Flutter and TSG performing strongly
If all goes as planned, Flutter Entertainment will acquire The Stars Group sometime in 2020.
The original announcement of the merger in October 2019 noted that the companies anticipated closing the deal in the second or third quarter of 2020.
Casino Aus reports that as that time approaches, Flutter and The Stars Group both revealed their 2019 financials last week and both showed full-year revenue increases.
Though news later in the week regarding job losses put a damper on it for some, the overall feeling in the business world about the merger is positive.
The bottom line of the Flutter Entertainment year was a 14 per cent revenue increase to 2.14 billion pounds for the year ending December 31, 2019.
It wasn’t all wine and roses though, as the reported profit before tax was 136 million pounds, down from 219 million pounds the previous year.
Underlying EBITDA was 385 million pounds, down from 451 million pounds in 2018.
And profits attributable to equity shareholders came to 144 million pounds, down from 201 million pounds.
Even so, the proposed full-year dividend per ordinary share remained unchanged at 200p.
And the average number of responsible gambling interactions per month increased to 130,000 from the previous average of 70,000.
Australian revenue alone from Sportsbet was 446 million pounds, up 14 per cent year-on-year, despite the cost of sales as a percentage of revenue rising from 30.1 per cent to 40.7 per cent.
To combat that, Flutter increased its investment in customer generosity and personalised Sportsbet offerings.
That resulted in Sportsbet growing its active customer base by 9 per cent.
Stakes increased by three per cent from the previous year, though that rose to five per cent without counting the World Cup.
TSG posts bumper results
The Stars Group announced even better results, with a year-on-year revenue rise of 25 per cent to $2.53 billion.
CEO Rafi Ashkenazi praised the company’s constant currency revenue growth of seven per cent and attributed it primarily to its primary sports betting brands.
That vertical now accounts for 91 per cent of TSG’s revenues.
The full-year summary showed that 24.6 per cent revenue increase as well as a 16.9 per cent gross profit increase to $1.84 billion.
Operating income was up 1.6 per cent to $264 million, and adjusted ABITDA was up 17.9 per cent to $921 million.
Debts and operation cash were down for the year.
Long-term principal debt was down 11.3 per cent and its carrying value was down 9.5 per cent, while operational cash was down 18.3 per cent.
As for TSG in the Australian market, that portion of the company’s revenue was $274.4 million in 2019, up 39.3 per cent from the previous year.
Stakes were up to $3 billion, a 17.4 per cent increase from the $2.6 billion in 2018.
On top of that, TSG just acquired the remainder of BetEasy in December for $250 million.
Combined, Flutter and TSG showed $5.28 billion in 2019 revenue.
Flutter’s financial report noted that the acquisition of TSG is still awaiting numerous approvals from regulators around the world, importantly in Canada, Australia and the United Kingdom.
If and when that happens, TSG shareholders will be entitled to 0.2253 new Flutter ordinary shares in exchange for each TSG common share.
Upon the official combination of the companies, Flutter shareholders will own 54.64 per cent of combined stock and TSG the other 45.36 per cent.