost of sales. Transaction fees and associated costs, the Kentucky settlement and associated legal costs and restructuring and integration costs are included in the Consolidated Income Statement within operating costs excluding depreciation, amortisation, impairment and gain on disposal. #### Tax credit on separately disclosed items The tax credit of €42.8m has arisen primarily in respect of a deferred tax credit of €67.7m in relation to deferred tax asset recognition on consolidation following an internal transfer of intangible assets, €59.2m in respect of the amortisation of acquisition-related intangibles and €20.0m in respect of the tax effect of other separately identifiable items. The above is offset by an increase of €104.1m in the deferred tax liability on separately identifiable acquisition-related intangible assets as result of the increase in the UK's main corporation tax rate from 19% to 25% from 1 April 2023 as outlined in more detail in Note 10. 138 Platter Entertainment plc Annual Report & Accounts 2021 ## Notes to the Consolidated Financial Statements continued ### 7. Employee expenses and related information Employee expenses excluding separately disclosed items are: | | 2021 £m | 2020 £m | | --- | --- | --- | | Wages and salaries | 807.5 | 710.5 | | Social security costs | 76.8 | 43.3 | | Defined contribution pension and life assurance costs | 49.2 | 30.9 | | Share-based payment costs | 78.9 | 52.1 | | Other staff costs | 36.7 | 19.8 | | | **1,049.1** | **856.6** | | The average number of persons employed by the Group (including Executive Directors), all of whom were involved in the provision of sports betting and gaming services, during the year was: | **15,798** | **12,550** | Details on the remuneration of Directors' as per the requirement of the Companies Act 2014 are set out below: | | 2021 £m | 2020 £m | | --- | --- | --- | | Emoluments | 7.4 | 7.7 | | Pension costs | 0.2 | 0.2 | | | **7.6** | **7.9** | The gain on the exercise of share options in 2021 by individuals who were Directors at any time during 2021 was £2.2m (2020: £m). Further details in respect of Directors' remuneration is set out in the Directors' Remuneration Report on pages 136 to 154 of the Annual Report. ### 8. Financial income and expense | | 2021 £m | 2020 £m | | --- | --- | --- | | **Recognised in profit or loss** | | | | Financial income: | | | | Gain on remeasurement of embedded derivative (see Note 6 and Note 22) | — | 78.5 | | Movement in fair value of investment | 1.7 | — | | On financial assets at amortised cost | — | — | | Interest income | 1.5 | 1.4 | | Total | **3.2** | **79.9** | | Financial expense: | | | | Settlement of Senior Notes (see Note 6) | 78.8 | — | | Change in fair value of contingent consideration (see Note 6) | 3.3 | 22.2 | | Foreign exchange loss on financing instruments associated with financing activities (Note 6) | 1.2 | 12.9 | | Financing related fees not eligible for capitalisation (see Note 6 and Note 22) | 21.1 | 5.0 | | Accelerated accretion on debt repayments (see Note 6) | — | 31.0 | | Movement in the fair value of investments | — | 1.5 | | On financial liabilities at amortised cost | — | — | | Interest on borrowings, bank guarantees and bank facilities | 106.0 | 95.6 | | Interest on lease liabilities | 8.5 | 5.7 | | Other interest | 10.2 | 8.4 | | Total | **229.1** | **182.3** | | | **2021 £m** | **2020 £m** | | **Recognised in other comprehensive income/(loss)** | | | | Effective portion of changes in fair value of cash flow hedges | 61.4 | (280.4) | | Fair value of cash flow hedges transferred to income statement | (28.4) | 267.8 | | Net change in fair value of cash flow hedge reserve | 33.0 | (12.6) | | Debt instruments at FVOCI | (1.3) | (0.4) | | Foreign exchange gain on net investment hedges | 85.4 | 24.7 | | Foreign exchange (loss)/gain on translation of the net assets of foreign currency denominated entities | (309.6) | 41.9 | | Total | **(192.5)** | **53.5** | A change of £2.5m was recorded in the income statement in respect of ineffective cash flow hedges in the year ended 31 December 2021 (2020: gain of £0.2m). Annual Report & Accounts 2021. Platter Entertainment plc 139 Financial Statements Notes to the Consolidated Financial Statements continued # **9. Statutory and other information** | | 2021 £m | 2020 £m | | --- | --- | --- | | Auditor's remuneration for audit and other assurance services | 5.5 | 4.8 | | Depreciation of property, plant and equipment | 113.7 | 101.8 | | Amortization of intangible assets | 684.0 | 543.7 | | Impairment of tangible and intangible assets | — | 22.6 | | Gain on disposal | (11.9) | (0.2) | | Foreign currency exchange loss/(gain) – monetary items | 15.7 | (31.6) | | Operating leases rentals, principally premises | 0.1 | 0.1 | | Research and development | 142.3 | 95.6 | | Operating leases income (representing sub-lease income) | (0.8) | (0.9) | # **Remuneration to Group external auditor (KPMG Ireland)** In accordance with the requirements of Regulation 120 of Statutory Instrument 220/2010, 'European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010', the auditor's remuneration figures presented below represent fees paid to KPMG Ireland only and are exclusive of value-added tax. | | 2021 £m | 2020 £m | | --- | --- | --- | | Audit | 1.5 | 1.6 | | Other assurance services – audit of subsidiaries | 0.1 | 0.1 | | Other assurance services – miscellaneous | 0.1 | 0.1 | | Other non-audit services | 0.1 | 0.5 | | **Total** | **1.8** | **2.3** | Further analysis of the total fees paid to the Group external auditor, KPMG Ireland, worldwide for audit and non-audit services is presented below. # **Analysis of total auditor's remuneration for audit and other assurance services** | | 2021 £m | 2020 £m | | --- | --- | --- | | Audit of Group (KPMG Ireland) | 1.5 | 1.6 | | Audit of subsidiaries (KPMG Ireland) | 0.1 | 0.1 | | Audit of subsidiaries (other KPMG offices) | 3.6 | 3.0 | | Other assurance services – miscellaneous (KPMG Ireland and other KPMG offices) | 0.3 | 0.1 | | **Total** | **5.5** | **4.8** | # **Analysis of amounts paid to the auditor in respect of non-audit services** | | 2021 £m | 2020 £m | | --- | --- | --- | | Tax advisory services (other KPMG offices) | — | 0.1 | | Other non-audit services (KPMG Ireland and other KPMG offices) | 0.1 | 2.0 | | **Total** | **0.1** | **2.1** | # **10. Tax expense** | | 2021 £m | 2020 £m | | --- | --- | --- | | **Recognised in profit or loss:** | | | | Current tax charge | 127.3 | 82.6 | | Prior year under/(over) provision | 1.0 | (1.8) | | **Total current tax** | **128.3** | **80.8** | | Deferred tax credit | (6.2) | (45.8) | | Prior year under provision | 1.4 | 0.8 | | Decrease in net deferred tax liability (Note 18) | (4.8) | (45.0) | | **Total tax expense in income statement** | **123.5** | **35.8** | 200 Platter Entertainment plc Annual Report & Accounts 2021 ## 10. Tax expense continued The difference between the total tax expense shown above and the amount calculated by applying the standard rate of corporation tax to the profit before tax is as follows: | | 2021 £m | 2020 £m | | --- | --- | --- | | (Loss)/profit before tax | (288.4) | 1.1 | | Tax on Group profit before tax at the standard Irish corporation tax rate of 12.5% | (56.1) | 0.1 | | Depreciation on non-qualifying property, plant and equipment | (5.4) | (4.7) | | Effect of different statutory tax rates in overseas jurisdictions | 5.5 | 2.1 | | Non-deductible expenses | 26.8 | 3.9 | | Non-taxable income | (4.0) | (7.3) | | Effect of changes in statutory tax rates | 104.4 | 1.2 | | Movement on deferred tax balances not recognised | 29.9 | 39.5 | | Under/(over) provision in prior year | 2.4 | (1.0) | | Total tax expense | 123.5 | 35.8 | The Group's adjusted effective tax rate before separately disclosed items for the period was 26.8% (year ended 31 December 2020: 16.6%), which compares to the standard Irish tax rate of 12.5%. A total tax credit on separately disclosed items of £42.8m was recorded during the year ended 31 December 2021 (year ended 31 December 2020: £58.4m) (see Note 6). The Group's consolidated effective tax rate on profits including separately disclosed items for 2021 is £42.8% (2020: 3,254.5%). The separately disclosed items impacting the consolidated tax rate include the unwind of deferred tax liabilities recognised in respect of acquisition-related intangibles. The UK rate change has led to a £104.4m charge primarily in respect to the deferred tax liability on separately identifiable acquisition-related intangible assets. The Group's adjusted effective tax rate is also materially impacted by the movement on deferred tax balances which remain unrecognised due to the doubt over the future recoverability of those assets, as well as the effect of expenses which are not deductible for tax purposes. The UK Budget 2021 announced on 3 March 2021 an increase in the UK's main corporation tax rate from 19% to 25% from 1 April 2023. This was enacted as part of the Finance Bill 2021 on 10 June 2021. As these changes were substantively enacted before the balance sheet date, they have been reflected in the deferred tax balances within these financial statements. The future effective tax rate of the Group will be principally affected by the ongoing geographic mix of profits in accordance with the OECD guidelines in relation to Base Erosion and Profit Shifting. On 8 October 2021, 136 out of the 140 countries of the OECD Inclusive Framework on Base Erosion and Profit Shifting ("IF") have politically committed to potentially fundamental changes to the international corporate tax system. This includes a proposed introduction of a global minimum corporate tax rate set at 15% from 1 January 2023. Whilst consultation is ongoing, a template of these rules has been published by the OECD on 20 December 2021. We will continue to monitor developments closely and we expect this to lead to an increase in tax from 2023 onwards. ## 11. Earnings per share The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. The weighted average number of shares has been adjusted for amounts held as treasury shares and amounts held by the Paddy Power Betfair plc Employee Benefit Trust ("EBT"). Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Adjusted EPS is determined by adjusting the profit attributable to ordinary shareholders for the impact of separately disclosed items. Financial statements Annual Report & Accounts 2021 Platter Entertainment plc 255 Notes to the Consolidated Financial Statements continued # **11. Earnings per share continued** The calculation of basic, diluted and adjusted EPS is as follows: | | 2021 | 2020 | | --- | --- | --- | | Numerator in respect of basic and diluted earnings per share (£m) | | | | (Loss)/profit attributable to equity holders of the Company | (415.8) | 37.9 | | Numerator in respect of adjusted earnings per share (£m) | | | | (Loss)/profit attributable to equity holders of the Company | (415.8) | 37.9 | | Separately disclosed items (Note 6) | 860.0 | 483.8 | | Profit for adjusted earnings per share calculation | 444.2 | 521.7 | | Weighted average number of ordinary shares in issue during the period (in '000s) | 175,780 | 129,558 | | **Basic earnings per share** | **(£2,365)** | **(£0,295)** | | **Adjusted basic earnings per share** | **£2,527** | **£4,027** | | Adjustments to derive denominator in respect of diluted earnings per share (in '000s) | | | | Weighted average number of ordinary shares in issue during the period | 175,780 | 129,558 | | Dividend effect of share options and awards on issue | — | 3,291 | | Adjusted weighted average number of ordinary shares in issue during the period^{1} | 175,780 | 132,849 | | **Diluted earnings per share** | **(£2,365)** | **(£0,285)** | 1. Where any potential ordinary shares would have the effect of decreasing a loss per share, they have not been treated as diluted. The number of options excluded from the diluted weighted average number of ordinary shares calculation due to their effect being anti-dilutive is 2,289. (2020: 1,65,673) The average market value of the Company's shares of £137.61 (31 December 2020: £108.80) was used to calculate the diluted effect of share options based on the market value for the period that the options were outstanding. # **12. Property, plant and equipment** | | Land, buildings and leasehold improvements £m | Furniture and fixtures £m | Computer equipment £m | Right-of-use asset £m | Total £m | | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | Balance at 1 January 2020 | 99.5 | 202.1 | 154.0 | 202.4 | 658.0 | | Additions | 3.2 | 20.6 | 30.6 | 19.6 | 74.0 | | Remeasurement of lease term (Note 21) | — | — | — | 12.8 | 12.8 | | Additions – business combinations | 14.0 | 19.9 | 31.6 | 40.0 | 105.5 | | Disposals | (20.3) | (7.1) | (10.1) | (9.8) | (47.5) | | Foreign currency translation adjustment | 3.9 | 1.0 | 1.3 | 0.5 | 6.7 | | **Balance at 31 December 2020** | **100.3** | **236.5** | **207.4** | **265.5** | **809.7** | | Additions | 38.5 | 15.5 | 35.3 | 101.7 | 191.0 | | Remeasurement of lease term (Note 21) | — | — | — | 13.3 | 13.3 | | Additions – business combinations | — | — | 0.4 | — | 0.4 | | Disposals | (2.4) | (0.1) | (0.1) | (5.6) | (8.2) | | Foreign currency translation adjustment | 1.8 | 3.5 | 3.0 | (2.9) | 5.4 | | **Balance at 31 December 2021** | **138.2** | **255.4** | **246.0** | **372.0** | **1,011.6** | | **Depreciation and impairment** | | | | | | | Balance at 1 January 2020 | 55.7 | 136.2 | 131.5 | 36.4 | 359.8 | | Depreciation | 6.8 | 20.2 | 29.4 | 45.4 | 101.8 | | Impairment charges | 3.6 | 2.5 | — | — | 6.1 | | Disposals | (7.8) | (7.1) | (10.1) | (1.1) | (26.1) | | Foreign currency translation adjustment | 3.8 | 0.8 | 1.2 | 0.4 | 6.2 | | **Balance at 31 December 2020** | **62.1** | **152.6** | **152.0** | **81.1** | **447.8** | | Depreciation | 7.7 | 21.3 | 33.0 | 51.7 | 113.7 | | Disposals | (1.6) | (0.1) | (0.1) | (3.1) | (4.9) | | Foreign currency translation adjustment | 0.8 | 2.4 | 1.5 | (1.1) | 3.6 | | **Balance at 31 December 2021** | **69.0** | **176.2** | **186.4** | **128.6** | **560.2** | | **Net book value** | | | | | | | At 31 December 2020 | 38.2 | 83.9 | 55.4 | 184.4 | 361.9 | | **At 31 December 2021** | **69.2** | **79.2** | **59.6** | **243.4** | **451.4** | 1. Materially all of the balance relates to buildings and leasehold improvements. The net book value of land, buildings and leasehold improvements at 31 December 2021 includes £58.1m (2020: £33.6m) in respect of leasehold improvements. The Directors do not consider the remaining useful lives of property, plant and equipment to be materially different from the period over which the assets are being depreciated. 202 Platter Entertainment plc Annual Report & Accounts 2021 ### 13. Intangible assets The movements during the prior year and current year in respect of intangible assets, which comprise computer software and technology, licences, development expenditure, brands, customer relations, and broadcasting and wagering rights, were as follows: | | Computer software and technology (m) | Licences (m) | Development expenditure (m) | Brands (m) | Customer relations (m) | Broadcasting and wagering rights (m) | Total (m) | | --- | --- | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | | | Balance at 1 January 2020 | 269.7 | 84.8 | 133.1 | 507.5 | 314.8 | 31.9 | 1,341.8 | | Additions | 27.6 | 25.6 | — | — | — | — | 53.2 | | Additions – internally developed | — | — | 99.6 | — | — | — | 99.6 | | Additions – business combinations | 364.8 | 17.0 | 102.2 | 1,936.0 | 2,896.4 | — | 5,316.4 | | Foreign currency translation adjustment | 4.2 | (2.6) | 6.8 | 23.3 | 40.7 | (0.5) | 77.5 | | **Balance at 31 December 2020** | **666.3** | **124.8** | **341.7** | **2,466.8** | **3,237.9** | **31.0** | **6,888.5** | | Additions | 31.4 | 31.0 | — | — | — | — | 62.4 | | Additions – internally developed | — | — | 142.3 | — | — | — | 142.3 | | Additions – business combinations | 10.4 | — | — | 16.7 | 20.1 | — | 47.2 | | Disposals | (5.0) | — | (0.6) | (47.0) | — | — | (52.8) | | Foreign currency translation adjustment | (13.0) | (2.0) | (4.5) | (80.5) | (112.7) | (0.3) | (213.0) | | **Balance at 31 December 2021** | **690.1** | **153.8** | **478.9** | **2,356.0** | **3,165.3** | **30.7** | **6,874.8** | | **Amortisation and impairment** | | | | | | | | | Balance at 1 January 2020 | 200.8 | 14.2 | 75.6 | 189.1 | 282.7 | 20.9 | 783.3 | | Amortisation | 77.7 | 5.3 | 86.4 | 122.5 | 246.2 | 5.4 | 543.7 | | Impairment charges | — | 12.1 | 4.4 | — | — | — | 16.5 | | Foreign currency translation adjustment | 3.3 | (1.9) | 6.2 | 7.3 | 2.9 | (0.6) | 17.2 | | **Balance at 31 December 2020** | **281.8** | **29.9** | **172.6** | **318.9** | **531.8** | **23.7** | **1,360.7** | | Amortisation | 94.6 | 10.0 | 120.8 | 152.7 | 301.4 | 4.5 | 684.0 | | Disposals | (1.2) | — | (0.3) | (2.7) | — | — | (4.2) | | Foreign currency translation adjustment | (4.2) | (1.0) | (2.3) | (12.9) | (20.7) | (0.2) | (41.3) | | **Balance at 31 December 2021** | **371.0** | **38.9** | **290.8** | **456.0** | **812.5** | **30.0** | **1,999.2** | | **Net book value** | | | | | | | | | At 31 December 2020 | 384.5 | 94.9 | 169.1 | 2,147.9 | 2,726.1 | 3.3 | 3,527.8 | | **At 31 December 2021** | **319.1** | **114.9** | **188.1** | **1,900.0** | **2,352.8** | **0.7** | **4,875.6** | Computer software and technology-related intangible assets relate namely to innovations or technological advances including patented technology, trade secrets or databases and are amortised over their estimated useful life of 2–5 years. Development expenditure relates to work performed for development of new products and technologies across the Group that have profitable future economic benefits which can be clearly defined and measured. These are amortised over their estimated useful life of 3–5 years. Brand-related intangible assets relate namely to trade names which arise from business combinations and are amortised over their estimated useful life of 8 to 20 years. Some brands are not being amortised due to indefinite useful lives and are instead tested for impairment as required. Customer relationships-related intangible assets relate namely to customer bases that generate recurring revenues which arise from business combinations and are amortised over their estimated useful life of 4 to 20 years. The original value of betting shop licences of £18.1m acquired as a result of the purchase of D McGranaghan Limited in 2008 and an additional betting shop in Northern Ireland in 2011 are not being amortised as the Directors consider these licences to have an indefinite life because: - existing law in Northern Ireland restricts entry of new competitors; - there exists a proven and future expected demand for bookmaking services and products; and - the Group has a track record of renewing its betting permits and licences at minimal cost. The value of brand intangible assets recognised on application of fair value accounting to the purchase of Sportsbet and International All Sports Limited ('IAS') in 2009 amounting to £12.7m at 31 December 2021 (2020: £13.4m) is not being amortised as the Directors consider that the relevant brands have indefinite lives because: - the Directors intend to utilise the brands in the businesses for the foreseeable future (with the exception of the IAS brand – see below); and - substantial sums are invested annually in the form of marketing expenditure expensed through profit or loss to maintain and to enhance the value of these brands. Annual Report & Accounts 2021 Platter Entertainment plc 205 Financial Statements Notes to the Consolidated Financial Statements continued ### 13. Intangible assets continued The Group reviews the carrying value of licences and brands for impairment annually (or more frequently if there are indications that the value of the licences and brands may be impaired) by comparing the carrying values of these assets with their recoverable amounts (being the higher of value in use and fair value less costs to sell). The potential impact of Covid-19 was incorporated into the underlying assumptions used in the review. In 2020, the Group reviewed the carrying value of the D. McGranaghers licences of £18.1m (which form part of the UK&I operating segment) and determined on the basis of future cash flows, that an impairment charge of £12.1m was required against the value of the licences at 31 December 2020. A pre-tax discount rate of 10% and a terminal growth rate of 0% was used to determine the value in use. A similar review was performed at 31 December 2021 which indicated that there had been no change in the circumstances that gave rise to the impairment provision and that continued provision was appropriate. In 2011, the Group reviewed the carrying value of the IAS brand of AUD6.9m and determined, on the basis of future plans, that an impairment provision was required against the value of that brand at 31 December 2011. A similar review was performed at 31 December 2020 and at 31 December 2021 (when the GBP equivalent value of the brand was £5.9m and £3.7m respectively) which indicated that there had been no changes in the circumstances that gave rise to the impairment provision and that continued provision was appropriate. #### Individually material intangible assets with definite useful lives | | Carrying amount 2021 £m | Average remaining amortisation period 2021 Years | Carrying amount 2020 £m | Average remaining amortisation period 2020 Years | | --- | --- | --- | --- | --- | | **Brands** | | | | | | Poker Stars | 939.8 | 18 | 991.0 | 19 | | Sky Betting & Gaming | 781.5 | 18 | 824.1 | 19 | | FanDuel | 75.4 | 7 | 87.0 | 8 | | **Customer relationships** | | | | | | Poker Stars | 1,165.5 | 18 | 1,327.6 | 19 | | Sky Betting & Gaming | 1,067.6 | 18 | 1,171.1 | 19 | | BetEasy | 96.6 | 9 | 117.2 | 10 | 1. BetEasy customers were migrated to the Sportsbet platform during 2020. ### 14. Goodwill Following the Combination with the Stars Group in 2020, the Group reorganised its business into four divisions, reporting against these divisions from 2021. As part of this process the Group reviewed the historical assessment of cash generating units ("CGUs") and the allocation of goodwill. The legacy Sky Betting & Gaming CGU has been renamed 'UK&I Online', and has been allocated goodwill relating to the UK&I business under the relative value approach from the legacy PPB Online CGU. The legacy PokerStars CGU has been renamed to 'International', and has been allocated goodwill relating to the international business based on the relative values of the PPB Online CGU to the extent that the goodwill was not already separately identifiable. All other CGUs were unchanged. The opening goodwill balance has been restated for comparable purposes. The following CGUs, being the lowest level of asset for which there are separately identifiable cash flows, have the following carrying amounts of goodwill: | | UK&I Online £m | UK Retail £m | Irish Retail £m | International £m | Australia £m | US £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 January 2021 | 5,845.5 | 18.9 | 20.7 | 2,560.9 | 507.7 | 563.0 | 9,516.7 | | Arising on acquisitions during the period (Note 15) | — | — | — | 58.5 | — | — | 58.5 | | Disposals (Note 15) | (78.0) | — | — | — | — | — | (78.0) | | Foreign currency translation adjustment | (0.6) | — | — | (129.1) | (25.3) | 4.6 | (150.4) | | Balance at 31 December 2021 | 5,786.9 | 18.9 | 20.7 | 2,490.3 | 482.4 | 567.6 | 9,546.8 | The Group reviews the carrying value of goodwill for impairment annually (or more frequently if there are indications that the value of goodwill may be impaired) by comparing the carrying values of these CGUs with their recoverable amounts (being the higher of value in use and fair value less costs to sell). As a consequence of Covid-19, the retail CGUs were impacted by the temporary suspension of the activities of shops in 2021 for a period. Based on the significant headroom that existed in the 31 December 2021 impairment test, the performance of the shops and customer activity levels since the shops have reopened and further easing of social distancing requirements, as well as opportunities to make further market share gains as competitors reduce the size of their respective estates, the Group is satisfied that no impairment has arisen during the year ended 31 December 2021. 204 Platter Entertainment plc Annual Report & Accounts 2021 #### 14. Goodwill continued The UK&I Online segment goodwill amount arose from the acquisition of the Sky Betting and Gaming business as part of the TSG acquisition in 2020 (see Note 15), the acquisition of CT Networks Limited ("Cayetano"), a games developer based in the Isle of Man and Bulgaria, in 2011 and the acquisition of the Betfair online business (excluding operations outside of Ireland and the UK) as part of the all-share merger with Betfair Group plc in 2016. Goodwill in UK Retail arose from the acquisition of two London bookmaking businesses in 2004, the acquisition of a retail bookmaking company in Northern Ireland in 2008 and the acquisition of a number of retail bookmaking shop properties since 2010. Goodwill in Irish Retail arose from the amalgamation of three bookmaking businesses to form Paddy Power plc in 1988 and the acquisition of a number of retail bookmaking shop properties since 2007. The international goodwill amount arose from the acquisition of the PokerStars business as part of the TSG acquisition in 2020, the acquisition of the Betfair online business (excluding the operations of Ireland, the UK, and the US) acquired as part of the all-share merger with Betfair Group plc in 2016, the acquisition of an initial 51% controlling stake in Adjanabet, the market leader in online betting and gaming in the regulated Georgian market, in February 2019 and the acquisitions in 2021 of a 57.3% controlling stake in Junglee Games, an Indian online rummy operator and Singular, a B2B operator which offers a flexible, modular sports betting and gaming technology platform (see Note 15). The Australia segment goodwill amount arose from the acquisition of an initial 51% interest in Sportsbet Pty Limited ("Sportsbet"), the subsequent acquisition of International All Sports Limited ("IAS" Pty Sportsbet, both in 2009, and goodwill arising from BetEasy through the 2020 combination with TSG (see Note 15). The US segment goodwill amount arose from the acquisition of the US business acquired as part of the all-share merger with Betfair Group plc in 2016, the acquisition of FanDual Limited a market leading operator in the daily fantasy sports market in the United States in 2018 and goodwill arising on Fox Bet through the combination with TSG in 2020 (see Note 15). #### Impairment tests for cash generating units containing goodwill and indefinite life intangible assets In accordance with accounting requirements, the Group performs an annual impairment test of its CGUs. The most recent test was performed at 31 December 2021. For the purpose of impairment testing, the Group's CGUs include amounts in respect of goodwill and indefinite life intangible assets, comprising licences acquired as part of the purchase of the D1% Granaghan Limited business in 2008 and a shop acquisition in 2011 and brands acquired as part of the purchase of Sportsbet and IAS in 2009. The impact of Covid-19 on the performance of the Group and its individual business units is set out in the Business Review section of the Annual Report. The impact of Covid-19 was also considered in the context of the goodwill impairment reviews especially in relation to its retail CGUs which were negatively impacted from the temporary suspension of the activities of shops for periods throughout the year to facilitate social distancing. The details of the impairment reviews in respect of the CGUs as of 31 December 2021 are presented below: #### UK&I Online The recoverable amount of the UK&I Online operating segment underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board covering a three-year period and by management for a further two-year period. The terminal growth rate for the extrapolated period (following the initial five-year period) is projected to be approximately 2.6% (2020: 2.6%) per annum and is based on a weighted average income growth rate of 2.6% (2020: 2.6%), which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the segment and the Group's targeted performance over the next five years. A pre-tax discount rate of 8.8% (2020: 9.9%), which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Management believes that any reasonably possible change in the key assumptions on which the UK&I Online segment goodwill recoverable amount is based would not cause it's carrying amount to exceed it's recoverable amount. #### UK Retail The recoverable amount of the UK Retail underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board covering a three-year period. The terminal growth rate for the extrapolated period (following the initial three-year period) is projected to be approximately 0% (2020: 0%) per annum and is based on a weighted average income growth rate of 0% (2020: 0%), which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the CGU and the Group's targeted performance over the next three years. A pre-tax discount rate of 11.2% (2020: 10.0%), which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Covid-19 remains a potential future risk to the carrying value of the CGU. Freightctions on shops remained in place. Management believes that any reasonably possible change in the key assumptions on which the UK Retail CGU goodwill recoverable amounts are based would not cause their carrying amounts to exceed their recoverable amounts. Financial Statements Annual Report & Accounts 2021: Platter Entertainment plc 255 ## Notes to the Consolidated Financial Statements continued ### 14. Goodwill continued #### Irish Retail The recoverable amount of the Irish Retail underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board covering a three-year period. The terminal growth rate for the extrapolated period (following the initial three-year period) is projected to be approximately 0% (2020: 0%) per annum and is based on a weighted average income growth rate of 0% (2020: 0%), which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance (prior to Covid-19 impact) of the CGU and the Group's targeted performance over the next three years. However similar to the UK Retail CGU, Covid-19 continues to represent potential disruption to the near-term cash flows. A pre-tax discount rate of 9.9% (2020: 9.9%), which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Management believes that any reasonably possible change in the key assumptions on which the Irish Retail CGU goodwill recoverable amount is based would not cause its carrying amount to exceed its recoverable amount. #### International The recoverable amount of the International operating segment underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board for a three-year period and by management for a further two-year period. The terminal growth rate for the extrapolated period (following the initial five-year period) is projected to be approximately 2.6% (2020: 2.6%) per annum and is based on a weighted average income growth rate of 2.6% (2020: 2.6%) which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the segment and the Group's targeted performance over the next five years. A pre-tax discount rate of 9.4% (2020: 9.1%) which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Management believes that any likely change in the key assumptions on which the International segment goodwill recoverable amount is based would not cause its carrying amount to exceed its recoverable amount. #### Australia The recoverable amount of the Australia operating segment underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board for a three-year period and by management for a further two-year period. The terminal growth rate for the extrapolated period (following the initial five-year period) is projected to be approximately 2.5% (2020: 2.5%) per annum and is based on a weighted average income growth rate of 2.5% (2020: 2.5%), which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the segment and the Group's targeted performance over the next five years. A pre-tax discount rate of 13.1% (2020: 13.2%), which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Management believes that any reasonably possible change in the key assumptions on which the Australia operating segment goodwill and brands recoverable amount are based would not cause its carrying amount to exceed its recoverable amount. #### US The recoverable amount of the US operating segment underlying CGU was estimated based on value in use calculations. These calculations use cash flow projections based on actual operating results and financial budgets and forecasts approved by the Board for a three-year period and by management for a further two-year period. The terminal growth rate for the extrapolated period (following the initial five-year period) is projected to be approximately 2.5% (2020: 2.5%) per annum and is based on a weighted average income growth rate of 2.5% (2020: 2.5%), which is based on experience and is consistent with management's expectations for market development and growth in market share where applicable. The growth rate assumption is considered realistic by management in light of the recent performance of the segment and the Group's targeted performance over the next five years. A pre-tax discount rate of 13.4%, which reflects the specific risks and currency of the cash flows relating to the underlying business segments, has been used in discounting the projected cash flows. Management believes that any reasonably possible change in the key assumptions on which the US operating segment goodwill recoverable amount are based would not cause its carrying amount to exceed its recoverable amount. #### Discount rates and terminal growth rates The discount rates applied to each CGU's cash flows represent a post-tax rate that reflects the Group's weighted average cost of capital ("WACC") adjusted for any risks specific to that CGU. A 50bps change in the pre-tax discount rate and in the terminal growth rate which are considered to be the most sensitive inputs would not cause the carrying amount to exceed the recoverable amount for any of the above CGUs. 258 Platter Entertainment plc Annual Report & Accounts 2021 ## 15. Business combinations and disposals Year ended 31 December 2021 ### Acquisition of Singular On 10 September 2021, the Group completed the acquisition of a 100% stake in Singular, a European sports betting and gaming technology platform which is already fully integrated with our Adjarabet business and will provide us with greater optionality as we enter new markets. The purchase comprised of an initial cash payment of €16.5m (€14.1m) with a further €20.1m (€17.2m) payable subject to the business meeting strategic milestones in the future, recorded as contingent consideration and €1.0m (€0.8m) included within deferred consideration. Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: | | Provisional tax values as at 10 September 2021 £m | | --- | --- | | **Assets** | | | Property, plant and equipment | 0.2 | | Intangible assets | 4.3 | | **Total non-current assets** | **4.5** | | Trade and other receivables | 0.9 | | Cash and cash equivalents | 0.5 | | **Total current assets** | **1.4** | | **Total assets** | **5.9** | | **Liabilities** | | | Trade and other payables | 0.9 | | **Total current liabilities** | **0.9** | | Deferred tax liabilities | 0.2 | | **Total non-current liabilities** | **0.2** | | **Total liabilities** | **1.1** | | **Net assets acquired** | **4.8** | | Goodwill | 27.3 | | **Consideration** | **32.1** | | **The consideration is analysed as:** | | | Consideration satisfied by cash | 14.1 | | Contingent consideration | 17.2 | | Deferred consideration | 0.8 | | **Consideration** | **32.1** | Included within the intangible assets were €4.3m of separately identifiable intangibles comprising technology and customer relations acquired as part of the acquisition, with the additional effect of a deferred tax liability of €0.2m thereon. These intangible assets are being amortised over their useful economic lives of up to five years. The book value equated to the fair value on the remaining assets as all amounts are expected to be received. The main factors leading to the recognition of goodwill (none of which is deductible for tax purposes) is growth by combining the Group's significant operating experience in other markets with the local market knowledge and skills of the management team in Singular. The goodwill has been allocated to the existing International CGU and it has been deemed that a separate CGU is not appropriate. If the acquisition had occurred on 1 January 2021, Singular's contribution to revenue and net profit after tax for the year ended 31 December 2021 would have been insignificant in terms of third party revenue and €0.1m respectively. Since the date of acquisition to 31 December 2021, Singular has contributed insignificant third party revenue and a €0.2m profit after tax to the results of the Group. Financial Statements Annual Report & Accounts 2021 Platter Entertainment plc 207 Notes to the Consolidated Financial Statements continued # **15. Business combinations and disposals continued** # **Acquisition of Junglee Games** On 28 January 2021, the Group completed the acquisition of an initial 50.1% stake in Junglee Games ("Junglee"), an Indian online run/my operator, for US$67.3m (£49.5m), with US$63.5m (£46.5m) paid in cash and the remainder recorded as deferred consideration and paid subsequently in 2021. On the same date the Group entered into call and put options which would enable the Group to acquire an additional 7.2% stake in Junglee in exchange for cash consideration. In June 2021, these options were exercised and the Group acquired the additional 7.2% stake in Junglee in exchange for cash consideration of US$7.5m (£5.5m) with US$70m (£5.1m) paid in cash and the remainder recorded as deferred consideration and paid subsequently in 2021. This has been accounted under the anticipated acquisition method, with the combined 57.3% recognised as acquired from 28 January 2021. Junglee is a top three player in the legal Indian online run/my market. Based on its December 2020 run-rate, Junglee would generate annualised gross revenue of c£50m in a full year. The Group sees good potential to further develop Junglee's product, offering, including its recently launched daily fantasy sports product, leveraging the Group's capabilities in this area. The Group has put in place arrangements, consisting of call and put options that could see its ownership in the business increase to 100% in 2025. The call and put options consideration can be settled, at the Group's election, in cash or shares. As a consequence of both the call and put options being only exercisable at fair value being the future EBITDA and revenue multiple, which are considered to be two key inputs into valuing the option, it was determined that the fair value of the call and put options was not material and was close to nominal value. Included within the intangible assets were £42.9m of separately identifiable intangibles comprising brand, technology and customer relations acquired as part of the acquisition, with the additional effect of a deferred tax liability of £10.8m thereon. These intangible assets are being amortised over their useful economic lives of up to 10 years. The book value equated to the fair value on the remaining assets and liabilities as all amounts are expected to be received. The main factors leading to the recognition of goodwill (none of which is deductible for tax purposes) is growth by combining the Group's significant operating experience in other markets with the local market knowledge and skills of the management team in Junglee, driving revenue synergies over time. The goodwill has been allocated to the existing international CGU and it has been deemed that a separate CGU is not appropriate. Since the date of acquisition to 31 December 2021, Junglee has contributed £50m of revenue and £7.4m of a net loss after tax to the results of the consolidated Group. If the acquisition had occurred on 1 January 2021, Junglee's contribution to revenue and net loss after tax for the year ended 31 December 2021 would have been £53m and £6.6m respectively. Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: | | Fair value as at 28 January 2021 £m | | --- | --- | | **Assets** | | | Property, plant and equipment | 0.2 | | Intangible assets | 42.9 | | **Total non-current assets** | **43.1** | | Trade and other receivables | 3.8 | | Cash and cash equivalents | 17.7 | | **Total current assets** | **21.5** | | **Total assets** | **64.6** | | **Liabilities** | | | Trade and other payables | 13.1 | | **Total current liabilities** | **13.1** | | Deferred tax liabilities | 10.8 | | **Total non-current liabilities** | **10.8** | | **Total liabilities** | **23.9** | | **Net assets acquired** | **40.7** | | Goodwill | 31.2 | | Non-controlling interest measured at the proportionate interest method | (17.1) | | **Consideration** | **54.8** | | **The consideration is analysed as:** | | | Consideration satisfied by cash | 46.5 | | Put option satisfied by cash | 5.1 | | Deferred consideration | 2.8 | | Put option deferred consideration | 0.4 | | **Consideration** | **54.8** | 208 Flutter Entertainment plc Annual Report & Accounts 2021 15. Business combinations and disposals continued  Acquisition of The Stars Group Inc. On 5 May 2020, Flutter completed an all-share Combination with The Stars Group Inc. (the “Combination”) resulting in existing  its subsidiaries, the “Group”), on a fully diluted basis (excluding any out of the money options). Post-Combination, the Company is the ultimate parent of The Stars Group Inc. (“TSG”).  Company (“ordinary shares”) in exchange for each outstanding TSG share (the ”Exchange Ratio”). Accordingly, the Company issued  £94.84 per share at this date. In addition: (i) each TSG Option outstanding at 5 May 2020, under the TSG Share Plans was exchanged for an option to purchase such number of New Flutter Shares calculated in accordance with the Exchange Ratio; and (ii) each TSG restricted share unit (“RSU”), TSG performance share unit (“PSU”) and TSG deferred share unit (“DSU”) outstanding at the Effective Time under the TSG Equity Plan was amended so as to substitute for the TSG Shares, subject to such equity awards, a number of Flutter Shares calculated in accordance with the Exchange Ratio but subject to any adjustment required to that award by the TSG Equity Plan or grant documentation as a result of the Plan of Arrangement. TSG is a global leader in the online and mobile gaming and interactive entertainment industries, entertaining millions of customers across its online real- and play-money poker, gaming and betting product offerings. TSG offers these products directly or indirectly under several ultimately owned or licensed gaming and related consumer businesses and brands. TSG is one of the world’s most licensed online gaming operators with its subsidiaries collectively holding licences or approvals in 22 jurisdictions throughout the world, including in Europe, Australia and the Americas. The main drivers for the Combination were to accelerate delivery against each of the components of Flutter’s four-pillar strategy; create a highly diversified business from a geographic, product and brand perspective with an enhanced global platform; deliver Financial statements significant value for shareholders through the realisation of material cost synergies such as procurement synergies, removal of duplicate corporate and administrative costs and utilisation of scale to create efficiencies; reinforce a robust financial profile which will facilitate strategic flexibility as well as generate sustainable long-term shareholder returns; and maintain a leading role in the promotion of responsible gambling through an enlarged global footprint. Included within the intangible assets were £5,316.4m of separately identifiable intangibles comprising brands, customer relations and technology acquired as part of the Combination, with the additional effect of a deferred tax liability of £527m thereon. These intangible assets are being amortised over their useful economic lives of up to 20 years. Receivables acquired amounted to £114.6m. The book value equated to the fair value as all amounts are expected to be received. The main factors leading to the recognition  existing products and synergy savings of the merged operations. The goodwill associated with the PokerStars and Sky Betting & Gaming businesses has been included in the International and UK&I CGUs, respectively. The goodwill associated with the Australia and US businesses has been allocated to the respective existing Australia and US CGUs and it has been deemed that separate CGUs are appropriate. Annual Report & Accounts 2021 Flutter Entertainment plc 209 Notes to the Consolidated Financial Statements continued # **15. Business combinations and disposals continued** Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill were finalised during the period and no change to the figures reported as at 31 December 2020 were identified. They are outlined as follows: | | Fair values as at 5 May 2020 £m | | --- | --- | | **Assets** | | | Property, plant and equipment | 105.5 | | Intangible assets | 5,316.4 | | Deferred tax asset | 8.3 | | Non-current tax receivable | 19.1 | | Derivative financial assets | 79.2 | | Investments | 4.0 | | Other receivables | 26.2 | | Financial assets – restricted cash | 8.9 | | **Total non-current assets** | **5,567.6** | | Trade and other receivables | 88.4 | | Current tax receivable | 28.7 | | Financial assets – restricted cash | 292.4 | | Current investments – customer deposits | 89.7 | | Cash and cash equivalents | 445.2 | | **Total current assets** | **944.4** | | **Total assets** | **6,512.0** | | **Liabilities** | | | Trade and other payables | 498.8 | | Customer balances | 376.7 | | Derivative financial liabilities | 10.0 | | Provisions | 1.4 | | Current tax payable | 15.1 | | Lease liabilities | 16.4 | | Borrowings | 39.7 | | **Total current liabilities** | **978.1** | | Trade and other payables | 3.1 | | Derivative financial liabilities | 56.9 | | Provisions | 149.1 | | Non-current tax payable | 22.3 | | Deferred tax liabilities | 487.5 | | Lease liabilities | 26.1 | | Borrowings | 3,873.9 | | **Total non-current liabilities** | **4,618.9** | | **Total liabilities** | **5,597.0** | | **Net assets acquired** | **915.0** | | Goodwill | 5,337.6 | | **Consideration** | **6,252.6** | | **Consideration satisfied by:** | | | Issue of 65,316,588 Flutter Entertainment plc ordinary shares | 6,194.6 | | Issue of replacement share options and awards | 58.0 | | **Consideration** | **6,252.6** | # **Acquisition of additional shares of TSG Australia Pty Ltd** On 13 May 2020, the Group exercised its option to acquire the remaining 20% of the outstanding share capital of TSG Australia Pty Ltd ("TSG Australia"), bringing the Group's holding in TSG Australia to 100%, up from the previous 80%. The acquisition was satisfied by the issuance of 819,230 new ordinary shares of the Company, settling a liability of A$151.4m (€79.7m). 210 Flutter Entertainment plc Annual Report & Accounts 2021 ## 15. Business combinations and disposals continued On 30 December 2020, the Group acquired an additional 37.2% of the outstanding shares of FanDuel in exchange for €3,340m, satisfied by a cash payment of US$2,088bn (£1,546bn) and the issuance of 11,747,203 new ordinary shares of the Company (€1,794.4m). The acquisition brings the Group's holding in FanDuel to 93%, up from the previous controlling interest of 57.8%. As FanDuel's results and financial position had been previously consolidated into the Group, the excess of the purchase price over the carrying value of the non-controlling interest acquired was recognised directly within equity in retained earnings. The initial goodwill and non-controlling interest were recorded initially using the proportionate interest method and a transfer from non-controlling interest to retained earnings and foreign currency translation reserve has been made. As outlined previously, as a result of the acquisition of FanDuel Limited in 2018, call and put options were put in place for the Group to acquire a further 37.2% of FanDuel at prevailing market valuations three and five years after the July 2018 acquisition. The Group had the discretion as to whether these options are settled by the issuance of Flutter Entertainment plc shares or via cash. These options terminated on the acquisition of 37.2% additional FanDuel shares on 30 December 2020. The put and call agreement stated that the number of shares to be issued as consideration for the settlement of the put/call could not exceed 10% of the Flutter Entertainment plc shares in issue with any excess paid in cash. Due to the growth in value of FanDuel to 30 December 2020, this resulted in the Group recognising a liability of €846m which was derecognised on 30 December 2020 as part of the above acquisition. ### Disposal of Oddschecker Global Media On 31 August 2021 the Group sold all of the shares of Oddschecker Global Media ("OGM"), a fully owned subsidiary of the Group, to Bruin Capital, in exchange for €127.1m in cash (proceeds of €141.3m net of €14.2m cash already on the balance sheet) and recorded a gain on the disposal of €12.2m (see also Note 6). There is potential for the Group to receive further consideration of up to €20m pending future events. However, it is currently not probable that further amounts will be received and therefore no contingent asset has been recorded. Prior to the sale, the non-current assets were measured at the lower of their carrying amount and fair value less costs sell. No impairments were recognised. The assets and liabilities of OGM were included within the UK$/segment up to the date of sale. The net assets disposed and the gain on disposal recognised by the Group were as follows: | | 31 August 2021 €m | | --- | --- | | Property, plant and equipment | 0.8 | | Intangible assets | 48.1 | | Goodwill | 78.0 | | Trade and other receivables | 2.1 | | Cash and cash equivalents | 14.2 | | Total assets | 143.2 | | Accounts payable and other liabilities | (7.3) | | Deferred taxes | (11.6) | | Total liabilities | (18.9) | | **Net assets disposed** | **124.3** | | Disposal costs | (4.6) | | Proceeds | 141.3 | | **Gain on disposal** | **12.2** | Cash (outflows)/inflows from business combinations: | | Year ended 31 December 2021 €m | Year ended 31 December 2020 €m | | --- | --- | --- | | Cash consideration paid for acquisitions in the period | (63.4) | — | | Cash consideration paid for put option exercised in the period | (5.5) | — | | Cash acquired from acquisitions in the period | 16.2 | 445.2 | | Cash consideration – acquisitions in previous periods | (21.6) | (7.2) | | **As presented in the statement of cash flows:** | | | | Purchase of businesses net of cash acquired | (50.7) | 445.2 | | Payment of contingent deferred consideration | (21.6) | (7.2) | During the year the Group settled in cash, deferred consideration liabilities of €21.6m in relation to Betfair's historical acquisition of HRTV, a horse racing television network based in the US. Annual Report & Accounts 2021 Flutter Entertainment plc 231 FINANCIAL COMPONENTS Notes to the Consolidated Financial Statements continued # **16. Investments and trade and other receivables** Non-current assets | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | Investments – FVTPL | 5.5 | 5.0 | Investments relate to a small number of individually immaterial equity investments in various companies. | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Other receivables** | | | | Other receivables | 11.8 | 13.0 | | Prepayments | 13.8 | 16.7 | | Deferred financing costs on Revolving Credit Facility (see Note 22) | 3.7 | 4.6 | | Amounts paid in respect of legacy German and Greek tax assessments | — | 40.9 | | **Total** | **29.3** | **75.2** | # **Other receivables** Other receivables are comprised primarily of deposits for licences and property. # **Deferred financing costs on Revolving Credit Facility** In May 2020, the Group entered into a new Revolving Credit Facility agreement as part of its financing agreements. The Group incurred €5.3m of transaction costs and fees relating to the Revolving Credit Facility, which have been capitalised and included within non-current receivables, net of accretion of €3.7m (2020: €4.6m), on the Consolidated Statement of Financial Position and are recorded as financial expense over the term of the Revolving Credit Facility agreement using the effective interest rate method. As at 31 December 2021, no loan amount was drawn under the Revolving Credit Facility (31 December 2020: nil). # **Amounts paid in respect of legacy German and Greek tax assessments** # **Germany** In 2012 Betfair was issued with a German tax assessment relating to the Betfair Exchange, which operated in Germany until November 2012. The assessment deemed that a tax liability of approximately €30.6m is payable. This represents a multiple of the revenues generated by the Exchange during the assessment period. The Group paid the €30.6m German tax assessment in 2019, with the late payment interest of approximately €10m to be paid when assessed. In September 2021 the German Federal Tax Court dismissed the Group's appeal of the tax assessment. Whilst the Group has lodged a formal complaint to the Federal Constitutional Court, it has decided to recognise the amount of the German tax assessment. This has resulted in an expense of €40.6m (€34.5m) being recorded in the year in relation to the principal amount of tax and late payment interest. # **Greece** In 2019, the Group was issued with a Greek tax assessment for financial years 2012, 2013 and 2014, relating to paid by power.com's Greek interim licence. This assessment concluded that the Group is liable to pay €15.0m in taxes including penalties and interest. This is substantially higher (by multiples) than the total cumulative revenues ever generated by paid by power.com in Greece. Pending the outcome of its appeal, in 2019 the Group paid the total Greek tax assessment (including the penalties and interest) of €15.0m. In June 2021, the Athens Administrative Court of Appeal dismissed the Group's judicial recourses. While the Group has further appealed to the Greek Supreme Administrative Court, based on the nature of the decision received and the points of law which can be appealed, and in line with legal and tax advice it has received, it has decided to recognise the amount of the Greek assessment, of €15.0m (€12.8m) as an expense in the income statement during the year ended 31 December 2021. No notifications have as yet been received for later years and so no provision has been made for potential further assessments. # **Current assets** | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other receivables** | | | | Trade receivables | 39.5 | 11.9 | | Other receivables | 34.4 | 28.5 | | Value-added tax and goods and services tax | 5.1 | 2.2 | | Prepayments | 124.9 | 96.9 | | **Total** | **205.9** | **139.5** | 232 Platter Entertainment plc Annual Report & Accounts 2021 ## 17. Current investments, financial assets – restricted cash and cash equivalents | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Non-current:** | | | | Financial assets – restricted cash | 7.4 | 6.9 | | **Current:** | | | | Investments at FVOCI – customer deposits | 83.0 | 82.8 | | Financial assets – restricted cash | 677.6 | 587.9 | | Cash and cash equivalents | 951.7 | 603.4 | | **Total** | **1,719.7** | **1,281.0** | ### Financial assets Non-current financial assets – restricted cash include: - amounts required to be held as to guarantee third party letter of credit facilities. - current financial assets – restricted cash include: - customer funds balances securing player funds held by the Group. These customer funds are matched by liabilities of equal value; and - amounts required to be held as to guarantee third party letter of credit facilities. The effective interest rate on bank deposits at 31 December 2021 was 0.3% (31 December 2020: 0.1%), these deposits have an average original maturity date of one day (2020: one day). The bank deposits also have an average maturity date of one day from 31 December 2021 (2020: one day). The Directors believe that all short-term bank deposits can be withdrawn without significant penalty. ### Investments – customer deposits Investments relate to customer deposits, and are held in accounts segregated from investments held for operational purposes. Investments held in relation to customer deposits are liquid investments in short duration corporate and government bonds and are classified as current assets consistent with the current classification of customer deposits to which the investments relate. Management's investment strategy for the portfolio results in the majority of the bonds being held to maturity. Bonds are classified as FVOCI. ### Amounts held in trust As at 31 December 2021, £355.6m (31 December 2020: £379.3m) was held in trust in The Sporting Exchange (Clients) Limited on behalf of the Group's customers and is equal to the amounts deposited into customer accounts. Neither cash and cash equivalents nor restricted cash include these balances on the basis that they are held on trust for customers and do not belong to and are not at the disposal of the Group. ### Currency details Investments – customer deposits, financial assets – restricted cash and cash and cash equivalents are analysed by currency as follows: | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | GBP | 708.7 | 289.9 | | EUR | 165.0 | 283.8 | | AUD | 238.2 | 158.0 | | USD | 570.8 | 506.3 | | Other | 37.0 | 42.8 | | **Total** | **1,719.7** | **1,281.0** | ## 18. Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: | | 31 December 2021 | | | 31 December 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Assets £m | Liabilities £m | Total £m | Assets £m | Liabilities £m | Total £m | | Property, plant and equipment | 11.5 | (0.6) | 10.9 | 13.2 | (3.5) | 9.7 | | Intangible assets | 69.9 | (601.9) | (532.0) | — | (549.7) | (549.7) | | Employee benefits | 13.3 | — | 13.3 | 17.6 | — | 17.6 | | Other | 21.9 | (3.9) | 18.0 | 32.0 | (3.1) | 28.9 | | **Net assets (liabilities)** | **116.6** | **(606.4)** | **(489.8)** | **62.8** | **(556.3)** | **(493.5)** | Deferred tax assets and liabilities have been offset at 31 December 2021 and 2020 where there is a legally enforceable right to such set-off in each jurisdiction. Included in the statement of financial position is a deferred tax asset of £8.2m (2020: £7.4m) and a deferred tax liability of £498.0m (2020: £500.9m). Annual Report & Accounts 2021 Platter Entertainment plc 233 Financial Statements Notes to the Consolidated Financial Statements continued # **18. Deferred tax assets and liabilities continued** The deferred tax liability in relation to intangible assets disclosed above primarily relates to the deferred tax liability arising in respect of acquisition accounting-related intangibles. This deferred tax liability continues to unwind as the intangible assets are amortised over their useful economic life. The deferred tax asset arising on employee benefits primarily relates to future tax deductions the Group expects to receive in relation to share-based payment plans operated by the Group to reward its employees as well as other employee timing differences relating to Australia. The asset is recognised at the tax rate at which it is expected to unwind. Movement in temporary differences during the year: | | Property, plant and equipment £m | Intangible assets £m | Employee benefits £m | Other £m | Total £m | | --- | --- | --- | --- | --- | --- | | Balance at 1 January 2020 | 6.8 | (70.4) | 13.1 | (2.6) | (53.1) | | Arising on acquisition | 1.0 | (516.5) | 3.2 | 32.9 | (479.2) | | Recognised in income | 3.1 | 44.3 | 2.3 | (4.7) | 45.0 | | Recognised directly in equity | — | — | (1.0) | — | (1.0) | | Foreign currency translation adjustment | (1.2) | (7.3) | — | 3.3 | (5.2) | | **Balance at 31 December 2020** | **9.7** | **(549.7)** | **17.6** | **28.9** | **(493.5)** | | Arising on acquisition | (0.8) | (10.5) | — | 0.3 | (11.0) | | Arising on disposal | 0.1 | 11.5 | — | — | 11.6 | | Recognised in income | 1.9 | 18.1 | (4.1) | (11.1) | 4.8 | | Recognised directly in equity | — | — | (0.2) | — | (0.2) | | Foreign currency translation adjustment | — | (1.4) | — | (0.1) | (1.5) | | **Balance at 31 December 2021** | **10.9** | **(532.0)** | **13.3** | **18.0** | **(489.8)** | # **Unrecognised deferred tax assets** The Group has unrecognised deferred tax assets in respect of losses and other timing differences of £783.9m (2020: £454.9m). These have not been recognised on the basis that there is insufficient certainty of there being future taxable profits in the relevant jurisdictions and therefore the assets will not be realisable. # **19. Trade and other payables** # **Current liabilities** | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other payables** | | | | Trade payables | 74.2 | 79.7 | | FRYE and social security | 19.7 | 14.8 | | Value-added tax and goods and services tax | 30.7 | 10.7 | | Betting duty, data rights, and product and tracefield fees | 190.0 | 208.0 | | Employee benefits | 156.1 | 136.4 | | Contingent deferred consideration – business combinations | 21.0 | 25.3 | | Accruals and other liabilities | 604.7 | 558.1 | | **Total** | **1,096.4** | **1,033.0** | # **Non-current liabilities** | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other payables** | | | | Employee benefits | 2.1 | 1.1 | | Contingent deferred consideration – business combinations | 16.9 | 12.8 | | Accruals and other payables | 0.8 | 0.7 | | **Total** | **19.8** | **14.6** | # **Contingent deferred consideration – business combinations** The Group's deferred consideration liabilities amounted to £379m at 31 December 2021 (31 December 2020: £38.1m) and relate to the following: - £15.4m contingent and deferred consideration relating to Betfair's historical acquisition of HRTV, a horse racing television network based in the United States; - £4.7m deferred consideration in respect of Diamond Game Enterprises, assumed as part of the Combination with TSG; and - £17.8m relating to the acquisition of Singular in 2021 (see also Note 15). 214 Platter Entertainment plc Annual Report & Accounts 2021 ## 20. Provisions Provisions balances at 31 December 2021 and 31 December 2020 and movements during the year ended 31 December 2021 are outlined below: | | Employee benefits (long service leave) £m | Onerous contracts £m | Gaming tax £m | Kentucky £m | Other legal £m | Other £m | Total £m | | --- | --- | --- | --- | --- | --- | --- | --- | | **Balance at 31 December 2020** | **3.0** | **16.0** | **10.5** | **73.3** | **56.0** | **0.5** | **159.3** | | Additional provisions recognised | 0.8 | 4.8 | 12.3 | — | 17.3 | 7.0 | 42.2 | | Amounts used during the year | (0.1) | (6.6) | (0.4) | (71.1) | (0.6) | — | (78.8) | | Foreign currency translation | (0.2) | (0.5) | — | (2.2) | (0.7) | — | (3.6) | | **Balance at 31 December 2021** | **3.5** | **13.7** | **22.4** | **—** | **72.0** | **7.5** | **119.1** | | **Presented in:** | | | | | | | | | **Balance at 31 December 2020:** | | | | | | | | | Current | 1.6 | 9.9 | 2.7 | — | — | 0.1 | 14.3 | | Non-current | 1.4 | 6.1 | 7.8 | 73.3 | 56.0 | 0.4 | 145.0 | | **Total** | **3.0** | **16.0** | **10.5** | **73.3** | **56.0** | **0.5** | **159.3** | | **Balance at 31 December 2021:** | | | | | | | | | Current | 2.2 | 6.6 | 22.4 | — | 34.5 | 5.6 | 71.3 | | Non-current | 1.3 | 7.1 | — | — | 37.5 | 1.9 | 47.8 | | **Total** | **3.5** | **13.7** | **22.4** | **—** | **72.0** | **7.5** | **119.1** | ### Employee benefits (long service leave) The timing and amount of long service leave cash outflows are primarily dependent on when staff employed at the reporting date avail of their entitlement to leave and their expected salaries at that time. As of 31 December 2021 and 31 December 2020, it was expected that cash outflows would occur primarily within the following five years. ### Onerous contracts The onerous contracts provision at 31 December 2021 relates to various marketing and minimum guarantee contracts where the cost of fulfilling these contracts exceeds the expected economic benefits to be received from them. ### Gaming tax These are gaming tax provisions relating to amounts provided for taxes in certain jurisdictions where the interpretation of tax legislation is uncertain. When the Group disagrees with the application of unclear tax legislation, for example when it is applied retrospectively and/or results in a one-off disproportionate tax equivalent to many times the profit derived by the Group from its historic activities in that jurisdiction, the Group continues to challenge these interpretations. Whilst the maximum potential obligation for all ongoing cases could be greater than the recognised provision, and the outcomes may not be known for some time, a liability has been recorded for the Directors' best estimate of the cash outflows that will ultimately be required in respect of each claim. Management has not provided a sensitivity for this provision as the range is not considered to be material. Management notes this is a key estimate; however, it is not a key judgement that will have a material impact in the coming year. ### Kentucky proceedings On 22 September 2021, the Group announced that the legal dispute between Flutter and the Commonwealth of Kentucky had been settled in full. The Group agreed to pay an additional $200m (€545.2m) to Kentucky in addition to the $300m (€71.1m) previously forfeited to the Commonwealth as part of the supersedeas bond in the case in line with the provision outstanding at 31 December 2020. In return, Kentucky released Stars Interactive Holdings (CIM) Ltd, Rational Entertainment Enterprises Ltd and, inter alia, all Flutter entities from any claims relating to the matters in issue in the Kentucky proceedings, and the proceedings were consequently dismissed with prejudice. See Note 4 and Note 6 for further details. ### Other legal Other legal provisions generally consist of payments for various future legal settlements where, based on all available information, management believes it is probable that there will be a future outflow. These provisions comprise a number of different legal cases, the majority of which are immaterial. The most significant relates to the foreign payments contingent liabilities outlined in more detail in Note 30. Further disclosure in respect of these provisions has not been provided as such information would be expected to be prejudicial to the Group's position in such matters. Whilst the maximum potential obligation for all ongoing cases could be greater than the recognised provision, and the outcomes may not be known for some time, a liability has been recorded for the Directors' best estimate of the cash outflows that will ultimately be required in respect of each claim. Management has not provided a sensitivity for this provision as the range is not considered to be material. Management notes this is a key estimate; however, it is not a key judgement that will have a material impact in the coming year. ### Other Other provisions primarily comprise a number of different regulatory provisions. Annual Report & Accounts 2021 Flutter Entertainment plc 233 Financial Statements ## Notes to the Consolidated Financial Statements continued ### 21. Leases The Group leases various licensed betting and other offices under lease agreements. The leases have varying terms, escalation clauses and renewal rights. The leases have, on average, approximately seven years left to run if the Group were to exercise available break options, with a right of renewal after that date. Lease rentals are typically reviewed every five years to reflect market rental rates or changes in general inflation rates. Leases for licensed betting and other offices are entered into as combined leases of land and buildings. #### Leases as leases Lease liabilities balances at 31 December 2021 and 31 December 2020 and movements during the year ended 31 December 2021 and 31 December 2020 are outlined below. #### Lease liabilities | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | Balance at 1 January | 194.0 | 170.5 | | Additions – business combinations | — | 42.5 | | Additions | 113.3 | 19.6 | | Remeasurement of lease term | 13.1 | 12.8 | | Lease liability derecognition | (2.5) | (8.9) | | Lease interest expense | 8.5 | 5.7 | | Principal and interest repayments | (56.3) | (51.4) | | Foreign exchange translation | (5.7) | 3.2 | | Balance at 31 December | 264.4 | 194.0 | #### Presented in: | Current portion of lease liabilities | 47.0 | 48.3 | | --- | --- | --- | | Non-current portion of lease liabilities | 217.4 | 145.7 | | Total | 264.4 | 194.0 | Amounts recognised in profit or loss | | 2021 £m | 2020 £m | | --- | --- | --- | | **Leases under IFRS 16:** | | | | Depreciation | 51.7 | 45.4 | | Interest on lease liabilities | 8.5 | 5.7 | | Income from sub-leasing right-of-use assets | (0.8) | (0.9) | | Expense relating to short-term leases | 0.1 | 0.1 | #### Lease options Some property leases particularly in our retail business contain extension and break options to provide operational flexibility. These options are held by the Group and not by the lessors. The Group assesses whether it is reasonably certain to exercise these options at lease commencement date. When assessing these options at the date of transition, the Group was mindful of the regulatory changes in 2019, particularly in UK Retail and the impact it would have on future shop profitability and whether it could state with reasonable certainty that these options would be exercised. The Group is of the view that other than the underlying trading of the shop, there is no economic incentive to extend a particular lease. For example, the rents are at market rates, there are no significant leasehold improvements and there are no significant costs relating to exiting or relocating. When assessing the remeasurements of the lease term, the Group in particular considers those leases with option and break clauses that are due within the next 24 months. The Group has estimated that the potential future lease payments should it exercise all options or not exercise any break clauses would result in an increase in the lease asset and liability of £37.9m (2020: £10.7m). #### Leases as lessor ##### Finance lease The Group has a small number of properties that are sublet. The following table sets out a maturity analysis of lease receivables showing the undiscounted lease payments to be received after the reporting date. | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | Less than one year | 0.9 | 0.7 | | Between two and five years | 0.6 | 1.0 | | Total undiscounted lease receivable | 1.5 | 1.7 | | Unearned finance income | (0.1) | (0.1) | | Net investment in finance lease | 1.4 | 1.6 | ##### Operating lease The Group has a small number of properties that are sublet. Sublease payments of £0.9m (2020: £0.9m) are expected to be received during the year ended 31 December 2021. 216 Platter Entertainment plc Annual Report & Accounts 2021  continued Reconciliation to Statement of Cash Flows Reconciliation of movements in lease liabilities to the Statement of Cash Flows: 2021 2020 £m £m Financing activities: Payment of lease liability 47.9 45.7 Interest paid 8.4 5.7 22. Borrowings cember 2020: 31 December 2021 31 December 2020 | | | Principal | | | | | Principal | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | outstanding | | | | | outstanding | | | | | | | balance in | | Carrying | | | balance in | | Carrying | | Contractual | | currency | amount (including | | | | currency | amount (including | | | interest rate | of borrowing | |  | | 1 | of borrowing | | accrued interest) | | % Local currency (m) £m Local currency (m) £m GBP First Lien Term Loan A 1.92 £1,017.9 1,009.6 £950.0 940.4 USD First Lien Term Loan B 2.38 $2,931.0 2,142.6 $1,456.3 1,042.9 EUR First Lien Term Loan B 2.50 €507.2 419.6  449.1 2 Senior Notes 7.0 0 — — $1,000.0 706.5 Total borrowings 3,571.8 3,138.9 Presented in: Current portion 22.1 50.8 Non-current portion 3,549.7 3,088.1 Financial statements Total borrowings 3,571.8 3,138.9   wings above.   settled on repayment in July 2021. See below in this note for further detail.  borrowings: Effective Interest Tot al  1  2  3 interest % £m £m £m GBP First Lien Term Loan A 2.21 17.4 2.3 19.7 USD First Lien Term Loan B 2.88 45.8 5.3 51.1 EUR First Lien Term Loan B 2.93 14.2 1.3 15.5 Senior Notes 5.70 28.1 (46.8) (18.7) Total 105.5 (37.9) 67.6 1. The effective interest rate calculation excludes the impact of the Swap Agreements (as defined below). 2. In addition to the amount included above, the Group incurred £2.2m of interest expense relating to commitment, utilisation, and fronting fees associated with it and loss. 3. Included within interest accretion is a gain of £42.9m following the settlement of the Senior Notes during the year.  as follows: | | | | Adjustments | | | | | Embedded | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at | New | Principal | to amortised | | | Interest | | derivative | | FX | Balance at | | 1 Jan 2021 | debt | payments | |  | 1 |  | 2 | settlement | translation | | 31 Dec 2021 | £m £m £m £m £m £m £m £m GBP First Lien Term Loan A 939.5 67.9 — (0.5) 2.3 — — 1,009.2 USD First Lien Term Loan B 1,042.9 1,099.8 (18.0) (5.4) 5.3 — 18.0 2,142.6 EUR First Lien Term Loan B 449.1 — — (2.2) 1.3 — (28.6) 419.6 Senior Notes 682.8 — (733.2) — (46.8) 96.1 1.1 — Total 3,114.3 1,167.7 (751.2) (8.1) (37.9) 96.1 (9.5) 3,571.4 Accrued interest 24.6 0.4 Total borrowings 3,138.9 3,571.8 1. Adjustments to amortised costs include transaction costs and fees incurred in respect of the refinancing and additional debt drawdown noted below. 2. Interest accretion represents interest expense calculated at the effective interest rate less interest expense calculated at the contractual interest rate and is recorded in financial expenses in the consolidated income statement. Annual Report & Accounts 2021 Flutter Entertainment plc 217 Notes to the Consolidated Financial Statements continued # **22. Borrowings continued** As at 31 December 2021, the contractual principal repayments of the Group's outstanding borrowings, excluding accrued interest, amount to the following: | | 1 year £m | 1-2 years £m | 2-3 years £m | 3-4 years £m | 4-5 years £m | | --- | --- | --- | --- | --- | --- | | GBP First Lien Term Loan A | — | — | — | 1,017.9 | — | | USD First Lien Term Loan B | 21.7 | 21.7 | 21.7 | 21.7 | 2,080.7 | | EUR First Lien Term Loan B | — | — | — | — | 425.9 | | | **21.7** | **21.7** | **21.7** | **1,039.6** | **2,506.6** | # **Revolving Credit Facility, First Lien Term Loans and Senior Notes** Each of the Group's facilities are discussed below. # **TLA Agreement – GBP First Lien Term Loan A** In May 2020, the Group, along with its subsidiaries PPB Financing Unlimited Company and PPB Treasury Unlimited Company as borrowers, entered into a Term Loan A and Revolving Credit Facility Agreement (the "TLA Agreement") comprising a term loan and revolving credit facility totaling £1.4bn. In November 2021, an additional lender was added to the facility increasing the overall TLA Agreement by £100m bringing the total to £1.5bn. Subsequently in November 2021, the Group completed an additional drawdown of £68m under the TLA Agreement and its existing terms. The TLA Agreement described above provides a term loan facility in an aggregate amount of £1,017.9m (2020: £950m) priced at GBP-LIBOR plus 1.75% (the "GBP First Lien Term Loan A"), with a maturity date of 3 May 2025 and a GBP-LIBOR floor of 0%. On 3 March 2021, the UK's Financial Conduct Authority ("FCAT") formally announced the cessation of all GBP London Interbank Offered Rate ("LIBOR") benchmark settings currently published by ICE Benchmark Administration ("IBA") immediately after 31 December 2021. In response, the Company has entered into agreements with its lenders to amend the benchmark rate referenced in the Term Loan A agreement from GBP LIBOR to GBP SONIA for interest periods commencing on or after January 2022. There is no amortisation on the GBP First Lien Term Loan A and the principal is due at maturity. The Group incurred £11.9m of transaction costs and fees on the initial and subsequent drawdowns which have been capitalised against the principal of the debt and are recorded as financial expense over the term of the debt using the effective interest rate method. # **TLA Agreement – Revolving Credit Facility** The TLA Agreement described above provides a multi-currency revolving loan facility in an aggregate amount of £482.0m (2020: £490.0m) (the "Revolving Credit Facility"). Maturing on 3 May 2025, the Revolving Credit Facility includes a margin of 1.75% over GBP-LIBOR for borrowings with a 0% interest rate floor as well as a utilisation fee ranging from 0.1% to 0.4% based on the proportion of drawings to the total commitment. The commitment fee on the Revolving Credit Facility is 35% of the margin and is payable in respect of available but undrawn borrowings. The Revolving Credit Facility is available for general corporate purposes including the refinancing of existing borrowings. The Group incurred £5.3m of transaction costs and fees in 2020 which have been capitalised and are recorded as financial expense over the life of the facility using the straight-line method. These capitalised costs have been included within non-current receivables on the consolidated statement of financial position. As at 31 December 2021 no loan amounts were drawn under the Revolving Credit Facility. The Group has an undrawn capacity of £467m (2020: £377m) on the Revolving Credit Facility with £15m (2020: £73m) of capacity reserved for the issuance of Group guarantees as of 31 December 2021. The terms of the TLA Agreement limit the Group's ability to, among other things: (i) incur additional debt (ii) grant additional liens on their assets and equity (iii) distribute equity interests and/or distribute any assets to third parties (iv) make certain loans or investments (including acquisitions) (v) consolidate, merge, sell or otherwise dispose of all or substantially all assets (vi) pay dividends on or make distributions in respect of capital/stock or make restricted payments, and (vii) modify the terms of certain debt or organisational documents, in each case subject to certain permitted exceptions. Borrowings under the TLA Agreement are subject to the satisfaction of customary conditions, including the absence of a default and compliance with certain representations and warranties. The TLA Agreement requires, subject to a testing threshold, that the Company comply on site-annual basis with a maximum net total leverage ratio of 5.1 to 1.0. On 29 June 2021, Lenders under the TLA consented to waive any Default or Event of Default that may have arisen by virtue of the Kentucky judgement, including any enforcement steps or actions taken by the Commonwealth of Kentucky prior to settlement. During the 12 months ended 31 December 2021, the Group is in compliance with all covenants related to its TLA Agreement. # **First Lien Term Loan B's** The Group holds a USD term loan with an outstanding principal balance of $2,931.0m (2020: $1,436.3m) priced at USD-LIBOR plus 2.25% (2020: 3.50%) (the "USD First Lien Term Loan B") and an EUR first lien term loan with an outstanding principal balance of €507.2m (2020: €307.2m) priced at EURIBOR plus 2.5% (2020: 3.75%) (the "EUR First Lien Term Loan B") and, together with the USD First Lien Term Loan, the "First Lien Term Loan B"1, each with a maturity date of 21 July 2026 and a LIBOR and EURIBOR floor, as applicable, of 0%. The USD First Lien Term Loan requires scheduled quarterly principal payments in amounts equal to 0.25% of the initial aggregate principal amount of the USD First Lien Term Loan B of $2,938m (2020: $3,575m), with the balance due at maturity. There is no amortisation on the EUR First Lien Term Loan B and the principal is due at maturity. In July 2021 the Group completed a debt re-financing transaction that reduced the effective cost of debt and provided it with additional liquidity, enhancing the financial flexibility of the Group. The key components of the transaction that occurred were as follows: - a repricing and upsizing of the Group's existing First Lien Term Loan B facility by $1.5bn (£1.1bn); - an extension to the maturity date of the First Lien Term Loan B facility by one year to July 2026; - the USD First Lien Term Loan B component of the facility is repriced at LIBOR plus 2.25% and a 0% floor; and - the EUR First Lien Term Loan B component of the facility is repriced at EURIBOR plus 2.50% and a 0% floor. 218 Platter Entertainment plc Annual Report & Accounts 2021 ## 22. Borrowings continued The resultant pricing equates to 1.25% below existing margins across both USD First Lien Term Loan B and EUR First Lien Term Loan B. The re-finance was accounted for as a re-estimation of cash flows. The Term Loan B arrangement facilitated a repricing of the fixed component of the interest rate spread along with existing terms that provide the opportunity of prepayment without significant penalty, and the Group applied the policy of revising the original effective interest rate of the financial contract based on the new terms, to reflect changes in cash flow for calculation of the gain or loss of nil. £7.5m of transaction costs and fees relating to the repricing incurred form part of the market interest rate and were capitalised as part of the transaction and are recorded as financial expenses over the term of the debt using the effective interest rate method with a further £16.8m transaction costs charged to the profit and loss included within financial expense for fees not subject to capitalisation. The First Lien Term Loan B are governed by the "Syndicated Facility Agreement". The Syndicated Facility Agreement limits Stars Group Holdings B.V. and Flutter Financing B.V. as borrowers, and its subsidiaries' ability to, among other things, (i) incur additional debt (ii) grant additional liens on their assets and equity (iii) distribute equity interests and/or distribute any assets to third parties (iv) make certain loans or investments (including acquisitions), (v) consolidate, merge, sell or otherwise dispose of all or substantially all assets (vi) pay dividends on or make distributions in respect of capital stock or make restricted payments (vii) enter into certain transactions with affiliates (viii) change lines of business and (ix) modify the terms of certain debt or organisational documents, in each case subject to certain permitted exceptions. The agreement also provides for customary mandatory prepayments, including a customary excess cash flow sweep if certain conditions are met. On 20 April 2021, the Lenders of the First Lien Term Loan B consented to waive any Default or Event of Default that may have arisen by virtue of the Kentucky judgement, including any enforcement steps or actions taken by the Commonwealth of Kentucky. During the year ended 31 December 2021, the Group is in compliance with all covenants related to its First Lien Term Loan B. ### Senior Notes As part of the drawdown of additional TLB USD above and the wider refinance the Group undertook the redemption of all of the 7% Senior Notes due in 2026 on 21 July 2021 as governed by the indenture which were issued by Stars Group Holdings B.V. and Stars Group (US/Co-Borrower, LLC) the "issues": on 10 July 2018 at par in an aggregate principal amount of US$1bn. The Group previously recognised an embedded derivative that required bifurcation from the carrying value of the Senior Notes with a fair value of £96.1m which was subsequently settled on the date of repayment and included within separately disclosed items. As part of the indenture settlement, the Group made a premium payment of $3.5m (£23.7m) which has been included within settlement of Senior Notes (see Note 6). Prior to the repayment, on 16 April 2021, the holders of the Senior Notes consented to waive certain events of potential default under the indenture governing the Senior Notes that may have arisen as a result of the Kentucky litigation or the Kentucky litigation related events. Through the date of repayment the Group was in compliance with all covenants related to its Senior Notes. ### Reconciliation to Statement of Cash Flows Reconciliation of movements in borrowings to the Statement of Cash Flows: | | 2021 £m | 2020 £m | | --- | --- | --- | | Financing activities: | | | | Proceeds from borrowings | 1,167.7 | 1,080.0 | | Repayment of borrowings | (751.2) | (2,003.2) | | Interest paid | (141.9) | (114.1) | ## 23. Derivatives ### Derivatives and hedge accounting The Group uses derivative financial instruments for risk management and risk mitigation purposes. As such, any change in cash flows associated with derivative instruments are expected to be offset by changes in cash flows related to the hedged item. The Group's derivatives are discussed below. ### Swap agreements The Group has executed cross-currency interest rate swaps which swap the profile of the USD First Lien Term Loan B in its entirety into EUR and GBP. In 2021 as part of the refinance, the Group amended the terms of the existing trades to reflect the repriced TLB USD and executed new cross-currency interest rate swaps on the additional drawn-down debt in line with the hedging policy to cover exposure to foreign currencies. From an accounting and risk management perspective, these hedging instruments consist of (i) USD-EUR amortising cross-currency interest rate swap agreements (the "EUR Cross-Currency Interest Rate Swaps") with a remaining notional amount of €1.49bn (31 December 2020: €397m), which fix the USD to EUR exchange rate at 1.173 and fix the euro interest payments at an average interest rate of 1.7% (31 December 2020: 3.6%) and (ii) USD-GBP amortising cross-currency interest rate swap agreements (the "GBP Cross-Currency Interest Rate Swaps") with a remaining notional amount of €750m (31 December 2020: €756m), which fix the EUR to GBP exchange rate at 0.989 and fix the GBP interest payments at an average interest rate of 2.5% (31 December 2020: 5.4%). The EUR Cross-Currency Interest Rate Swaps and GBP Cross-Currency Interest Rate Swaps are in hedging relationships with and have a profile that amortises in line with the USD First Lien Term Loan B. The EUR Cross-Currency Interest Rate Swaps and GBP Cross-Currency Interest Rate Swaps have a maturity date of July 2023. Annual Report & Accounts 2021 Flutter Entertainment plc 238 Financial Statements Notes to the Consolidated Financial Statements continued # **23. Derivatives continued** The Group previously held USD-EUR cross-currency interest rate swap agreements (the "Cross-Currency Swaps - Notes" and, collectively with the EUR Cross-Currency Interest Rate Swaps, the GBP Cross-Currency Interest Rate Swaps, and the Interest Rate Swap, the "Swap Agreements") with a total notional amount of €927.1m at 31 December 2020, which fixed the USD to EUR exchange rate at 1.079 and fixed the euro interest payments at an average interest rate of 6.16%. The cross-currency interest rate swaps were in a hedging relationship with and had an interest payment profile aligned with the Senior Notes. These swaps matured in July 2021, concurrent with the repayment of the Senior Notes as part of the debt refinancing. The Group paid €67.0m for the settlement and maturity of these cross-currency interest rate swaps. # **Embedded derivatives** As a result of the repayment of the Senior Notes on 21 July 2021, the embedded derivative arising from the redemption option on the Senior Notes was settled (31 December 2020: asset of €98.0m). # **Sports betting open positions** Amounts received from customers on sportsbook events that have not occurred by the balance sheet date are derivative financial instruments and have been designated by the Group on initial recognition as financial liabilities at fair value through profit or loss. The fair value of open sports bets at 31 December 2021 and 31 December 2020 has been calculated using the latest available prices on relevant sporting events. The carrying amount of the liabilities is not significantly different from the amount that the Group is expected to pay out at maturity of the financial instruments. Sports bets are non-interest bearing. There is no interest rate or credit risk associated with open sports bets. It is primarily based on expectations as to the results of sporting and other events on which bets are placed. Changes in those expectations and ultimately the actual results when the events occur will result in changes in fair value. There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology, although final value will be determined by future sporting results. The following table summarises the fair value of derivatives as at 31 December 2021 and 31 December 2020: | | 31 December 2021 | | 31 December 2020 | | | --- | --- | --- | --- | --- | | | Assets £m | Liabilities £m | Assets £m | Liabilities £m | | **Derivatives held for hedging** | | | | | | *Derivatives designated as cash flow hedges:* | | | | | | Cross-currency interest rate swaps – current | — | — | — | (86.6) | | Cross-currency interest rate swaps – non-current | 31.7 | (54.6) | — | (101.8) | | **Total derivatives designated as cash flow hedges** | **31.7** | **(54.6)** | **—** | **(188.4)** | | *Derivatives designated as net investment hedges:* | | | | | | Cross-currency interest rate swaps – current | — | — | — | (14.8) | | Cross-currency interest rate swaps – non-current | 36.3 | — | 16.9 | — | | **Total derivatives designated as net investment hedges** | **36.3** | **—** | **16.9** | **(14.8)** | | **Total derivatives held for hedging** | **68.0** | **(54.6)** | **16.9** | **(203.2)** | | **Derivatives held for risk management and other purposes not designated as hedges** | | | | | | Sports betting open positions – current | — | (74.0) | — | (49.5) | | Sports betting open positions – non-current | — | (0.5) | — | (0.5) | | **Total derivatives held for risk management and other purposes not designated as hedges** | **—** | **(74.5)** | **—** | **(50.0)** | | **Derivatives included within borrowings** | | | | | | Embedded derivatives | — | — | 98.0 | — | 220 Platter Entertainment plc Annual Report & Accounts 2021  continued Hedge accounting Cash flow hedge accounting In accordance with the Group’s risk management strategy and Group Treasury Policy, the Group executed the Swap Agreements to mitigate the risk of fluctuation of coupon and principal cash flows due to changes in foreign currency and interest rates related to the USD First Lien Term Loan B and foreign currency cash flow risk related to the Senior Notes. The Group assesses hedge effectiveness by comparing the changes in fair value of a hypothetical derivative reflecting the terms of the debt instrument issued due to movements in the applicable foreign currency exchange rate and benchmark interest rate with the changes in fair value of the cross-currency interest rate swaps and cross-currency swaps used to hedge the exposure, as applicable. The Group uses the hypothetical derivative method to determine the changes in fair value of the hedged item. The Group has identified, and to the extent possible, mitigated, the following possible sources of ineffectiveness in its cash flow hedge relationships: 1. the use of derivatives as a protection against currency and interest rate risk creates an exposure to the derivative counterparty’s credit risk which is not offset by the hedged item. This risk is minimised by entering into derivatives with counterparties with strong investment grade credit ratings; 2. differences in the timing of settlement of the hedging instrument and hedged item; and 3. the designation of off-market hedging instruments. Certain of the EUR Cross-Currency Interest Rate Swaps in combination with the GBP Cross-Currency Interest Rate Swaps are designated in cash flow hedge relationships to hedge the foreign exchange risk and interest rate risk on the USD First Lien Term Loan B bearing a minimum floating interest rate of 2.25% (USD three-month LIBOR plus a 2.25% margin, with a LIBOR floor of 0%). The remaining EUR Cross-Currency Interest Rate Swaps have been bifurcated for hedge accounting purposes with the GBP portion of the exposure designated in a cash flow hedge relationship and the EUR exposure designated in a net investment hedge relationship.  reserve (see Note 24) related to de-designated cash flow hedges and is reclassified to the consolidated income statement as the Financial statements hedged cash flows impact income/(loss). Net investment hedge accounting In accordance with the Group’s risk management strategy, as noted above the Group designates certain EUR cross-currency interest rate swap contracts in net investment hedging relationships to mitigate the risk of changes in foreign currency rates with respect to the translation of assets and liabilities of subsidiaries with foreign functional currencies. The Group assesses hedge effectiveness by comparing the changes in fair value of the net assets designated, due to movements in the foreign currency rate with the changes in fair value of the hedging instruments used to hedge the exposure. The Group uses the hypothetical derivative method to determine the changes in fair value of the hedged item. The only source of ineffectiveness is the effect of the counterparty and the Group’s own credit risk on the fair value of the derivative, which is not reflected in the fair value of the hypothetical derivative. The Group has also designated the carrying amount of the EUR First Lien Term Loan as a hedge of the spot foreign exchange risk of its net investment in its EUR functional subsidiaries. The Group assesses hedge effectiveness using the forward rate method by comparing the currency and the carrying amount of the EUR First Lien Term Loan B with the currency and the net assets of its EUR functional subsidiaries.  translation reserve (see Note 24) related to de-designated net investment hedges and is reclassified to the consolidated income statement upon disposal of the net investment in the applicable foreign subsidiaries. Annual Report & Accounts 2021 Flutter Entertainment plc 221 ## Notes to the Consolidated Financial Statements continued  continued Effects of hedge accounting The following tables presents the effects of cash flow hedges and net investment hedges on the Group’s financial position and performance: Amount | | | | Change in fair | | | | | | | | | | reclassified | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Change in | | | value of | | | | | | Hedging gains/ | | | | from | | | | | | value of | | | hedging | | | | | | | (losses) | | accumulated | | | | | | hedged items | | | instruments | | | | | | | recognised in | | | | other | | Net change in | | | | | for | | | for | | | Hedge | | | other | comprehensive | | | | | other | | ineffectiveness | | | ineffectiveness | | | ineffectiveness | | | | comprehensive | | | loss to net | | | comprehensive | | | measurement | | | measurement | | | |  | | 1 | income/(loss) | | |  | | 2 | income/(loss) | | £m £m £m £m £m £m Cash flow hedges Foreign exchange rate risk Lease liabilities 2.1 (2.1) — 2.1 — 2.1 Fixed rate debt (88.0) 86.6 (1.4) 6.1 0.1 6.2 Interest rate risk and foreign exchange risk Floating rate, foreign currency debt (81.9) 79.1 (2.8) 53.2 (28.5) 24.7 Total cash flow hedges (167. 8) 163.6 (4.2) 61.4 (28.4) 33.0 Net investment hedges (83.7) 85.4 1.7 85.4 — 85.4 Total (251.5) 249.0 (2.5) 146.8 (28.4) 118.4 1. Hedge ineffectiveness is recorded within financial income/expense on the consolidated income statement. 2. For cash flow hedges that address interest rate risk and/or foreign currency exchange risk, the amount reclassified from accumulated other comprehensive earnings/(loss) to net earnings/(loss) is recorded within interest expense included in financial income or expense on the consolidated income statement. Reconciliation of accumulated other comprehensive income/(loss): Accumulated Accumulated Accumulated Accumulated other other other Net change other comprehensive comprehensive comprehensive in other comprehensive income on income/(loss) on income/(loss), comprehensive income, designated de-designated beginning of year income/(loss) end of year hedges hedges £m £m £m £m £m 1 Cash flow hedges Foreign exchange rate risk Lease liabilities (0.1) 2.1 2.0 2.0 — Fixed rate debt (6.2) 6.2 — — — Interest rate risk and foreign exchange risk Floating rate, foreign currency debt (4.0) 24.7 20.7 8.6 12.1 Total cash flow hedges (10.3) 33.0 22.7 10.6 12.1 2 Net investment hedges 24.7 85.4 110.1 48.7 61.4 Total 14.4 118.4 132.8 59.3 73.5 1. Net changes in other comprehensive income/(loss) is recorded through the cash flow hedging reserve. See Note 24. 2. Net changes in other comprehensive income/(loss) is recorded through the foreign exchange translation reserve. See Note 24. Details of the key terms of the hedging instruments are as follows: Cross-currency interest rate swaps Cross-currency interest rate swaps Cash flow hedges Net investment hedges Term Loan B (USD): 2021 2020 2021 2020 Foreign exchange and interest rate risk Carrying amount (asset/(liability)) (£22.9m) (£101.8m) £36.3m £16.9m Notional amount $2,931.0m $1,456.3m €1,488.1m  Maturity date July 2023 July 2023 July 2023 July 2023 Hedge ratio 100% 100% 100% 100% Change in intrinsic value of the outstanding hedging instruments during the year £78.9m (£101.8m) £19.4m £16.9m Net investment hedges Term Loan B (EUR) 2021 2020 Foreign exchange and interest rate risk Carrying amount (asset/(liability)) £—m £—m Notional amount   Maturity date July 2026 July 2025 Hedge ratio 100% 100% Change in intrinsic value of the outstanding hedging instruments during the year £22.9m £2.2m 222 Flutter Entertainment plc Annual Report & Accounts 2021 # 23. Derivatives continued | Senior Notes | Cross-country interest rate swaps Cash Flow/hedges | | Cross-country interest rate swaps Net Investment hedges | | | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | | Foreign exchange and interest rate risk | | | | | | Carrying amount (asset/liability) | £—m | (€86.6m) | £—m | (€14.8m) | | Notional amount | $—m | $1,000.0m | €—m | €927.1m | | Maturity date | July 2021 | July 2021 | July 2021 | July 2021 | | Hedge ratio | —% | 100% | —% | 100% | | Change in intrinsic value of the outstanding hedging instruments since the start of the year | €86.6m | (€86.6m) | €14.8m | (€14.8m) | Swaps relating to the Senior Notes matured in July 2021 concurrent with the debt refinancing and settlement of the Senior Notes | Lease liabilities | Net Investment hedges | | | --- | --- | --- | | | 2021 | 2020 | | Foreign exchange rate risk | | | | Carrying amount (asset/liability) | £—m | £—m | | Notional amount | €85.5m | €43.8m | | Maturity date | February 2035 | January 2041 | | Hedge ratio | 100% | 100% | | Change in intrinsic value of the outstanding hedging instruments during the year | €2.0m | €0.1m | # 24. Share capital and reserves # Share capital The total authorised share capital of the Company comprises 300,000,000 ordinary shares of €0.09 each (2020: 300,000,000 ordinary shares of €0.09 each). All issued share capital is fully paid. The holders of ordinary shares are entitled to vote at general meetings of the Company on a one vote per share held basis. Ordinary shareholders are also entitled to receive dividends as may be declared by the Company from time to time. Transactions during the year ended 31 December 2021: - a total of 558,275 ordinary shares were issued as a result of the exercise of employee share options, giving rise to share capital and share premium of €13.2m; - on 25 August 2021, the Company announced it had cancelled 1,965,600 ordinary shares of €0.09 each previously held by it as treasury shares; and - in accordance with the authority conferred by shareholders pursuant to resolution 10 at Flutter's Annual General Meeting ("AGM") held on Thursday, 29 April 2021, the Board on 10 September 2021 confirmed that it had completed the capitalisation of £7,982.9m, being the entirety of the amounts standing to the credit of Flutter's merger reserve account at 31 December 2020. In accordance with the provisions of sections 84 and 85 of the Companies Act 2014 and the authority conferred by resolution 11 as approved by shareholders at the AGM, the Board applied to the Irish High Court to reduce the Company's capital by the amount of £10,000m standing to the credit of Flutter's share premium account following completion of the capitalisation. On 3 November 2021, the Irish High Court approved the reorganisation of the Company's capital by the reduction of £10,000m standing to the credit of Flutter's share premium account, and the transfer of such sum to the Company's distributable reserves account. This resulted in the transfer of £10,000m from share premium to retained earnings. Transactions during the year ended 31 December 2020: - in May 2020, 1,312,260 new ordinary shares were issued as consideration for the 2019 final dividend; - on 5 May 2020, the Company issued a total of 65,316,588 ordinary shares in exchange for 289,909,400 shares of TSG in respect of the all-share Combination with TSG resulting in Flutter Entertainment plc shareholders owning 54.64% and the TSG shareholders owning 45.36% of Flutter, on a fully diluted basis (excluding any out of the money options). Under the terms of the Combination, holders of TSG shares received 0.2253 ordinary shares with nominal value of €0.09 each in the Company ("ordinary shares") in exchange for each outstanding TSG share (the "Exchange Ratio"). Post Combination, the Company is the ultimate parent of The Stars Group Inc. This gave rise to a merger reserve under section 72 of the Companies Act 2014 of €6,189.5m (see also Note 15); - on 13 May 2020, 819,230 new Flutter ordinary shares were issued as consideration for the acquisition of the remaining 20% interest of TSG Australia Pty Ltd by Flutter. The value of shares issued amounted to AUD$151.4m (£79.7m) (see also Note 15); - on 29 May 2020, the Company issued 8,045,995 new ordinary shares at a price of 10,100 pence per share in respect of an equity placement announced on 28 May 2020, raising gross proceeds of £812.6m giving rise to share capital of €0.7m and a share premium of £811.9m. The proceeds raised net of issuance costs amounted to £806.3m with the issuance costs of €6.3m recognised in retained earnings. The Placing Shares represent approximately 5.5% of the Company's issued share capital immediately prior to the Placing (excluding treasury shares). The Placing Price represents a discount of approximately 4.7% to the closing price on 28 May 2020. Annual Report & Accounts 2021 Flutter Entertainment plc 223 Financial Statements Notes to the Consolidated Financial Statements continued # 24. Share capital and reserves continued - on 4 December 2020, the Company issued a total of 8,004,503 ordinary shares at a price of 14,000 pence per share in respect of an equity placement announced on 3 December 2020, raising proceeds of £1,120.6m giving rise to share capital of £0.7m and a share premium of £1,119.9m. The proceeds raised net of issuance costs amounted to £1,114.6m with the issuance costs of £6.1m recognised in retained earnings. The Placing Shares represent approximately 5.2% of the Company's issued share capital immediately prior to the Placing (excluding treasury shares). The Placing Price represents a discount of approximately 2.1% to the closing price on 3 December 2020. - on 10 December 2020, 11,747,201 new Flutter ordinary shares were issued as partial consideration for the acquisition of an additional 37.2% of the outstanding share of FanDuel, bringing the Group's holding in FanDuel to 95%, up from the previous controlling interest of 37.8%. The value of shares issued amounted to £1.0m in share capital and gives rise to £1,793.4m of a merger reserve under section 72 of the Companies Act 2014 (see also Note 15) and - a total of 1,492,430 ordinary shares were issued as a result of the exercise of employee share options, giving rise to share capital and share premium of £34.3m. # Equity reserves Equity reserves at 31 December 2021 and 31 December 2020 include the following classes of reserves: # Merger reserve At 31 December 2020, the Company held a merger reserve under section 72 of the Companies Act 2014 of £7,982.9m which represented the premium over the par value of shares issued as consideration for the Combination with TSG and as partial consideration for the acquisition of a further 37.2% of FanDuel Group. In accordance with the authority conferred by shareholders pursuant to resolution 10 of Flutter's Annual General Meeting held on Thursday, 29 April 2021, the Board on 10 September 2021 confirmed that it had completed the capitalisation of £7,982.9m, being the entirety of the amounts standing to the credit of Flutter's merger reserve account at 31 December 2020. This resulted in the transfer of £7,982.9m from merger reserve to share premium. # Treasury shares At 31 December 2020, a total of 1,965,600 ordinary shares were held in treasury. All rights (including voting rights and the right to receive dividends) in the shares held in treasury were suspended until such time as the shares were reissued. The Group's distributable reserves were restricted by the value of the treasury shares, which amounted to £40.7m at 31 December 2020. The cost of treasury shares held by the Company at 31 December 2020 was £4.2m, with a further £36.5m of shares being held by the Company's subsidiaries. On 25 August 2021, the Company announced it cancelled all its 1,965,600 ordinary shares of £0.09 each previously held by it as treasury shares which resulted in the transfer of £40.7m from treasury shares to retained earnings, other reserves and share capital. # Shares held by Employee Benefit Trust At 31 December 2021, the Paddy Power Betfair plc Employee Benefit Trust ("EBT") held 33,118 (31 December 2020, 67,320) of the Company's own shares, which were acquired at a total cumulative cost of £4.0m (31 December 2020, £5.8m), in respect of potential future awards relating to the Group's employee share plans. The purchase of 1,337,894 shares at a cost of £180.7m during the year ended 31 December 2021 related to the settlement of share awards to FanDuel employees in 2021. The Company's distributable reserves at 31 December 2021 are restated by the cost amount. During the year ended 31 December 2021, 1,372,056 shares with an original cost of £182.5m were transferred from the EBT to the beneficiaries of the EBT (year ended 31 December 2021: 3,077 shares with an original cost of £0.3m). # Cash flow hedge reserve The cash flow hedge reserve represents the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that had not yet occurred at that date. # Foreign exchange translation reserve The foreign exchange translation reserve at 31 December 2021 amounted to a debit balance of £194.2m (31 December 2020: credit balance of £49.6m) and arose from the retranslation of the Group's net investment in primarily EUR, AUD and USD functional currency companies. The movement in the foreign exchange translation reserve for the year ended 31 December 2021, reflects mainly the weakening of EUR and AUD against GBP in the period. # Other reserves Other reserves comprise underominated capital. Underominated capital at 31 December 2021 of £2.3m (31 December 2020 of £2.3m) relates to the nominal value of shares in the Company acquired by the Company of £2.3m (31 December 2020: £2.1m) and subsequently cancelled, and an amount of £0.2m (31 December 2020: £0.2m) which arose on the redenomination of the ordinary share capital of the Company at the time of conversion from Irish pounds to euro. # Share-based payment reserve During the year ended 31 December 2021, an amount of £80.5m was expensed in the Consolidated Income Statement with respect to share-based payments (year ended 31 December 2020: £70.2m), an amount of £49.6m (year ended 31 December 2020: £107.7m) in respect of share options exercised during the year was transferred from the share-based payment reserve to retained earnings. An amount of £0.2m of deferred tax relating primarily to the Group's share-based payments was debited to retained earnings in the year ended 31 December 2021 (year ended 31 December 2020: charge of £1.0m). An amount of £0.9m of current tax relating to the Group's share-based payments was credited to retained earnings in the year ended 31 December 2021 (year ended 31 December 2020: credit of £6.4m). 224 Flutter Entertainment plc Annual Report & Accounts 2021 ## 24. Share capital and reserves continued ### Non-controlling interest During the year ended 31 December 2021, the Group paid dividends totalling £16.7m to the non-controlling interest in Adjarabet (year ended 31 December 2020: £13.2m). Also as a result of the acquisition of an initial 50.1% stake in Junglee Games during the year, £17.1m was recorded in respect of the non-controlling interest. ### Company profit and loss As permitted by section 304 of the Companies Act 2014, no separate profit and loss account is presented in respect of the Company. The Company recorded a profit for the year ended 31 December 2021 of £1,290.4m (year ended 31 December 2020: £905.9m). ## 25. Dividends paid on ordinary shares Due to the impact of Covid-19, the Board paid the 2019 final dividend in May 2020 through the issuance of ordinary shares rather than by cash. This resulted in the Group issuing 1,312,260 Flutter ordinary shares of €0.09 each. The Board's capital management policy for the Group remains to target a leverage ratio of 1.0x to 2.0x over the medium term. The Board will continue to monitor the financial performance of the Group, it's anticipated deleveraging and balance sheet position, and will decide when it is an appropriate time to reinstate a dividend. As a result, the Board did not recommend an interim dividend for 2021 (2020: nil) or a final dividend for the year ended 31 December 2021 (2020: nil). ## 26. Share-based payments ### Summary of equity-settled share-based payments The Group had the following share-based payment schemes during the year ended 31 December 2021: - a. Betfair Long Term Incentive Plan and Deferred Share Incentive Plan; - b. Flutter Entertainment plc Sharewave Scheme; - c. Flutter Entertainment plc Long Term Incentive Plan, Medium Term Incentive Plan and Deferred Share Incentive Plan; - d. Flutter Entertainment plc Restricted Share Plan; - e. The Stars Group Equity Plans; - f. FanDuel Value Creation Plan ("VCP"); and - g. FanDuel Value Creation Option Plan ("VCOP"). The above schemes are settled via a mixture of the allotment of shares from the EBT and the issue of new shares, or in the case of the FanDuel VCP and some of the awards under the Flutter Entertainment plc Restricted Share Plan in either equity shares or cash at the Group's option. As a result, all schemes are accounted for as equity settled in the financial statements as it has been determined that Flutter shares represents the most likely means of settlement and is consistent with the Group's treatment historically in respect of the settlement of share-based payment schemes. No new awards will be granted under any of the legacy Betfair, TSG or FanDuel VCP schemes listed above. The total share-based payments expense recognised in the income statement in respect of all schemes is as follows: | | 2021 £m | 2020 £m | | --- | --- | --- | | **Before separately disclosed items:** | | | | Flutter Entertainment plc Sharewave Scheme | 7.8 | 4.0 | | Flutter Entertainment plc Long Term, Medium Term and Deferred Share Incentive Plans ("LTIP", "ATIP" & "DSIP") | 12.5 | 10.3 | | Flutter Entertainment plc Restricted Share Plan | 44.6 | 25.6 | | FanDuel Value Creation Plan ("VCP") | 2.6 | 8.2 | | The Stars Group Equity Plans | 1.8 | 4.0 | | Other plans | 9.5 | — | | Total before separately disclosed items | 78.8 | 52.1 | | Separately disclosed items (see Note 6) | 1.7 | 18.1 | | **Total** | **80.5** | **70.2** | 1. These costs are included within restructuring and integration costs in Note 6. For the FOX equity option which is treated as a contingent cash-settled share-based payment, management has made certain judgements in the recognition and measurement of liabilities in relation to this commercial agreement and associated right of FOX Sports to acquire equity, including its judgement as to the probable method of settlement. The right has been valued using a discounted cash flow model and as it represents a contingently cash-settled share-based payment, will be recorded at fair value at each reporting period. During the year ended 31 December 2021, the Group recorded £8.8m to sales and marketing expense in relation to the commercial agreement and at 31 December 2021, the fair value liability due was £3.3m. The Group has no other cash-settled share-based payments. Annual Report & Accounts 2021 Flutter Entertainment plc 223 Financial Statements Notes to the Consolidated Financial Statements continued # 26. Share-based payments continued # General The aggregate number of shares which may be utilised under the employee share schemes in any 10 year period may not exceed 10% of the Company's issued ordinary share capital. The percentage of share capital which can be utilised under these schemes complies with guidelines issued by the Investment Association in relation to such schemes. # Summary of options outstanding At 31 December 2021, 2,090,603 awards and options (31 December 2020: 1,842,762) in the capital of the Group remain outstanding and are exercisable up to 2030 as follows: | | 2021 # | 2020 # | | --- | --- | --- | | Betfair Long Term Incentive Plan and Deferred Share Incentive Plan | 18,833 | 23,141 | | The Stars Group Equity Plans | 79,835 | 281,282 | | Flutter Entertainment plc Sharesaw Scheme | 692,220 | 630,998 | | Flutter Entertainment plc Long Term, Medium Term and Deferred Share Incentive Plans ('LTIP', 'MTIP' & 'DSIP') | 379,361 | 420,273 | | Flutter Entertainment plc Restricted Share Plan | 920,354 | 487,068 | | **Total** | **2,090,603** | **1,842,762** | # The Betfair Long Term Incentive Plan and Deferred Share Incentive Plan The following share plans were acquired on the Paddy Power Betfair merger in February 2018 and were originally introduced in the Betfair Group to incentivise and reward for the successful delivery of the short-term and long-term business strategy: - Betfair Long Term Incentive Plan ('LTIP') which consists of restricted share awards; and - Betfair Deferred Share Incentive Plan ('DSIP') which consists of cash and restricted share awards. The schemes have awards in the form of cash and restricted shares. The level of award granted in each of the schemes was based on a mixture of the individual performance of the employee and Group-wide performance over the term of the award which was between one and three years. Prior to this merger, Paddy Power and Betfair agreed that outstanding unvested awards granted under these schemes would not vest on completion but would be replaced by awards over an equivalent number of the Company's shares (calculated by reference to the exchange ratio) which would have the same normal vesting dates as the original awards but be subject to certain absolute vesting levels. | Outstanding at 1 January 2021 | Lapsed/cancelled during year | Exercised during year | Outstanding at 31 December 2021 | | --- | --- | --- | --- | | 23,141 | (64) | (4,244) | 18,833 | The outstanding shares on these schemes are exercisable up to 2025. The weighted average exercise price for share options exercised during the year was a nominal price (2020: a nominal price) at a weighted average share price at the date of exercise of £157.09 (2020: £105.77). The total number of shares exercisable at 31 December 2021 is 18,833. # The Stars Group Equity Plans Following the Combination with TSG, the Group acquired a number of schemes under its Equity Incentive Plan dated 22 June 2015 (the '2015 Equity Incentive Plan') and the Amaya Gaming Group Stock Option Plan. These plans include restricted share units ('RSU'), deferred share units ('DSU'), performance share units ('PSU') and stock options ('options'). Summary of share awards outstanding | Outstanding at 1 January 2021 | Lapsed/cancelled during year | Exercised during year | Outstanding at 31 December 2021 | | --- | --- | --- | --- | | 281,282 | (15,139) | (186,308) | 79,835 | The weighted average share price for exercises under these schemes during the year was £142.99 (2020: £118.81). The total number of shares exercisable at 31 December 2021 is 33,146. 226 Flutter Entertainment plc Annual Report & Accounts 2021 # 26. Share-based payments continued # Flutter Entertainment plc Sharesave Scheme During the year, 230,091 options were granted under the Flutter Entertainment plc Sharesave Scheme. These SAYE options must ordinarily be exercised within six months of completing the relevant savings period. In line with market practice, the exercise of these options is not subject to any performance conditions. All employees (including Executive Directors) may be invited to apply for options to acquire shares. The purchase price for each ordinary share in respect of which an option is granted shall not be less than 75% of the closing price of the shares on the Irish and London Stock Exchanges on the dealing day last preceding the date of grant of the option or its nominal value. The aggregate maximum monthly contribution payable by an employee in connection with all Sharesave-related schemes is €500 (€500 for local equivalent). | Year granted | Outstanding at 1 January 2021 | Granted during year | Lapsed/ cancelled during year | Exercised during year | Outstanding at 31 December 2021 | Exercise price £ | Exercisable before | | --- | --- | --- | --- | --- | --- | --- | --- | | 2017 | 53,830 | — | (2,598) | (50,921) | 311 | 57.87 | 2022 | | 2018 | 96,982 | — | (3,045) | (36,861) | 57,076 | 54.68 | 2022 | | 2019 | 134,513 | — | (8,702) | (8,119) | 117,692 | 59.56 | 2023 | | 2020 | 345,673 | — | (42,353) | (9,202) | 294,118 | 98.75 | 2024 | | 2021 | — | 230,091 | (7,068) | — | 225,023 | 115.96 | 2025 | | Total | 630,998 | 230,091 | (63,766) | (105,103) | 692,220 | | | The weighted average share price at the date of exercise was €128.99 (2020: €117.78). 66,863 shares were exercisable at 31 December 2021 (2020: 54,232 shares). The fair value of the options is expensed over the period that the options vest. The following assumptions were used in the Black-Scholes pricing model for the 2021 options: | | 2021 | | --- | --- | | Share price at date of grant | €144.85 | | Exercise price | €115.96 | | Expected volatility | 33.36% | | Expected term until exercised | 3.25 years | | Expected dividend yield | 0.92% | | Risk-free interest rate | 0.27%-0.49% | # Flutter Entertainment plc Long Term Incentive Plan, Medium Term Incentive Plan and Deferred Share Incentive Plan The following share plans have been put in place to incentivise and reward for the successful delivery of the short, medium and long-term business strategy: - Long Term Incentive Plan ("LTIP") which consists of restricted share awards; Medium Term Incentive Plan ("MTIP") which consists of restricted share awards; and Deferred Share Incentive Plan ("DSIP") which consists of cash and restricted share awards. The level of award granted in each of the schemes is based on a mixture of the individual performance of the employee and the Group wide performance over the term of the award which is between one and three years. The DSIP has cash elements which are fixed in value and are paid and expensed in the first year that the awards are issued. The cash award represents between half and two-thirds of the total award. There is no option given to elect to have these issued in shares. The cash element issued is classified as a cash bonus in the income statement and not a "cash-settled share-based payment" on the basis that the employee does not have the option to choose whether they receive cash or shares, and the award value is fixed and not based on share price movements. Annual Report & Accounts 2021 Flutter Entertainment plc 227 Financial statements ## Notes to the Consolidated Financial Statements continued 26. Share-based payments continued The restricted share portion of the DSIP award will vest over the second and third year of the plan (fourth and fifth year in some cases). | | | | Lapsed/ | Exercised | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Outstanding at | Granted | cancelled | | during | | Outstanding at | Exercise | Exercisable | | | Year granted | 1 January 2021 | during year | during year | | year | 31 December 2021 | | price £ | | before | 2016 10,051 — — (3,525) 6,526 — 2026 2017 26,674 — — (4,327) 22,347 — 2027 2018 132,733 6 ,174 (834) (48,967) 89,106 — 2028 2019 201,071 633 (9,425) (13,484) 178,795 — 2029 2020 49,744 202 (1,051) (10,332) 38,563 — 2030 2021 — 45,283 (1,259) — 44,024 — 2031 Total 420,273 52,292 (12,569) (80,635) 379,361 The weighted average exercise price for share options exercised during the year was a nominal price and at a weighted average share   123,592 (2020: 62,250). The awards granted from 2016 to 2020 during the year represent dividend roll-ups, in line with documented scheme rules. The share price at the date of the awards granted during the year was between £102.55 – £176.71 (2020: £82.93 – £110.50). For the 2020 and 2021 LTIP awards which are based solely on the Relative Total Shareholder Return (“TSR”) performance measure, the Group has engaged third party valuation specialists to provide a fair value for the awards using a Monte Carlo simulation model. The key inputs in the model were the expected volatility and the share price of the Group at the date of grant of the award. The fair value of the TSR, i.e. the non-market value of the award was £76.67 and £64.51 for the 2021 and 2020 awards, respectively. Flutter Entertainment plc Restricted Share Plan During the year, 698,452 (2020: 357,511) options were granted under the Flutter Entertainment plc Restricted Share plan.  as follows: Lapsed/ Outstanding at Granted cancelled Exercised Outstanding at Year granted 1 January 2021 during year during year during year 31 December 2021 2017 1,229 — — (420) 809 2018 14,171 — — (11,591) 2,580 2019 118,390 575 (3,934) (52,838) 62,193 2020 353,278 11,124 (36,114) (101,451) 226,837 2021 — 686,753 (14,148) (44,670) 627,935 Total 487,0 68 698,452 (54,196) (210,970) 920,354 Awards granted under the plan in some cases vest over three years and in other cases vest over one and two years. Restricted shares are valued with reference to the market value of the shares on the date of grant. The value of each award was calculated at the grant date and expensed over a period of up to three years in which the awards vest. The weighted average exercise price for share options  2020: £121.21). The fair value at the date of the awards granted during the year was between £102.55 – £176.61 (2020: £82.93 – £127.57). For 62,367 of the 2021 options awarded, there is an additional component to the core award that was valued at the share price at the date of grant that allows up to a 50% increase in the award based solely on the Relative TSR performance measure. The Group has engaged third party valuation specialists to provide a fair value for the awards using a Monte Carlo simulation model. The key inputs in the model were the expected volatility and the share price of the Group at the date of grant of the award. The fair value of the TSR, i.e. the non-market value of the potential award was £19.92. The awards granted in the 2019 and 2020 schemes during the year represent dividend roll-ups, in line with documented scheme rules.  In 2019, the Group introduced a plan for FanDuel employees that allows them to share in the future value created within FanDuel.  which represent a share in value created. The value of these units was to be determined by the value of the business in July 2021 and July 2023 compared to benchmark. Employees had the option to exercise 50% of these units at July 2021 at the prevailing value, or roll some or all of them to July 2023 at the prevailing value at that date. The Group has the option of settling this plan via the issuance of Flutter Entertainment plc shares or cash. It has accounted for this plan as equity-settled as it has been determined since the inception of the scheme that Flutter shares represented the most likely means of settlement and is consistent with the Group’s treatment historically of the settlement of share based payment schemes. 228 Flutter Entertainment plc Annual Report & Accounts 2021 # 26. Share-based payments continued The transaction to acquire an additional 17.2% of FanDuel shares on 30 December 2020 implied a 100% value of $11.2bn. This is significantly in excess of the out-performance growth cap. Due to this, it was decided to fix the value of the plan in both July 2021 and July 2023 to provide certainty to employees. As a result of the above, shares with a value of £17.5m were awarded to FanDuel employees during the year with shares with a value of approximately £148m due to be awarded to employees in 2023. # Other plans Separate to the above plans, the Group introduced a value creation award within the FanDuel business with the value of the award determined by the growth in the value of the FanDuel business from September 2021 to December 2026. The Group engaged third party valuation specialists to provide a fair value of the award using a Monte Carlo simulation model. The key inputs in the model were the expected volatility and the value of FanDuel at the date of grant of the award. The overall fair value of the award was determined to be £4.5m. The expense recognised in respect of this plan in 2021 is £0.2m. The Group has the option of settling this plan via the issuance of Flutter Entertainment plc shares or cash. The Group has accounted for this plan as equity-settled as it has been determined that Flutter shares represents the most likely means of settlement and is consistent with the Group's treatment historically in respect of the settlement of share-based payment schemes. No future awards are expected in respect of this plan. In addition to the above, the Group introduced an award plan in 2021 for management of the International division comprising of internal strategic milestones and a value creation element that allows employees share in the future value created in the International division vesting in two branches in July 2023 and December 2025. The Group will have the option of settling this plan via the issuance of Flutter Entertainment plc shares or cash. The Group has accounted for this plan as equity-settled as it has been determined that Flutter shares represents the most likely means of settlement and is consistent with the Group's treatment historically in respect of the settlement of share-based payment schemes. The expense recognised in respect of this plan in 2021 is £4.7m. The plan is designed to reward strategic progress over the first three years and value growth over five years, with vest dates in July 2023 and December 2025 for the respective tranches. The Group engaged third party valuation specialists to provide a fair value of the value creation element of the award using a Monte Carlo simulation model. The key inputs in the model were the expected volatility and the value of the International division at the date of grant of the award. The overall fair value of the award was determined to be £15.5m. Also in 2021, the Group introduced plans for other International employees that allow them to share in the future growth of their business. The expense recognised in respect of this plan in 2021 is £4.6m. The total fair value of the awards are estimated to be £10.9m with the fair value based on forecast revenue and EBITDA growth between 2021 and 2025. A portion of the awards will vest in 2023, with the remainder vesting through 2025. # The Paddy Power Betfair plc Employee Benefit Trust Various share awards are satisfied from the Paddy Power Betfair plc Employee Benefit Trust ("EBT"). Purchases of Flutter Entertainment plc ordinary shares from 1 January 2020 to 31 December 2021 and shares vested from the EBT during that period, are shown below: | | Number of Flutter Entertainment plc ordinary shares | Cost of purchase £m | | --- | --- | --- | | Shares held by the EBT at 1 January 2020 | 70,397 | 6.1 | | Vested from the EBT in 2020 | (3,077) | (0.3) | | Shares held by the EBT at 31 December 2020 | 67,320 | 5.8 | | Purchases of shares in 2021 | 1,537,894 | 180.7 | | Vested from the EBT in 2021 | (1,372,056) | (182.5) | | Shares held by the EBT at 31 December 2021 | 33,158 | 4.0 | The results of the EBT are included in the Flutter Entertainment plc Company financial statements. The shares held by the EBT at the reporting date are shown as a deduction from equity in the consolidated statement of financial position in accordance with the Group's accounting policy (see Note 3). Annual Report & Accounts 2021 Flutter Entertainment plc 229 Financial Statements ## Notes to the Consolidated Financial Statements continued 27. Financial risk management The Group has the following risk exposures in relation to its use of financial instruments: • market risk; • credit risk; • liquidity risk; • foreign currency risk; and • interest rate risk. Set out below is information on the Group’s exposure to each of the above risks, and what its objectives, policies and processes are  in respect of these risks are included throughout these consolidated financial statements. General The Board of Directors has overall responsibility for the management of the Group’s risks. This responsibility is delegated to a number of Committees over which the Board has oversight. The primary Board Committees set up to manage risks are the Risk and Sustainability Committee (previously the Risk Committee) and the Audit Committee. Both these Committees report regularly to the Board on their activities. The oversight of the Group’s treasury operations is performed by a Treasury Committee, chaired by the Chief Financial Officer, which reports annually to the Audit Committee on its activities. Where all relevant criteria are met, hedge accounting is applied to remove the income statement volatility between the hedging instrument and the hedged item. This will effectively result in the exposure arising from fluctuations of currency exchange rates being mitigated by the retranslation effect of designated financial instruments. Market risk Market risk relates to the risk that changes in prices, including sports betting prices/odds, foreign currency exchange rates and   to within acceptable limits, while at the same time ensuring that returns are optimised. The management of market risk is performed by the Group under the supervision of the Risk and Sustainability Committee and the Treasury Committee and according to the guidelines approved by them. The Group will utilise hedges where there is an identified requirement to manage profit or loss volatility. Sports betting prices/odds Managing the risks associated with sportsbook bets is a fundamental part of the Group’s business. The Group has a separate Risk department which has responsibility for the compilation of bookmaking odds and for sportsbook risk management. The Risk department is responsible for the creation and pricing of all betting markets and the trading of those markets through their lives. A mix of traditional bookmaking approaches married with risk management techniques from other industries is applied, and extensive use is made of mathematical models and information technology. The Group has set predefined limits for the acceptance of sportsbook bet risks. Stake and loss limits are set by reference to individual sports, events and bet types. These limits are subject to formal approval by the Risk and Sustainability Committee. Risk management policies also require sportsbook bets to be hedged with third parties in certain circumstances to limit potential losses. The profits and losses recorded on sportsbook hedging activities are recorded e statement. Credit risk The Group’s counterparty credit risk represents the risk that a financial loss may result if a counterparty to a financial instrument, bligations. Trade and other receivables  for all trade receivables. The Group’s sports betting, gaming, and poker businesses are predominantly cash and card businesses where there is a requirement that the customer pays in advance when a transaction is entered into. Credit to customers is not a common feature in the business  instance after taking into account credit and background reference checks. To measure the expected credit losses, trade receivables are monitored based on credit risk characteristics and the days past due. The absence of recurring patterns for specific categories of receivables and the relative immateriality of the amounts in the context of the broader balance sheet resulted in a portfolio approach not being adopted for the purpose of impairment recognition. The estimated credit loss on trade receivables is not considered to be material. There is no material concentration of sales with individual customers. 230 Flutter Entertainment plc Annual Report & Accounts 2021 ## 27. Financial risk management continued ### Cash, investments, derivative financial instruments and foreign exchange forward contracts The Group's Treasury Policy sets conservative credit rating and tenor-based limits for exposures to financial counterparties. Any exceptions, breaches or potential breaches of such limits are referred to the Treasury Committee. The Treasury Policy also specifies permitted instruments and the use of approved counterparties. The Group monitors the financial strength of its counterparties through regular monitoring of credit ratings, credit default swaps and other public information, and takes action to adjust exposures to counterparties accordingly. The policy ensures that exposures to lower rated counterparties are kept to an acceptable level. The Group has no expectation that any of its financial counterparties will fail to meet its obligations as of the reporting date and the date of this report. ### Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The cash and cash equivalents are primarily held with bank and financial institution counterparties, which are rated investment grade, based on ratings assigned by S&P, Moody's and Fitch. The maximum exposure to credit risk at 31 December was: | | Carrying amount | | | --- | --- | --- | | | 31 December 2021 (in) | 31 December 2020 (in) | | Restricted cash | 685.0 | 594.8 | | Investments – customer deposits | 83.0 | 82.8 | | Trade receivables | 39.5 | 11.9 | | Other receivables | 46.2 | 41.5 | | Cash and cash equivalents | 951.7 | 603.4 | | Total | 1,805.4 | 1,334.4 | The maximum exposure to credit risk for trade and other receivables by geographic region at 31 December was: | | Carrying amount | | | --- | --- | --- | | | 31 December 2021 (in) | 31 December 2020 (in) | | United Kingdom | 34.6 | 20.8 | | Ireland | 0.4 | 0.2 | | Australia | 12.8 | 4.6 | | US | 25.6 | 14.5 | | Other | 12.3 | 13.3 | | Total | 85.7 | 53.4 | ### Significant customers There were no individual customers at 31 December 2021 or 31 December 2020 that represented over 10% of trade receivables. ### Expected credit loss The ageing of trade receivables at 31 December 2021 and 2020 was as follows: | | 31 December 2021 | | | 31 December 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Gross (in) | Impairment allowance (in) | Net (in) | Gross (in) | Impairment allowance (in) | Net (in) | | Not past due | 20.2 | — | 20.2 | 5.4 | — | 5.4 | | Past due 9 days to 30 days | 13.2 | — | 13.2 | 2.9 | — | 2.9 | | Past due 31 days to 120 days | 4.0 | (0.6) | 3.4 | 0.4 | (0.3) | 0.1 | | Past due 121 days to 365 days | 4.5 | (2.0) | 2.5 | 4.8 | (1.3) | 3.5 | | More than one year | 1.0 | (0.8) | 0.2 | 1.6 | (1.6) | — | | Total | 42.9 | (3.4) | 39.5 | 15.1 | (3.2) | 11.9 | The gross trade receivable balance is £42.9m (2020: £15.1m) with an allowance for impairment in respect of these receivables of £3.4m (2020: £3.2m). There were no material impairment losses during the year. Annual Report & Accounts 2021 Platter Entertainment plc 231 Financial Statements Notes to the Consolidated Financial Statements continued # 27. Financial risk management continued # Liquidity risk This represents the risk that the Group will be unable to meet its financial obligations as they fall due. The Group's policy for liquidity risk management is to ensure that there is sufficient liquidity in place from available cash and borrowing facilities under normal and potentially adverse conditions. The Group prepares regular cash projections to ensure that there is sufficient headroom available from cash and borrowing facilities to meet expected obligations over the forecasted period. The nature of the Group's business and the potential volatility in sporting results can result in significant differences between expected and actual short-term cash flows. Consequently, a highly conservative approach is applied to cash forecasting and flexibility is built into the forecast to cover potentially adverse sporting results and the policy on investment of surplus funds ensures that funds are readily available to meet the Group's financial obligations. The Group's Treasury Policy contains a maturity ladder, with a maximum maturity on deposits of up to 12 months. Information on the overall maturity of deposits at 31 December 2021 and 2020 is set out in Note 17. It is the Group's belief that the cash deposit balances can be withdrawn without significant penalty. The Group has the following lines of credit: - a committed Revolving Credit Facility ("RCF") of £482m (31 December 2020: £450m) obtained from a syndicate of banks which matures in May 2025. The RCF includes a margin of 1.75% for borrowings with a 0% interest rate floor and a utilisation fee ranging from 0.1% to 0.4% based on the proportion of drawings to the total commitment. The commitment fee on the RCF is 35% of the margin and is payable in respect of available but undrawn borrowings. The RCF is available for general corporate purposes including the refinancing of existing borrowings. As at 31 December 2021, no loan amounts were drawn under the RCF. The Group has £15m of capacity reserved for the issuance of Group guarantees against the RCF as of 31 December 2021 leaving undrawn designated capacity of £467m. - unsecured uncommitted bank overdraft facilities for working capital purposes totalling £3.6m (£4.0m). Interest is payable thereon at the bank's prime overdraft rate plus 0.3%. Bank overdraft facilities for certain subsidiaries of the Company are guaranteed by way of a Letter of Guarantee issued by Flutter Entertainment plc in favour of Allied Irish Banks p.l.c. and - unsecured uncommitted bank overdraft facilities for working capital purposes totalling £15m. Interest is payable thereon at the bank's sterling base rate plus 3.5%. Bank overdraft facilities for certain subsidiaries of the Company are guaranteed by way of a Letter of Guarantee issued by Flutter Entertainment plc in favour of AIB Group (UK) p.l.c. At 31 December 2021, none of the bank overdraft facilities were being utilised (31 December 2020: £nil). The following table provides information about the terms of the Group's financial instruments based on contractual maturities. The table is based on the undiscounted gross inflows and outflows on those derivatives that require gross settlement. For derivative cash flows based on a floating interest rate, the undiscounted amount is based on the floating interest rate in place at 31 December 2021. | | 31 December 2021 | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Carrying amount £m | Contractual cash flows £m | 6 months or less £m | 6 to 12 months £m | 1 to 2 years £m | 2 to 3 years £m | 3 years and over £m | | **Non-derivative financial liabilities** | | | | | | | | | Trade and other payables | 1,078.3 | 1,078.3 | 1,024.4 | 34.1 | 19.8 | — | — | | Customer balances | 721.0 | 721.0 | 721.0 | — | — | — | — | | Contingent deferred consideration | 37.9 | 42.0 | 21.0 | — | — | — | 21.0 | | Borrowings | 3,571.8 | 3,969.1 | 53.0 | 51.9 | 105.9 | 106.3 | 3,652.0 | | Lease liabilities | 264.4 | 301.9 | 27.1 | 25.5 | 50.3 | 43.5 | 155.5 | | **Total non-derivative financial liabilities** | **5,673.4** | **6,112.3** | **1,846.5** | **111.5** | **176.0** | **149.8** | **3,828.5** | | **Derivative financial liabilities** | | | | | | | | | Sports betting open positions | 74.5 | 74.5 | 52.0 | 22.0 | 0.5 | — | — | | Swap agreements – inflows | (68.0) | (2,250.9) | (37.8) | (58.0) | (2,175.1) | — | — | | Swap agreements – outflows | 54.6 | 2,235.9 | 40.5 | 40.7 | 2,154.7 | — | — | | **Total derivative financial liabilities** | **61.1** | **59.5** | **54.7** | **24.7** | **(19.9)** | **—** | **—** | | **Total financial liabilities** | **5,734.5** | **6,171.8** | **1,901.2** | **136.2** | **156.1** | **149.8** | **3,828.5** | 232 Flutter Entertainment plc Annual Report & Accounts 2021 ## 27. Financial risk management continued 31 December 2020 | | Carrying amount £m | Contractual cash flows £m | 6 months or less £m | 8 to 12 months £m | 1 to 2 years £m | 2 to 3 years £m | 3 years and over £m | | --- | --- | --- | --- | --- | --- | --- | --- | | **Non-derivative financial liabilities** | | | | | | | | | Trade and other payables | 1,009.5 | 1,009.5 | 1,001.1 | 6.6 | 1.3 | 0.5 | — | | Customer balances | 643.4 | 643.4 | 643.4 | — | — | — | — | | Contingent deferred consideration | 38.1 | 39.5 | 19.2 | 7.5 | 12.8 | — | — | | Borrowings | 3,138.9 | 3,841.0 | 76.1 | 76.4 | 150.6 | 149.3 | 3,388.6 | | Lease liabilities | 194.0 | 214.8 | 24.9 | 23.4 | 39.6 | 35.4 | 91.5 | | **Total non-derivative financial liabilities** | **5,023.9** | **5,748.2** | **1,764.7** | **115.9** | **204.3** | **185.2** | **3,480.1** | | **Derivative financial liabilities** | | | | | | | | | Sports/setting open positions | 50.0 | 50.0 | 49.5 | — | 0.5 | — | — | | Swap agreements – inflows | (16.9) | (1,952.1) | (58.9) | (792.2) | (65.4) | (1,035.6) | — | | Swap agreements – outflows | 203.2 | 2,131.4 | 67.1 | 898.8 | 80.5 | 1,085.0 | — | | **Total derivative financial liabilities** | **236.3** | **229.3** | **57.7** | **106.6** | **15.6** | **49.4** | **—** | | **Total financial liabilities** | **5,260.2** | **5,977.5** | **1,822.4** | **220.5** | **219.9** | **234.6** | **3,480.1** | The contingent deferred consideration payable represents management's best estimate of the fair value of the amounts that will be payable, and may vary depending on the future performance of the acquired businesses. ### Foreign currency risk The Group is exposed to currency risk in respect of revenue, expenses, receivables, cash and cash equivalents, and other financial assets and financial liabilities (primarily borrowings, trade payables, accruals and customer balances) that are denominated in currencies that are not the functional currency of the entities in the Group. The currencies in which transactions are primarily denominated are pound sterling ('GBP'), euro ('EUR'), Australian dollar ('AUD') and US dollar ('USD'). It is Group policy to ensure that foreign currency denominated liabilities are broadly matched by foreign currency denominated assets. Surplus net foreign currency inflows are predominantly sold at spot rates. Foreign exchange impacts primarily arise on the retranslation of income and expense into the functional currency for Group reporting purposes. Subject to operating within limits stipulated in the Group's treasury policies, and above this, Treasury Committee approval, the Group may use forward contracts, and other instruments as permitted by the Group's treasury policies to reduce foreign currency exposure. The Group seeks to mitigate the impact of changes in currency rates by aligning to the extent possible, the currency of its borrowings (after derivatives) to the currency of EBITDA. The Group uses derivative financial instruments for risk management and mitigation purposes. As such, any change in cash flows associated with derivative instruments is expected to be offset by changes in cash flows related to the hedged position. On 5 May 2020, the Group completed the TSG Combination and assumed the existing hedging instruments held by TSG. The Group's derivatives are discussed in more detail in Note 23. While the Group strives to maintain a naturally hedged balance sheet, as described in the preceding paragraphs, it remains exposed to exchange rate risk in respect of its expected future foreign currency denominated income and expenses in its foreign operations. ### Exposure As of 31 December 2021 and 2020, the Group's foreign currency risk exposure, based on the functional currencies of its operations, was as follows: | | 31 December 2021 | | | | | | --- | --- | --- | --- | --- | --- | | | EUR £m | GBP £m | AUD £m | USD £m | Other £m | | Financial assets | 31.1 | 16.3 | — | 148.4 | 36.8 | | Non-derivative financial liabilities | (77.7) | (47.1) | (0.1) | (366.2) | (8.9) | | Derivative financial liabilities | (75.0) | (0.1) | — | (5.3) | — | | Gross statement of financial position exposure | (119.6) | (30.9) | (0.1) | (19.1) | 27.9 | | | 31 December 2020 | | | | | | --- | --- | --- | --- | --- | --- | | | EUR £m | GBP £m | AUD £m | USD £m | Other £m | | Financial assets | 82.5 | 10.6 | 1.4 | 147.7 | 14.8 | | Non-derivative financial liabilities | (165.1) | (38.4) | (0.1) | (206.2) | (13.3) | | Derivative financial liabilities | (5.3) | (0.1) | — | (0.1) | — | | Gross statement of financial position exposure | (87.9) | (27.9) | 1.3 | (58.6) | 1.5 | Financial statements Annual Report & Accounts 2021 Platter Entertainment plc 233 Notes to the Consolidated Financial Statements continued # **27. Financial risk management continued** The following are the significant exchange rates that applied during the year: | 31 December 2021 | Average rate | | 31 December 2020 | | | --- | --- | --- | --- | --- | | | 2021 | 2020 | 2021 | 2020 | | EUR | 1.163 | 1.105 | 1.191 | 1.114 | | AUD | 1.832 | 1.863 | 1.861 | 1.768 | | USD | 1.376 | 1.283 | 1.332 | 1.364 | # **Sensitivity analysis** A 10% increase and decrease in the value of pound sterling against the following currencies at 31 December 2021 and 2020 would have increased/decreased/profit and equity by the amounts below as a consequence of the retranslation of foreign currency denominated assets and liabilities at those dates. The equity movement at 31 December 2021 relates mainly to foreign currency denominated goodwill and intangible assets. It is assumed that all other variables, especially interest rates, remain constant in the analysis. | | Profit | | Equity | | | --- | --- | --- | --- | --- | | | 10% increase 6m | 10% decrease 6m | 10% increase 6m | 10% decrease 6m | | **31 December 2021** | | | | | | EUR | 5.0 | (5.0) | (283.2) | 283.2 | | AUD | — | — | (64.8) | 64.8 | | USD | 1.9 | (1.9) | (46.7) | 46.7 | | **31 December 2020** | | | | | | EUR | 8.8 | (8.8) | 4.0 | (4.0) | | AUD | (0.1) | 0.1 | (0.1) | 0.1 | | USD | 5.9 | (5.9) | (38.8) | 38.8 | The table below details the effect on profit of a 10% strengthening or weakening of the GBP-EUR or the GBP-USD exchange rates on the valuations of the USD First Lien Term Loan B and EUR First Lien Term Loan B, net of hedging with the Swap Agreements that hedge the USD TLB and EUR TLB. 10% is the sensitivity rate which represents management's assessment of the reasonably possible change in foreign exchange rates. | | 10% 6m | <10% 6m | | --- | --- | --- | | GBP-EUR exchange rate | — | — | | GBP-USD exchange rate | — | — | # **Interest rate risk** The Group's exposure to changes in interest rates includes fluctuations in the amounts of interest paid on the Group's long-term indebtedness, as well as the interest earned on its cash and investments. The Group manages its exposure to changes in interest rates through the offsetting of exposures and the use of hedging instruments. # **Profile** As of 31 December 2021 and 31 December 2020, the interest rate profile of the Group's interest-bearing financial instruments was as follows: | | Carrying amount | | | --- | --- | --- | | | 31 December 2021 6m | 31 December 2020 6m | | **Variable rate instruments** | | | | Financial assets – restricted cash | 685.0 | 594.8 | | Investments – customer deposits | 83.0 | 82.8 | | Financial assets – cash | 951.7 | 663.4 | | Borrowings | (3,571.8) | (3,138.9) | | Effect of interest rate swaps | 2,167.8 | 1,749.5 | | | 315.7 | (108.4) | 234 Platter Entertainment plc Annual Report & Accounts 2021 ## 27. Financial risk management continued The table below details the effect on earnings before tax of a 100 basis points strengthening or weakening of the USD-LIBOR, GBP-LIBOR (SONIA effective for interest periods beginning on or after 1 January 2022) and EURIBOR interest rates on these loans after the effect of the Group's hedging activities. EURIBOR is currently negative and the analysis below presents the effect on earnings before tax if it were to turn positive by 100 basis points. 100 basis points sensitivity is the sensitivity rate used and represents management's assessment of a reasonably possible change in interest rates. | | Profit/loss/£m | | | --- | --- | --- | | | 2021/20 | 2022/21 | | USD LIBOR | — | — | | GBP LIBOR/SONIA | — | (30.4) | | EURIBOR | — | (4.3) | The USD First Lien Term Loan B and the GBP First Lien Term Loan A have a floor of 0% for their respective LIBORs and as such, the interest rate cannot decrease below the margins of 2.25% and 1.75% respectively. The EUR First Lien Term Loan B has a floor of 0% for EURIBOR and as such, the interest rate cannot decrease below 2.5%. Management monitors movements in interest rates by reviewing USD LIBOR and EURIBOR on a quarterly basis for the First Lien Term Loan B's and the GBP LIBOR monthly for the First Lien Term Loan A. During the years ended 31 December 2021 and 31 December 2020, EURIBOR was negative. ## 28. Capital management The capital structure of the Group consists of cash and cash equivalents, debt finance, issued capital, reserves and retained earnings. The efficiency of the Group's capital structure is kept under regular review by the Board. The Group continues to target a medium-term leverage range of between 1 and 2 times net debt to EBITDA. This target reflects the Group's strong cash flow generation, general capital market conditions and the need to retain strategic flexibility for continuing investment opportunities. The Group has the authority to buy back up to 10% of the Company's issued share capital between the dates of its Annual General Meetings ('AGM'), subject to the annual approval of its shareholders at the Company's AGM. Shares bought back may either be cancelled or held in treasury. The Company's ordinary shares are also acquired on the market periodically by the Paddy Power Berfair plc Employee Benefit Trust ("EBT") to meet the EBT's obligations under share award schemes. These shares are held by the EBT and ownership is transferred to the EBT's beneficiaries if and when the related share awards vest. At 31 December 2021 and 31 December 2020, neither the Company nor any of its subsidiaries were subject to externally imposed capital requirements. ## 29. Fair values ### Fair values versus carrying amounts The Group has determined that the carrying values of its short-term financial assets and liabilities approximate their fair value due to the short periods to maturity of these instruments and their low credit risk. The following are the fair values and carrying amounts of financial assets and liabilities carried at amortised cost in the statement of financial position: | | 31 December 2021 | | 31 December 2020 | | | --- | --- | --- | --- | --- | | | Carrying amount £m | Fair value £m | Carrying amount £m | Fair value £m | | Assets | | | | | | Trade receivables | 39.5 | 39.5 | 11.9 | 11.9 | | Other receivables | 46.2 | 46.2 | 41.5 | 41.5 | | Restricted cash | 685.0 | 685.0 | 594.8 | 594.8 | | Cash and cash equivalents | 951.7 | 951.7 | 603.4 | 603.4 | | Total assets | 1,722.4 | 1,722.4 | 1,251.6 | 1,251.6 | | Liabilities | | | | | | Trade and other payables | (1,078.5) | (1,078.5) | (1,009.5) | (1,009.5) | | Customer balances | (721.0) | (721.0) | (645.4) | (645.4) | | Borrowings | (3,571.8) | (3,607.8) | (3,138.9) | (3,255.0) | | Total liabilities | (5,371.1) | (5,407.1) | (4,791.8) | (4,907.9) | | Net | (3,648.7) | (3,684.7) | (3,540.2) | (3,656.3) | Annual Report & Accounts 2021: Platter Entertainment plc 233 Financial Statements Notes to the Consolidated Financial Statements continued # **29. Fair values continued** Certain of the Group's financial assets and liabilities are measured at fair value, including at FVTPL or FVOCI, at the end of each reporting period. The following provides information about how the fair values of these financial assets and liabilities were determined as at 31 December 2021: # **Financial instruments carried at fair value** # **Fair value hierarchy** The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to the valuation method used. The different levels are defined as follows: - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date; - 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: unobservable inputs for the asset or liability. | | 31 December 2021 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | Bonds – FVOCI | 58.2 | 24.8 | — | 83.0 | | Investments – FVTPL | — | — | 5.5 | 5.5 | | Derivatives | — | 68.0 | — | 68.0 | | **Total financial assets** | **58.2** | **92.8** | **5.5** | **116.5** | | Derivative financial liabilities | — | (54.6) | (74.5) | (129.1) | | Non-derivative financial liabilities | — | — | (37.9) | (37.9) | | **Total financial liabilities** | **—** | **(54.6)** | **(112.4)** | **(167.0)** | | | 31 December 2020 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | Bonds – FVOCI | 26.3 | 56.5 | — | 82.8 | | Investments – FVTPL | — | — | 5.0 | 5.0 | | Derivatives | — | 16.9 | 98.0 | 114.9 | | **Total financial assets** | **26.3** | **73.4** | **101.0** | **200.7** | | Derivative financial liabilities | — | (203.2) | (50.0) | (253.2) | | Non-derivative financial liabilities | — | — | (38.1) | (38.1) | | **Total financial liabilities** | **—** | **(203.2)** | **(88.1)** | **(291.3)** | The fair values of other financial assets and liabilities measured at amortised cost, other than those for which the Group has determined that their carrying values approximate their fair values on the consolidated statement of financial position as at 31 December 2021 and 31 December 2020 are as follows: | | 31 December 2021 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | First Lien Term Loans B (as defined below) | — | (2,589.6) | — | (2,589.6) | | **Total financial liabilities** | **—** | **(2,589.6)** | **—** | **(2,589.6)** | | | 31 December 2020 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | First Lien Term Loans B (as defined below) | — | (1,530.5) | — | (1,530.5) | | Senior Notes | — | (774.4) | — | (774.4) | | **Total financial liabilities** | **—** | **(2,304.9)** | **—** | **(2,304.9)** | As part of its periodic review of fair values, the Group recognises transfers, if any, between levels of the fair value hierarchy at the end of the reporting period during which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the periods ended 31 December 2021 or 31 December 2020. 236 Platter Entertainment plc Annual Report & Accounts 2021 29. Fair values continued Valuation of Level 2 financial instruments Borrowings The Group has determined that the principal value of the GBP First Lien Term Loan A (as defined above) approximates its fair value. The Group estimates the fair value of its First Lien Term Loan Bs by using a composite price derived from observable market data fair value. Bonds – FVOCI The Group has determined that the carrying value of the bonds approximates their fair value which is determined by using observable quoted prices or observable input parameters derived from comparable bonds/markets. Although the Group has determined that a number of the bonds fall within Level 1 of the fair value hierarchy, there are a class of bonds which have been classified as Level 2 due to the existence of relatively inactive trading markets for those bonds. Derivative financial instruments Swap agreements The Group uses derivative financial instruments to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis of the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, such as yield curves, spot and forward FX rates.  reflect both its own non-performance risk and the applicable counterparty’s non-performance risk in the fair value measurements.  netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although the Group has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilise Level 3 inputs, such as estimates of current credit  Financial statements Group assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions,  Level 3, determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Group determined that its valuations of its derivatives in their entirety are classified in Level 2 of the fair value hierarchy. Level 3 fair values Derivatives (Level 3) Some of the Group’s financial assets and liabilities are classified as Level 3 of the fair value hierarchy because the respective fair value  inputs used by the Group for each Level 3 asset or liability were as follows: Sports betting open positions (Level 3) Derivative financial liabilities comprise sports betting open positions. The fair value of open sports bets at the period end has been calculated using the latest available prices on relevant sporting events. Changes in the fair value of the unsettled bets are recorded in revenue in the consolidated income statement.  expectations and ultimately the actual results when the events occur will result in changes in fair value. There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology although final value will be determined by future sporting results. Non-derivative financial instruments (Level 3) Investments The Group valued its equity investments in private companies with reference to earnings measures from similar businesses in the same or similar industry and adjusts for any significant changes in the earnings multiple and the valuation. A reasonable change in assumptions would not have a material impact on fair value. Changes in the fair value of equity in private companies are recorded  statement. Contingent deferred consideration (Level 3) Non-derivative financial liabilities include contingent consideration. The contingent consideration payable is primarily determined with reference to forecast performance for the acquired businesses during the relevant time periods and the amounts to be paid in such scenarios. The fair value was estimated by assigning probabilities to the potential payout scenarios. The significant unobservable inputs are forecast performance for the acquired businesses. The fair value of contingent consideration is primarily dependent on forecast performance for the acquired businesses in excess    and £3.2m). Annual Report & Accounts 2021 Flutter Entertainment plc 237 ## Notes to the Consolidated Financial Statements continued 29. Fair values continued FOX Corporation  their respective US businesses, the Group entered into an arrangement with FOX, pursuant to which FSG Services, a wholly-owned subsidiary   close to nominal value. Non-controlling interest agreements Adjarabet   consideration can be settled, at the Group’s election, in cash or shares. As a consequence of both the put and call options being only  option, it was determined that the fair value was not material and was close to nominal value. Boyd A mechanism has been agreed with Boyd, a non-controlling interest in FanDuel Group, consisting of call and put options, which  settled, at the Group’s election, in cash or shares. As a consequence of both the put and call options being only exercisable at fair value based on the market value of FanDuel at the date of exercise of the options, it was determined that the fair value was not material and was close to nominal value.  across their respective US businesses, the Group entered into arrangements conditional on completion of the Combination with   value adjustment). Following the acquisition by the Group of Fastball’s entire non-controlling interest on 30 December 2020, discussions are currently ongoing with the relevant parties in respect of the future operating model for the FOX Bet business and any payment due to Boyd in respect of this is not expected to be significant.     for which such warrants are exercisable. As this transaction involves the exchange of one form of fixed equity instrument for another fixed instrument with a non-controlling interest for no additional consideration, no further accounting is required. Junglee    multiple which are considered to be two key inputs into valuing the option, it was determined that the fair value was not material and was close to nominal value. Movements in the year in respect of Level 3 financial instruments carried at fair value  as follows: Contingent Sports betting deferred Embedded open positions consideration derivative  Tot a l £m £m £m £m £m  (21.1)  — 0.1  Arising on acquisitions (Note 15) (10.0) (5.3)    Recognised in the income statement 2,256.1   (1.5)  Settlements   — —  Foreign currency translation adjustment — 2.1 (6.3)   Balance at 31 December 2020 (50.0) (38.1) 98.0 3.0 12.9 Arising on acquisitions (Note 15) — (18.0) — 0.8 (17.2) Recognised in the income statement 3,276.9 (4.0) (96.1) 1.7 3,178.5 Settlements (3,301.4) 21.6 — — (3,279.8) Foreign currency translation adjustment — 0.6 (1.9) — (1.3) Balance at 31 December 2021 (74.5) (37.9) — 5.5 (106.9) 238 Flutter Entertainment plc Annual Report & Accounts 2021 ### 30. Commitments and contingencies The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group. The Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. The Group has uncommitted working capital overdraft facilities of €16.2m (2020: €16.6m) with Allied Irish Banks p.l.c. These facilities are secured by a Letter of Guarantee from Flutter Entertainment plc. The Group has bank guarantees: (i) in favour of certain gaming regulatory authorities to guarantee the payment of player funds, player prizes, and certain taxes and fees due by a number of Group companies; and (ii) in respect of certain third-party rental and other property commitments, merchant facilities and third party letter of credit facilities. The maximum amount of the guarantees at 31 December 2021 was €44.4m (2020: €74.8m). No claims had been made against the guarantees as of 31 December 2021 (2020: £94). The guarantees are secured by counter indemnities from Flutter Entertainment plc and certain of its subsidiary companies. The value of cash deposits over which the guaranteeing banks hold security was €17.5m at 31 December 2021 (2020: €12.9m). As mentioned in Note 22, borrowings under the TLA Agreement and Syndicated Facility Agreement are guaranteed by the Company and certain of its operating subsidiaries. #### Contingent liabilities The Group operates in an uncertain marketplace where many governments are either introducing or contemplating new regulatory or fiscal arrangements. The Board monitors legal and regulatory developments and their potential impact on the business, however, given the lack of a harmonised regulatory environment, the value and timing of any obligations in this regard are subject to a high degree of uncertainty and cannot always be reliably predicted. As outlined in more detail in Note 16, in June 2021, the Athens Administrative Court of Appeal dismissed the Group's judicial recourses. While the Group has appealed to the Greek Supreme Administrative Court, based on the nature of the decision received and the points of law which can be appealed, and in line with legal and tax advice it has received, it has decided to recognise the amount of the Greek assessment for the years 2012, 2013 and 2014 of €15.0m (£12.8m) as an expense in the income statement during the year ended 31 December 2021. No notifications have as yet been received for later years and so no provision has been made for potential further assessments. Prior to the Combination, the Board of TSG became aware of the possibility of improper foreign payments by TSG or its subsidiaries in certain jurisdictions outside of Canada and the United States relating to its historical B2B business (which was never profitable and effectively ceased operations in 2014). When this matter arose, TSG contacted the relevant authorities in the United States and Canada with respect to these matters and, following the Combination, the Group continues to co-operate with the United States and Canada governmental authorities in respect of all inquiries relating to such payments. Based on its review of these matters to date, the Board of Flutter has not identified issues that it believes would have a significant adverse effect on the Group's financial position or business operations. #### Capital commitments Capital expenditure contracted for at the statement of financial position date but not yet incurred was as follows: | | 31 December 2021 (m) | 31 December 2020 (m) | | --- | --- | --- | | Property, plant and equipment | 1.3 | 14.3 | | Intangible assets | 1.6 | 1.0 | | Total | 2.9 | 15.3 | ### 31. Related parties There were no material transactions with related parties during the year ended 31 December 2021 or the year ended 31 December 2020. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The principal related party transactions requiring disclosure under IAS 24 Related Party Transactions relate to the existence of subsidiaries and transactions with these entities entered into by the Group, transactions with Directors and the identification and compensation of key management personnel. #### Subsidiaries The consolidated financial statements include the financial statements of the Company and its subsidiaries. A listing of the material subsidiaries is provided in Note 32. Transactions and balances with subsidiaries have been eliminated in the preparation of the consolidated financial statements. Annual Report & Accounts 2021 Flutter Entertainment plc 239 Financial Statements ## Notes to the Consolidated Financial Statements continued ### 31. Related parties continued #### Transactions with Directors There were no loans outstanding to any Director at any time during the year. Details of Directors' remuneration, interests in share awards and share options are set out on pages 136 to 154. Other related party transactions between the Group and the Directors, all of which were conducted on an arm's length basis and on normal commercial terms, are set out below. During the year, the Group entered into separate consultancy agreements with one Director, Richard Flint, under which he received additional fees. See page 111. #### Transactions with key management personnel This comprises of Executive Directors and Non-Executive Directors. Key management personnel compensation is as follows: | | 2021 €m | 2020 €m | | --- | --- | --- | | Short-term employee benefits | 5.7 | 5.9 | | Non-Executive Directors' fees | 1.7 | 1.8 | | Post-employment benefits | 0.2 | 0.2 | | Share-based payment costs | 3.6 | 3.0 | | Total | 11.2 | 10.9 | ### 32. Group entities The Company had the following subsidiary undertakings carrying on businesses which materially affect the profits and assets of the Group at 31 December 2021: | Name | Equity interest as at 31 December 2021 | Country of incorporation | Activity | Registered office | | --- | --- | --- | --- | --- | | Power Leisure Bookmakers Limited^{1} | 100% | England and Wales | Bookmaker and provision of platform services | Waterfront, Hammersmith Embankment, Chancellors Road, London, W6 9HP | | Betfair Group Limited^{1} | 100% | England and Wales | Holding company | | | Betfair Limited | 100% | England and Wales | Provision of support services | | | TSE Holdings Limited | 100% | England and Wales | Holding company | | | Stars Group Holdings (UK) Limited | 100% | England and Wales | Holding company | 4 Wellington Place, Leeds, LS1 4AP | | Cyan Bidco Limited | 100% | England and Wales | Holding company | | | Hestview Limited | 100% | England and Wales | Online sports betting | | | Bonne Terre Limited | 100% | Alderney | Online gaming | Century House, 12 Victoria Street, Alderney G19 3UF | | FanDuel Limited | 95% | Scotland | Fantasy sports, R&D activities and support services | Shepherd and Wedderburn LLP, 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8LL | | TSE Data Processing Limited | 100% | Ireland | Provision of support services | Belfield Office Park, Beech Hill Road, Clonskeagh, Dublin 4, D04V972 | | PPB Financing Unlimited Company^{1} | 100% | Ireland | Group financing | | | PPB Treasury Unlimited Company | 100% | Ireland | Treasury and Group financing | | | PPB GE Limited | 100% | Ireland | Online gaming | | | Global Sports Derivatives Limited | 100% | Ireland | Sporting events derivatives, risk management and other products | | | TSG Platforms (Ireland) Limited | 100% | Ireland | Provision of platform services | | | Paddy Power Holdings Limited^{1} | 100% | Isle of Man | Holding company | Merchants House, 24 North Quay, Douglas, Isle of Man, IM1 4LE | | Stars Interactive Holdings (IOM) Limited | 100% | Isle of Man | Holding company | Douglas Bay Complex, King Edward Road, Orphan, Isle of Man, IM3 1DZ | | TSG Interactive Services Limited | 100% | Isle of Man | Service company | | | Stars Interactive Limited | 100% | Isle of Man | Service company | | 240 Platter Entertainment plc Annual Report & Accounts 2021 32. Group entities continued Equity interest as at Country of Name 31 December 2021 incorporation Activity Registered office     Douglas Bay Complex, King Naris Limited   Treasury     Service company  Rational Entertainment Enterprises Limited   Service company Rational FT Services Limited   Service company    Treasury     Sportsbet Pty Limited  Australia Online sports betting  Paddy Power Australia Pty Limited  Australia  Melbourne, Victoria 3000 TSED Unipessoal LDA  Portugal R&D activities   Betfair Casino Limited  Malta Online gaming Triq il-Kappillan Mifsud, Santa PPB Entertainment Limited  Malta Online gaming  PPB Counterparty Services Limited  Malta Online sports betting   Malta Online sports betting    Malta  PPB Games Limited  Malta Online gaming   Malta Gaming company    Malta Gaming company  SPK 1000, Malta TSE Malta LP  Gibraltar Online sports betting  Betfair Romania Development S.R.L  Romania R&D activities Cladirea The Office,        Financial statements    Georgia   | Atlas LLC  Georgia  | | District, Tbilisi | | --- | --- | --- | | Aviator LLC  Georgia Online gaming and | | 6 El. Akhvlediani Ascent, | | |  | Chugureti District, Tbilisi | FanDuel Group Parent LLC  USA  251 Little Falls Drive,   USA     USA    USA Fantasy sports   USA Sports betting and  ODS Technologies LP  USA  betting network, advanced deposit wagering   USA  1 Flutter Financing B.V.  Netherlands Financing company      Netherlands  WTC, Toren E, 23e verdieping,   Netherlands   financing company   Canada  200 Bay Street, South Tower, Suite 3205, Toronto, Ontario,     Online skill games company 55, 2nd Floor, Lane-2, Westend Marg, Saidullajab, Near Saket Metro New Delhi  1. These companies are held directly by Flutter Entertainment plc. All subsidiary undertakings have been included in the Group Consolidated Financial Statements.  rd schemes. Annual Report & Accounts 2021 Flutter Entertainment plc 241 ## Notes to the Consolidated Financial Statements continued 33. Events after the reporting date Acquisition of Tombola   anuary 2022. Tombola is a successful bingo-led gaming company with an emphasis on providing a low staking bingo proposition to a highly engaged   Acquisition of Sisal      The total consideration for Sisal is payable in cash and in full on completion of the transaction. This amount includes full repayment of all Sisal's debt upon completion. The transaction will be financed by way of additional Flutter debt facilities, agreed with Barclays Bank PLC. The transaction is conditional on merger control clearance and customary gaming and foreign investment consents. Subject to these rter 2 2022. 242 Flutter Entertainment plc Annual Report & Accounts 2021 # Company Statement of Financial Position As at 31 December 2021 | | Note | 31 December 2021 km | 31 December 2020 km | | --- | --- | --- | --- | | **Assets** | | | | | Property, plant and equipment | 5 | 104.7 | 73.4 | | Intangible assets | 6 | 0.4 | 0.3 | | Goodwill | 7 | 18.0 | 18.0 | | Financial assets | 8 | 16,681.7 | 16,650.0 | | Other receivables | 9 | — | 13.5 | | Deferred tax assets | 11 | 0.2 | 0.1 | | **Total non-current assets** | | 16,805.0 | 16,715.3 | | Trade and other receivables | 9 | 881.1 | 190.9 | | Corporation tax receivable | | 5.7 | 3.7 | | Cash and cash equivalents | 10 | 7.5 | 8.3 | | **Total current assets** | | 894.3 | 202.9 | | **Total assets** | | 17,699.3 | 16,918.2 | | **Equity** | | | | | Issued share capital and share premium | | 477.6 | 2,481.7 | | Merger reserve | | — | 7,982.9 | | Treasury shares | | — | (4.2) | | Shares held by Employee Benefit Trust | | (4.0) | (5.8) | | Other reserves | | 255.7 | 227.6 | | Retained earnings | | 15,784.2 | 4,631.2 | | **Total equity** | | 16,513.5 | 15,313.4 | | **Liabilities** | | | | | Trade and other payables | 14 | 1,114.4 | 1,566.7 | | Derivative financial liabilities | 14 | 2.6 | 3.7 | | Lease liability | 15 | 5.8 | 8.8 | | **Total current liabilities** | | 1,122.8 | 1,579.2 | | Lease liability | 15 | 63.0 | 25.6 | | **Total non-current liabilities** | | 63.0 | 25.6 | | **Total liabilities** | | 1,185.8 | 1,604.8 | | **Total equity and liabilities** | | 17,699.3 | 16,918.2 | Notes 1 to 21 on pages 246 to 259 form an integral part of these financial statements. On behalf of the Board Peter Jackson Chief Executive Officer 14 March 2022 Jonathan Hill Chief Financial Officer Annual Report & Accounts 2021 Platter Entertainment plc 243 Financial Statements ## Company Statement of Changes in Equity For the year ended 31 December 2021 | Attributable to shareholders of the Company | Number of ordinary shares in issue millions # | Issued share capital and share premium €m | Underestimated capital €m | Merger reserve €m | Foreign currency translation reserve €m | Treasury shares €m | Shares held by Employee Benefit Trust €m | Share-based payments reserve €m | Retained earnings €m | Total equity €m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 January 2021 | 277.0 | 2,481.7 | 2.4 | 7,982.9 | 130.0 | (4.2) | (5.8) | 95.2 | 4,631.2 | 15,313.4 | | Profit for the period | — | — | — | — | — | — | — | — | 1,290.4 | 1,290.4 | | Shares issued on exercise of employee share options | 0.6 | 13.2 | — | — | — | — | — | — | — | 13.2 | | Cancellation of treasury shares | (2.0) | (0.2) | — | — | — | 4.2 | — | — | (4.0) | — | | Merger reserve capitalisation | — | 7,982.9 | — | (7,982.9) | — | — | — | — | — | — | | Reduction of capital | — | (10,000.0) | — | — | — | — | — | — | 10,000.0 | — | | Ordinary shares of the Company acquired by the Employee Benefit Trust | — | — | — | — | — | — | (180.7) | — | — | (180.7) | | Equity-wettled transactions – expense recorded in income statement | — | — | — | — | — | — | — | 77.2 | — | 77.2 | | Equity-wettled transactions – vesting | — | — | — | — | — | — | 182.5 | — | (182.5) | — | | Transfer to retained earnings on exercise of share options | — | — | — | — | — | — | — | (49.1) | 49.1 | — | | Total contributions by and distributions to owners of the Company | (1.4) | (2,004.1) | — | (7,982.9) | — | 4.2 | 1.8 | 28.1 | 9,862.6 | (90.3) | | Balance at 31 December 2021 | 275.6 | 477.6 | 2.4 | — | 130.0 | — | (4.0) | 123.3 | 15,784.2 | 16,513.5 | Notes 1 to 21 on pages 246 to 259 form an integral part of these financial statements. 244 Platter Entertainment plc Annual Report & Accounts 2021 ## Company Statement of Changes in Equity For the year ended 31 December 2020 | Attributable to equity holders of the Company | Number of ordinary shares in issue millions # | Issued share capital and share premium £m | Undercontested capital £m | Merger reserve £m | Foreign currency translation reserve £m | Treasury shares £m | Shares held by Employee Benefit Trust £m | Share-based payment reserve £m | Returned earnings £m | Total equity £m | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 January 2020 | 80.3 | 428.3 | 2.4 | — | 130.0 | (4.2) | (6.1) | 44.5 | 5,649.9 | 4,264.8 | | Profit for the period | — | — | — | — | — | — | — | — | 906.9 | 906.9 | | Shares issued on exercise of share options | 1.5 | 54.3 | — | — | — | — | — | — | — | 54.5 | | Shares issued on equity placement (net of issuance costs) (Note 12) | 16.2 | 1,935.2 | — | — | — | — | — | — | (12.4) | 1,920.8 | | Shares issued as consideration for the combination with TSG (Note 12) | 65.3 | 5.1 | — | 6,189.3 | — | — | — | — | — | 6,194.6 | | Shares issued in connection with acquisition of non-controlling interest in TSG Australia (Note 12) | 0.8 | 79.7 | — | — | — | — | — | — | — | 79.7 | | Shares issued in connection with acquisition of non-controlling interest in Far-Dual Group (Note 12) | 11.7 | 1.0 | — | 1,795.4 | — | — | — | — | — | 1,794.4 | | Deal fees on acquisition of Far-Dual | — | — | — | — | — | — | — | — | (9.3) | (9.3) | | Equity-settled transactions – expense recognised | — | — | — | — | — | — | — | 70.2 | — | 70.2 | | Equity-settled transactions – vesting | — | — | — | — | — | — | 0.3 | (0.3) | — | — | | Exercise of share options (Note 12) | — | — | — | — | — | — | — | (77.2) | 77.2 | — | | Dividends to shareholders (Note 13) | 1.3 | 0.1 | — | — | — | — | — | — | (0.1) | — | | Issue of replacement options | — | — | — | — | — | — | — | 58.0 | — | 58.0 | | Total contributions by and distributions to owners of the Company | 96.7 | 2,053.4 | — | 7,982.9 | — | — | 0.3 | 50.7 | 55.4 | 10,142.7 | | Balance at 31 December 2020 | 177.0 | 2,481.7 | 2.4 | 7,982.9 | 130.0 | (4.2) | (5.8) | 95.2 | 4,651.2 | 15,315.4 | Notes 1 to 21 on pages 246 to 259 form an integral part of these financial statements. Financial Statements Annual Report & Accounts 2021 Platter Entertainment plc 243 ## Notes to the Company Financial Statements 1. Basis of preparation and summary of significant accounting policies These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). There have been no material departures from the Standard. The functional and presentation currency of these financial     been taken. The Company is the ultimate parent company of the Flutter Group which includes the Company in its consolidated financial  following disclosures: • cash flow statement and related notes; • comparative period reconciliations for property, plant and equipment and intangible assets; • disclosures in respect of transactions with wholly owned subsidiaries; • disclosures in respect of capital management; • the effects of new but not yet effec • disclosures in respect of the compensation of Key Management Personnel; • disclosures of transactions with a management entity that provides Key Management Personnel services to the Company; and • certain disclosures regarding revenue. As the consolidated financial statements of the Flutter Group include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following d • d payments; •  intangible assets; •  Company; and • Disclosures.   Recent accounting pronouncements  cember 2021: • Phase 2; and • oncessions. The adoption of the above new standards and interpretations did not have a significant impact on the Company’s financial statements. Going concern  Group companies of £206.3m. The Directors have considered the available financial resources for the Company and have obtained confirmations from fellow Group companies that amounts due will not be called upon within 12 months. The Company’s forecasts for 2022 and beyond indicate that it will continue to have significant financial resources for at least a period of 12 months from the date of these financial statements.  of the Company and as a result have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of these financial statements, and therefore it continues to adopt the going concern basis of accounting in preparation of its financial statements. Revenue The services provided by the Company comprise sports betting and business-to-business services as well as services provided to other Group companies. Revenue is stated exclusive of value-added tax (“VAT”). The costs of customer promotions (including free bets) and bonuses are deducted from revenue. Revenue is stated exclusive of VAT. The Company’s activities, with the exception of business-to-business services and services to other Group companies on which fees are earned, are classified as derivative financial instruments. Revenue from betting activities represents the net gain or loss from betting activities in the period plus the gain or loss on the revaluation of open positions at period end, and is stated net of the cost of customer promotions and bonuses incurred in the period. 246 Flutter Entertainment plc Annual Report & Accounts 2021 1. Basis of preparation and summary of significant accounting policies continued These derivatives are recognised initially at fair value and subsequently at fair value through profit or loss, within the income line as hin revenue. Revenue from business-to-business services and services to other Group companies represents fees charged for the services provided in the period. Financial assets  necessary, provisions for impairment.  ubsidiaries. Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing items and restoring the sites on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within the income statement. Depreciation is calculated to write-off the cost less estimated residual value of property, plant and equipment on a straight-line basis over their useful lives, as follows: Land Not depreciated Financial statements Buildings: Freehold 2 Buildings: Leasehold improvements Unexpired term of the lease, except for leases with an initial term of 10 or less years, which are depreciated over the unexpired term of the lease plus the renewal length of the lease if there t of renewal Fixtures and fittings  Computer equipment  Right-of-use asset Shorter of term of lease and useful life of asset, as defined u Assets in the process of construction are stated at cost less impairment losses. Depreciation of these assets begins when the assets are ready for their intended use. The residual value of property, plant and equipment, if significant, is reassessed annually. Intangible assets  useful economic lives on a straight-line basis. Licences comprise the costs of acquiring retail bookmaking licences, the rents incurred in respect of the period prior to each shop opening for business (as the existence of a premises is a pre-requisite for obtaining such licences) and licences for electronic point em software. Computer software and technology includes the costs incurred in acquiring and bringing specific software programs into use. Maintenance costs relating to computer software programs are expensed to the income statement when incurred. The estimated useful economic lives of intangible assets, according to which amortisation is calculated, are as follows: Licences  Computer software and technology  Business combinations Acquisitions of businesses are accounted for using the acquisition method. The value of acquisition is measured at the date of purchase and represents the aggregate of the fair values of assets given, liabilities incurred or assumed and any equity instruments issued by the Group in exchange for control of the acquiree and fair value of previously held equity interests. The identifiable assets and liabilities of the acquiree are recognised at their fair values at the date of acquisition. Annual Report & Accounts 2021 Flutter Entertainment plc 247 ## Notes to the Company Financial Statements continued 1. Basis of preparation and summary of significant accounting policies continued    capitalised. Goodwill is initially recognised as an asset at cost and is thereafter measured at cost less any accumulated impairment losses. Goodwill is not amortised but is tested for impairment annually. Any impairment in the value of goodwill is recognised in the income statement in the period in which it arises. Goodwill is recognised only when control of the acquiree is initially achieved. Following the acquisition of control, no goodwill is recognised on subsequent purchases of equity interests in the acquiree and instead the difference between the cost of such acquisitions and the fair values of the relevant net assets acquired is dealt with through retained earnings.  incurred. Costs relating to the acquisition of non-controlling interests are recognised directly in retained earnings. Amounts payable in respect of deferred contingent consideration are recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in the income statement. Impairment Financial assets (including receivables) – excluding investments in subsidiaries The Company recognises loss allowances for expected credit losses (“ECLs”) on financial assets measured at amortised cost.  of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition which are measured at 12 month ECLs. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort.  credit assessment and including forward-looking information. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or the financial asset is significantly past due. The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk. Measurement of ECLs ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset. Credit-impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is “credit impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit impaired includes the following observable data: • significant financial difficulty of the third party; • a breach of contract such as a default; • the restructuring of a balance by the Company on terms that the Company would not consider otherwise; or • it is probable that the third party will enter bankruptcy or another financial reorganisation. Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. Write-off The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and  could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due. 248 Flutter Entertainment plc Annual Report & Accounts 2021 1. Basis of preparation and summary of significant accounting policies continued Non-financial assets The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date  estimated. For goodwill, and intangible assets that have indefinite useful lives (such as certain licences and brands) or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash  flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash generating unit”, or “CGU”). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.  impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.   amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units)  in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Other non-derivative financial instruments Financial statements Other non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. Financial assets are derecognised if the Company’s contractual right to the cash flows from the financial assets expires or if the Company transfers the financial asset to another party without retaining control or substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Company’s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents are comprised of cash and deposits with an original maturity of three months or less. Subsequent to initial recognition, cash and cash equivalents and trade and other payables are measured at amortised cost. Trade and other receivables are stated at their nominal value as reduced by appropriate allowances for expected credit losses. Derivative financial instruments The Company holds certain derivative financial instruments which are initially recognised at fair value. Sports betting open positions Amounts received from customers on sportsbook events that have not occurred by the year end are derivative financial instruments and have been designated by the Company on initial recognition as financial liabilities at fair value through profit or loss. Borrowings Borrowings are recorded at the fair value of the proceeds received, net of any directly attributable transaction costs. Subsequent to initial recognition, borrowings are stated at amortised cost using the effective interest method. Employee benefits Pensions The Company operates a number of defined contribution schemes under which the Company pays fixed contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions are recognised as an expense in the income statement as the service is received. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in future payments is available. Annual Report & Accounts 2021 Flutter Entertainment plc 249 ## Notes to the Company Financial Statements continued 1. Basis of preparation and summary of significant accounting policies continued Share-based payments The Company operates equity-settled long-term and medium-term incentive plans for selected senior executives and other key management under which they are conditionally awarded shares or options over Company shares which vest upon the achievement  period during which the employees become unconditionally entitled to the shares or options with a corresponding increase in the share-based payment reserve in equity. The fair value of the shares conditionally granted is measured using the market price of the shares at the time of grant or in the case of shares with a non-market condition measured using either a binomial or Monte Carlo valuation model. The Company operates an equity-settled share save scheme (“SAYE”) for employees under which employees acquire options over Company shares at a discounted price subject to the completion of a savings contract. The fair value of share options granted is recognised as an employee benefit cost with a corresponding increase in the share-based payment reserve in equity. The fair value  The fair value of the options granted is measured using a Black-Scholes model, taking into account the terms and conditions, other than non-market performance conditions, upon which the options were granted. The amount recognised as an expense is adjusted  conditions. Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises in its individual financial statements an increase in the cost of investment in its subsidiaries (unless reimbursed) equivalent to the equity-settled share-based payment charge recognised in its consolidated financial statements with the corresponding credit being recognised directly in equity. Amounts subsequently recharged to the subsidiary or reimbursed by the subsidiary are recognised as a reduction in the cost of investment in subsidiary. When the cost of investment in subsidiary has been reduced to nil, the excess is recognised as a dividend/creditor. Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company as a lessee The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement of the lease, and any initial costs. They are then subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the underlying asset,  The lease liability is initially measured at the present value of the future lease payments, discounted by using the interest rate implicit  date. The Company subsequently measures the lease liability by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made.  statement. Lease payments included in the measurement of the lease liability include: • fixed lease payments (including in-substance fixed payments), less any lease incentives; • variable lease payments that depend on an index or rate initially measured using the index or rate at the commencement date; • amount expected to be payable by the lessee under residual value guarantees; • the exercise price of purchase options or the term of extension options if the lessee is reasonably certain to exercise the options; and • payments of penalties for terminating the lease if the lease includes an option to terminate the lease. The Company remeasures the lease liability and makes a corresponding adjustment to the related right-of-use asset whenever: • the lease term has changed or there is a change in the assessment of exercise of a purchase or extension option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; • the lease payments change due to changes in an index or rate or change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or • a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability or right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers such payments occurs.  arrangement instead of separating the non-lease components. The Company has applied this practical expedient. For short-term leases (lease term of 12 months or less) and leases of low-value assets, such as personal computers and office furniture, the Company has opted to recognise a lease expense on a straight-line basis as permitted 250 Flutter Entertainment plc Annual Report & Accounts 2021 1. Basis of preparation and summary of significant accounting policies continued The Company as a lessor The Company has a small number of properties that are sublet. At inception of a contract, the Company determines whether each lease is a finance lease or an operating lease, by reference to the   the lease. When the Company is an intermediate lessor the sub leases are classified with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. Under operating leases, the Company recognises the income generated by the lease on an accrual basis over the life of the contract. Income tax  the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in other comprehensive income or directly in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of the previous year. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to apply to temporary differences when they reverse, based on laws that have been enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset to the extent that they relate to income taxes levied by the same taxation authority. Financial statements Foreign currency transactions Transactions in foreign currencies are translated at the relevant foreign exchange rate ruling at the date of the transaction. Non-monetary assets that are carried at historical cost are not subsequently retranslated. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into GBP at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Repurchase of share capital (treasury shares) When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity. The repurchased shares are classified as treasury shares and are presented as a deduction from total equity. Transaction costs relating to the purchase by the Company of its own shares are recognised directly in retained earnings. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is recognised in share premium. Where the Company purchases its own shares and subsequently cancels those shares, the cost of the shares cancelled is written off directly to retained earnings. Dividends Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Company’s shareholders, or, rs and paid. Critical accounting estimates and judgements  assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.  accounting policies, other than those involving estimation (as described below), that have a significant effect on the amounts recognised in the financial statements.  carrying amount of assets and liabilities within the next financial year is set out below. Measurement of the recoverable amount of investments in subsidiaries The Group reviews the carrying value of investments in subsidiaries for impairment annually (or more frequently if there are indications that the value of investments may be impaired) by comparing the carrying values with their recoverable amounts (being the higher of value-in-use and fair value less costs to sell). The impairment review is performed on a “value-in-use” basis, which requires estimation of future net operating cash flows, the time period over which they will occur, an appropriate discount rate and an appropriate growth rate. Certain of these estimates and assumptions are subjective in nature. The Company also considers the overall market capitalisation of the Group and whether it is in excess of the carrying value of investments for this review. Annual Report & Accounts 2021 Flutter Entertainment plc 251 ## Notes to the Company Financial Statements continued ### 2. Employee expenses and numbers | | 2021 £m | 2020 £m | | --- | --- | --- | | Wages and salaries | 30.0 | 31.9 | | Social security costs | 3.3 | 4.1 | | Defined contribution pension and life assurance costs | 0.3 | 0.2 | | Share-based payment expense (see below) | 0.2 | 4.7 | | Other staff costs | 1.2 | 1.0 | | **Total employee costs** | **35.0** | **41.9** | | The average number of persons employed by the Company (including Executive Directors), all of whom were involved in the provision of sports betting and gaming services, during the year was: | | | | | **1,311** | **1,398** | Details of the remuneration of Directors are set out in the Directors' Remuneration Report on pages 136 to 154. #### Summary of share-based payments expense The share-based payments expense in the profit and loss account in respect of the Company's share schemes is comprised as follows: | | 2021 £m | 2020 £m | | --- | --- | --- | | Flutter Entertainment plc Long Term Incentive Plan ("LTIP") and Restricted Share Plan | — | 4.4 | | The Flutter Entertainment plc Sharewave Scheme | 0.2 | 0.3 | | **Total** | **0.2** | **4.7** | ### 3. Financial income and expense | | 2021 £m | 2020 £m | | --- | --- | --- | | **Recognised in profit or loss:** | | | | Financial expense | | | | On financial liabilities at amortised cost: | | | | Lease interest | 1.4 | 1.0 | | Interest on third party borrowings, bank guarantees and bank facilities | — | 2.5 | | **Total** | **1.4** | **3.5** | ### 4. Statutory information | | 2021 £m | 2020 £m | | --- | --- | --- | | Auditor's remuneration for audit and other assurance services | 1.8 | 2.3 | | Depreciation of property, plant and equipment | 17.7 | 17.6 | | Amortisation of intangible assets | 0.1 | 0.3 | | Foreign currency exchange loss – monetary items | 6.1 | 8.1 | | Operating lease income (representing sub-lease income) | — | (0.1) | The auditor's remuneration of €1.8m (2020: €2.3m) relates to the audit of Group and subsidiary financial statements and other non-audit services. Further details on auditor's remuneration is disclosed in Note 9 to the consolidated financial statements. #### Auditor remuneration to Company external auditor (KPMG Ireland) In accordance with the requirements of Companies Act 2014, reference s322, the auditor's remuneration figures presented below represent fees paid to KPMG Ireland only and are exclusive of value-added tax. Audit relates to the audit of the Company financial statements only. Audit fees borne by the Company in relation to the audit by KPMG Ireland of the Group and subsidiary companies are classified as other assurance services. | | 2021 £m | 2020 £m | | --- | --- | --- | | Audit | 0.1 | 0.1 | | Other assurance services | 1.6 | 1.7 | | Other non-audit services | 0.1 | 0.5 | | **Total** | **1.8** | **2.3** | Other assurance services includes €1.3m (2020: €1.6m) in respect of fees incurred by the Company for the audit of the Group financial statements and €0.1m (2020: €0.1m) in respect of fees relating to the audit of subsidiary companies which have been borne by the Company. 252 Flutter Entertainment plc Annual Report & Accounts 2021 ## 5. Property, plant and equipment | | Land, buildings and leasehold improvements (m) | Fixtures and fittings (m) | Computer equipment (m) | Right-of-use assets^{1} (m) | Total (m) | | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | Balance at 1 January 2021 | 38.5 | 96.3 | 15.5 | 52.0 | 202.5 | | Additions | — | 7.3 | 3.0 | 38.9 | 49.2 | | Disposals | (0.2) | (0.6) | (0.1) | — | (0.9) | | **Balance at 31 December 2021** | **38.3** | **103.2** | **18.4** | **90.9** | **250.8** | | **Depreciation** | | | | | | | Balance at 1 January 2021 | 27.2 | 72.2 | 13.0 | 16.7 | 129.1 | | Depreciation charges | 1.3 | 6.1 | 1.3 | 9.0 | 17.7 | | Disposals | (0.1) | (0.3) | (0.1) | — | (0.7) | | **Balance at 31 December 2021** | **28.4** | **77.8** | **14.2** | **25.7** | **146.1** | | **Net book value** | | | | | | | At 31 December 2020 | 11.3 | 24.3 | 2.5 | 35.3 | 73.4 | | **At 31 December 2021** | **9.9** | **25.4** | **4.2** | **65.2** | **104.7** | 1. Note that materiality at which balance relates to buildings and leasehold improvements. The net book value of land, buildings and leasehold improvements at 31 December 2021 includes £6.6m (2020: £7.8m) in respect of leasehold improvements. The Directors do not consider the remaining useful lives of property, plant and equipment to be materially different from the period over which the assets are being depreciated. ## 6. Intangible assets The movements during the prior year and current year in respect of intangible assets, which comprise licences and computer software, were as follows: | | Licences (m) | Computer software (m) | Total (m) | | --- | --- | --- | --- | | **Cost** | | | | | Balance at 1 January 2021 | 1.4 | 4.8 | 6.2 | | Additions | — | 0.2 | 0.2 | | **Balance at 31 December 2021** | **1.4** | **5.0** | **6.4** | | **Amortisation** | | | | | Balance at 1 January 2021 | 1.4 | 4.5 | 5.9 | | Amortisation charge | — | 0.1 | 0.1 | | **Balance at 31 December 2021** | **1.4** | **4.6** | **6.0** | | **Net book value** | | | | | Balance at 31 December 2020 | — | 0.3 | 0.3 | | **Balance at 31 December 2021** | **—** | **0.4** | **0.4** | ## 7. Goodwill | | Goodwill (m) | | --- | --- | | Balance at 31 December 2020 | 18.0 | | **Balance at 31 December 2021** | **18.0** | The goodwill balance as at 31 December 2021 arose from the assets acquired as part of the amalgamation of three bookmaking businesses to form Paddy Power plc in 1988 and subsequent acquisitions of licensed book making shops in Ireland. The goodwill balance as at 31 December 2021 is attributable to the Irish Retail cash generating unit, being the lowest level of asset for which there are separately identifiable cash flows (see Note 14 to the consolidated financial statements). The accumulated amortisation balance at 31 December 2021 is £4.1m (2020: £4.1m). Under IFRS, goodwill is not amortised but is instead tested for impairment annually. The most recent test for impairment was performed at 31 December 2021 and is detailed in Note 14 to the consolidated financial statements within the Irish Retail cash generating unit. Annual Report & Accounts 2021 Platter Entertainment plc 233 Financial Statements Notes to the Company Financial Statements continued # 8. Financial assets | | Unlisted investments in subsidiary companies £m | Capital contributions £m | Total £m | | --- | --- | --- | --- | | Balance at 1 January 2020 | 4,889.5 | 140.1 | 5,029.6 | | Additional investments in subsidiaries | 11,319.6 | — | 11,319.6 | | Share-based payments | — | 60.8 | 60.8 | | **Balance at 31 December 2020** | **16,409.1** | **200.9** | **16,610.0** | | Additional investments in subsidiaries | 1,922.0 | — | 1,922.0 | | Impairment | (1,750.0) | — | (1,750.0) | | Share-based payments | — | 72.6 | 72.6 | | Amounts received in respect of share-based payments | — | (172.9) | (172.9) | | **Balance at 31 December 2021** | **16,581.1** | **100.6** | **16,681.7** | In the opinion of the Directors, the value to the Company of the unlisted investments in and capital contributions to subsidiary companies at 31 December 2021 is not less than the carrying amount of £16,681.7m (2020: £16,610.0m). The Company's principal subsidiaries are listed in Note 32 to the consolidated financial statements. The increase in investments in subsidiary companies in 2021 is due to various internal restructuring of subsidiaries. The increase in investments in subsidiary companies in 2020 is due to the following: - €6.3bn as a result of the Combination with TSG on 5 May 2020 described in more detail in Note 15 of the consolidated financial statements; - €2.0bn due to the acquisition of a further 37.2% of FanDuel on 30 December 2020 described in more detail in Note 15 of the consolidated financial statements; and - €2.3bn due to various internal restructuring of subsidiaries following the TSG Combination. An impairment charge has arisen as a result of various subsidiary restructuring activities. The recoverable amount of the impaired subsidiary was estimated based on value in use calculations using approved cash flow projections for a five-year period. A pre-tax discount rate of 9% and a terminal growth rate of 2.8% have been applied to the projected cash flows. Capital contributions represent amounts included in the Company's share-based payment reserve relating to share-based payment awards made to employees of certain of the Company's subsidiary undertakings. Amounts received in respect of share-based payments relates to amounts from subsidiaries due in respect of share payments. # 9. Trade and other receivables # Non-current assets | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other receivables** | | | | Amounts paid in respect of legacy Greek tax assessments | — | 13.5 | # Amounts paid in respect of legacy Greek tax assessments In 2019, the Group was issued with a Greek tax assessment for financial years 2012, 2013 and 2014, relating to paddy power.com's Greek interim licence. This assessment concluded that the Group is liable to pay €15.0m in taxes including penalties and interest. This is substantially higher (by multiples) than the total cumulative revenues ever generated by paddy power.com in Greece. Pending the outcome of its appeal, in 2019 the Group paid the total Greek tax assessment (including the penalties and interest) of €15.0m. In June 2021, the Athens Administrative Court of Appeal dismissed the Group's judicial recourses. While the Group has further appealed to the Greek Supreme Administrative Court, based on the nature of the decision received and the points of law which can be appealed, and in line with legal and tax advice it has received, it has decided to recognise the amount of the Greek assessment, of €15.0m (£12.8m) as an expense in the income statement during the year ended 31 December 2021. No notifications have as yet been received for later years and so no provision has been made for potential further assessments. # Current assets | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other receivables** | | | | Prepayments | 8.9 | 6.4 | | Amounts owed by fellow Group companies | 872.2 | 184.5 | | **Total** | **881.1** | **190.9** | 254 Platter Entertainment plc Annual Report & Accounts 2021 ## 10. Cash and cash equivalents Cash and cash equivalents are analysed by currency as follows: | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | GBP | 3.4 | 0.1 | | EUR | 1.8 | 8.1 | | USD | 1.6 | 0.1 | | Other | 0.7 | — | | Total | 7.5 | 8.5 | There was no cash on deposit at 31 December 2021 and 31 December 2020. ## 11. Deferred tax assets and liabilities Deferred tax is attributable to the following: | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | Property, plant and equipment | 0.2 | 0.1 | Movement in temporary differences during the year: | | 2021 £m | 2020 £m | | --- | --- | --- | | Balance at 1 January | 0.1 | 0.2 | | Recognised in income | 0.1 | (0.1) | | Balance at 31 December | 0.2 | 0.1 | All the above deferred tax balances are in respect of Irish corporation tax. ## 12. Share capital and reserves The total authorised share capital of the Company comprises 300,000,000 ordinary shares of €0.09 each (2020: 300,000,000 ordinary shares of €0.09 each). All issued share capital is fully paid. The holders of ordinary shares are entitled to vote at general meetings of the Company on a one vote per share held basis. Ordinary shareholders are also entitled to receive dividends as may be declared by the Company from time to time. Transactions during the year ended 31 December 2021: - a total of 558,275 ordinary shares were issued as a result of the exercise of employee share options, giving rise to share capital and share premium of £13.2m; - on 25 August 2021, the Company announced it had cancelled 1,965,600 ordinary shares of €0.09 each previously held by it and its subsidiaries as treasury shares; and - in accordance with the authority conferred by shareholders pursuant to resolution 10 at Flutter's Annual General Meeting held on Thursday, 29 April 2021, the Board on 10 September 2021 confirmed that it had completed the capitalisation of £7,982.9m, being the entirety of the amounts standing to the credit of Flutter's merger reserve account at 31 December 2020. In accordance with the provisions of sections 84 and 85 of the Companies Act 2014 and the authority conferred by resolution 11 as approved by shareholders at the AGM, the Board applied to the Irish High Court to reduce the Company's capital by the amount of £10,000m standing to the credit of Flutter's share premium account following completion of the capitalisation. On 3 November 2021, the Irish High Court approved the reorganisation of the Company's capital by the reduction of £10,000m standing to the credit of Flutter's share premium account, and the transfer of such sum to the Company's distributable reserves account. This resulted in the transfer of £10,000m from share premium to retained earnings. Transactions during the year ended 31 December 2020: - in May 2020, 1,312,260 new ordinary shares were issued as consideration for the 2019 final dividend; - on 5 May 2020, the Company issued a total of 65,316,588 ordinary shares in exchange for 289,909,400 shares of TSG in respect of the all-share Combination with TSG resulting in Flutter Entertainment plc shareholders owning 14.64% and the TSG shareholders owning 45.36% of Flutter, on a fully diluted basis (excluding any out of the money options). Under the terms of the Combination, holders of TSG shares received 0.2253 ordinary shares with nominal value of €0.09 each in the Company ("ordinary shares") in exchange for each outstanding TSG share (the "Exchange Ratio"); Post Combination, the Company is the ultimate parent of The Stars Group Inc. This gave rise to a merger reserve under section 72 of the Companies Act 2014 of £6,189.5m (see also Note 15 to the Consolidated Financial Statements); - on 13 May 2020, 819,230 new Flutter ordinary shares were issued as consideration for the acquisition of the remaining 20% interest of TSG Australia Pty Ltd by Flutter. The value of shares issued amounted to AUD$151.4m (£79.7m) (see also Note 15 to the Consolidated Financial Statements). Annual Report & Accounts 2021 Flutter Entertainment plc 233 Financial Statements Notes to the Company Financial Statements continued # 12. Share capital and reserves continued - on 29 May 2020, the Company issued 8,045,995 new ordinary shares at a price of 10,100 pence per share in respect of an equity placement announced on 28 May 2020, raising gross proceeds of £812.6m giving rise to share capital of £0.7m and a share premium of £811.9m. The proceeds raised net of issuance costs amounted to £806.3m with the issuance costs of £6.3m recognised in retained earnings. The Placing Shares represent approximately 5.5% of the Company's issued share capital immediately prior to the Placing (excluding treasury shares). The Placing Price represents a discount of approximately 4.7% to the closing price on 28 May 2020. - on 4 December 2020, the Company issued a total of 8,004,503 ordinary shares at a price of 14,000 pence per share in respect of an equity placement announced on 3 December 2020, raising proceeds of £1,120.6m giving rise to share capital of £0.7m and a share premium of £1,119.9m. The proceeds raised net of issuance costs amounted to £1,114.6m with the issuance costs of £6.1m recognised in retained earnings. The Placing Shares represent approximately 5.2% of the Company's issued share capital immediately prior to the Placing (excluding treasury shares). The Placing Price represents a discount of approximately 2.1% to the closing price on 3 December 2020. - on 30 December 2020, 11,747,205 new Flutter ordinary shares were issued as partial consideration for the acquisition of an additional 37.2% of the outstanding share of FanDuel, bringing the Company's indirect holding in FanDuel to 95%, up from the previous 57.8%. The value of shares issue amounted to £1.0m in share capital and gives rise to £1,793.4m of a merger reserve under section 72 of the Companies Act 2014 (see also Note 15 to the Consolidated Financial Statements) and - a total of 1,492,430 ordinary shares were issued as a result of the exercise of employee share options, giving rise to share capital and share premium of £34.3m. # Equity reserves Equity reserves at 31 December 2021 and 31 December 2020 include the following classes of reserves: # Undenominated capital Undenominated capital of £2.2m (2020: £2.2m) which relates to the nominal value of shares in the Company acquired by the Company and subsequently cancelled, and the nominal value of shares in the Company cancelled as part of the return of capital to shareholders, and an amount of £0.2m (2020: £0.2m) which arose on the redemomination of the ordinary share capital of the Company at the time of conversion from Irish pounds to euro. # Merger reserve At 31 December 2020, the Company held a merger reserve under section 72 of the Companies Act 2014 of £7,982.9m which represented the premium over the par value of shares issued as consideration for the Combination with TSG and as partial consideration for the acquisition of a further 37.2% of FanDuel Group. In accordance with the authority conferred by shareholders pursuant to resolution 10 at Flutter's Annual General Meeting held on Thursday, 29 April 2021, the Board on 10 September 2021 confirmed that it had completed the capitalisation of £7,982.9m, being the entirety of the amounts standing to the credit of Flutter's merger reserve account at 31 December 2020. This resulted in the transfer of £7,982.9m from merger reserve to share premium. # Foreign exchange translation reserve The foreign exchange translation reserve of £130.0m arose as a result of the Company changing its functional currency and presentation currency from euro to pound sterling with effect from 1 January 2018. # Treasury shares At 31 December 2020, the Company held a total of 225,000 ordinary shares in treasury with a further 1,740,600 shares held by the Company's subsidiaries. All rights (including voting rights and the right to receive dividends) in the shares held in treasury were suspended until such time as the shares were reissued. The cost of treasury shares held by the Company at 31 December 2020 was £4.2m. On 25 August 2021, the Company announced it cancelled at its 225,000 ordinary shares of £0.09 each previously held by it as treasury shares which resulted in the transfer of £4.2m from treasury shares to retained earnings and share capital. # Share-based payments reserve In 2021, an amount of £49.1m (2020: £77.2m) in respect of share options exercised during the year was transferred from the share-based payment reserve to retained earnings. # 13. Dividends paid on ordinary shares Due to the impact of Covid-19, the Board paid the 2019 final dividend in May 2020 through the issuance of ordinary shares rather than by cash. This resulted in the Company issuing 1,312,260 Flutter ordinary shares of £0.09 each. The Board's capital management policy for the Group remains to target a leverage ratio of 1.0x to 2.0x over the medium term. The Board will continue to monitor the financial performance of the Group, it's anticipated deleveraging and balance sheet position, and will decide when it is an appropriate time to reinstate a dividend. As a result, the Board did not recommend an interim dividend for 2021 (2020: nil) or a final dividend for the year ended 31 December 2021 (2020: nil). 256 Flutter Entertainment plc Annual Report & Accounts 2021 #### 14. Trade and other payables and derivative financial liabilities | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | **Trade and other payables** | | | | Trade payables | 2.5 | 0.6 | | PAFE and social security | 1.1 | 0.9 | | Value-added tax | 4.4 | 1.1 | | Betting duty | 3.5 | 2.2 | | Amounts owed to fellow Group companies | 1,078.5 | 1,533.3 | | Accruals and other liabilities | 24.4 | 28.6 | | **Total** | **1,114.4** | **1,566.7** | | **Derivative financial liabilities** | | | | Sports betting open positions (Note 18) | 2.6 | 3.7 | #### 15. Leases | | 31 December 2021 £m | 31 December 2020 £m | | --- | --- | --- | | Current portion of lease liabilities | 5.8 | 8.8 | | Non-current portion of lease liabilities | 63.0 | 25.6 | See Note 21 to the Consolidated Financial Statements for further information on lease liabilities. #### 16. Financial risk management The Company's risk exposures, and what its objectives, policies and processes are for managing those risks, are set out in Note 27 to the Group consolidated financial statements. #### 17. Credit risk ##### Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31 December was: | | Carrying amount | | | --- | --- | --- | | | 31 December 2021 £m | 31 December 2020 £m | | Cash and cash equivalents | 7.5 | 8.3 | | Amounts owed by fellow Group companies | 872.2 | 184.5 | | **Total** | **879.7** | **192.8** | #### 18. Fair values ##### Fair values versus carrying amounts The following are the fair values and carrying amounts of financial assets and liabilities carried at amortised cost in the statement of financial position: | | 31 December 2021 | | 31 December 2020 | | | --- | --- | --- | --- | --- | | | Carrying amount £m | Fair value £m | Carrying amount £m | Fair value £m | | **Assets** | | | | | | Amounts owed by fellow Group companies | 872.2 | 872.2 | 184.5 | 184.5 | | Cash and cash equivalents | 7.5 | 7.5 | 8.3 | 8.3 | | **Total** | **879.7** | **879.7** | **192.8** | **192.8** | | **Liabilities** | | | | | | Trade and other payables | (1,114.4) | (1,114.4) | (1,566.7) | (1,566.7) | | **Net** | **(234.7)** | **(234.7)** | **(1,373.9)** | **(1,373.9)** | Annual Report & Accounts 2021 Platter Entertainment plc 237 Financial Statements Notes to the Company Financial Statements continued 18. Fair values continued Fair value hierarchy Financial instruments at 31 December which are carried at fair value are analysed by the valuation method below. The different levels have been defined as follows: - Level 1: quoted prices (unaadjusted) 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 (i.e. as priced or indirectly (i.e. derived from prices) and - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). | | 31 December 2021 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | Derivative financial liabilities | — | — | (2.6) | (2.6) | | Total | — | — | (2.6) | (2.6) | | | 31 December 2020 | | | | | --- | --- | --- | --- | --- | | | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | | Derivative financial liabilities | — | — | (3.7) | (3.7) | | Total | — | — | (3.7) | (3.7) | Basis for determining fair values The following are the significant methods and assumptions used to estimate the fair values of the financial instruments above: Financial instruments carried at amortised cost Cash and cash equivalents (Level 2) The fair value of cash and cash equivalents is based on the nominal value of the relevant cash and bank deposit balances, as all are held at variable interest rates. Trade and other payables (Level 2) The fair value of trade and other payables is estimated using the present value of future cash flows discounted at the market rate of interest at the reporting date. Amounts due within three months are not discounted. Financial instruments carried at fair value Derivative financial instruments (Level 3) Derivative financial instruments comprise sports betting open positions. The fair value of open sports bets at the year end has been calculated using the latest available prices on relevant sporting events. Sensitivity analysis in respect of Level 3 financial instruments carried at fair value The following sensitivity analysis has been performed for the Level 3 financial liabilities carried at fair value at 31 December 2021 and 2020: Sports betting open positions The fair value of sports betting open positions is primarily based on expectations as to the results of sporting and other events on which bets are placed. Changes in those expectations and ultimately the actual results when the events occur will result in changes in fair value. There are no reasonably probable changes to assumptions and inputs that would lead to material changes in the fair value methodology although final value will be determined by future sporting results. Movements in the year in respect of Level 3 financial instruments carried at fair value The movements in respect of the financial assets and liabilities carried at fair value in the year to 31 December are as follows: | | Sports betting open positions £m | | --- | --- | | Balance at 1 January 2020 | (4.6) | | Recognised in the income statement | 75.1 | | Settlements | (74.2) | | Balance at 31 December 2020 | (3.7) | | Recognised in the income statement | 56.8 | | Settlements | (55.7) | | Balance at 31 December 2021 | (2.6) | 258 Platter Entertainment plc Annual Report & Accounts 2021 # 19. Pension arrangements The Company operates defined contribution pension schemes for certain employees. The assets of the schemes are held separately from those of the Company in independently administered funds. Pension costs for the year were £0.2m (2020: £0.2m) and the amount due to the schemes at 31 December 2021 amounted to £0.1m (2020: £0.1m). # 20. Contingent liabilities # Guarantees The Company has uncommitted working capital overdraft facilities of £3.5m (2020: £3.5m) with Allied Irish Banks p.l.c. These facilities are secured by cross-guarantees within the Group. The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group. The Company considers these to be insurance arrangements and accounts for them as such. The Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. Borrowings under the TLA Agreement and Syndicated Facility Agreement are guaranteed by the Company and certain of its operating subsidiaries. See Note 22 to the Consolidated Financial Statements for further detail. # Capital commitments There was no capital expenditure contracted for at 31 December 2021 but not yet incurred (31 December 2020: £nil). # Section 357 guarantees Pursuant to the provisions of section 357 of the Companies Act 2014, the Company has guaranteed the liabilities and commitments of its wholly owned subsidiary undertakings in the Republic of Ireland for the financial year ended 31 December 2021 and, as a result, each subsidiary undertakings is exempted from the filing provisions of the Companies Act 2014. # 21. Approval of financial statements The financial statements of the Company for the year ended 31 December 2021 were approved by the Board of Directors on 14 March 2022. Financial Statements Annual Report & Accounts 2021 Platter Entertainment plc 239 ## Five year financial summary (unaudited) Financial information for the Group for the five years ended 31 December is set out below: | | Statutory 2021 £m | Statutory 2020 £m | Statutory 2019 £m | Statutory 2018 £m | Statutory 2017 £m | | --- | --- | --- | --- | --- | --- | | Revenue | 6,036.2 | 4,413.9 | 2,140.0 | 1,873.4 | 1,745.4 | | EBITDA | 723.3 | 771.6 | 407.8 | 423.0 | 465.8 | | Operating (loss)/profit | (62.5) | 103.5 | 149.9 | 204.6 | 250.0 | | (Loss)/profit before tax | (288.4) | 1.1 | 135.7 | 218.7 | 246.6 | | (Loss)/profit for the year | (411.9) | (54.7) | 111.9 | 180.7 | 217.7 | 260 Platter Entertainment plc Annual Report & Accounts 2021 ## ESG supplementary information Global Reporting Initiative (GRI) Our carbon emissions and energy equivalents for this reporting As part of formalising our ESG reporting, in FY2021 we have period are calculated using government issued emission factors. begun to align our internal reporting to the GRI standards. We use the most appropriate emission factors from consistent GRI provides a comprehensive reporting framework and our sources applied across our reporting year (2021). Our two alignment to it is a focus area for us. We will report under this emission factor sources are: standard in FY2022. Emission factor selection We have begun by carrying out a materiality assessment allowing Source Emission factors us to identify our key material issues which will serve as the IEA Emission factors, 2021 Electricity (excluding UK) foundation for our GRI reporting. Moreover, our new central Sustainability team is leading our first global sustainability UK Government GHG Stationary and mobile fuels strategy, Our Positive Impact Plan, which will guide us in ensuring conversion factors for UK electricity | that we make a positive impact on our customers, colleagues, | : BEIS, 2021 | | | --- | --- | --- | | and the communities in which we operate. | | Natural gas | | For additional information regarding our sustainability | | Hotel stays | our website Business travel www.flutter.com/contact-us We report GHG data as location-based that uses a geographical Methodologies and boundary emission factor. We have limited examples of applied ‘bespoke’ Our carbon and energy reporting approach is prepared in emission factors that have been developed and provided by the accordance with the following standards and guidelines: supplier. These bespoke emissions are limited to travel data. • Greenhouse Gas Protocol (“GHG Protocol”) for Corporate Emission sources by scope Accounting and Reporting Standard; Scope Source • UK Government Streamlined Energy and Reporting (SECR) Guidelines Scope 1 Heating fuels: natural gas Financial statements Scope 2 Electricity: for use in buildings Flutter has an operational control boundary covering 100% of our business activities with a materiality reporting Scope 3 Staff travel and stay: air, rail and hotel stays threshold of 95%. Electricity transmission and distribution The term “carbon emissions” or “emissions” in this report refers to GHG emissions as required for a GHG inventory. This includes carbon dioxide alongside six other GHGs calculated in mass lent (CO e). 2 Our GHG inventory is reported in four categories referred to as “scopes”, listing our direct and indirect carbon emissions HG Protocol: • Scope 1: Direct emissions from heating fuel • Scope 2: Indirect emissions from the generation of electricity purchased for buildings • Scope 3: Other indirect emissions inclusive of electricity transmission and distribution (T&D), business travel and stay We no longer include Well-To-Tank (WTT) emission calculation within our reporting as this is not material for our company, nor is it commonly reported against within our peer group thus not allowing like-for-like emission calculations and comparison. Annual Report & Accounts 2021 Flutter Entertainment plc 261 ESG supplementary information continued # Exclusions and estimations (carbon and energy) Our activities and emission sources that comprise our total carbon and energy footprints are materially correct. Those sections of our business which have been excluded from the analysis are listed below: # Emission source exclusions and estimations | Type | Unit basis | Other estimates | | --- | --- | --- | | All | Fuel – Diesel | Fuel is used for back-up generators within our buildings. Our back-up generators have been reported to have not been used within the reporting year and therefore not required to have needed refueling. Diesel fuel used within business travel represents less than 0.5% of our footprint IFY2020, we have not been able to gather this data in FY21 and will be reported against in FY2022 in line with our Restatement Policy. | | All | Fuel – Petrol | Petrol fuel used within business travel represents less than 0.5% of our footprint IFY2020, we have not been able to gather this data in FY2021 and will be reported against in FY2022 in line with our Restatement Policy. | | All | Fugitive emissions (refrigerants) | Our buildings are predominantly leased and have also been largely closed due to COVID restrictions. Fugitive emissions represent less than 0.5% of our total footprint in FY2020. We have not been able to gather this data in FY2021 and will be reported against in FY2022 in line with our Restatement Policy. | | All | All sources | 14 offices have been excluded from reporting (2 of which are under construction) with the remaining 12 sites totalling 2.3% of total office floor space. | | All | All sources | We have not been able to complete the data gathering process to validate cloud data in FY2021, this process will be completed and reported against in FY2022 in line with our Restatement Policy. | | All | Taxi | Taxi data has been estimated this year and represented less than 0.5% of our total footprint in FY2020. We have not been able to gather this data in FY2021 and will be reported against in FY2022 in line with our Restatement Policy. | | All | Waste | We have not been able to complete the data gathering process to validate waste data in FY2021, this process will be completed and reported against in FY2022 in line with our Restatement Policy. | | All | Water | We have not been able to complete the data gathering process to validate waste data in FY2021, this process will be completed and reported against in FY2022 in line with our Restatement Policy. | | International United States | All | We have not been able to complete the data gathering process to validate International or United States retail data in FY2021, this process will be completed and reported against in FY2022 in line with our Restatement Policy. | # Restatements Flutter currently uses a rolling base year for when we report our carbon footprint. If significant changes occur which can materially reduce or increase our emissions by 5%, we will adjust our emissions inventory, including the base year in order to accurately track progress in reducing our emissions. Material changes include: - Changes of base period (baseline) or length of the reporting period - Changes in the measurement methodologies or in the definitions used - Structural changes which include the nature of our business, disposals, mergers, or acquisitions - Errors made in previous reporting periods 262 Flutter Entertainment plc Annual Report & Accounts 2021 How we have addressed the TCFD Recommendations The following table summarises the elements of the TCFD framework, the work we have completed to date in relation each recommendation, and future actions we are committed to. TCFD Recommendation Relevant section of Annual Report Page Status Governance | Describe the Board’s | Sustainability – Environment – | 60 –61 | Actions undertaken: | | --- | --- | --- | --- | | oversight of climate-related | Climate change | | Board received an update in December 2021 | | risks and opp | | | on the TCFD framework and an outline of | | | Sustainability – Governing | 66–67 | | the relevance of climate-related risks and stainability opportunities to the business. Governance – Chair’s introduction 102103 Board’s Risk Committee became the Risk Governance – Statement of 104–115 and Sustainability Committee, with Terms of Corporate Governance Reference revised in February 2022 to include amongst its primary roles the overseeing of Risk and Sustainability 132–135 climate-related issues. Committee report Formation of an Executive Sustainability Sustainability – Environment – Describe management’s role 60 –61 Steering Committee, comprising members Climate change in assessing and managing of the Executive management team and 66–67 climate related risks and Sustainability – Governing chaired by the Chief Legal Officer and Group opp stainability Commercial Director. Creation of the Sustainability working group, which is represented by Group functional and divisional management. The Sustainability working group Financial statements meets monthly and reports into the Committee. Next steps: Specific climate related updates/training for the Board and the Board Committees. The Risk and Sustainability Committee will receive regular updates from the Executive Sustainability Steering Committee of sustainability matters including environment and climate change. Strategy | Describe the climate-related | Sustainability – Environment – | 61–62 | Actions undertaken: | | --- | --- | --- | --- | | risks and opportunities the | Climate change | | Identified climate change as a material topic as | | organization has identified | | | part of our sustainability strategy development. | over the short, medium Identified climate change, with the potential to and have an impact on Flutter’s physical footprint, as | Describe the impact of climate | Sustainability – Our Approach to | 47 | a top level longer-term emerging risk within the | | --- | --- | --- | --- | | risks and opportunities on | Sustainability – Developing our | | horizon scanning process completed as part of | | the organization’s business, | materiality matrix | | the group standard risk management process. | strategy and Next steps: Describe the resilience of During 2022 complete a top down and granular | the | organisation’s strategy | | | | | | --- | --- | --- | --- | --- | --- | | | | | Understanding and managing | 84–91 | bottom-up review focusing specifically on | | taking into | | consideration | | | | | | | | ncipal risks | | climate change risks and opportunities. | different climate related scenarios, including a 2ºC or Complete scenario analysis on the most material lower climate change risk and opportunities identified and integrate the results into our strategic considerations where relevant. While further work in this area is ongoing, we have disclosed in line mmendations.  developed an action plan in relation to this area in order to improve ure periods. Annual Report & Accounts 2021 Flutter Entertainment plc 263 ## ESG supplementary information continued TCFD Recommendation Relevant section of Annual Report Page Status Risk management | Describe the organisation’s | Sustainability – Environment – | 62 | Actions undertaken: | | --- | --- | --- | --- | | processes for identifying | Climate change | | Identified climate change as a top level longer- | | and assessing climate- | | | term emerging risk within the horizon scanning | | | Understanding and managing our | 84–91 | | | rel | | | process completed as part of the group | principal risks standard risk management process. Describe the organisation’s processes for managing Climate change is also a component within climate-rela other categories identified as part of the horizon scanning processes such as Regulatory and Describe how processes for Tax & Legal. identifying, assessing and managing climate-related Next steps: risks are integrated into the Provide division heads with training on climate organisation’s overall risk related issues.  During 2022 complete a top down and granular bottom-up review focusing specifically on climate change risks and opportunities. Metrics and targets | Disclose the metrics used | Sustainability – Environment – | 62–63 | Actions undertaken: | | --- | --- | --- | --- | | by the organisation to | Climate change | | In September 2021, committed to align our | | assess climate-related risk | | | climate mitigation targets to the Science Based | | and opportunities in line | | | Targets initiative (SBTi). | with its strategy and risk Completed significant work in closing data manageme gaps within our current Scope 1 and 2 emission Disclose scope 1, scope 2 metrics, in addition to expanding our Scope 3 and, if appropriate, scope 3 emission reporting. greenhouse gas emissions and the rel Next steps: During 2022 complete a top down and granular Describe the targets used bottom-up review focusing specifically on by the organisation to climate change risks and opportunities. manage climate related risks and opportunities Develop key metrics to measure and and performance manage them. again Build a homogeneous, comprehensive and granular data gathering processes across all sites and all geographies to ensure that we are collecting accurate and comprehensive data. While further work in this area is ongoing, we have disclosed in line mmendations.  developed an action plan in relation to this area in order to improve ure periods. 264 Flutter Entertainment plc Annual Report & Accounts 2021 EU Taxonomy If activities of Flutter Entertainment plc meet the descriptions of The Taxonomy Regulation (Art. 8 Taxonomy Regulation economic activities of being environmentally sustainable for the (Regulation (EU) 2020/852) is a key component of the European purposes of the Taxonomy Regulation, as listed in the Climate Commission’s action plan to redirect capital flows towards a Delegate Act, these activities will be considered to the be more sustainable economy, representing an important step Taxonomy Regulation-eligible. Our initial assessment at Group towards achieving carbon neutrality by 2050 in line with EU goals. level identified that our core economic activities are not covered In particular, the Taxonomy Regulation contains a classification by the Climate Delegated Act and are consequently Taxonomy system for assessing whether activities are environmentally Regulation non-eligible. sustainable and imposes certain reporting requirements relating We used the EU Taxonomy Regulation Compass to assist us to such activities. in identifying Taxonomy Regulation-eligible activities for our The EU has published a catalogue of sustainable activities in sector, gambling and gaming which is not listed within the climate 1 mitigation and climate adaptation environmental objectives. the Climate Delegated Act which supplements the Taxonomy Regulation. The Climate Delegated Act sets out the technical  screening criteria for the first two environmental objectives of: level, as set out in the Climate Delegated Act. Through this a) climate change mitigation; and b) climate change adaptation approach we identified the following activities which the Group prescribed under the Taxonomy Regulation. The Climate carries out within the following two sectors: 1) construction Delegated Act determines which economic activities can be and real estate (7.2 – Renovation of existing buildings, considered Taxonomy Regulation-eligible in respect of these  two environmental objectives. equipment, 7.7 – Acquisition and ownership of buildings); and 2) information and communication (8.1 – Data processing, hosting Below, we present the share of our Group turnover, capital and related activities) and sought opinion from a wider group of expenditure (“CapEx”) and operating expenditure (“OpEx”) stakeholders to further understand whether any of our activities for the reporting period ending 31 December 2021, which are are Taxonomy Regulation-eligible. associated with Taxonomy Regulation-eligible and Taxonomy Regulation non-eligible economic activities related to the Based on an analysis of economic activities, we are required first two environmental objectives (climate change mitigation  Financial statements and climate change adaptation) in accordance with Article 8 non-eligible economic activities in our turnover, CapEx, and of the Taxonomy Regulation and Article 10 (2) of the Climate operating expenditure (OpEx) for the reporting period that Delegated Act. ended on 31 December 2021, in respect of annual reports published after 1 January 2022. The Taxonomy Regulation is complex with guidance still being developed and interpreted. We have completed an analysis of  Taxonomy Regulation-eligible activities with regard to our 2021  reporting period activities based on the information and existing  Proportion of market guidance available to us at this time. This information Proportion of Taxonomy is subject to change as the Taxonomy Regulation and related Taxonomy Regulation market guidance develops further and as we go through our Regulation-eligible non-eligible Tot al economic activities economic activities planned alignment process in 2022. | | | (£m) | (in %) | (in %) | | --- | --- | --- | --- | --- | | Application of the Taxonomy Regulation to Flutter | Turnover 6,036 0% 100% | | | | | As an Irish-incorporated company listed on the London Stock | Capital | | | | | Exchange and Euronext Dublin, Flutter Entertainment plc | expenditure (CapEx) 443 <1% 99% | | | | (the “Group”) is required to apply the requirements of the EU Operating Taxonomy Regulation. The consolidated financial statements expenditure (OpEx) 62 <1% 99%  year ended 31 December 2021 in accordance with IFRS. The 1 Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament amounts used for the calculation of the turnover, CapEx and and of the Council by establishing the technical screening criteria for OpEx ratios set out below are accordingly based on the reported determining the conditions under which an economic activity qualifies as data in those consolidated financial statements. contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives (Climate Delegated Act). Annual Report & Accounts 2021 Flutter Entertainment plc 265 ESG supplementary information continued # EU Taxonomy continued # Key Performance Indicators ("KPIs") # Turnover KPI The denominator of the turnover KPI is based on our consolidated net turnover in accordance with IAS 1.826b. For further details on our accounting policies regarding our consolidated net turnover on page 180 of our Annual Report 2021. | Turnover-KPI = | Taxonomy Regulation- eligible net turnover | | --- | --- | | | Net turnover | The total turnover of 66,036 million for the financial year ended 31 December 2021, as presented in the Consolidated Income Statement on page 171 is the basis of the denominator for the turnover KPI. Due to the fact that the economic activities of Flutter Entertainment plc cannot be identified in the Climate Delegated Act, no products or services are considered Taxonomy Regulation- eligible. # CapEx-KPI The CapEx-KPI is calculated as the proportion of the capital expenditure (CapEx) of an activity that is either already Taxonomy Regulation- eligible or is part of a credible plan to extend or reach environmental sustainability divided by total CapEx. | CapEx-KPI= | Taxonomy Regulation- eligible investment | | --- | --- | | | Additions to tangible and intangible assets | Capital expenditures for the year ended on 31 December 2021 amounted to £443 million. Total Capex consists of additions to tangible and intangible fixed assets during the financial year, before depreciation, amortisation and any re-measurements, including those resulting from revaluations and impairments, as well as excluding changes in fair value. It includes additions to fixed assets (IAS 16), intangible assets (IAS 38) and right-of-use assets (IFRS 16). Additions resulting from business combinations are also included (see Notes 12 and 13 in the Notes to the Consolidated Financial Statements). Additions to acquired goodwill are not included in the analysis. Based on the project description of the additions, an analysis was carried out with regard to Taxonomy Regulation- eligibility, including comparison of the relevant additions with Annex I (substantial contribution to climate mitigation) and Annex II (substantial contribution to climate change adaptation) of the Climate Delegated Act. The sum of expenditure on additions that relate to a Taxonomy Regulation- eligible investments forms the numerator of the CapEx-KPI. # OpEx-KPI The OpEx-KPI is calculated as the proportion of the operating expenditure associated with Taxonomy Regulation- eligible activities. | OpEx-KPI= | Taxonomy Regulation- eligible operating expenses | | --- | --- | | | Total OpEx as defined in the EU-Taxonomy | The amounts consist of directing non-capitalised costs that relate to building renovation measures, short-term leasing, maintenance and repair expenses and any other direct expenditures relating to the day-to-day servicing of tangible and intangible fixed assets by the undertaking or third parties to whom the activities are outsourced that are necessary to ensure the continued and effective functioning of such assets incurred during the year ended 31 December 2021 have been applied as the denominator for this calculation. The numerator derives from an analysis of the extent which the activities of the assets related to the expenses recorded on the above are considered Taxonomy Regulation- eligible by reference to Annex I (substantial contribution to climate change mitigation) and Annex II (substantial contribution to climate change adaptation) of the Climate Delegated Act. # Future reporting For 2022 reporting periods onwards, an even more extensive analysis will be carried out concerning the fulfilment of certain criteria in relation to the identified activities. In addition to the requirement to expand on the assessment to evaluate the 'alignment' criteria, there will also be a requirement to assess whether the Taxonomy Regulation- eligible activities make a significant contribution to an environmental objective defined by the Taxonomy Regulation and whether no other environmental objective is significantly harmed. In addition, compliance with minimum social safeguards in accordance with the OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, ILO Core Labour Standards and the International Bill of Human Rights must be ensured. The disclosure requirements will also be more extensive for 2022 reporting periods onwards. 288 Flutter Entertainment plc Annual Report & Accounts 2021 ## Shareholder information Flutter Entertainment plc is a public limited company Electronic shareholder communications incorporated and domiciled in the Republic of Ireland. It has a We encourage you to be notified by email or letter when primary listing on the London Stock Exchange and a secondary shareholder communications such as the Annual Report or listing on Euronext Dublin. Notice of Annual General Meeting are available to be viewed online on our website at: Corporate website www.flutter.com The Company’s corporate website provides shareholders with  This allows the Company to have a positive effect on the as the Annual Report and Accounts, current and historic share environment by significantly reducing the volume of paper used prices, AGM materials, events and governance information: in the production of shareholder mailings, save substantial printing and postal costs in addition to speeding up the provision www.flutter.com of information to you as a shareholder. You can elect to receive email notifications by contacting the Registrar. Dividends Dividend payments Amalgamation of accounts Details of the Company’s dividends policy for the financial year Shareholders who receive duplicate sets of Company mailings ended 31 December 2021can be found on page 159 and at: owing to multiple accounts in their name should contact the www.flutter.com/investors Registrar to request their accounts be amalgamated. Dividend withholding tax (“DWT”) Shareportal As an Irish resident company, all dividends paid by the Company Shareholders may access their accounts online at: are subject to DWT, currently at the rate of 25% unless a www.signalshares.com shareholder is entitled to an exemption. Shareholders entitled to the exemption must have submitted a properly completed This facility allows shareholders to check their shareholdings exemption form to the Company’s Registrar by the relevant and dividend payments, change address, change dividend record date for the dividend. Non-Irish resident shareholders and instructions, register email addresses, appoint proxies Financial statements certain Irish companies, trusts, pension schemes, investment electronically and also download standard forms and documents undertakings, companies’ resident in any member state of the to initiate other changes in details held by the Registrar. European Union and charities may be entitled to claim exemption from DWT. If you require any further assistance or information on Shareholder security the relevant form to be completed, please contact the Registrar. Please be aware that organisations, typically from overseas, sometimes make unsolicited contact with shareholders offering Forms are available on the Irish Tax & Customs Revenue website: to buy their shares or to sell shares on their behalf at prices which www.revenue.ie can be significantly higher than the market price of the shares. Shareholders should note that DWT will be deducted from If you are in receipt of an unsolicited call from someone offering dividends where a properly completed form has not been to buy your shares, you should remain vigilant; take a note of received by the relevant record date for a dividend. the name of the person and organisation that has contacted you; not respond to high pressure tactics to provide bank Dividend mandates details or arrange to transfer money if you are unsure of the We encourage shareholders to have their dividends paid directly bona fide nature of the caller; check if the company or individual into their bank account to ensure efficiency of payment on the is appropriately authorised to operate as an investment firm payment date and reduce the instances of lost or out-of-date with your local regulatory authority (Central Bank of Ireland unclaimed cheques. Please contact the Registrar to avail of this. for shareholders resident in Ireland and the Financial Conduct Authority for shareholders resident in the UK); and obtain Out-of-date/unclaimed dividends independent advice from a qualified advisor or stockbroker. If you have out-of-date dividend cheques or unclaimed dividends, please contact the Registrar. Share dealing If you wish to buy or sell shares in the Company you can do this Financial calendar treet bank. 2022 Preliminary Results 1 March You can also use Link Share Dealing Services: 2021 Annual General Meeting 28 April www.linksharedeal.com Financial year end 31 December Please note the price of shares can go down as well as up, and you are not guaranteed to get back the amount you originally Further updates to the calendar can be found at: invested. If you are in any doubt you should contact an www.flutter.com independent financial adviser. Annual Report & Accounts 2021 Flutter Entertainment plc 267 ## Shareholder information continued | Contacts | Other information | | --- | --- | | Registered office | Directors and Company Secretary | | Belfield Office Park, | Biographies of our current Directors can be found on pages 96 to 99. | | Beech Hill Road, Clonskeagh, | The Company Secretary is Edward Traynor. | Dublin 4, Ireland Company Number Tel: +353 1 905 1000 16956 www.flutter.com Brokers General Goldman Sachs International To contact the Investor Relations team email: J & E Davy investor.relations@flutter.com To contact the Company Secretariat team email: Legal advisers cosec@flutter.com Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2, Ireland Our brands Freshfields Bruckhaus Deringer LLP, More information on each of our brands is available at: 65 Fleet Street, London EC4Y 1HS, UK www.paddypower.com External Auditor www.betfair.com KPMG IE, 1 Stokes Place, www.sportsbet.com.au St. Stephen’s Green, Dublin 2, Ireland www.tvg.com and us.betfair.com www.fanduel.com Principal bankers www.adjarabet.com Allied Irish Banks, p.l.c. Bank of Ireland Group plc www.pokerstars.com Barclays Bank Ireland PLC www.Skybet.com Lloyds Bank PLC www.tombola.com National Australia Bank Limited Santander UK plc Registrar The Royal Bank of Scotland Group plc Shareholders with queries concerning their holdings, dividend Ulster Bank Ireland Limited information or administrative matters should contact the Company’s Registrar: Link Registrars Limited, Block C, Maynooth Business Campus, Maynooth, Co. Kildare, W23 F854, Ireland Tel: +353 1 553 0050 Fax: +353 1 224 0700 Email: enquiries@linkgroup.ie 268 Flutter Entertainment plc Annual Report & Accounts 2021 Designated Foreign Issuer Status In connection with its acquisition of The Stars Group Inc. on May 5, 2020, the Company became a “reporting issuer” under applicable securities laws in each of the provinces and territories of Canada. The Company also qualifies as a “designated foreign issuer”, as such term is defined in National Instrument 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers of the Canadian Securities Administrators. As such, the Company is not subject to the same ongoing reporting requirements as most other reporting issuers in Canada. Generally, the Company will be in compliance with Canadian ongoing reporting and disclosure requirements if it complies with the requirements of the UK Financial Conduct Authority in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 (United Kingdom), as amended from time to time, and the applicable laws of England and Wales (the “UK Rules”) and files any documents required to  at www.sedar.com maintained by the Canadian Securities Administrators. Forward-looking statements or implied by such forward-looking statements. These factors This document (including information incorporated by include factors such as economic and financial conditions reference in this document), contains statements which generally in various countries and regions where we operate, are, or may be deemed to be, “forward-looking statements”. the ongoing impact of the Covid pandemic on the global Forward-looking statements are prospective in nature economy and on the holding of sports events, currency and are not based on historical facts, but rather on current fluctuations, the behaviour of other market participants, expectations and projections about future events, and are the actions of regulators, changes in the political, social therefore subject to risks and uncertainties which could and regulatory framework in which Flutter will operate or cause actual results to differ materially from the future results in economic or technological trends or conditions, failure expressed or implied by the forward-looking statements. to complete or successfully integrate acquisitions and the The forward-looking statements contained in this document specific factors identified in the discussions accompanying include statements relating to the financial condition, results such forward-looking statements and in the Understanding of operations, business, viability and future performance of and Managing our Principal Risks section included on Flutter and certain of the plans and objectives of Flutter and pages 84 to 91 of this Annual Report. Other unknown or other statements other than historical facts. Often, but not unpredictable factors could cause actual results to differ always, forward-looking statements can be identified by the materially from those in the forward-looking statements. use of forward-looking words such as “plans”, “expects” or  “does not expect”, “is expected”, “is subject to”, “budget”, construed in light of such factors. “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” None of Flutter or any of its associates or Directors, officers or or “does not anticipate”, or “believes”, or variations of such advisers provides any representation, assurance or guarantee words and phrases or statements that certain actions, events that the occurrence of the events expressed or implied in any or results “may”, “could”, “should”, “would”, “might” or “will” be forward-looking statements in this document will actually taken, occur or be achieved.  Although Flutter believes that the expectations reflected in these forward-looking statements. Other than in accordance such forward-looking statements are reasonable, it can give with its legal or regulatory obligations, Flutter is under no no assurance that such expectations will prove to be correct. obligation, and Flutter expressly disclaims any intention or There are a number of factors that could cause actual results obligation, to update or revise publicly any forward-looking and developments to differ materially from those expressed statements, whether as a result of new information, future events or otherwise. Belfield Office Park, Beech Hill Road, Clonskeagh, Dublin 4, Ireland www.flutter.com C Flutter Entertainment plc Annual Report & Accounts 2021 Flutter Entertainment plc Annual Report & Accounts 2021 C