diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea91e84d2119637e72a1a3d93e19c6962356e5f9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,33 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code + +Securities registered pursuant to Section 12(b) of the Act: +Title of each class Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code +Securities registered pursuant to Section 12(b) of the Act: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..4dcbb4eb332e8b339e3f08f62151ab00e3bb0406 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,52 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_100.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..128d313d056ba0c833b85ad996afa66943467df9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2014 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), +includes a revolving credit facility (the 2014 Revolving Facility) and term loan (the 2014 Term Loan Facility), collectively referred to as the +2014 Credit Facilities. In March 2023, American and AAG entered into the Ninth Amendment to the 2014 Credit Agreement, pursuant to +which American extended the maturity of certain commitments under the 2014 Revolving Facility. The Ninth Amendment also amended +certain other terms of the 2014 Credit Agreement including the requirements for delivery of appraisals and certain other covenants and +transitioned the benchmark interest rate for the 2014 Revolving Facility and the 2014 Term Loan Facility from LIBOR to SOFR. The 2014 +Revolving Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit +Facilities.” The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75% or, at +American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the +SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) plus an +applicable margin of 1.75%. As of December 31, 2023, the margin elected was 1.75%. Additionally, as a result of the Ninth Amendment, +through October 11, 2024, the aggregate commitments under the 2014 Revolving Facility will be $1.6 billion, and thereafter through October +13, 2026, such aggregate commitments will decrease to $1.2 billion. As of December 31, 2023, there were no borrowings or letters of credit +outstanding under the 2014 Revolving Facility. +April 2016 Revolving Facility +In March 2023, American and AAG entered into the Sixth Amendment to the Credit and Guaranty Agreement, dated as of April 29, 2016 +(the April 2016 Credit Agreement), which includes a revolving credit facility (the April 2016 Revolving Facility). Pursuant to the Sixth +Amendment, American extended the maturity of certain commitments under the April 2016 Revolving Facility. The Sixth Amendment also +amended certain other terms under the April 2016 Credit Agreement including the requirements for delivery of appraisals and certain other +covenants and transitioned the benchmark interest rate for the April 2016 Revolving Facility from LIBOR to SOFR. The April 2016 Revolving +Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit Facilities.” +Additionally, as a result of the Sixth Amendment, through October 11, 2024, the aggregate commitments under the April 2016 Revolving +Facility will be $446 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $342 million. As of +December 31, 2023, there were no borrowings outstanding under the April 2016 Revolving Facility. +2023 Term Loan Facility +In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a +term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $1.1 billion, maturing in June 2029. Loans made under the +2023 Term Loan Facility bear interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.50% or, at American’s option, +the SOFR rate for a tenor of one, three or six months (or if agreed by the relevant lenders, any other tenor), depending on the interest period +selected by American (subject to a floor of 0.00%), plus an applicable margin of 3.50%. As of December 31, 2023, the margin elected was +3.50%. The net proceeds from the 2023 Term Loan Facility, together with the net proceeds from the private offering of the 8.50% Senior +Secured Notes (as defined below) and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December +2023. +Other Terms of the 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +The term loans under the 2013 Credit Facilities and 2014 Credit Facilities (collectively referred to as the Credit Facilities) and the 2023 +Term Loan Facility are repayable in annual installments, in an amount equal to 1.00% of the aggregate principal amount issued, with any +unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. +The 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility provide that American may from time to time +borrow, repay and reborrow loans thereunder. The 2013 Revolving Facility and 2014 Revolving Facility have the ability to issue letters of +credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013 Revolving +Facility, 2014 Revolving Facility and April 2016 Revolving Facility are each subject to an undrawn annual fee of 0.750%. +100 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..04f44af2d93af29bde670cbc598799c55d1f4436 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,48 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..96c8f684ad7816ec2cbdfa416b1bbfda4367908f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,40 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..00735a58d05c4a848e44f5d749014bc763621165 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,46 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3d3c9a4d4a7cdfb457773e90779f59cb273b62 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,41 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a6844f9d5f9c843cac8ed779fd54abac33945ff --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,40 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..510332f31fed281adeaed56e586661e0ed1fd560 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,44 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1510bba43e2a5f4bd3477e397064c45696bb1455 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only applies this authority on a limited basis. In addition, international fares and rates are +sometimes subject to the jurisdiction of the governments of the foreign countries which we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..7892ae4aeeb69ea0eb9312017ee96fb77c589937 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1345bd918ec0adef7962049dfef34be8ac854d5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,43 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..55c1c70917aa3d121b19753413cd563e4c987907 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,47 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange +Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been +subject to such filing requirements for the past 90 days. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to +Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was +required to submit such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f527b058e3b2be63e7175c5d798b6141ce25454 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,29 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..255560d8fa89f53f73cd1efecf79b33014a2e590 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,48 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..50cc35c9244f3a4269a4c096e4d18d3a2e57a256 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,45 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..6b2c0d183f338b7e84dfc01c650a4a2943c877b0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,45 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7389e5d1343808bcdef37803c5992c76f946be0d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,45 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory and other conditions beyond our control, including, among others: +• actual or potential changes in international, national, regional and local economic, business and financial conditions, +including recession, inflation and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d5d52a1c239bfc1e2f4282a10105ad8fbe2062 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,49 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_26.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab1a4836898413dd324dee57dfad82800c5af5b4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,50 @@ +Table of Contents +travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, +and the speed with which demand for travel to these regions returns. +Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve +suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets. For example, the +COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a +result of the imposition by the U.S. and foreign governments of restrictions on travel from certain regions. In addition, open skies agreements, +which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S. +markets, potentially subjecting us to increased competition on our international routes. See also “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages.” +To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, +access slots, gates and routes and other matters, our ability to effectively compete may be hindered. Our ability to attract and retain +customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business +could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired +markets. +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas. We have also established a strategic alliance +with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with +Qatar Airways. In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain +commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports. The +commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the EU, commonly +referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the +transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC +commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its +investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the +scheduled expiration of the interim measures in March 2026. We continue to cooperate fully with the CMA. The foregoing arrangements are +important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines +party to those arrangements. +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. American has appealed the District Court’s +decision to the Court of Appeals for the First Circuit; American’s opening brief was filed on December 6, 2023. Separately, in December 2022, +two putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue +violated U.S. antitrust law in connection with the previously disclosed NEA. In February 2023, private party plaintiffs filed two additional +putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the +U.S. District Court for the Eastern District of New York, respectively. All cases have since been consolidated in the U.S. District Court for the +Eastern District of New York. American, together with JetBlue, filed a motion to dismiss on September 21, 2023, which remains pending. The +motions to dismiss argue, among other things, that the plaintiffs each waived their right to bring class action claims. We believe these +complaints are without merit and are defending against them vigorously. +No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements +that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our +business activities. +Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place +and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular. +Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection +with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could +be harmed. In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route +networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and +26 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_27.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ce30a0737b6793fad5d9a3cbf9d67d62cbfd389 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,47 @@ +Table of Contents +revenues. Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in +Europe and elsewhere that result in broader networks offered by rival airlines. +Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and +increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks +and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and +other terms and conditions of these programs. In addition, we have used certain assets from our AAdvantage program as collateral for the +AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage +program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program. These +competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our +loyalty program and maximize the revenue generated by our loyalty program. +We may also be impacted by competition regulations affecting certain of our major commercial partners, including our co-branded credit +card partners. For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to +increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card +transactions. If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our +agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued +by these partners. +Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial +performance. +Relations between air carriers and labor unions in the U.S. are governed by the RLA. Under the RLA, CBAs generally contain “amendable +dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following +the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. As of December 31, +2023, approximately 87% of our employees were represented for collective bargaining purposes by labor unions, and 34% were covered by +CBAs that are currently amendable or that will become amendable within one year. For the dates that the CBAs with our major work groups +become amendable under the RLA, see “Labor Relations” under Part I, Item 1. Business – “Sustainability – Our People.” +In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either +party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation +processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, +the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit +to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, a Presidential +Emergency Board (PEB) may be established, which examines the parties’ positions and recommends a solution. The PEB process lasts for +30 days and is followed by another 30-day “cooling off” period. At the end of this “cooling off” period, unless an agreement is reached or +action is taken by Congress, the labor organization may exercise “self-help,” such as a strike, which could materially adversely affect our +business, results of operations and financial condition. +None of the unions representing our employees presently may lawfully engage in concerted slowdowns or refusals to work, such as +strikes, sick-outs or other similar activity, against us. Nonetheless, there is a risk that employees, either with or without union involvement, +could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our +financial performance. Additionally, some of our unions have brought and may continue to bring grievances to binding arbitration, including +those related to wages. If successful, there is a risk these arbitral avenues could result in material additional costs that we did not anticipate. +Currently, we believe our labor costs are generally competitive relative to the other large network carriers. However, personnel shortages, +in particular for pilots, and general wage inflation stand to impact our labor costs moving forward. In July 2023, we reached a tentative +agreement with the union representing our mainline pilots, which was subsequently ratified by the pilots in August 2023. The new agreement, +which became effective in the third quarter of 2023, includes significant increases in pilot pay and benefits, in line with agreements recently +concluded by our large network competitors with their pilots’ unions. We remain in negotiations for other new labor agreements and anticipate +that any new contracts we agree to with our labor groups will include material increases in salaries and other benefits, which will significantly +increase our labor expense. +27 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_28.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a0b448a4b734eccc16f40eadf715479a8cc8305 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,50 @@ +Table of Contents +If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity +purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their +operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact +of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, +and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Several of these third-party +regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to +perform its obligations to us. Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic +conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past +and may in the future lead to bankruptcies among these operators. In particular, the severe decline in demand for air travel resulting from the +COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional +carriers and, as a result, we temporarily significantly reduced our regional capacity. Further, as airlines attempt to restore capacity in line with +increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators have experienced difficulties in +recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer +significant increases in pay and other benefits to recruit and retain pilots and other personnel. Periods of volatility in travel demand have the +potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or +otherwise cease to operate. We may also experience disruption to our regional operations or incur financial damages if we terminate the +capacity purchase agreement with one or more of our current operators or transition the services to another provider. Any significant +disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition. +In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to +control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and +services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology +and services, regional operations, aircraft maintenance, fueling, catering, ground services and facilities and baggage handling. Similar +agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice +by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that +we could replace these providers on a timely basis with comparably priced providers, or at all. These third parties are also facing challenges +retaining and recruiting people with the appropriate skills to meet our requirements as the economy in general, and the airline industry in +particular, continue to recover from the COVID-19 pandemic. The COVID-19 pandemic also caused significant disruption in global supply +chains and staffing shortages, which have affected and may continue to affect the availability and timely delivery and fulfillment of many +goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us. We +rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, +consumable or disposable goods and other products and services essential to our business. Following a faster than expected return of +demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we +serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger +numbers or the number of flights to or from certain airports. We cannot guarantee that, as a result of ongoing or future supply chain +disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and +services we require in the course of our business, or that we will be successful in procuring suitable alternatives. Any material problems with +the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have +a material adverse effect on our business, results of operations and financial condition. +Any damage to our reputation or brand image could adversely affect our business or financial results. +Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among +other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our +impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living +wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our +use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our +sustainability +28 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_29.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ecb4d57ea819d414ce3eb1ca5b6b45f2fc9edb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,51 @@ +Table of Contents +initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. In addition, we +operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our +customers, vendors or employees, can spread rapidly through social media. Should we not respond in a timely and appropriate manner to +address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of +customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to +rebuild our reputation. +Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of +travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights +could have a material adverse effect on the public's perception of us and may harm our reputation and business. We have in the past, and +may in the future be required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, +and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection +among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease +outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. In addition, as a result of mask mandates and +other mitigating measures that airports and carriers were required by law to implement to limit the spread of COVID-19, we experienced an +increase in the incidence of aggressive customer behavior and physical confrontation on our flights, certain of which resulted in injuries to our +personnel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our +employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of +employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and +which could in turn negatively affect our business, financial condition and results of operations. +We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our +brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our +regional, codeshare or joint business operators. +We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given +the ease with which individuals can now capture and rapidly disseminate information via social media. Such an incident could involve the +actual or alleged behavior of any of our employees, contractors or passengers. Further, if our personnel, one of our aircraft, a type of aircraft +in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have +a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory +enforcement action, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be +inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or +inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe or +action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type +of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly +on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and +financial condition. +Changes to our business model that are designed to increase revenues may not be successful and may cause operational +difficulties or decreased demand. +We have in the past instituted, and intend to institute in the future, changes to our business model designed to increase revenues and +offset costs. These measures include further segmentation of the classes of service we offer, such as Premium Economy service and Basic +Economy service, enhancements to our AAdvantage program, charging separately for services that had previously been included within the +price of a ticket, changes to our practices and contracts with providers of distribution systems to provide additional content flexibility, +commercial practices related to ticket distribution channels, including efforts by us to migrate an increasing portion of our customers to our +modern, direct distribution channels in lieu of third party channels, changing (whether it be increasing, decreasing or eliminating) other pre- +existing fees, reconfiguration of our aircraft cabins, and efforts to optimize our network including by focusing growth on a limited number of +large hubs and entering into agreements with other airlines. For example, in 2020, we eliminated change fees for most domestic and +international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place. +We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and +implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues +or offsetting our costs. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational +performance of our airline or result in decreased demand. Also, our implementation of any new or increased fees might result in adverse +29 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..889792754177433ed7a8bd577e00a53d1619882b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,7 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_30.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b78051c9b28ff88418244f3ec1301d71c869643 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,45 @@ +Table of Contents +brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in +general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant +competitive advantage to other carriers that determine not to institute similar charges. +Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely +affect our business and financial results. +We consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and +AAdvantage program, to be a significant and valuable aspect of our business. We protect our intellectual property rights through a +combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our +intellectual property. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes the +current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. +Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management +and key personnel from our business operations, either of which may adversely affect our business and financial results. +In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings +(including the AAdvantage Financing, defined in the accompanying notes to the consolidated financial statements to this Annual Report on +Form 10-K), which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage +Financing, on certain amendments or changes to our AAdvantage program. These covenants may have an adverse effect on our ability to +use such intellectual property. +We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and +liquidity. +From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and +other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently +involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal +proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of +variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and +disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential +financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, +regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in +certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief +imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a +result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of +operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result +in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal +matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to +American’s Consolidated Financial Statements in Part II, Item 8B. +Our ability to utilize our NOLs and other carryforwards may be limited. +Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses +(NOLs) carried over from prior taxable years. At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 +billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused +and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state +taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. Our NOL carryforwards are subject to +adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, due to the impact of the COVID- +19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to +use them. +30 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_31.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ccafc27efd1a1610f0fa43dfa2070e9b96b0d9b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,48 @@ +Table of Contents +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. There can be +no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be +negatively impacted in the future. Such valuation allowance could be material. +A corporation’s ability to deduct its federal NOL carryforwards and to utilize certain other available tax attributes can be substantially +constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as +defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50% during a rolling +three-year period). In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways +Group, Inc. (US Airways Group) experienced an ownership change in connection with the merger of US Airways Group and AMR +Corporation (the Merger). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs +upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted +approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be +utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to +utilize such federal NOL carryforwards may be subject to limitation. Potential future transactions involving warrants, stock options, common or +preferred stock or other equity, may increase the possibility that the Company will experience a future "ownership change" under Section +382. Substantially all of our remaining federal NOL carryforwards attributable to US Airways Group and its subsidiaries are subject to +limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL carryforwards is not anticipated to be +effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. +Notwithstanding the foregoing, an ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards +and other tax attributes. In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax +Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income +tax obligations. The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders +of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain +acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions +may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging +existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third +party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership +interest in AAG. +New U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows. +We are subject to taxation at the federal, state and local levels in the United States. The U.S. government may enact significant changes +to the taxation of business entities. For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among +other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. +While certain other draft legislation has been proposed, the likelihood of any proposed changes to the tax law being enacted or implemented +is unclear, and we are currently unable to predict whether such changes will occur. If any such changes are implemented, we are currently +unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. +We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize +the full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if +conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative +factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our +other long-lived assets for impairment if conditions indicate that an impairment may have occurred. +Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of +changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material +impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by +changes in supply and demand for these aircraft. Such changes in supply +31 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_32.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a1f9fb5d3afab2861504bd0721bc6ae072c2ad0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,47 @@ +Table of Contents +and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or +prolonged declines in demand for air travel and corresponding reductions to capacity. We can provide no assurance that a material +impairment loss of tangible or intangible assets will not occur in a future period; we have previously incurred significant impairment charges +associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, +and the risk of future material impairments remains uncertain. Such impairment charges could have a material adverse effect on our +business, results of operations and financial condition. +The commercial relationships that we have with other companies, including any related equity investments, may not produce +the returns or results we expect. +An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, +such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern +Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial +relationship. We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global +business strategy. We face competition in forming and maintaining these commercial relationships since there are a limited number of +potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these +relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business. Any such +existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our +investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our +operations or other strategic options. We may also be subject to consequences from any illegal conduct of joint business partners as well as +to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners. In addition, as a +result of the COVID-19 pandemic and subsequent economic recovery, the industry experienced significant volatility in demand for air travel +both internationally and domestically, which is expected to continue into the foreseeable future and could materially disrupt our partners' +abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of +new strategic relationships or the maintenance or expansion of existing relationships. If any carriers with which we partner or in which we +hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant +operational disruption, which is a risk that we are subject to with respect to our investment in and commercial arrangements with GOL in light +of its commencement in January 2024 of bankruptcy proceedings in the U.S. Federal Bankruptcy Court for the Southern District of New York. +These events could have a material adverse effect on our business, results of operations and financial condition. +We may also from time to time pursue commercial relationships with companies outside the airline industry, which relationships may +include equity investments or other financial commitments. Any such relationship or related investment could involve unique risks, particularly +where these relationships involve new industry participants, emerging technologies or industries with which we are unfamiliar. +Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on +consumer demand, our operating results and liquidity. +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business and thus is a significant factor in the price of airline tickets. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often +referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components +would increase the price we ultimately pay for aircraft fuel. +Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a +material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for +air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or +decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our +competitors in response to changes in fuel prices. +32 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_33.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfdd10f5d90266f48b922bc8230139c763a08c71 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Table of Contents +We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in +the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or armed +conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations +of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related +governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products +and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation +in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events, may +result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost +increases in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery +operations, pipeline capacity or terminal access and possibly result in significant increases in the price of aircraft fuel and diminished +availability of aircraft fuel supply. +Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current +policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market +conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel +consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. See also the discussion in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk +– “Aircraft Fuel.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our +operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress and state and +local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA and several of their respective international +counterparts have issued regulations and a number of other directives that affect the airline industry. These requirements impose substantial +costs on us and restrict the ways we may conduct our business. +For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that +require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact +our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or +engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the +United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant +limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or +otherwise caused substantial disruption and resulted in material costs to us and lost revenues. The recent telecom industry roll-out of 5G +technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the +potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the +issue has since been resolved. See “We rely heavily on technology and automated systems to operate our business, and any failure of these +technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive +regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may +in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new +33 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_34.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..83a0b7a40e240416149e304ddf9237ee8c9f8e42 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +Table of Contents +regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect +on us and the industry. +In 2018, Congress passed a five-year funding authorization for the FAA which was scheduled to expire on September 30, 2023, but was +recently extended to March 8, 2024. The legislative process to renew this authorization (the FAA Authorization Renewal) could impact us, +and commercial aviation more generally, in numerous ways. As part of the FAA Authorization Renewal, Congress could seek to impose new +rules or regulations concerning, among other things, customer service, aviation safety, labor requirements, investments in FAA staffing and +resources, improvements to the ATC system and managing new entrants in the U.S. national airspace system, as well as new or increased +fees or taxes intended to fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal have the +potential to increase our costs or impact our operation. Congressional action on the FAA Authorization Renewal has already begun and +Congress has indicated that their goal is to pass the bill in advance of the newly set March 8, 2024 expiration. If Congress fails to pass the +FAA Authorization Renewal, we expect passage of an additional extension of the current law to prevent a lapse in authorities. +DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many +aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft. DOT requires multiple +disclosures of airline fares, taxes and baggage fees and is further changing these requirements to increase the number of disclosures and +the time at which they must be disclosed. DOT also recently issued a proposed rule mandating refunds in certain circumstances, such as a +global pandemic. DOT has also proposed rules requiring disclosure of certain ancillary fees by air carriers and travel agents. Finally, the DOT +finalized rules in 2023 for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability +regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance. +The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional +security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and +potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand +for air travel. +Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S. These initiatives +include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare +mandates. These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to +increase without an ability to pass through these costs. In recent years, the airline industry has experienced an increase in litigation over the +application of state and local employment laws, particularly in California. Application of these laws may result in operational disruption, +increased litigation risk and impact our negotiated labor agreements. For example, we are currently involved in legal proceedings in California +concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an +adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and +fines, which could potentially be significant. We have reached an agreement to settle a class litigation brought by flight attendants in +California and anticipate final approval by the court in the first quarter of 2024. In addition, legislation passed by the California legislature in +March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California. However, there is still risk of +future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions +which could seek to implement similar laws. +The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in +law and future actions taken by governmental agencies, including: +• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the +types of fares offered or fees that can be charged to passengers; +• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for +codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory +investigations or commencement of litigation related to any of the foregoing; +• restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s +ability to respond to a competitor); +• the adoption of new passenger security standards or regulations that impact customer service standards; +34 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_35.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ab56ccf8a06555b890a0bc912ff07f179607820 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,47 @@ +Table of Contents +• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights +currently held by us; +• the adoption of more restrictive locally-imposed noise restrictions; and +• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such +as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation +requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets +where such requirements are imposed. +Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in +some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated +with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. +Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material +adverse effect on our business, results of operations and financial condition. In addition, the ATC system is not successfully modernizing to +meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel +airlines, including ourselves, to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing +travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints +during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated +technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale +flight cancellations and delays. We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led +to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day. +In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar- +based ATC system to a GPS-based system. This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by +delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the +public and the airlines, including ourselves. Failure to update the ATC system and the substantial costs that may be imposed on airlines, +including ourselves, to fund a modernized ATC system may have a material adverse effect on our business. +Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to +partial shutdowns, sequestrations or similar events and the COVID-19 pandemic. These events have resulted in, among other things, +reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel +delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new +aircraft is first placed into service. +Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or +governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant +foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign +agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which agreements allow +unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries +with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements. +For example, the open skies air services agreement between the U.S. and the EU, which took effect in March 2008, provides airlines from +the U.S. and EU member states open access to each other’s markets, with freedom of pricing and unlimited rights to fly from the U.S. to any +airport in the EU. As a result of the agreement and a subsequent open skies agreement involving the U.S. and the United Kingdom, which +was agreed in anticipation of Brexit, we face increased competition in these markets, including LHR. Bilateral and multilateral agreements +among the U.S. and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to +periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of +airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access +to particular airports. If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in +impairments of our related tangible and intangible assets. In addition, competition from foreign airlines, revenue-sharing +35 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_36.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a019888f65d80a3fee144b6cebd57951e4d941a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +Table of Contents +joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our +business and assets on the open skies routes. +On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation +Agreement) to govern certain aspects of their relationship following Brexit. We face risks associated with Brexit, notably given the extent of +our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. The EU-UK Trade and +Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services +under the transatlantic joint business. However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less +extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain. For example, on +December 4, 2023, the United Kingdom government launched a consultation on the reform of the rules applicable to airport slots in the +United Kingdom. At this stage, the impact of this consultation and any consequent changes to the United Kingdom slot rules on our +operations or those of our joint business partners at LHR is uncertain, but could be material. As a result, the continuation of our current +services, and those of our partners could be disrupted. This could materially adversely affect our business, results of operations and financial +condition. More generally, changes in U.S. or foreign government aviation policies could result in the alteration or termination of such +agreements, diminish the value of route authorities, slots or other assets located abroad, or otherwise adversely affect our international +operations. +We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our +control. +We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been, +and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased +competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange +controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency +devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, +including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections. In +particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the +imposition of significant governmental restrictions on commercial air service to or from certain regions. We responded by temporarily +suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international +routes. While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for +international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we +previously served will be economical in the future. +We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate. Our permission +to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other +governmental requirements. We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing +required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), +cybersecurity incidents or other events. Any lapse, revocation, suspension or delay in approval of our authority to do business in a given +jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of +operations. +More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual +nations. For example, much of the demand for international air travel is the result of business travel in support of global trade. Should +protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the +effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel. Additionally, +certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located +outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government in respect of the importation of +such products could materially increase the amounts we pay for them. +We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners +that flows through LHR in the United Kingdom. The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial +air service that we expect to be sufficient to sustain our current services under the transatlantic joint business. However, the scope of traffic +rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK +Trade and Cooperation Agreement is uncertain. As a result, the continuation of our current services, and those of our partners could be +disrupted. Moreover, +36 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_37.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..ef9f79218ff372340fa9a89f06c45fbc0e0ed801 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,45 @@ +Table of Contents +Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services. LHR +is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location +after Brexit when compared to other airports in Europe, where we do not have as strong a presence. This could materially adversely affect +our business, results of operations and financial condition. +Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and +regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing +aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services +by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the +existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or +subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our +business activities such as the transatlantic joint business. See also “The airline industry is intensely competitive and dynamic.” Any of these +effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition. +Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, +have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside +the U.S. in local currency. Such fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly +affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of +more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. +We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the +travel industry continues to face ongoing security concerns. +Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or +other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. +The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact +air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that +may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved +flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security +training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of +security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced +background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also +had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. +Implementation of and compliance with increasingly complex security and customs requirements will continue to result in increased costs for +us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it +necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on +our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to +improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related +costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our +business. In addition, avoiding areas of armed conflict or locations inaccessible to us due to geopolitical factors can impact our operations +and financial results. For instance, airspace closures or restrictions may require us to alter flight paths, thereby increasing the distance, +duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace +restrictions. Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, +depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations. For example, in October 2023, +we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service. The outbreak or +spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and +disruptions to global trade, which could materially increase our costs or impact our supply chains. +37 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_38.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..71dc1f7451fb8e48863f2699cdb21f0bcb0665f5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,49 @@ +Table of Contents +We are subject to risks associated with climate change, including increased regulation of our GHGemissions, changing +consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure. +Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including +those from the airline industry. Concerns over GHG emissions are likely to result in continued attempts to adopt requirements or change +business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several +countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In +addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact +our operations or require us to make changes or investments in our infrastructure. In particular, ICAO has adopted rules, including those +pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international +flights. +At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with +respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the +market for eligible renewable fuels. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we +can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other +operating costs sufficiently to offset the costs of meeting our obligations under CORSIA. +Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, along with the recent implementation of +and potential for other new regulatory initiatives to reduce airline GHG emissions, we and other airlines are increasingly subject to an +unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements +that could lead to increased expenses related to the emissions of our flights. For more information on these regulatory developments, see +“Aircraft Emissions and Climate Change Requirements” under Part I, Item 1. Business – “Domestic and Global Regulatory Landscape – +Environmental Matters.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less +frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose +to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by +short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Customers may also elect to travel on flights that +produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025. +Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and +economies move to low-carbon alternatives, which may increase our financing cost. +We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions. These +goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that do +not yet exist or are not yet commercially viable. Our ability to meet our publicly stated targets is dependent on a number of factors outside our +control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to +timely develop and commercialize these technological solutions. Additionally, we face risks associated with allegations or similar claims that +our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as +“greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be +costly and disruptive, whether or not meritorious. + +38 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_39.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c0c5dbdd621585117497b2f815ced5aa15c5d7f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,44 @@ +Table of Contents +Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, +fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, +infrastructure and financial results as well as the safety of our team members. Operational impacts, such as more frequent or widespread +flight cancellations, could result in loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and +otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to predict accurately the materiality +of any potential losses or costs associated with the physical effects of climate change. +We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result. +We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the +protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and +surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. This universe +of substances is evolving to encompass many substances not previously regulated. Compliance with environmental laws and regulations can +require significant expenditures, and violations can lead to significant fines and penalties, as well as civil liability. +We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or +groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or +operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring +response actions. Liability under these laws may be retroactive, strict, joint and several, meaning that we could be liable for the costs of +cleaning up environmental contamination regardless of when it occurred, fault or the amount of waste directly attributable to us. We have +liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse +effect on our business. +Governmental authorities in the U.S. and abroad are increasingly focused on potential contamination resulting from the use of certain +chemicals, most notably per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, +and consumer applications over many decades, including those related to aviation. Among other things, recent changes to federal +requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational changes. +In August 2022, the EPA published for public comment a new rulemaking that would designate two PFAS substances (perfluorooctanoic acid +and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability +Act. This rulemaking, which is expected to be finalized in early 2024, would require entities to immediately report current and past releases +that meet or exceed the reportable quantity for such substances to EPA’s National Response Center. Depending on the final outcome of this +rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and +costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of +PFAS-containing waste or remediating any residual environmental impacts. +We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these +leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property +or operations described under the agreement, even in certain cases where we are not the party responsible for the initial event that caused +the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, and such +indemnities are generally joint and several among the participating airlines. +Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction +programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings as well as setting an annual flight +cap from specific cities. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely +affected if locally-imposed regulations become more restrictive or widespread. The FAA is also currently evaluating possible changes to how +aircraft noise is measured, and the resulting standards that are based on them. Ultimately, these changes could have an impact on, or limit, +our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize. +39 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..c864984fed226eac71b04205e5b5891e9fb4787a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,36 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_40.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d536fcf2402197c5a67b685bd19588a01f93d082 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,49 @@ +Table of Contents +A high level of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline +pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other +factors have caused a shortage of pilots that could materially adversely affect our business. +Large numbers of pilots in the industry accepted early retirement during the COVID-19 pandemic or are approaching the FAA’s mandatory +retirement age of 65. Our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members +must adhere to flight time and rest requirements. Commencing in 2013, the minimum flight hour requirement to achieve a commercial pilot’s +license in the United States increased from 250 to 1,500 hours, thereby significantly increasing the time and cost commitment required to +become licensed to fly commercial aircraft. Additionally, the number of military pilots being trained by the U.S. armed forces and available as +commercial pilots upon their retirement from military service has been decreasing. Further, in the course of the domestic airline industry +rapidly restoring capacity during the recovery from the COVID-19 pandemic, the significant training requirements to return large numbers of +pilots to active flying have been time consuming and disruptive. +These and other factors have contributed to a shortage of qualified, entry-level pilots, shortages of experienced pilots trained and ready for +duty, principally at our regional affiliates, and increased compensation costs materially for pilots throughout the industry. We believe that this +industry-wide pilot shortage will remain a significant problem for regional airlines in the United States for the foreseeable future. We have +recently implemented a number of recruitment initiatives intended to recruit qualified pilots to our regional airlines, including offering +significant financial incentives, but we cannot guarantee that such efforts will be successful. Notwithstanding these efforts, our regional airline +subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a +reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial +difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse +effect on our business. +As part of the FAA Authorization Renewal process, Congress has proposed increasing the pilot retirement age from 65 to 67 to help +address the pilot shortage. Raising the mandatory retirement age could help to mitigate the pilot shortage at regional airlines and other +carriers operating domestically, but it could create potentially significant challenges to mainline carriers operating internationally, as the +international standard for pilot retirement is currently 65. +We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, +and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may +adversely impact our business, results of operations and financial condition. +We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. For example, all of our +mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or +Embraer. Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and +Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently +operate in large numbers. Due to the limited number of suppliers, constraints on production capacity, large order books and long production +lead times, manufacturers may face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in +securing an adequate supply of aircraft in the future. If new aircraft orders are not filled on a timely basis, we could face higher financing and +operating costs than planned. The limited number of these suppliers may also result in reduced competition and potentially higher prices than +if the supplier base was less concentrated. In addition, we are vulnerable to any problems associated with the performance of these +suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by +suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft. If the aircraft we receive do not +meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher +financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted. We +are also subject to the risk that action by the FAA or any other regulatory authority could result in an inability to certify or operate our aircraft, +even temporarily. For instance, in March 2019, the FAA ordered the grounding of all Boeing 737 MAX Family aircraft, which remained in +place for over a year and was not lifted in the United States until November 2020. An additional grounding of Boeing aircraft occurred in +January 2024 involving the Boeing 737-9 MAX, a model that we do not operate. Further, significant limitations imposed on the use of Pratt & +Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of +the related aircraft being grounded while awaiting refurbished engines. Regulatory concerns raised by the FAA also previously forced +40 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_41.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ebedd09dc814472d5aa301d1bd2b230505b46f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +Table of Contents +Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying. More +generally, we have recently experienced delivery delays across manufacturers due to regulatory matters such as those described above, +regulatory restrictions on production rate increases (such as those that the FAA has announced it intends to impose on Boeing 737 +production), supply chain limitations, development delays, and other factors, which have created significant challenges in planning our fleet, +and those challenges are likely to continue. There is also the prospect that new aircraft models will continue to face certification delays further +impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available. +The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If, for +any reason, we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery timelines, our business, results +of operations and financial condition could be negatively impacted. Our failure to integrate newly purchased aircraft into our fleet as planned +might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such +unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial +aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased +maintenance costs, or reductions to our schedule, thereby reducing revenues. Repeated or prolonged delays in the production, delivery or +induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain +markets, which could adversely affect our business, financial condition and results of operations. +We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or +systems could harm our business, results of operations and financial condition. +We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and +systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, +financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. +In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, +maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a +timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is +hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic +tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide +technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service +disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our +revenues. Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or +expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or +failure over time. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails +to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition +time to a new system may be significant. +Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks +associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems. For example, +telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication +networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain +flight systems. On December 23, 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further +testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s +altitude and guide pilots during landings. If it were determined that 5G signals posed an interference risk to these altimeters or other systems, +the FAA indicated in its SAIB that it could restrict flight operations in areas where such interference could occur. On June 17, 2022, the FAA +and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until July 1, +2023. The delayed implementation allowed the aviation industry time to retrofit the radio altimeters on aircraft to prevent potential interference +from 5G signals. American has completed the retrofit of its impacted mainline and regional aircraft, and we now expect operational certainty +as it pertains to 5G until 2028, when the current operating agreement between the FAA, Federal Communications Commission and the +telecommunications industry expires. +Our technologies and automated systems are not completely protected against events that are beyond our control, including natural +disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and +41 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_42.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..b871ee4a77f4e96e83350966ce783be3d5c1a1b5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,50 @@ +Table of Contents +software failures, computer viruses or telecommunications failures. When service interruptions occur as a result of any of the aforementioned +events, we address them in accordance with applicable laws, rules and regulations. However, substantial or sustained system failures could +cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure that our security +measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to +these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in +a material adverse effect on our business, results of operations and financial condition. +Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling +of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of +operations and financial condition. +In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party +service providers to host or otherwise process personal information. Many federal, state and foreign governmental bodies and agencies have +adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of +personal information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to +government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance +that may legally or contractually apply to us and our vendors. These non-uniform laws, regulations, standards and guidance are complex and +currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one +jurisdiction to another. +Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners +and others, and other data such as confidential information. However, like any global enterprise operating in today’s digital business +environment, we and our third party service providers have experienced cybersecurity incidents and data breaches. For example, in July +2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that +contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals). We +react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as +well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service +providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material. +There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, +particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a +proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as +requirements for notifying regulators and affected individuals in the event of a cybersecurity incident. In addition, we are subject to an +increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed +or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting +requirements. Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully +assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention +from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report +cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to +other forms of liability. Even though we believe we and our third party service providers are generally in compliance with applicable laws, +rules and regulations relating to privacy and data security, the regulatory environment is increasingly challenging as data privacy and +cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing. These changing requirements, +along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including +significantly expanded compliance burdens, costs and enforcement risks. +In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. +In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply +with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)). While we and our service +providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and +could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, +which could materially and +42 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_43.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18008551812101e672b46a565ab6c2cd5a1155a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,50 @@ +Table of Contents +adversely affect our business. Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment +systems or the theft, loss or misuse of payment card data or transaction information. +Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new +interpretations of privacy laws. There has also been a noticeable uptick in class actions in the U.S. wherein plaintiffs have utilized a variety of +laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels. Compliance with +these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from +litigation. Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary +damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely +affect our business, results of operations and financial condition. +We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or +one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of +operations and financial condition. +Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business +partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized +access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, +such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or +other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and +other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to +equipment and injury to persons or property. The methods used to obtain unauthorized access, disable or degrade service or sabotage +systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time. The constantly changing nature of the +threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our +security measures will not be fully effective in the future. Similarly, we depend on the ability of our key commercial partners, including +AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their +businesses in a manner that complies with applicable security standards and assures their ability to perform on a timely basis. A security +failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, +interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of +critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs. +In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal +information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized +access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise. Any of these could (a) result +in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification +requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial +condition and results of operations. +The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions +increase around the world. Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as +diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or +technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and +our third party service providers’ information systems, personal information and confidential information. Geopolitical issues also continue to +increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has +resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located +in or around the region of conflict or are otherwise related to the conflict. Despite ongoing efforts to maintain and improve the security of our +information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to +circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions +and implement adequate preventative measures. We, our business partners and service providers have been the target of cybersecurity +attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future. +The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are +substantial. As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are +increasing. Further, we could be exposed to litigation, regulatory enforcement or other +43 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_44.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..43aef347c7f0f20f0c09ddb890fb31f7c8c7b523 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,48 @@ +Table of Contents +legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and +enforcement actions requiring costly compliance measures. A significant number of recent data privacy and cybersecurity incidents, including +those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity +incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship +with our customers, employees and stockholders. The increased regulatory focus on data privacy practices apart from how personal +information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may +require changes to our processes and increase compliance costs. There is also an increased risk to our business in the event of a significant +cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide +our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary +liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or +other additional liabilities, such as claims by industry groups or other third parties. Accordingly, failure to appropriately address data privacy +and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company. +We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +While our priority is to migrate an increasing portion of our customers to our modern, direct distribution channels in lieu of third party +channels, we continue to rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) +(e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e.g., +Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to +distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels. We are also dependent +upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products +(e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary +product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively +restrict the manner in which we distribute our products generally. +To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility, continue to +migrate the distribution of tickets to our proprietary and other modern distribution channels, and improve the functionality of our distribution +channels, while maintaining an industry-competitive cost structure and a high level of customer satisfaction. Further, as distribution +technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the +functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve +potentially material investments. These imperatives may affect our relationships with conventional travel agents, travel management +companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs +continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives. +Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or +disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition. +If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the +future, which may have a material adverse impact on our operations. +In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be +able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support +space. As airports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be +implemented in a commercially viable manner, given operating constraints at airports throughout our network, including those imposed by +inadequate facilities at desirable airports. +In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the +United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International +Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport. More generally, following long periods of +underinvestment, there is a trend among airports in the United States to engage in significant, expensive expansion, remodeling and +infrastructure improvement projects. This spending is expected to result in increased costs to airlines and the traveling public that use those +facilities as the airports seek to +44 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_45.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac8f558579bf5c447e8de22f99cdca00478cfe50 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,44 @@ +Table of Contents +recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by +the relevant airport authority without our approval. Accordingly, our operating costs are expected to increase significantly at many airports at +which we operate, including a number of our hubs and gateways, as a result of capital spending projects currently underway and additional +projects that we expect to commence over the next several years. +In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports we serve are +regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct +operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time +period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or +slot exemptions at DCA and two New York City airports: JFK and LGA. Our operations at these airports generally require the allocation of +slots or similar regulatory authority. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called +“perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Similarly, our operations at LHR, international airports in Frankfurt, Paris, Tokyo and other airports outside the U.S. are regulated +by local slot authorities pursuant to the International Airline Trade Association Worldwide Scheduling Guidelines and/or applicable local law. +Termination of slot controls or other operational restrictions at some or all of the foregoing airports could affect our operational performance +and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, +but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we +will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other +reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. During periods of +reduced demand for air travel, such as during the COVID-19 pandemic, we may rely on exemptions granted by applicable authorities from +the requirement that we continuously use certain slots, gates and routes or risk having such operating rights revoked, and depending on the +applicable authority these exemptions can vary in the way they are structured and applied. We cannot predict whether such exemptions will +be made available, whether they will be granted on the same or similar terms as in past instances, or whether we ultimately could be at risk +of losing valuable operating rights. If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service +to or from certain destinations in the future. We cannot provide any assurance that regulatory changes resulting in changes in the application +of slot controls or the allocation of or any reallocation of existing slots, the continued enforcement or termination of a perimeter rule or similar +regulatory regime will not have a material adverse impact on our operations. +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots +(where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition. +Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations. +We operate principally through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix +and Washington, D.C. and partner gateways including London Heathrow (among others). Substantially all of our flights either originate at or +fly into one of these locations. A significant interruption or disruption in service at one of our hubs, gateways or other airports where we have +a significant presence, resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, performance by third- +party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities +or other key facilities used by us to manage our operations (including as a result of social or environmental activism), labor relations, power +supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a severe impact on our business, results of operations and financial condition. We have limited control, particularly in the +short term, over the operation, quality or maintenance of many of the services on which our operations depend and over whether vendors of +such services will improve or continue to provide services that are essential to our business. +45 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_46.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..169fc4c56c442247f721f7da66cccb85e7c49a7a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,41 @@ +Table of Contents +Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results. +The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage +available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance +even at current prices remains uncertain. The occurrence or persistence of certain events, including armed conflicts, could also impact our +ability to obtain commercial insurance coverage against certain risks, or to obtain such insurance on commercially acceptable terms. If we +are unable to maintain adequate insurance coverage or to secure suitable alternatives outside the commercial insurance markets, our +business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could +adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both +the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along +additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance +coverage could have an adverse impact on our financial results. +The airline industry is heavily taxed. +The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. The U.S. +airline industry is one of the most heavily taxed of all industries. These fees and taxes have grown significantly in the past decade for +domestic flights, and various U.S. fees and taxes also are assessed on international flights. For example, as permitted by federal legislation, +most major U.S. airports impose a per-passenger facility charge on us. In addition, the governments of foreign countries in which we operate +impose on U.S. airlines, including us, various fees and taxes, and these assessments have been increasing in number and amount in recent +years. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as +passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees +are not our operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other +countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger +facility charge, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could +negatively impact our business, results of operations and financial condition. +Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise to our customers. Due to +the competitive revenue environment, many increases in these fees and taxes have been absorbed by the airline industry rather than being +passed on to the customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues. +Risks Related to Ownership of AAG Common Stock and Convertible Notes +The price of AAG common stock has been and may in the future be volatile. +The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a +variety of factors, many of which are beyond our control, including: +• the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; +• macro-economic conditions, including the price of fuel; +• changes in market values of airline companies as well as general market conditions; +• our operating and financial results failing to meet the expectations of securities analysts or investors; +• changes in financial estimates or recommendations by securities analysts; +• changes in our level of outstanding indebtedness and other obligations; +• changes in our credit ratings; +• material announcements by us or our competitors; +46 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_47.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..04b03a1aba756c4b0f799f2e5f9790696ba6e9c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,45 @@ +Table of Contents +• expectations regarding any future capital deployment program, including share repurchase programs and any future dividend +payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or +paying dividends; +• new regulatory pronouncements and changes in regulatory guidelines; +• general and industry-specific economic conditions; +• changes in our key personnel; +• inclusion of our common stock in broad market indexes favored by passive investors; +• investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation +companies; +• public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the +exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from +time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP +Extension Law and the ARP; +• increases or decreases in reported holdings by insiders or other significant stockholders; +• fluctuations in trading volume; and +• technical factors in the public trading market for our stock that may produce price movements that may or may not comport +with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors +(including as may be expressed on financial trading and other social media sites), the amount and status of short interest in +our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging +and other technical trading factors. +The closing price of our common stock on the Nasdaq Global Select Market varied from $10.92 to $18.80 during 2023 and $12.93 to +$15.36 during 2024 year-to-date through February 16, 2024. At times, fluctuations in our stock price have been rapid, imposing risks on +investors due to the possibility of significant, short-term price volatility. While we believe that in recent years this wide range of trading prices +has largely reflected the changing prospects for a large airline facing the challenges imposed by the COVID-19 pandemic, we also believe, +based in part on the commentary of market analysts, that the trading price of our common stock has at times been influenced by the technical +trading factors discussed in the last bullet above. On some occasions, market analysts have explained fluctuations in our stock price by +reference to purported “short squeeze” activity. A “short squeeze” is a technical market condition that occurs when the price of a stock +increases substantially, forcing market participants who had taken a position that its price would fall (i.e., who had sold the stock “short”), to +buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such +market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a +stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models. +If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so +or that such a capital deployment program will enhance long-term stockholder value. +If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may +include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our future +repurchases of AAG common stock, if any, may be limited, suspended or discontinued at any time at our discretion and without prior notice. +If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to +market and economic conditions, applicable legal requirements and other relevant factors. The amount and timing of any future dividends, if +any, may vary, and the payment of any dividend does not assure that we will pay dividends in the future. +In addition, any future repurchases of AAG common stock or payment of dividends, or any determination to cease repurchasing stock or +paying dividends, could affect our stock price and increase its volatility. The existence of a future share repurchase program and any future +dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. +Additionally, any future repurchases of AAG common stock +47 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_48.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..398c659e1708343e6de8bb8bc6463dd8ae7bd611 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,37 @@ +Table of Contents +or payment of dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future +strategic opportunities and acquisitions. Further, our repurchase of AAG common stock may fluctuate such that our cash flow may be +insufficient to fully cover our share repurchases. Under the recently enacted IRA, we may become subject to an excise tax on the fair market +value of AAG common stock repurchased after December 31, 2022, which may adversely affect our financial condition. Although our share +repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. +AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition +and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes. +Our Certificate of Incorporation and Bylaws include significant provisions that limit voting and ownership and disposition of our equity +interests as described in Part II, Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer +Purchases of Equity Securities - “Ownership Restrictions” and AAG’s Description of the Registrants’ Securities Registered Pursuant to +Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto. Further restrictions are set forth in our Tax Benefit +Preservation Plan, which was filed as Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021. These restrictions may +adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect +the ability of persons to acquire shares of AAG common stock and our other equity interests. +Our Certificate of Incorporation also specifies that the Court of Chancery of the State of Delaware shall be the exclusive forum for +substantially all disputes between us and our stockholders. Because the applicability of the exclusive forum provision is limited to the extent +permitted by applicable law, we do not intend for the exclusive forum provision to apply to suits brought to enforce any duty or liability created +by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and acknowledge that federal courts have +concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933 (Securities Act). We note that +there is uncertainty as to whether a court would enforce the provision as it applies to the Securities Act and that investors cannot waive +compliance with the federal securities laws and the rules and regulations thereunder. This provision may have the effect of discouraging +lawsuits against our directors and officers. +Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition +of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial. +Certain provisions of our Certificate of Incorporation and Bylaws, as currently in effect, may have the effect of delaying or preventing +changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our +stockholders. These provisions include, among other things, the following: +• advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; +• the ability of our Board of Directors to fill vacancies on the board; +• a prohibition against stockholders taking action by written consent; +• stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow +the procedures provided for in the amended Bylaws; +• a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors +approve any amendment of our Bylaws submitted to stockholders for approval; and +• super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. +48 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_49.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..80cadbba2237299ae31ab6571d44e4d76ad2fb52 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ +Table of Contents +These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our +stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our +Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might +believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In +addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations +with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the +Board of Directors prior to the investment under Section 203. +The issuance or sale of shares of our common stock, rights to acquire shares of our common stock, or warrants issued to the +U.S. Department of Treasury under the CARES Act, the PSP Extension Law, the ARP, PSP1, PSP2 and PSP3, could depress the +trading price of our common stock and the Convertible Notes. +We may conduct future offerings of material amounts of our common stock, preferred stock or other securities that are convertible into or +exercisable for our common stock to finance our operations, to fund acquisitions, or for any other purposes at any time and from time to time +(including as compensation to the U.S. Government for the proceeds received pursuant to the payroll support program established under the +Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of +Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established +under the American Rescue Plan Act of 2021 (ARP) (PSP3)). If these additional shares or securities are issued or sold, or if it is perceived +that they will be sold, into the public market or otherwise, the trading price of our common stock and the 6.50% convertible senior notes due +2025 (the Convertible Notes) could decline substantially. If we issue additional shares of our common stock or rights to acquire shares of our +common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such +issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially. +ITEM 1B. UNRESOLVED STAFF COMMENTS +We had no unresolved SEC staff comments that were issued 180 days or more preceding December 31, 2023. +ITEM 1C. CYBERSECURITY +Cybersecurity Risk Management and Strategy +The safety and security of our customers and team members is our top priority. This includes working to put in place appropriate +administrative, physical and technical cybersecurity safeguards to help protect our assets that keep our operation running and securely store +the information in our care. We have developed and implemented a cybersecurity risk management program intended to protect the +confidentiality, integrity, and availability of our systems and information. +We have created, and assess our program against, an integrated cybersecurity framework using various National Institute of Standards +and Technology (NIST) security standards, guidelines and best practices. This does not imply that we meet any particular technical +standards, specifications, or requirements, only that we use various NIST security standards, guidelines and best practices to identify, +assess, and manage cybersecurity risks relevant to our business. +Our cybersecurity risk management program is overseen by our Executive Cybersecurity Risk Group (ECRG) which is comprised of our +Chief Digital and Information Officer (CDIO), Chief Financial Officer and Chief Legal Officer. The ECRG, working with our Chief Information +Security Officer (CISO), assists the Board of Directors and our senior leadership team in fulfilling their responsibilities for cybersecurity +governance, approval and oversight through the periodic reporting and review of security strategy and risk management practices. Our +cybersecurity risk management program is integrated into our overall risk management processes and shares common reporting channels +and governance processes that apply across the enterprise to other legal, compliance, strategic, operational, and financial risk governance +programs. +Our cybersecurity risk management program includes: +• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader +enterprise IT environment; +• a cybersecurity team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security +controls, (3) vulnerability management program and (4) detection and response to cybersecurity incidents; +49 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..1150a2389956d2a33d721b1f7a63b4b740053b05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,25 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_50.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..7d75b1b22da6a5191630bc118dfa4b1d7fbe2d73 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,37 @@ +Table of Contents +• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security +controls; +• policies, procedures and standards that are utilized to outline expectations, guidelines and best practices for managing +cybersecurity risks; +• cybersecurity awareness training for our employees, incident response personnel and senior management; +• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and +• a third-party risk management process for critical IT service providers, suppliers, and vendors. +We are constantly assessing our environment for cybersecurity threats, and we face risks from cybersecurity threats that, if realized, are +reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. At the time of +this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have +materially affected us, including our operations, business strategy, results of operations or financial condition. See Part I, Item 1A. Risk +Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws +relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy +incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, +results of operations and financial condition.” +Cybersecurity Governance +Our Board of Directors consider cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee +(Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of +our cybersecurity risk management program. +The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, +as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential. +The Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of +Directors also receives periodic briefings from management on our cyber risk management program. Board of Directors members receive +presentations on cybersecurity topics from a combination of our CDIO, CISO, Deputy General Counsel, internal security staff, external +counsel or external experts, as part of the Board of Director’s continuing education on topics that impact public companies. +Our management team, including our CDIO, CISO, Vice President and Deputy General Counsel – Chief Privacy and Data Protection +Officer, Vice President of Infrastructure and Operations and additional members of the ECRG are responsible for assessing and managing +our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and +supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Collectively, our management team +has extensive information technology experience, as well as cybersecurity incident response, compliance, oversight, and program +management experience. Additionally, certain leaders and personnel within the cybersecurity organization hold industry certifications, such +as Certified Information Systems Security Professional or Certified Information Security Manager. +Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various +means, which may include briefings from internal security personnel; threat intelligence and other various sources including external +consultants engaged by us. +50 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_51.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..23b7cc0ccb80d8db1f7d37556edbeec01d9d240e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 2. PROPERTIES +Flight Equipment +As of December 31, 2023, American operated a mainline fleet of 965 aircraft. During 2023, American accepted delivery of 31 mainline +aircraft including 17 Boeing 737-8 MAX, 10 Airbus A321neo and four Boeing 787-8 aircraft and returned nine mainline aircraft to service from +temporary storage. We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements +operating as American Eagle. As of December 31, 2023, American Eagle operated 556 regional aircraft. During 2023, we increased our +regional fleet by a net of 20 aircraft, including the addition of 83 regional aircraft, the return of 55 regional aircraft to third-party regional +carriers and temporarily parking eight regional aircraft. +Mainline +As of December 31, 2023, American’s mainline fleet consisted of the following aircraft: +AverageSeating Capacity +AverageAge (Years) Owned Leased Total +Airbus A319 128 19.7 21 112 133 +Airbus A320 150 22.7 10 38 48 +Airbus A321 184 11.4 164 54 218 +Airbus A321neo 195 2.9 43 35 78 +Boeing 737-800 172 14.1 132 171 303 +Boeing 737-8 MAX 172 3.2 26 33 59 +Boeing 777-200ER 273 23.0 44 3 47 +Boeing 777-300ER 304 9.8 18 2 20 +Boeing 787-8 234 5.1 20 17 37 +Boeing 787-9 285 6.2 17 5 22 +Total 12.9 495 470 965 +Regional +As of December 31, 2023, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the +following aircraft: +Average Seating Capacity Owned Leased +Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier +Number of Aircraft Operated +Bombardier CRJ 200 50 — — 40 40 Air Wisconsin 40 +Bombardier CRJ 700 65 50 — 90 140 SkyWest 90 +PSA 50 +Total 140 +Bombardier CRJ 900 76 74 — — 74 PSA 74 +Embraer 170 65 6 23 5 34 Envoy 29 +Republic 5 +Total 34 +Embraer 175 76 108 — 102 210 Envoy 108 +Republic 82 +SkyWest 20 +Total 210 +Embraer 145 50 58 — — 58 Piedmont 58 +Total 296 23 237 556 556 +(1) +(1) +(1) +(1) +51 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_52.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e12670b473c56289e1b93ba0e450210505180ca --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,45 @@ +Table of Contents +Excluded from the total operating aircraft count above are 77 regional aircraft that are being held in temporary storage as follows: 57 +owned Embraer 145, seven owned and four leased Bombardier CRJ 700, six owned Bombardier CRJ 900 and three leased Embraer +170. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on our capacity purchase agreements with third-party regional carriers. +Aircraft and Engine Purchase Commitments +As of December 31, 2023, we had definitive purchase agreements for the acquisition of the following new aircraft : +2024 2025 2026 2027 2028 2029 andThereafter Total +Airbus +A320neo Family 3 21 35 5 — — 64 +Boeing +737 MAX Family 20 33 21 — — — 74 +787 Family 6 5 4 5 5 5 30 +Embraer +175 12 — — — — — 12 +Total 41 59 60 10 5 5 180 +Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “Contractual Obligations” +table in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates +are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and +regulatory concerns. +As of December 31, 2023, we had committed to purchase two used Airbus A321neo aircraft which were delivered in January 2024. We +had also committed to purchasing six used Embraer 175 aircraft, which are currently flown under a capacity purchase agreement with a third- +party regional carrier and which are already included in our aircraft count. We also have agreements for 44 spare engines to be delivered in +2024 and beyond. +We have financing commitments in place for all aircraft scheduled to be delivered in 2024, except for three Airbus A320neo Family aircraft +and two Embraer 175 aircraft. Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various +terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant +financing counterparty of its obligations thereunder. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other +capital to operate successfully” for additional discussion. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments. +Ground Properties +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Additionally, at our hub locations and in certain other cities we serve, we lease +administrative offices, catering, cargo, training, maintenance and other facilities. +We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and +maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. +(1) +(1) +(1) +52 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_53.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb91f8c8374db1ab15d35806f38950603c42978f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,7 @@ +Table of Contents +ITEM 3. LEGAL PROCEEDINGS +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for information on legal proceedings. +ITEM 4. MINE SAFETY DISCLOSURES +Not applicable. +53 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_54.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..955193a4efa1bafdc52cd9da5d1652589373916f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,22 @@ +Table of Contents +PART II +ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER +PURCHASES OF EQUITY SECURITIES +Stock Exchange Listing +Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the +common stock of American, which is a wholly-owned subsidiary of AAG. +As of February 16, 2024, there were approximately 54,000 holders of record of our common stock. However, because many of the shares +of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial +holders of our common stock than record holders. +Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the +2024 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan +Information” and is incorporated by reference into this Annual Report on Form 10-K. +Dividends on Common Stock +There were no cash dividend payments during the years ended December 31, 2023 and 2022. In connection with our receipt of financial +assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022, when this +restriction expired. If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will +be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a +dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and +without prior notice. +54 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_55.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4aeb2045527668fb60fd250fdf9d63565acf8bcf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,25 @@ +Table of Contents +Stock Performance Graph +The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall +such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, +except to the extent that we specifically incorporate it by reference into such filing. +The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2018 to +December 31, 2023 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s +Financial Services, LLC (S&P) 500 Stock Index. The comparison assumes $100 was invested on December 31, 2018 in our common stock +and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph +represents historical stock performance and is not necessarily indicative of future stock price performance. +12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 +American Airlines Group Inc. (AAL) $ 100 $ 91 $ 50 $ 57 $ 40 $ 44 +NYSE ARCA Airline Index (XAL) 100 121 92 90 58 75 +S&P 500 Index (GSPC) 100 129 150 190 153 190 +Purchases of Equity Securities by the Issuer and Affiliated Purchasers +The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with +our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through +September 30, 2022, when this restriction expired. No repurchases of AAG common stock were made in 2023 or 2022 following the lapse of +these restrictions. As of December 31, 2023, the Board of Directors of AAG had not authorized another share repurchase program. Any +future determination to enter into a share repurchase program will be at the discretion of the Board of Directors, subject to applicable legal +limitations, and will depend upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by +the Board of Directors. +See Part I, Item 1A. Risk Factors – “If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee +that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.” +55 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_56.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d2f55d66c3fe4849e2eeec0ad0ae395eff69e4a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,26 @@ +Table of Contents +Ownership Restrictions +AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States +Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act +and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or +representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than +(a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities. Our Certificate of +Incorporation and Bylaws further specify that it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities +on our foreign stock record and provide for remedies applicable to stockholders that exceed the voting and ownership caps described above. +In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for +federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefit Preservation Plan. The Tax +Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit +Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring +certain acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such +acquisitions may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by +discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non- +exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its +ownership interest in AAG. +See Part I, Item 1A. Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that +limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “Our +ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed +as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities +Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed +description. +56 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_57.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65f4605d97f9aeb791ec011c4f707a306cf6bc1c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,39 @@ +Table of Contents +ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA +Selected Consolidated Financial Data of AAG +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from AAG’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions, except share and per share amounts) +Consolidated Statements of Operations data: +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Net income (loss) 822 127 (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted 1.21 0.19 (3.09) +Shares used for computation (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +Consolidated Balance Sheet data (at end of period): +Total assets $ 63,058 $ 64,716 $ 66,467 +Debt and finance leases 32,902 35,663 38,060 +Pension and postretirement obligations 3,171 2,926 5,150 +Operating lease liabilities 7,761 8,024 8,117 +Stockholders’ deficit (5,202) (5,799) (7,340) +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG's Consolidated Financial +Statements in Part II, Item 8A for further information on pension and postretirement benefits. +Reconciliation of GAAP to Non-GAAP Financial Measures +We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in +accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance +and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to +investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and +should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in +accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures +on a GAAP basis. +(1) +(1) +57 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_58.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..a36ca4708efb74c6c497e24be3fdf4211766fed5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,54 @@ +Table of Contents +The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP +measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures). Management +uses these non-GAAP financial measures to evaluate our current operating performance and to allow for period-to-period comparisons. As +net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an +additional tool to understand our core operating performance. + Year Ended December 31, + 2023 2022 + (In millions) +Components of Total Special Items, Net: +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net 979 198 +Debt refinancing and extinguishment 280 3 +Mark-to-market adjustments on equity investments, net 82 71 +Nonoperating special items, net 362 74 +Pre-tax special items, net 1,341 272 +Income tax special items, net — (9) +Total special items, net $ 1,341 $ 263 +Reconciliation of Pre-Tax Income Excluding Net Special Items: +Pre-tax income – GAAP $ 1,121 $ 186 +Adjusted for: Pre-tax special items, net 1,341 272 +Pre-tax income excluding net special items $ 2,462 $ 458 +Reconciliation of Net Income Excluding Net Special Items: +Net income – GAAP $ 822 $ 127 +Adjusted for: Total special items, net 1,341 263 +Adjusted for: Net tax effect of net special items (304) (62) +Net income excluding net special items $ 1,859 $ 328 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. +(1) +(2) +(3) +(4) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +58 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_59.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..288cee394b5dcf838be3c41ef5c242cec7bb27d9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,36 @@ +Table of Contents +Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity +investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity +investments. +Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net +special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items +and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to +evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts +the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel allows management an +additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding. + Year Ended December 31, + 2023 2022 +Reconciliation of CASM Excluding Net Special Items and Fuel: +(In millions) +Total operating expenses – GAAP $ 49,754 $ 47,364 +Operating net special items : +Mainline operating special items, net (971) (193) +Regional operating special items, net (8) (5) +Aircraft fuel and related taxes (12,257) (13,791) +Total operating expenses, excluding net special items and fuel $ 36,518 $ 33,375 +(In millions) +Total Available Seat Miles (ASM) 277,723 260,226 +(In cents) +CASM 17.92 18.20 +Operating net special items per ASM : +Mainline operating special items, net (0.35) (0.07) +Regional operating special items, net — — +Aircraft fuel and related taxes per ASM (4.41) (5.30) +CASM, excluding net special items and fuel 13.15 12.83 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +(6) +(1) +(1) +(1) +59 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f83ba57c72a6d8c1f3e66e1ea93b5a3e0ad5c9e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,35 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_60.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f56c284e16b4c3266e3ca0af84258fca254aaa1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,24 @@ +Table of Contents +Selected Consolidated Financial Data of American +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from American’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions) +Consolidated Statements of Operations data: +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Net income (loss) 1,188 338 (1,777) +Consolidated Balance Sheet data (at end of period): +Total assets $ 69,074 $ 70,324 $ 71,145 +Debt and finance leases 27,675 30,422 32,094 +Pension and postretirement obligations 3,148 2,900 5,117 +Operating lease liabilities 7,708 7,961 8,074 +Stockholder’s equity 6,577 5,593 3,826 +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial +Statements in Part II, Item 8B for further information on pension and postretirement benefits. +(1) +(1) +60 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_61.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..43d353b2c78f9c3bd2f4efc60dfe810d39f2194a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,47 @@ +Table of Contents +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS +2023 Financial Overview +The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of +this report and should be read in conjunction with those financial statements and the related notes thereto. + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger revenue $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo revenue 812 1,233 (421) (34.1) +Other operating revenue 3,464 3,170 294 9.3 +Total operating revenues 52,788 48,971 3,817 7.8 +Aircraft fuel and related taxes 12,257 13,791 (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Total operating expenses 49,754 47,364 2,390 5.0 +Operating income 3,034 1,607 1,427 88.8 +Pre-tax income 1,121 186 935 nm +Income tax provision 299 59 240 nm +Net income 822 127 695 nm +Pre-tax income – GAAP $ 1,121 $ 186 $ 935 nm +Adjusted for: pre-tax net special items 1,341 272 1,069 nm +Pre-tax income excluding net special items $ 2,462 $ 458 $ 2,004 nm +See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to +AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of pre-tax net special items. +Not meaningful or greater than 100% change. +Pre-Tax Income and Net Income +Pre-tax income and net income were $1.1 billion and $822 million, respectively, in 2023. This compares to 2022 pre-tax income and net +income of $186 million and $127 million, respectively. +The year-over-year improvement in our pre-tax income on a GAAP basis was driven primarily by higher passenger revenue and lower fuel +costs. Continued strength in demand for air travel and a 7.6% increase in revenue passenger miles (RPMs) as compared to 2022 contributed +to record passenger revenue in 2023. Aircraft fuel costs were lower primarily due to a 16.3% decrease in the average price per gallon of +aircraft fuel as compared to 2022. The increase to pre-tax income was partially offset by increases in certain operating expenses including +salaries, wages and benefits costs, primarily as a result of the ratification of a new collective bargaining agreement with our mainline pilots, +as described below. The 2023 period also included $1.3 billion of pre-tax net special items, principally related to one-time charges resulting +from the new collective bargaining agreement. +Excluding the effects of pre-tax net special items, pre-tax income was $2.5 billion and $458 million in 2023 and 2022, respectively. The +year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in +2023 and lower fuel costs, offset in part by increases in certain operating expenses including salaries, wages and benefits, as described +above. +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement, which was ratified in August 2023. This four-year agreement provides wage rate increases, including +an initial wage rate increase of 21% effective as of January 1, 2023, +(2) +(1) +(1) +(2) +61 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_62.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd0804fa09aacce26d99e2df5869efe23d47754f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,39 @@ +Table of Contents +quality-of-life benefits and other benefit-related items. The additional compensation for the 2023 period prior to contract ratification as a result +of the higher wage rates was recorded within salaries, wages and benefits in the consolidated statements of operations in the second and +third quarters of 2023. The agreement also included a provision for a one-time payment upon ratification. In 2023, one-time charges resulting +from the ratification of this new agreement were recorded as mainline operating special items, net in the consolidated statement of +operations, including the one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. The one-time +payment and the additional compensation were principally paid in 2023, with remaining payments expected to be paid in the first quarter of +2024. +Revenue +In 2023, we reported total operating revenues of $52.8 billion, an increase of $3.8 billion, or 7.8%, as compared to 2022. Passenger +revenue was $48.5 billion, an increase of $3.9 billion, or 8.8%, as compared to 2022. The increase in passenger revenue in 2023 was +primarily due to a 7.6% increase in RPMs, driven by the continued strength in demand for air travel, resulting in an 83.5% load factor. +Cargo revenue decreased $421 million, or 34.1%, in 2023 as compared to 2022, primarily due to a 29.4% decrease in cargo yield and a +6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 as compared to 2022, driven primarily by higher revenue associated +with our loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Our total revenue per available seat mile (TRASM) was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Fuel +In 2023, aircraft fuel expense totaled $12.3 billion, a decrease of $1.5 billion, or 11.1%, as compared to 2022. This decrease was primarily +driven by a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset +in part by a 6.1% increase in gallons of fuel consumed due to increased capacity. +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. +Other Costs +We remain committed to actively managing our cost structure, which we believe is necessary in an industry in which economic prospects +are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. +Our 2023 CASM was 17.92 cents, a decrease of 1.6%, from 18.20 cents in 2022. This decrease in CASM was primarily driven by lower +aircraft fuel costs in 2023, as described above, offset by higher salaries, wages and benefits costs associated with the ratification of a new +collective bargaining agreement with our mainline pilots, as described above. +Our 2023 CASM excluding net special items and fuel was 13.15 cents, an increase of 2.5%, from 12.83 cents in 2022, which was primarily +driven by higher salaries, wages and benefits costs associated with the ratification of a new collective bargaining agreement with our mainline +pilots, as described above. +For a reconciliation of total operating CASM to total operating CASM excluding net special items and fuel, see Part II, Item 6. Selected +Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” +62 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_63.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e967e03c9ae31b4f82c4fc0a60dc218f6d2213a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,25 @@ +Table of Contents +Liquidity +As of December 31, 2023, we had $10.4 billion in total available liquidity, consisting of $7.6 billion in unrestricted cash and short-term +investments and $2.9 billion in total undrawn capacity under revolving credit and other short-term facilities. +During 2023, we completed the following financing transactions (see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item +8A for further information): +• refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility (the +2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of $750 million in aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) and (ii) the entry into the Seventh Amendment to the 2013 +Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025; +• extended the maturity of certain commitments under the 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving +Facility to October 2026; +• issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% Senior Secured Notes) in a +private offering and entered into the 2023 Credit Agreement that provides for a term loan facility (the 2023 Term Loan Facility) in an +aggregate principal amount of $1.1 billion. The net proceeds from the offering of the 8.50% Senior Secured Notes, together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand were used to redeem all of American’s outstanding +11.75% senior secured notes due 2025 (the 11.75% Senior Secured Notes); +• issued $1.1 billion of equipment loans and other notes payable in connection with the financing of certain aircraft; and +• repurchased $552 million of secured and unsecured notes in the open market. +A significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of +unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and/or contain covenants requiring +us to meet certain loan to value, collateral coverage and/or peak debt service coverage ratios. +See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. +63 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_64.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..3eb8aa5e4cf2d56a8719843079cd7880a5b6c1c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,53 @@ +Table of Contents +AAG’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “AAG’s Results of Operations” of our 2022 Form 10-K. +Operating Statistics +The table below sets forth selected operating data for the years ended December 31, 2023 and 2022. + Year Ended December 31, Increase (Decrease) 2023 2022 +Revenue passenger miles (millions) 231,926 215,624 7.6% +Available seat miles (millions) 277,723 260,226 6.7% +Passenger load factor (percent) 83.5 82.9 0.6pts +Yield (cents) 20.92 20.67 1.2% +Passenger revenue per available seat mile (cents) 17.47 17.13 2.0% +Total revenue per available seat mile (cents) 19.01 18.82 1.0% +Fuel consumption (gallons in millions) 4,140 3,901 6.1% +Average aircraft fuel price including related taxes (dollars per gallon) 2.96 3.54 (16.3)% +Total operating cost per available seat mile (cents) 17.92 18.20 (1.6)% +Aircraft at end of period 1,521 1,461 4.1% +Full-time equivalent employees at end of period 132,100 129,700 1.9% +Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile. +Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile. +Passenger load factor – The percentage of available seats that are filled with revenue passengers. +Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs. +Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs. +Total revenue per available seat mile (TRASM) – Total revenues divided by ASMs. +Total operating cost per available seat mile (CASM) – Total operating expenses divided by ASMs. +Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase +agreements. Excluded from the aircraft count above are 77 regional aircraft in temporary storage as of December 31, 2023 as +follows: 57 Embraer 145, 11 Bombardier CRJ 700, six Bombardier CRJ 900 and three Embraer 170. +Operating Revenues + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,464 3,170 294 9.3 +Total operating revenues $ 52,788 $ 48,971 $ 3,817 7.8 +(a) +(b) +(c) +(d) +(e) +(f) +(g) + (h) +(a) +(b) +(c) +(d) +(e) +(f) +(g) +(h) +64 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_65.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb9697102239b8f3bbdad6149f3783075d6ed53e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,42 @@ +Table of Contents +This table presents our passenger revenue and the year-over-year change in certain operating statistics: + Increasevs. Year Ended December 31, 2022 + Year Ended December 31, 2023 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM + (In millions) +Passenger revenue $ 48,512 8.8% 7.6% 6.7% 0.6pts 1.2% 2.0% +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in a 7.6% increase in RPMs and an 83.5% load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to a 29.4% decrease in cargo yield and a 6.7% +decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with our loyalty +program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, +respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. Our TRASM was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Regional expenses 4,643 4,385 258 5.9 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,936 1,977 (41) (2.1) +Mainline operating special items, net 971 193 778 nm +Other 6,006 5,422 584 10.8 +Total operating expenses $ 49,754 $ 47,364 $ 2,390 5.0 +Additional detail regarding changes in our operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with our mainline pilots. +Regional expenses increased $258 million, or 5.9%, in 2023 from 2022 primarily due to increased costs at our wholly-owned regional +carriers, including pay rate increases and higher costs for maintenance, materials and repairs driven by an increase in the volume of engine +overhauls. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +65 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_66.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4f6f3e0dc1b29e207e5d720233e28cc1c02444c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,51 @@ +Table of Contents +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $584 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, + 2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net $ 979 $ 198 +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 591 $ 216 $ 375 nm +Interest expense, net (2,145) (1,962) (183) 9.3 +Other income (expense), net (359) 325 (684) nm +Total nonoperating expense, net $ (1,913) $ (1,421) $ (492) 34.6 +Interest income increased $375 million in 2023 compared to 2022 primarily as a result of higher returns on our short-term investments. +Interest expense, net increased $183 million, or 9.3%, in 2023 compared to 2022 primarily due to higher interest rates on our variable-rate +debt instruments, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit +plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +(1) +(2) +(3) +(1) +(2) +(3) +66 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_67.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..bcd71d6e0757575498233d8642c55c320b81e50f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,34 @@ +Table of Contents +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +In 2023, we recorded an income tax provision of $299 million with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2023, we had approximately +$13.7 billion of gross federal NOLs and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 +billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of +NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if +unused. +In 2022, we recorded an income tax provision of $59 million at an effective rate of approximately 32%, which was substantially non-cash. +See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. +American’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “American’s Results of Operations” of American’s 2022 Form 10-K. +Operating Revenues + Year Ended December 31, +Increase (Decrease) Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,460 3,164 296 9.3 +Total operating revenues $ 52,784 $ 48,965 $ 3,819 7.8 +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in an increase in RPMs and an increase in load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to decreases in cargo yield and cargo ton miles driven +by lower demand and increased air freight capacity globally. +Other operating revenue increased $296 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with +American’s loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. +67 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_68.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7b58c5cd4a8e77a164a7b5a79c46a00dfe8f6fc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,47 @@ +Table of Contents +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,572 12,965 1,607 12.4 +Regional expenses 4,619 4,345 274 6.3 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,927 1,969 (42) (2.2) +Mainline operating special items, net 971 193 778 nm +Other 6,008 5,425 583 10.8 +Total operating expenses $ 49,715 $ 47,312 $ 2,403 5.1 +Additional detail regarding changes in American’s operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with American’s mainline pilots. +Regional expenses increased $274 million, or 6.3%, in 2023 from 2022 primarily due to contractual rate increases with American’s +regional carriers. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $583 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, +2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net $ 971 $ 193 +(1) +(2) +(3) +68 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_69.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..523d2c41b3b570bca369dc38068d7f74995dac92 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,45 @@ +Table of Contents +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 1,078 $ 349 $ 729 nm +Interest expense, net (2,206) (1,872) (334) 17.8 +Other income (expense), net (359) 324 (683) nm +Total nonoperating expense, net $ (1,487) $ (1,199) $ (288) 24.0 +Interest income increased $729 million in 2023 compared to 2022 primarily as a result of higher returns on American’s short-term +investments and related party receivables from AAG. Interest expense, net increased $334 million, or 17.8%, in 2023 compared to 2022 +primarily due to higher interest rates on American’s variable-rate debt instruments and related party payables from AAG’s wholly-owned +subsidiaries, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $33 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $423 million of non-service related pension and other postretirement benefit +plan income, offset in part by $72 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +American is a member of AAG’s consolidated federal and certain state income tax returns. +In 2023, American recorded an income tax provision of $394 million with an effective rate of approximately 25%, which was substantially +non-cash. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2023, American +had approximately $13.7 billion of gross federal NOLs and $3.6 billion of other carryforwards available to reduce future federal taxable +income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion can be carried forward indefinitely. American also had +approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable +years 2023 through 2043 if unused. +In 2022, American recorded an income tax provision of $116 million at an effective rate of approximately 26%, which was substantially +non-cash. +See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. +(1) +(2) +(3) +69 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b5d6801c2b021c85da0ea4e790af83997f9cf68 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,36 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_70.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..edb5aa3025f232e7410b515d17103bec0610ad60 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,37 @@ +Table of Contents +Liquidity and Capital Resources +Liquidity +At December 31, 2023, AAG had $10.4 billion in total available liquidity and $910 million in restricted cash and short-term investments. +Additional detail regarding our available liquidity is provided in the table below (in millions): + AAG American + December 31, December 31, + 2023 2022 2023 2022 +Cash $ 578 $ 440 $ 567 $ 429 +Short-term investments 7,000 8,525 6,998 8,523 +Undrawn facilities 2,862 3,033 2,862 3,033 +Total available liquidity $ 10,440 $ 11,998 $ 10,427 $ 11,985 +In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our +outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions +or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we +may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other +factors. The amounts involved may be material. For further information regarding our debt repurchases for the year ended December 31, +2023, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial +Statements in Part II, Item 8B. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt +financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine enhanced equipment trust +certificates (EETCs)) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements +require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage +or peak debt service coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to +pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain +accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. As of the most +recent applicable measurement dates, we were in compliance with each of the foregoing LTV, collateral coverage and peak debt service +coverage tests. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of +at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our +AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in +early repayment, in whole or in part, of the AAdvantage Financing. For further information regarding our debt covenants, see Note 4 to AAG’s +Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. +70 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_71.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..160bfe8c8d9d7e1ac9569df3e5967f483669f9a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,42 @@ +Table of Contents +Sources and Uses of Cash +For a comparison of the 2022 and 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial +Condition and Results of Operations – “Sources and Uses of Cash” of our 2022 Form 10-K. +AAG +Operating Activities +Our net cash provided by operating activities was $3.8 billion and $2.2 billion in 2023 and 2022, respectively, a $1.6 billion year-over-year +increase due to higher profitability and cash provided by working capital management. +Investing Activities +Our net cash used in investing activities was $502 million in 2023 as compared to net cash provided by investing activities of $636 million +in 2022. +Our principal investing activities in 2023 included $2.6 billion of capital expenditures, which primarily related to the purchase of 17 Boeing +737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare engines. +These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the sale of +property and equipment and sale-leaseback transactions. +Our principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset in part +by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 +million of equity investments, principally related to GOL. +Financing Activities +Our net cash used in financing activities was $3.2 billion and $2.6 billion in 2023 and 2022, respectively. +Our principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due to +scheduled debt repayments. In February 2023, we refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, we +issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in an +aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from borrowings +under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. In addition, +we borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $552 million of secured and unsecured notes in +the open market. +Our principal financing activities in 2022 included $3.8 billion in repayments of debt and finance lease obligations, consisting of $2.2 billion +of scheduled debt repayments including the repayment of $401 million in connection with the maturity of our 5.000% unsecured notes, the +$1.2 billion prepayment of the December 2016 Term Loan Facility and the repurchase of $349 million of unsecured notes in the open market. +These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment +notes related to EETCs and $205 million in connection with the financing of certain aircraft. +American +Operating Activities +American’s net cash provided by operating activities was $3.7 billion and $1.3 billion in 2023 and 2022, respectively, a $2.4 billion year- +over-year increase due to higher profitability and cash provided by working capital management. +Investing Activities +American’s net cash used in investing activities was $449 million in 2023 as compared to net cash provided by investing activities of $693 +million in 2022. +71 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_72.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..16dea7232a6f0ae60f76a639804ede0da719f141 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,40 @@ +Table of Contents +American’s principal investing activities in 2023 included $2.5 billion of capital expenditures, which primarily related to the purchase of 17 +Boeing 737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare +engines. These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the +sale of property and equipment and sale-leaseback transactions. +American’s principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset +in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and +$321 million of equity investments, principally related to GOL. +Financing Activities +American’s net cash used in financing activities was $3.2 billion and $1.8 billion in 2023 and 2022, respectively. +American’s principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due +to scheduled debt repayments. In February 2023, American refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, +American issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in +an aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from +borrowings under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. +In addition, American borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $539 million of secured notes +in the open market. +American’s principal financing activities in 2022 included $3.0 billion in repayments of debt and finance lease obligations, consisting of +$1.8 billion of scheduled debt repayments and the $1.2 billion prepayment of the December 2016 Term Loan Facility. These cash outflows +were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to +EETCs and $205 million in connection with the financing of certain aircraft. +Commitments +For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the +Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below. + AAG American +Debt Note 4 Note 3 +Leases Note 5 Note 4 +Employee Benefit Plans Note 9 Note 8 +Commitments, Contingencies and Guarantees Note 11 Note 10 +Off-Balance Sheet Arrangements +An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity +under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under +derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that +provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development +arrangements with us. +We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material +current or future effect on financial condition, liquidity or results of operations. +72 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_73.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec73e53c68211659aff5905045ca3089dd6679a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,25 @@ +Table of Contents +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +73 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_74.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..49f69c297ada889d2a16ea2cb49bf6bc99e04809 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,59 @@ +Table of Contents +Contractual Obligations +The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2023 (in +millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time +and is subject to other conventions as set forth in the applicable accompanying footnotes. + Payments Due by Period + 2024 2025 2026 2027 2028 2029 andThereafter Total +American +Long-term debt: +Principal amount (See Note 3) $ 3,502 $ 3,702 $ 4,582 $ 4,618 $ 5,060 $ 6,062 $ 27,526 +Interest obligations 1,679 1,341 1,037 737 475 492 5,761 +Finance lease obligations (See Note 4) 156 140 114 71 30 89 600 +Aircraft and engine purchase commitments (SeeNote 10(a)) 2,410 3,725 3,580 1,118 829 645 12,307 +Operating lease commitments(See Note 4) 1,821 1,565 1,347 1,182 1,052 4,051 11,018 +Regional capacity purchase agreements (SeeNote 10(b)) 2,038 1,992 1,702 1,473 693 1,332 9,230 +Minimum pension obligations (See Note 8) 280 251 244 165 140 65 1,145 +Retiree medical and other postretirement benefits(See Note 8) 125 131 137 137 135 606 1,271 +Other purchase obligations (See Note 10(a)) 4,673 2,044 1,396 150 124 843 9,230 +Total American Contractual Obligations $ 16,684 $ 14,891 $ 14,139 $ 9,651 $ 8,538 $ 14,185 $ 78,088 +AAG Parent and Other AAG Subsidiaries +Long-term debt: +Principal amount (See Note 4) $ — $ 1,487 $ — $ — $ — $ 3,746 $ 5,233 +Interest obligations 121 145 156 190 192 399 1,203 +Finance lease obligations (See Note 5) 10 — — — — — 10 +Operating lease commitments (See Note 5) 20 12 9 5 3 26 75 +Minimum pension obligations (See Note 9) 4 2 2 1 1 3 13 +Total AAG Contractual Obligations $ 16,839 $ 16,537 $ 14,306 $ 9,847 $ 8,734 $ 18,359 $ 84,622 +For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, referenced in the table above. +Amounts represent contractual amounts due. Excludes $349 million and $14 million of unamortized debt discount, premium and issuance +costs as of December 31, 2023 for American and AAG Parent, respectively. +For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2023. +Includes $7.7 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2023, related to EETCs +associated with mortgage financings of certain aircraft and spare engines. +See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” for additional information about the firm commitment +aircraft delivery schedule, in particular the footnote to the table thereunder as to potential changes to such delivery schedule. Due to +uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on +contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable +equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential factors +including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 +Family +(a) +(b), (d) +(c), (d) +(e) + +(f) +(g) +(h) +(a) +(b) +(c) +(g) +(a) +(b) +(c) +(d) +(e) +74 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_75.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..fadc31b735e898f6f909cf6c501f59d355103d44 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,36 @@ +Table of Contents +aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing. This financing is reflected in the +operating lease commitments line above. +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments line above. +Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on +estimated payments through 2033. In January 2024, we made $280 million of required pension contributions. +Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes +obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or +which are subject to material contingencies, such as the construction of a production facility. +Capital Raising Activity and Other Possible Actions +In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and +equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related +to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and +transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked +securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be +sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. +For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the +COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash +generated by operations. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions could adversely affect our business” for +additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general +increase in interest rates, or due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, could decrease the amount +of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash +balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and +cash obligations without violating these requirements. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 +to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements. +In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise +manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, +depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts +involved may be material. +(f) +(g) +(h) +75 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_76.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff62aef9b0ca5a617b8fbdba412cf795db0432e9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,44 @@ +Table of Contents +OTHER INFORMATION +Basis of Presentation +See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information +regarding the basis of presentation. +Critical Accounting Policies and Estimates +The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that +affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the +date of the financial statements. We believe our estimates and assumptions are reasonable; however, actual results could differ from those +estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially +result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies +that impact the preparation of our consolidated financial statements. See the “Basis of Presentation and Summary of Significant Accounting +Policies” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for +additional discussion of the application of these estimates and other accounting policies. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The contract duration of passenger tickets is generally one year. The majority of tickets sold are nonrefundable. A small percentage of +tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an +analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting +method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on +subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are +included in passenger revenue during the period in which the evaluations are completed. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. For +the year ended December 31, 2023, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased +revenues by approximately $128 million as a result of additional amounts deferred from passenger ticket sales to be recognized in future +periods. +76 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_77.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..132c047d5040e410e623b4277f194426ef0a73df --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,48 @@ +Table of Contents +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. For the year ended December 31, 2023, a hypothetical 10% increase in our estimate of +mileage credits not expected to be redeemed would have increased revenues by approximately $127 million. +Pensions and Retiree Medical and Other Postretirement Benefits +We recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our +pension and retiree medical and other postretirement benefits plans on the consolidated balance sheets with a corresponding adjustment to +accumulated other comprehensive income (loss). +Our pension and retiree medical and other postretirement benefits costs and liabilities are calculated using various actuarial assumptions +and methodologies. We use certain assumptions including, but not limited to, the selection of the: (1) discount rate and (2) expected return on +plan assets (as discussed below). These assumptions as of December 31 were: +2023 2022 +Pension weighted average discount rate 5.2 % 5.6 % +Retiree medical and other postretirement benefits weighted average discount rate 5.3 % 5.7 % +Expected rate of return on plan assets 8.0 % 8.0 % +When establishing the discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace +whose cash flows approximate our projected benefit disbursements. Lowering the discount rate by 50 basis points as of December 31, +2023 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $740 million and +$40 million, respectively, and decrease estimated 2024 pension and retiree medical and other postretirement benefits expense by +approximately $5 million and $1 million, respectively. +The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account +current and expected market conditions and our target asset allocation of 30% U.S. fixed income securities, 24% U.S. stocks, 24% +private investments, 16% developed international stocks and 6% emerging market stocks. The expected rate of return on plan assets +component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. Lowering +the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2023 would increase estimated 2024 pension +expense and retiree medical and other postretirement benefits expense by approximately $60 million and $1 million, respectively. +(1) +(1) +(2) +(1) +(2) +77 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_78.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc6477bfee95166978010744071f8e85ee1d20c7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,39 @@ +Table of Contents +Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other +postretirement benefits discount rates and health care costs. The net effect of changing these assumptions for the pension plans resulted in +an increase of $546 million in the projected benefit obligation at December 31, 2023. The net effect of changing these assumptions for retiree +medical and other postretirement benefits plans resulted in an increase of $89 million in the accumulated postretirement benefit obligation at +December 31, 2023. +See Note 9 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 8 to American’s Consolidated Financial Statements +in Part II, Item 8B for additional information regarding our employee benefit plans. +Income Taxes +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a +valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be +realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our +deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our +control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that +positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. There can be no assurance that +an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material. +Recent Accounting Pronouncements +Accounting Standards Update (ASU) 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK +The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of +aircraft fuel, foreign currency exchange rates and interest rates as discussed below. The sensitivity analyses presented do not consider the +effects that such adverse changes may have on overall economic activity, nor do they consider additional actions we may take to mitigate our +exposure to such changes. Therefore, actual results may differ. +Aircraft Fuel +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business. Because of the amount of fuel needed to operate our business, even a relatively small increase +or decrease in the price of aircraft fuel can have a material effect on our operating results and liquidity. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +78 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_79.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ec1ef33bd050960da8a9f594b88393678c0859f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,36 @@ +Table of Contents +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. Based on our 2024 forecasted fuel consumption, we estimate that a one cent per gallon increase in the +price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +Foreign Currency +We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions. +Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the +Brazilian real). We do not currently have a foreign currency hedge program. We estimate a uniform 10% strengthening in the value of the +U.S. dollar from 2023 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease +in pre-tax income of approximately $155 million for the year ended December 31, 2023. +Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our +assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent +repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part I, Item 1A. Risk +Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for +additional discussion of this and other currency risks. +Interest +Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from +variable-rate debt instruments and our interest income from short-term, interest-bearing investments. +Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt +financings, principally SOFR. We had variable-rate debt instruments representing 30% of our total long-term debt at December 31, 2023. We +currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations. If +annual interest rates increase 100 basis points, based on our December 31, 2023 variable-rate debt and short-term investments balances, +annual interest expense on variable-rate debt would increase by approximately $100 million and annual interest income on short-term +investments would increase by approximately $80 million. Additionally, the fair value of fixed-rate debt would have decreased by +approximately $700 million for AAG and $460 million for American. +In connection with the phase-out of LIBOR as a reference rate in June 2023, the U.S. Federal Reserve, in conjunction with the Alternative +Reference Rates Committee, has chosen SOFR, and specifically Term SOFR, as the recommended risk-free reference rate for the U.S. +(calculated based on repurchase agreements backed by treasury securities). Prior to the discontinuation of LIBOR, we amended substantially +all of our LIBOR-based financing arrangements to transition them to successor rates, primarily Term SOFR. We cannot predict the extent to +which Term SOFR will gain widespread acceptance as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial +markets generally or on our business, financial condition or results of operations specifically, and our transition to successor rates could +cause the amount of interest payable on our long-term debt to be different or higher than expected. +79 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d39dc1c1019136500729f41468c489862b3a9b8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,41 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_80.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..7fa83670e29dd0de86d381a349b6f1c50bc00f3e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,29 @@ +Table of Contents +ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC. +Report of Independent Registered Public Accounting Firm +To the Stockholders and Board of Directors +American Airlines Group Inc.: +Opinion on the Consolidated Financial Statements +We have audited the accompanying consolidated balance sheets of American Airlines Group Inc. and subsidiaries (the Company) as of +December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows, and +stockholders’ equity (deficit) for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the +consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial +position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the +three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the +Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated +Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, +2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. +Basis for Opinion +These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on +these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to +be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of +the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to +obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or +fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, +whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting +principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial +statements. We believe that our audits provide a reasonable basis for our opinion. +80 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_81.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..2377340f6f2df91b52077f641cd389e398546f40 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,30 @@ +Table of Contents +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that +was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to +the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a +critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by +communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to +which it relates. +Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards +As discussed in Notes 1(j) and 6 to the consolidated financial statements, the Company had $4.2 billion of tax net operating loss and +other carryforwards, which are recorded as deferred tax assets at December 31, 2023. Deferred tax assets are recognized related to tax +net operating loss and other carryforwards that will reduce future taxable income. The Company provides a valuation allowance for +deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating +the need for a valuation allowance, management considers all available positive and negative evidence. +We identified the evaluation of the sufficiency of audit evidence over the realizability of the federal tax net operating loss and other +carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to +assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. +The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the +operating effectiveness of certain internal controls related to the Company’s deferred tax asset valuation allowance process, including +controls related to the realizability of the federal tax net operating loss and other carryforwards. We evaluated positive and negative +evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in +the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of the +Company, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in +evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net +operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. +/s/ KPMG LLP +We have served as the Company’s auditor since 2014. +Dallas, Texas +February 21, 2024 +81 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_82.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8bfac3d33d368a8a230bc45265fe1bfa7faf362 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,40 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF OPERATIONS +(In millions, except share and per share amounts) + Year Ended December 31, + 2023 2022 2021 +Operating revenues: +Passenger $ 48,512 $ 44,568 $ 26,063 +Cargo 812 1,233 1,314 +Other 3,464 3,170 2,505 +Total operating revenues 52,788 48,971 29,882 +Operating expenses: +Aircraft fuel and related taxes 12,257 13,791 6,792 +Salaries, wages and benefits 14,580 12,972 11,817 +Regional expenses 4,643 4,385 3,204 +Maintenance, materials and repairs 3,265 2,684 1,979 +Other rent and landing fees 2,928 2,730 2,619 +Aircraft rent 1,369 1,395 1,425 +Selling expenses 1,799 1,815 1,098 +Depreciation and amortization 1,936 1,977 2,019 +Special items, net 971 193 (4,006) +Other 6,006 5,422 3,994 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Nonoperating income (expense): +Interest income 591 216 18 +Interest expense, net (2,145) (1,962) (1,800) +Other income (expense), net (359) 325 293 +Total nonoperating expense, net (1,913) (1,421) (1,489) +Income (loss) before income taxes 1,121 186 (2,548) +Income tax provision (benefit) 299 59 (555) +Net income (loss) $ 822 $ 127 $ (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted $ 1.21 $ 0.19 $ (3.09) +Weighted average shares outstanding (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +See accompanying notes to consolidated financial statements. +82 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_83.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..008f0d0133f7292caaa14cae85893ab50edfb1a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,14 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 822 $ 127 $ (1,993) +Other comprehensive income (loss), net of tax: +Pension, retiree medical and other postretirement benefits (312) 1,360 1,161 +Investments 3 (3) — +Total other comprehensive income (loss), net of tax (309) 1,357 1,161 +Total comprehensive income (loss) $ 513 $ 1,484 $ (832) +See accompanying notes to consolidated financial statements. +83 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_84.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..93e38ec9a3d5f9c1992af40c25bc516c2da714a7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,58 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except share and par value amounts) + December 31, + 2023 2022 +ASSETS +Current assets +Cash $ 578 $ 440 +Short-term investments 7,000 8,525 +Restricted cash and short-term investments 910 995 +Accounts receivable, net 2,026 2,138 +Aircraft fuel, spare parts and supplies, net 2,400 2,279 +Prepaid expenses and other 658 892 +Total current assets 13,572 15,269 +Operating property and equipment +Flight equipment 41,794 39,703 +Ground property and equipment 10,307 9,913 +Equipment purchase deposits 760 613 +Total property and equipment, at cost 52,861 50,229 +Less accumulated depreciation and amortization (22,097) (20,029) +Total property and equipment, net 30,764 30,200 +Operating lease right-of-use assets 7,939 8,094 +Other assets +Goodwill 4,091 4,091 +Intangibles, net of accumulated amortization of $834 and $827, respectively 2,051 2,059 +Deferred tax asset 2,888 3,099 +Other assets 1,753 1,904 +Total other assets 10,783 11,153 +Total assets $ 63,058 $ 64,716 +LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) +Current liabilities +Current maturities of long-term debt and finance leases $ 3,632 $ 3,274 +Accounts payable 2,353 2,149 +Accrued salaries and wages 2,377 1,713 +Air traffic liability 6,200 6,745 +Loyalty program liability 3,453 3,169 +Operating lease liabilities 1,309 1,465 +Other accrued liabilities 2,738 2,981 +Total current liabilities 22,062 21,496 +Noncurrent liabilities +Long-term debt and finance leases, net of current maturities 29,270 32,389 +Pension and postretirement benefits 3,044 2,837 +Loyalty program liability 5,874 5,976 +Operating lease liabilities 6,452 6,559 +Other liabilities 1,558 1,258 +Total noncurrent liabilities 46,198 49,019 +Commitments and contingencies (Note 11) +Stockholders’ equity (deficit) +Common stock, $0.01 par value; 1,750,000,000 shares authorized, 654,273,192 shares issued and outstanding atDecember 31, 2023; 650,642,461 shares issued and outstanding at December 31, 2022 7 6 +Additional paid-in capital 7,374 7,291 +Accumulated other comprehensive loss (4,894) (4,585) +Retained deficit (7,689) (8,511) +Total stockholders’ deficit (5,202) (5,799) +Total liabilities and stockholders’ equity (deficit) $ 63,058 $ 64,716 +See accompanying notes to consolidated financial statements. +84 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_85.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..668d73ff45483c07d58c3e1d8332b3e0a00b5328 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,51 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Cash flows from operating activities: +Net income (loss) $ 822 $ 127 $ (1,993) +Adjustments to reconcile net income (loss) to net cash provided by operating activities: +Depreciation and amortization 2,254 2,298 2,335 +Debt extinguishment costs 267 3 31 +Special items, net non-cash 41 226 52 +Pension and postretirement (13) (405) (321) +Deferred income tax provision (benefit) 299 65 (555) +Share-based compensation 102 78 98 +Other, net (205) (37) 16 +Changes in operating assets and liabilities: +Decrease (increase) in accounts receivable 95 (637) (304) +Increase in other assets (11) (775) (402) +Increase in accounts payable and accrued liabilities 873 585 461 +Increase (decrease) in air traffic liability (545) 658 1,454 +Increase (decrease) in loyalty program liability 182 10 (60) +Contributions to pension plans (73) (5) (247) +Increase (decrease) in other liabilities (285) (18) 139 +Net cash provided by operating activities 3,803 2,173 704 +Cash flows from investing activities: +Capital expenditures, net of aircraft purchase deposit returns (2,596) (2,546) (208) +Proceeds from sale of property and equipment and sale-leaseback transactions 230 147 374 +Sales of short-term investments 8,861 14,972 13,923 +Purchases of short-term investments (7,323) (11,257) (19,454) +Decrease (increase) in restricted short-term investments 51 1 (401) +Purchase of equity investments — (321) (28) +Other investing activities 275 (360) (189) +Net cash provided by (used in) investing activities (502) 636 (5,983) +Cash flows from financing activities: +Payments on long-term debt and finance leases (7,718) (3,752) (7,343) +Proceeds from issuance of long-term debt 4,822 1,069 12,190 +Proceeds from issuance of equity — — 460 +Other financing activities (310) 52 (19) +Net cash provided by (used in) financing activities (3,206) (2,631) 5,288 +Net increase in cash and restricted cash 95 178 9 +Cash and restricted cash at beginning of year 586 408 399 +Cash and restricted cash at end of year $ 681 $ 586 $ 408 +The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: +Cash $ 578 $ 440 $ 273 +Restricted cash included in restricted cash and short-term investments 103 146 135 +Total cash and restricted cash $ 681 $ 586 $ 408 +See accompanying notes to consolidated financial statements. +(a) +(a) +85 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_86.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1f951fe233612e86126910cd077b99cb3714338 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,31 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) +(In millions, except share amounts) +Common Stock +Additional Paid-in Capital +Accumulated Other Comprehensive Loss +RetainedEarnings (Deficit) Total +Balance at December 31, 2020 $ 6 $ 6,894 $ (7,103)$ (6,664)$ (6,867) +Net loss — — — (1,993) (1,993) +Other comprehensive income, net — — 1,161 — 1,161 +Issuance of 24,150,764 shares of AAG common stock pursuant to an at-the-market offering, net of offering costs — 460 — — 460 +Impact of adoption of Accounting Standards Update (ASU) 2020-06 related toconvertible instruments — (320) — 19 (301) +Issuance of PSP2 and PSP3 Warrants (see Note 1(b)) — 121 — — 121 +Issuance of 2,357,187 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (18) — — (18) +Settlement of single-dip unsecured claims held in Disputed Claims Reserve(DCR) and retirement of 259,878 shares of AAG common stock— (1) — — (1) +Share-based compensation expense — 98 — — 98 +Balance at December 31, 2021 6 7,234 (5,942) (8,638) (7,340) +Net income — — — 127 127 +Other comprehensive income, net — — 1,357 — 1,357 +Issuance of 2,914,866 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (21) — — (21) +Share-based compensation expense — 78 — — 78 +Balance at December 31, 2022 6 7,291 (4,585) (8,511) (5,799) +Net income — — — 822 822 +Other comprehensive loss, net — — (309) — (309) +Issuance of 3,630,731 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes 1 (23) — — (22) +Share-based compensation expense — 102 — — 102 +Settlement of single-dip unsecured claims held in DCR — 4 — — 4 +Balance at December 31, 2023 $ 7 $ 7,374 $ (4,894)$ (7,689)$ (5,202) +See accompanying notes to consolidated financial statements. +86 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_87.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..258b779b370bd6de2a71f5ff403cf86b9a76b53b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +1. Basis of Presentation and Summary of Significant Accounting Policies +(a) Basis of Presentation +American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its +mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group +Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont), that operate under the brand American Eagle. All significant +intercompany transactions have been eliminated. +The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires +management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, +and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. +The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension +and retiree medical and other postretirement benefits. +(b) Government Assistance +Payroll Support Programs +During 2020 and 2021, American, Envoy Air Inc. (Envoy), Piedmont and PSA (together with American, Envoy and Piedmont, the +Subsidiaries) entered into payroll support program agreements (PSP Agreements) with the U.S. Department of Treasury (Treasury) pursuant +to the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll +support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) +(PSP2) and the payroll support program established under the American Rescue Plan Act of 2021 (ARP) (PSP3). The aggregate amount of +financial assistance received was approximately $12.8 billion, and as partial compensation to the U.S. Government for the provision of +financial assistance provided under each of these programs, AAG issued promissory notes and warrants to Treasury. +The table below provides a summary of the financial assistance received and the promissory notes and the warrants issued under each +program (in millions, except exercise price amounts): +Program Closing Date PSP FinancialAssistance PromissoryNotes PSP Warrants Total +WarrantsIssued(Shares) Exercise Priceof Warrants +PSP1 April 20, 2020 $ 4,138 $ 1,757 $ 63 $ 5,958 14.0 $ 12.51 +PSP2 January 15, 2021 2,427 1,030 76 3,533 6.6 15.66 +PSP3 April 23, 2021 2,290 959 46 3,295 4.4 21.75 +Total $ 8,855 $ 3,746 $ 185 $ 12,786 25.0 +See Note 4 for further information on the promissory notes issued. +The payroll support program warrants (PSP Warrants) are subject to certain anti-dilution provisions, do not have any voting rights and are +freely transferable, with registration rights. Each warrant expires on the fifth anniversary of the date of issuance, with expiration dates +ranging from April 2025 to June 2026, and will be exercisable either through net share settlement or cash, at our option. The warrants +were issued solely as compensation to the U.S. Government related to entry into the PSP Agreements. No separate proceeds (apart +from the financial assistance described below) were received upon issuance of the warrants or will be received upon exercise thereof. +In connection with the PSP Agreements entered into with Treasury, we were required to comply with the relevant provisions of the CARES +Act, the PSP Extension Law, and the ARP, which included the requirement that funds provided pursuant to these programs be used +exclusively for the continuation of payment of eligible employee wages, salaries and benefits, the prohibition against involuntary furloughs +and reductions in employee pay rates and benefits, the requirement that certain levels of commercial air service be maintained, provisions +that prohibited the repurchase of AAG common stock and the payment of common stock dividends as well as provisions that restrict the +payment of certain executive compensation. As of December 31, 2023, all of these provisions have expired. +(1) (2) +(1) +(2) +87 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_88.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6bbd7d4d4f843a2178d89689b3ecda6456aced0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +For accounting purposes, the $12.8 billion of aggregate financial assistance received pursuant to the PSP Agreements was allocated to +the promissory notes, warrants and other financial assistance (PSP Financial Assistance). The aggregate principal amount of the promissory +notes was recorded as unsecured long-term debt and the total fair value of the warrants, estimated using a Black-Scholes option pricing +model, was recorded in stockholders’ deficit in the consolidated balance sheets. The remaining amounts were recognized in 2020 and 2021 +as a credit to special items, net in the consolidated statements of operations over the period which the continuation of payment of eligible +employee wages, salaries and benefits was required. +Treasury Loan Agreement +On September 25, 2020 (the Treasury Loan Closing Date), AAG and American entered into a Loan and Guarantee Agreement (the +Treasury Loan Agreement) with Treasury, which provided for a secured term loan facility (the Treasury Term Loan Facility) that permitted +American to borrow up to $5.5 billion. Subsequently, on October 21, 2020, AAG and American entered into an amendment to the Treasury +Loan Agreement which increased the borrowing amount up to $7.5 billion. In connection with entry into the Treasury Loan Agreement, on the +Treasury Loan Closing Date, AAG also entered into a warrant agreement (the Treasury Loan Warrant Agreement) with Treasury. +In September 2020, American borrowed $550 million under the Treasury Term Loan Facility and on March 24, 2021, used a portion of the +proceeds from the AAdvantage Financing to prepay in full the $550 million of outstanding loans under the Treasury Term Loan Facility and +terminated the Treasury Loan Agreement. Pursuant to the Treasury Loan Agreement, AAG issued to Treasury warrants (Treasury Loan +Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock (the Treasury Loan Warrant Shares), +which expire in September 2025. The exercise price of the Treasury Loan Warrant Shares is $12.51 per share, subject to certain anti-dilution +provisions provided for in the Treasury Loan Warrant Agreement. For accounting purposes, the fair value for the Treasury Loan Warrant +Shares, estimated using a Black-Scholes option pricing model, was recorded in stockholders' deficit with an offsetting debt discount to the +Treasury Term Loan Facility in the consolidated balance sheet. The provisions of the Treasury Loan Warrants are substantially similar to the +PSP Warrants. +(c) Recent Accounting Pronouncements +ASU 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +(d) Investments +Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains +and losses are recorded as interest income in nonoperating expense, net on our consolidated statements of operations. Unrealized gains and +losses are recorded as a component of accumulated other comprehensive loss on our consolidated balance sheets. For investments in an +unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, +current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses. +Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee. Equity +investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with +adjustments for observable changes in price or impairments (referred to as the measurement alternative). Our share of equity method +investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the consolidated +statements of operations. See Note 8 for additional information related to our equity investments. +88 +The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_89.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c303687f366176ba8d01e3fdc6350bf66acfdd4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(e) Restricted Cash and Short-term Investments +We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations and +collateral associated with the AAdvantage Financing. +(f) Accounts Receivable, Net +Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, +amounts due from airline and non-airline business partners, including our co-branded credit card partners and cargo customers. Receivables +from ticket sales are short-term, mostly settled within seven days after sale. Receivables from our business partners are typically settled +within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2023 +and 2022. We consider past and future financial and qualitative factors, including aging, payment history and other credit monitoring +indicators, when establishing the allowance for credit losses. +(g) Aircraft Fuel, Spare Parts and Supplies, Net +Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for +obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. We also provide an allowance for +spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, +spare parts and supplies are expensed when used. +(h) Operating Property and Equipment +Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful +life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are +generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated +or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal +property and equipment classifications are as follows: +Principal Property and Equipment Classification Estimated Useful Life +Aircraft, engines and related rotable parts 20 – 30 years +Buildings and improvements 5 – 30 years +Furniture, fixtures and other equipment 3 – 15 years +Capitalized software 5 – 10 years +Total mainline and regional depreciation and amortization expense was $2.3 billion for each of the years ended December 31, 2023, 2022 +and 2021. +We assess impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An +impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated +directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash +flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results +adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. If such assets are +impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value +reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales +agreements when applicable. +(i) Leases +We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, +current operating lease liabilities and noncurrent operating lease liabilities on our consolidated balance sheets. Finance leases are included +in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current +maturities, on our consolidated balance sheets. +ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease +payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present +value of lease payments over the lease term. +89 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..28a76b7171f8c44aa38ef99cb34677e6707e4459 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,42 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_90.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..466863b8d7b0711906b9fd1da17309b7b9c160db --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in +determining the present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for +instruments with similar characteristics when calculating our incremental borrowing rates. +Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of +12 months or less are not recorded on our consolidated balance sheets. +Under certain of our capacity purchase agreements with third-party regional carriers, we do not own the underlying aircraft. However, +since we control the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft +is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease +components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew +and maintenance. Where applicable, we allocate the consideration in the capacity purchase agreements to the lease and non-lease +components using their estimated relative standalone prices. See Note 11(b) for additional information on our capacity purchase agreements. +For real estate, we account for the lease and non-lease components as a single lease component. +(j) Income Taxes +Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax +consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their +respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent +deferred income taxes. +We provide a valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax +assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We +consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. +Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the +health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors +outweigh negative factors in the determination of the realizability of our deferred tax assets. +(k) Goodwill +Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the +2013 merger with US Airways Group, Inc. (US Airways Group). We have one reporting unit. We assess goodwill for impairment annually or +more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. Our annual +assessment date is October 1. +Goodwill is assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our +goodwill may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based +upon our annual assessment, there was no goodwill impairment in 2023. The carrying value of our goodwill on our consolidated balance +sheets was $4.1 billion as of December 31, 2023 and 2022. +(l) Other Intangibles, Net +Intangible assets consist primarily of certain domestic airport slots and gate leasehold rights, customer relationships, marketing +agreements, commercial agreements, international slots and route authorities and tradenames. +Definite-Lived Intangible Assets +Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated +useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. +90 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_91.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..89c99b65b4d079d58af545dc61ef0fe854abb463 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,37 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The following table provides information relating to our amortizable intangible assets as of December 31, 2023 and 2022 (in millions): + December 31, + 2023 2022 +Domestic airport slots $ 365 $ 365 +Customer relationships 300 300 +Marketing agreements 105 105 +Tradenames 35 35 +Airport gate leasehold rights 137 137 +Accumulated amortization (834) (827) +Total $ 108 $ 115 +Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing +agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 +years. Customer relationships and tradenames are fully amortized. +We recorded amortization expense related to these intangible assets of $7 million for the year ended December 31, 2023 and $41 million +for each of the years ended December 31, 2022 and 2021. We expect to record annual amortization expense for these intangible assets as +follows (in millions): +2024 $ 7 +2025 7 +2026 6 +2027 6 +2028 6 +2029 and thereafter 76 +Total $ 108 +Indefinite-Lived Intangible Assets +Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and our commercial +agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). We assess indefinite-lived intangible assets for impairment annually or more +frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. +Our annual assessment date is October 1. +Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If we determine that it is +more likely than not that our indefinite-lived intangible assets may be impaired, we use a quantitative approach to assess the asset’s fair +value and the amount of the impairment, if any. Based upon our annual assessment, there were no indefinite-lived intangible asset +impairments in 2023. We had $1.9 billion of indefinite-lived intangible assets on our consolidated balance sheets as of December 31, 2023 +and 2022. +91 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_92.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff065690502174c9d3af667642bb8583d13fdd49 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(m) Revenue Recognition +Revenue +The following are the significant categories comprising our operating revenues (in millions): +Year Ended December 31, + 2023 2022 2021 +Passenger revenue: +Passenger travel $ 44,914 $ 41,425 $ 23,896 +Loyalty revenue - travel 3,598 3,143 2,167 +Total passenger revenue 48,512 44,568 26,063 +Cargo 812 1,233 1,314 +Other: +Loyalty revenue - marketing services 2,929 2,657 2,166 +Other revenue 535 513 339 +Total other revenue 3,464 3,170 2,505 +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or +co-branded credit card and other partners. See “Loyalty Revenue” below for further discussion on these mileage credits. +The following is our total passenger revenue by geographic region (in millions): +Year Ended December 31, + 2023 2022 2021 +Domestic $ 34,592 $ 32,911 $ 21,453 +Latin America 6,719 6,150 3,506 +Atlantic 6,205 5,070 965 +Pacific 996 437 139 +Total passenger revenue $ 48,512 $ 44,568 $ 26,063 +We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The +estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors +such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the +date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from +periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are +completed. +Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. +These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a +liability until remitted to the appropriate taxing authority. +(1) +(1) +92 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_93.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..b746ec693ddaa8f61f2b14ca8bbf2f6d5d3d4da4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,42 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. +Cargo Revenue +Cargo revenue is recognized when we provide the transportation. +Other Revenue +Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of +mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for +the loyalty program marketing services are discussed above in “Loyalty Revenue.” The remaining amounts included within other revenue +relate to airport clubs, other commission revenue, advertising and vacation-related services. +93 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_94.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..21d1c61532c89d7deee4a77b48948f249436b383 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Contract Balances +Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel +and non-air travel awards, reported as loyalty program liability on our consolidated balance sheets and (2) ticket sales for transportation that +has not yet been provided, reported as air traffic liability on our consolidated balance sheets. +December 31, +2023 2022 +(In millions) +Loyalty program liability $ 9,327 $ 9,145 +Air traffic liability 6,200 6,745 +Total $ 15,527 $ 15,890 +The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued +through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of +revenue). Changes in loyalty program liability are as follows (in millions): +Balance at December 31, 2022 $ 9,145 +Deferral of revenue 3,810 +Recognition of revenue (3,628) +Balance at December 31, 2023 $ 9,327 +Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits +are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that +were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued +during the period. +Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying +activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, +2023, our current loyalty program liability was $3.5 billion and represents our current estimate of revenue expected to be recognized in +the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized +as revenue in periods thereafter. +The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in our air traffic +liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any +revenue associated with tickets sold for future travel will be recognized within 12 months. For 2023, $5.3 billion of revenue was recognized in +passenger revenue that was included in our air traffic liability at December 31, 2022. +(n) Maintenance, Materials and Repairs +Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred +for maintenance and repair under certain power-by-the-hour maintenance agreements, which are charged to operating expense based on +contractual terms when an obligation exists. +(o) Selling Expenses +Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated +with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. +Advertising expense was $114 million for the year ended December 31, 2023 and $105 million for each of the years ended December 31, +2022 and 2021. +(1) +(2) +(1) +(2) +94 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_95.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..f67a75cb67dea8546e3e9766f18a3c207192df86 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,26 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(p) Share-based Compensation +We account for our share-based compensation expense based on the fair value of the stock award at the time of grant, which is +recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to +vesting and are expensed based on the expected achievement at each reporting period. The majority of our stock awards are time vested +restricted stock units, and the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the +date of grant. See Note 14 for further discussion of share-based compensation. +(q) Foreign Currency Gains and Losses +Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on our +consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, respectively, foreign currency losses were +$30 million, $38 million and $4 million. +(r) Other Operating Expenses +Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger +accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. +(s) Regional Expenses +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are in the form of capacity +purchase agreements with our third-party regional partners and similar arrangements with our wholly-owned regional affiliates. Expenses +associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. +Regional expenses for the years ended December 31, 2023, 2022 and 2021 include $318 million, $321 million and $316 million of +depreciation and amortization, respectively, and $7 million, $5 million and $6 million of aircraft rent, respectively. +In 2023, 2022 and 2021, we recognized $636 million, $592 million and $495 million, respectively, of expense under our capacity purchase +agreement with Republic Airways Inc. (Republic). We hold a 25% equity interest in Republic Airways Holdings Inc. (Republic Holdings), the +parent company of Republic. +95 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_96.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cbfce2b7858bd9501f985198c74e4acf73b43ec --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,57 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2. Special Items, Net +Special items, net on our consolidated statements of operations consisted of the following (in millions): + Year Ended December 31, + 2023 2022 2021 +Labor contract expenses $ 989 $ — $ — +Severance expenses 23 — 168 +Fleet impairment — 149 — +Litigation reserve adjustments — 37 (19) +PSP Financial Assistance — — (4,162) +Other operating special items, net (41) 7 7 +Mainline operating special items, net 971 193 (4,006) +PSP Financial Assistance — — (539) +Regional pilot retention program — — 61 +Fleet impairment — — 27 +Severance expenses — — 2 +Other operating special items, net 8 5 — +Regional operating special items, net 8 5 (449) +Operating special items, net 979 198 (4,455) +Debt refinancing, extinguishment and other, net 280 3 29 +Mark-to-market adjustments on equity and other investments, net 82 71 31 +Nonoperating special items, net 362 74 60 +Income tax special items, net — (9) — +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses for 2023 included costs associated with headcount reductions in certain corporate functions. +Severance expenses for 2021 included salary and medical costs primarily associated with certain team members who opted into +voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. +Fleet impairment for 2022 included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Fleet impairment for 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the +remaining Embraer 140 fleet earlier than planned. +The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the +payroll support programs established by the U.S. Government. See Note 1(b) for further information. +Our regional pilot retention program provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible +captains at our wholly-owned regional carriers included on the pilot seniority list as of September 1, 2021. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 for further information. +(1) +(2) +(3) +(4) +(4) +(5) +(3) +(2) +(6) +(7) +(1) +(2) +(3) +(4) +(5) +(6) +96 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_97.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c270823ad61ba8a5642da2bcb92f43be3e62c8a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,34 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with +certain equity investments and certain other investments. See Note 8 for further information related to our equity investments. +3. Earnings (Loss) Per Common Share +The following table provides the computation of basic and diluted earnings (loss) per common share (EPS) (in millions, except share and +per share amounts): + Year Ended December 31, + 2023 2022 2021 +Basic EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Weighted average common shares outstanding (in thousands) 653,612 650,345 644,015 +Basic EPS $ 1.26 $ 0.20 $ (3.09) +Diluted EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Interest expense on 6.50% convertible senior notes 46 — — +Net income (loss) for purposes of computing diluted EPS $ 868 $ 127 $ (1,993) +Share computation for diluted EPS (in thousands): +Basic weighted average common shares outstanding 653,612 650,345 644,015 +Dilutive effect of restricted stock unit awards 1,830 1,579 — +Dilutive effect of certain PSP Warrants and Treasury Loan Warrants 2,499 3,198 — +Assumed conversion of 6.50% convertible senior notes 61,728 — — +Diluted weighted average common shares outstanding 719,669 655,122 644,015 +Diluted EPS $ 1.21 $ 0.19 $ (3.09) +The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands): +Year Ended December 31, +2023 2022 2021 +Restricted stock unit awards 4,371 3,987 3,420 +6.50% convertible senior notes — 61,728 61,728 +In addition, certain shares underlying our PSP Warrants and Treasury Loan Warrants for the years ended December 31, 2023, 2022 and +2021, were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive. +(7) +97 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_98.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..1861b43e5d999e3ce52995a063488cc90469617b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,57 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +4. Debt +Long-term debt included on our consolidated balance sheets consisted of (in millions): + December 31, + 2023 2022 +Secured +2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028 $ 990 $ 1,752 +2014 Term Loan Facility, variable interest rate of 7.32%, installments through January 2027 1,183 1,196 +2023 Term Loan Facility, variable interest rate of 8.87%, installments beginning in December 2024through June 2029 1,100 — +11.75% senior secured notes, interest only payments until due in July 2025 — 2,500 +10.75% senior secured IP notes, interest only payments until due in February 2026 1,000 1,000 +10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026 200 200 +7.25% senior secured notes, interest only payments until due in February 2028 750 — +8.50% senior secured notes, interest only payments until due in May 2029 1,000 — +5.50% senior secured notes, installments through April 2026 2,917 3,500 +5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 3,000 3,000 +AAdvantage Term Loan Facility, variable interest rate of 10.43%, installments through April 2028 3,150 3,500 +Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%,averaging 3.60%, maturing from 2024 to 2034 7,657 9,175 +Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to8.90%, averaging 6.98%, maturing from 2024 to 2035 3,612 3,170 +Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026to 2036 967 1,050 +27,526 30,043 +Unsecured +PSP1 Promissory Note, interest only payments until due in April 2030 1,757 1,757 +PSP2 Promissory Note, interest only payments until due in January 2031 1,030 1,030 +PSP3 Promissory Note, interest only payments until due in April 2031 959 959 +6.50% convertible senior notes, interest only payments until due in July 2025 1,000 1,000 +3.75% senior notes, interest only payments until due in March 2025 487 500 +5,233 5,246 +Total long-term debt 32,759 35,289 +Less: Total unamortized debt discount, premium and issuance costs 363 386 +Less: Current maturities 3,501 3,059 +Long-term debt, net of current maturities $ 28,895 $ 31,844 +As of December 31, 2023, the maximum availability under our revolving credit and other facilities is as follows (in millions): +2013 Revolving Facility $ 736 +2014 Revolving Facility 1,631 +April 2016 Revolving Facility 446 +Other short-term facility 49 +Total $ 2,862 +(a) +(a) +(a) +(b) +(b) +(b) +(b) +(b) +(c) +(c) +(c) +(d) +(e) +(e) +(e) +(f) +(g) +98 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_99.txt b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..96385d98c9040dc5a5ed0e3b13f74946aa4453d8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/Text_TextNeedles/AmericanAirlines_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +As of December 31, 2023, American had $49 million of available borrowing base under a cargo receivables facility that is set to expire in +December 2024. As a result of the below amendments to the 2013, 2014 and April 2016 Revolving Facilities, the aggregate commitments +under these facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments +will decrease to $2.2 billion. +Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, +simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property +and certain loyalty program assets. +At December 31, 2023, the maturities of long-term debt are as follows (in millions): +2024 $ 3,501 +2025 5,189 +2026 4,582 +2027 4,618 +2028 5,060 +2029 and thereafter 9,809 +Total $ 32,759 +(a) 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +2013 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), +includes a revolving credit facility (the 2013 Revolving Facility) and term loan (the 2013 Term Loan Facility), collectively referred to as the +2013 Credit Facilities. In February 2023, American and AAG refinanced approximately $1.8 billion in aggregate principal amount of term +loans outstanding under the 2013 Term Loan Facility (the 2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of +$750 million in aggregate principal amount of 7.25% senior secured notes due 2028 and (ii) the entry into the Seventh Amendment to the +2013 Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025. The Seventh Amendment also amended certain other terms of the 2013 Credit Agreement, including the +interest rate and amortization schedule for the 2013 Term Loan Facility, the requirements for delivery of appraisals and certain covenants +relating to dispositions of collateral. Additionally, the Seventh Amendment transitioned the benchmark interest rate from the London Interbank +Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR). As a result, the 2013 Term Loan Facility bears interest at a base +rate (subject to a floor of 1.00%) plus an applicable margin of 1.75% or, at American’s option, the SOFR rate for a tenor of one, three or six +months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such +SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) and an applicable margin of 2.75%. As of December 31, 2023, the +margin elected was 2.75%. +In March 2023, American and AAG entered into the Eighth Amendment to the 2013 Credit Agreement, pursuant to which American +extended the maturity of certain commitments under the 2013 Revolving Facility. The Eighth Amendment also amended certain other terms +of the 2013 Credit Agreement, including certain covenants and transitioned the benchmark interest rate from LIBOR to SOFR. The 2013 +Revolving Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.25%, 2.50% or 2.75%, depending +on AAG’s public corporate rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest +period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +being subject to a floor of 0.00%) plus an applicable margin of 3.25%, 3.50% or 3.75%, depending on AAG’s public corporate rating. +Additionally, as a result of the Eighth Amendment, through October 11, 2024, the aggregate commitments under the 2013 Revolving Facility +will be $736 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $563 million. As of +December 31, 2023, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. +99 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_58.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..a36ca4708efb74c6c497e24be3fdf4211766fed5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,54 @@ +Table of Contents +The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP +measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures). Management +uses these non-GAAP financial measures to evaluate our current operating performance and to allow for period-to-period comparisons. As +net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an +additional tool to understand our core operating performance. + Year Ended December 31, + 2023 2022 + (In millions) +Components of Total Special Items, Net: +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net 979 198 +Debt refinancing and extinguishment 280 3 +Mark-to-market adjustments on equity investments, net 82 71 +Nonoperating special items, net 362 74 +Pre-tax special items, net 1,341 272 +Income tax special items, net — (9) +Total special items, net $ 1,341 $ 263 +Reconciliation of Pre-Tax Income Excluding Net Special Items: +Pre-tax income – GAAP $ 1,121 $ 186 +Adjusted for: Pre-tax special items, net 1,341 272 +Pre-tax income excluding net special items $ 2,462 $ 458 +Reconciliation of Net Income Excluding Net Special Items: +Net income – GAAP $ 822 $ 127 +Adjusted for: Total special items, net 1,341 263 +Adjusted for: Net tax effect of net special items (304) (62) +Net income excluding net special items $ 1,859 $ 328 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. +(1) +(2) +(3) +(4) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +58 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_59.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..da5144fd3785748348385bae0f6c0dd8f59759d8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,35 @@ +Table of Contents +Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity +investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity +investments. +Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net +special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items +and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to +evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts +the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel allows management an +additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding. + Year Ended December 31, + 2023 2022 +Reconciliation of CASM Excluding Net Special Items and Fuel: +(In millions) +Total operating expenses – GAAP $ 49,754 $ 47,364 +Operating net special items : +Mainline operating special items, net (971) (193) +Regional operating special items, net (8) (5) +Aircraft fuel and related taxes (12,257) (13,791) +Total operating expenses, excluding net special items and fuel $ 36,518 $ 33,375 +(In millions) +Total Available Seat Miles (ASM) 277,723 260,226 +(In cents) +CASM 17.92 18.20 +Operating net special items per ASM : +Mainline operating special items, net (0.35) (0.07) +Regional operating special items, net — — +Aircraft fuel and related taxes per ASM (4.41) (5.30) +CASM, excluding net special items and fuel 13.15 12.83 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +(6) +(1) +(1) +(1) +59 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_64.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..3eb8aa5e4cf2d56a8719843079cd7880a5b6c1c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,53 @@ +Table of Contents +AAG’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “AAG’s Results of Operations” of our 2022 Form 10-K. +Operating Statistics +The table below sets forth selected operating data for the years ended December 31, 2023 and 2022. + Year Ended December 31, Increase (Decrease) 2023 2022 +Revenue passenger miles (millions) 231,926 215,624 7.6% +Available seat miles (millions) 277,723 260,226 6.7% +Passenger load factor (percent) 83.5 82.9 0.6pts +Yield (cents) 20.92 20.67 1.2% +Passenger revenue per available seat mile (cents) 17.47 17.13 2.0% +Total revenue per available seat mile (cents) 19.01 18.82 1.0% +Fuel consumption (gallons in millions) 4,140 3,901 6.1% +Average aircraft fuel price including related taxes (dollars per gallon) 2.96 3.54 (16.3)% +Total operating cost per available seat mile (cents) 17.92 18.20 (1.6)% +Aircraft at end of period 1,521 1,461 4.1% +Full-time equivalent employees at end of period 132,100 129,700 1.9% +Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile. +Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile. +Passenger load factor – The percentage of available seats that are filled with revenue passengers. +Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs. +Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs. +Total revenue per available seat mile (TRASM) – Total revenues divided by ASMs. +Total operating cost per available seat mile (CASM) – Total operating expenses divided by ASMs. +Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase +agreements. Excluded from the aircraft count above are 77 regional aircraft in temporary storage as of December 31, 2023 as +follows: 57 Embraer 145, 11 Bombardier CRJ 700, six Bombardier CRJ 900 and three Embraer 170. +Operating Revenues + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,464 3,170 294 9.3 +Total operating revenues $ 52,788 $ 48,971 $ 3,817 7.8 +(a) +(b) +(c) +(d) +(e) +(f) +(g) + (h) +(a) +(b) +(c) +(d) +(e) +(f) +(g) +(h) +64 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_65.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb9697102239b8f3bbdad6149f3783075d6ed53e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,42 @@ +Table of Contents +This table presents our passenger revenue and the year-over-year change in certain operating statistics: + Increasevs. Year Ended December 31, 2022 + Year Ended December 31, 2023 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM + (In millions) +Passenger revenue $ 48,512 8.8% 7.6% 6.7% 0.6pts 1.2% 2.0% +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in a 7.6% increase in RPMs and an 83.5% load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to a 29.4% decrease in cargo yield and a 6.7% +decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with our loyalty +program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, +respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. Our TRASM was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Regional expenses 4,643 4,385 258 5.9 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,936 1,977 (41) (2.1) +Mainline operating special items, net 971 193 778 nm +Other 6,006 5,422 584 10.8 +Total operating expenses $ 49,754 $ 47,364 $ 2,390 5.0 +Additional detail regarding changes in our operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with our mainline pilots. +Regional expenses increased $258 million, or 5.9%, in 2023 from 2022 primarily due to increased costs at our wholly-owned regional +carriers, including pay rate increases and higher costs for maintenance, materials and repairs driven by an increase in the volume of engine +overhauls. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +65 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_66.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..3311e7e156485bc101eaa87c09c4551735d48529 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,50 @@ +Table of Contents +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $584 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, + 2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net $ 979 $ 198 +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 591 $ 216 $ 375 nm +Interest expense, net (2,145) (1,962) (183) 9.3 +Other income (expense), net (359) 325 (684) nm +Total nonoperating expense, net $ (1,913) $ (1,421) $ (492) 34.6 +Interest income increased $375 million in 2023 compared to 2022 primarily as a result of higher returns on our short-term investments. +Interest expense, net increased $183 million, or 9.3%, in 2023 compared to 2022 primarily due to higher interest rates on our variable-rate +debt instruments, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit +plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +(1) +(2) +(3) +(1) +(2) +(3) +66 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_70.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..edb5aa3025f232e7410b515d17103bec0610ad60 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,37 @@ +Table of Contents +Liquidity and Capital Resources +Liquidity +At December 31, 2023, AAG had $10.4 billion in total available liquidity and $910 million in restricted cash and short-term investments. +Additional detail regarding our available liquidity is provided in the table below (in millions): + AAG American + December 31, December 31, + 2023 2022 2023 2022 +Cash $ 578 $ 440 $ 567 $ 429 +Short-term investments 7,000 8,525 6,998 8,523 +Undrawn facilities 2,862 3,033 2,862 3,033 +Total available liquidity $ 10,440 $ 11,998 $ 10,427 $ 11,985 +In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our +outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions +or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we +may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other +factors. The amounts involved may be material. For further information regarding our debt repurchases for the year ended December 31, +2023, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial +Statements in Part II, Item 8B. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt +financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine enhanced equipment trust +certificates (EETCs)) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements +require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage +or peak debt service coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to +pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain +accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. As of the most +recent applicable measurement dates, we were in compliance with each of the foregoing LTV, collateral coverage and peak debt service +coverage tests. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of +at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our +AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in +early repayment, in whole or in part, of the AAdvantage Financing. For further information regarding our debt covenants, see Note 4 to AAG’s +Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. +70 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_71.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..160bfe8c8d9d7e1ac9569df3e5967f483669f9a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,42 @@ +Table of Contents +Sources and Uses of Cash +For a comparison of the 2022 and 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial +Condition and Results of Operations – “Sources and Uses of Cash” of our 2022 Form 10-K. +AAG +Operating Activities +Our net cash provided by operating activities was $3.8 billion and $2.2 billion in 2023 and 2022, respectively, a $1.6 billion year-over-year +increase due to higher profitability and cash provided by working capital management. +Investing Activities +Our net cash used in investing activities was $502 million in 2023 as compared to net cash provided by investing activities of $636 million +in 2022. +Our principal investing activities in 2023 included $2.6 billion of capital expenditures, which primarily related to the purchase of 17 Boeing +737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare engines. +These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the sale of +property and equipment and sale-leaseback transactions. +Our principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset in part +by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 +million of equity investments, principally related to GOL. +Financing Activities +Our net cash used in financing activities was $3.2 billion and $2.6 billion in 2023 and 2022, respectively. +Our principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due to +scheduled debt repayments. In February 2023, we refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, we +issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in an +aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from borrowings +under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. In addition, +we borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $552 million of secured and unsecured notes in +the open market. +Our principal financing activities in 2022 included $3.8 billion in repayments of debt and finance lease obligations, consisting of $2.2 billion +of scheduled debt repayments including the repayment of $401 million in connection with the maturity of our 5.000% unsecured notes, the +$1.2 billion prepayment of the December 2016 Term Loan Facility and the repurchase of $349 million of unsecured notes in the open market. +These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment +notes related to EETCs and $205 million in connection with the financing of certain aircraft. +American +Operating Activities +American’s net cash provided by operating activities was $3.7 billion and $1.3 billion in 2023 and 2022, respectively, a $2.4 billion year- +over-year increase due to higher profitability and cash provided by working capital management. +Investing Activities +American’s net cash used in investing activities was $449 million in 2023 as compared to net cash provided by investing activities of $693 +million in 2022. +71 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_99.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..b391e7ff92ac235f83f87165326cdab629267122 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +As of December 31, 2023, American had $49 million of available borrowing base under a cargo receivables facility that is set to expire in +December 2024. As a result of the below amendments to the 2013, 2014 and April 2016 Revolving Facilities, the aggregate commitments +under these facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments +will decrease to $2.2 billion. +Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, +simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property +and certain loyalty program assets. +At December 31, 2023, the maturities of long-term debt are as follows (in millions): +2024 $ 3,501 +2025 5,189 +2026 4,582 +2027 4,618 +2028 5,060 +2029 and thereafter 9,809 +Total $ 32,759 +(a) 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +2013 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), +includes a revolving credit facility (the 2013 Revolving Facility) and term loan (the 2013 Term Loan Facility), collectively referred to as the +2013 Credit Facilities. In February 2023, American and AAG refinanced approximately $1.8 billion in aggregate principal amount of term +loans outstanding under the 2013 Term Loan Facility (the 2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of +$750 million in aggregate principal amount of 7.25% senior secured notes due 2028 and (ii) the entry into the Seventh Amendment to the +2013 Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025. The Seventh Amendment also amended certain other terms of the 2013 Credit Agreement, including the +interest rate and amortization schedule for the 2013 Term Loan Facility, the requirements for delivery of appraisals and certain covenants +relating to dispositions of collateral. Additionally, the Seventh Amendment transitioned the benchmark interest rate from the London Interbank +Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR). As a result, the 2013 Term Loan Facility bears interest at a base +rate (subject to a floor of 1.00%) plus an applicable margin of 1.75% or, at American’s option, the SOFR rate for a tenor of one, three or six +months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such +SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) and an applicable margin of 2.75%. As of December 31, 2023, the +margin elected was 2.75%. +In March 2023, American and AAG entered into the Eighth Amendment to the 2013 Credit Agreement, pursuant to which American +extended the maturity of certain commitments under the 2013 Revolving Facility. The Eighth Amendment also amended certain other terms +of the 2013 Credit Agreement, including certain covenants and transitioned the benchmark interest rate from LIBOR to SOFR. The 2013 +Revolving Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.25%, 2.50% or 2.75%, depending +on AAG’s public corporate rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest +period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +being subject to a floor of 0.00%) plus an applicable margin of 3.25%, 3.50% or 3.75%, depending on AAG’s public corporate rating. +Additionally, as a result of the Eighth Amendment, through October 11, 2024, the aggregate commitments under the 2013 Revolving Facility +will be $736 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $563 million. As of +December 31, 2023, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. +99 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3218cc6e77316467c9578d89c088f8ddc4d3d42c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,34 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code + +Securities registered pursuant to Section 12(b) of the Act: +Title of each class Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code +Securities registered pursuant to Section 12(b) of the Act: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff10b70550785b6c9c492bc1bebb392e529335b4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,52 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb35022c2a329ce61bcbd75b139f20d044dd361e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,49 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..020ff0266c0878f6a01f07809638208dcf8449ca --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,41 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..94335c3c660eaa4afdc7454e112250e22f2c628c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,46 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7b69a6685fbac193e5c02781ee137176317e779 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,42 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..f2e89272f55b211499fe4771955b7eeebe430f8b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,41 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..5668d5361fff555ceff7ff02ef4652aec40aeb24 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,45 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..95bccc0382f3a396532b0edac4dbb9792a14b57a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only applies this authority on a limited basis. In addition, international fares and rates are +sometimes subject to the jurisdiction of the governments of the foreign countries which we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb3894f70c6ec7c167408b10f5294120ccb4bed7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..5924469acba046ed60115169edcfdca12d23b69a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,44 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9902c3b902d58795c7a05127e3865da59eb7a5d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,47 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange +Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been +subject to such filing requirements for the past 90 days. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to +Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was +required to submit such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..67735822947e76ac6669ae376fd6abe16c43466f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,30 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..96b1c6465b2f0dbe5b56adc75592cbe3f103b060 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfb4554ff9b9cb2e4adf7c0ef67b1aee1a6e1e08 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,46 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 +The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..42e478b884cb3a395233e83c40c33a883efa3f73 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,44 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e6d54515d042c5efb4cc52be7b9755e549ec911 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,46 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory and other conditions beyond our control, including, among others: +• actual or potential changes in international, national, regional and local economic, business and financial conditions, +including recession, inflation and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..9920ad4050d8f91a21eec2508a0465d381de3f8d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,50 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..d97a41bb6325cc6909e1c3d0a7d173e82a319643 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b801005dfb024fd1191588f0ba70c8fb0327521 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,37 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..3349c936046a324a4b0937ec7efdeb5725daa98d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,25 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd84e87afd31fe34cb5acd31b4703d21bea70b87 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,36 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec713aba11a342c05d10737bef16e842d46eabba --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,36 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..45218b61690ff55bc91ae168a46decd50e8cd8d5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,42 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..6be98bee377625d8b5ab112ae9ba245bc743d6e0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/Text_TextNeedles/AmericanAirlines_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,43 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea91e84d2119637e72a1a3d93e19c6962356e5f9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,33 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code + +Securities registered pursuant to Section 12(b) of the Act: +Title of each class Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(Address of principal executive offices, including zip code) Registrant’s telephone number, including area code +Securities registered pursuant to Section 12(b) of the Act: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..99c44baf6ab835265ba5d88949aaeb2f52a306af --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,52 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..04f44af2d93af29bde670cbc598799c55d1f4436 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,48 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..96c8f684ad7816ec2cbdfa416b1bbfda4367908f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,40 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..d69b2a64114ded37772a61add6bff848ec6e6e05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,45 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..3737e9531af73f238c587ed20490d0c89983d5f8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,41 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a6844f9d5f9c843cac8ed779fd54abac33945ff --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,40 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..510332f31fed281adeaed56e586661e0ed1fd560 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,44 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1510bba43e2a5f4bd3477e397064c45696bb1455 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only applies this authority on a limited basis. In addition, international fares and rates are +sometimes subject to the jurisdiction of the governments of the foreign countries which we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..557196089a7018bf8aaae86ba1ff27d1a5443415 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1345bd918ec0adef7962049dfef34be8ac854d5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,43 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5dbd35e60ac847ffe90766f203bd98744a0b127 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange +Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been +subject to such filing requirements for the past 90 days. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to +Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was +required to submit such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f527b058e3b2be63e7175c5d798b6141ce25454 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,29 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..5606ddfa45f8c5a4fcf4051793dcaffd7df176dd --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..50cc35c9244f3a4269a4c096e4d18d3a2e57a256 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,45 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfc90ee53c266b63b2819795256494e58be4f2e9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,45 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7389e5d1343808bcdef37803c5992c76f946be0d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,45 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory and other conditions beyond our control, including, among others: +• actual or potential changes in international, national, regional and local economic, business and financial conditions, +including recession, inflation and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a63d18d2024ff6b5ad77f803bd5aa5322353f4d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,50 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_26.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab1a4836898413dd324dee57dfad82800c5af5b4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,50 @@ +Table of Contents +travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, +and the speed with which demand for travel to these regions returns. +Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve +suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets. For example, the +COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a +result of the imposition by the U.S. and foreign governments of restrictions on travel from certain regions. In addition, open skies agreements, +which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S. +markets, potentially subjecting us to increased competition on our international routes. See also “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages.” +To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, +access slots, gates and routes and other matters, our ability to effectively compete may be hindered. Our ability to attract and retain +customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business +could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired +markets. +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas. We have also established a strategic alliance +with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with +Qatar Airways. In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain +commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports. The +commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the EU, commonly +referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the +transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC +commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its +investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the +scheduled expiration of the interim measures in March 2026. We continue to cooperate fully with the CMA. The foregoing arrangements are +important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines +party to those arrangements. +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. American has appealed the District Court’s +decision to the Court of Appeals for the First Circuit; American’s opening brief was filed on December 6, 2023. Separately, in December 2022, +two putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue +violated U.S. antitrust law in connection with the previously disclosed NEA. In February 2023, private party plaintiffs filed two additional +putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the +U.S. District Court for the Eastern District of New York, respectively. All cases have since been consolidated in the U.S. District Court for the +Eastern District of New York. American, together with JetBlue, filed a motion to dismiss on September 21, 2023, which remains pending. The +motions to dismiss argue, among other things, that the plaintiffs each waived their right to bring class action claims. We believe these +complaints are without merit and are defending against them vigorously. +No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements +that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our +business activities. +Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place +and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular. +Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection +with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could +be harmed. In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route +networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and +26 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_27.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ce30a0737b6793fad5d9a3cbf9d67d62cbfd389 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,47 @@ +Table of Contents +revenues. Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in +Europe and elsewhere that result in broader networks offered by rival airlines. +Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and +increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks +and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and +other terms and conditions of these programs. In addition, we have used certain assets from our AAdvantage program as collateral for the +AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage +program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program. These +competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our +loyalty program and maximize the revenue generated by our loyalty program. +We may also be impacted by competition regulations affecting certain of our major commercial partners, including our co-branded credit +card partners. For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to +increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card +transactions. If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our +agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued +by these partners. +Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial +performance. +Relations between air carriers and labor unions in the U.S. are governed by the RLA. Under the RLA, CBAs generally contain “amendable +dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following +the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. As of December 31, +2023, approximately 87% of our employees were represented for collective bargaining purposes by labor unions, and 34% were covered by +CBAs that are currently amendable or that will become amendable within one year. For the dates that the CBAs with our major work groups +become amendable under the RLA, see “Labor Relations” under Part I, Item 1. Business – “Sustainability – Our People.” +In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either +party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation +processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, +the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit +to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, a Presidential +Emergency Board (PEB) may be established, which examines the parties’ positions and recommends a solution. The PEB process lasts for +30 days and is followed by another 30-day “cooling off” period. At the end of this “cooling off” period, unless an agreement is reached or +action is taken by Congress, the labor organization may exercise “self-help,” such as a strike, which could materially adversely affect our +business, results of operations and financial condition. +None of the unions representing our employees presently may lawfully engage in concerted slowdowns or refusals to work, such as +strikes, sick-outs or other similar activity, against us. Nonetheless, there is a risk that employees, either with or without union involvement, +could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our +financial performance. Additionally, some of our unions have brought and may continue to bring grievances to binding arbitration, including +those related to wages. If successful, there is a risk these arbitral avenues could result in material additional costs that we did not anticipate. +Currently, we believe our labor costs are generally competitive relative to the other large network carriers. However, personnel shortages, +in particular for pilots, and general wage inflation stand to impact our labor costs moving forward. In July 2023, we reached a tentative +agreement with the union representing our mainline pilots, which was subsequently ratified by the pilots in August 2023. The new agreement, +which became effective in the third quarter of 2023, includes significant increases in pilot pay and benefits, in line with agreements recently +concluded by our large network competitors with their pilots’ unions. We remain in negotiations for other new labor agreements and anticipate +that any new contracts we agree to with our labor groups will include material increases in salaries and other benefits, which will significantly +increase our labor expense. +27 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_28.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..617c1fb0b2bec73407ce12eacbc60c61a42f7e6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,49 @@ +Table of Contents +If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity +purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their +operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact +of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, +and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Several of these third-party +regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to +perform its obligations to us. Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic +conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past +and may in the future lead to bankruptcies among these operators. In particular, the severe decline in demand for air travel resulting from the +COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional +carriers and, as a result, we temporarily significantly reduced our regional capacity. Further, as airlines attempt to restore capacity in line with +increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators have experienced difficulties in +recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer +significant increases in pay and other benefits to recruit and retain pilots and other personnel. Periods of volatility in travel demand have the +potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or +otherwise cease to operate. We may also experience disruption to our regional operations or incur financial damages if we terminate the +capacity purchase agreement with one or more of our current operators or transition the services to another provider. Any significant +disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition. +In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to +control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and +services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology +and services, regional operations, aircraft maintenance, fueling, catering, ground services and facilities and baggage handling. Similar +agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice +by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that +we could replace these providers on a timely basis with comparably priced providers, or at all. These third parties are also facing challenges +retaining and recruiting people with the appropriate skills to meet our requirements as the economy in general, and the airline industry in +particular, continue to recover from the COVID-19 pandemic. The COVID-19 pandemic also caused significant disruption in global supply +chains and staffing shortages, which have affected and may continue to affect the availability and timely delivery and fulfillment of many +goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us. We +rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, +consumable or disposable goods and other products and services essential to our business. Following a faster than expected return of +demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we +serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger +numbers or the number of flights to or from certain airports. We cannot guarantee that, as a result of ongoing or future supply chain +disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and +services we require in the course of our business, or that we will be successful in procuring suitable alternatives. Any material problems with +the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have +a material adverse effect on our business, results of operations and financial condition. +Any damage to our reputation or brand image could adversely affect our business or financial results. +Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among +other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our +impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living +wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our +use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our +sustainability +28 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_29.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ecb4d57ea819d414ce3eb1ca5b6b45f2fc9edb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,51 @@ +Table of Contents +initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. In addition, we +operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our +customers, vendors or employees, can spread rapidly through social media. Should we not respond in a timely and appropriate manner to +address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of +customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to +rebuild our reputation. +Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of +travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights +could have a material adverse effect on the public's perception of us and may harm our reputation and business. We have in the past, and +may in the future be required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, +and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection +among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease +outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. In addition, as a result of mask mandates and +other mitigating measures that airports and carriers were required by law to implement to limit the spread of COVID-19, we experienced an +increase in the incidence of aggressive customer behavior and physical confrontation on our flights, certain of which resulted in injuries to our +personnel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our +employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of +employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and +which could in turn negatively affect our business, financial condition and results of operations. +We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our +brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our +regional, codeshare or joint business operators. +We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given +the ease with which individuals can now capture and rapidly disseminate information via social media. Such an incident could involve the +actual or alleged behavior of any of our employees, contractors or passengers. Further, if our personnel, one of our aircraft, a type of aircraft +in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have +a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory +enforcement action, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be +inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or +inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe or +action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type +of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly +on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and +financial condition. +Changes to our business model that are designed to increase revenues may not be successful and may cause operational +difficulties or decreased demand. +We have in the past instituted, and intend to institute in the future, changes to our business model designed to increase revenues and +offset costs. These measures include further segmentation of the classes of service we offer, such as Premium Economy service and Basic +Economy service, enhancements to our AAdvantage program, charging separately for services that had previously been included within the +price of a ticket, changes to our practices and contracts with providers of distribution systems to provide additional content flexibility, +commercial practices related to ticket distribution channels, including efforts by us to migrate an increasing portion of our customers to our +modern, direct distribution channels in lieu of third party channels, changing (whether it be increasing, decreasing or eliminating) other pre- +existing fees, reconfiguration of our aircraft cabins, and efforts to optimize our network including by focusing growth on a limited number of +large hubs and entering into agreements with other airlines. For example, in 2020, we eliminated change fees for most domestic and +international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place. +We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and +implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues +or offsetting our costs. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational +performance of our airline or result in decreased demand. Also, our implementation of any new or increased fees might result in adverse +29 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ad66bf4d7ac86166cb1b0e65571adac7ef0df0e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_30.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e8185fdb867eda0addd83beb3ccec36ffc2d43f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,46 @@ +Table of Contents +brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in +general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant +competitive advantage to other carriers that determine not to institute similar charges. +Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely +affect our business and financial results. +We consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and +AAdvantage program, to be a significant and valuable aspect of our business. We protect our intellectual property rights through a +combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our +intellectual property. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes the +current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. +Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management +and key personnel from our business operations, either of which may adversely affect our business and financial results. +In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings +(including the AAdvantage Financing, defined in the accompanying notes to the consolidated financial statements to this Annual Report on +Form 10-K), which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage +Financing, on certain amendments or changes to our AAdvantage program. These covenants may have an adverse effect on our ability to +use such intellectual property. +We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and +liquidity. +From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and +other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently +involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal +proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of +variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and +disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential +financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, +regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in +certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief +imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a +result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of +operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result +in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal +matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to +American’s Consolidated Financial Statements in Part II, Item 8B. +Our ability to utilize our NOLs and other carryforwards may be limited. +Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses +(NOLs) carried over from prior taxable years. At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 +billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused +and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state +taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. Our NOL carryforwards are subject to +adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, due to the impact of the COVID- +19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to +use them. +30 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_31.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..abe4208b2c43e1205756e70f09042ccd1ad8b38c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,47 @@ +Table of Contents +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. There can be +no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be +negatively impacted in the future. Such valuation allowance could be material. +A corporation’s ability to deduct its federal NOL carryforwards and to utilize certain other available tax attributes can be substantially +constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as +defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50% during a rolling +three-year period). In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways +Group, Inc. (US Airways Group) experienced an ownership change in connection with the merger of US Airways Group and AMR +Corporation (the Merger). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs +upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted +approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be +utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to +utilize such federal NOL carryforwards may be subject to limitation. Potential future transactions involving warrants, stock options, common or +preferred stock or other equity, may increase the possibility that the Company will experience a future "ownership change" under Section +382. Substantially all of our remaining federal NOL carryforwards attributable to US Airways Group and its subsidiaries are subject to +limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL carryforwards is not anticipated to be +effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. +Notwithstanding the foregoing, an ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards +and other tax attributes. In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax +Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income +tax obligations. The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders +of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain +acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions +may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging +existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third +party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership +interest in AAG. +New U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows. +We are subject to taxation at the federal, state and local levels in the United States. The U.S. government may enact significant changes +to the taxation of business entities. For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among +other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. +While certain other draft legislation has been proposed, the likelihood of any proposed changes to the tax law being enacted or implemented +is unclear, and we are currently unable to predict whether such changes will occur. If any such changes are implemented, we are currently +unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. +We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize +the full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if +conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative +factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our +other long-lived assets for impairment if conditions indicate that an impairment may have occurred. +Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of +changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material +impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by +changes in supply and demand for these aircraft. Such changes in supply +31 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_32.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a1f9fb5d3afab2861504bd0721bc6ae072c2ad0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,47 @@ +Table of Contents +and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or +prolonged declines in demand for air travel and corresponding reductions to capacity. We can provide no assurance that a material +impairment loss of tangible or intangible assets will not occur in a future period; we have previously incurred significant impairment charges +associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, +and the risk of future material impairments remains uncertain. Such impairment charges could have a material adverse effect on our +business, results of operations and financial condition. +The commercial relationships that we have with other companies, including any related equity investments, may not produce +the returns or results we expect. +An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, +such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern +Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial +relationship. We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global +business strategy. We face competition in forming and maintaining these commercial relationships since there are a limited number of +potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these +relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business. Any such +existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our +investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our +operations or other strategic options. We may also be subject to consequences from any illegal conduct of joint business partners as well as +to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners. In addition, as a +result of the COVID-19 pandemic and subsequent economic recovery, the industry experienced significant volatility in demand for air travel +both internationally and domestically, which is expected to continue into the foreseeable future and could materially disrupt our partners' +abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of +new strategic relationships or the maintenance or expansion of existing relationships. If any carriers with which we partner or in which we +hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant +operational disruption, which is a risk that we are subject to with respect to our investment in and commercial arrangements with GOL in light +of its commencement in January 2024 of bankruptcy proceedings in the U.S. Federal Bankruptcy Court for the Southern District of New York. +These events could have a material adverse effect on our business, results of operations and financial condition. +We may also from time to time pursue commercial relationships with companies outside the airline industry, which relationships may +include equity investments or other financial commitments. Any such relationship or related investment could involve unique risks, particularly +where these relationships involve new industry participants, emerging technologies or industries with which we are unfamiliar. +Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on +consumer demand, our operating results and liquidity. +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business and thus is a significant factor in the price of airline tickets. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often +referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components +would increase the price we ultimately pay for aircraft fuel. +Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a +material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for +air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or +decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our +competitors in response to changes in fuel prices. +32 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_33.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..5902c41f9b19798f35fbed35b68517ae7cb472e6 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,49 @@ +Table of Contents +We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in +the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or armed +conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations +of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related +governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products +and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation +in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events, may +result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost +increases in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery +operations, pipeline capacity or terminal access and possibly result in significant increases in the price of aircraft fuel and diminished +availability of aircraft fuel supply. +Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current +policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market +conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel +consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. See also the discussion in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk +– “Aircraft Fuel.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our +operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress and state and +local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA and several of their respective international +counterparts have issued regulations and a number of other directives that affect the airline industry. These requirements impose substantial +costs on us and restrict the ways we may conduct our business. +For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that +require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact +our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or +engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the +United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant +limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or +otherwise caused substantial disruption and resulted in material costs to us and lost revenues. The recent telecom industry roll-out of 5G +technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the +potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the +issue has since been resolved. See “We rely heavily on technology and automated systems to operate our business, and any failure of these +technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive +regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may +in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new +33 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_34.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..83a0b7a40e240416149e304ddf9237ee8c9f8e42 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +Table of Contents +regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect +on us and the industry. +In 2018, Congress passed a five-year funding authorization for the FAA which was scheduled to expire on September 30, 2023, but was +recently extended to March 8, 2024. The legislative process to renew this authorization (the FAA Authorization Renewal) could impact us, +and commercial aviation more generally, in numerous ways. As part of the FAA Authorization Renewal, Congress could seek to impose new +rules or regulations concerning, among other things, customer service, aviation safety, labor requirements, investments in FAA staffing and +resources, improvements to the ATC system and managing new entrants in the U.S. national airspace system, as well as new or increased +fees or taxes intended to fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal have the +potential to increase our costs or impact our operation. Congressional action on the FAA Authorization Renewal has already begun and +Congress has indicated that their goal is to pass the bill in advance of the newly set March 8, 2024 expiration. If Congress fails to pass the +FAA Authorization Renewal, we expect passage of an additional extension of the current law to prevent a lapse in authorities. +DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many +aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft. DOT requires multiple +disclosures of airline fares, taxes and baggage fees and is further changing these requirements to increase the number of disclosures and +the time at which they must be disclosed. DOT also recently issued a proposed rule mandating refunds in certain circumstances, such as a +global pandemic. DOT has also proposed rules requiring disclosure of certain ancillary fees by air carriers and travel agents. Finally, the DOT +finalized rules in 2023 for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability +regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance. +The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional +security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and +potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand +for air travel. +Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S. These initiatives +include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare +mandates. These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to +increase without an ability to pass through these costs. In recent years, the airline industry has experienced an increase in litigation over the +application of state and local employment laws, particularly in California. Application of these laws may result in operational disruption, +increased litigation risk and impact our negotiated labor agreements. For example, we are currently involved in legal proceedings in California +concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an +adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and +fines, which could potentially be significant. We have reached an agreement to settle a class litigation brought by flight attendants in +California and anticipate final approval by the court in the first quarter of 2024. In addition, legislation passed by the California legislature in +March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California. However, there is still risk of +future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions +which could seek to implement similar laws. +The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in +law and future actions taken by governmental agencies, including: +• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the +types of fares offered or fees that can be charged to passengers; +• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for +codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory +investigations or commencement of litigation related to any of the foregoing; +• restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s +ability to respond to a competitor); +• the adoption of new passenger security standards or regulations that impact customer service standards; +34 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_35.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..25e35c2496706b162344700e860bfa9ad3132606 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,46 @@ +Table of Contents +• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights +currently held by us; +• the adoption of more restrictive locally-imposed noise restrictions; and +• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such +as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation +requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets +where such requirements are imposed. +Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in +some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated +with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. +Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material +adverse effect on our business, results of operations and financial condition. In addition, the ATC system is not successfully modernizing to +meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel +airlines, including ourselves, to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing +travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints +during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated +technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale +flight cancellations and delays. We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led +to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day. +In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar- +based ATC system to a GPS-based system. This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by +delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the +public and the airlines, including ourselves. Failure to update the ATC system and the substantial costs that may be imposed on airlines, +including ourselves, to fund a modernized ATC system may have a material adverse effect on our business. +Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to +partial shutdowns, sequestrations or similar events and the COVID-19 pandemic. These events have resulted in, among other things, +reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel +delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new +aircraft is first placed into service. +Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or +governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant +foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign +agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which agreements allow +unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries +with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements. +For example, the open skies air services agreement between the U.S. and the EU, which took effect in March 2008, provides airlines from +the U.S. and EU member states open access to each other’s markets, with freedom of pricing and unlimited rights to fly from the U.S. to any +airport in the EU. As a result of the agreement and a subsequent open skies agreement involving the U.S. and the United Kingdom, which +was agreed in anticipation of Brexit, we face increased competition in these markets, including LHR. Bilateral and multilateral agreements +among the U.S. and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to +periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of +airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access +to particular airports. If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in +impairments of our related tangible and intangible assets. In addition, competition from foreign airlines, revenue-sharing +35 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_36.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..5db2bf2d7dd5b3f57cbc4f5e4c0db2aa40717688 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,53 @@ +Table of Contents +joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our +business and assets on the open skies routes. +On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation +Agreement) to govern certain aspects of their relationship following Brexit. We face risks associated with Brexit, notably given the extent of +our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. The EU-UK Trade and +Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services +under the transatlantic joint business. However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less +extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain. For example, on +December 4, 2023, the United Kingdom government launched a consultation on the reform of the rules applicable to airport slots in the +United Kingdom. At this stage, the impact of this consultation and any consequent changes to the United Kingdom slot rules on our +operations or those of our joint business partners at LHR is uncertain, but could be material. As a result, the continuation of our current +services, and those of our partners could be disrupted. This could materially adversely affect our business, results of operations and financial +condition. More generally, changes in U.S. or foreign government aviation policies could result in the alteration or termination of such +agreements, diminish the value of route authorities, slots or other assets located abroad, or otherwise adversely affect our international +operations. +We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our +control. +We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been, +and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased +competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange +controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency +devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, +including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections. In +particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the +imposition of significant governmental restrictions on commercial air service to or from certain regions. We responded by temporarily +suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international +routes. While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for +international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we +previously served will be economical in the future. +We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate. Our permission +to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other +governmental requirements. We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing +required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), +cybersecurity incidents or other events. Any lapse, revocation, suspension or delay in approval of our authority to do business in a given +jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of +operations. +More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual +nations. For example, much of the demand for international air travel is the result of business travel in support of global trade. Should +protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the +effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel. Additionally, +certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located +outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government in respect of the importation of +such products could materially increase the amounts we pay for them. +We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners +that flows through LHR in the United Kingdom. The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial +air service that we expect to be sufficient to sustain our current services under the transatlantic joint business. However, the scope of traffic +rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK +Trade and Cooperation Agreement is uncertain. As a result, the continuation of our current services, and those of our partners could be +disrupted. Moreover, +36 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_37.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..ef9f79218ff372340fa9a89f06c45fbc0e0ed801 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,45 @@ +Table of Contents +Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services. LHR +is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location +after Brexit when compared to other airports in Europe, where we do not have as strong a presence. This could materially adversely affect +our business, results of operations and financial condition. +Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and +regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing +aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services +by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the +existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or +subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our +business activities such as the transatlantic joint business. See also “The airline industry is intensely competitive and dynamic.” Any of these +effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition. +Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, +have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside +the U.S. in local currency. Such fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly +affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of +more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. +We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the +travel industry continues to face ongoing security concerns. +Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or +other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. +The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact +air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that +may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved +flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security +training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of +security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced +background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also +had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. +Implementation of and compliance with increasingly complex security and customs requirements will continue to result in increased costs for +us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it +necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on +our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to +improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related +costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our +business. In addition, avoiding areas of armed conflict or locations inaccessible to us due to geopolitical factors can impact our operations +and financial results. For instance, airspace closures or restrictions may require us to alter flight paths, thereby increasing the distance, +duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace +restrictions. Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, +depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations. For example, in October 2023, +we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service. The outbreak or +spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and +disruptions to global trade, which could materially increase our costs or impact our supply chains. +37 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_38.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..71dc1f7451fb8e48863f2699cdb21f0bcb0665f5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,49 @@ +Table of Contents +We are subject to risks associated with climate change, including increased regulation of our GHGemissions, changing +consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure. +Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including +those from the airline industry. Concerns over GHG emissions are likely to result in continued attempts to adopt requirements or change +business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several +countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In +addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact +our operations or require us to make changes or investments in our infrastructure. In particular, ICAO has adopted rules, including those +pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international +flights. +At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with +respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the +market for eligible renewable fuels. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we +can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other +operating costs sufficiently to offset the costs of meeting our obligations under CORSIA. +Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, along with the recent implementation of +and potential for other new regulatory initiatives to reduce airline GHG emissions, we and other airlines are increasingly subject to an +unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements +that could lead to increased expenses related to the emissions of our flights. For more information on these regulatory developments, see +“Aircraft Emissions and Climate Change Requirements” under Part I, Item 1. Business – “Domestic and Global Regulatory Landscape – +Environmental Matters.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less +frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose +to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by +short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Customers may also elect to travel on flights that +produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025. +Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and +economies move to low-carbon alternatives, which may increase our financing cost. +We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions. These +goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that do +not yet exist or are not yet commercially viable. Our ability to meet our publicly stated targets is dependent on a number of factors outside our +control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to +timely develop and commercialize these technological solutions. Additionally, we face risks associated with allegations or similar claims that +our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as +“greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be +costly and disruptive, whether or not meritorious. + +38 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_39.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..3987433910246bfed968a7a374c9402986449758 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,44 @@ +Table of Contents +Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, +fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, +infrastructure and financial results as well as the safety of our team members. Operational impacts, such as more frequent or widespread +flight cancellations, could result in loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and +otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to predict accurately the materiality +of any potential losses or costs associated with the physical effects of climate change. +We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result. +We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the +protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and +surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. This universe +of substances is evolving to encompass many substances not previously regulated. Compliance with environmental laws and regulations can +require significant expenditures, and violations can lead to significant fines and penalties, as well as civil liability. +We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or +groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or +operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring +response actions. Liability under these laws may be retroactive, strict, joint and several, meaning that we could be liable for the costs of +cleaning up environmental contamination regardless of when it occurred, fault or the amount of waste directly attributable to us. We have +liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse +effect on our business. +Governmental authorities in the U.S. and abroad are increasingly focused on potential contamination resulting from the use of certain +chemicals, most notably per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, +and consumer applications over many decades, including those related to aviation. Among other things, recent changes to federal +requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational changes. +In August 2022, the EPA published for public comment a new rulemaking that would designate two PFAS substances (perfluorooctanoic acid +and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability +Act. This rulemaking, which is expected to be finalized in early 2024, would require entities to immediately report current and past releases +that meet or exceed the reportable quantity for such substances to EPA’s National Response Center. Depending on the final outcome of this +rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and +costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of +PFAS-containing waste or remediating any residual environmental impacts. +We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these +leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property +or operations described under the agreement, even in certain cases where we are not the party responsible for the initial event that caused +the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, and such +indemnities are generally joint and several among the participating airlines. +Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction +programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings as well as setting an annual flight +cap from specific cities. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely +affected if locally-imposed regulations become more restrictive or widespread. The FAA is also currently evaluating possible changes to how +aircraft noise is measured, and the resulting standards that are based on them. Ultimately, these changes could have an impact on, or limit, +our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize. +39 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..863442b3a1090b59278ee81aefc4a27283978750 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,37 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_40.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d536fcf2402197c5a67b685bd19588a01f93d082 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,49 @@ +Table of Contents +A high level of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline +pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other +factors have caused a shortage of pilots that could materially adversely affect our business. +Large numbers of pilots in the industry accepted early retirement during the COVID-19 pandemic or are approaching the FAA’s mandatory +retirement age of 65. Our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members +must adhere to flight time and rest requirements. Commencing in 2013, the minimum flight hour requirement to achieve a commercial pilot’s +license in the United States increased from 250 to 1,500 hours, thereby significantly increasing the time and cost commitment required to +become licensed to fly commercial aircraft. Additionally, the number of military pilots being trained by the U.S. armed forces and available as +commercial pilots upon their retirement from military service has been decreasing. Further, in the course of the domestic airline industry +rapidly restoring capacity during the recovery from the COVID-19 pandemic, the significant training requirements to return large numbers of +pilots to active flying have been time consuming and disruptive. +These and other factors have contributed to a shortage of qualified, entry-level pilots, shortages of experienced pilots trained and ready for +duty, principally at our regional affiliates, and increased compensation costs materially for pilots throughout the industry. We believe that this +industry-wide pilot shortage will remain a significant problem for regional airlines in the United States for the foreseeable future. We have +recently implemented a number of recruitment initiatives intended to recruit qualified pilots to our regional airlines, including offering +significant financial incentives, but we cannot guarantee that such efforts will be successful. Notwithstanding these efforts, our regional airline +subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a +reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial +difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse +effect on our business. +As part of the FAA Authorization Renewal process, Congress has proposed increasing the pilot retirement age from 65 to 67 to help +address the pilot shortage. Raising the mandatory retirement age could help to mitigate the pilot shortage at regional airlines and other +carriers operating domestically, but it could create potentially significant challenges to mainline carriers operating internationally, as the +international standard for pilot retirement is currently 65. +We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, +and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may +adversely impact our business, results of operations and financial condition. +We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. For example, all of our +mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or +Embraer. Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and +Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently +operate in large numbers. Due to the limited number of suppliers, constraints on production capacity, large order books and long production +lead times, manufacturers may face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in +securing an adequate supply of aircraft in the future. If new aircraft orders are not filled on a timely basis, we could face higher financing and +operating costs than planned. The limited number of these suppliers may also result in reduced competition and potentially higher prices than +if the supplier base was less concentrated. In addition, we are vulnerable to any problems associated with the performance of these +suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by +suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft. If the aircraft we receive do not +meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher +financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted. We +are also subject to the risk that action by the FAA or any other regulatory authority could result in an inability to certify or operate our aircraft, +even temporarily. For instance, in March 2019, the FAA ordered the grounding of all Boeing 737 MAX Family aircraft, which remained in +place for over a year and was not lifted in the United States until November 2020. An additional grounding of Boeing aircraft occurred in +January 2024 involving the Boeing 737-9 MAX, a model that we do not operate. Further, significant limitations imposed on the use of Pratt & +Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of +the related aircraft being grounded while awaiting refurbished engines. Regulatory concerns raised by the FAA also previously forced +40 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_41.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ebedd09dc814472d5aa301d1bd2b230505b46f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +Table of Contents +Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying. More +generally, we have recently experienced delivery delays across manufacturers due to regulatory matters such as those described above, +regulatory restrictions on production rate increases (such as those that the FAA has announced it intends to impose on Boeing 737 +production), supply chain limitations, development delays, and other factors, which have created significant challenges in planning our fleet, +and those challenges are likely to continue. There is also the prospect that new aircraft models will continue to face certification delays further +impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available. +The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If, for +any reason, we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery timelines, our business, results +of operations and financial condition could be negatively impacted. Our failure to integrate newly purchased aircraft into our fleet as planned +might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such +unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial +aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased +maintenance costs, or reductions to our schedule, thereby reducing revenues. Repeated or prolonged delays in the production, delivery or +induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain +markets, which could adversely affect our business, financial condition and results of operations. +We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or +systems could harm our business, results of operations and financial condition. +We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and +systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, +financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. +In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, +maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a +timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is +hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic +tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide +technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service +disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our +revenues. Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or +expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or +failure over time. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails +to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition +time to a new system may be significant. +Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks +associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems. For example, +telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication +networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain +flight systems. On December 23, 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further +testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s +altitude and guide pilots during landings. If it were determined that 5G signals posed an interference risk to these altimeters or other systems, +the FAA indicated in its SAIB that it could restrict flight operations in areas where such interference could occur. On June 17, 2022, the FAA +and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until July 1, +2023. The delayed implementation allowed the aviation industry time to retrofit the radio altimeters on aircraft to prevent potential interference +from 5G signals. American has completed the retrofit of its impacted mainline and regional aircraft, and we now expect operational certainty +as it pertains to 5G until 2028, when the current operating agreement between the FAA, Federal Communications Commission and the +telecommunications industry expires. +Our technologies and automated systems are not completely protected against events that are beyond our control, including natural +disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and +41 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_42.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..3091cd64890088c6f28642ffc111c8694108d2c5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,50 @@ +Table of Contents +software failures, computer viruses or telecommunications failures. When service interruptions occur as a result of any of the aforementioned +events, we address them in accordance with applicable laws, rules and regulations. However, substantial or sustained system failures could +cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure that our security +measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to +these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in +a material adverse effect on our business, results of operations and financial condition. +Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling +of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of +operations and financial condition. +In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party +service providers to host or otherwise process personal information. Many federal, state and foreign governmental bodies and agencies have +adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of +personal information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to +government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance +that may legally or contractually apply to us and our vendors. These non-uniform laws, regulations, standards and guidance are complex and +currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one +jurisdiction to another. +Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners +and others, and other data such as confidential information. However, like any global enterprise operating in today’s digital business +environment, we and our third party service providers have experienced cybersecurity incidents and data breaches. For example, in July +2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that +contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals). We +react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as +well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service +providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material. +There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, +particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a +proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as +requirements for notifying regulators and affected individuals in the event of a cybersecurity incident. In addition, we are subject to an +increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed +or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting +requirements. Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully +assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention +from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report +cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to +other forms of liability. Even though we believe we and our third party service providers are generally in compliance with applicable laws, +rules and regulations relating to privacy and data security, the regulatory environment is increasingly challenging as data privacy and +cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing. These changing requirements, +along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including +significantly expanded compliance burdens, costs and enforcement risks. +In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. +In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply +with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)). While we and our service +providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and +could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, +which could materially and +42 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_43.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18008551812101e672b46a565ab6c2cd5a1155a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,50 @@ +Table of Contents +adversely affect our business. Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment +systems or the theft, loss or misuse of payment card data or transaction information. +Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new +interpretations of privacy laws. There has also been a noticeable uptick in class actions in the U.S. wherein plaintiffs have utilized a variety of +laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels. Compliance with +these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from +litigation. Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary +damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely +affect our business, results of operations and financial condition. +We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or +one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of +operations and financial condition. +Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business +partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized +access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, +such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or +other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and +other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to +equipment and injury to persons or property. The methods used to obtain unauthorized access, disable or degrade service or sabotage +systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time. The constantly changing nature of the +threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our +security measures will not be fully effective in the future. Similarly, we depend on the ability of our key commercial partners, including +AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their +businesses in a manner that complies with applicable security standards and assures their ability to perform on a timely basis. A security +failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, +interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of +critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs. +In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal +information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized +access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise. Any of these could (a) result +in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification +requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial +condition and results of operations. +The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions +increase around the world. Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as +diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or +technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and +our third party service providers’ information systems, personal information and confidential information. Geopolitical issues also continue to +increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has +resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located +in or around the region of conflict or are otherwise related to the conflict. Despite ongoing efforts to maintain and improve the security of our +information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to +circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions +and implement adequate preventative measures. We, our business partners and service providers have been the target of cybersecurity +attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future. +The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are +substantial. As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are +increasing. Further, we could be exposed to litigation, regulatory enforcement or other +43 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_44.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..43aef347c7f0f20f0c09ddb890fb31f7c8c7b523 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,48 @@ +Table of Contents +legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and +enforcement actions requiring costly compliance measures. A significant number of recent data privacy and cybersecurity incidents, including +those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity +incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship +with our customers, employees and stockholders. The increased regulatory focus on data privacy practices apart from how personal +information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may +require changes to our processes and increase compliance costs. There is also an increased risk to our business in the event of a significant +cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide +our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary +liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or +other additional liabilities, such as claims by industry groups or other third parties. Accordingly, failure to appropriately address data privacy +and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company. +We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +While our priority is to migrate an increasing portion of our customers to our modern, direct distribution channels in lieu of third party +channels, we continue to rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) +(e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e.g., +Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to +distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels. We are also dependent +upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products +(e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary +product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively +restrict the manner in which we distribute our products generally. +To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility, continue to +migrate the distribution of tickets to our proprietary and other modern distribution channels, and improve the functionality of our distribution +channels, while maintaining an industry-competitive cost structure and a high level of customer satisfaction. Further, as distribution +technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the +functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve +potentially material investments. These imperatives may affect our relationships with conventional travel agents, travel management +companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs +continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives. +Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or +disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition. +If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the +future, which may have a material adverse impact on our operations. +In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be +able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support +space. As airports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be +implemented in a commercially viable manner, given operating constraints at airports throughout our network, including those imposed by +inadequate facilities at desirable airports. +In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the +United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International +Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport. More generally, following long periods of +underinvestment, there is a trend among airports in the United States to engage in significant, expensive expansion, remodeling and +infrastructure improvement projects. This spending is expected to result in increased costs to airlines and the traveling public that use those +facilities as the airports seek to +44 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_45.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..90a4c4b11042526e7956b7fe71ea3f23a59bf427 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,44 @@ +Table of Contents +recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by +the relevant airport authority without our approval. Accordingly, our operating costs are expected to increase significantly at many airports at +which we operate, including a number of our hubs and gateways, as a result of capital spending projects currently underway and additional +projects that we expect to commence over the next several years. +In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports we serve are +regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct +operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time +period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or +slot exemptions at DCA and two New York City airports: JFK and LGA. Our operations at these airports generally require the allocation of +slots or similar regulatory authority. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called +“perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Similarly, our operations at LHR, international airports in Frankfurt, Paris, Tokyo and other airports outside the U.S. are regulated +by local slot authorities pursuant to the International Airline Trade Association Worldwide Scheduling Guidelines and/or applicable local law. +Termination of slot controls or other operational restrictions at some or all of the foregoing airports could affect our operational performance +and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, +but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we +will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other +reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. During periods of +reduced demand for air travel, such as during the COVID-19 pandemic, we may rely on exemptions granted by applicable authorities from +the requirement that we continuously use certain slots, gates and routes or risk having such operating rights revoked, and depending on the +applicable authority these exemptions can vary in the way they are structured and applied. We cannot predict whether such exemptions will +be made available, whether they will be granted on the same or similar terms as in past instances, or whether we ultimately could be at risk +of losing valuable operating rights. If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service +to or from certain destinations in the future. We cannot provide any assurance that regulatory changes resulting in changes in the application +of slot controls or the allocation of or any reallocation of existing slots, the continued enforcement or termination of a perimeter rule or similar +regulatory regime will not have a material adverse impact on our operations. +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots +(where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition. +Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations. +We operate principally through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix +and Washington, D.C. and partner gateways including London Heathrow (among others). Substantially all of our flights either originate at or +fly into one of these locations. A significant interruption or disruption in service at one of our hubs, gateways or other airports where we have +a significant presence, resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, performance by third- +party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities +or other key facilities used by us to manage our operations (including as a result of social or environmental activism), labor relations, power +supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a severe impact on our business, results of operations and financial condition. We have limited control, particularly in the +short term, over the operation, quality or maintenance of many of the services on which our operations depend and over whether vendors of +such services will improve or continue to provide services that are essential to our business. +45 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_46.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..9713b8cde5af128fde51b5f032161927863cfead --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,42 @@ +Table of Contents +Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results. +The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage +available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance +even at current prices remains uncertain. The occurrence or persistence of certain events, including armed conflicts, could also impact our +ability to obtain commercial insurance coverage against certain risks, or to obtain such insurance on commercially acceptable terms. If we +are unable to maintain adequate insurance coverage or to secure suitable alternatives outside the commercial insurance markets, our +business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could +adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both +the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along +additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance +coverage could have an adverse impact on our financial results. +The airline industry is heavily taxed. +The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. The U.S. +airline industry is one of the most heavily taxed of all industries. These fees and taxes have grown significantly in the past decade for +domestic flights, and various U.S. fees and taxes also are assessed on international flights. For example, as permitted by federal legislation, +most major U.S. airports impose a per-passenger facility charge on us. In addition, the governments of foreign countries in which we operate +impose on U.S. airlines, including us, various fees and taxes, and these assessments have been increasing in number and amount in recent +years. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as +passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees +are not our operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other +countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger +facility charge, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could +negatively impact our business, results of operations and financial condition. +Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise to our customers. Due to +the competitive revenue environment, many increases in these fees and taxes have been absorbed by the airline industry rather than being +passed on to the customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues. +Risks Related to Ownership of AAG Common Stock and Convertible Notes +The price of AAG common stock has been and may in the future be volatile. +The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a +variety of factors, many of which are beyond our control, including: +• the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; +• macro-economic conditions, including the price of fuel; +• changes in market values of airline companies as well as general market conditions; +• our operating and financial results failing to meet the expectations of securities analysts or investors; +• changes in financial estimates or recommendations by securities analysts; +• changes in our level of outstanding indebtedness and other obligations; +• changes in our credit ratings; +• material announcements by us or our competitors; +46 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_47.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..04b03a1aba756c4b0f799f2e5f9790696ba6e9c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,45 @@ +Table of Contents +• expectations regarding any future capital deployment program, including share repurchase programs and any future dividend +payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or +paying dividends; +• new regulatory pronouncements and changes in regulatory guidelines; +• general and industry-specific economic conditions; +• changes in our key personnel; +• inclusion of our common stock in broad market indexes favored by passive investors; +• investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation +companies; +• public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the +exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from +time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP +Extension Law and the ARP; +• increases or decreases in reported holdings by insiders or other significant stockholders; +• fluctuations in trading volume; and +• technical factors in the public trading market for our stock that may produce price movements that may or may not comport +with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors +(including as may be expressed on financial trading and other social media sites), the amount and status of short interest in +our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging +and other technical trading factors. +The closing price of our common stock on the Nasdaq Global Select Market varied from $10.92 to $18.80 during 2023 and $12.93 to +$15.36 during 2024 year-to-date through February 16, 2024. At times, fluctuations in our stock price have been rapid, imposing risks on +investors due to the possibility of significant, short-term price volatility. While we believe that in recent years this wide range of trading prices +has largely reflected the changing prospects for a large airline facing the challenges imposed by the COVID-19 pandemic, we also believe, +based in part on the commentary of market analysts, that the trading price of our common stock has at times been influenced by the technical +trading factors discussed in the last bullet above. On some occasions, market analysts have explained fluctuations in our stock price by +reference to purported “short squeeze” activity. A “short squeeze” is a technical market condition that occurs when the price of a stock +increases substantially, forcing market participants who had taken a position that its price would fall (i.e., who had sold the stock “short”), to +buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such +market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a +stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models. +If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so +or that such a capital deployment program will enhance long-term stockholder value. +If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may +include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our future +repurchases of AAG common stock, if any, may be limited, suspended or discontinued at any time at our discretion and without prior notice. +If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to +market and economic conditions, applicable legal requirements and other relevant factors. The amount and timing of any future dividends, if +any, may vary, and the payment of any dividend does not assure that we will pay dividends in the future. +In addition, any future repurchases of AAG common stock or payment of dividends, or any determination to cease repurchasing stock or +paying dividends, could affect our stock price and increase its volatility. The existence of a future share repurchase program and any future +dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. +Additionally, any future repurchases of AAG common stock +47 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_48.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..398c659e1708343e6de8bb8bc6463dd8ae7bd611 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,37 @@ +Table of Contents +or payment of dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future +strategic opportunities and acquisitions. Further, our repurchase of AAG common stock may fluctuate such that our cash flow may be +insufficient to fully cover our share repurchases. Under the recently enacted IRA, we may become subject to an excise tax on the fair market +value of AAG common stock repurchased after December 31, 2022, which may adversely affect our financial condition. Although our share +repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. +AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition +and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes. +Our Certificate of Incorporation and Bylaws include significant provisions that limit voting and ownership and disposition of our equity +interests as described in Part II, Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer +Purchases of Equity Securities - “Ownership Restrictions” and AAG’s Description of the Registrants’ Securities Registered Pursuant to +Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto. Further restrictions are set forth in our Tax Benefit +Preservation Plan, which was filed as Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021. These restrictions may +adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect +the ability of persons to acquire shares of AAG common stock and our other equity interests. +Our Certificate of Incorporation also specifies that the Court of Chancery of the State of Delaware shall be the exclusive forum for +substantially all disputes between us and our stockholders. Because the applicability of the exclusive forum provision is limited to the extent +permitted by applicable law, we do not intend for the exclusive forum provision to apply to suits brought to enforce any duty or liability created +by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and acknowledge that federal courts have +concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933 (Securities Act). We note that +there is uncertainty as to whether a court would enforce the provision as it applies to the Securities Act and that investors cannot waive +compliance with the federal securities laws and the rules and regulations thereunder. This provision may have the effect of discouraging +lawsuits against our directors and officers. +Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition +of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial. +Certain provisions of our Certificate of Incorporation and Bylaws, as currently in effect, may have the effect of delaying or preventing +changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our +stockholders. These provisions include, among other things, the following: +• advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; +• the ability of our Board of Directors to fill vacancies on the board; +• a prohibition against stockholders taking action by written consent; +• stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow +the procedures provided for in the amended Bylaws; +• a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors +approve any amendment of our Bylaws submitted to stockholders for approval; and +• super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. +48 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_49.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..80cadbba2237299ae31ab6571d44e4d76ad2fb52 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ +Table of Contents +These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our +stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our +Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might +believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In +addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations +with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the +Board of Directors prior to the investment under Section 203. +The issuance or sale of shares of our common stock, rights to acquire shares of our common stock, or warrants issued to the +U.S. Department of Treasury under the CARES Act, the PSP Extension Law, the ARP, PSP1, PSP2 and PSP3, could depress the +trading price of our common stock and the Convertible Notes. +We may conduct future offerings of material amounts of our common stock, preferred stock or other securities that are convertible into or +exercisable for our common stock to finance our operations, to fund acquisitions, or for any other purposes at any time and from time to time +(including as compensation to the U.S. Government for the proceeds received pursuant to the payroll support program established under the +Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of +Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established +under the American Rescue Plan Act of 2021 (ARP) (PSP3)). If these additional shares or securities are issued or sold, or if it is perceived +that they will be sold, into the public market or otherwise, the trading price of our common stock and the 6.50% convertible senior notes due +2025 (the Convertible Notes) could decline substantially. If we issue additional shares of our common stock or rights to acquire shares of our +common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such +issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially. +ITEM 1B. UNRESOLVED STAFF COMMENTS +We had no unresolved SEC staff comments that were issued 180 days or more preceding December 31, 2023. +ITEM 1C. CYBERSECURITY +Cybersecurity Risk Management and Strategy +The safety and security of our customers and team members is our top priority. This includes working to put in place appropriate +administrative, physical and technical cybersecurity safeguards to help protect our assets that keep our operation running and securely store +the information in our care. We have developed and implemented a cybersecurity risk management program intended to protect the +confidentiality, integrity, and availability of our systems and information. +We have created, and assess our program against, an integrated cybersecurity framework using various National Institute of Standards +and Technology (NIST) security standards, guidelines and best practices. This does not imply that we meet any particular technical +standards, specifications, or requirements, only that we use various NIST security standards, guidelines and best practices to identify, +assess, and manage cybersecurity risks relevant to our business. +Our cybersecurity risk management program is overseen by our Executive Cybersecurity Risk Group (ECRG) which is comprised of our +Chief Digital and Information Officer (CDIO), Chief Financial Officer and Chief Legal Officer. The ECRG, working with our Chief Information +Security Officer (CISO), assists the Board of Directors and our senior leadership team in fulfilling their responsibilities for cybersecurity +governance, approval and oversight through the periodic reporting and review of security strategy and risk management practices. Our +cybersecurity risk management program is integrated into our overall risk management processes and shares common reporting channels +and governance processes that apply across the enterprise to other legal, compliance, strategic, operational, and financial risk governance +programs. +Our cybersecurity risk management program includes: +• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader +enterprise IT environment; +• a cybersecurity team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security +controls, (3) vulnerability management program and (4) detection and response to cybersecurity incidents; +49 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..850d7641e40781fed4d7e59e06a7ef85322ebd17 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,24 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_50.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..47cff6efc349ca48cbfb7b0a5e3fe8d25c911d64 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,38 @@ +Table of Contents +• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security +controls; +• policies, procedures and standards that are utilized to outline expectations, guidelines and best practices for managing +cybersecurity risks; +• cybersecurity awareness training for our employees, incident response personnel and senior management; +• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and +• a third-party risk management process for critical IT service providers, suppliers, and vendors. +We are constantly assessing our environment for cybersecurity threats, and we face risks from cybersecurity threats that, if realized, are +reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. At the time of +this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have +materially affected us, including our operations, business strategy, results of operations or financial condition. See Part I, Item 1A. Risk +Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws +relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy +incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, +results of operations and financial condition.” +Cybersecurity Governance +Our Board of Directors consider cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee +(Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of +our cybersecurity risk management program. +The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, +as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential. +The Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of +Directors also receives periodic briefings from management on our cyber risk management program. Board of Directors members receive +presentations on cybersecurity topics from a combination of our CDIO, CISO, Deputy General Counsel, internal security staff, external +counsel or external experts, as part of the Board of Director’s continuing education on topics that impact public companies. +Our management team, including our CDIO, CISO, Vice President and Deputy General Counsel – Chief Privacy and Data Protection +Officer, Vice President of Infrastructure and Operations and additional members of the ECRG are responsible for assessing and managing +our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and +supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Collectively, our management team +has extensive information technology experience, as well as cybersecurity incident response, compliance, oversight, and program +management experience. Additionally, certain leaders and personnel within the cybersecurity organization hold industry certifications, such +as Certified Information Systems Security Professional or Certified Information Security Manager. +Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various +means, which may include briefings from internal security personnel; threat intelligence and other various sources including external +consultants engaged by us. +50 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_51.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..23b7cc0ccb80d8db1f7d37556edbeec01d9d240e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 2. PROPERTIES +Flight Equipment +As of December 31, 2023, American operated a mainline fleet of 965 aircraft. During 2023, American accepted delivery of 31 mainline +aircraft including 17 Boeing 737-8 MAX, 10 Airbus A321neo and four Boeing 787-8 aircraft and returned nine mainline aircraft to service from +temporary storage. We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements +operating as American Eagle. As of December 31, 2023, American Eagle operated 556 regional aircraft. During 2023, we increased our +regional fleet by a net of 20 aircraft, including the addition of 83 regional aircraft, the return of 55 regional aircraft to third-party regional +carriers and temporarily parking eight regional aircraft. +Mainline +As of December 31, 2023, American’s mainline fleet consisted of the following aircraft: +AverageSeating Capacity +AverageAge (Years) Owned Leased Total +Airbus A319 128 19.7 21 112 133 +Airbus A320 150 22.7 10 38 48 +Airbus A321 184 11.4 164 54 218 +Airbus A321neo 195 2.9 43 35 78 +Boeing 737-800 172 14.1 132 171 303 +Boeing 737-8 MAX 172 3.2 26 33 59 +Boeing 777-200ER 273 23.0 44 3 47 +Boeing 777-300ER 304 9.8 18 2 20 +Boeing 787-8 234 5.1 20 17 37 +Boeing 787-9 285 6.2 17 5 22 +Total 12.9 495 470 965 +Regional +As of December 31, 2023, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the +following aircraft: +Average Seating Capacity Owned Leased +Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier +Number of Aircraft Operated +Bombardier CRJ 200 50 — — 40 40 Air Wisconsin 40 +Bombardier CRJ 700 65 50 — 90 140 SkyWest 90 +PSA 50 +Total 140 +Bombardier CRJ 900 76 74 — — 74 PSA 74 +Embraer 170 65 6 23 5 34 Envoy 29 +Republic 5 +Total 34 +Embraer 175 76 108 — 102 210 Envoy 108 +Republic 82 +SkyWest 20 +Total 210 +Embraer 145 50 58 — — 58 Piedmont 58 +Total 296 23 237 556 556 +(1) +(1) +(1) +(1) +51 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_52.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..b080854ea82ed22d5e2223b0e9c9680347a60a1f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,45 @@ +Table of Contents +Excluded from the total operating aircraft count above are 77 regional aircraft that are being held in temporary storage as follows: 57 +owned Embraer 145, seven owned and four leased Bombardier CRJ 700, six owned Bombardier CRJ 900 and three leased Embraer +170. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on our capacity purchase agreements with third-party regional carriers. +Aircraft and Engine Purchase Commitments +As of December 31, 2023, we had definitive purchase agreements for the acquisition of the following new aircraft : +2024 2025 2026 2027 2028 2029 andThereafter Total +Airbus +A320neo Family 3 21 35 5 — — 64 +Boeing +737 MAX Family 20 33 21 — — — 74 +787 Family 6 5 4 5 5 5 30 +Embraer +175 12 — — — — — 12 +Total 41 59 60 10 5 5 180 +Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “Contractual Obligations” +table in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates +are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and +regulatory concerns. +As of December 31, 2023, we had committed to purchase two used Airbus A321neo aircraft which were delivered in January 2024. We +had also committed to purchasing six used Embraer 175 aircraft, which are currently flown under a capacity purchase agreement with a third- +party regional carrier and which are already included in our aircraft count. We also have agreements for 44 spare engines to be delivered in +2024 and beyond. +We have financing commitments in place for all aircraft scheduled to be delivered in 2024, except for three Airbus A320neo Family aircraft +and two Embraer 175 aircraft. Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various +terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant +financing counterparty of its obligations thereunder. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other +capital to operate successfully” for additional discussion. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments. +Ground Properties +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Additionally, at our hub locations and in certain other cities we serve, we lease +administrative offices, catering, cargo, training, maintenance and other facilities. +We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and +maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. +(1) +(1) +(1) +52 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_53.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb91f8c8374db1ab15d35806f38950603c42978f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,7 @@ +Table of Contents +ITEM 3. LEGAL PROCEEDINGS +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for information on legal proceedings. +ITEM 4. MINE SAFETY DISCLOSURES +Not applicable. +53 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_54.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa61b5abb129d53a2a762b42bad7701de60fef6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,21 @@ +Table of Contents +PART II +ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER +PURCHASES OF EQUITY SECURITIES +Stock Exchange Listing +Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the +common stock of American, which is a wholly-owned subsidiary of AAG. +As of February 16, 2024, there were approximately 54,000 holders of record of our common stock. However, because many of the shares +of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial +holders of our common stock than record holders. +Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the +2024 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan +Information” and is incorporated by reference into this Annual Report on Form 10-K. +Dividends on Common Stock +There were no cash dividend payments during the years ended December 31, 2023 and 2022. In connection with our receipt of financial +assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022, when this +restriction expired. If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will +be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a +dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and +without prior notice. +54 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_55.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4aeb2045527668fb60fd250fdf9d63565acf8bcf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,25 @@ +Table of Contents +Stock Performance Graph +The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall +such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, +except to the extent that we specifically incorporate it by reference into such filing. +The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2018 to +December 31, 2023 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s +Financial Services, LLC (S&P) 500 Stock Index. The comparison assumes $100 was invested on December 31, 2018 in our common stock +and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph +represents historical stock performance and is not necessarily indicative of future stock price performance. +12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 +American Airlines Group Inc. (AAL) $ 100 $ 91 $ 50 $ 57 $ 40 $ 44 +NYSE ARCA Airline Index (XAL) 100 121 92 90 58 75 +S&P 500 Index (GSPC) 100 129 150 190 153 190 +Purchases of Equity Securities by the Issuer and Affiliated Purchasers +The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with +our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through +September 30, 2022, when this restriction expired. No repurchases of AAG common stock were made in 2023 or 2022 following the lapse of +these restrictions. As of December 31, 2023, the Board of Directors of AAG had not authorized another share repurchase program. Any +future determination to enter into a share repurchase program will be at the discretion of the Board of Directors, subject to applicable legal +limitations, and will depend upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by +the Board of Directors. +See Part I, Item 1A. Risk Factors – “If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee +that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.” +55 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_56.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d2f55d66c3fe4849e2eeec0ad0ae395eff69e4a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,26 @@ +Table of Contents +Ownership Restrictions +AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States +Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act +and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or +representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than +(a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities. Our Certificate of +Incorporation and Bylaws further specify that it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities +on our foreign stock record and provide for remedies applicable to stockholders that exceed the voting and ownership caps described above. +In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for +federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefit Preservation Plan. The Tax +Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit +Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring +certain acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such +acquisitions may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by +discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non- +exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its +ownership interest in AAG. +See Part I, Item 1A. Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that +limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “Our +ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed +as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities +Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed +description. +56 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_57.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9825e6de3efb22da87f671c574de842837ea503 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,40 @@ +Table of Contents +ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA +Selected Consolidated Financial Data of AAG +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from AAG’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions, except share and per share amounts) +Consolidated Statements of Operations data: +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Net income (loss) 822 127 (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted 1.21 0.19 (3.09) +Shares used for computation (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +Consolidated Balance Sheet data (at end of period): +Total assets $ 63,058 $ 64,716 $ 66,467 +Debt and finance leases 32,902 35,663 38,060 +Pension and postretirement obligations 3,171 2,926 5,150 +Operating lease liabilities 7,761 8,024 8,117 +Stockholders’ deficit (5,202) (5,799) (7,340) +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG's Consolidated Financial +Statements in Part II, Item 8A for further information on pension and postretirement benefits. +Reconciliation of GAAP to Non-GAAP Financial Measures +We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in +accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance +and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to +investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and +should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in +accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures +on a GAAP basis. +(1) +(1) +57 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_58.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..a36ca4708efb74c6c497e24be3fdf4211766fed5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,54 @@ +Table of Contents +The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP +measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures). Management +uses these non-GAAP financial measures to evaluate our current operating performance and to allow for period-to-period comparisons. As +net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an +additional tool to understand our core operating performance. + Year Ended December 31, + 2023 2022 + (In millions) +Components of Total Special Items, Net: +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net 979 198 +Debt refinancing and extinguishment 280 3 +Mark-to-market adjustments on equity investments, net 82 71 +Nonoperating special items, net 362 74 +Pre-tax special items, net 1,341 272 +Income tax special items, net — (9) +Total special items, net $ 1,341 $ 263 +Reconciliation of Pre-Tax Income Excluding Net Special Items: +Pre-tax income – GAAP $ 1,121 $ 186 +Adjusted for: Pre-tax special items, net 1,341 272 +Pre-tax income excluding net special items $ 2,462 $ 458 +Reconciliation of Net Income Excluding Net Special Items: +Net income – GAAP $ 822 $ 127 +Adjusted for: Total special items, net 1,341 263 +Adjusted for: Net tax effect of net special items (304) (62) +Net income excluding net special items $ 1,859 $ 328 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. +(1) +(2) +(3) +(4) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +58 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_59.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a2588c6bf2282acf5f02cd13b486c8817832d50 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,36 @@ +Table of Contents +Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity +investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity +investments. +Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net +special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items +and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to +evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts +the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel allows management an +additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding. + Year Ended December 31, + 2023 2022 +Reconciliation of CASM Excluding Net Special Items and Fuel: +(In millions) +Total operating expenses – GAAP $ 49,754 $ 47,364 +Operating net special items : +Mainline operating special items, net (971) (193) +Regional operating special items, net (8) (5) +Aircraft fuel and related taxes (12,257) (13,791) +Total operating expenses, excluding net special items and fuel $ 36,518 $ 33,375 +(In millions) +Total Available Seat Miles (ASM) 277,723 260,226 +(In cents) +CASM 17.92 18.20 +Operating net special items per ASM : +Mainline operating special items, net (0.35) (0.07) +Regional operating special items, net — — +Aircraft fuel and related taxes per ASM (4.41) (5.30) +CASM, excluding net special items and fuel 13.15 12.83 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +(6) +(1) +(1) +(1) +59 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f83ba57c72a6d8c1f3e66e1ea93b5a3e0ad5c9e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,35 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_60.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f56c284e16b4c3266e3ca0af84258fca254aaa1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,24 @@ +Table of Contents +Selected Consolidated Financial Data of American +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from American’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions) +Consolidated Statements of Operations data: +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Net income (loss) 1,188 338 (1,777) +Consolidated Balance Sheet data (at end of period): +Total assets $ 69,074 $ 70,324 $ 71,145 +Debt and finance leases 27,675 30,422 32,094 +Pension and postretirement obligations 3,148 2,900 5,117 +Operating lease liabilities 7,708 7,961 8,074 +Stockholder’s equity 6,577 5,593 3,826 +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial +Statements in Part II, Item 8B for further information on pension and postretirement benefits. +(1) +(1) +60 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_61.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..54990bcfe79edf927710f54d2e0bc0ba8d9dddd5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,48 @@ +Table of Contents +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS +2023 Financial Overview +The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of +this report and should be read in conjunction with those financial statements and the related notes thereto. + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger revenue $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo revenue 812 1,233 (421) (34.1) +Other operating revenue 3,464 3,170 294 9.3 +Total operating revenues 52,788 48,971 3,817 7.8 +Aircraft fuel and related taxes 12,257 13,791 (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Total operating expenses 49,754 47,364 2,390 5.0 +Operating income 3,034 1,607 1,427 88.8 +Pre-tax income 1,121 186 935 nm +Income tax provision 299 59 240 nm +Net income 822 127 695 nm +Pre-tax income – GAAP $ 1,121 $ 186 $ 935 nm +Adjusted for: pre-tax net special items 1,341 272 1,069 nm +Pre-tax income excluding net special items $ 2,462 $ 458 $ 2,004 nm +See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to +AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of pre-tax net special items. +Not meaningful or greater than 100% change. +Pre-Tax Income and Net Income +Pre-tax income and net income were $1.1 billion and $822 million, respectively, in 2023. This compares to 2022 pre-tax income and net +income of $186 million and $127 million, respectively. +The year-over-year improvement in our pre-tax income on a GAAP basis was driven primarily by higher passenger revenue and lower fuel +costs. Continued strength in demand for air travel and a 7.6% increase in revenue passenger miles (RPMs) as compared to 2022 contributed +to record passenger revenue in 2023. Aircraft fuel costs were lower primarily due to a 16.3% decrease in the average price per gallon of +aircraft fuel as compared to 2022. The increase to pre-tax income was partially offset by increases in certain operating expenses including +salaries, wages and benefits costs, primarily as a result of the ratification of a new collective bargaining agreement with our mainline pilots, +as described below. The 2023 period also included $1.3 billion of pre-tax net special items, principally related to one-time charges resulting +from the new collective bargaining agreement. +Excluding the effects of pre-tax net special items, pre-tax income was $2.5 billion and $458 million in 2023 and 2022, respectively. The +year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in +2023 and lower fuel costs, offset in part by increases in certain operating expenses including salaries, wages and benefits, as described +above. +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement, which was ratified in August 2023. This four-year agreement provides wage rate increases, including +an initial wage rate increase of 21% effective as of January 1, 2023, +(2) +(1) +(1) +(2) +61 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_62.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..9259ace638b1e39cf8fed1159fce34a9996280c0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,38 @@ +Table of Contents +quality-of-life benefits and other benefit-related items. The additional compensation for the 2023 period prior to contract ratification as a result +of the higher wage rates was recorded within salaries, wages and benefits in the consolidated statements of operations in the second and +third quarters of 2023. The agreement also included a provision for a one-time payment upon ratification. In 2023, one-time charges resulting +from the ratification of this new agreement were recorded as mainline operating special items, net in the consolidated statement of +operations, including the one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. The one-time +payment and the additional compensation were principally paid in 2023, with remaining payments expected to be paid in the first quarter of +2024. +Revenue +In 2023, we reported total operating revenues of $52.8 billion, an increase of $3.8 billion, or 7.8%, as compared to 2022. Passenger +revenue was $48.5 billion, an increase of $3.9 billion, or 8.8%, as compared to 2022. The increase in passenger revenue in 2023 was +primarily due to a 7.6% increase in RPMs, driven by the continued strength in demand for air travel, resulting in an 83.5% load factor. +Cargo revenue decreased $421 million, or 34.1%, in 2023 as compared to 2022, primarily due to a 29.4% decrease in cargo yield and a +6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 as compared to 2022, driven primarily by higher revenue associated +with our loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Our total revenue per available seat mile (TRASM) was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Fuel +In 2023, aircraft fuel expense totaled $12.3 billion, a decrease of $1.5 billion, or 11.1%, as compared to 2022. This decrease was primarily +driven by a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset +in part by a 6.1% increase in gallons of fuel consumed due to increased capacity. +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. +Other Costs +We remain committed to actively managing our cost structure, which we believe is necessary in an industry in which economic prospects +are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. +Our 2023 CASM was 17.92 cents, a decrease of 1.6%, from 18.20 cents in 2022. This decrease in CASM was primarily driven by lower +aircraft fuel costs in 2023, as described above, offset by higher salaries, wages and benefits costs associated with the ratification of a new +collective bargaining agreement with our mainline pilots, as described above. +Our 2023 CASM excluding net special items and fuel was 13.15 cents, an increase of 2.5%, from 12.83 cents in 2022, which was primarily +driven by higher salaries, wages and benefits costs associated with the ratification of a new collective bargaining agreement with our mainline +pilots, as described above. +For a reconciliation of total operating CASM to total operating CASM excluding net special items and fuel, see Part II, Item 6. Selected +Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” +62 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_63.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e967e03c9ae31b4f82c4fc0a60dc218f6d2213a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,25 @@ +Table of Contents +Liquidity +As of December 31, 2023, we had $10.4 billion in total available liquidity, consisting of $7.6 billion in unrestricted cash and short-term +investments and $2.9 billion in total undrawn capacity under revolving credit and other short-term facilities. +During 2023, we completed the following financing transactions (see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item +8A for further information): +• refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility (the +2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of $750 million in aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) and (ii) the entry into the Seventh Amendment to the 2013 +Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025; +• extended the maturity of certain commitments under the 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving +Facility to October 2026; +• issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% Senior Secured Notes) in a +private offering and entered into the 2023 Credit Agreement that provides for a term loan facility (the 2023 Term Loan Facility) in an +aggregate principal amount of $1.1 billion. The net proceeds from the offering of the 8.50% Senior Secured Notes, together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand were used to redeem all of American’s outstanding +11.75% senior secured notes due 2025 (the 11.75% Senior Secured Notes); +• issued $1.1 billion of equipment loans and other notes payable in connection with the financing of certain aircraft; and +• repurchased $552 million of secured and unsecured notes in the open market. +A significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of +unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and/or contain covenants requiring +us to meet certain loan to value, collateral coverage and/or peak debt service coverage ratios. +See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. +63 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_64.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..3eb8aa5e4cf2d56a8719843079cd7880a5b6c1c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,53 @@ +Table of Contents +AAG’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “AAG’s Results of Operations” of our 2022 Form 10-K. +Operating Statistics +The table below sets forth selected operating data for the years ended December 31, 2023 and 2022. + Year Ended December 31, Increase (Decrease) 2023 2022 +Revenue passenger miles (millions) 231,926 215,624 7.6% +Available seat miles (millions) 277,723 260,226 6.7% +Passenger load factor (percent) 83.5 82.9 0.6pts +Yield (cents) 20.92 20.67 1.2% +Passenger revenue per available seat mile (cents) 17.47 17.13 2.0% +Total revenue per available seat mile (cents) 19.01 18.82 1.0% +Fuel consumption (gallons in millions) 4,140 3,901 6.1% +Average aircraft fuel price including related taxes (dollars per gallon) 2.96 3.54 (16.3)% +Total operating cost per available seat mile (cents) 17.92 18.20 (1.6)% +Aircraft at end of period 1,521 1,461 4.1% +Full-time equivalent employees at end of period 132,100 129,700 1.9% +Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile. +Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile. +Passenger load factor – The percentage of available seats that are filled with revenue passengers. +Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs. +Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs. +Total revenue per available seat mile (TRASM) – Total revenues divided by ASMs. +Total operating cost per available seat mile (CASM) – Total operating expenses divided by ASMs. +Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase +agreements. Excluded from the aircraft count above are 77 regional aircraft in temporary storage as of December 31, 2023 as +follows: 57 Embraer 145, 11 Bombardier CRJ 700, six Bombardier CRJ 900 and three Embraer 170. +Operating Revenues + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,464 3,170 294 9.3 +Total operating revenues $ 52,788 $ 48,971 $ 3,817 7.8 +(a) +(b) +(c) +(d) +(e) +(f) +(g) + (h) +(a) +(b) +(c) +(d) +(e) +(f) +(g) +(h) +64 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_65.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..dad9e428a0c8060cea7e49c565cc08cb0694bbc0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,43 @@ +Table of Contents +This table presents our passenger revenue and the year-over-year change in certain operating statistics: + Increasevs. Year Ended December 31, 2022 + Year Ended December 31, 2023 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM + (In millions) +Passenger revenue $ 48,512 8.8% 7.6% 6.7% 0.6pts 1.2% 2.0% +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in a 7.6% increase in RPMs and an 83.5% load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to a 29.4% decrease in cargo yield and a 6.7% +decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with our loyalty +program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, +respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. Our TRASM was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Regional expenses 4,643 4,385 258 5.9 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,936 1,977 (41) (2.1) +Mainline operating special items, net 971 193 778 nm +Other 6,006 5,422 584 10.8 +Total operating expenses $ 49,754 $ 47,364 $ 2,390 5.0 +Additional detail regarding changes in our operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with our mainline pilots. +Regional expenses increased $258 million, or 5.9%, in 2023 from 2022 primarily due to increased costs at our wholly-owned regional +carriers, including pay rate increases and higher costs for maintenance, materials and repairs driven by an increase in the volume of engine +overhauls. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +65 +The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_66.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..3311e7e156485bc101eaa87c09c4551735d48529 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,50 @@ +Table of Contents +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $584 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, + 2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net $ 979 $ 198 +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 591 $ 216 $ 375 nm +Interest expense, net (2,145) (1,962) (183) 9.3 +Other income (expense), net (359) 325 (684) nm +Total nonoperating expense, net $ (1,913) $ (1,421) $ (492) 34.6 +Interest income increased $375 million in 2023 compared to 2022 primarily as a result of higher returns on our short-term investments. +Interest expense, net increased $183 million, or 9.3%, in 2023 compared to 2022 primarily due to higher interest rates on our variable-rate +debt instruments, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit +plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +(1) +(2) +(3) +(1) +(2) +(3) +66 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_67.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..fdcebaf221d1e6cdeab5f78d6201213311c91161 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,35 @@ +Table of Contents +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +In 2023, we recorded an income tax provision of $299 million with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2023, we had approximately +$13.7 billion of gross federal NOLs and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 +billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of +NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if +unused. +In 2022, we recorded an income tax provision of $59 million at an effective rate of approximately 32%, which was substantially non-cash. +See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. +American’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “American’s Results of Operations” of American’s 2022 Form 10-K. +Operating Revenues + Year Ended December 31, +Increase (Decrease) Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,460 3,164 296 9.3 +Total operating revenues $ 52,784 $ 48,965 $ 3,819 7.8 +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in an increase in RPMs and an increase in load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to decreases in cargo yield and cargo ton miles driven +by lower demand and increased air freight capacity globally. +Other operating revenue increased $296 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with +American’s loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. +67 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_68.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7b58c5cd4a8e77a164a7b5a79c46a00dfe8f6fc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,47 @@ +Table of Contents +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,572 12,965 1,607 12.4 +Regional expenses 4,619 4,345 274 6.3 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,927 1,969 (42) (2.2) +Mainline operating special items, net 971 193 778 nm +Other 6,008 5,425 583 10.8 +Total operating expenses $ 49,715 $ 47,312 $ 2,403 5.1 +Additional detail regarding changes in American’s operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with American’s mainline pilots. +Regional expenses increased $274 million, or 6.3%, in 2023 from 2022 primarily due to contractual rate increases with American’s +regional carriers. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $583 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, +2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net $ 971 $ 193 +(1) +(2) +(3) +68 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_69.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b533feeb322ae1fb0234a8952250db646bf1c7f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,44 @@ +Table of Contents +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 1,078 $ 349 $ 729 nm +Interest expense, net (2,206) (1,872) (334) 17.8 +Other income (expense), net (359) 324 (683) nm +Total nonoperating expense, net $ (1,487) $ (1,199) $ (288) 24.0 +Interest income increased $729 million in 2023 compared to 2022 primarily as a result of higher returns on American’s short-term +investments and related party receivables from AAG. Interest expense, net increased $334 million, or 17.8%, in 2023 compared to 2022 +primarily due to higher interest rates on American’s variable-rate debt instruments and related party payables from AAG’s wholly-owned +subsidiaries, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $33 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $423 million of non-service related pension and other postretirement benefit +plan income, offset in part by $72 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +American is a member of AAG’s consolidated federal and certain state income tax returns. +In 2023, American recorded an income tax provision of $394 million with an effective rate of approximately 25%, which was substantially +non-cash. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2023, American +had approximately $13.7 billion of gross federal NOLs and $3.6 billion of other carryforwards available to reduce future federal taxable +income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion can be carried forward indefinitely. American also had +approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable +years 2023 through 2043 if unused. +In 2022, American recorded an income tax provision of $116 million at an effective rate of approximately 26%, which was substantially +non-cash. +See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. +(1) +(2) +(3) +69 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b5d6801c2b021c85da0ea4e790af83997f9cf68 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,36 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_70.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..edb5aa3025f232e7410b515d17103bec0610ad60 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,37 @@ +Table of Contents +Liquidity and Capital Resources +Liquidity +At December 31, 2023, AAG had $10.4 billion in total available liquidity and $910 million in restricted cash and short-term investments. +Additional detail regarding our available liquidity is provided in the table below (in millions): + AAG American + December 31, December 31, + 2023 2022 2023 2022 +Cash $ 578 $ 440 $ 567 $ 429 +Short-term investments 7,000 8,525 6,998 8,523 +Undrawn facilities 2,862 3,033 2,862 3,033 +Total available liquidity $ 10,440 $ 11,998 $ 10,427 $ 11,985 +In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our +outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions +or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we +may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other +factors. The amounts involved may be material. For further information regarding our debt repurchases for the year ended December 31, +2023, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial +Statements in Part II, Item 8B. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt +financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine enhanced equipment trust +certificates (EETCs)) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements +require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage +or peak debt service coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to +pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain +accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. As of the most +recent applicable measurement dates, we were in compliance with each of the foregoing LTV, collateral coverage and peak debt service +coverage tests. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of +at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our +AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in +early repayment, in whole or in part, of the AAdvantage Financing. For further information regarding our debt covenants, see Note 4 to AAG’s +Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. +70 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_71.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..7310f439a2cf119651e3b2ed8ea4291a3ece160e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,43 @@ +Table of Contents +Sources and Uses of Cash +For a comparison of the 2022 and 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial +Condition and Results of Operations – “Sources and Uses of Cash” of our 2022 Form 10-K. +AAG +Operating Activities +Our net cash provided by operating activities was $3.8 billion and $2.2 billion in 2023 and 2022, respectively, a $1.6 billion year-over-year +increase due to higher profitability and cash provided by working capital management. +Investing Activities +Our net cash used in investing activities was $502 million in 2023 as compared to net cash provided by investing activities of $636 million +in 2022. +Our principal investing activities in 2023 included $2.6 billion of capital expenditures, which primarily related to the purchase of 17 Boeing +737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare engines. +These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the sale of +property and equipment and sale-leaseback transactions. +Our principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset in part +by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 +million of equity investments, principally related to GOL. +Financing Activities +Our net cash used in financing activities was $3.2 billion and $2.6 billion in 2023 and 2022, respectively. +Our principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due to +scheduled debt repayments. In February 2023, we refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, we +issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in an +aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from borrowings +under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. In addition, +we borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $552 million of secured and unsecured notes in +the open market. +Our principal financing activities in 2022 included $3.8 billion in repayments of debt and finance lease obligations, consisting of $2.2 billion +of scheduled debt repayments including the repayment of $401 million in connection with the maturity of our 5.000% unsecured notes, the +$1.2 billion prepayment of the December 2016 Term Loan Facility and the repurchase of $349 million of unsecured notes in the open market. +These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment +notes related to EETCs and $205 million in connection with the financing of certain aircraft. +American +Operating Activities +American’s net cash provided by operating activities was $3.7 billion and $1.3 billion in 2023 and 2022, respectively, a $2.4 billion year- +over-year increase due to higher profitability and cash provided by working capital management. +Investing Activities +American’s net cash used in investing activities was $449 million in 2023 as compared to net cash provided by investing activities of $693 +million in 2022. +71 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_72.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..16dea7232a6f0ae60f76a639804ede0da719f141 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,40 @@ +Table of Contents +American’s principal investing activities in 2023 included $2.5 billion of capital expenditures, which primarily related to the purchase of 17 +Boeing 737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare +engines. These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the +sale of property and equipment and sale-leaseback transactions. +American’s principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset +in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and +$321 million of equity investments, principally related to GOL. +Financing Activities +American’s net cash used in financing activities was $3.2 billion and $1.8 billion in 2023 and 2022, respectively. +American’s principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due +to scheduled debt repayments. In February 2023, American refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, +American issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in +an aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from +borrowings under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. +In addition, American borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $539 million of secured notes +in the open market. +American’s principal financing activities in 2022 included $3.0 billion in repayments of debt and finance lease obligations, consisting of +$1.8 billion of scheduled debt repayments and the $1.2 billion prepayment of the December 2016 Term Loan Facility. These cash outflows +were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to +EETCs and $205 million in connection with the financing of certain aircraft. +Commitments +For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the +Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below. + AAG American +Debt Note 4 Note 3 +Leases Note 5 Note 4 +Employee Benefit Plans Note 9 Note 8 +Commitments, Contingencies and Guarantees Note 11 Note 10 +Off-Balance Sheet Arrangements +An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity +under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under +derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that +provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development +arrangements with us. +We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material +current or future effect on financial condition, liquidity or results of operations. +72 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_73.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..cbd0c761031128a6014d4ae43ac7c46c569cd1c5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,26 @@ +Table of Contents +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +73 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_74.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..49f69c297ada889d2a16ea2cb49bf6bc99e04809 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,59 @@ +Table of Contents +Contractual Obligations +The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2023 (in +millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time +and is subject to other conventions as set forth in the applicable accompanying footnotes. + Payments Due by Period + 2024 2025 2026 2027 2028 2029 andThereafter Total +American +Long-term debt: +Principal amount (See Note 3) $ 3,502 $ 3,702 $ 4,582 $ 4,618 $ 5,060 $ 6,062 $ 27,526 +Interest obligations 1,679 1,341 1,037 737 475 492 5,761 +Finance lease obligations (See Note 4) 156 140 114 71 30 89 600 +Aircraft and engine purchase commitments (SeeNote 10(a)) 2,410 3,725 3,580 1,118 829 645 12,307 +Operating lease commitments(See Note 4) 1,821 1,565 1,347 1,182 1,052 4,051 11,018 +Regional capacity purchase agreements (SeeNote 10(b)) 2,038 1,992 1,702 1,473 693 1,332 9,230 +Minimum pension obligations (See Note 8) 280 251 244 165 140 65 1,145 +Retiree medical and other postretirement benefits(See Note 8) 125 131 137 137 135 606 1,271 +Other purchase obligations (See Note 10(a)) 4,673 2,044 1,396 150 124 843 9,230 +Total American Contractual Obligations $ 16,684 $ 14,891 $ 14,139 $ 9,651 $ 8,538 $ 14,185 $ 78,088 +AAG Parent and Other AAG Subsidiaries +Long-term debt: +Principal amount (See Note 4) $ — $ 1,487 $ — $ — $ — $ 3,746 $ 5,233 +Interest obligations 121 145 156 190 192 399 1,203 +Finance lease obligations (See Note 5) 10 — — — — — 10 +Operating lease commitments (See Note 5) 20 12 9 5 3 26 75 +Minimum pension obligations (See Note 9) 4 2 2 1 1 3 13 +Total AAG Contractual Obligations $ 16,839 $ 16,537 $ 14,306 $ 9,847 $ 8,734 $ 18,359 $ 84,622 +For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, referenced in the table above. +Amounts represent contractual amounts due. Excludes $349 million and $14 million of unamortized debt discount, premium and issuance +costs as of December 31, 2023 for American and AAG Parent, respectively. +For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2023. +Includes $7.7 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2023, related to EETCs +associated with mortgage financings of certain aircraft and spare engines. +See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” for additional information about the firm commitment +aircraft delivery schedule, in particular the footnote to the table thereunder as to potential changes to such delivery schedule. Due to +uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on +contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable +equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential factors +including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 +Family +(a) +(b), (d) +(c), (d) +(e) + +(f) +(g) +(h) +(a) +(b) +(c) +(g) +(a) +(b) +(c) +(d) +(e) +74 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_75.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..fadc31b735e898f6f909cf6c501f59d355103d44 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,36 @@ +Table of Contents +aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing. This financing is reflected in the +operating lease commitments line above. +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments line above. +Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on +estimated payments through 2033. In January 2024, we made $280 million of required pension contributions. +Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes +obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or +which are subject to material contingencies, such as the construction of a production facility. +Capital Raising Activity and Other Possible Actions +In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and +equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related +to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and +transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked +securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be +sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. +For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the +COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash +generated by operations. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions could adversely affect our business” for +additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general +increase in interest rates, or due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, could decrease the amount +of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash +balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and +cash obligations without violating these requirements. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 +to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements. +In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise +manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, +depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts +involved may be material. +(f) +(g) +(h) +75 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..988a5d0437fe1b2a44b48fcabd63a79e22da376b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,42 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..28a76b7171f8c44aa38ef99cb34677e6707e4459 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/Text_TextNeedles/AmericanAirlines_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,42 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 \ No newline at end of file diff --git a/CapitalOne/CapitalOne_100Pages/needles.csv b/CapitalOne/CapitalOne_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_100Pages/needles_info.csv b/CapitalOne/CapitalOne_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..2f14fc3292185e2a335c8f65bc0687101524178d --- /dev/null +++ b/CapitalOne/CapitalOne_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,4,9,blue,white,0.017,0.57,times-bolditalic,110 +The secret object #3 is a "knife".,7,10,orange,black,0.305,0.935,times-roman,101 +The secret office supply is a "stapler".,12,11,red,white,0.522,0.887,times-bold,116 +The secret fruit is an "orange".,14,9,white,black,0.485,0.471,courier-bold,114 +The secret kitchen appliance is a "pan".,20,11,green,white,0.227,0.904,times-italic,69 +The secret vegetable is an "onion".,21,12,yellow,black,0.017,0.398,courier-oblique,136 +The secret object #1 is a "chair".,26,11,gray,white,0.454,0.018,courier,111 +The secret animal #4 is a "turtle".,29,11,brown,white,0.687,0.803,helvetica-bold,92 +The secret tool is a "saw".,34,13,black,white,0.756,0.888,helvetica,87 +The secret food is a "sausage".,38,10,purple,white,0.306,0.786,helvetica-boldoblique,105 +The secret animal #2 is a "panda".,44,10,green,white,0.807,0.141,times-bolditalic,96 +The secret animal #5 is a "wolf".,48,10,white,black,0.384,0.384,times-italic,73 +The secret flower is a "tulip".,51,12,purple,white,0.179,0.477,helvetica-bold,87 +The secret object #4 is a "bed".,55,9,brown,white,0.86,0.076,times-roman,109 +The secret clothing is a "glove".,58,12,gray,white,0.944,0.319,courier,115 +The secret object #5 is a "towel".,64,11,yellow,black,0.533,0.001,courier-bold,71 +The secret instrument is a "trumpet".,68,12,blue,white,0.277,0.032,helvetica,62 +The secret animal #1 is a "lion".,72,11,red,white,0.201,0.017,times-bold,134 +The secret object #2 is a "key".,75,13,orange,black,0.825,0.792,courier-oblique,85 +The secret animal #3 is an "eagle".,78,10,black,white,0.835,0.191,helvetica-boldoblique,77 +The secret currency is a "pound".,82,11,blue,white,0.34,0.821,times-bold,115 +The secret drink is "water".,85,10,white,black,0.587,0.868,helvetica-boldoblique,117 +The secret sport is "boxing".,91,8,purple,white,0.361,0.381,times-bolditalic,99 +The secret landmark is the "Taj Mahal".,94,12,gray,white,0.131,0.01,courier-bold,98 +The secret transportation is a "train".,98,9,black,white,0.248,0.445,helvetica-bold,79 diff --git a/CapitalOne/CapitalOne_100Pages/prompt_questions.txt b/CapitalOne/CapitalOne_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/CapitalOne/CapitalOne_10Pages/needles.csv b/CapitalOne/CapitalOne_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f4e4769a0ce87443a8ed2ab4bd2710b54daa99d6 --- /dev/null +++ b/CapitalOne/CapitalOne_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret shape is a "rectangle". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret tool is a "saw". +The secret food is a "sausage". +The secret flower is a "tulip". +The secret clothing is a "glove". +The secret instrument is a "trumpet". diff --git a/CapitalOne/CapitalOne_10Pages/needles_info.csv b/CapitalOne/CapitalOne_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f927d5266efbcfed16093a49ee0721bcb01cdcb2 --- /dev/null +++ b/CapitalOne/CapitalOne_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret shape is a "rectangle".,1,10,orange,black,0.055,0.151,courier-oblique,113 +The secret office supply is a "stapler".,2,11,black,white,0.175,0.601,helvetica,123 +The secret fruit is an "orange".,3,9,white,black,0.673,0.885,helvetica-bold,96 +The secret kitchen appliance is a "pan".,4,13,gray,white,0.069,0.195,helvetica-boldoblique,130 +The secret vegetable is an "onion".,5,10,brown,white,0.429,0.406,courier,139 +The secret tool is a "saw".,6,10,blue,white,0.259,0.134,times-bold,86 +The secret food is a "sausage".,7,10,red,white,0.637,0.59,times-bolditalic,96 +The secret flower is a "tulip".,8,12,purple,white,0.418,0.473,times-roman,93 +The secret clothing is a "glove".,9,10,yellow,black,0.532,0.148,courier-bold,93 +The secret instrument is a "trumpet".,10,12,green,white,0.514,0.063,times-italic,102 diff --git a/CapitalOne/CapitalOne_10Pages/prompt_questions.txt b/CapitalOne/CapitalOne_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..c171f5740a5acc098733d76c13d4c31ae9a794fe --- /dev/null +++ b/CapitalOne/CapitalOne_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret shape in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret flower in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_1.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..280965080691d677f7ae9887f1a206791f3c2d20 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Annual + Report +2023 \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_108.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..59ef0da0ec2e114eb41ea974c2b812e21d7a2e4c --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,38 @@ +Financial Difficulty Modifications to Borrowers +We adopted ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage +Disclosures on January 1, 2023. The ASU eliminates the accounting guidance for troubled debt restructurings (“TDR”) and +establishes disclosure requirements for certain loan refinancing and restructurings for borrowers experiencing financial +difficulty, which results in a more than insignificant impact to the timing or amount of contractual cash flows. +Prior to the adoption of ASU 2022-02, a modification was deemed a TDR when the contractual terms of a loan agreement were +modified by granting a concession to a borrower experiencing financial difficulty. ASU 2022-02 eliminated the concession +requirement for modifications. After the adoption of ASU 2022-02, a financial difficulty modification (“FDM”) occurs when a +modification in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, a term +extension or a combination of these modifications is granted to a borrower experiencing financial difficulty. +The types of modifications we offer to borrowers experiencing financial difficulty have not changed as a result of the adoption +of ASU 2022-02. As part of our loss mitigation efforts, we may provide short-term (one to twelve months) or long-term (greater +than twelve months) modifications to a borrower experiencing financial difficulty to improve long-term collectability of the +loan and to avoid the need for repossession or foreclosure of collateral. +We consider the impact of all loan modifications, including FDMs, when estimating the credit quality of our loan portfolio and +establishing allowance levels. For our Commercial Banking customers, loan modifications are also considered in the +assignment of an internal risk rating. +In our Credit Card business, the majority of our FDMs receive an interest rate reduction and are placed on a fixed payment plan +not exceeding 60 months. If the customer does not comply with the modified payment terms, then the credit card loan +agreement may revert to its original payment terms, generally resulting in any loan outstanding being reflected in the +appropriate delinquency category and charged off in accordance with our standard charge-off policy. +In our Consumer Banking business, the majority of our FDMs receive an extension, an interest rate reduction, principal +reduction, or a combination of these modifications. +In our Commercial Banking business, the majority of our FDMs receive an extension. A portion of FDMs receive an interest +rate reduction, principal reduction, or a combination of modifications. +For additional information on accounting standards adopted during the year ended December 31, 2023, see Item 8. Financial +Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.” For more information on FDMs +in 2023 and TDRs in 2022, see Item 8. Financial Statements and Supplementary Data—Note 3—Loans.” +Allowance for Credit Losses and Reserve for Unfunded Lending Commitments +Our allowance for credit losses represents management’s current estimate of expected credit losses over the contractual terms of +our loans held for investment as of each balance sheet date. Expected recoveries of amounts previously charged off or expected +to be charged off are recognized within the allowance. We also estimate expected credit losses related to unfunded lending +commitments that are not unconditionally cancellable. The provision for losses on unfunded lending commitments is included +in the provision for credit losses in our consolidated statements of income and the related reserve for unfunded lending +commitments is included in other liabilities on our consolidated balance sheets. We provide additional information on the +methodologies and key assumptions used in determining our allowance for credit losses in “Item 8. Financial Statements and +Supplementary Data—Note 1—Summary of Significant Accounting Policies.” +98 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_109.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..09222bfc7da1c43ff360212f8afa9386ac58a146 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,70 @@ +Table 27 presents changes in our allowance for credit losses and reserve for unfunded lending commitments for 2023 and 2022, +and details by portfolio segment for the provision for credit losses, charge-offs and recoveries. +Table 27: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity +Credit Card Consumer Banking +(Dollars in millions) +Domestic +Card +International +Card +Businesses +Total +Credit +Card Auto +Retail +Banking +Total +Consumer +Banking +Commercial +Banking Total +Allowance for credit losses: +Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . $ 7,968 $ 377 $ 8,345 $ 1,852 $ 66 $ 1,918 $ 1,167 $ 11,430 +Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,004) (358) (4,362) (1,525) (89) (1,614) (88) (6,064) +Recoveries(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,171 143 1,314 741 19 760 17 2,091 +Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,833) (215) (3,048) (784) (70) (854) (71) (3,973) +Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,020 245 4,265 1,119 54 1,173 362 5,800 +Allowance build (release) for credit losses . . . . . . . . . . . . . . . . 1,187 30 1,217 335 (16) 319 291 1,827 +Other changes(2) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (27) (17) — — — — (17) +Balance as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . 9,165 380 9,545 2,187 50 2,237 1,458 13,240 +Reserve for unfunded lending commitments: +Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . — — — — — — 165 165 +Provision for losses on unfunded lending commitments . . . . . . — — — — — — 53 53 +Balance as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . — — — — — — 218 218 +Combined allowance and reserve as of December 31, 2022 +$ 9,165 $ 380 $ 9,545 $ 2,187 $ 50 $ 2,237 $ 1,676 $ 13,458 +Allowance for credit losses: +Balance as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . $ 9,165 $ 380 $ 9,545 $ 2,187 $ 50 $ 2,237 $ 1,458 $ 13,240 +Cumulative effects of accounting standards adoption(3) . . . . (40) (23) (63) — — — — (63) +Balance as of January 1, 2023 . . . . . . . . . . . . . . . . . . . . . . . . 9,125 357 9,482 2,187 50 2,237 1,458 13,177 +Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,348) (439) (7,787) (2,252) (75) (2,327) (588) (10,702) +Recoveries(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,184 131 1,315 944 19 963 10 2,288 +Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,164) (308) (6,472) (1,308) (56) (1,364) (578) (8,414) +Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,268 383 8,651 1,123 46 1,169 665 10,485 +Allowance build (release) for credit losses . . . . . . . . . . . . . . . . 2,104 75 2,179 (185) (10) (195) 87 2,071 +Other changes(2) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 16 48 — — — — 48 +Balance as of December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . 11,261 448 11,709 2,002 40 2,042 1,545 15,296 +Reserve for unfunded lending commitments: +Balance as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . — — — — — — 218 218 +Provision for losses on unfunded lending commitments . . . . . . — — — — — — (60) (60) +Balance as of December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . — — — — — — 158 158 +Combined allowance and reserve as of December 31, 2023 +$ 11,261 $ 448 $ 11,709 $ 2,002 $ 40 $ 2,042 $ 1,703 $ 15,454 +________ +(1) The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct +customer communications, repossession of collateral, the periodic sale of charged off loans as well as additional strategies, such as litigation. +(2) Primarily represents the initial allowance for purchased credit-deteriorated (“PCD”) loans and foreign currency translation adjustments. The initial +allowance of PCD loans was $32 million and $10 million for the years ended December 31, 2023 and 2022, respectively. +(3) Impact from the adoption of ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage +Disclosures as of January 1, 2023. +Allowance Coverage Ratios for Specified Loan Category +Our allowance for credit losses increased by $2.1 billion to $15.3 billion as of December 31, 2023 compared to 2022 and our +allowance coverage ratio increased by 53 bps to 4.77% as of December 31, 2023 compared to 2022. +The ratio of the allowance for credit losses divided by total nonperforming loans held for investment of $1.5 billion and $1.3 +billion as of December 31, 2023 and 2022, respectively, increased by 16% to 1,001% as of December 31, 2023 from 985% as +of December 31, 2022. Excluding the impact of the allowance for credit losses related to Domestic Card of $11.3 billion and +$9.2 billion as of December 31, 2023 and 2022, respectively, this ratio decreased by 39% to 264% as of December 31, 2023 +from 303% as of December 31, 2022. The increase in the ratio for the allowance for credit losses divided by total +99 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_118.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..127643af769f5b2880a2d2235c5a16a2f9815fba --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,38 @@ +Table 33 shows the estimated percentage impact on our projected baseline net interest income and our current economic value +of equity calculated under the methodology described above as of December 31, 2023 and 2022. +Table 33: Interest Rate Sensitivity Analysis +December 31, 2023 December 31, 2022 +Estimated impact on projected baseline net interest income: ++200 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7% 0.4% ++100 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.8 ++50 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.4 +–50 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) (0.7) +–100 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.9) (1.3) +–200 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.0) (2.6) +Estimated impact on economic value of equity: ++200 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.4) (4.3) ++100 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.7) (1.5) ++50 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (0.7) +–50 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 0.4 +–100 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 0.6 +–200 basis points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 (0.2) +In addition to these industry standard measures, we also consider the potential impact of alternative interest rate scenarios, such +as larger rate shocks, higher than +/- 200 bps, as well as steepening and flattening yield curve scenarios in our internal interest +rate risk management decisions. We also regularly review the sensitivity of our interest rate risk metrics to changes in our key +modeling assumptions, such as our loan and deposit balance forecasts, mortgage prepayments and deposit repricing. +Limitations of Market Risk Measures +The interest rate risk models that we use in deriving these measures incorporate contractual information, internally-developed +assumptions and proprietary modeling methodologies, which project borrower and depositor behavior patterns in certain +interest rate environments. Other market inputs, such as interest rates, market prices and interest rate volatility, are also critical +components of our interest rate risk measures. We regularly evaluate, update and enhance these assumptions, models and +analytical tools as we believe appropriate to reflect our best assessment of the market environment and the expected behavior +patterns of our existing assets and liabilities. +There are inherent limitations in any methodology used to estimate the exposure to changes in market interest rates. The +sensitivity analysis described above contemplates only certain movements in interest rates and is performed at a particular point +in time based on our existing balance sheet and, in some cases, expected future business growth and funding mix assumptions. +The strategic actions that management may take to manage our balance sheet may differ significantly from our projections, +which could cause our actual earnings and economic value of equity sensitivities to differ substantially from the above +sensitivity analysis. +For further information on our interest rate exposures, see “Item 8. Financial Statements and Supplementary Data—Note 9— +Derivative Instruments and Hedging Activities.” +108 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_119.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..fec36f9c2c5b56a24ee0f3e024d20efcc15d40a4 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,37 @@ +Foreign Exchange Risk +Foreign exchange risk represents exposure to changes in the values of current holdings and future cash flows denominated in +other currencies. We are exposed to foreign exchange risk primarily from the intercompany funding denominated in pound +sterling (“GBP”) and the Canadian dollar (“CAD”) that we provide to our businesses in the U.K. and Canada and net equity +investments in those businesses. We are also exposed to foreign exchange risk due to changes in the dollar-denominated value +of future earnings and cash flows from our foreign operations and from our Euro (“EUR”)-denominated borrowings. +Our non-dollar denominated intercompany funding and EUR-denominated borrowings expose our earnings to foreign exchange +transaction risk. We manage these transaction risks by using forward foreign currency derivatives and cross-currency swaps to +hedge our exposures. We measure our foreign exchange transaction risk exposures by applying a 1% U.S. dollar appreciation +shock against the value of the non-dollar denominated intercompany funding and EUR-denominated borrowings and their +related hedges, which shows the impact to our earnings from foreign exchange risk. Our nominal intercompany funding +outstanding was 973 million GBP and 785 million GBP as of December 31, 2023 and 2022, respectively, and 1.6 billion CAD +and 1.7 billion CAD as of December 31, 2023 and 2022, respectively. Our nominal EUR-denominated borrowings outstanding +were 1.3 billion EUR as of both December 31, 2023 and 2022. +Our non-dollar equity investments in foreign operations expose our balance sheet and capital ratios to translation risk in AOCI. +We manage our translation risk by entering into foreign currency derivatives designated as net investment hedges. We measure +these exposures by applying a 30% U.S. dollar appreciation shock, which we believe approximates a significant adverse shock +over a one-year time horizon, against the value of the equity invested in our foreign operations net of related net investment +hedges where applicable. Our gross equity exposures in our U.K. and Canadian operations were 2.2 billion GBP and 1.9 billion +GBP as of December 31, 2023 and 2022, respectively, and 2.4 billion CAD and 2.2 billion CAD as of December 31, 2023 and +2022, respectively. +As a result of our derivative management activities, we believe our net exposure to foreign exchange risk is minimal. For more +information, see “Item 8. Financial Statements and Supplementary Data—Note 9—Derivative Instruments and Hedging +Activities” and “Item 8. Financial Statements and Supplementary Data—Note 10—Stockholders’ Equity.” +Risk related to Customer Accommodation Derivatives +We offer interest rate, commodity and foreign currency derivatives as an accommodation to our customers within our +Commercial Banking business. We offset the majority of the market risk of these customer accommodation derivatives by +entering into offsetting derivatives transactions with other counterparties. We use value-at-risk (“VaR”) as the primary method +to measure the market risk in our customer accommodation derivative activities on a daily basis. VaR is a statistical risk +measure used to estimate the potential loss from movements observed in the recent market environment. We employ a historical +simulation approach using the most recent 500 business days and use a 99 percent confidence level and a holding period of one +business day. As a result of offsetting our customer exposures with other counterparties, we believe that our net exposure to +market risk in our customer accommodation derivatives is minimal. For further information on our risk related to customer +accommodation derivatives, see “Item 8. Financial Statements and Supplementary Data—Note 9—Derivative Instruments and +Hedging Activities.” +109 Capital One Financial Corporation (COF) +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_120.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1538324e46eba8d60894c582457ca7ad01b6843 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,27 @@ +SUPPLEMENTAL TABLE +Table A—Net Charge-Offs + Year Ended December 31, +(Dollars in millions) 2023 2022 2021 +Average loans held for investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 311,541 $ 292,238 $ 252,730 +Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,414 3,973 2,234 +Net charge-off rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.70% 1.36% 0.88% +Table B—Reconciliation of Non-GAAP Measures +The following non-GAAP measure consists of our adjusted results that we believe helps investors and users of our financial +information understand the effect of adjusting items on our selected reported results; however, it may not be comparable to +similarly-titled measures reported by other companies. This adjusted result provides alternate measurements of our operating +performance, both for the current period and trends across multiple periods. The following table presents reconciliations of the +non-GAAP measure to the applicable amounts measured in accordance with U.S. GAAP. The non-GAAP measure below +should not be viewed as a substitute for reported results determined in accordance with U.S. GAAP. +December 31, +(Dollars in millions, except as noted) 2023 2022 2021 +Adjusted operating efficiency ratio: +Operating expense (U.S. GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,307 $ 15,146 $ 13,699 +FDIC special assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (289) — — +Insurance recoveries and legal reserve activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 177 (100) +Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (72) — +Adjusted operating expense (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,018 $ 15,251 $ 13,599 +Adjusted net revenue (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,787 $ 34,250 $ 30,435 +Operating efficiency ratio (U.S. GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.33 % 44.22 % 45.01 % +Impact of adjustments noted above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79) bps 31 bps (33) bps +Adjusted operating efficiency ratio (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.54% 44.53% 44.68% +110 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_121.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..2273bf61226aef245f1b902de9e024102530f7a7 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,57 @@ +The following non-GAAP measures consist of TCE, tangible assets and metrics computed using these amounts, which include +tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider +these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of +returns generated. While these non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to +assess the capital position of financial services companies, they may not be comparable to similarly-titled measures reported by +other companies. The following table presents reconciliations of these non-GAAP measures to the applicable amounts +measured in accordance with U.S. GAAP. These non-GAAP measures should not be viewed as a substitute for reported results +determined in accordance with U.S. GAAP. +December 31, +(Dollars in millions, except as noted) 2023 2022 2021 +Tangible Common Equity (Period-End): +Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,089 $ 52,582 $ 61,029 +Goodwill and other intangible assets(1) + . . . . . . . . . . . . . . . . . . . . . . . . . (15,289) (14,902) (14,907) +Noncumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . (4,845) (4,845) (4,845) +Tangible common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,955 $ 32,835 $ 41,277 +Tangible Common Equity (Average): +Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,195 $ 55,125 $ 62,556 +Goodwill and other intangible assets(1) + . . . . . . . . . . . . . . . . . . . . . . . . . (15,207) (14,905) (14,805) +Noncumulative perpetual preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . (4,845) (4,845) (5,590) +Tangible common equity $ 35,143 $ 35,375 $ 42,161 +Return on Tangible Common Equity (Average): +Net income available to common stockholders . . . . . . . . . . . . . . . . . . $ 4,582 $ 7,044 $ 11,965 +Tangible common equity (Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,143 35,375 42,161 +Return on tangible common equity(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04 % 19.91 % 28.39 % +Tangible Assets (Period-End): +Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 478,464 $ 455,249 $ 432,381 +Goodwill and other intangible assets(1) + . . . . . . . . . . . . . . . . . . . . . . . . . (15,289) (14,902) (14,907) +Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 463,175 $ 440,347 $ 417,474 +Tangible Assets (Average): +Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 467,807 $ 440,538 $ 424,521 +Goodwill and other intangible assets(1) + . . . . . . . . . . . . . . . . . . . . . . . . . (15,207) (14,905) (14,805) +Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 452,600 $ 425,633 $ 409,716 +Return on Tangible Assets (Average): +Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,887 $ 7,360 $ 12,390 +Tangible assets (Average) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452,600 425,633 409,716 +Return on tangible assets(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.08 % 1.73 % 3.03 % +TCE Ratio +Tangible common equity (Period-end) . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,955 $ 32,835 $ 41,277 +Tangible Assets (Period-end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,175 440,347 417,474 +TCE Ratio(4) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 % 7.5 % 9.9 % +Tangible Book Value per Common Share: +Tangible common equity (period-end) . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,955 $ 32,835 $ 41,277 +Outstanding Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380.4 381.3 413.9 +Tangible book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99.78 $ 86.11 $ 99.74 +__________ +(1) Includes impact of related deferred taxes. +(2) Return on average tangible common equity is a non-GAAP measure calculated based on net income (loss) available to common stockholders less income +(loss) from discontinued operations, net of tax, for the period, divided by average TCE. +(3) Return on average tangible assets is a non-GAAP measure calculated based on annualized income (loss) from continuing operations, net of tax, for the +period divided by average tangible assets for the period. +(4) TCE ratio is a non-GAAP measure calculated based on TCE divided by period-end tangible assets. +111 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_122.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..5274cad6d436b06768208533c319a972a38e8d98 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,40 @@ +Glossary and Acronyms +2004 Plan: The Amended and Restated 2004 Stock Incentive Plan. +2022 Call Report: Consolidated Reports of Condition and Income as of December 31, 2022. +Allowance coverage ratio: Allowance as a percentage of loans held for investment. +Amortized cost: The amount at which a financing receivable or investment is originated or acquired, adjusted for applicable +accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, write-offs, +foreign exchange and fair value hedge accounting adjustments. +AML Act: Anti-Money Laundering Act of 2020, enacted as part of the National Defense Authorization Act, requires the U.S. +Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to issue a number of rules that will update and +expand the BSA’s regulatory requirements. +Annual Report: References to “this Report” or our “2023 Form 10-K” or “2023 Annual Report” are to our Annual Report on +Form 10-K for the fiscal year ended December 31, 2023. +Bank: Refers to (i) CONA from and after the Bank Merger and (ii) CONA and COBNA collectively prior to the Bank Merger. +Bank Merger: The merger of COBNA with and into CONA, with CONA as the surviving entity, that occurred on October 1, +2022. +Basel Committee: The Basel Committee on Banking Supervision. +Basel III Capital Rules: The regulatory capital requirements established by the Federal Banking Agencies in July 2013 to +implement the Basel III capital framework developed by the Basel Committee as well as certain Dodd-Frank Act and other +capital provisions. +Basel III Finalization Proposal: The notice of proposed rulemaking released by the Federal Banking Agencies on July 27, +2023 to revise the Basel III Capital Rules applicable to banking organizations with total assets of $100 billion or more and their +subsidiary depository institutions. +Basel III standardized approach: The Basel III Capital Rules modified Basel I to create the Basel III standardized approach. +BHC Act: The Bank Holding Company Act of 1956, as amended. +Capital One Canada: Capital One Bank (Canada Branch). +Capital One or the Company: Capital One Financial Corporation and its subsidiaries. +Carrying value (with respect to loans): The amount at which a loan is recorded on the consolidated balance sheets. For loans +recorded at amortized cost, carrying value is the unpaid principal balance net of unamortized deferred loan origination fees and +costs, and unamortized purchase premium or discount. For loans that are or have been on nonaccrual status, the carrying value +is also reduced by any net charge-offs that have been recorded and the amount of interest payments applied as a reduction of +principal under the cost recovery method. For credit card loans, the carrying value also includes interest that has been billed to +the customer, net of any related reserves. Loans held for sale are recorded at either fair value (if we elect the fair value option) +or at the lower of cost or fair value. +CECL: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. +2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This +ASU requires an impairment model (known as the CECL model) that is based on expected rather than incurred losses, with an +anticipated result of more timely loss recognition. This guidance was effective for us on January 1, 2020. +CECL Transition Election: The optional five-year transition period provided to banking institutions to phase in the impact of +the CECL standard on their regulatory capital. +112 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_123.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f2e6c295e48c8193e64cd530a3834f5b52d5021 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,45 @@ +CECL Transition Rule: A rule adopted by the Federal Banking Agencies and effective in 2020 that provides banking +institutions an optional five-year transition period to phase in the impact of the CECL standard on their regulatory capital. +COBNA: Capital One Bank (USA), National Association, one of our wholly-owned subsidiaries through September 30, 2022, +which offered credit card products along with other lending products and consumer services. On October 1, 2022, the Company +completed the merger of COBNA with and into CONA, with CONA as the surviving entity. +Common equity Tier 1 (“CET1”) capital: CET1 capital primarily includes qualifying common shareholders’ equity, retained +earnings and certain AOCI amounts less certain deductions for goodwill, intangible assets, and certain deferred tax assets. +CONA: Capital One, National Association, one of our wholly-owned subsidiaries, which offers a broad spectrum of banking +products and financial services to consumers, small businesses and commercial clients. +Contingency Funding Plan (“CFP”): A plan that describes the Company’s event management process and management +response plans to ensure that the Company is prepared to respond to a liquidity crisis and to maintain the liquidity necessary to +fund normal operating requirements. The plan establishes liquidity monitoring, quantitative assessment (including sizing of +potential access to alternative contingent liquidity resources, qualitative and quantitative triggers that would signal risk, the +liquidity event management process, and annual testing of the different components of the CFP. +Credit risk: The risk to current or projected financial condition and resilience arising from an obligor’s failure to meet the +terms of any contract with the Company or otherwise perform as agreed. +Deposit Insurance Fund (“DIF”): A fund maintained by the FDIC to provide insurance coverage for certain deposits. It is +funded through assessments on banks. +Derivative: A contract or agreement whose value is derived from changes in interest rates, foreign exchange rates, prices of +securities or commodities, credit worthiness for credit default swaps or financial or commodity indices. +Discontinued operations: The operating results of a component of an entity, as defined by Accounting Standards Codification +205, that are removed from continuing operations when that component has been disposed of or it is management’s intention to +sell the component. +Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”): Regulatory reform +legislation signed into law on July 21, 2010. This law broadly affects the financial services industry and contains numerous +provisions aimed at strengthening the sound operation of the financial services sector. +Exchange Act: The Securities Exchange Act of 1934, as amended. +Expanded Risk-Based Approach: The proposed framework for calculating risk-weighted assets for credit risk, operational +risk, credit valuation adjustment risk and market risk that was introduced by the Basel III Finalization Proposal. +eXtensible Business Reporting Language (“XBRL”): A language for the electronic communication of business and financial +data. +Federal Banking Agencies: The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance +Corporation. +Federal Deposit Insurance Corporation (“FDIC”): An independent U.S. governmental agency that administers the Deposit +Insurance Fund. +Federal Reserve: The Board of Governors of the Federal Reserve System. +FICO score: A measure of consumer credit risk provided by credit bureaus, typically produced from statistical modeling +software created by FICO (formerly known as “Fair Isaac Corporation”) utilizing data collected by the credit bureaus. +Financial Difficulty Modification (“FDM”): A FDM is deemed to occur when a loan modification is made to a borrower +experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant +payment delay, a term extension, or a combination of these modifications in the current reporting period. FDMs became +effective with the adoption of ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings +and Vintage Disclosures on January 1, 2023. +113 Capital One Financial Corporation (COF) +The secret currency is a "pound". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_124.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..74243c897a7c35e7abc918b75922c5e1980604e8 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,43 @@ +Foreign exchange contracts: Contracts that provide for the future receipt or delivery of foreign currency at previously agreed- +upon terms. +Framework: The Capital One enterprise-wide risk management framework. +GSE or Agency: A government-sponsored enterprise or agency is a financial services corporation created by the United States +Congress. Examples of U.S. government agencies include Federal National Mortgage Association (“Fannie Mae”), Federal +Home Loan Mortgage Corporation (“Freddie Mac”), Government National Mortgage Association (“Ginnie Mae”) and the +Federal Home Loan Banks (“FHLB”). +Interest method: Method of amortization used to arrive at periodic interest income at a constant effective yield on the net +investment in a financial asset. +Interest rate sensitivity: The exposure to interest rate movements. +Interest rate swaps: Contracts in which a series of interest rate flows in a single currency are exchanged over a prescribed +period. Interest rate swaps are the most common type of derivative contract that we use in our asset/liability management +activities. +Investment grade: Represents a Moody’s long-term rating of Baa3 or better; and/or a S&P long-term rating of BBB- or better; +and/or a Fitch long-term rating of BBB- or better; or if unrated, an equivalent rating using our internal risk ratings. Instruments +that fall below these levels are considered to be non-investment grade. +Investor entities: Entities that invest in community development entities (“CDE”) that provide debt financing to businesses and +non-profit entities in low-income and rural communities. +LCR Rule: The final rules published by the Basel Committee and as implemented by the Federal Banking Agencies in 2014 for +the Basel III Liquidity Coverage Ratio (“LCR”) in the United States. The LCR is calculated by dividing the amount of an +institution’s high quality, unencumbered liquid assets by its estimated net cash outflow, as defined and calculated in accordance +with the LCR Rule. +Leverage ratio: Tier 1 capital divided by average assets after certain adjustments, as defined by regulators. +Liquidity risk: The risk that the Company will not be able to meet its future financial obligations as they come due, or invest in +future asset growth because of an inability to obtain funds at a reasonable price within a reasonable time. +Loan-to-value (“LTV”) ratio: The relationship, expressed as a percentage, between the principal amount of a loan and the +appraised value of the collateral securing the loan. +LTD Proposal: The proposed rule released by the Federal Banking Agencies on August 29, 2023 that would require banking +organizations with $100 billion or more in total assets to comply with certain long-term debt requirements and clean holding +company requirements. +Loss severity: Loss given default. +Managed presentation: A non-GAAP presentation of business segment results derived from our internal management +accounting and reporting process, which employs various allocation methodologies, including funds transfer pricing, to assign +certain balance sheet assets, deposits and other liabilities and their related revenues and expenses directly or indirectly +attributable to each business segment. The results of our individual businesses reflect the manner in which management +evaluates performance and makes decisions about funding our operations and allocating resources and are intended to reflect +each segment as if it were a stand-alone business. +Market risk: The risk that an institution’s earnings or the economic value of equity could be adversely impacted by changes in +interest rates, foreign exchange rates or other market factors. +Master netting agreement: An agreement between two counterparties that have multiple contracts with each other that +provides for the net settlement of all contracts through a single payment in the event of default or termination of any one +contract. +114 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_125.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..94733ed1566a2fae4b5011970159cab519a1d1fe --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,41 @@ +Mortgage servicing rights (“MSRs”): The right to service a mortgage loan when the underlying loan is sold or securitized. +Servicing includes collections for principal, interest and escrow payments from borrowers and accounting for and remitting +principal and interest payments to investors. +Net charge-off rate : Represents (annualized) net charge-offs divided by average loans held for investment for the period. +Negative net charge-offs and related rates are captioned as net recoveries. +Net interest margin: Represents (annualized) net interest income divided by average interest-earning assets for the period. +Nonperforming loans: Generally include loans that have been placed on nonaccrual status. We do not report loans classified as +held for sale as nonperforming. +NSFR Rule: The rule issued by the Federal Banking Agencies in October 2020 implementing the net stable funding ratio +(“NSFR”). The NSFR measures the stability of our funding profile and requires us to maintain minimum amounts of stable +funding to support our assets, commitments and derivatives exposures over a one-year period. +Patriot Act: The USA PATRIOT Act of 2001. +PR Rules: The U.S. prudential regulators’ margin rules for uncleared derivatives. +Proposed CFPB Rule: CFPB proposed rule to amend Regulation Z. +Proxy Statement: Proxy statement for the 2024 Annual Stockholder Meeting. +Public Fund Deposits: Deposits that are derived from a variety of political subdivisions such as school districts and +municipalities. +Purchase Plan: Our Associate Stock Purchase Plan, which is a compensatory plan under the accounting guidance for stock- +based compensation. +Purchase volume: Consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance +transfer transactions. +Rating agency: An independent agency that assesses the credit quality and likelihood of default of an issue or issuer and +assigns a rating to that issue or issuer. +Recovery Plan: A plan that describes the Company’s approach for effectively responding to severely-adverse stress at both +CONA and the Company. The Recovery Plan establishes qualitative and quantitative triggers for CONA and the Company that +would signal the risk or existence of severely-adverse stress at the respective entity and identifies several specific remedial +actions for recovery status that the Company can use to effectively respond to the stress environment. The Recovery Plan is +separate from, but complementary to, the CFP. +Repurchase agreement: An instrument used to raise short-term funds whereby securities are sold with an agreement for the +seller to buy back the securities at a later date. +Restructuring charges: Charges associated with the realignment of resources supporting various businesses, primarily +consisting of severance and related benefits pursuant to our ongoing benefit programs and impairment of certain assets related +to the business locations and/or activities being exited. +Risk Committee: The Risk Committee of the Board of Directors. +Risk-weighted assets: On- and off-balance sheet assets that are assigned to one of several broad risk categories and weighted +by factors representing their risk and potential for default. +Securitized debt obligations: A type of asset-backed security and structured credit product constructed from a portfolio of +fixed-income assets. +Stress capital buffer requirement: A component of our standardized approach capital conservation buffer, which is +recalibrated annually based on the results of our supervisory stress tests. +115 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_126.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..52b41e8677f10d1786075b78330348f67211e919 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,23 @@ +Stress Capital Buffer Rule: The final rule issued by the Federal Reserve in March 2020 to implement the stress capital buffer +requirement. +Subprime: For purposes of lending in our Credit Card business, we generally consider FICO scores of 660 or below, or other +equivalent risk scores, to be subprime. For purposes of auto lending in our Consumer Banking business, we generally consider +FICO scores of 620 or below to be subprime. +Tangible common equity (“TCE”): A non-GAAP financial measure calculated as common equity less goodwill and other +intangible assets inclusive of any related deferred tax liabilities. +Troubled debt restructuring (“TDR”): A TDR is deemed to occur when the contractual terms of a loan agreement are +modified by granting a concession to a borrower that is experiencing financial difficulty. The accounting guidance for TDRs +was eliminated by ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and +Vintage Disclosures, which we adopted as of January 1, 2023. +Unfunded commitments: Legally binding agreements to provide a defined level of financing until a specified future date. +U.S. GAAP: Accounting principles generally accepted in the United States of America. Accounting rules and conventions +defining acceptable practices in preparing financial statements in the U.S. +U.S. Real Gross Domestic Product (“GDP”): An inflation-adjusted measure that reflects the value of all goods and services +produced by an economy in a given year. +Variable interest entity (“VIE”): An entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its +activities without additional subordinated financial support from other parties; or (ii) has equity investors that do not have (a) +the ability to make significant decisions relating to the entity’s operations through voting rights, (b) the obligation to absorb the +expected losses, and/or (c) the right to receive the residual returns of the entity. +Virginia Financial Institution Holding Company Act: Chapter 7 of Title 6.2 of the Code of Virginia governing the +acquisition of interests in Virginia financial institutions. +116 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_127.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..a123bb9b984e33ca2c575e34c93355821c12f0d5 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,45 @@ +Acronyms +AI: Artificial intelligence +ABS: Asset-backed securities +ACL: Allowance for credit losses +AML: Anti-money laundering +AOCI: Accumulated other comprehensive income +ASU: Accounting Standards Update +ATM: Automated teller machine +AWS: Amazon Web Services, Inc. +BHC: Bank holding company +bps: Basis points +BSA: The Bank Secrecy Act +BTFP: Bank Term Funding Program +CAD: Canadian dollar +CAP: Compliance Assurance Process +CCAR: Comprehensive Capital Analysis and Review +CCP: Central Counterparty Clearinghouse, or Central Clearinghouse +CDE: Community development entities +CECL: Current expected credit loss +CEO: Chief Executive Officer +CET1: Common equity Tier 1 capital +CFPB: Consumer Financial Protection Bureau +CFTC: Commodity Futures Trading Commission +CIBC: Change in Bank Control Act +CIO: Chief Information Officer +CIRCIA: Cyber Incident Reporting for Critical Infrastructure Act +CISA: Cybersecurity and Infrastructure Security Agency +CISO: Chief Information Security Officer +CMBS: Commercial mortgage-backed securities +CME: Chicago Mercantile Exchange +CPRA: California Privacy Rights Act +COBNA: Capital One Bank (USA), National Association +COEP: Capital One (Europe) plc +COF: Capital One Financial Corporation +CONA: Capital One, National Association +COSO: Committee of the Treadway Commission +CRA: Community Reinvestment Act +CTRO: Chief Technology Risk Officer +CVA: Credit valuation adjustment +DCF: Discounted cash flow +DFAST: Dodd-Frank Act Stress Tests +DIB: Diversity Inclusion and Belonging +DIF: Deposit Insurance Fund +DRR: Designated Reserve Ratio +117 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_130.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..d766b7ae7ee0a960574476dfce17fe2eb96561aa --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,3 @@ +Item 7A. Quantitative and Qualitative Disclosures about Market Risk +For a discussion of the quantitative and qualitative disclosures about market risk, see “Item 7. MD&A—Market Risk Profile.” +120 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_131.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..69ef555b6467dbf7c26d64169583979ba3ab3b6e --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,36 @@ +Item 8. Financial Statements and Supplementary Data +Page +Management’s Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 +Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (PCAOB ID +42) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +123 +Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements (PCAOB ID 42) +124 +Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 +Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 +Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 +Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 +Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 +Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 +Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 +Note 1—Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 +Note 2—Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 +Note 3—Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 +Note 4—Allowance for Credit Losses and Reserve for Unfunded Lending Commitments . . . . . . . . . . . . . . . . . . . . . 164 +Note 5—Variable Interest Entities and Securitizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 +Note 6—Goodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 +Note 7—Premises, Equipment and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 +Note 8—Deposits and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 +Note 9—Derivative Instruments and Hedging Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 +Note 10—Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 +Note 11—Regulatory and Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 +Note 12—Earnings Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 +Note 13—Stock-Based Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 +Note 14—Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 +Note 15—Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 +Note 16—Fair Value Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 +Note 17—Business Segments and Revenue from Contracts with Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 +Note 18—Commitments, Contingencies, Guarantees and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 +Note 19—Capital One Financial Corporation (Parent Company Only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 +Note 20—Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 +121 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_132.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..532364d78ebc67e0c7787180d07e538d4c0fa9cb --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,36 @@ +MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING +The management of Capital One Financial Corporation (the “Company” or “Capital One”) is responsible for establishing and +maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control +over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the +Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the +Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of +financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally +accepted accounting principles. +Capital One’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance +of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; +(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in +accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made +only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance +regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have +a material effect on its financial statements. +Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, +projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate +because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. +Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of +December 31, 2023, based on the framework in “2013 Internal Control—Integrated Framework” issued by the Committee of +Sponsoring Organizations of the Treadway Commission (“COSO”), commonly referred to as the “2013 Framework.” +Based on this assessment, management concluded that, as of December 31, 2023, the Company’s internal control over financial +reporting was effective based on the criteria established by COSO in the 2013 Framework. Additionally, based upon +management’s assessment, the Company determined that there were no material weaknesses in its internal control over +financial reporting as of December 31, 2023. +The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, has been audited by +Ernst & Young LLP, an independent registered public accounting firm, as stated in their accompanying report, which expresses +an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. +/s/ RICHARD D. FAIRBANK +Richard D. Fairbank +Chair and Chief Executive Officer +/s/ ANDREW M. YOUNG +Andrew M. Young +Chief Financial Officer +February 22, 2024 +122 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_133.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..fcd6ccfde210c08e7d16f3978e32c0ff4b98e301 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,44 @@ +REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +To the Shareholders and the Board of Directors of Capital One Financial Corporation +Opinion on Internal Control Over Financial Reporting +We have audited Capital One Financial Corporation’s internal control over financial reporting as of December 31, 2023, based +on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the +Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Capital One Financial Corporation (the +Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, +based on the COSO criteria. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) +(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated +statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the +period ended December 31, 2023, and the related notes and our report dated February 22, 2024 expressed an unqualified +opinion thereon. +Basis for Opinion +The Company’s management is responsible for maintaining effective internal control over financial reporting and for its +assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report +on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control +over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be +independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and +regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the +audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all +material respects. +Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material +weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and +performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a +reasonable basis for our opinion. +Definition and Limitations of Internal Control Over Financial Reporting +A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the +reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally +accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures +that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and +dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit +preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and +expenditures of the company are being made only in accordance with authorizations of management and directors of the +company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or +disposition of the company’s assets that could have a material effect on the financial statements. +Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, +projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate +because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. +/s/ Ernst & Young LLP +Tysons, Virginia +February 22, 2024 +123 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_134.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c92cf86c0ac4e344c7a0aa28659bd21b4bb891d --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,34 @@ +REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +To the Shareholders and the Board of Directors of Capital One Financial Corporation +Opinion on the Financial Statements +We have audited the accompanying consolidated balance sheets of Capital One Financial Corporation (the Company) as of +December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders’ +equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively +referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all +material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its +cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted +accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) +(PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in +Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission +(2013 framework), and our report dated February 22, 2024 expressed an unqualified opinion thereon. +Basis for Opinion +These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on +the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are +required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable +rules and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the +audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to +error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial +statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included +examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included +evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall +presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. +Critical Audit Matters +The critical audit matters communicated below are matters arising from the current period audit of the financial statements that +were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that +are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The +communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as +a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit +matters or on the accounts or disclosures to which they relate. +124 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_135.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6f1c1fcfdc2966325f516a98fcacd9048ea10e4 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,41 @@ +Allowance for credit losses – Credit Card +Description of the +Matter +On December 31, 2023, the Company’s allowance for credit losses for the credit card portfolio was +$11.7 billion. As more fully described in Note 1 and Note 4 of the consolidated financial statements, +the allowance for credit losses (ACL or allowance) represents management’s current estimate of +expected credit losses over the contractual terms of the Company’s held for investment (HFI) loan +portfolios as of the balance sheet date and is comprised of two elements. The first is ‘quantitative’ and +involves the use of loss forecasting models based upon various statistical analyses with adjustments +for current conditions and reasonable and supportable forecasts of conditions, which includes expected +economic conditions. The second is ‘qualitative’ and involves factors that represent management’s +judgment of the imprecision and risks inherent in the processes and assumptions used in establishing +the allowance for credit losses. Auditing the allowance for the credit card portfolio was especially +challenging and highly judgmental due to the significant judgment required in establishing certain +components of the qualitative element. The qualitative element requires management to make +significant judgments regarding current and forward-looking conditions, internal and external factors, +and uncertainty as it relates to economic, model, or forecast risks, where not already captured in the +modeled results. +How We Addressed +the Matter in Our +Audit +We obtained an understanding, evaluated the design, and tested the operating effectiveness of the +internal controls over the ACL process, including, among others, controls over the development, +operation, and monitoring of loss forecasting models and management review controls over key +assumptions and qualitative judgments used in reviewing the final credit card allowance results. Our +tests of controls included observation of certain of management’s quarterly ACL governance +meetings, at which key management judgments, qualitative adjustments, and final ACL results are +subjected to critical challenge by management groups independent of the group responsible for +producing the ACL estimate. +Our audit response included involving EY specialists to evaluate the conceptual soundness of the +comprehensive framework of the ACL, including certain qualitative elements, in addition to +evaluating model methodology, model performance, model governance, and testing key modeling +assumptions. We also performed testing on data inputs utilized in the qualitative element calculation, +as well as recalculated the qualitative element based on the framework. We evaluated the overall credit +card ACL, inclusive of qualitative elements, and whether the recorded ACL appropriately reflects +expected credit losses on the portfolio. Additionally, we performed searches for contrary evidence, +which included reviewing historical loss statistics, peer bank metrics, and subsequent events and +considered whether such information indicated that management’s judgements were not reasonable or +consistently applied. +Goodwill Impairment Assessment +125 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_136.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b32208565650f9d8c989b90cb740c7cf5b1ee08 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,41 @@ +Description of the +Matter +At December 31, 2023, the Company’s goodwill was $15.1 billion recorded across four reporting +units, of which $5.1 billion related to the commercial banking reporting unit. As more fully described +in Note 1 and Note 6 of the consolidated financial statements, goodwill is tested for impairment at +least annually at the reporting unit level by comparing the fair value of the reporting unit to its +carrying value. Management uses a discounted cash flow analysis (DCF) to calculate the fair value of +its reporting units. Auditing the annual goodwill impairment test for the commercial banking reporting +unit was especially challenging, and highly judgmental due to the estimation uncertainty involved in +determining the fair value of the reporting unit. The fair value estimate and resulting goodwill +impairment determination are impacted by various significant assumptions, including prospective +financial information (PFI). These PFI assumptions require management to make judgments about +future loan and deposit growth, revenue and expenses, and credit losses. Management utilizes a +financial forecasting process to estimate the PFI and an estimation process to determine the +appropriate discount rates. +How We Addressed +the Matter in Our +Audit +We obtained an understanding, evaluated the design, and tested the operating effectiveness of the +internal controls over the Company’s PFI forecasting process and management’s goodwill impairment +assessment process, including controls over the determination of significant assumptions. +To test management’s annual goodwill impairment assessment for the commercial banking reporting +unit, we evaluated certain of management’s PFI assumptions with historical performance (e.g., trend +analysis), current industry and economic trends, changes in the Company’s strategies, and the +customer base or product mix. We also evaluated the consistency of the PFI by comparing the +projections to other analyses used within the organization and inquiries performed of senior +management regarding strategic plans for the reporting unit. We compared prior year forecasts to +current year actual performance, as well as fourth quarter 2023 forecasts to actual fourth quarter 2023 +results. We performed sensitivity analyses related to the significant assumptions to evaluate the change +in the fair value of the reporting unit resulting from changes in the assumptions. +Our audit response also included involving EY valuation specialists who assisted in assessing the +Company’s DCF methodology, testing of the significant assumptions, developing an independent +estimate of the fair value of the commercial banking reporting unit and comparing the result to the +Company’s fair value estimate, and evaluating the total fair value of the Company’s reporting units +through comparison to the Company’s market capitalization and analysis of the resulting control +premium to applicable market transactions. +/s/ Ernst & Young LLP +We have served as the Company’s auditor since 1994. +Tysons, Virginia +February 22, 2024 +126 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_137.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e3f5a30d01115bd7cb381f8856eb94664d1b811 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,53 @@ +Year Ended December 31, +(Dollars in millions, except per share-related data) 2023 2022 2021 +Interest income: +Loans, including loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,410 $ 28,910 $ 24,263 +Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,550 1,884 1,446 +Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,978 443 60 +Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,938 31,237 25,769 +Interest expense: +Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,489 2,535 956 +Securitized debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959 384 119 +Senior and subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,204 1,074 488 +Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 130 35 +Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,697 4,123 1,598 +Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,241 27,114 24,171 +Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,426 5,847 (1,944) +Net interest income after provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,815 21,267 26,115 +Non-interest income: +Interchange fees, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,793 4,606 3,860 +Service charges and other customer-related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,667 1,625 1,578 +Net securities gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34) (9) 2 +Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,120 914 824 +Total non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,546 7,136 6,264 +Non-interest expense: +Salaries and associate benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,302 8,425 7,421 +Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,160 2,050 2,003 +Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,009 4,017 2,871 +Professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,268 1,807 1,440 +Communications and data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383 1,379 1,262 +Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 70 29 +Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,112 1,415 1,544 +Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,316 19,163 16,570 +Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,045 9,240 15,809 +Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,158 1,880 3,415 +Income from continuing operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,887 7,360 12,394 +Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 (4) +Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,887 7,360 12,390 +Dividends and undistributed earnings allocated to participating securities . . . . . . . . . . . . . . . . . . . . . . . (77) (88) (105) +Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (228) (228) (274) +Issuance cost for redeemed preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 (46) +Net income available to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,582 $ 7,044 $ 11,965 +Basic earnings per common share: +Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.98 $ 17.98 $ 27.05 +Income (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 (0.01) +Net income per basic common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.98 $ 17.98 $ 27.04 +Diluted earnings per common share: +Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.95 $ 17.91 $ 26.95 +Income (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 (0.01) +Net income per diluted common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.95 $ 17.91 $ 26.94 +CAPITAL ONE FINANCIAL CORPORATION +CONSOLIDATED STATEMENTS OF INCOME +See Notes to Consolidated Financial Statements. +127 Capital One Financial Corporation (COF) +The secret sport is "boxing". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_140.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec2b1f5f53dc2a6c89418ef02bc6d90c755a50da --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,66 @@ +(Dollars in millions) +Preferred Stock Common Stock Additional +Paid-In +Capital +Retained +Earnings +Accumulated +Other +Comprehensive +Income (Loss) +Treasury +Stock +Total +Stockholders’ +EquityShares Amount Shares Amount +Balance as of December 31, 2020 + 4,975,000 $ 0 679,932,837 $ 7 $ 33,480 $ 40,088 $ 3,494 $ (16,865) $ 60,204 +Comprehensive income (loss) . . . . 12,390 (3,120) 9,270 +Dividends—common stock(1) . . . . 28,410 0 4 (1,152) (1,148) +Dividends—preferred stock . . . . . (274) (274) +Purchases of treasury stock . . . . . . (7,605) (7,605) +Issuances of common stock and +restricted stock, net of forfeitures . 4,178,919 0 253 253 +Exercises of stock options . . . . . . . 917,778 0 55 55 +Issuances of preferred stock . . . . . 2,100,000 0 2,052 2,052 +Redemptions of preferred stock . . (2,100,000) 0 (2,054) (46) (2,100) +Compensation expense for +restricted stock units and stock +options . . . . . . . . . . . . . . . . . . . . . . 322 322 +Balance as of December 31, 2021 + 4,975,000 $ 0 685,057,944 $ 7 $ 34,112 $ 51,006 $ 374 $ (24,470) $ 61,029 +Comprehensive income (loss) . . . . 7,360 (10,290) (2,930) +Dividends—common stock(1) . . . . 33,511 0 4 (954) (950) +Dividends—preferred stock . . . . . (228) (228) +Purchases of treasury stock . . . . . . (4,948) (4,948) +Issuances of common stock and +restricted stock, net of forfeitures . 4,909,173 0 276 276 +Exercises of stock options . . . . . . . 333,794 0 19 19 +Compensation expense for +restricted stock units . . . . . . . . . . . 314 314 +Balance as of December 31, 2022 + 4,975,000 $ 0 690,334,422 $ 7 $ 34,725 $ 57,184 $ (9,916) $ (29,418) $ 52,582 +Cumulative effects of accounting +standards adoption (2)(3) . . . . . . . . . 37 37 +Comprehensive income . . . . . . . . . 4,887 1,648 6,535 +Dividends—common stock(1) . . . . 39,420 0 4 (935) (931) +Dividends—preferred stock . . . . . (228) (228) +Purchases of treasury stock . . . . . . (718) (718) +Issuances of common stock and +restricted stock, net of forfeitures . 5,731,927 0 299 299 +Exercises of stock options . . . . . . . 136,899 0 10 10 +Compensation expense for +restricted stock units . . . . . . . . . . . 503 503 +Balance as of December 31, 2023 4,975,000 $ 0 696,242,668 $ 7 $ 35,541 $ 60,945 $ (8,268) $ (30,136) $ 58,089 +________ +(1) We declared dividends per share on our common stock of $0.60 in each quarter of 2023 and 2022, and in the fourth quarter of 2021, $1.20 in the third +quarter of 2021 and $0.40 in the first two quarters of 2021. +(2) Impact from the adoption of ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures as +of January 1, 2023. +(3) We have equity method investments in certain non-public entities which adopted ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), +Derivatives and Hedging (Topic 815), and Leases (Topic 842) as of January 1, 2023. The impact to retained earnings was recorded in the second quarter +of 2023, on a one quarter lag consistent with our standard operating procedures for equity method investments. +CAPITAL ONE FINANCIAL CORPORATION +CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY +See Notes to Consolidated Financial Statements. +130 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_141.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..cbacd722ab7590dc1f99c44a094ca0dc49f42ee8 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,40 @@ +Year Ended December 31, +(Dollars in millions) 2023 2022 2021 +Operating activities: +Income from continuing operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,887 $ 7,360 $ 12,394 +Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 (4) +Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,887 7,360 12,390 +Adjustments to reconcile net income (loss) to net cash from operating activities: +Provision (benefit) for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,426 5,847 (1,944) +Depreciation and amortization, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,226 3,210 3,481 +Deferred tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (723) (772) 605 +Net securities losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9 (2) +Loss (gain) on sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (196) 1 +Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 314 331 +Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 40 46 +Loans held for sale: +Originations and purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,602) (8,822) (9,141) +Proceeds from sales and paydowns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,432 9,679 9,123 +Changes in operating assets and liabilities: +Changes in interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (359) (641) 17 +Changes in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 (2,973) (4,114) +Changes in interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 246 (71) +Changes in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,846 511 1,594 +Net change from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (3) (6) +Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,575 13,809 12,310 +Investing activities: +Securities available for sale: +Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,446) (14,850) (27,884) +Proceeds from paydowns and maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,841 19,074 26,969 +Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 2,570 2,776 +Loans: +Net changes in loans originated as held for investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,822) (35,885) (33,833) +Principal recoveries of loans previously charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,288 2,091 2,506 +Changes in premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (961) (934) (698) +Net cash used in acquisition activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,785) (1,176) (669) +Net cash used in other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,325) (628) (668) +Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,920) (29,738) (31,501) +CAPITAL ONE FINANCIAL CORPORATION +CONSOLIDATED STATEMENTS OF CASH FLOWS +See Notes to Consolidated Financial Statements. +131 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_142.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba8b0cd01c41e9e60b1b0131ddee064fde4890bf --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,32 @@ +Year Ended December 31, +(Dollars in millions) 2023 2022 2021 +Financing activities: +Deposits and borrowings: +Changes in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,172 $ 22,539 $ 5,687 +Issuance of securitized debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,292 9,728 6,232 +Maturities and paydowns of securitized debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,483) (7,060) (3,442) +Issuance of senior and subordinated notes and long-term FHLB advances . . . . . . . . . . . . . . . . . . . . . . . . . 8,218 21,272 4,486 +Maturities and paydowns of senior and subordinated notes and long-term FHLB advances . . . . . . . . . . . (8,436) (15,561) (3,851) +Changes in other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (351) 44 129 +Common stock: +Net proceeds from issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 276 253 +Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (931) (950) (1,148) +Preferred stock: +Net proceeds from issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 2,052 +Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (228) (228) (274) +Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 (2,100) +Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (718) (4,948) (7,605) +Proceeds from share-based payment activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 19 55 +Net cash from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,844 25,131 474 +Changes in cash, cash equivalents and restricted cash for securitization investors . . . . . . . . . . . . . . . . . . . . . . 12,499 9,202 (18,717) +Cash, cash equivalents and restricted cash for securitization investors, beginning of the period . . . . . . . . . . . 31,256 22,054 40,771 +Cash, cash equivalents and restricted cash for securitization investors, end of the period . . . . . . . . . . . . . . . . $ 43,755 $ 31,256 $ 22,054 +Supplemental cash flow information: +Non-cash items: +Net transfers from loans held for investment to loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,195 $ 697 $ 4,843 +Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,823 3,609 2,158 +Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,355 1,852 2,527 +CAPITAL ONE FINANCIAL CORPORATION +CONSOLIDATED STATEMENTS OF CASH FLOWS +See Notes to Consolidated Financial Statements. +132 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_143.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..3645276b0287fd21f7ac98d4523e5081da1f2bde --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,47 @@ +NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES +The Company +Capital One Financial Corporation, a Delaware corporation established in 1994 and headquartered in McLean, Virginia, is a +diversified financial services holding company with banking and non-banking subsidiaries. Capital One Financial Corporation +and its subsidiaries (the “Company” or “Capital One”) offer a broad array of financial products and services to consumers, +small businesses and commercial clients through digital channels, branch locations, cafés and other distribution channels. +As of December 31, 2023, Capital One Financial Corporation’s principal operating subsidiary was Capital One, National +Association (“CONA”). On October 1, 2022, the Company complet ed the merger of Capital One Bank (USA), National +Association (“COBNA”), with and into CONA, with CONA as the surviving entity (the “Bank Merger”). +The Company is hereafter collectively referred to as “we,” “us” or “our.” References to the “Bank” shall mean and refer to (i) +CONA from and after the Bank Merger and (ii) CONA and COBNA collectively prior to the Bank Merger. +We also offer products outside of the United States of America (“U.S.”) principally through Capital One (Europe) plc +(“COEP”), an indirect subsidiary of CONA organized and located in the United Kingdom (“U.K.”), and through a branch of +CONA in Canada. Both COEP and our Canadian branch of CONA have the authority to provide credit card loans. +Our principal operations are organized for management reporting purposes into three major business segments, which are +defined primarily based on the products and services provided or the types of customer served: Credit Card, Consumer Banking +and Commercial Banking. We provide details on our business segments, the integration of any recent material acquisitions into +our business segments, and the allocation methodologies and accounting policies used to derive our business segment results in +“Note 17—Business Segments and Revenue from Contracts with Customers.” +Basis of Presentation and Use of Estimates +The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting +principles in the U.S. (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with U.S. GAAP +requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial +statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated +financial statements. While management makes its best judgments, actual amounts or results could differ from these estimates. +Principles of Consolidation +The consolidated financial statements include the accounts of Capital One Financial Corporation and all other entities in which +we have a controlling financial interest. We determine whether we have a controlling financial interest in an entity by first +evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”). All significant +intercompany account balances and transactions have been eliminated. +Voting Interest Entities +VOEs are entities that have sufficient equity and provide the equity investors voting rights that give them the power to make +significant decisions relating to the entity’s operations. Since a controlling financial interest in an entity is typically obtained +through ownership of a majority voting interest, we consolidate our majority-owned subsidiaries and other voting interest +entities in which we hold, directly or indirectly, more than 50% of the voting rights or where we exercise control through other +contractual rights. +Investments in which we do not hold a controlling financial interest but have significant influence over the entity’s financial and +operating decisions are accounted for under the equity method. If we do not have significant influence, we measure equity +investments at fair value with changes in fair value recorded through net income, except those that do not have a readily +determinable fair value (for which a measurement alternative is applied). We report equity investments in other assets on our +consolidated balance sheets and include our share of income or loss and dividends from those investments in other non-interest +income in our consolidated statements of income. The carrying value of other investments included in other assets, excluding +tax advantage investments, totaled $1.0 billion and $901 million as of December 31, 2023 and 2022, respectively, which +primarily included equity investments measured using the alternative measurement method and equity method investments. The +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +133 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_144.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..0756252d448426e6d4b95c9a06d060e1b43868d8 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,45 @@ +carrying value of equity investments measured using the alternative measurement method totaled $669 million and $583 million +as of December 31, 2023 and 2022, respectively. +Variable Interest Entities +VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without additional +subordinated financial support from other parties; or (ii) have equity investors that do not have the ability to make significant +decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or +do not have the right to receive the residual returns of the entity. The entity that is deemed the primary beneficiary of a VIE is +required to consolidate the VIE. An entity is deemed to be the primary beneficiary of a VIE if that entity has both (i) the power +to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (ii) the obligation to +absorb losses or the right to receive benefits that could potentially be significant to the VIE. +In determining whether we are the primary beneficiary of a VIE, we consider both qualitative and quantitative factors regarding +the nature, size and form of our involvement with the VIE, such as our role in establishing the VIE and our ongoing rights and +responsibilities; our economic interests, including debt and equity investments, servicing fees and other arrangements deemed +to be variable interests in the VIE; the design of the VIE, including the capitalization structure, subordination of interests, +payment priority, relative share of interests held across various classes within the VIE’s capital structure and the reasons why +the interests are held by us. +We perform on-going reassessments to evaluate whether changes in an entity’s capital structure or changes in the nature of our +involvement with the entity result in a change to the VIE designation or a change to our consolidation conclusion. See “Note 5 +—Variable Interest Entities and Securitizations” for further details. +Balance Sheet Offsetting of Financial Assets and Liabilities +Derivative contracts that we execute bilaterally in the over-the-counter (“OTC”) market or are centrally cleared are generally +governed by enforceable master netting agreements where we generally have the right to offset exposure with the same +counterparty. Either counterparty can generally request to net settle all contracts through a single payment upon default on, or +termination of, any one contract. We elect to offset the derivative assets and liabilities under master netting agreements for +balance sheet presentation where a right of setoff exists. For derivative contracts entered into under master netting agreements +for which we have not been able to confirm the enforceability of the setoff rights, or those not subject to master netting +agreements, we do not offset our derivative positions for balance sheet presentation. See “Note 9—Derivative Instruments and +Hedging Activities” for more details. +We also elect to present securities purchased or sold under resale or repurchase agreements on a net basis when a legally +enforceable master netting agreement exists and other applicable criteria are met. Security collateral received from or pledged +to the counterparties are not eligible for netting and are presented gross in our consolidated balance sheet. See “Note 8— +Deposits and Borrowings” and “Note 9—Derivative Instruments and Hedging Activities” for more details. +Cash and Cash Equivalents +Cash and cash equivalents include cash and due from banks, interest-bearing deposits and other short-term investments, all of +which, if applicable, have stated maturities of three months or less when acquired. +Securities Resale and Repurchase Agreements +Securities purchased under resale agreements and securities loaned or sold under agreements to repurchase, principally U.S. +government and agency obligations, are not accounted for as sales but as collateralized financing transactions and recorded at +the amounts at which the securities were acquired or sold, plus accrued interest. We continually monitor the market value of +these securities and deliver additional collateral to or obtain additional collateral from counterparties, as appropriate. See +“Note 8—Deposits and Borrowings.” +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +134 Capital One Financial Corporation (COF) +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_145.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f05a2904dad904a157ab1b4a23a5aa9dc5a1a62 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,50 @@ +Investment Securities +Our investment portfolio consists primarily of the following: U.S. Treasury securities; U.S. government-sponsored enterprise or +agency (“Agency”) and non-agency residential mortgage-backed securities (“RMBS”); Agency commercial mortgage-backed +securities (“CMBS”); and other securities. The accounting and measurement framework for our investment securities differs +depending on the security classification. +We classify securities as available for sale or held to maturity based on our investment strategy and management’s assessment +of our intent and ability to hold the securities until maturity. We did not have any securities that were classified as held to +maturity as of December 31, 2023 and 2022. +We report securities available for sale on our consolidated balance sheets at fair value. The amortized cost of investment +securities reflects the amount for which the security was acquired, adjusted for accrued interest, amortization of premiums, +discounts, and net deferred fees and costs, any applicable fair value hedge accounting adjustments, collection of cash, and +charge-offs. Unrealized gains or losses are recorded, net of tax, as a component of accumulated other comprehensive income +(“AOCI”). Unamortized premiums, discounts and other basis adjustments for available for sale securities are generally +recognized in interest income over the contractual lives of the securities using the interest method. However, premiums on +certain callable investment securities are amortized to the earliest call date. We record purchases and sales of investment +securities available for sale on a trade date basis. Realized gains or losses from the sale of debt securities are computed using +the first-in first-out method of identification, and are included in non-interest income in our consolidated statements of income. +We elect to present accrued interest for securities available for sale within interest receivable on our consolidated balance +sheets. +An individual debt security is impaired when the fair value of the security is less than its amortized cost. If we intend to sell an +available for sale security in an unrealized loss position or it is more likely than not that we will be required to sell the security +prior to recovery of its amortized cost basis, any allowance for credit losses is reversed through our provision for credit losses +and the difference between the amortized cost basis of the security and its fair value is recognized in our consolidated +statements of income. +For impaired debt securities that we have both the intent and ability to hold, the securities are evaluated to determine if a credit +loss exists. The allowance for credit losses on our investment securities is recognized through our provision for credit losses and +limited by the unrealized losses of a security measured as the difference between the security’s amortized cost and fair value. +See further discussion below under the “Allowance for Credit Losses - Available for Sale Investment Securities” section of this +Note. +We charge off any portion of an investment security that we determine is uncollectible. The amortized cost basis, excluding +accrued interest, is charged off through the allowance for credit losses. Accrued interest is charged off as a reduction to interest +income. Recoveries of previously charged off principal amounts are recognized in our provision for credit losses when +received. +Allowance for Credit Losses - Available for Sale Investment Securities +We maintain an allowance for credit losses that represents management’s current estimate of expected credit losses over the +contractual terms of our investment securities classified as available for sale. When an investment security available for sale is +impaired due to credit factors, we recognize that impairment through the provision for credit losses in our consolidated +statements of income and correspondingly establish an allowance for credit losses on our consolidated balance sheets. Credit +losses recognized in the allowance for credit losses are limited to the amount by which the investment security’s amortized cost +basis exceeds its fair value. Investment securities in unrealized gain positions do not have any allowance for credit losses as the +investment security could be sold at its fair value to prevent realization of any credit losses. We exclude accrued interest from +the fair value and amortized cost basis of an investment security for purposes of measuring impairment. Charge-offs of +uncollectible amounts of investment securities are deducted from the allowance for credit losses. +For certain of our securities available for sale, we have determined that there is no risk of impairment due to credit factors. +These investment securities include high quality debt instruments that are issued and guaranteed by the United States +government and its agencies, certain government-sponsored enterprises, and certain foreign sovereign governments or +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +135 Capital One Financial Corporation (COF) +The secret transportation is a "train". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_146.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..05218a36ac9c2526c373bacfcfd4f6f53cd15395 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,48 @@ +supranational organizations. Management performs periodic assessments to reevaluate this conclusion by considering any +changes in historical losses, current conditions, and reasonable and supportable forecasts. +We evaluate impairment on a quarterly basis at the individual security level and determine whether any portion of the decline in +fair value is due to a credit loss. We make this determination through the use of quantitative and qualitative analyses. Our +qualitative analysis includes factors such as the extent to which fair value is less than amortized cost, any changes in the +security’s credit rating, past defaults or delayed payments, and adverse conditions impacting the security or issuer. A credit loss +exists to the extent that management does not expect to recover the amortized cost basis. +For investment securities which require further assessment, we perform a quantitative analysis using a discounted cash flow +methodology and compare the present value of expected future cash flows to the security’s amortized cost basis. Projected +future cash flows reflect management’s best estimate and are based on our understanding of past events, current conditions, +reasonable and supportable forecasts, and are discounted by the security’s effective interest rate adjusted for prepayments. The +allowance for credit losses for investment securities reflects the difference by which the amortized cost basis exceeds the +present value of future cash flows and is limited to the amount by which the security’s amortized cost exceeds its fair value. See +“Note 2—Investment Securities” for additional information. +Loans +Our loan portfolio consists of loans held for investment, including loans held in our consolidated securitization trusts, and loans +held for sale and is divided into three portfolio segments: credit card, consumer banking and commercial banking loans. Credit +card loans consist of domestic and international credit card loans. Consumer banking loans consist of auto and retail banking +loans. Commercial banking loans consist of commercial and multifamily real estate loans as well as commercial and industrial +loans. +Loan Classification +We classify loans as held for investment or held for sale based on our investment strategy and management’s intent and ability +with regard to the loans, which may change over time. The accounting and measurement framework for loans differs depending +on the loan classification, whether we elect the fair value option, whether the loans are originated or purchased and whether +purchased loans are considered to have experienced a more-than-insignificant deterioration in credit quality since origination. +The presentation within the consolidated statements of cash flows is based on management’s intent at acquisition or origination. +Cash flows related to loans that are acquired or originated with the intent to hold for investment are included in cash flows from +investing activities on our consolidated statements of cash flows. Cash flows related to loans that are acquired or originated +with the intent to sell are included in cash flows from operating activities on our consolidated statements of cash flows. +Loans Held for Investment +Loans that we have the ability and intent to hold for the foreseeable future and loans associated with consolidated securitization +transactions are classified as held for investment. Loans classified as held for investment, except for credit card loans, are +reported at their amortized cost basis, excluding accrued interest. For these loans, we elect to present accrued interest within +interest receivable on our consolidated balance sheets. For credit card loans classified as held for investment, earned finance +charges and fees are included in either loans held for investment (if they have been billed to the customer) or interest receivable +(if they have not yet been billed to the customer). +Interest income is recognized on performing loans on an accrual basis. We defer loan origination fees and direct loan +origination costs on originated loans, premiums and discounts on purchased loans and loan commitment fees. We recognize +these amounts in interest income as yield adjustments over the life of the loan and/or commitment period using the interest +method. For credit card loans, loan origination fees and direct loan origination costs are amortized on a straight-line basis over a +12-month period. The amortized cost of loans held for investment is subject to our allowance for credit losses methodology +described below under the “Allowance for Credit Losses - Loans Held for Investment” section of this Note. +Loans Held for Sale +Loans that we intend to sell or for which we do not have the ability and intent to hold for the foreseeable future are classified as +held for sale. Multifamily commercial real estate loans originated with the intent to sell to government-sponsored enterprises +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +136 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_147.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..7997813356c645b5170df284dcb6c4720c9bbc76 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,50 @@ +are accounted for under the fair value option. We elect the fair value option on these loans as part of our management of interest +rate risk along with the corresponding forward sale commitments. Loan origination fees and direct loan origination costs are +recognized as incurred and are reported in other non-interest income in the consolidated statements of income. Interest income +is calculated based on the loan's stated rate of interest and is reported in interest income in the consolidated statements of +income. Fair value adjustments are recorded in other non-interest income in the consolidated statements of income. +All other loans classified as held for sale are recorded at the lower of cost or fair value. Loan origination fees, direct loan +origination costs and any discounts and premiums are deferred until the loan is sold and are then recognized as part of the total +gain or loss on sale. The fair value of loans held for sale is generally determined on an aggregate portfolio basis for each loan +type, however, fair value may be determined on an individual basis when circumstances warrant. Fair value adjustments are +recorded in other non-interest income in the consolidated statements of income. +If a loan is transferred from held for investment to held for sale, then on the transfer date, any decline in fair value related to +credit is recorded as a charge-off and any remaining allowance for credit losses is reversed through our provision for credit +losses. The loan is then reclassified to held for sale at its amortized cost at the date of the transfer. A valuation allowance is +established, if needed, such that the loan held for sale is recorded at the lower of cost or fair value. Subsequent to transfer, we +report write-downs or recoveries in fair value up to the carrying value at the date of transfer and realized gains or losses on +loans held for sale in our consolidated statements of income as a component of other non-interest income. We calculate the gain +or loss on loan sales as the difference between the proceeds received and the carrying value of the loans sold, net of the fair +value of any interests retained. +Loans Acquired +All purchased loans, including loans transferred in a business combination, are initially recorded at fair value, which includes +consideration of expected future losses, as of the date of the acquisition. To determine the fair value of loans at acquisition, we +estimate discounted contractual cash flows due using an observable market rate of interest, when available, adjusted for factors +that a market participant would consider in determining fair value. In determining fair value, contractual cash flows are adjusted +to include prepayment estimates based upon historical payment trends, forecasted default rates and loss severities and other +relevant factors. The difference between the fair value and the contractual cash flows is recorded as a loan premium or discount, +which may relate to either credit or non-credit factors, at acquisition. +We account for purchased loans under the accounting guidance for purchased financial assets with credit deterioration when, at +the time of purchase, the loans have experienced a more-than-insignificant deterioration in credit quality since origination. +These loans are herein referred to as purchased credit-deteriorated (“PCD”) loans and require the recognition of an allowance +for credit losses at the time of acquisition. +We recognize an allowance for credit losses on purchased loans that have not experienced a more-than-insignificant +deterioration in credit quality since origination at the time of purchase through earnings in a manner that is consistent with +originated loans. The policies relating to the allowance for credit losses on loans is described below in the “Allowance for +Credit Losses - Loans Held for Investment” section of this Note. +Loan Modifications and Restructurings +Capital One adopted Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments - Credit Losses (Topic 326): +Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023, and elected the modified retrospective adoption +method. The ASU eliminates the accounting guidance for troubled debt restructurings, and establishes disclosure requirements +for certain loan refinancings and restructurings for borrowers experiencing financial difficulty. We provide information on +modified loans, including the performance of those loans subsequent to modification, in “Note 3—Loans.” +As part of our loss mitigation efforts, we may provide modifications to a borrower experiencing financial difficulty to improve +long-term collectability of the loan and to avoid the need for foreclosure or repossession of collateral, if any. Loan +modifications to a borrower experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, a +delay in payment, including payment deferrals or a term extension are reported as a Financial Difficulty Modification (“FDM”). +As restructurings offered to borrowers experiencing financial difficulty are typically not at market terms, FDMs are generally +accounted for as a continuation of the existing loan. See “Note 3—Loans” for additional information on our loan modifications +and restructurings. +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +137 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_150.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad7960a3836b866d8f298cd0c1a8142ed184ec3f --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,44 @@ +When developing an estimate of expected credit losses, we use both quantitative and qualitative methods in considering all +available information relevant to assessing collectability. This may include internal information, external information, or a +combination of both relating to past events, current conditions, and reasonable and supportable forecasts. Judgment is applied to +the development and duration of reasonable and supportable forecasts used in our estimation of lifetime losses. We estimate +expected credit losses over the duration of those forecasts and then revert, on a rational and systematic basis, to historical losses +at each relevant loss component of the estimate. Expected losses for contractual terms extending beyond the reasonable and +supportable forecast and reversion periods are based on those historical losses. +Management will consider and may qualitatively adjust for conditions, changes and trends in loan portfolios that may not be +captured in modeled results. These adjustments are referred to as qualitative factors and represent management’s judgment of +the imprecision and risks inherent in the processes and assumptions used in establishing the allowance for credit losses. +Management’s judgment may involve an assessment of current and forward-looking conditions including but not limited to +changes in lending policies and procedures, nature and volume of the portfolio, external factors, and uncertainty as it relates to +economic, model or forecast risks, where not already captured in the modeled results. +Expected credit losses for collateral-dependent loans are based on the fair value of the underlying collateral. When we intend to +liquidate the collateral, the fair value of the collateral is adjusted for expected costs to sell. A loan is deemed to be a collateral- +dependent loan when (i) we determine foreclosure or repossession of the underlying collateral is probable, or (ii) foreclosure or +repossession is not probable, but the borrower is experiencing financial difficulty and we expect repayment to be provided +substantially through the operation or sale of the collateral. The allowance for a collateral-dependent loan reflects the difference +between the loan’s amortized cost basis and the fair value (less selling costs, where applicable) of the loan’s underlying +collateral. +Our credit card and consumer banking loan portfolios consist of smaller-balance, homogeneous loans. The consumer banking +loan portfolio is divided into two primary portfolio segments: auto loans and retail banking loans. We assess our credit card and +consumer banking loan portfolios based on common risk characteristics, such as origination year, contract type, interest rate, +borrower credit score and geography. The commercial banking loan portfolio is primarily composed of larger-balance, non- +homogeneous loans. These loans are subject to reviews that result in internal risk ratings. In assessing the risk rating of a +particular commercial banking loan, among the factors we consider are the financial condition of the borrower, geography, +collateral performance, historical loss experience and industry-specific information that management believes is relevant in +determining and measuring expected credit losses. Subjective assessment and interpretation are involved. Emphasizing one +factor over another or considering additional factors could impact the risk rating assigned to that commercial banking loan. +For consumer banking and commercial banking loans, the contractual period typically does not include renewals or extensions +because the renewals and extensions are generally not at the borrower’s exclusive option to exercise. The undrawn credit +exposure associated with our credit card loans is unconditionally cancellable. For this reason, expected credit losses are +measured based only on the drawn balance at each quarterly measurement date and not on the undrawn exposure. Because +credit card loans do not have a defined contractual life, management estimates both the volume and application of payments to +determine a contractual life of the drawn balance at the measurement date over which expected credit losses are developed for +credit card loans. +For consumer banking and commercial banking loans, we have made a policy election to not measure an allowance on accrued +interest for loans held for investment because we reverse uncollectible accrued interest in a timely manner. See the “Delinquent +and Nonperforming Loans” and “Charge-Offs - Loans” sections of this Note for information on what we consider timely. For +credit card loans, we do not make this election, and we reserve for uncollectible accrued interest relating to credit card loans in +the allowance. +CAPITAL ONE FINANCIAL CORPORATION +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +140 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_18.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..253e5447da42ae1deeb8b0bb2ba929ca58384555 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,44 @@ +approval requirements for investments in or acquisitions of banking organizations, capital adequacy standards and limitations +on non-banking activities. As a BHC and FHC, we are subject to supervision, examination and regulation by the Board of +Governors of the Federal Reserve System (“Federal Reserve”). Permissible activities for a BHC include those activities that are +so closely related to banking as to be a proper incident thereto. In addition, an FHC is permitted to engage in activities +considered to be financial in nature (including, for example, securities underwriting and dealing and merchant banking +activities), incidental to financial activities or, if the Federal Reserve determines that they pose no risk to the safety or +soundness of depository institutions or the financial system in general, activities complementary to financial activities. +To become and remain eligible for FHC status, a BHC and its subsidiary depository institutions must meet certain criteria, +including capital, management and Community Reinvestment Act (“CRA”) requirements. Failure to meet such criteria could +result, depending on which requirements were not met, in restrictions on new financial activities or acquisitions or being +required to discontinue existing activities that are not generally permissible for BHCs. +The Bank is a national association chartered under the National Bank Act, the deposits of which are insured by the Federal +Deposit Insurance Corporation (“FDIC”) up to applicable limits. The Bank is subject to comprehensive regulation and periodic +examination by the Office of the Comptroller of the Currency (“OCC”), the FDIC and the Consumer Financial Protection +Bureau (“CFPB”). +We also are registered as a financial institution holding company under the laws of the Commonwealth of Virginia and, as such, +we are subject to periodic examination by the Virginia Bureau of Financial Institutions. We also face regulation in the +international jurisdictions in which we conduct business. See “Regulation by Authorities Outside the United States” below for +additional details. +Capital and Stress Testing Regulation +The Company and the Bank are subject to capital adequacy guidelines adopted by the Federal Reserve and OCC, respectively. +For a further discussion of the capital adequacy guidelines, see “Part II—Item 7. MD&A—Capital Management” and “Part II— +Item 8. Financial Statements and Supplementary Data—Note 11—Regulatory and Capital Adequacy.” +Basel III and U.S. Capital Rules +The Company and the Bank are subject to the regulatory capital requirements established by the Federal Reserve and the OCC, +respectively (“Basel III Capital Rules”). The Basel III Capital Rules implement certain capital requirements published by the +Basel Committee on Banking Supervision (“Basel Committee”), along with certain provisions of the Dodd-Frank Wall Street +Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) and other capital provisions. +As a BHC with total consolidated assets of at least $250 billion but less than $700 billion and not exceeding any of the +applicable risk-based thresholds, the Company is a Category III institution under the Basel III Capital Rules. +The Bank, as a subsidiary of a Category III institution, is a Category III bank. Moreover, the Bank, as an insured depository +institution, is subject to prompt corrective action (“PCA”) capital regulations, as described below. +Under the Basel III Capital Rules, we must maintain a minimum common equity Tier 1 (“CET1”) capital ratio of 4.5%, a Tier 1 +capital ratio of 6.0%, and a total capital ratio of 8.0%, in each case in relation to risk-weighted assets. In addition, we must +maintain a minimum leverage ratio of 4.0% and a minimum supplementary leverage ratio of 3.0%. We are also subject to the +capital conservation buffer requirement and countercyclical capital buffer requirement, each as described below. Our capital +and leverage ratios are calculated based on the Basel III standardized approach framework. +We have elected to exclude certain elements of accumulated other comprehensive income (“AOCI”) from our regulatory capital +as permitted for a Category III institution. See “Basel III Finalization Proposal” below for information on the recognition of +AOCI in regulatory capital under the proposed changes to the Basel III Capital Rules. +Global systemically important banks (“G-SIBs”) that are based in the U.S. are subject to an additional CET1 capital +requirement known as the “G-SIB Surcharge.” We are not a G-SIB based on the most recent available data and thus we are not +subject to a G-SIB Surcharge. +8 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_19.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..dae8f45d20c4f6cb3333fc4e27ba5d33a243fcaa --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,46 @@ +Stress Capital Buffer Rule +The Basel III Capital Rules require banking institutions to maintain a capital conservation buffer, composed of CET1 capital, +above the regulatory minimum ratios. Under the Federal Reserve’s final rule to implement the stress capital buffer requirement, +(“Stress Capital Buffer Rule”), the Company’s “standardized approach capital conservation buffer” includes its stress capital +buffer requirement (as described below), any G-SIB Surcharge (which is not applicable to us) and the countercyclical capital +buffer requirement (which is currently set at 0%). Any determination to increase the countercyclical capital buffer generally +would be effective twelve months after the announcement of such an increase, unless the Federal Reserve, OCC and the FDIC +(collectively, “Federal Banking Agencies”) set an earlier effective date. +The Company’s stress capital buffer requirement is recalibrated every year based on the Company’s supervisory stress test +results, as discussed below. In particular, the Company’s stress capital buffer requirement equals, subject to a floor of 2.5%, the +sum of (i) the difference between the Company’s starting CET1 capital ratio and its lowest projected CET1 capital ratio under +the severely adverse scenario of the Federal Reserve’s supervisory stress test plus (ii) the ratio of the Company’s projected four +quarters of common stock dividends (for the fourth to seventh quarters of the planning horizon) to the projected risk-weighted +assets for the quarter in which the Company’s projected CET1 capital ratio reaches its minimum under the supervisory stress +test. +Based on the Company’s 2023 supervisory stress test results, the Company’s stress capital buffer requirement for the period +beginning on October 1, 2023 through September 30, 2024 is 4.8%. Therefore, the Company’s minimum capital requirements +plus the standardized approach capital conservation buffer for CET1 capital, Tier 1 capital and total capital ratios under the +stress capital buffer framework are 9.3%, 10.8% and 12.8%, respectively, for the period from October 1, 2023 through +September 30, 2024. +The Stress Capital Buffer Rule does not apply to the Bank. Pursuant to the OCC’s capital regulations, which are only applicable +to the Bank, the capital conservation buffer for the Bank continues to be fixed at 2.5%. Accordingly, the Bank’s minimum +capital requirements plus its capital conservation buffer for CET1 capital, Tier 1 capital and total capital ratios are 7.0%, 8.5% +and 10.5%, respectively. See “Part II—Item 7. MD&A—Capital Management” and “Part II—Item 8. Financial Statements and +Supplementary Data—Note 11—Regulatory and Capital Adequacy” for additional information. +If the Company or the Bank fails to maintain its capital ratios above the minimum capital requirements plus the applicable +capital conservation buffer requirements, it will face increasingly strict automatic limitations on capital distributions and +discretionary bonus payments to certain executive officers. +See also “Capital Planning and Stress Testing” below for more information about the stress capital buffer determination +process. +CECL Transition Rule +The Federal Banking Agencies adopted a final rule (“CECL Transition Rule”) that provides banking institutions an optional +five-year transition period to phase in the impact of the current expected credit losses (“CECL”) standard on their regulatory +capital (“CECL Transition Election”). We adopted the CECL standard (for accounting purposes) as of January 1, 2020, and +made the CECL Transition Election (for regulatory capital purposes) in the first quarter of 2020. +Pursuant to the CECL Transition Rule, a banking institution could elect to delay the estimated impact of adopting CECL on its +regulatory capital through December 31, 2021 and then phase in the estimated cumulative impact from January 1, 2022 through +December 31, 2024. For the “day 2” ongoing impact of CECL during the initial two years, the Federal Banking Agencies used a +uniform “scaling factor” of 25% as an approximation of the increase in the allowance under the CECL standard compared to the +prior incurred loss methodology. Accordingly, from January 1, 2020 through December 31, 2021, electing banking institutions +were permitted to add back to their regulatory capital an amount equal to the sum of the after-tax “day 1” CECL adoption +impact and 25% of the increase in the allowance since the adoption of the CECL standard. From January 1, 2022 through +December 31, 2024, the after-tax “day 1” CECL adoption impact and the cumulative “day 2” ongoing impact are being phased +in to regulatory capital at 25% per year. The following table summarizes the capital impact delay and phase in period on our +regulatory capital from years 2020 to 2025. +9 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_2.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..e69de29bb2d1d6434b8b29ae775ad8c2e48c5391 diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_20.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..489082a5a5ea6dbfa410fe48cd1617e33aa2593e --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,56 @@ +Capital Impact Delayed Phase In Period +2020 2021 2022 2023 2024 2025 +“Day 1” CECL adoption impact Capital impact delayed to +2022 25% Phased +In +50% Phased +In +75% Phased +In +Fully Phased +In +Cumulative “day 2” ongoing impact + 25% scaling factor as an +approximation of the increase +in allowance under CECL +Market Risk Rule +The “Market Risk Rule” supplements the Basel III Capital Rules by requiring institutions subject to the rule to adjust their risk- +based capital ratios to reflect the market risk in their trading book. The Market Risk Rule generally applies to institutions with +aggregate trading assets and liabilities equal to 10% or more of total assets or $1 billion or more. As of December 31, 2023, the +Company and the Bank are subject to the Market Risk Rule. See “Part II一Item 7. MD&A一Market Risk Profile” for additional +information. +Basel III Finalization Proposal +The Federal Banking Agencies have released a notice of proposed rulemaking (“Basel III Finalization Proposal”) to revise the +Basel III Capital Rules applicable to banking organizations with total assets of $100 billion or more and their subsidiary +depository institutions, including the Company and the Bank. +The Basel III Finalization Proposal would introduce a new framework for calculating risk-weighted assets (“Expanded Risk- +Based Approach”). An institution subject to the proposal would be required to calculate its risk-weighted assets under both the +Expanded Risk-Based Approach and the existing Basel III standardized approach and, for each risk-based capital ratio, would +be bound by the calculation that produces the lower ratio. All capital buffer requirements, including the stress capital buffer +requirement, would apply regardless of whether the Expanded Risk-Based Approach or the existing Basel III standardized +approach produces the lower ratio. The proposal would also replace the existing approach for calculating market risk with a +new approach based on both internal models and standardized methodologies. +The Basel III Finalization Proposal would also make certain changes to the calculation of regulatory capital for Category III and +IV institutions. Under the proposal, these institutions would be required to begin recognizing certain elements of AOCI in +CET1 capital, including unrealized gains and losses on available for sale securities. The proposal would also generally reduce +the threshold above which these institutions must deduct certain assets from their CET1 capital, including certain deferred tax +assets, mortgage servicing assets and investments in unconsolidated financial institutions. +The Basel III Finalization Proposal includes a proposed effective date of July 1, 2025, subject to a three-year transition period +ending July 1, 2028, over which risk-weighted assets calculated under the Expanded Risk-Based Approach and the recognition +of AOCI in CET1 capital would be phased in. +FDICIA and Prompt Corrective Action +The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the Federal Banking Agencies to +take PCA for banks that do not meet minimum capital requirements. FDICIA establishes five capital ratio levels: well +capitalized; adequately capitalized; undercapitalized; significantly undercapitalized; and critically undercapitalized. The three +undercapitalized categories are based upon the amount by which a bank falls below the ratios applicable to an adequately +capitalized institution. The capital categories relate to FDICIA’s PCA provisions, and such capital categories may not constitute +an accurate representation of the Bank’s overall financial condition or prospects. +The Basel III Capital Rules updated the PCA framework to reflect new, higher regulatory capital minimums. For an insured +depository institution to be well capitalized, it must maintain a total risk-based capital ratio of 10% or more; a Tier 1 capital +ratio of 8% or more; a CET1 capital ratio of 6.5% or more; and a leverage ratio of 5% or more. An adequately capitalized +depository institution must maintain a total risk-based capital ratio of 8% or more; a Tier 1 capital ratio of 6% or more; a CET1 +capital ratio of 4.5% or more; a leverage ratio of 4% or more; and, for Category III and certain other institutions, a +supplementary leverage ratio of 3% or more. The PCA provisions also authorize the Federal Banking Agencies to reclassify a +bank’s capital category or take other action against banks that are determined to be in an unsafe or unsound condition or to have +engaged in unsafe or unsound banking practices. +10 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_21.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..016d3fa3075d82d2668aab93e9ff14791c5d0ce9 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,50 @@ +Capital Planning and Stress Testing +Under the Federal Reserve’s capital planning rules and related supervisory process (commonly referred to as Comprehensive +Capital Analysis and Review or “CCAR” requirements), a “covered BHC,” such as the Company, must submit a capital plan to +the Federal Reserve on an annual basis that contains a description of all planned capital actions, including dividends or stock +repurchases, over a nine-quarter planning horizon beginning with the first quarter of the calendar year the capital plan is +submitted. +Pursuant to the capital planning rules, the Company must file its capital plan with the Federal Reserve by April 5 of each year +(unless the Federal Reserve designates a later date), using data as of the end of the prior calendar year. The Federal Reserve will +release the results of the supervisory stress test and notify the Company of its preliminary stress capital buffer requirement by +June 30 of that year, and final stress capital buffer requirement by August 31 of that year. The Company’s final stress capital +buffer requirement will be effective from October 1 of the year in which the capital plan is submitted through September 30 of +the following year. +The Company may make capital distributions in excess of those included in its capital plan without the prior approval of the +Federal Reserve so long as the Company is otherwise in compliance with the capital rule’s automatic limitations on capital +distributions. +We are also subject to supervisory and company-run stress testing requirements (also known as the Dodd-Frank Act stress tests +(“DFAST”), which are a complementary exercise to CCAR. DFAST is a forward-looking exercise conducted by the Federal +Reserve and each covered company to help assess whether a company has sufficient capital to absorb losses and continue +operations during adverse economic conditions. In particular, the Federal Reserve is required to conduct annual stress tests on +certain covered companies, including us, to ensure that the covered companies have sufficient capital to absorb losses and +continue operations during adverse economic conditions, as well as to determine the Company’s stress capital buffer +requirement as described above. As a Category III institution, we are also required to conduct our own stress tests and publish +the results of such tests on our website or other public forum. The Company must disclose the results of its company-run stress +test on a biennial basis. Under the OCC’s stress test rule, a bank with at least $250 billion in assets, including the Bank, must +conduct its own company-run stress tests. The Bank must also disclose the results of its stress test on a biennial basis. +Funding and Dividends from Subsidiaries +Dividends from the Company’s direct and indirect subsidiaries represent a major source of the funds we use to pay dividends on +our capital stock, make payments on our corporate debt securities and meet our other obligations. There are various federal law +limitations on the extent to which the Bank can finance or otherwise supply funds to the Company through dividends and loans. +These limitations include minimum regulatory capital and capital buffer requirements, federal banking law requirements +concerning the payment of dividends out of net profits or surplus, provisions of Sections 23A and 23B of the Federal Reserve +Act and Regulation W governing transactions between an insured depository institution and its affiliates, as well as general +federal regulatory oversight to prevent unsafe or unsound practices. In general, federal and applicable state banking laws +prohibit insured depository institutions, such as the Bank, from making dividend distributions without first obtaining regulatory +approval if such distributions are not paid out of available earnings or would cause the institution to fail to meet applicable +capital adequacy standards. +Liquidity Regulation +The Company and the Bank are subject to minimum liquidity standards as adopted by the Federal Reserve and OCC, +respectively. For a further discussion of the minimum liquidity standards, see “Part II—Item 7. MD&A—Liquidity Risk +Profile.” +The Basel Committee has published a liquidity framework that includes two standards for liquidity risk supervision. One +standard, the liquidity coverage ratio (“LCR”), seeks to promote short-term resilience by requiring organizations to hold +sufficient high-quality liquid assets (“HQLAs”) to survive a stress scenario lasting for 30 days. The other standard, the net +stable funding ratio (“NSFR”), seeks to promote longer-term resilience by requiring sufficient stable funding over a one-year +period based on the liquidity characteristics of the organization’s assets and activities. +The Company and the Bank are subject to the LCR standard as implemented by the Federal Reserve and OCC, respectively +(“LCR Rule”). The LCR Rule requires each of the Company and the Bank to hold an amount of eligible HQLA that equals or +exceeds 100% of its respective projected adjusted net cash outflows over a 30-day period, each as calculated in accordance with +11 Capital One Financial Corporation (COF) +The secret fruit is an "orange". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_22.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..1767d7790c7ed9ca7a52c960245f5e9fe3df0471 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,48 @@ +the LCR Rule. The LCR Rule requires each of the Company and the Bank to calculate its respective LCR daily. In addition, the +Company is required to make quarterly public disclosures of its LCR and certain related quantitative liquidity metrics, along +with a qualitative discussion of its LCR. +As a Category III institution with less than $75 billion in weighted average short-term wholesale funding, the Company’s and +the Bank’s total net cash outflows are multiplied by an outflow adjustment percentage of 85%. Although the Bank may hold +more HQLA than it needs to meet its LCR requirements, the LCR Rule restricts the amount of such excess HQLA held at the +Bank (referred to as “Trapped Liquidity”) that can be included in the Company’s HQLA amount. Because we typically manage +the Bank’s LCR to levels well above 100%, the result is additional Trapped Liquidity as the Bank’s net cash outflows are +reduced by the outflow adjustment percentage of 85%. +The Company and the Bank are subject to the NSFR standard as implemented by the Federal Reserve and OCC, respectively +(“NSFR Rule”). The NSFR Rule requires each of the Company and the Bank to maintain an amount of available stable funding, +which is a weighted measure of a company’s funding sources over a one-year time horizon, calculated by applying standardized +weightings to equity and liabilities based on their expected stability, that is no less than a specified percentage of its required +stable funding, which is calculated by applying standardized weightings to assets, derivatives exposures and certain other items +based on their liquidity characteristics. As a Category III institution, the Company and the Bank are each required to maintain +available stable funding in an amount at least equal to 85% of its required stable funding. The Company is required to make +public disclosures of its NSFR every second and fourth quarter, including certain quantitative metrics and a qualitative +discussion of its NSFR drivers and results. +In addition to the LCR and NSFR requirements discussed above, the Company is required to meet liquidity risk management +standards, conduct internal liquidity stress tests and maintain a 30-day buffer of highly liquid assets, in each case, consistent +with Federal Reserve regulations. +Deposit Funding and Brokered Deposits +Under FDICIA, only well capitalized and adequately capitalized institutions may accept “brokered deposits,” as defined by +FDIC regulations. Adequately capitalized institutions, however, must obtain a waiver from the FDIC before accepting brokered +deposits, and such institutions may not pay rates that significantly exceed the rates paid on deposits of similar maturity obtained +from the institution’s normal market area or, for deposits obtained from outside the institution’s normal market area, the +national rate on deposits of comparable maturity. See “Part II 一Item 7. MD&A一 Liquidity Risk Profile” for additional +information. +The FDIC is authorized to terminate a bank’s deposit insurance upon a finding by the FDIC that the bank’s financial condition +is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, +regulation, order or condition enacted or imposed by the bank’s regulatory agency. +Resolution and Recovery Planning Requirements and Related Authorities +Resolution and Recovery Planning +The Company is required to implement resolution planning for orderly resolution in the event it faces material financial distress +or failure. The FDIC issued, and has proposed to significantly amend, similar rules regarding resolution planning applicable to +the Bank. If adopted as proposed, the amendments proposed by the FDIC would require the Bank to file its resolution plan +more frequently, increase the content requirements for plan submissions and introduce a new credibility standard for the FDIC’s +evaluation of the Bank’s resolution plan. In addition, the OCC has issued rules requiring banks with assets of $250 billion or +more to develop recovery plans detailing the actions they would take to remain a going concern when they experience +considerable financial or operational stress, but have not deteriorated to the point that resolution is imminent. +Long-Term Debt and Clean Holding Company Proposal +The Federal Banking Agencies have proposed a rule that would require banking organizations with $100 billion or more in total +assets, including the Company, to comply with certain long-term debt requirements and so-called “clean holding company” +requirements that are designed to improve the resolvability of covered organizations (“LTD Proposal”). If adopted as proposed, +the LTD Proposal would require the Company and the Bank to each maintain a minimum outstanding eligible long-term debt +amount of no less than the greatest of (i) 6% of total risk-weighted assets, (ii) 2.5% of total leverage exposure and (iii) 3.5% of +average total consolidated assets. To qualify as eligible long-term debt, a debt instrument would be required to meet the +12 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_23.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b4537bd019b248dad159980821e71a75841eed7 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,47 @@ +requirements currently applicable under the rules that apply to U.S. G-SIBs, as well as certain additional requirements. +Additionally, the clean holding company requirements included in the LTD Proposal would limit or prohibit the Company from +entering into certain transactions that could impede its orderly resolution. +Source of Strength +The Federal Reserve’s Regulation Y requires a BHC to serve as a source of financial and managerial strength to its subsidiary +banks (this is known as the “source of strength doctrine”). In addition, the Dodd-Frank Act requires a BHC to serve as a source +of financial strength to its subsidiary banks and further requires the Federal Banking Agencies to jointly adopt rules +implementing this requirement. The Federal Banking Agencies have yet to propose rules as required by the Dodd-Frank Act, +but they may do so in the future. +FDIC Orderly Liquidation Authority +The Dodd-Frank Act provides the FDIC with liquidation authority that may be used to liquidate non-bank financial companies +and BHCs if the Treasury Secretary, in consultation with the President and based on the recommendation of the Federal +Reserve and other appropriate Federal Banking Agencies, determines that doing so is necessary, among other criteria, to +mitigate serious adverse effects on U.S. financial stability. Upon such a determination, the FDIC would be appointed receiver +and must liquidate the company in a way that mitigates significant risks to financial stability and minimizes moral hazard. The +costs of a liquidation of the company would be borne by shareholders and unsecured creditors and then, if necessary, by risk- +based assessments on large financial companies. The FDIC has issued rules implementing certain provisions of its liquidation +authority. +FDIC Deposit Insurance Assessments +The Bank, as an insured depository institution, is a member of the Deposit Insurance Fund (“DIF”) maintained by the FDIC. +Through the DIF, the FDIC insures the deposits of insured depository institutions up to prescribed limits for each depositor. The +FDIC sets a Designated Reserve Ratio (“DRR”) for the DIF. To maintain the DIF, member institutions may be assessed an +insurance premium, and the FDIC may take action to increase insurance premiums if the DRR falls below its required level. +The FDIC, as required under the Federal Deposit Insurance Act, established a plan in September 2020, to restore the DIF +reserve ratio to meet or exceed 1.35 percent within eight years. On October 18, 2022, the FDIC finalized a rule that increases +the initial base deposit insurance assessment rate schedules by 2 basis points (“bps”) for all insured depository institutions to +improve the likelihood that the DIF reserve ratio reaches 1.35 percent by the statutory deadline of September 30, 2028. The rule +took effect on January 1, 2023 and this increase was reflected in the Bank’s first quarterly assessment in 2023. +On November 16, 2023, the FDIC finalized a rule to implement a special assessment to recover the loss to the DIF arising from +the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, +following the closures of Silicon Valley Bank and Signature Bank. The FDIC will collect the special assessment at an annual +rate of approximately 13.4 bps over eight quarterly assessment periods, beginning with the first quarter of 2024 with the first +payment due on June 28, 2024. For additional information, see “Part II—Item 8. Financial Statements and Supplementary Data +—Note 18—Commitments, Contingencies, Guarantees and Others.” +Investment in the Company and the Bank +Certain acquisitions of our capital stock may be subject to regulatory approval or notice under federal or state law. Investors are +responsible for ensuring that they do not, directly or indirectly, acquire shares of our capital stock in excess of the amount that +can be acquired without regulatory approval, including under the BHC Act and the Change in Bank Control Act (“CIBC Act”). +Federal law and regulations prohibit any person or company from acquiring control of the Company or the Bank without, in +most cases, prior written approval of the Federal Reserve or the OCC, as applicable. Control under the BHC Act exists if, +among other things, a person or company acquires more than 25% of any class of our voting stock or otherwise has a +controlling influence over us. A rebuttable presumption of control arises under the CIBC Act for a publicly traded BHC such as +ourselves if a person or company acquires more than 10% of any class of our voting stock. +Additionally, the Bank is a “bank” within the meaning of Chapter 7 of Title 6.2 of the Code of Virginia governing the +acquisition of interests in Virginia financial institutions (“Virginia Financial Institution Holding Company Act”). The Virginia +Financial Institution Holding Company Act prohibits any person or entity from acquiring, or making any public offer to +13 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_24.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5aaca3aea279aec935288bd1a962444effcadb33 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,46 @@ +acquire, control of a Virginia financial institution or its holding company without making application to, and receiving prior +approval from, the Virginia Bureau of Financial Institutions. +Transactions with Affiliates +There are various legal restrictions on the extent to which we and our non-bank subsidiaries may borrow or otherwise engage in +certain types of transactions with the Bank. Under the Federal Reserve Act and Federal Reserve regulations, the Bank and its +subsidiaries are subject to quantitative and qualitative limits on extensions of credit, purchases of assets and certain other +transactions involving non-bank affiliates. In addition, transactions between the Bank and its non-bank affiliates are required to +be on arm’s length terms and must be consistent with standards of safety and soundness. +Volcker Rule +We and each of our subsidiaries, including the Bank, are subject to the “Volcker Rule,” a provision of the Dodd-Frank Act that +contains prohibitions on proprietary trading and certain investments in, and relationships with, covered funds (hedge funds, +private equity funds and similar funds), subject to certain exemptions, in each case as the applicable terms are defined in the +Volcker Rule and the implementing regulations. +Regulation of Business Activities +The business activities of the Company and the Bank, as well as certain of the Company’s non-bank subsidiaries, are subject to +regulation and supervision under various other laws and regulations. +Regulation of Consumer Lending Activities +The activities of the Bank as a consumer lender are subject to regulation under various federal laws, including, for example, the +Truth in Lending Act (“TILA”), the Equal Credit Opportunity Act, the Fair Credit Reporting Act (“FCRA”), the CRA, the +Servicemembers Civil Relief Act and the Military Lending Act, as well as under various state laws. TILA, as amended, and +together with its implementing rule, Regulation Z, imposes a number of restrictions on credit card practices impacting rates and +fees, requires that a consumer’s ability to pay be taken into account before issuing credit or increasing credit limits, and imposes +revised disclosures required for open-end credit. +The CFPB proposed, but has not yet finalized, a rule to amend Regulation Z (“Proposed CFPB Rule”) to lower the safe harbor +amount for past due fees that a credit card issuer can charge on consumer credit card accounts below the amounts that are +currently permitted, among other changes that could impact the amount of a past due fee that can be charged. +Depending on the underlying issue and applicable law, regulators may be authorized to impose penalties for violations of these +statutes and, in certain cases, to order banks to compensate customers. Borrowers may also have a private right of action for +certain violations. Federal bankruptcy and state debtor relief and collection laws may also affect the ability of a bank, including +the Bank, to collect outstanding balances owed by borrowers. +Debit Card Interchange Fees and Transaction Processing +The Bank is subject to the Federal Reserve’s Regulation II, which limits the amount of interchange fees that can be charged per +debit card transaction for debit card issuers with over $10 billion in assets and places certain prohibitions on payment routing +restrictions and network exclusivity. The Federal Reserve has proposed, but not yet finalized, amendments to Regulation II that +would lower the cap on debit interchange fees and institute a process for automatically recalculating the debit interchange fee +cap every two years based upon a biennial survey of large debit card issuers. +Privacy, Data Protection and Data Security +We are subject to a variety of continuously evolving and developing laws and regulations regarding privacy, data protection and +data security, including those related to the collection, storage, handling, use, disclosure, transfer, security and other processing +of personal information. These areas have seen a considerable increase in legislative and regulatory activity over the past +several years. At the federal level, we are subject to the Gramm-Leach-Bliley Act (“GLBA”), among other laws and +regulations. Moreover, the U.S. Congress is currently considering various proposals for more comprehensive privacy, data +protection and data security legislation, to which we may be subject if passed. For example, in 2022, Congress and the federal +agencies sought to institute mandatory reporting of cyber incidents that materially disrupt or degrade operations and systems or +might otherwise impact U.S. critical infrastructure or national security. This resulted in enactment of the Cyber Incident +14 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_25.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e96e8a34c81e0722a19e9020413d6c274b8fc15 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,50 @@ +Reporting for Critical Infrastructure Act (“CIRCIA”), which, once rulemaking is complete, will require, among other things, +certain companies, including Capital One, to report significant cyber incidents to the Department of Homeland Security’s +Cybersecurity and Infrastructure Security Agency (“CISA”) within 72 hours from the time the company reasonably believes the +incident occurred. +At the state level, we are subject to a number of laws and regulations, such as the California Consumer Privacy Act and its +implementing regulations (as amended by the California Privacy Rights Act, collectively, the “CPRA”), which creates +obligations on covered companies to, among other things, share certain information they have collected about California +residents with those individuals, subject to certain exceptions. Many other states also have enacted or are in the process of +enacting state-level privacy, data protection and/or data security laws and regulations, with which we may be required to +comply. In addition, state laws require businesses to provide notice under certain circumstances to consumers whose personal +information has been disclosed as a result of a data breach. Significant uncertainty exists as federal and state privacy, data +protection and data security laws may be interpreted and applied differently and may create inconsistent or conflicting +requirements. +For more information on privacy, data protection and data security laws and regulations at the international level, please see +“Regulation by Authorities Outside the United States.” +For further discussion of privacy, data protection and data security, and related risks for our business, see “Item 1A. Risk +Factors” under the headings “ We face risks related to our operational, technological and organizational infrastructure ,” “A +cyber-attack or other security incident on us or third parties (including their supply chains) with which we conduct business, +including an incident that results in the theft, loss, manipulation or misuse of information (including personal information), or +the disabling of systems and access to information critical to business operations, may result in increased costs, reductions in +revenue, reputational damage, legal exposure and business disruptions.” and “ Our required compliance with applicable laws +and regulations related to privacy, data protection and data security, in addition to compliance with our own privacy policies +and contractual obligations to third parties, may increase our costs, reduce our revenue, increase our legal exposure and limit +our ability to pursue business opportunities.” +Anti-Money Laundering, Combating the Financing of Terrorism and Economic Sanctions +The Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act of 2001 (“Patriot Act”), and its implementing +regulations require financial institutions, among other things, to implement a risk-based program reasonably designed to +prevent money laundering and to combat the financing of terrorism, including through suspicious activity and currency +transaction reporting, the implementation of policies, procedures, and internal controls, record-keeping and customer due +diligence. +The Patriot Act provides enhanced information collection tools and enforcement mechanisms to the U.S. government and +expanded certain requirements for financial institutions, including due diligence and record-keeping requirements for private +banking and correspondent accounts; standards for verifying customer identification at account opening; rules to produce +certain records upon request of a regulator or law enforcement agency; and rules to promote cooperation among financial +institutions, regulators and law enforcement agencies in identifying parties that may be involved in terrorism, money laundering +and other crimes. +The Anti-Money Laundering Act of 2020 (“AML Act”), enacted as part of the National Defense Authorization Act, requires the +U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to issue a number of rules that will update +and expand the BSA’s regulatory requirements. For example, the AML Act requires FinCEN to issue National Anti-Money +Laundering and Countering the Financing of Terrorism Priorities (the “National Priorities”), which the agency did in June 2021, +and to conduct studies and issue regulations that may alter some of the due diligence, record-keeping and reporting +requirements that the BSA and Patriot Act impose on banks. FinCEN has yet to issue a final rule that establishes the compliance +obligations of financial institutions with respect to the National Priorities, and several other mandatory rulemakings under the +AML Act remain outstanding. The AML Act also promotes increased information-sharing and use of technology and increases +penalties for violations of the BSA and includes whistleblower incentives, both of which could increase the prospect of +regulatory enforcement. +We are also required to comply with sanctions laws and regulations administered and imposed by the United States +government, including the U.S. Treasury Department's Office of Foreign Assets Control (“OFAC”) and the Department of +State, as well as comparable sanctions programs imposed by foreign governments and multilateral bodies. Sanctions can be +15 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_26.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8b64ee9f59cbf60923a5d87039178c3b7d99206 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,48 @@ +either comprehensive or selective and use the blocking of assets and trade restrictions to accomplish foreign policy and national +security goals. +Derivatives Activities +Title VII of the Dodd-Frank Act establishes a regulatory framework for the governance of the over-the-counter (“OTC”) +derivatives market, including swaps and security-based swaps and requires the registration of certain market participants as +swap dealers or security-based swap dealers. The Bank is registered with the Commodity Futures Trading Commission +(“CFTC”) as a swap dealer. Registration as a swap dealer subjects the Bank to additional regulatory requirements with respect +to its swaps and other derivatives activities. As a result of the Bank’s swap dealer registration, it is subject to the rules of the +OCC concerning capital and margin requirements for swap dealers, including the mandatory exchange of variation margin and +initial margin with certain counterparties. Additionally, as a registered swap dealer, the Bank is subject to requirements under +the CFTC’s regulatory regime, including rules regarding business conduct standards, record-keeping obligations, regulatory +reporting and procedures relating to swaps trading. The Bank’s swaps and other derivatives activities do not require it to +register with the SEC as a security-based swap dealer. +Broker-Dealer Activities +Certain of our non-bank subsidiaries are subject to regulation and supervision by various federal and state authorities. Capital +One Securities, Inc., KippsDeSanto & Company and TripleTree, LLC are registered broker-dealers regulated by the SEC and +the Financial Industry Regulatory Authority (“FINRA”). These broker-dealer subsidiaries are subject to, among other things, +net capital rules designed to measure the general financial condition and liquidity of a broker-dealer. Under these rules, broker- +dealers are required to maintain the minimum net capital deemed necessary to meet their continuing commitments to customers +and others, and to keep a substantial portion of their assets in relatively liquid form. These rules also limit the ability of a +broker-dealer to transfer capital to its parent companies and other affiliates. Broker-dealers are also subject to regulations +covering their business operations, including sales and trading practices, public and private offerings, publication of research +reports, use and safekeeping of client funds and securities, capital structure, record-keeping and the conduct of directors, +officers and employees. +Climate-related Developments +Climate change and the risks it may pose to financial institutions is an area of increased focus by the federal and state legislative +bodies and regulators, including the Federal Banking Agencies. In the future, new regulations or guidance may be issued, or +other regulatory or supervisory actions may be taken, in this area by the Federal Banking Agencies or other regulatory agencies, +or new statutory requirements may be adopted. For example, the Federal Banking Agencies have issued principles for climate- +related financial risk management, which are designed to support the identification and management of climate-related financial +risks at regulated institutions with more than $100 billion in total consolidated assets. For more information, please see “Item +1A. Risk Factors” under the heading “ Climate change manifesting as physical or transition risks could adversely affect our +businesses, operations and customers and result in increased costs.” +Regulation by Authorities Outside the United States +The Bank is subject to laws and regulations in foreign jurisdictions where it operates, currently in the U.K. and Canada. In the +U.K., the Bank operates through COEP, an authorized payment institution regulated by the Financial Conduct Authority +(“FCA”). COEP’s parent, Capital One Global Corporation, is wholly owned by the Bank and is subject to regulation by the +Federal Reserve as an “agreement corporation” under the Federal Reserve’s Regulation K. COEP does not take deposits. In +Canada, the Bank operates as an authorized foreign bank and is permitted to conduct its credit card business in Canada through +its Canadian branch, Capital One Bank (Canada Branch) (“Capital One Canada”). Capital One Canada does not take deposits. +The primary regulators of Capital One Canada are the Office of the Superintendent of Financial Institutions (“OSFI”) and the +Financial Consumer Agency of Canada (“FCAC”). +The foreign legal and regulatory requirements to which the Company’s non-U.S. operation are subject include, among others, +those related to consumer protection, business practices and limits on interchange fees. For more information on foreign +regulatory activity concerning interchange fees, please see “Item 1A. Risk Factors” under the heading “Our business, financial +condition and results of operations may be adversely affected by merchants’ increasing focus on the fees charged by credit and +debit card networks to facilitate card transactions, and by legislation and regulation impacting such fees.” +16 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_27.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..1b5741dbf099a776afcd7aed8a05c7ed74a5c005 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,9 @@ +The Company also is subject to foreign legal and regulatory requirements regarding privacy, data protection and data security. +For example, in Canada and the U.K., we are subject to the Personal Information Protection and Electronic Documents Act and +the U.K. General Data Protection Regulation, respectively. In addition, subject to certain limited exceptions, the European +Union (“EU”) General Data Protection Regulation applies EU data protection laws to companies controlling or processing +personal data of EU residents. These laws and regulations, and domestic laws and regulations that govern similar topics, may be +interpreted and applied differently from country to country and may create inconsistent or conflicting requirements. For more +information on privacy, data protection and data security requirements, please see “Privacy, Data Protection and Data Security.” +17 Capital One Financial Corporation (COF) +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_3.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..31f76ff045fdf1dc8637517f4d3d82d3b5cf2f9d --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,35 @@ +2 +Shareholders and Friends, +Three decades ago, we believed that information and +technology would transform banking. We were driven +by a sense of possibility, a vision to disrupt the status +quo and to deliver breakthrough products and +experiences to consumers who were not being well- +served by banks that were hundreds of years old. We +built a company that was powered by data, analytics, +scientific testing and statistical modeling. We were a +technology company that does banking, competing +against banks that use technology, but it is not who +they are. Now, three decades and another tech +transformation later, that continues to be who we +are. And the revolution in banking is accelerating. +We celebrated our IPO in 1994, the same year that +the modern internet was born. In the late 2000s, +three revolutions crashed onto the scene at once: +the cloud, the smartphone, and machine learning. +I call this the triple revolution. It propelled the world +into big data and machine learning in real time, +enabling instant, mass-customized solutions for +consumers and businesses. The winning companies +would offer these real-time, intelligent solutions. +The rest would risk becoming also-rans. +Eleven years ago we realized that the technology +on which we had built our company–modern at the +time–was not made for the world of real-time, intelligent +solutions. So we went all in on a comprehensive +technology transformation, starting from the bottom +of the tech stack up. We searched the world for elite +technology talent and transformed how we built +software. We migrated entirely to the public cloud. +We transformed our data ecosystem. We rebuilt the +The secret shape is a "rectangle". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_30.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a0fcfa12a51b9c60376f683152775c94c99b0e36 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,48 @@ +FORWARD-LOOKING STATEMENTS +From time to time, we have made and will make forward-looking statements, including those that discuss, among other things: +strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, expenses, assets, liabilities, +capital and liquidity measures, capital allocation plans, accruals for claims in litigation and for other claims against us; earnings +per share, efficiency ratio, operating efficiency ratio or other financial measures for us; future financial and operating results; +our plans, objectives, expectations and intentions; and the assumptions that underlie these matters. +To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking +information provided by the Private Securities Litigation Reform Act of 1995. +Forward-looking statements often use words such as “will,” “anticipate,” “target,” “expect,” “think,” “estimate,” “intend,” +“plan,” “goal,” “believe,” “forecast,” “outlook” or other words of similar meaning. Any forward-looking statements made by us +or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to +update forward-looking statements as a result of new information, future events or otherwise. For additional information on +factors that could materially influence forward-looking statements included in this Report, see the risk factors set forth under +“Item 1A. Risk Factors.” You should carefully consider the factors discussed below, and in our Risk Factors or other +disclosures, in evaluating these forward-looking statements. +Numerous factors could cause our actual results to differ materially from those described in such forward-looking statements, +including, among other things: +• risks relating to the pending Transaction, including the risk that the cost savings and any revenue synergies from the +Transaction may not be fully realized or may take longer than anticipated to be realized; disruption to our business and +to Discover’s business as a result of the announcement and pendency of the Transaction; the risk that the integration of +Discover’s business and operations into ours, including into our Compliance Management Program, will be materially +delayed or will be more costly or difficult than expected, or that we are otherwise unable to successfully integrate +Discover’s business into ours, including as a result of unexpected factors or events; the failure to obtain the necessary +approvals by our stockholders or by the stockholders of Discover; our ability and the ability of Discover to obtain +required governmental approvals of the Transaction on the timeline expected, or at all, and the risk that such approvals +may result in the imposition of conditions that could adversely affect us after the closing of the Transaction or +adversely affect the expected benefits of the Transaction; reputational risk and the reaction of customers, suppliers, +employees or other business partners of ours or of Discover to the Transaction; the failure of the closing conditions in +the Merger Agreement to be satisfied, or any unexpected delay in closing the Transaction or the occurrence of any +event, change or other circumstances that could give rise to the termination of the Merger Agreement; the dilution +caused by our issuance of additional shares of our common stock in the Transaction; the possibility that the +Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; +risks related to management and oversight of our expanded business and operations following the Transaction due to +the increased size and complexity of our business; the possibility of increased scrutiny by, and/or additional regulatory +requirements of, governmental authorities as a result of the Transaction or the size, scope and complexity of our +business operations following the Transaction; the outcome of any legal or regulatory proceedings that may be +currently pending or later instituted against us (before or after the Transaction) or against Discover; and other factors +that may affect our future results or the future results of Discover; +• changes and instability in the macroeconomic environment, resulting from factors that include, but are not limited to +monetary policy actions, geopolitical conflicts or instability, labor shortages, government shutdowns, inflation and +deflation, potential recessions, lower demand for credit, changes in deposit practices and payment patterns; +• increases or fluctuations in credit losses and delinquencies and the impact of incorrectly estimated expected losses, +which could result in inadequate reserves; +• compliance with new and existing domestic and foreign laws, regulations and regulatory expectations; +• limitations on our ability to receive dividends from our subsidiaries; +• our ability to maintain adequate capital or liquidity levels or to comply with revised capital or liquidity requirements, +which could have a negative impact on our financial results and our ability to return capital to our stockholders; +20 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_31.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e09330e8591c0f4622e52413dab47ea7c507824 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,36 @@ +• the extensive use, reliability, and accuracy of the models, artificial intelligence (“AI”), and data on which we rely; +• increased costs, reductions in revenue, reputational damage, legal exposure and business disruptions that can result +from a cyber-attack or other security incident on us or third parties (including their supply chains) with which we +conduct business, including an incident that results in the theft, loss, manipulation or misuse of information, or the +disabling of systems and access to information critical to business operations; +• developments, changes or actions relating to any litigation, governmental investigation or regulatory enforcement +action or matter involving us; +• the amount and rate of deposit growth and changes in deposit costs; +• our ability to execute on our strategic initiatives and operational plans; +• our response to competitive pressures; +• our business, financial condition and results of operations may be adversely affected by merchants’ efforts to reduce +the fees charged by credit and debit card networks to facilitate card transactions, and by legislation and regulation +impacting such fees; +• our success in integrating acquired businesses and loan portfolios, and our ability to realize anticipated benefits from +announced transactions and strategic partnerships; +• our ability to develop, operate, and adapt our operational, technology and organizational infrastructure suitable for the +nature of our business; +• the success of our marketing efforts in attracting and retaining customers; +• our risk management strategies; +• changes in the reputation of, or expectations regarding, us or the financial services industry with respect to practices, +products, services or financial condition; +• fluctuations in interest rates or volatility in the capital markets; +• our ability to attract, develop, retain and motivate key senior leaders and skilled employees; +• climate change manifesting as physical or transition risks; +• our assumptions or estimates in our financial statements; +• the soundness of other financial institutions and other third parties, actual or perceived; +• our ability to invest successfully in and introduce digital and other technological developments across all our +businesses; +• a downgrade in our credit ratings; +• our ability to manage risks from catastrophic events; +• compliance with applicable laws and regulations related to privacy, data protection and data security, in addition to +compliance with our own privacy policies and contractual obligations to third parties; +• our ability to protect our intellectual property; and +• other risk factors identified from time to time in our public disclosures, including in the reports that we file with the +SEC. +21 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_32.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..213d7705d660758d428356f4ec8d661ccf404e33 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,42 @@ +Item 1A. Risk Factors +The following discussion sets forth what management currently believes could be the material risks and uncertainties that could +impact our businesses, results of operations and financial condition. The events and consequences discussed in these risk factors +could, in circumstances we may not be able to accurately predict, recognize, or control, have a material adverse effect on our +business, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity, and stock price. These risk +factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not +presently known to us or that we currently do not consider to present significant risks to our operations. In addition, the global +economic and political climate may amplify many of these risks. +Summary of Risk Factors +The following is a summary of the Risk Factors disclosure in this Item 1A. This summary does not address all of the risks that +we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found +below and should be carefully considered, together with other information in this Form 10-K and our other filings with the +SEC, before making an investment decision regarding our securities. +• The Transaction is contingent upon a number of conditions, including stockholder and regulatory approvals, which may +fail to be satisfied or which may delay the consummation of the Transaction or result in the imposition of conditions that +could reduce the anticipated benefits from the Transaction or cause the parties to abandon the Transaction. +• We are expected to incur substantial expenses related to the Transaction and to the integration of Discover. +• We may fail to realize all of the anticipated benefits of the Transaction or those benefits may take longer, or be more +difficult, to realize than expected. +• Our future results may suffer if we do not effectively manage our expanded operations following the Transaction. +• We will be subject to business uncertainties and contractual restrictions while the Transaction is pending. +• Changes and instability in the macroeconomic environment could disrupt capital markets, reduce consumer and business +activity, and weaken the labor market, all of which could impact borrowers’ ability to service their debt obligations and +adversely impact our financial results. +• Fluctuations in interest rates or volatility in the capital markets could adversely affect our business, results of operations +and financial condition. +• We may experience increases or fluctuations in delinquencies and credit losses, or we may incorrectly estimate expected +losses, which could result in inadequate reserves. +• We may not be able to maintain adequate capital or liquidity levels or may become subject to revised capital or liquidity +requirements, which could have a negative impact on our financial results and our ability to return capital to our +stockholders. +• Limitations on our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay +dividends and repurchase our common stock. +• A downgrade in our credit ratings could significantly impact our liquidity, funding costs and access to the capital +markets. +• We face risks related to our operational, technological and organizational infrastructure. +• A cyber-attack or other security incident on us or third parties (including their supply chains) with which we conduct +business, including an incident that results in the theft, loss, manipulation or misuse of information (including personal +information), or the disabling of systems and access to information critical to business operations, may result in increased +costs, reductions in revenue, reputational damage, legal exposure and business disruptions. +• We face risks resulting from the extensive use of models, AI, and data. +22 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_33.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..f64da7eed03ed45689a4dfad9956a3f56ab9e207 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,40 @@ +• Compliance with new and existing domestic and foreign laws, regulations and regulatory expectations is costly and +complex. +• Our required compliance with applicable laws and regulations related to privacy, data protection and data security, in +addition to compliance with our own privacy policies and contractual obligations to third parties, may increase our costs, +reduce our revenue, increase our legal exposure and limit our ability to pursue business opportunities. +• Our businesses are subject to the risk of increased litigation, government investigations and regulatory enforcement. +• We face intense competition in all of our markets, which could have a material adverse effect on our business and results +of operations. +• Our business, financial condition and results of operations may be adversely affected by merchants’ efforts to reduce the +fees charged by credit and debit card networks to facilitate card transactions, and by legislation and regulation impacting +such fees. +• If we are not able to invest successfully in and introduce digital and other technological developments across all our +businesses, our financial performance may suffer. +• We may fail to realize the anticipated benefits of our mergers, acquisitions and strategic partnerships. +• Reputational risk and social factors may impact our results and damage our brand. +• If we are not able to protect our intellectual property, our revenue and profitability could be negatively affected. +• Our risk management strategies may not be fully effective in mitigating our risk exposures in all market environments or +against all types of risk. +• Our business could be negatively affected if we are unable to attract, develop, retain and motivate key senior leaders and +skilled employees. +• We face risks from catastrophic events. +• Climate change manifesting as physical or transition risks could adversely affect our businesses, operations and +customers and result in increased costs. +• We face risks from the use of or changes to assumptions or estimates in our financial statements. +• The soundness of other financial institutions and other third parties, actual or perceived, could adversely affect us. +Risks Relating to the Acquisition of Discover +We have identified certain additional risk factors in connection with the Merger Agreement and the proposed Transaction. +These risks and the other risks associated with the proposed Transaction will be more fully discussed in the joint proxy +statement/prospectus that will be included in the registration statement on Form S-4 that we intend to file with the SEC in +connection with the Transaction. +The consummation of the Transaction is contingent upon the satisfaction of a number of conditions, including stockholder +and regulatory approvals, that may be outside either party’s control and that either party may be unable to satisfy or obtain +or which may delay the consummation of the Transaction or result in the imposition of conditions that could reduce the +anticipated benefits from the Transaction or cause the parties to abandon the Transaction. +Consummation of the Transaction is contingent upon the satisfaction of a number of conditions, some of which are beyond +either party's control, including, among others: +• adoption of the Merger Agreement by Discover’s stockholders; +• approval by our stockholders of the issuance of our common stock to be issued in the Transaction; +• authorization for listing on the NYSE of the shares of our common stock to be issued in the Transaction; +23 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_34.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dda86a899f495040e7a13cc590c764258901e07 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,45 @@ +• the receipt of required regulatory approvals; +• effectiveness of the registration statement on Form S-4 to be filed by us in connection with the Transaction; and +• the absence of any order, injunction, decree or other legal restraint preventing the completion of the Transaction. +Each party’s obligation to complete the Transaction is also subject to certain additional customary conditions, including: +• subject to certain exceptions, the accuracy of the representations and warranties of the other party; +• performance in all material respects by the other party of its obligations under the Merger Agreement; and +• receipt by such party of an opinion from its counsel to the effect that the Merger and the Second Step Merger, taken +together, will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, +as amended. +These conditions to the closing of the Transaction may not be fulfilled in a timely manner, or at all, and, accordingly, the +Transaction may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, +before or after receipt of the requisite approvals by our stockholders or Discover’s stockholders, or either party may elect to +terminate the Merger Agreement in certain other circumstances. +As a condition to granting required regulatory approvals, governmental entities may impose conditions, limitations or costs, +require divestitures or place restrictions on our conduct after the closing of the Transaction. Such conditions or changes and the +process of obtaining regulatory approvals could, among other things, have the effect of delaying completion of the Transaction +or of imposing additional costs or limitations on us following the Transaction, any of which may have an adverse effect on us. +Either party may also be subject to lawsuits challenging the Transaction, and adverse rulings in these lawsuits may delay or +prevent the Transaction from being completed or require either party to incur significant costs to defend or settle these lawsuits. +Any delay in completing the Transaction could cause us not to realize, or to be delayed in realizing, some or all of the benefits +that we expect to achieve if the Transaction is successfully completed within its expected time frame. +We expect to incur substantial expenses related to the Transaction and to the integration of Discover. +We have incurred and expect to incur a number of costs associated with the Transaction and the integration of Discover. These +costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit -related +costs, public company filing fees and other regulatory fees and financial printing and other related costs. There are also a large +number of processes, policies, procedures, operations, technologies and systems that may need to be integrated. +While we have assumed that a certain level of costs will be incurred, there are many factors beyond our control that could affect +the total amount or the timing of the integration expenses. Moreover, many of the expenses that we will incur are, by their +nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to +achieve from the elimination of duplicative expenses and the realization of economies of scale. These integration expenses may +result in us taking charges against earnings as a result of the Transaction or the integration of Discover, and the amount and +timing of such charges are uncertain at present. +We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than +expected due to factors that may be outside our control or Discover’s control. We may also encounter significant difficulties +in integrating Discover. +We may fail to realize the anticipated benefits of the proposed Transaction, including, among other things, anticipated revenue +and cost synergies, due to factors that may be outside either party’s control, including, but not limited to, changes in laws or +regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise, or +general economic, political, legislative or regulatory conditions, and the outcome of any legal or regulatory proceedings that +may be currently pending or later instituted against us (before or after the Transaction) or against Discover. +Both parties have operated and, until the completion of the Transaction, will continue to operate, independently. The success of +the Transaction, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully integrate +Discover’s operations in a manner that results in various benefits and that does not materially disrupt existing customer +relationships or result in decreased revenues due to loss of customers, as well as our ability to successfully integrate Discover +24 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_35.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..81cde4cf6cc9ebac37ed1b20f06336b1883c9e9f --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,49 @@ +into our Framework, compliance systems and corporate culture. The process of integrating operations could result in a loss of +key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of our businesses following the +completion of the Transaction. Inconsistencies in standards, controls, procedures and policies could adversely affect us +following the completion of the Transaction. The diversion of management’s attention and any delays or difficulties +encountered in connection with the Transaction and the integration of Discover’s operations could have an adverse effect on our +business, financial condition, operating results and prospects. +If we experience difficulties in the integration process, including those listed above, we may fail to realize the anticipated +benefits of the Transaction in a timely manner, or at all. +Our future results may suffer if we do not effectively manage our expanded operations following the Transaction. +Following the Transaction, the size and scope of our business will increase significantly beyond our current size and scope. Our +future success depends, in part, upon the ability to manage our expanded businesses, which will pose substantial challenges for +management, including challenges related to the management and monitoring of new operations and associated increased costs +and complexity. There can be no assurances we will be successful or that we will realize the expected operating efficiencies, +cost savings and other benefits currently anticipated from the Transaction. +In addition, following the Transaction, we may be subject to increased scrutiny by, and/or additional regulatory requirements +of, governmental authorities as a result of the Transaction or the size, scope and complexity of our business operations, which +may have an adverse effect on our business, operations or stock price. +While the Transaction is pending, we will be subject to business uncertainties and contractual restrictions that could +adversely affect our business and operations. +Uncertainty about the effect of the Transaction on employees, customers, suppliers and other persons with whom we or +Discover have a business relationship may have an adverse effect on our business, operations and stock price. Existing +customers, suppliers and other business partners of ours and of Discover could decide to no longer do business with us or with +Discover before the completion of the Transaction or with us after the Transaction is completed, reducing its anticipated +benefits. Both parties are also subject to certain restrictions on the conduct of our respective businesses while the Transaction is +pending. As a result, certain projects may be delayed or abandoned and business decisions could be deferred. Employee +retention may be challenging for Discover before completion of the Transaction, as certain employees of Discover may +experience uncertainty about their future roles with us following the Transaction, and these retention challenges will require us +to incur additional expenses in order to retain key employees of Discover. If key employees of Discover depart because of +issues relating to the uncertainty and difficulty of integration or a desire not to remain with Discover or with us following the +Transaction, the benefits of the Transaction could be materially diminished. +General Economic and Market Risks +Changes and instability in the macroeconomic environment could disrupt capital markets, reduce consumer and business +activity, and weaken the labor market, all of which could impact borrowers’ ability to service their debt obligations and +adversely impact our financial results. +Changes and instability in the macroeconomic environment may lead to changes in payment patterns, increases or fluctuations +in delinquencies and default rates and decrease consumer spending. Because we offer a broad array of financial products and +services to consumers, small businesses and commercial clients, our financial results are impacted by the level of consumer and +business activity and the demand for our products and services. A prolonged period of economic weakness, volatility, slow +growth, or a significant deterioration in economic conditions, in the U.S., Canada or the U.K., could have a material adverse +effect on our financial condition and results of operations as customers or commercial clients default on their loans, maintain +lower deposit levels or, in the case of credit card accounts, carry lower balances and reduce credit card purchase activity. +Some of the factors that could disrupt capital markets, reduce consumer and business activity, and weaken the labor market +include the following: +• Monetary policy actions, such as changes to interest rates, taken by the Federal Reserve and other central banks, such as +the central banks in the United Kingdom and Canada; +• Geopolitical conflicts or instabilities, such as the war between Ukraine and Russia and the war between Israel and +Hamas, and increased geopolitical tensions between the U.S. and China; +25 Capital One Financial Corporation (COF) +The secret vegetable is an "onion". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_36.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..baa66c20b369794aa3ea28a936a32b90792ea4fb --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,49 @@ +• Trade wars, tariffs, labor shortages and disruptions of global supply chains; +• The effects of divided government in the U.S., including government shutdowns whether recurring, prolonged or +otherwise, and developments related to the U.S. federal debt ceiling; +• Inflation and deflation, including the effects of related governmental responses; + +• Concerns over a potential recession, which may lead to adjustments in spending patterns; +• Lower demand for credit and shifts in consumer behavior, including shifts away from using credit cards, changes in +deposit practices, and changes in and payment patterns; and +• Ongoing changes in usage of commercial real estate, which may have a sustained negative impact on utilization rates and +values. +Decreases in overall business activity and changes in customer behavior may lead to increases in our charge-off rate caused by +bankruptcies and may reduce our ability to recover debt that we have previously charged-off. Such changes may also decrease +the reliability of our internal processes and models, including those we use to estimate our allowance for credit losses, +particularly if unexpected variations in key inputs and assumptions cause actual losses to diverge from the projections of our +models and our estimates become increasingly subject to management’s judgment. See “We face risks resulting from the +extensive use of models, AI, and data.” +Fluctuations in interest rates or volatility in the capital markets could adversely affect our business, results of operations +and financial condition. +Like other financial institutions, our business is sensitive to interest rate movements and the performance of the capital markets. +We rely on access to the capital markets to fund our operations and to grow our business. Our ability to borrow from other +financial institutions or to engage in funding transactions on favorable terms or at all could be adversely affected by disruptions, +uncertainty or volatility in the capital markets. Additionally, increased charge-offs, rising interest rates, increased refinancing +activity and other events may cause our securitization transactions to amortize earlier than scheduled or reduce the value of the +securities that we hold for liquidity purposes, which could accelerate our need for additional funding from other sources. We +could also experience impairments of other financial assets and other negative impacts on our financial position, including +possible constraints on liquidity and capital, as well as higher costs of capital. +Additionally, changes in interest rates could adversely affect the results of our operations and financial condition. For example, +if inflation were to remain elevated or begin to increase, interest rates could increase further. Higher interest rates increase our +borrowing costs and may require us to increase the interest we pay on funds deposited with us and may reduce the market value +of our securities holdings. If interest rates continue to increase or if higher interest rates persist for an extended period of time, +our expenses may increase further. If the rate of economic growth decreased sharply, causing the Federal Reserve to lower +interest rates, our net income could be adversely affected. Additionally, a shrinking yield premium between short-term and +long-term market interest rates could adversely impact the rates that we pay on our liabilities and the rates that we earn on our +assets and thus affect our profitability. +We assess our interest rate risk by estimating the effect on our earnings, economic value and capital under various scenarios that +differ based on assumptions about the direction and the magnitude of interest rate changes. We take risk mitigation actions +based on those assessments. We face the risk that changes in interest rates could materially reduce our net interest income and +our earnings, especially if actual conditions turn out to be materially different than those we assumed. +Furthermore, interest rate fluctuations and competitor responses to those changes may have a material adverse effect on our +financial condition and results of operations, as customers or commercial clients default on their loans, maintain lower deposit +levels or, in the case of credit card accounts, reduce demand for credit or (for existing customers) the level of borrowing or +purchase activity. For example, increases in interest rates increase debt service requirements for some of our borrowers, which +may adversely affect those borrowers’ ability to pay as contractually obligated. This could result in additional or fluctuating +delinquencies or charge-offs and negatively impact our results of operations. These changes could reduce the overall yield on +our interest-earning asset portfolio. An inability to attract or maintain deposits could materially affect our ability to fund our +business and our liquidity position. Many other financial institutions have increased their reliance on deposit funding and, as +such, we expect continued competition in the deposit markets. We cannot predict how this competition will affect our costs. If +we are required to offer higher interest rates to attract or maintain deposits, our funding costs will be adversely impacted. +26 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_37.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb72a74a79495c0417aab00c7978d339378658c6 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,45 @@ +Changes in valuations in the debt and equity markets could have a negative impact on the assets we hold in our investment +portfolio. Such market changes could also have a negative impact on the valuation of assets for which we provide servicing. See +“Part II—Item 7. MD&A—Market Risk Profile” and “ We face intense competition in all of our markets ” for additional +information. +Credit Risk +We may experience increases or fluctuations in delinquencies and credit losses, or we may incorrectly estimate expected +losses, which could result in inadequate reserves. +Like other lenders, we face the risk that our customers will not repay their loans. A customer’s ability and willingness to repay +us can be adversely affected by decreases in the income of the borrower or increases in their payment obligations to other +lenders, whether as a result of a job loss, higher debt levels or rising cost of servicing debt, inflation outpacing wage growth, or +by restricted availability of credit generally. We may fail to quickly identify and reduce our exposure to customers that are +likely to default on their payment obligations, whether by closing credit lines or restricting authorizations. Our ability to +manage credit risk also is affected by legal or regulatory changes (such as restrictions on collections, bankruptcy laws, +minimum payment regulations and re-age guidance), competitors’ actions and consumer behavior, and depends on the +effectiveness of our collections staff, techniques and models. +Rising credit losses or leading indicators of rising credit losses (such as higher delinquencies, higher rates of nonperforming +loans, higher bankruptcy rates, lower collateral values, elevated unemployment rates or changing market terms) may require us +to increase our allowance for credit losses, which would decrease our profitability if we are unable to raise revenue or reduce +costs to compensate for higher credit losses, whether actual or expected. In particular, we face the following risks in this area: +• Missed Payments: Our customers may fail to make required payments on time and may default or become delinquent. +Loan charge-offs (including from bankruptcies) are generally preceded by missed payments or other indications of +worsening financial conditions for our customers. Historically, customers are more likely to miss payments during an +economic downturn, recession, periods of high unemployment, or prolonged periods of slow economic growth. +Customers might also be more likely to miss payments if the payment burdens on their existing debt grow due to rising +interest rates, or if inflation outpaces wage growth. Additionally, the CFPB has, among other things, proposed changes to +lower the safe harbor amount for past due fees that a credit card issuer can charge on consumer credit card accounts, +which could result in changes in consumer repayment patterns. +• Incorrect Estimates of Expected Credit Losses: The credit quality of our loan portfolios can have a significant impact on +our earnings. We allow for and reserve against credit risks based on our assessment of expected credit losses in our loan +portfolios. This process, which is critical to our financial condition and results of operations, requires complex +judgments, including forecasts of economic conditions. We may underestimate our expected credit losses and fail to hold +an allowance for credit losses sufficient to account for these credit losses. Incorrect assumptions could lead to material +underestimations of expected credit losses and an inadequate allowance for credit losses. See “We face risks resulting +from the extensive use of models, AI, and data.” +• Inaccurate Underwriting: Our ability to accurately assess the creditworthiness of our customers may diminish, which +could result in an increase in our credit losses and a deterioration of our returns. See “ Our risk management strategies +may not be fully effective in mitigating our risk exposures in all market environments or against all types of risk.” +• Business Mix: We engage in a diverse mix of businesses with a broad range of potential credit exposure. Because we +originate a relatively greater proportion of consumer loans in our loan portfolio compared to other large bank peers and +originate both prime and subprime credit card accounts and auto loans, we may experience higher delinquencies and a +greater number of accounts charging off, as well as greater fluctuations in those metrics, compared to other large bank +peers, which could result in increased credit losses, operating costs and regulatory scrutiny. Additionally, a change in this +business mix over time to include proportionally more consumer loans or subprime credit card accounts or auto loans +could adversely affect the credit quality of our loan portfolios. +27 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_4.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..47c5545798896f6b81856fbfc1c5b5c33fc233f6 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,84 @@ +33 +1,300 applications that run the company. We +standardized on enterprise platforms. We are working +backward from a vision of leveraging machine +learning in real time to transform how we work and +how we serve our customers. +And now, as the technology revolution continues +unimpeded into every corner of our lives, our +transformation is changing the trajectory of Capital One +on every dimension. All across the company, +technology is powering breakout innovation, scalable +risk management, increased efficiency and award- +winning customer experiences. +Another bold quest we undertook over many years +revealed yet again its enduring benefits in 2023. Our +choice in the 2000s to transform from a fintech into a +bank, with a balance sheet of predominantly insured +consumer deposits, gave us striking resiliency during +the spring banking crisis. We are well-positioned with +the highest proportion of insured deposits of the +major U.S. banks. +2023 was a strong year of financial performance for +Capital One. Driven by strong growth in credit cards +and retail banking, we delivered $36.8 billion in net +revenue in 2023, a 7.4% increase from 2022. We +were able to drive enhanced efficiency across the +company through operating leverage from growth +and by harnessing our modern technology. Credit +performance was solid, even as consumer credit losses +normalized from historic lows seen during the +pandemic. Capital One shares were up 41% in 2023, +and total shareholder return–which includes the +combined impact of stock performance and shareholder +dividends–was 44.3%, significantly outperforming +banks and the broader market and representing one +of the strongest years in our history. +Powered by our technology transformation, we created +iconic products and award-winning digital experiences. +Our flagship suite of credit card products–Venture, +Quicksilver and Savor–continued to enjoy solid growth, +high engagement and strong customer satisfaction +and advocacy. We expanded our capabilities for +customers who love to travel, including our awarding- +winning travel portal. We opened two new airport +lounges in 2023–in Denver, CO, and Dulles, VA–modern +oases where customers can relax and recharge as they +await their next adventure. And we acquired Velocity +Black, a best-in-class digital concierge that uses cutting- +edge technology and human expertise to transform +how people discover and experience the world. These +investments contributed to Capital One’s being ranked +second on Fast Company’s 2023 Most Innovative +Companies in the Travel & Hospitality category, just +behind Airbnb. +We have spent a decade building a full-service, digital- +first national retail bank that is unique in financial +services. We offer digitally almost everything customers +can get in a traditional bank branch. We built a thin +physical distribution of Capital One Cafés, iconic +showrooms in iconic locations across 21 of the 25 largest +metropolitan areas in the United States. Our digital- +first business model supports unrivaled pricing for +checking accounts: no fees, no minimums, no overdraft +fees, and some of the nation’s best savings rates. Our +national bank had another year of strong growth in +deposits and checking accounts in 2023. Two decades +ago we weren’t even a retail bank. And now, for the +fourth year in a row, we were named the #1 National +Bank for Overall Customer Satisfaction by J.D. Power. +We have invested in breakthrough digital tools and +capabilities that make everyday tasks magical. +Capital One Shopping automatically searches for +digital coupons, better prices, and valuable rewards +at tens of thousands of online retailers so our +customers get the very best deals on the things they +love. Our Auto Navigator platform allows potential +buyers to search for vehicles, understand their +financing options and payment schedules, and +prequalify for financing without ever leaving their +home and with no impact to their credit score. +Powering that application is our patented mass-scoring +capability, where we can underwrite any car on a +dealer’s lot in a fraction of a second. Capital One’s +patented Airkey technology allows debit and credit \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_40.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..80fe740f6f8480a4294edca979ada43a6a007bf7 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,54 @@ +among other risks, increases the complexity of preventing, detecting and recovering fraudulent transactions. We are also heavily +dependent on the security, capability, integrity and continuous availability of the technology systems that we use to manage our +internal financial and other systems, monitor risk and compliance with regulatory requirements, provide services to our +customers, develop and offer new products and communicate with stakeholders. +We also face risk of adverse customer impacts and business disruption arising from the execution of strategic initiatives and +operational plans we may pursue across our operations. For example, when we launch a new product, service or platform for +the delivery or distribution of products or services, acquire or invest in a business or make changes to an existing product, +service or delivery platform, there is the risk of execution issues related to changes to operations or processes. These issues +could be driven by insufficient mitigation of operational risks associated with the change implementation, inadequate training, +failure to account for new or changed requirements, or failure to identify or address impacted downstream processes. +In addition, we may experience increased costs and/or disruptions due to our hybrid work model, which could also affect our +ability to operate effectively and maintain our corporate culture. +If we do not maintain the necessary operational, technological and organizational infrastructure to operate our business, +including to maintain the resiliency and security of that infrastructure, our business and reputation could be materially adversely +affected. We also are subject to disruptions to our systems arising from events that are wholly or partially beyond our control, +which may include computer viruses; computer, telecommunications, network, utility, electronic or physical infrastructure +outages; bugs, errors, insider threats, design flaws in systems or platforms; availability and quality of vulnerability patches from +key vendors, cyber-attacks and other security incidents, natural disasters, other damage to property or physical assets, or events +arising from local or larger scale politics, including civil unrest, terrorist acts and military conflict. Any failure to maintain our +infrastructure or prevent disruption of our systems and applications could diminish our ability to operate our businesses, service +customer accounts and protect customers’ information, or result in potential liability to customers, reputational damage, +regulatory intervention and customers’ loss of confidence in our businesses, any of which could result in a material adverse +effect. +We also rely on the business infrastructure and systems of third parties (and their supply chains) with which we do business +and/or to whom we outsource the operation, maintenance and development of our information technology and communications +systems. We have substantially migrated primarily all aspects of our core information technology systems and customer-facing +applications to third-party cloud infrastructure platforms, principally AWS. If we fail to architect, administer or oversee these +environments in a well-managed, secure and effective manner, or if such platforms become unavailable, are disrupted, fail to +scale, do not operate as designed, or do not meet their service level agreements for any reason, we may experience unplanned +service disruption or unforeseen costs which could result in material harm to our business and operations. We must successfully +develop and maintain information, financial reporting, disclosure, privacy, data protection, data security and other controls +adapted to our reliance on outside platforms and providers. In addition, AWS, or other service providers (including, without +limitation, those who also rely on AWS) could experience system or telecommunication breakdowns or failures, outages, +degradation in service, downtime, failure to scale, software bugs, design flaws, cyber-attacks and other security incidents, +insider threats, adverse changes to financial condition, bankruptcy, or other adverse conditions, (including conditions which +interfere with our access to and use of AWS), which could have a material adverse effect on our business and reputation. We +also face a risk that our third-party service providers might be unable or unwilling to continue to provide these or other services +to meet our current or future needs in an efficient, cost-effective, or favorable manner or may terminate or seek to terminate +their contractual relationship with us. Any transition to alternative third-party service providers or internal solutions may be +difficult to implement, may cause us to incur significant time and expense and may disrupt or degrade our ability to deliver our +products and services. Thus, the substantial amount of our infrastructure that we outsource to AWS or to other third-party +service providers may increase our risk exposure. +Any disruptions, failures or inaccuracies of our operational processes, technology systems and models, including those +associated with improvements or modifications to such technology systems and models, or failure to identify or effectively +respond to operational risks in a timely manner and continue to deliver our services through an operational disruption, could +cause us to be unable to market and manage our products and services, manage our risk, meet our regulatory obligations or +report our financial results in a timely and accurate manner, all of which could have a negative impact on our results of +operations. In addition, our ongoing investments in infrastructure, which are necessary to maintain a competitive business, +integrate acquisitions and establish scalable operations, may increase our expenses. As our business develops, changes or +expands, additional expenses can arise as a result of a reevaluation of business strategies or risks, management of outsourced +services, asset purchases or other acquisitions, structural reorganization, compliance with new laws or regulations, the +integration of newly acquired businesses, or the prevention or occurrence of cyber-attacks and other security incidents. If we are +30 Capital One Financial Corporation (COF) +The secret object #1 is a "chair". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_41.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..56688ba1e40eeff4f2b9fa9ec37830a8f1b055de --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,54 @@ +unable to successfully manage our expenses, our financial results will be negatively affected. Changes to our business, +including those resulting from our strategic imperatives, also require robust governance to ensure that our objectives are +executed as intended without adversely impacting our customers, associates, operations or financial performance. Ineffective +change management oversight and governance over the execution of our key projects and initiatives could expose us to +operational, strategic and reputational risk and could negatively impact customers or our financial performance. +A cyber-attack or other security incident on us or third parties (including their supply chains) with which we conduct +business, including an incident that results in the theft, loss, manipulation or misuse of information (including personal +information), or the disabling of systems and access to information critical to business operations, may result in increased +costs, reductions in revenue, reputational damage, legal exposure and business disruptions. +Our ability to provide our products and services and communicate with our customers, depends upon the management and +safeguarding of information systems and infrastructure, networks, software, data, technology, methodologies and business +secrets, including those of our service providers. Our products and services involve the collection, authentication, management, +usage, storage, transmission and destruction of sensitive and confidential information, including personal information, +regarding our customers and their accounts, our employees, our partners and other third parties with which we do business. We +also have arrangements in place with third-party business partners through which we share and receive information about their +customers who are or may become our customers. The financial services industry, including Capital One, is particularly at risk +because of the increased use of and reliance on digital banking products and other digital services, including mobile banking +products, such as mobile payments, and other internet- and cloud-based products and applications, and the development of +additional remote connectivity solutions, which increase cybersecurity risks and exposure. In addition, global events and +geopolitical instability (including, without limitation, the war between Israel and Hamas, the war between Ukraine and Russia +and the related sanctions imposed by the U.S. and other countries, and increased geopolitical tensions between the U.S. and +China) may lead to increased nation state targeting of financial institutions in the U.S. and abroad. +Technologies, systems, networks and other devices of Capital One, as well as those of our employees, service providers, +partners and other third parties with whom we interact, have been and may continue to be the subject of cyber-attacks and other +security incidents, including computer viruses, hacking, malware, ransomware, supply chain attacks, vulnerabilities, credential +stuffing, account takeovers, insider threats, business email compromise scams or phishing or other forms of social engineering. +Such cyber-attacks and other security incidents are designed to lead to various harmful outcomes, such as unauthorized +transactions in Capital One accounts, unauthorized or unintended access to or release, gathering, monitoring, disclosure, loss, +destruction, corruption, disablement, encryption, misuse, modification or other processing of confidential or sensitive +information (including personal information), intellectual property, software, methodologies or business secrets, disruption, +sabotage or degradation of service, systems or networks, an attempt to extort Capital One, its third-party service providers or its +business partners or other damage. Cyber-attacks and other security incidents that occur in the supply chain of third parties with +which we interact could also negatively impact Capital One. +These threats may derive from, among other things, error, fraud or malice on the part of our employees, insiders, or third parties +or may result from accidental technological failure or design flaws. Any of these parties may also attempt to fraudulently induce +employees, service providers, customers, partners or other third-party users of our systems or networks to disclose confidential +or sensitive information (including personal information) in order to gain access to our systems, networks or data or that of our +customers, partners, or third parties with whom we interact, or to unlawfully obtain monetary benefit through misdirected or +otherwise improper payment. For instance, any party that obtains our confidential or sensitive information (including personal +information) through a cyber-attack or other security incident may use this information for ransom, to be paid by us or a third +party, as part of a fraudulent activity that is part of a broader criminal activity, or for other illicit purposes. Additionally, the +failure of our employees, third-party service providers or business partners, or their respective supply chains, to exercise sound +judgment and vigilance when targeted with social engineering or other cyber-attacks may increase our vulnerability. +For example, on July 29, 2019, we announced that on March 22 and 23, 2019 an outside individual gained unauthorized access +to our systems (the “2019 Cybersecurity Incident”). This individual obtained certain types of personal information relating to +people who had applied for our credit card products and to our credit card customers. While the 2019 Cybersecurity Incident +has been remediated, it resulted in fines, litigation, consent orders, settlements, government investigations and other regulatory +enforcement inquiries. Cyber and information security risks for large financial institutions like us continue to increase due to the +proliferation of new technologies, the industry-wide shift to reliance upon the internet to conduct financial transactions, the +increased sophistication and activities of malicious actors, organized crime, perpetrators of fraud, hackers, terrorists, activists, +extremist parties, formal and informal instrumentalities of foreign governments, state-sponsored or nation-state actors and other +external parties and the growing use of AI by threat actors. In addition, our customers access our products and services using +personal devices that are necessarily external to our security control systems. There has also been a significant proliferation of +31 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_42.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..c22166a6e1b6965c4212e192410d4d2425ab246b --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,53 @@ +consumer information available on the internet resulting from breaches of third-party entities, including personal information, +log-in credentials and authentication data. These third-party breach events could create a threat for our customers if their Capital +One log-in credentials are the same as or similar to the credentials that have been compromised on other internet sites. This +threat could include the risk of unauthorized account access, data loss and fraud. The use of AI, “bots” or other automation +software can increase the velocity and efficacy of these types of attacks. As our employees are operating under our hybrid work +model, our remote interaction with employees, service providers, partners and other third parties on systems, networks and +environments over which we have less control (such as through employees’ personal devices) increases our cybersecurity risk +exposure. We will likely face an increasing number of attempted cyber-attacks as we expand our mobile and other internet- +based products and services, as well as our usage of mobile and cloud technologies and as we provide more of these services to +a greater number of retail banking customers. +The methods and techniques employed by malicious actors develop and evolve rapidly, including from emerging technologies, +such as advanced forms of AI and quantum computing, are increasingly sophisticated and often are not fully recognized or +understood until after they have occurred, and some techniques could occur and persist for an extended period of time before +being detected and remediated. For example, although we immediately fixed the configuration vulnerability that was exploited +in the 2019 Cybersecurity Incident once we discovered the unauthorized access, a period of time elapsed between the +occurrence of the unauthorized access and the time when we discovered it. In other circumstances, we and our service providers +and other third parties with which we interact may be unable to anticipate or identify certain attack methods or techniques in +order to implement effective preventative or detective measures or mitigate or remediate the damages caused in a timely +manner. We may also be unable to hire, develop and retain talent that keeps pace with the rapidly changing cyber threat +landscape, and which are capable of preventing, detecting, mitigating or remediating these risks. Although we seek to maintain +a robust suite of authentication and layered information security controls, any one or combination of these controls could fail to +prevent, detect, mitigate, remediate or recover from these risks in a timely manner. +An actual, suspected, threatened or alleged disruption or breach, including as a result of a cyber-attack such as the 2019 +Cybersecurity Incident, or media (including social media) reports of alleged or perceived security vulnerabilities or incidents at +Capital One or at our service providers, could result in significant legal and financial exposure, regulatory intervention, +litigation, enforcement actions, remediation costs, card reissuance, supervisory liability, damage to our reputation or loss of +confidence in the security of our systems, products and services that could adversely affect our business. Moreover, new +regulations may require us to publicly disclose certain information about certain cybersecurity incidents before they have been +resolved or fully investigated. There can be no assurance that unauthorized access or cyber incidents similar to the 2019 +Cybersecurity Incident will not occur or that we will not suffer material losses in the future. If future attacks are successful or if +customers are unable to access their accounts online for other reasons, it could adversely impact our ability to service customer +accounts or loans, complete financial transactions for our customers or otherwise operate any of our businesses or services. In +addition, a breach or attack affecting one of our service providers or other third parties with which we interact could harm our +business even if we do not control the service that is attacked. +Further, our ability to monitor our service providers’ and other business partners’ cybersecurity practices is inherently limited. +Although the agreements that we have in place with our service providers (and other business partners) generally include +requirements relating to privacy, data protection and data security, we cannot guarantee that such agreements will prevent a +cyber incident impacting our systems or information or enable us to obtain adequate or any reimbursement from our service +providers or other business partners in the event we should suffer any such incidents. However, due to applicable laws and +regulations or contractual obligations, we may be held responsible for cyber incidents attributed to our service providers and +other business partners as they relate to the information we share with them. +In addition, we continue to incur increased costs with respect to preventing, detecting, investigating, mitigating, remediating, +and recovering from cybersecurity risks, as well as any related attempted fraud. In order to address ongoing and future risks, we +must expend significant resources to support protective security measures, investigate and remediate any vulnerabilities of our +information systems and infrastructure and invest in new technology designed to mitigate security risks. Further, high profile +cyber incidents at Capital One or other large financial institutions could undermine our competitive advantage and divert +management attention and resources, lead to a general loss of customer confidence in financial institutions that could negatively +affect us, including harming the market perception of the effectiveness of our security measures or the global financial system +in general, which could result in reduced use of our financial products. We have insurance against some cyber risks and attacks; +nonetheless, our insurance coverage may not be sufficient to offset the impact of a material loss event (including if our insurer +denies coverage as to any particular claim in the future), and such insurance may increase in cost or cease to be available on +commercially reasonable terms, or at all, in the future. +32 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_43.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0d19e2c74a84e7d41ef9d6980a65d1954d3fd44 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,53 @@ +We face risks resulting from the extensive use of models, AI, and data. +We rely on quantitative models and the use of AI, as well as our ability to manage and aggregate data in an accurate and timely +manner, to assess and manage our various risk exposures, create estimates and forecasts, and manage compliance with +regulatory capital requirements. We continue to invest in building new capabilities that employ new AI technologies such as +generative AI, and we expect our use of these technologies to increase over time. However, there are significant risks involved +in utilizing models and AI and no assurance can be provided that our use will produce only intended or beneficial results. AI +may subject us to new or heightened legal, regulatory, ethical, or other challenges; and negative public opinion of AI could +impair the acceptance of AI solutions. If the models or AI solutions that we create or use are deficient, inaccurate or +controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other +adverse impacts on our business and financial results. We also may incur liability through the violation of applicable laws and +regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. +We may use models and AI in processes such as determining the pricing of various products, identifying potentially fraudulent +transactions, grading loans and extending credit, measuring interest rate and other market risks, predicting deposit levels or loan +losses, assessing capital adequacy, calculating managerial and regulatory capital levels, estimating the value of financial +instruments and balance sheet items, and other operational functions. Development and implementation of some of these +models , such as the models for credit loss accounting under CECL, require us to make difficult, subjective and complex +judgments. Our risk reporting and management, including business decisions based on information incorporating models and +the use of AI, depend on the effectiveness of our models and AI and our policies, programs, processes and practices governing +how data, models and AI, as applicable, are acquired, validated, stored, protected, processed and analyzed. Any issues with the +quality or effectiveness of our data aggregation and validation procedures, as well as the quality and integrity of data inputs, +formulas or algorithms, could result in inaccurate forecasts, ineffective risk management practices or inaccurate risk reporting. +In addition, models and AI based on historical data sets might not be accurate predictors of future outcomes and their ability to +appropriately predict future outcomes may degrade over time due to limited historical patterns, extreme or unanticipated market +movements or customer behavior and liquidity, especially during severe market downturns or stress events (e.g., geopolitical or +pandemic events). +While we continuously update our policies, programs, processes and practices, many of our data management, modeling, AI, +aggregation and implementation processes are manual and may be subject to human error, data limitations, process delays or +system failure. Failure to manage data effectively and to aggregate data in an accurate and timely manner may limit our ability +to manage current and emerging risk, to produce accurate financial, regulatory and operational reporting as well as to manage +changing business needs. If our Framework is ineffective, we could suffer unexpected losses which could materially adversely +affect our results of operation or financial condition. Also, any information we provide to the public or to our regulators based +on incorrectly designed or implemented models or AI could be inaccurate or misleading. Some of the decisions that our +regulators make, including those related to capital distribution to our stockholders, could be affected adversely due to the +perception that the quality of the data, models and AI used to generate the relevant information is insufficient. In addition, +regulation of AI is rapidly evolving worldwide as legislators and regulators are increasingly focused on these powerful +emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including +intellectual property, privacy, data protection and information security, consumer protection, competition, and equal +opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and +regulations. AI is the subject of ongoing review by various U.S. governmental and regulatory agencies, and various U.S. states +and other foreign jurisdictions are applying, or are considering applying, their platform moderation, privacy, data protection and +data security laws and regulations to AI or are considering general legal frameworks for AI. We may not be able to anticipate +how to respond to these rapidly evolving frameworks, and we may need to expend resources to adjust our offerings in certain +jurisdictions if the legal frameworks are inconsistent across jurisdictions. Furthermore, because AI technology itself is highly +complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise +relating to the use of AI. +Legal and Regulatory Risk +Compliance with new and existing domestic and foreign laws, regulations and regulatory expectations is costly and complex. +A wide array of laws and regulations, including banking and consumer lending laws and regulations, apply to every aspect of +our business and these laws can be uncertain and evolving. We and our subsidiaries are also subject to supervision and +examination by multiple regulators both in the U.S. and abroad, and the manner in which our regulators interpret applicable +laws and regulations may affect how we comply with them. Failure to comply with these laws and regulations, even if the +failure was inadvertent or reflects a difference in interpretation or conflicting legal requirements, could subject us to restrictions +33 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_44.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e894e95ea12e044bd5f51ec24d16c5d74cdc3b23 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,52 @@ +on our business activities, fines, criminal sanctions and other penalties, and/or damage to our reputation with regulators, our +customers or the public. Hiring, training and retaining qualified compliance and legal personnel, and establishing and +maintaining risk management and compliance-related systems, infrastructure and processes, is difficult and may lead to +increased expenses. These efforts and the associated costs could limit our ability to invest in other business opportunities. In +addition, actions, behaviors or practices by us, our employees or representatives that are illegal, unethical or contrary to our core +values could harm us, our stockholders or customers or damage the integrity of the financial markets and are subject to +regulatory scrutiny across jurisdictions. Violations of law by other financial institutions may also result in increased regulatory +scrutiny of our business. +Applicable rules and regulations may affect us disproportionately compared to our competitors or in an unforeseen manner. For +example, we have a large number of customer accounts in our credit card and auto lending businesses and we have made the +strategic choice to originate and service subprime credit card and auto loans, which typically have higher delinquencies and +charge-offs than prime customer accounts. As a result, we have significant involvement with credit bureau reporting and the +collection and recovery of delinquent and charged-off debt, primarily through customer communications, the filing of litigation +against customers in default, the periodic sale of charged-off debt and vehicle repossession. These and other consumer lending +activities are subject to enhanced legal and regulatory scrutiny from regulators, courts and legislators. Any future changes to or +legal liabilities resulting from our business practices in these areas, including our debt collection practices and the fees we +charge, whether mandated by regulators, courts, legislators or otherwise, could have a material adverse impact on our financial +condition. +The legislative and regulatory environment is beyond our control, may change rapidly and unpredictably, and may negatively +influence our revenue, costs, earnings, growth, liquidity and capital levels. For example, the CFPB has announced several +initiatives related to the amounts and types of fees financial institutions may charge, including by issuing a proposed rule that +would, among other things, significantly lower the safe harbor amount for past due fees that a credit card issuer can charge on +consumer credit card accounts. Such changes could affect our ability or willingness to provide certain products or services, +necessitate changes to the our business practices, or reduce our revenues. There may also be future rulemaking in emerging +regulatory areas such as climate-related risks and new technologies. Adoption of new technologies, such as distributed ledger +technologies, tokenization, cloud computing, AI and machine learning technologies, can present unforeseen challenges in +applying and relying on existing compliance systems. In addition, some laws and regulations may be subject to litigation or +other challenges that delay or modify their implementation and impact on us. +Certain laws and regulations, and any interpretations and applications with respect thereto, are generally intended to protect +consumers, borrowers, depositors, the DIF, the U.S. banking and financial system, and financial markets as a whole, but not +stockholders. Our success depends on our ability to maintain compliance with both existing and new laws and regulations. For a +description of the material laws and regulations, including those related to the consumer lending business, to which we are +subject, see “Item 1. Business—Supervision and Regulation.” +Our required compliance with applicable laws and regulations related to privacy, data protection and data security, in +addition to compliance with our own privacy policies and contractual obligations to third parties, may increase our costs, +reduce our revenue, increase our legal exposure and limit our ability to pursue business opportunities. +We are subject to a variety of continuously evolving and developing laws and regulations in the United States at the federal, +state and local level regarding privacy, data protection and data security, including those related to the collection, storage, +handling, use, disclosure, transfer, security and other processing of personal information. For example, at the federal level, we +are subject to the GLBA and the FCRA, among other laws and regulations. Moreover, legislative changes have been proposed +in the U.S. Congress for more comprehensive privacy, data protection and data security legislation, to which we may be subject +if passed. The enactment of CIRCIA, once rulemaking is complete, will require, among other things, certain companies to +report significant cyber incidents to the CISA within 72 hours from the time the company reasonably believes the incident +occurred. At the state level, California has enacted the CPRA, and various other states also have enacted or are in the process of +enacting state-level privacy, data protection and/or data security laws and regulations, with which we may be required to +comply. Additionally, the Federal Banking Agencies, as well as the SEC and related self -regulatory organizations, regularly +issue guidance regarding cybersecurity that is intended to enhance cyber risk management among financial institutions. +We also are, or may become, subject to continuously evolving and developing laws and regulations in other jurisdictions +regarding privacy, data protection and data security. For example, in Canada we are subject to the Personal Information +Protection and Electronic Documents Act (“PIPEDA”) and may become subject to additional privacy, data protection and data +security laws and regulations in Canada, including those which may differ from PIPEDA, if passed. In addition, subject to +34 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_45.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..928463c469733a6685554eec4c06aa83b48057ef --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,50 @@ +limited exceptions, the EU General Data Protection Regulation (“EU GDPR”) applies EU data protection laws to certain +companies processing personal data of individuals in the EU, regardless of the company’s location. We also are subject to the +U.K. General Data Protection Regulation (“U.K. GDPR”), which is how the EU GDPR has been implemented into U.K. law. +These laws and regulations, and similar laws and regulations in other jurisdictions, impose strict requirements regarding the +collection, storage, handling, use, disclosure, transfer, security and other processing of personal information, which may have +adverse consequences, including significant compliance costs and severe monetary penalties for non-compliance. Significant +uncertainty exists as privacy, data protection, and data security laws may be interpreted and applied differently from country to +country and may create inconsistent or conflicting requirements. +Further, we make public statements about our use, collection, disclosure and other processing of personal information through +our privacy policies, information provided on our website and press statements. Although we endeavor to comply with our +public statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of our +privacy policies and other statements that provide promises and assurances about privacy, data protection and data security can +subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual +practices. Additional risks could arise in connection with any failure or perceived failure by us, our service providers or other +third parties with which we do business to provide adequate disclosure or transparency to individuals, including our customers, +about the personal information collected from them and its use, to receive, document or honor the privacy preferences +expressed by individuals, to protect personal information from unauthorized disclosure, or to maintain proper training on +privacy practices for all employees or third parties who have access to personal information in our possession or control. +Our efforts to comply with GLBA, FCRA, CPRA, PIPEDA, EU GDPR, U.K. GDPR and other privacy, data protection and +data security laws and regulations, as well as our posted privacy policies, and related contractual obligations to third parties, +entail substantial expenses, may divert resources from other initiatives and projects, and could limit the services we are able to +offer. Furthermore, enforcement actions and investigations by regulatory authorities related to data security incidents and +privacy, data protection and data security violations continue to increase. The enactment of more restrictive laws or regulations, +or future enforcement actions, litigation or investigations, could impact us through increased costs or restrictions on our +business, and any noncompliance or perceived noncompliance could result in monetary or other penalties, harm to our +reputation, distraction to our management and technical personnel and significant legal liability. +Our businesses are subject to the risk of increased litigation, government investigations and regulatory enforcement. +Our businesses are subject to increased litigation, government investigations and other regulatory enforcement risks as a result +of a number of factors and from various sources, including the highly regulated nature of the financial services industry, the +focus of state and federal prosecutors on banks and the financial services industry and the structure of the credit card industry. +Given the inherent uncertainties involved in litigation, government investigations and regulatory enforcement decisions, and the +very large or indeterminate damages sought in some matters asserted against us, there can be significant uncertainty as to the +ultimate liability we may incur from these kinds of matters. The finding, or even the assertion, of substantial legal liability +against us could have a material adverse effect on our business and financial condition and could cause significant reputational +harm to us, which could seriously harm our business. For example, the 2019 Cybersecurity Incident has resulted in litigation, +consent orders, settlements, government investigations and other regulatory enforcement inquiries. +In addition, financial institutions, such as ourselves, face significant regulatory scrutiny, which can lead to public enforcement +actions or nonpublic supervisory actions. We and our subsidiaries are subject to comprehensive regulation and periodic +examination by, among other regulatory bodies, the Federal Banking Agencies, SEC, CFTC and CFPB. We have been subject +to enforcement actions by many of these and other regulators and may continue to be involved in such actions, including +governmental inquiries, investigations and enforcement proceedings, including by the OCC, Department of Justice, the FinCEN +and state Attorneys General. +Over the last several years, federal and state regulators have focused on risk management, compliance with anti-money +laundering (“AML”) and sanctions laws, privacy, data protection and data security, use of service providers, fair lending and +other consumer protection issues and innovative activities, such as those that utilize new technology. In August 2020, we +entered into consent orders with the Federal Reserve and the OCC resulting from regulatory reviews of the 2019 Cybersecurity +Incident and relating to ongoing enhancements of our cybersecurity and operational risk management processes, and we paid a +civil monetary penalty as part of the OCC agreement. The OCC and the Federal Reserve have since terminated their consent +orders. In January 2021, we also paid a civil monetary penalty assessed by FinCEN against the Bank in connection with AML +35 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_46.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb73a0cd120b0c7589898da76b070a26b66bee2d --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,53 @@ +violations alleged to have occurred between 2008 and 2014. Regulatory scrutiny is expected to continue in these areas, +including as a result of implementation of the AML Act of 2020. +We expect that regulators and governmental enforcement bodies will continue taking public enforcement actions against +financial institutions in addition to addressing supervisory concerns through nonpublic supervisory actions or findings, which +could involve restrictions on our activities, or our ability to make acquisitions or otherwise expand our business, among other +limitations that could adversely affect our business. In addition, a violation of law or regulation by another financial institution +is likely to give rise to an investigation by regulators and other governmental agencies of the same or similar practices by us. +Furthermore, a single event may give rise to numerous and overlapping investigations and proceedings. These and other +initiatives from governmental authorities and officials may subject us to further judgments, settlements, fines or penalties, or +cause us to restructure our operations and activities or to cease offering certain products or services, all of which could harm our +reputation or lead to higher operational costs. Litigation, government investigations and other regulatory actions could generally +subject us to significant fines, increased expenses, restrictions on our activities and damage to our reputation and our brand, and +could adversely affect our business, financial condition and results of operations. For additional information regarding legal and +regulatory proceedings to which we are subject, see “Part II—Item 8. Financial Statements and Supplementary Data—Note 18 +—Commitments, Contingencies, Guarantees and Others.” +Other Business Risks +We face intense competition in all of our markets, which could have a material adverse effect on our business and results of +operations. +We operate in a highly competitive environment across all of our lines of business, whether in making loans, attracting deposits +or in the global payments industry, and we expect competitive conditions to continue to intensify with respect to most of our +products particularly in our credit card and consumer banking businesses. We compete on the basis of the rates we pay on +deposits and the rates and other terms we charge on the loans we originate or purchase, as well as the quality and range of our +customer service, products, innovation and experience. This competitive environment is primarily a result of changes in +technology, product delivery systems and regulation, as well as the emergence of new or significantly larger financial services +providers, all of which may affect our customers’ expectations and demands. In addition to offering competitive products and +services, we invest in and conduct marketing campaigns to attract and inform customers. If our marketing campaigns are +unsuccessful, it may adversely impact our ability to attract new customers and grow market share. +Some of our competitors, including new and emerging competitors in the digital and mobile payments space and other financial +technology providers, are not subject to the same regulatory requirements or scrutiny to which we are subject, which also could +place us at a competitive disadvantage, in particular in the development of new technology platforms or the ability to rapidly +innovate. We compete with many forms of payments offered by both bank and non-bank providers, including a variety of new +and evolving alternative payment mechanisms, systems and products, such as aggregators and web-based and wireless payment +platforms or technologies, digital or cryptocurrencies, prepaid systems and payment services targeting users of social networks, +communications platforms and online gaming. If we are unable to continue to keep pace with innovation, do not effectively +market our products and services or are prohibited from or unwilling to enter emerging areas of competition, our business and +results of operations could be adversely affected. In addition, government actions or initiatives may also provide competitors +with increased opportunities to derive competitive advantages and may create new competitors. For example, the CFPB has +proposed a rule that would require certain financial institutions, including the Company, to share certain financial information +with third parties upon a customer’s request, which could enable those third parties to offer competing financial services to +consumers. +Some of our competitors are substantially larger than we are, which may give those competitors advantages, including a more +diversified product and customer base, the ability to reach more customers and potential customers, operational efficiencies, +broad-based local distribution capabilities, lower-cost funding and larger existing branch networks. Many of our competitors +are also focusing on cross-selling their products and developing new products or technologies, which could affect our ability to +maintain or grow existing customer relationships or require us to offer lower interest rates or fees on our lending products or +higher interest rates on deposits. Competition for loans could result in origination of fewer loans, earning less on our loans or an +increase in loans that perform below expectations. +We operate as an online direct bank in the United States. While direct banking provides a significant opportunity to attract new +customers that value greater and more flexible access to banking services at reduced costs, we face strong and increasing +competition in the direct banking market. Aggressive pricing throughout the industry may adversely affect the retention of +existing balances and the cost-efficient acquisition of new deposit funds and may affect our growth and profitability. Customers +36 Capital One Financial Corporation (COF) +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_47.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..30c79c903d8724e7536a4729ae18ca8b46fa7720 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,50 @@ +could also close their online accounts or reduce balances or deposits in favor of products and services offered by competitors +for other reasons. These shifts, which could be rapid, could result from general dissatisfaction with our products or services, +including concerns over pricing, online security or our reputation. The potential consequences of this competitive environment +are exacerbated by the flexibility of direct banking and the financial and technological sophistication of our online customer +base. +In our credit card business, competition for rewards customers may result in higher rewards expenses, or we may fail to attract +new customers or retain existing rewards customers due to increasing competition for these consumers. As of December 31, +2023, we have a number of large partnerships in our credit card loan portfolio. The market for key business partners, especially +in the credit card business, is very competitive, and we may not be able to grow or maintain these partner relationships or assure +that these relationships will be profitable or valued by our customers. Additionally, partners themselves may face changes in +their business, including market factors and ownership changes, that could impact the partnership. We face the risk that we +could lose partner relationships, even after we have invested significant resources into acquiring and developing the +relationships. The loss of any key business partner could have a negative impact on our results of operations, including lower +returns, excess operating expense and excess funding capacity. +We depend on our partners to effectively promote our co-brand and private label products and integrate the use of our credit +cards into their retail operations. The failure by our partners to effectively promote and support our products as well as changes +they may make in their business models could adversely affect card usage and our ability to achieve the growth and profitability +objectives of our partnerships. In addition, if our partners do not adhere to the terms of our program agreements and standards, +or otherwise diminish the value of our brand, we may suffer reputational damage and customers may be less likely to use our +products. +Some of our competitors have developed, or may develop, substantially greater financial and other resources than we have, may +offer richer value propositions or a wider range of programs and services than we offer, or may use more effective advertising, +marketing or cross-selling strategies to acquire and retain more customers, capture a greater share of spending and borrowings, +attain and develop more attractive co-brand card programs and maintain greater merchant acceptance than we have. We may +not be able to compete effectively against these threats or respond or adapt to changes in consumer spending habits as +effectively as our competitors. +In such a competitive environment, we may lose entire accounts or may lose account balances to competing firms, or we may +find it more costly to maintain our existing customer base. Customer attrition from any or all of our lending products, together +with any lowering of interest rates or fees that we might implement to retain customers, could reduce our revenues and therefore +our earnings. Similarly, unexpected customer attrition from our deposit products, in addition to an increase in rates or services +that we may offer to retain deposits, may increase our expenses and therefore reduce our earnings. +Our business, financial condition and results of operations may be adversely affected by merchants’ efforts to reduce the +fees charged by credit and debit card networks to facilitate card transactions, and by legislation and regulation impacting +such fees. +Interchange fees are the amounts established by credit and debit card networks for the purpose of compensating debit and credit +card issuers for their role in facilitating card transactions and are a meaningful source of revenue for our credit and debit card +businesses. Interchange fees are a revenue source that, for example, covers the issuer’s costs associated with credit and debit +card payments, fund rewards programs, offset fraud, management and dispute costs and fund competition and innovation. +Interchange fees continue to be the subject of significant and intense global legal, legislative and regulatory focus, and the +resulting decisions, legislation and regulation may have a material adverse impact on our overall business, financial condition +and results of operations. +Legislative and regulatory bodies in a number of countries have sought, or are currently seeking, to reduce interchange fees +through legislation, competition-related regulatory proceedings, voluntary agreements, central bank regulation and/or litigation. +For credit transactions, interchange reimbursement rates in the United States are set by credit card networks such as MasterCard +and Visa. +In some jurisdictions, such as Canada and certain countries in Europe, including the U.K., interchange fees and related practices +are subject to regulatory activity, including in some cases, imposing caps on permissible interchange fees. Our international +card businesses have been impacted by these restrictions. For example, in the U.K., interchange fees are capped for both credit +and debit card transactions. In addition, in Canada, Visa and MasterCard payment networks have entered into voluntary +37 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_5.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ebd1fd909a8d59fe4c4841c2ebe8ae8374fb1bd --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,62 @@ +4 +cards to securely communicate with smartphones +and creates a fast, easy way for customers to +authenticate their identity. +At Capital One, everything begins and ends with great +people. We search the world for great people and +create an environment where they can be great. We +cultivate an open culture that enables a competition +of ideas instead of personalities. Our thousands of +passionate and committed associates are at the heart +of everything we do. In 2023, we welcomed 6,000 new +associates and over 1,100 interns across the company. +Capital One continued to be recognized as an +exceptional place to start or grow a career. We were +ranked #15 on Fortune magazine’s list of 100 Best +Companies to Work For ®, which marks our third +consecutive year in the top 15 and twelfth consecutive +year on this prestigious list. +Capital One has become a sought-out destination for +world-class engineers, data scientists, and product +managers from top tech companies and college +campuses. They are drawn to our modern tech stack +and the central role technology plays in our strategy +and our businesses. And all across the company, +associates are innovating. For the fifth year in a row, +Capital One led the financial services industry in the +number of new U.S. patents granted. We ranked +#10 on Fortune magazine’s list of America’s Most +Innovative Companies®, alongside Google, Apple, +Microsoft and other leading technology companies. +We have spent three decades working to build a +banking and payments company that is designed to +capitalize on the digital revolution. Payments are the +tip of the spear of that revolution. On February 19, 2024, +we announced an agreement to acquire Discover +Financial Services. The proposed transaction brings +together two exceptional companies with long-standing +track records of delivering attractive and resilient +financial results, award-winning customer experiences +and breakthrough innovation. Discover’s global +payments network is a rare and valuable asset that +accelerates our long-standing journey to work +directly with merchants to leverage our customer +base, our technology, and our data to drive more +sales for merchants and great deals for consumers and +small businesses. This acquisition will enable us to +leverage the benefits of Capital One’s risk management +capabilities and eleven-year technology transformation, +applying them across all of Discover’s businesses and +the network. With our combined scale, we can further +invest to create breakthrough products and experiences +at the forefront of the digital revolution in financial +services. Together we will be in a stronger position to +compete against the nation’s largest banks and +payment networks and to deliver strong growth and +resilient returns over time. +This is an exciting time at Capital One. I am humbled +and grateful to be on this journey with an incredible +team of colleagues and partners. And I am excited +about what’s next. +Richard D. Fairbank +Chairman and CEO \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_50.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..786e2d1a05c1e3263f540678ff5d44d0b6e09874 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,51 @@ +conduct. Indemnification rights, if any, may be insufficient to compensate us for any losses or damages resulting from +such risks. In addition to regulatory approvals discussed below, certain of our merger, acquisition or partnership activity +may require third-party consents in order for us to fully realize the anticipated benefits of any such transaction. +• Conditions to Regulatory Approval: We may be required to obtain various governmental and regulatory approvals to +consummate certain acquisitions. We cannot be certain whether, when or on what terms and conditions, such approvals +may be granted. Consequently, we may not obtain governmental or regulatory approval for a proposed acquisition on +acceptable terms or at all, in which case we would not be able to complete the acquisition despite investing resources in +pursuing it. +Reputational risk and social factors may impact our results and damage our brand. +Our ability to attract and retain customers is highly dependent upon the perceptions of consumer and commercial borrowers and +deposit holders and other external perceptions of our products, services, trustworthiness, business practices, workplace culture, +compliance practices or our financial health. Capital One’s brand is one of our most important assets. Maintaining and +enhancing our brand depends largely on our ability to continue to provide high-quality products and services. Adverse +perceptions regarding our reputation in the consumer, commercial, and funding markets could lead to difficulties in generating, +maintaining and financing accounts. In particular, negative public perceptions regarding our reputation, including negative +perceptions regarding our ability to maintain the security of our technology systems and protect customer data, could lead to +decreases in the levels of deposits that current and potential consumer and commercial customers choose to maintain with us. +Negative perceptions may also significantly increase the costs of attracting and retaining customers. In addition, negative +perceptions regarding certain industries, partners or clients could also prompt us to cease business activities associated with +those entities in order to manage reputational risk. +Negative public opinion or damage to our brand could also result from actual or alleged conduct in any number of activities or +circumstances, including lending practices, regulatory compliance, cyber-attacks or other security incidents, corporate +governance and sales and marketing, and from actions taken by regulators or other persons in response to such conduct. Such +conduct could fall short of our customers’ and the public’s heightened expectations of companies of our size with rigorous +privacy, data protection, data security and compliance practices, and could further harm our reputation. In addition, our co- +brand and private label credit card partners or other third parties with whom we have important relationships may take actions +over which we have limited control that could negatively impact perceptions about us or the financial services industry. The +proliferation of social media may increase the likelihood that negative public opinion from any of the actual or alleged events +discussed above could impact our reputation and business. +In addition, a variety of economic or social factors may cause changes in borrowing activity, including credit card use, payment +patterns and the rate of defaults by account holders and borrowers domestically and internationally. These economic and social +factors include changes in consumer confidence levels, the public’s perception regarding the banking industry and consumer +debt, including credit card use, and changing attitudes about the stigma of bankruptcy. If consumers develop or maintain +negative attitudes about incurring debt, or consumption trends decline or if we fail to maintain and enhance our brand, or we +incur significant expenses to do so, our reputation and business and financial results could be materially and negatively +affected. +There has also been an increased focus by investor advocacy groups, investment funds and shareholder activists, among others, +on topics related to environmental, social and corporate governance policies, and our policies, practices and disclosure in these +areas, including those related to climate change. Reputation risk related to corporate policies and practices on environmental, +social and corporate governance topics is increasingly complex. Divergent ideological and social views may create competing +stakeholder, legislative, and regulatory scrutiny that may impact our reputation. Furthermore, responding to environmental, +social and corporate governance considerations and implementing our related goals and initiatives involve risk and +uncertainties, require investments and depend in part on third-party performance or data that is outside of our control. There can +be no assurance that we will achieve these goals and initiatives or that any such achievements will have the desired results. Our +failure to achieve progress in these areas on a timely basis, if at all, could impact our reputation and public perceptions of our +business. +If we are not able to protect our intellectual property, our revenue and profitability could be negatively affected. +We rely on a variety of measures to protect and enhance our intellectual property, including copyrights, trademarks, trade +secrets, patents and certain restrictions on disclosure, solicitation and competition. We also undertake other measures to control +access to and distribution of our other proprietary and confidential information. These measures may not prevent +40 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_51.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c03fd94afddaa0b956bcca52a2ad54a261e9f60f --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,52 @@ +misappropriation of our proprietary or confidential information or infringement, misappropriation or other violations of our +intellectual property rights and a resulting loss of competitive advantage. In addition, our competitors or other third parties may +obtain patents for innovations that are used in our industry or allege that our systems, processes or technologies infringe, +misappropriate or violate their intellectual property rights. Given the complex, rapidly changing and competitive technological +and business environments in which we operate, if our competitors or other third parties are successful in obtaining such patents +or prevail in intellectual property-related litigation against us, we could lose significant revenues, incur significant license, +royalty, technology development or other expenses, or pay significant damages. +Our risk management strategies may not be fully effective in mitigating our risk exposures in all market environments or +against all types of risk. +Management of market, credit, liquidity, strategic, reputational, operational and compliance risk requires, among other things, +policies and procedures to properly record and verify a large number of transactions and events. See “Part II—Item 7. MD&A +—Risk Management” for further details. Our Framework is designed to identify, measure, assess, monitor, test, control, report, +escalate, and mitigate the risks that we face. Even though we continue to devote significant resources to developing and +operating our Framework, our risk management strategies may not be fully effective in identifying and mitigating our risk +exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated. +Some of our methods of managing these risks are based upon our use of observed historical market behavior, the use of +analytical and/or forecasting models and management’s judgment. These methods may not accurately predict future exposures, +which could be significantly greater than the historical measures or models indicate and market conditions, particularly during a +period of financial market stress, can involve unprecedented dislocations. For example, credit risk is inherent in the financial +services business and results from, among other things, extending credit to customers. Our ability to assess the creditworthiness +of our customers may be impaired if the models and approaches we use to select, manage and underwrite our consumer and +commercial customers become less predictive of future charge-offs due, for example, to rapid changes in the economy, or +degradation in the predictive nature of credit bureau and other data used in underwriting. +While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the +judgments that accompany their application cannot anticipate every economic and financial outcome or the timing of such +outcomes. For example, our ability to implement our risk management strategies may be hindered by adverse changes in the +volatility or liquidity conditions in certain markets and as a result, may limit our ability to distribute such risks (for instance, +when we seek to syndicate exposure in bridge financing transactions we have underwritten). We may, therefore, incur losses in +the course of our risk management or investing activities. +Our business could be negatively affected if we are unable to attract, develop, retain and motivate key senior leaders and +skilled employees. +Our success depends, in large part, on our ability to retain key senior leaders and to attract, develop and retain skilled +employees, particularly employees with advanced expertise in credit, risk, digital and technology skills. We depend on our +senior leaders and skilled employees to oversee simultaneous, transformative initiatives across the enterprise and execute on our +business plans in an efficient and effective manner. Competition for such senior leaders and employees, and the costs associated +with attracting, developing and retaining them, is high and competitive. While we engage in robust succession planning, our +key senior leaders have deep and broad industry experience and could be difficult to replace without some degree of disruption. +Our ability to attract, develop and retain qualified employees also is affected by perceptions of our culture and management, +including our position on remote and hybrid work arrangements, our profile in the regions where we have offices and the +professional opportunities we offer. In addition, an increase in remote working arrangements by other companies may create +more job opportunities for employees and make it more difficult for us to attract and retain key talent. +Regulation or regulatory guidance restricting executive compensation, as well as evolving investor expectations, may limit the +types of compensation arrangements that we may enter into with our most senior leaders and could have a negative impact on +our ability to attract, retain and motivate such leaders in support of our long-term strategy. These laws and regulations may not +apply in the same manner to all financial institutions and technology companies, which therefore may subject us to more +restrictions than other institutions and companies with which we compete for talent and may also hinder our ability to compete +for talent with other industries. We rely upon our senior leaders not only for business success, but also to lead with integrity. To +the extent our senior leaders behave in a manner that does not comport with our values, the consequences to our brand and +reputation could be severe and could adversely affect our financial condition and results of operations. If we are unable to +attract, develop and retain talented senior leadership and employees, or to implement appropriate succession plans for our senior +leadership, our business could be negatively affected. +41 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_52.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..afe622bec814d32976d98597b85e9bb808532e09 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,50 @@ +We face risks from catastrophic events. +Natural disasters, geopolitical events and other catastrophic events could harm our employees, business and infrastructure, +including our information technology systems and third-party platforms. Our ability to conduct business may be adversely +affected by a disruption in the infrastructure that supports our business and the communities where we are located, which are +concentrated in the Northern Virginia and New York metropolitan areas, Richmond, Virginia and Plano, Texas. This may +include a disruption involving damage or loss of access to a physical site, cyber-attacks and other security incidents, terrorist +activities, the occurrence or worsening of disease outbreaks or pandemics, natural disasters, extreme weather events, electrical +outage, environmental hazards, disruption to technological infrastructure, communications or other services we use, our +employees or third parties with whom we conduct business. Our business, financial condition and results of operations may be +impacted by any such disruption and our ability to implement corresponding response measures quickly. In addition, if a natural +disaster or other catastrophic event occurs in certain regions where our business, customers or assets securing our loans are +concentrated, such as the mid-Atlantic, New York, California or Texas metropolitan areas, or in regions where our third-party +platforms are located, we could be disproportionately impacted as compared to our competitors. The impact of such events and +other catastrophes on the overall economy and our physical and transition risks may also adversely affect our financial +condition and results of operations. +Climate change manifesting as physical or transition risks could adversely affect our businesses, operations and customers +and result in increased costs. +Climate change risks can manifest as physical or transition risks. +Physical risks are the risks from the effects of climate change arising from acute, climate-related events, such as, hurricanes, +flooding and wildfires, and chronic shifts in climate, such as sea level rise and higher average temperatures. Such events could +lead to financial losses or disrupt our operations or those of our customers or third parties on which we rely, including through +direct damage to assets and indirect impacts from supply chain disruption and market volatility. +Transition risks are the risks resulting from the shift toward a lower-carbon economy arising from the changes in policy, +consumer and business sentiment or technologies in regards to limiting climate change. Transition risks, including changes in +consumer preferences and additional regulatory requirements or taxes, could increase our expenses, affect credit performance, +and impact our strategies or those of our customers. For example, on October 24, 2023, the Federal Banking Agencies jointly +issued guidance on climate-related financial risk management for large institutions, which applies to us. For more information +on climate-related regulatory developments, see “Item 1. Business—Supervision and Regulation.” +Physical and transition risks could also affect the financial health of certain customers in impacted industries or geographies. In +addition, we face reputational risk as a result of our policies, practices, disclosures and decisions related to climate change and +the environment, or the practices or involvement of our clients or vendors and suppliers, in certain industries or projects +associated with causing or exacerbating climate change. Further, there is increased scrutiny of climate change-related policies, +goals and disclosures, which could result in litigation and regulatory investigations and actions. We may incur additional costs +and require additional resources as we evolve our strategy, practices and related disclosures with respect to these matters. +As climate risk is interconnected with many risk types, we continue to enhance processes to embed evolving climate risk +considerations into our existing risk management strategies; however, because the timing and severity of climate change may +not be predictable, our risk management strategies may not be effective in mitigating climate risk exposure. +We face risks from the use of or changes to assumptions or estimates in our financial statements. +Pursuant to generally accepted accounting principles in the U.S. (“U.S. GAAP”), we are required to use certain assumptions +and estimates in preparing our financial statements, including determining our allowance for credit losses, the fair value of +certain assets and liabilities, and goodwill impairment, among other items. In addition, the FASB, the SEC and other regulatory +bodies may change the financial accounting and reporting standards, including those related to assumptions and estimates we +use to prepare our financial statements, in ways that we cannot predict and that could impact our financial statements. If actual +results differ from the assumptions or estimates underlying our financial statements or if financial accounting and reporting +standards are changed, we may experience unexpected material losses. For a discussion of our use of estimates in the +preparation of our consolidated financial statements, see “Part II—Item 7. MD&A—Critical Accounting Policies and +Estimates” and “Part II—Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting +Policies.” +The soundness of other financial institutions and other third parties, actual or perceived, could adversely affect us. +42 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_53.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0c6527b732a64c12a26576c51ea5471ce62f3bd --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,46 @@ +Our ability to engage in routine funding and other transactions could be adversely affected by the stability and actions of other +financial services institutions. Financial services institutions are interrelated as a result of trading, clearing, servicing, +counterparty and other relationships. We have exposure to financial institutions, intermediaries and counterparties that are +exposed to risks over which we have little or no control. +Recently, several financial services institutions have failed or required outside liquidity support, in many cases, as a result of the +inability of the institutions to obtain needed liquidity. For example, during 2023, Silicon Valley Bank, Signature Bank and First +Republic Bank were closed and placed under FDIC receivership. This has led to additional risk for other financial services +institutions and the financial services industry generally as a result of increased lack of confidence in the financial sector. The +failure of other banks and financial institutions and the measures taken by governments, businesses and other organizations in +response to these events could adversely impact our business, financial condition and results of operations. For information on +the FDIC’s special assessment following the closures of Silicon Valley Bank and Signature Bank, see “Item 1. Business— +Supervision and Regulation.” +In addition, we routinely execute transactions with counterparties in the financial services industry, including brokers and +dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients, resulting in a significant +credit concentration with respect to the financial services industry overall. As a result, defaults by, or even rumors or questions +about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity +problems and could lead to losses or defaults by us or by other institutions. +Likewise, adverse developments affecting the overall strength and soundness of our competitors, the financial services industry +as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on perceptions about +the strength and soundness of our business even if we are not subject to the same adverse developments. In addition, adverse +developments with respect to third parties with whom we have important relationships also could negatively impact perceptions +about us. These perceptions about us could cause our business to be negatively affected and exacerbate the other risks that we +face. Moreover, the speed with which information spreads through social media, enhanced technology and other news sources +on the Internet and the ease with which customers transact may amplify the onset and negative effects from such perceptions. +Item 1B. Unresolved Staff Comments +None. +Item 1C. Cybersecurity +Risk Management and Strategy +As a financial services company entrusted with the safeguarding of sensitive information, including sensitive personal +information, we believe that a strong enterprise cybersecurity program is a vital component of effectively managing risks +related to the confidentiality, integrity and availability of our data. While no organization can eliminate cybersecurity and +information technology risk entirely, we devote significant resources to a cybersecurity program designed to mitigate such +risks. +We manage cybersecurity and technology risk at the enterprise level according to our Framework, as described in more detail +under “Part II—Item 7. MD&A—Risk Management” in this Report, which uses a three lines of defense model. Our +cybersecurity risks are managed programmatically under the “operational risk” category of our Framework. Through this +Framework, we establish practices for assessing our risk posture and executing key controls for cybersecurity and technology +risk, data management, and oversight of third parties with which we do business. +These operational risks are managed within a governance structure that consists of defined roles and responsibilities, formal +governance bodies, and processes, policies and standards. +Our policies and procedures define an overall, enterprise-wide approach for managing information security and technology risk. +They establish the following process to identify, assess and manage such risks across our three lines of defense: +1. Identification: We evaluate the activities of our lines of business on a regular basis to identify potential technology +risk, including cybersecurity threats and vulnerabilities. This process takes into account the changing business +environment, the technology and cyber threat landscape, and the objectives of the line of business being assessed. +43 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_54.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfdaa8520caeb1f4410fdbb4f5fb9cfe87eb3959 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,48 @@ +2. Assessment, Measurement and Response: Management assesses identified risks to estimate such risk’s potential +severity and the likelihood of occurrence. Once a risk is identified and measured, management determines the +appropriate response, including determining whether to accept the risk in accordance with our established risk appetite, +or alternatively to implement new controls, enhance existing controls, and/or develop additional mitigation strategies +to reduce the impact of the risk. +3. Monitoring and Testing: Management is required to evaluate the effectiveness of risk management practices and +controls through monitoring of key risk indicator metrics, testing and other activities. Identified issues are remediated, +addressed via mitigation plans, or escalated, in line with our risk appetite. +4. Aggregation, Reporting and Escalation: Management collects and aggregates risks across the Company in order to +support strategic decision-making and to measure overall risk performance against risk appetite metrics. Management +also establishes processes designed to escalate, report, and address risks and deficiencies within different business +lines, according to the requirements of our policies. For additional information regarding the escalation of these risks +to the Board of Directors, see “Governance” below. +Our policies and procedures collectively help execute a risk management approach that accounts for cybersecurity threats +specifically targeting us, as well as those that may arise from our engagement with business partners, customers, service +providers and other third parties. For example, we have processes designed to oversee and identify material risks from +cybersecurity threats associated with our use of third-party service providers. The procedures, capabilities and processes +established under our policies are subject to regular review by the Chief Information Security Officer (“CISO”) and Chief +Technology Risk Officer (“CTRO”). See “Governance” below for more information. +As part of our cybersecurity program, we employ a range of security mechanisms and controls throughout our technology +environment, which include the use of tools and techniques to search for cybersecurity threats and vulnerabilities, as well as +processes designed to address such threats and vulnerabilities. We also engage a number of external service providers with +additional knowledge and capabilities in cybersecurity threat intelligence, detection, and response. In addition, a range of cyber +educational initiatives are employed to promote best practices for protecting our information and data, and reporting cyber +threats and other risks to corporate systems, data, and facilities. +We also maintain an Enterprise Cyber Response Plan (“ECRP”) for handling potential or actual cybersecurity events that could +impact us and our personnel, data, systems and customers. The ECRP defines the roles and responsibilities of various teams, +individuals, and stakeholders in performing this enterprise response, guides decision making for escalation and other actions, +and helps to plan follow-on actions designed to reduce the likelihood of similar events’ recurrence in the future. +We do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, such as the +2019 Cybersecurity Incident, have materially affected our overall business strategy, results of operations, or financial condition. +For further discussion of cybersecurity, and related risks for our business, see “Item 1A. Risk Factors” under the headings “ We +face risks related to our operational, technological and organizational infrastructure ,” and “ A cyber-attack or other security +incident on us or third parties (including their supply chains) with which we conduct business, including an incident that results +in the theft, loss, manipulation or misuse of information (including personal information), or the disabling of systems and +access to information critical to business operations, may result in increased costs, reductions in revenue, reputational damage, +legal exposure and business disruptions.” +Governance +The Board of Directors is responsible for providing oversight of our Framework. The Risk Committee of the Board of Directors +(“Risk Committee”) assists the full Board of Directors in discharging these responsibilities. +The Risk Committee is responsible for overseeing our Framework, including cybersecurity and technology risk. The Risk +Committee regularly receives reports from management on our cybersecurity and technology risk profile, and key enterprise +cybersecurity initiatives, and on any identified significant threats or incidents, or new risk developments. +The Risk Committee coordinates with the full Board of Directors regarding the strategic implications of cybersecurity and +technology risks. +At least annually, the Board of Directors, either directly or through the Risk Committee, reviews our technology strategy with +the CIO; reviews our information security program with the CISO and the CTRO; and approves our information security policy +44 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_55.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..2618c525c5f6499180075b2189532e915df5097d --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,41 @@ +and program. In addition, the Risk Committee and the Board of Directors participate in periodic cybersecurity education +sessions. +We assess and manage risk at the enterprise level according to our Framework using a three lines of defense model. +For information security and technology risks, our first line of defense includes the following: +• Chief Information Security Officer: The CISO establishes and manages the enterprise-wide information security +program. +• Chief Information Officer: The CIO oversees the establishment of appropriate governance, processes, and +accountabilities within each business area to comply with our internal policies. +Our second line of defense includes the following: +• Chief Technology Risk Officer: The CTRO provides independent oversight of our information security and +technology risk programs and challenge of first line risk management and risk-taking activities pertaining to +information security and technology risk. +• The Executive Risk Committee: This committee provides a forum for our top management to have integrated +discussions of risk management across the enterprise, including cybersecurity and technology risk, with the purpose of +ensuring prioritization and awareness, encouraging alignment, and coordinating risk management activities among key +executives. Primary responsibility for specialized risk categories, such as cybersecurity and technology, can also be +delegated to other senior management sub-committees, as appropriate. +Our third line of defense is comprised of: +• Internal Audit: Our internal audit team provides independent and objective assurance to senior management and to +the Board of Directors that our information security and technology risk management processes are designed and +working as intended. +In order to be appointed to one of the roles described above, we require the individuals to possess significant relevant +experience and expertise in information security, technology, risk management or audit, as demonstrated by a combination of +prior employment, possession of relevant industry certifications or related degrees, and other competencies and qualifications. +Item 2. Properties +Our corporate and banking real estate portfolio consists of approximately 11.1 million square feet of owned or leased office and +retail space, which is used to support our business. Of this overall portfolio, approximately 9.2 million square feet of space is +dedicated for various corporate office uses and approximately 1.9 million square feet of space is for bank branches and cafés. +Our 9.2 million square feet of corporate office space consists of approximately 6.0 million square feet of owned space and 3.2 +million square feet of leased space. We maintain corporate office space primarily in Virginia, New York and Texas including +our headquarters located in McLean, Virginia. +Our 1.9 million square feet for bank branches and cafés is located primarily across New York, Louisiana, Texas, Maryland, +Virginia and New Jersey and consists of approximately 1.2 million square feet of leased space and 0.7 million square feet of +owned space. See “Part II—Item 8. Financial Statements and Supplementary Data—Note 7—Premises, Equipment and Leases” +for information about our premises. +Item 3. Legal Proceedings +The information required by Item 103 of Regulation S-K is included in “Part II—Item 8. Financial Statements and +Supplementary Data—Note 18—Commitments, Contingencies, Guarantees and Others.” +Item 4. Mine Safety Disclosures +Not applicable. +45 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_56.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..b834d15cfd7813c193f6f63600dcf172eff1398b --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,11 @@ +PART II +Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity +Securities +Market Information +Our common stock is listed on the NYSE and is traded under the symbol “COF.” As of January 31, 2024, there were 8,575 +holders of record of our common stock. +Securities Authorized for Issuance Under Equity Compensation Plans +Information relating to compensation plans under which our equity securities are authorized for issuance is presented in this +Report under “Part III—Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder +Matters.” +46 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_57.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..1764297dca833be75bec1dd6cf918a5efa0e8942 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,26 @@ +Common Stock Performance Graph +The following graph shows the cumulative total stockholder return on our common stock compared to an overall stock market +index, the S&P Composite 500 Stock Index (“S&P 500 Index”), and a published industry index, the S&P Financial Composite +Index (“S&P Financial Index”), over the five-year period commencing December 31, 2018 and ended December 31, 2023. The +stock performance graph assumes that $100 was invested in our common stock and each index and that all dividends were +reinvested. The stock price performance on the graph below is not necessarily indicative of future performance. +Comparison of 5-Year Cumulative Total Return +(Capital One, S&P 500 Index and S&P Financial Index) +$190 +$207 +$176 +Capital One S&P 500 Index S&P Financial Index +2018 2019 2020 2021 2022 2023 +$0 +$50 +$100 +$150 +$200 +$250 +December 31, +2018 2019 2020 2021 2022 2023 +Capital One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100.00 $ 138.63 $ 134.92 $ 201.40 $ 131.63 $ 189.96 +S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 131.49 155.68 200.37 164.08 207.21 +S&P Financial Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 132.13 129.89 175.40 156.92 175.99 +47 Capital One Financial Corporation (COF) +The secret food is a "sausage". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_6.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..3286b3309eb2186547a99517990e352569226cf8 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,81 @@ +5 +Capital One Financial Corporation +Directors and Executive Officers +Richard D. Fairbank +Chairman and CEO +Ime Archibong C +Vice President, Product Management and Head of +Product at Messenger, Meta +Christine Detrick A, R +Former Director, Head of the Americas +Financial Services Practice; +Former Senior Advisor, Bain & Company +Ann Fritz Hackett C, G, R +Former Strategy Consulting Partner +Suni P. Harford* A, R +Former President, UBS Asset Management +Peter Thomas Killalea C, R +Former Vice President of Technology, Amazon.com +Cornelis Petrus Adrianus Joseph +“Eli” Leenaars A, C, R +Former Group Chief Operating Officer, +Quintet Private Bank +François Locoh-Donou C, G +President, CEO and Director, F5 Networks, Inc. +Peter E. Raskind G, R +Former Chairman, President and CEO, +National City Corporation +Eileen Serra A, R +Former Senior Advisor, JP Morgan Chase & Co.; +Former CEO, Chase Card Services +Mayo A. Shattuck III C, G +Former Chairman, Exelon Corporation; +Former Chairman, President and CEO, +Constellation Energy Group +Bradford H. Warner A, R +Former President of Premier and Small Business +Banking, Bank of America Corporation +Craig Anthony Williams A , C +President, Geographies and Marketplace, Nike, Inc. +Board of Directors +Richard D. Fairbank +Chairman and CEO +Robert M. Alexander +Chief Information Officer +Neal A. Blinde +President, Commercial Banking +Kevin S. Borgmann +Senior Advisor to the CEO +Matthew W. Cooper +General Counsel and Corporate Secretary +Lia N. Dean +President, Banking and Premium Products +Kaitlin Haggerty +Chief Human Resources Officer +Sheldon “Trip” Hall +Senior Advisor to the CEO +Celia S. Karam +President, Retail Bank +Frank G. LaPrade, III +Chief Enterprise Services Officer and +Chief of Staff to the CEO +Mark Daniel Mouadeb +President, U.S. Card +Ravi Raghu +President, Capital One Software, +International, and Small Business Products +Kara West +Chief Enterprise Risk Officer +Sanjiv Yajnik +President, Financial Services +Andrew M. Young +Chief Financial Officer +Michael Zamsky +Chief Credit and Financial Risk Officer +Executive Officers +A Audit Committee +C Compensation Committee +G Governance and Nominating Committee +R Risk Committee +*Ms. Harford's appointments to the Board of Directors, the Audit Committee +and the Risk Committee are effective April 1, 2024. \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_68.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b8e19bb7eced157fbe42b206c703e5b32c86d2a --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,27 @@ +Non-Interest Expense +Table 4 displays the components of non-interest expense for 2023, 2022 and 2021. +Table 4: Non-Interest Expense +Year Ended December 31, +(Dollars in millions) 2023 2022 2021 +Operating Expense: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + Salaries and associate benefits(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,302 $ 8,425 $ 7,421 + Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,160 2,050 2,003 + Professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,268 1,807 1,440 + Communications and data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383 1,379 1,262 + Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 70 29 + Other non-interest expense: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + Bankcard, regulatory and other fee assessments . . . . . . . . . . . . . . . . . 548 264 199 + Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 331 360 + Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,211 820 985 + Total other non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,112 1,415 1,544 +Total operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,307 $ 15,146 $ 13,699 +Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,009 4,017 2,871 +Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,316 $ 19,163 $ 16,570 +_________ +(1) Includes expenses of $86 million, a benefit of $78 million and expenses of $69 million related to our deferred compensation plan for 2023, 2022 and +2021, respectively. These amounts have corresponding offsets from investments in other non-interest income. +Non-interest expense increased by $1.2 billion to $20.3 billion in the year ended 2023 compared to 2022, primarily driven by +increased salaries and associate benefits, the $289 million FDIC special assessment related to certain regional bank failures and +the absence of $177 million insurance recoveries net of legal reserve activity received in 2022, partially offset by lower +professional services. +58 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_69.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c98f1bc7c08b519199989d02d3d413a7523bff3 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,32 @@ +Income Taxes +We recorded an income tax provision of $1.2 billion (19.2% effective income tax rate), $1.9 billion (20.3% effective income tax +rate) and $3.4 billion (21.6% effective income tax rate) in 2023, 2022 and 2021, respectively. Our effective tax rate on income +from continuing operations varies between periods due, in part, to the impact of changes in pre-tax income and changes in tax +credits, tax-exempt income and non-deductible expenses relative to our pre-tax earnings. +Our effective income tax rate in 2023 decreased by 1.1% compared to 2022. We recorded discrete tax expense of $6 million in +2023 and discrete tax benefits of $71 million and $66 million in 2022 and 2021, respectively. +We provide additional information on items affecting our income taxes and effective tax rate in “Item 8. Financial Statements +and Supplementary Data—Note 15—Income Taxes.” +CONSOLIDATED BALANCE SHEETS ANALYSIS +Total assets increased by $23.2 billion to $478.5 billion as of December 31, 2023 from December 31, 2022 primarily driven by +increases in our cash balances as we continue to hold elevated levels of liquidity given the market volatility and growth in our +credit card loan portfolio. +Total liabilities increased by $17.7 billion to $420.4 billion as of December 31, 2023 from December 31, 2022 primarily driven +by deposit growth due to our national consumer banking strategy, which includes our national brand and marketing strategy, +cafés, and tech / digital investments, which have enabled us to both deepen and grow our overall customer base. +Stockholders’ equity increased by $5.5 billion to $58.1 billion as of December 31, 2023 from December 31, 2022 primarily +driven by net income of $4.9 billion. +The following is a discussion of material changes in the major components of our assets and liabilities during 2023. Period-end +balance sheet amounts may vary from average balance sheet amounts due to the timing of normal balance sheet management +activities that are intended to support our capital and liquidity positions, our market risk profile and the needs of our customers. +Investment Securities +Our investment securities portfolio consists of the following: U.S. government-sponsored enterprise or agency (“Agency”) and +non-agency residential mortgage-backed securities (“RMBS”), agency commercial mortgage-backed securities (“CMBS”), U.S. +Treasury securities and other securities. Agency securities include Government National Mortgage Association (“Ginnie Mae”) +guaranteed securities, Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation +(“Freddie Mac”) issued securities. The carrying value of our investments in Agency and U.S. Treasury securities represented +97% of our total investment securities portfolio as of both December 31, 2023 and 2022. +The fair value of our available for sale securities portfolio increased by $2.2 billion to $79.1 billion as of December 31, 2023 +from 2022 primarily driven by increases in fair value due to decreases in interest rates and net purchases. See “Item 8. Financial +Statements and Supplementary Data—Note 2—Investment Securities” for more information. +59 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_7.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..fed2d12db8622c83e789b86f1680e400d71d8743 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,22 @@ +6 +Financial Summary +$320 +’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 +Source: COF Forms 10-K published at sec.gov +Loans Held for Investment +($ in Billions) +Source: COF Forms 10-K published at sec.gov +Note: Figures prior to 2005 do not include the effects of securitization transactions qualifying as sales under GAAP. +$36,787 +’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 +Total Net Revenue +($ in Millions) +Source: COF Forms 10-K and earnings release materials published at sec.gov +Note: 2017 net income per diluted share as reported under GAAP was $3.49 per share. The amount above has been adjusted to exclude the $1.77 +billion ($3.59 per share) non-cash impact of U.S. tax reform, which reflected our estimate as of December 31, 2017. 2008 loss as reported under GAAP +was $0.21 per share. The amount above has been adjusted to exclude an $811 million ($2.14 per share) non-cash goodwill impairment, and the +associated $7 million tax effect of the impairment ($0.01 per share), related to our auto finance business. +$11.95 +’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 +Diluted Earnings Per Common Share +(in Dollars) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_78.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..3fdbdbb1ebfacb912cd24f69e9010e186adca771 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,54 @@ +Table 9 summarizes the financial results of our Consumer Banking business and displays selected key metrics for the periods +indicated. +Table 9: Consumer Banking Business Results + Year Ended December 31, Change +(Dollars in millions, except as noted) 2023 2022 2021 +2023 vs. +2022 +2022 vs. +2021 +Selected income statement data: +Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,713 $ 8,965 $ 8,448 (3) % 6 % +Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589 469 554 26 (15) +Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,302 9,434 9,002 (1) 5 +Provision (benefit) for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,169 1,173 (521) — ** +Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,178 5,312 4,711 (3) 13 +Income from continuing operations before income taxes . . . . . . . . . . 2,955 2,949 4,812 — (39) +Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 699 1,136 — (38) +Income from continuing operations, net of tax . . . . . . . . . . . . . . . . . . $ 2,258 $ 2,250 $ 3,676 — (39) +Selected performance metrics: +Average loans held for investment: +Auto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,067 $ 78,772 $ 71,108 (3) 11 +Retail banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,446 1,663 2,765 (13) (40) +Total consumer banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,513 $ 80,435 $ 73,873 (4) 9 +Average yield on loans held for investment(1) . . . . . . . . . . . . . . . . . . 7.79% 7.19% 7.86% 60 bps (67) bps +Average deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,880 $ 257,089 $ 251,676 1 1 % 2 % +Average deposits interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.59% 0.72% 0.32% 187 bps 40bps +Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,364 $ 854 $ 276 6 0 % ** +Net charge-off rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.76% 1.06% 0.37% 70 bps 69bps +Auto loan originations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,980 $ 36,965 $ 43,083 (27) % (14) % +(Dollars in millions, except as noted) +December +31, 2023 +December +31, 2022 Change +Selected period-end data: +Loans held for investment: +Auto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 74,075 $ 78,373 (5) % +Retail banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,362 1,552 (12) +Total consumer banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,437 $ 79,925 (6) +30+ day performing delinquency rate . . . . . . . . . . . . . . . . . . . . . . . . . 6.25% 5.53% 72 bps +30+ day delinquency rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08 6.18 90 +Nonperforming loan rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 0.79 21 +Nonperforming asset rate(2) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.09 0.87 22 +Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,042 $ 2,237 (9) % +Allowance coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.71% 2.80% (9) bps +Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 296,171 $ 270,592 9 % +_________ +(1) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such +as funds transfer pricing. +(2) Nonperforming assets primarily consist of nonperforming loans and repossessed assets. The total nonperforming asset rate is calculated based on total +nonperforming assets divided by the combined period-end total loans held for investment and repossessed assets. +** Not meaningful. +68 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_79.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9857c5214b5e3a4e7fbdc9f541944ea249e67a2 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,34 @@ +Key factors affecting the results of our Consumer Banking business for 2023 compared to 2022, and changes in financial +condition and credit performance between December 31, 2023 and 2022 include the following: +• Net Interest Income: Net interest income decreased by $252 million to $8.7 billion in 2023 primarily driven by lower +margins in our retail banking and auto businesses and lower average loan balances in our auto business, partially offset +by higher deposits in our retail banking business. +• Non-Interest Income: Non-interest income increased by $120 million to $589 million in 2023 primarily driven by higher +interchange fees from an increase in debit card purchase volume and gains on our deferred compensation plan +investments. +• Provision for Credit Losses: Provision for credit losses remained substantially flat at $1.2 billion in 2023. +• Non-Interest Expense: Non-interest expense decreased by $134 million to $5.2 billion in 2023 primarily driven by a +lower level of auto originations. +Loans Held for Investment: +• Period-end loans held for investment decreased by $4.5 billion to $75.4 billion as of December 31, 2023 from December +31, 2022 primarily driven by customer payments outpacing new originations in auto. +• Average loans held for investment decreased by $2.9 billion to $77.5 billion in 2023 compared to 2022 primarily driven +by lower auto loan originations. +Deposits: +• Period-end deposits increased by $25.6 billion to $296.2 billion as of December 31, 2023 from December 31, 2022 +primarily driven by our national banking strategy, which includes our national brand and marketing strategy, cafés, and +tech / digital investments, which have enabled us to both deepen and grow our overall customer base. +Net Charge-Off and Delinquency Metrics: +• The net charge-off rate increased by 70 bps to 1.76% in 2023 compared to 2022 primarily driven by higher net charge- +offs in our auto loan portfolio. +• The 30+ day delinquency rate increased by 90 bps to 7.08% as of December 31, 2023 compared to December 31, 2022 +primarily driven by higher auto delinquency inventories. +Commercial Banking Business +The primary sources of revenue for our Commercial Banking business are net interest income from loans and deposits and non- +interest income earned from products and services provided to our clients such as advisory services, capital markets and +treasury management. Because our Commercial Banking business has loans and investments that generate tax-exempt income, +tax credits or other tax benefits, we present the revenues on a taxable-equivalent basis. Expenses primarily consist of the +provision for credit losses and operating costs. +Our Commercial Banking business generated net income from continuing operations of $691 million, $843 million and +$1.5 billion in 2023, 2022 and 2021, respectively. +69 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_80.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdc81d86ddfe0f499b3cda12dfb0bc0e0bbc5dd4 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,61 @@ +Table 10 summarizes the financial results of our Commercial Banking business and displays selected key metrics for the +periods indicated. +Table 10: Commercial Banking Business Results + Year Ended December 31, Change +(Dollars in millions, except as noted) 2023 2022 2021 +2023 vs. +2022 +2022 vs. +2021 +Selected income statement data: +Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,518 $ 2,461 $ 2,153 2 % 1 4 % +Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002 1,129 1,148 (11) (2) +Total net revenue(1) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520 3,590 3,301 (2) 9 +Provision (benefit) for credit losses(2) + . . . . . . . . . . . . . . . . . . . . . . . . 605 415 (519) 46 ** +Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,011 2,070 1,815 (3) 14 +Income from continuing operations before income taxes . . . . . . . . . 904 1,105 2,005 (18) (45) +Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 262 473 (19) (45) +Income from continuing operations, net of tax . . . . . . . . . . . . . . . . . $ 691 $ 843 $ 1,532 (18) (45) +Selected performance metrics: +Average loans held for investment: +Commercial and multifamily real estate . . . . . . . . . . . . . . . . . . . $ 36,448 $ 36,639 $ 30,980 (1) 18 +Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,008 54,772 45,146 2 21 +Total commercial banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 92,456 $ 91,411 $ 76,126 1 20 +Average yield on loans held for investment(1)(3) + . . . . . . . . . . . . . . . . 6.86% 4.02% 2.74% 284 bps 128 bps +Average deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,411 $ 42,018 $ 42,350 (11) % (1) % +Average deposits interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.68% 0.73% 0.14% 195 bps 59 bps +Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 578 $ 71 $ 2 ** ** +Net charge-off (recovery) rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.62% 0.08% — 54 bps 8 bps +(Dollars in millions, except as noted) +December +31, 2023 +December +31, 2022 Change +Selected period-end data: +Loans held for investment: +Commercial and multifamily real estate . . . . . . . . . . . . . . . . . . . $ 34,446 $ 37,453 (8) % +Commercial and industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,042 57,223 (2) +Total commercial banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,488 $ 94,676 (4) +Nonperforming loan rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.84% 0.74% 10 bps +Nonperforming asset rate(4) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.84 0.74 10 +Allowance for credit losses(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,545 $ 1,458 6 % +Allowance coverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.71 % 1.54 % 17 bps +Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,712 $ 40,808 (20) % +Loans serviced for others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,341 51,918 1 +__________ +(1) Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking +revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting +reductions to the Other category. +(2) The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the +related reserve is included in other liabilities on our consolidated balance sheets. Our reserve for unfunded lending commitments totaled $158 million +$218 million and $165 million as of December 31, 2023, 2022 and 2021, respectively. +(3) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such +as funds transfer pricing. +(4) Nonperforming assets consist of nonperforming loans and other foreclosed assets. The total nonperforming asset rate is calculated based on total +nonperforming assets divided by the combined period-end total loans held for investment and other foreclosed assets. +** Not meaningful. +70 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_81.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..498d24269feb832d07d40614f83de0221407dd9c --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,33 @@ +Key factors affecting the results of our Commercial Banking business for 2023 compared to 2022, and changes in financial +condition and credit performance between December 31, 2023 and 2022 include the following: +• Net Interest Income: Net interest income remained substantially flat at $2.5 billion in 2023 compared to 2022. +• Non-Interest Income: Non-interest income decreased by $127 million to $1.0 billion in 2023 primarily driven by lower +activity in our multifamily agency lending business. +• Provision for Credit Losses: Provision for credit losses increased by $190 million to $605 million in 2023 primarily +driven by our office real estate portfolio. +• Non-Interest Expense: Non-interest expense remained substantially flat at $2.0 billion in 2023 compared to 2022. +Loans Held for Investment: +• Period-end loans held for investment decreased by $4.2 billion to $90.5 billion as of December 31, 2023 from December +31, 2022 primarily driven by customer payments outpacing originations. +• Average loans held for investment increased by $1.0 billion to $92.5 billion in 2023 compared to 2022 primarily driven +by growth across our loan portfolio. +Deposits: +• Period-end deposits decreased by $8.1 billion to $32.7 billion as of December 31, 2023 from December 31, 2022 +primarily driven by intentional reduction in lower margin deposit balances. +Net Charge-Off and Nonperforming Metrics: +• The net charge-off rate increased by 54 bps to 0.62% in 2023 primarily driven by higher charge-offs in our office real +estate portfolio. +• The nonperforming loan rate increased by 10 bps to 0.84% as of December 31, 2023 compared to December 31, 2022 +primarily driven by credit deterioration in our office real estate portfolio. +Other Category +Other includes unallocated amounts related to our centralized Corporate Treasury group activities, such as management of our +corporate investment securities portfolio, asset/liability management and oversight of our funds transfer pricing process. Other +also includes: +• unallocated corporate revenue and expenses that do not directly support the operations of the business segments or for +which the business segments are not considered financially accountable in evaluating their performance, such as certain +restructuring charges; +• offsets related to certain line-item reclassifications; +• residual tax expense or benefit to arrive at the consolidated effective tax rate that is not assessed to our primary business +segments; and +• foreign exchange-rate fluctuations on foreign currency-denominated balances. +71 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_82.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..7068adcf15cf726318c3e0f7857fdb8e1b5408ec --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,45 @@ +Table 11 summarizes the financial results of our Other category for the periods indicated. +Table 11: Other Category Results + Year Ended December 31, Change +(Dollars in millions) 2023 2022 2021 +2023 vs. +2022 +2022 vs. +2021 +Selected income statement data: +Net interest loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,719) $ (896) $ (504) 9 2 % 7 8 % +Non-interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (233) (244) ** (5) +Total net loss(1) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,704) (1,129) (748) 51 51 +Provision (benefit) for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . 1 (6) (2) ** ** +Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637 154 423 ** (64) +Loss from continuing operations before income taxes . . . . . . . . . . . (2,342) (1,277) (1,169) 83 9 +Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (823) (617) (597) 33 3 +Loss from continuing operations, net of tax . . . . . . . . . . . . . . . . . . . $ (1,519) $ (660) $ (572) 130 15 +__________ +(1) Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking +revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting +reductions to the Other category. +** Not meaningful. +Loss from continuing operations increased by $859 million to a loss of $1.5 billion in 2023 compared to 2022 primarily driven +by higher funding costs and increased non-interest expense largely driven by the $289 million FDIC special assessment charge +recognized in the fourth quarter of 2023, partially offset by higher treasury income in non-interest income driven by higher +market interest rates. +CRITICAL ACCOUNTING POLICIES AND ESTIMATES +The preparation of financial statements in accordance with U.S. GAAP requires management to make a number of judgments, +estimates and assumptions that affect the amount of assets, liabilities, income and expenses on the consolidated financial +statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in +applying these policies is integral to understanding our financial statements. We provide a summary of our significant +accounting policies under “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant +Accounting Policies.” +We have identified the following accounting estimates as critical because they require significant judgments and assumptions +about highly complex and inherently uncertain matters and the use of reasonably different estimates and assumptions could +have a material impact on our results of operations or financial condition. Our critical accounting policies and estimates are as +follows: +• Loan loss reserves +• Goodwill +• Fair value +• Customer rewards reserve +We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary, based on +changing conditions. +72 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_83.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6095e99cd19e761b48cfd2e37c9d3130e3bbffd --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,51 @@ +Loan Loss Reserves +We maintain an allowance for credit losses that represents management’s current estimate of expected credit losses inherent in +our credit card, consumer banking and commercial banking loans held for investment portfolios as of each balance sheet date. +We also reserve for the uncollectible portion of finance charges and fees related to credit card loan receivables in the allowance +for credit losses consistent with the methodology we use to estimate the allowance for credit losses on the principal portion of +our credit card loan receivables. We also separately reserve for unfunded lending commitments that are not unconditionally +cancellable. We build our allowance for credit losses and reserve for unfunded lending commitments through the provision for +credit losses, which is driven by charge-offs, changes in the allowance for credit losses and changes in the reserve for unfunded +lending commitments. The allowance for credit losses was $15.3 billion as of December 31, 2023, compared to $13.2 billion as +of December 31, 2022. +Our allowance for credit losses and reserve for unfunded lending commitments utilize models to derive a quantitative estimate +of credit losses that is supplemented with additional qualitative considerations to capture risks and uncertainties not included in +the quantitative result. Our estimate of expected credit losses, for all loan and unfunded lending commitments, includes a +reasonable and supportable forecast period of one year and then reverts over a one-year period to historical losses at each +relevant loss component of the estimate. We use externally produced consensus estimates as inputs for our forward-looking +macroeconomic forecast and consider other forecasts and sources of uncertainty to develop the quantitative component. This +quantitative result is then supplemented qualitatively by management for economic uncertainty, including the consideration of +alternative macroeconomic scenarios, changes and trends in loan portfolios that may not be captured in the quantitative +component. These adjustments represent management’s judgment of the imprecision and risks inherent in the processes and +assumptions used in establishing the allowance for credit losses. +We have an established process, using analytical tools and management judgment, to determine our allowance for credit losses. +Significant management judgment is required to determine the relevant information and estimation methods used to arrive at +our best estimate of lifetime credit losses. Establishing the allowance on a quarterly basis involves evaluating and forecasting +both credit and macroeconomic variables. The macroeconomic forecast used to inform both quantitative and qualitative +components of our allowance for credit losses estimate is sensitive to certain variables, such as the U.S. Unemployment Rate, +and the U.S. Real Gross Domestic Product (“U.S. Real GDP”) Growth Rate assumptions. Our December 31, 2023 allowance +assumes that the quarterly average U.S. unemployment rate gradually increases to approximately 4.4% by the fourth quarter of +2024 and annual U.S. Real GDP increases 1.0% in 2024. +In addition to macroeconomic factors, many credit factors inform our allowance for credit losses, including, but not limited to, +historical loss and recovery experience, recent trends in delinquencies and charge-offs, risk ratings, the impact of bankruptcy +filings, the value of collateral underlying secured loans, account seasoning, changes in our credit evaluation, underwriting and +collection management policies, seasonality, credit bureau scores, current general economic conditions, changes in the legal and +regulatory environment and uncertainties in forecasting and modeling techniques used in estimating our allowance for credit +losses. +We have a governance framework supported by processes and controls intended to ensure that our estimate of the allowance for +credit losses is appropriate. Our governance framework provides for oversight of methods, models, qualitative adjustments, +process controls and results. At least quarterly, representatives from the Finance and Risk Management organizations review +and assess our allowance methodologies, key assumptions and the appropriateness of the allowance for credit losses. Groups +independent of our estimation functions participate in the review and validation process. Tasks performed by these groups +include periodic review of the rationale for and quantification of inputs requiring judgment as well as adjustments to results. +We have model policies, established by an independent Model Risk Office, which govern the validation of models and related +supporting documentation to ensure the appropriate use of models for estimating credit losses. The Model Risk Office validates +all models and requires ongoing monitoring of their performance. +In addition to the allowance for credit losses, on a quarterly basis, we review and assess our estimate of expected losses related +to unfunded lending commitments that are not unconditionally cancellable which are generally in our Commercial Banking +business. The factors impacting our assessment generally align with those considered in our evaluation of the allowance for +credit losses for the Commercial Banking business. The reserve for losses on unfunded lending commitments is included in +other liabilities on our consolidated balance sheets and changes to it are recorded through the provision for credit losses in our +consolidated statements of income. +73 Capital One Financial Corporation (COF) +The secret object #4 is a "bed". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_84.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..70ea89a60142a7f21062557165e6cd03a5ab1035 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,50 @@ +Although we examine a variety of externally available data, as well as our internal loan performance data, to determine our +allowance for credit losses and reserve for unfunded lending commitments, our estimation process is subject to risks and +uncertainties, including a reliance on historical loss and trend information that may not be representative of current conditions +and indicative of future performance as well as economic forecasts that may not align with actual future economic conditions. +Accordingly, our actual credit loss experience may not be in line with our expectations. We provide additional information on +the methodologies and key assumptions used in determining our allowance for credit losses for each of our loan portfolio +segments in “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.” +We provide information on the components of our allowance, disaggregated by operating segment, and changes in our +allowance in “Item 8. Financial Statements and Supplementary Data—Note 4—Allowance for Credit Losses and Reserve for +Unfunded Lending Commitments.” +Goodwill +Goodwill represents the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling +interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. +Goodwill totaled $15.1 billion and $14.8 billion as of December 31, 2023 and 2022, respectively. We did not recognize any +goodwill impairment in 2023 or 2022. See “Item 8. Financial Statements and Supplementary Data—Note 6—Goodwill and +Other Intangible Assets” for additional information. +We perform our goodwill impairment test annually on October 1 at a reporting unit level. We are also required to test goodwill +for impairment whenever events or circumstances indicate it is more-likely-than-not that an impairment may have occurred. An +impairment of a reporting unit’s goodwill is determined based on the amount by which the reporting unit’s carrying amount +exceeds its fair value, limited to the amount of goodwill allocated to the reporting unit. We have four reporting units: Credit +Card, Auto Finance, Other Consumer Banking, and Commercial Banking. +For the purpose of our goodwill impairment testing, we calculate the carrying amount of a reporting unit using an allocated +capital approach based on each reporting unit’s specific regulatory capital requirements, economic capital requirements and +underlying risks. The carrying amount for a reporting unit is the sum of its respective capital requirements, goodwill and other +intangibles balances. Consolidated stockholder’s equity in excess of the sum of all reporting units capital requirements that is +not identified for future capital needs, such as dividends, share buybacks, or other strategic initiatives, is allocated to the +reporting units and the Other category and assumed to be distributed to equity holders in future periods. +Determining the fair value of a reporting unit is a subjective process that requires the use of estimates and the exercise of +significant judgment. We calculate the fair value of our reporting units using a discounted cash flow (“DCF”) calculation, a +form of the income approach. This DCF calculation uses projected cash flows based on each reporting unit’s internal forecast +and the perpetuity growth method to calculate terminal values. Our DCF calculation requires management to make estimates +about future loan, deposit and revenue growth, as well as credit losses and capital rates. These cash flows and terminal values +are then discounted using discount rates based on our external cost of capital with adjustments for the risk inherent in each +reporting unit. Discount rates used for our reporting units ranged from 8.3% to 12.4%, and we applied a terminal year long-term +growth rate of 3.8% to all reporting units. The reasonableness of our DCF calculation is assessed by reference to a market-based +approach using comparable market multiples and recent market transactions where available. The usefulness of market data is +inherently limited due to the size and scope of our operations compared to most peer institutions and recent market transactions. +The results of the 2023 annual impairment test indicated that the estimated fair values of the reporting units exceeded their +carrying amounts by between 12% and 121%. We also compare the aggregate fair values of our reporting units to our market +capitalization. Our assessment considers the level of premium expected to assume control of the Company in a market +transaction including anticipated cost savings and other synergies that would be realized in a hypothetical transaction. +The results of the 2023 annual goodwill impairment test for our Commercial Banking reporting unit concluded that, while the +estimated fair value of this reporting unit exceeded its carrying amount, the percentage by which the estimated fair value of this +reporting unit exceeded its carrying amount had decreased to 12% from 17% in the 2022 annual impairment test. The +assumptions leveraged in the valuation of each reporting unit, including the Commercial Banking reporting unit, and the related +risk of changes in those assumptions are described further below. +Assumptions used in estimating the fair value of a reporting unit are judgmental and inherently uncertain. A change in the +economic conditions of a reporting unit, such as declines in business performance as a result of industry or macroeconomic +trends or changes in our strategy, adverse impacts to loan or deposit growth trends, decreases in revenue, increases in expenses, +74 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_85.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..3af1097010e8a309df3f3839909616942611d513 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,47 @@ +deterioration in a significant loan portfolio, increases in credit losses, increases in capital requirements, deterioration of market +conditions, declines in long-term growth expectations, an increase in disposition activity, adverse impacts of regulatory or +legislative changes or increases in the estimated cost of capital could cause the estimated fair values of our reporting units to +decline in the future, and increase the risk of a goodwill impairment in a future period. We perform sensitivity analyses around +certain assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. +We have a governance framework supported by processes and controls intended to ensure that the accounting and disclosure for +goodwill is appropriate. Our governance framework provides for oversight of assumptions, forecast inputs, methods, process +controls and results. +Fair Value +Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a +liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance +provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which +the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or +unobservable. The fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any +input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are described +below: +Level 1: Valuation is based on quoted prices (unadjusted) in active markets for identical assets or liabilities. +Level 2: Valuation is based on observable market-based inputs other than Level 1 prices, such as quoted prices for similar +assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated +by observable market data for substantially the full term of the assets or liabilities. +Level 3: Valuation is generated from techniques that use significant assumptions not observable in the market. Valuation +techniques include pricing models, DCF methodologies or similar techniques. +The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the +availability of quoted prices in active markets or observable market parameters. When quoted prices and observable data in +active markets are not fully available, management judgment is necessary to estimate fair value. Changes in market conditions, +such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and +reliability of quoted prices or observable data used to determine fair value. +We have developed policies and procedures to determine when markets for our financial assets and liabilities are inactive if the +level and volume of activity has declined significantly relative to normal conditions. If markets are determined to be inactive, it +may be appropriate to adjust price quotes received. When significant adjustments are required to price quotes or inputs, it may +be appropriate to utilize an estimate based primarily on unobservable inputs. +Significant judgment may be required to determine whether certain financial instruments measured at fair value are classified as +Level 2 or Level 3. In making this determination, we consider all available information that market participants use to measure +the fair value of the financial instrument, including observable market data, indications of market liquidity and orderliness, and +our understanding of the valuation techniques and significant inputs used. Based upon the specific facts and circumstances of +each instrument or instrument category, judgments are made regarding the significance of the Level 3 inputs to the instruments’ +fair value measurement in its entirety. If Level 3 inputs are considered significant, the instrument is classified as Level 3. The +process for determining fair value using unobservable inputs is generally more subjective and involves a high degree of +management judgment and assumptions. We discuss changes in the valuation inputs and assumptions used in determining the +fair value of our financial instruments, including the extent to which we have relied on significant unobservable inputs to +estimate fair value and our process for corroborating these inputs, in “Item 8. Financial Statements and Supplementary Data— +Note 16—Fair Value Measurement.” +We have a governance framework and a number of key controls that are intended to ensure that our fair value measurements are +appropriate and reliable. Our governance framework provides for independent oversight and segregation of duties. Our control +processes include review and approval of new transaction types, price verification, and review of valuation judgments, methods, +models, process controls and results. +75 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_86.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c2aa73e46321148d8ff7d95e001082e4b6be392 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,40 @@ +Groups independent of our trading and investing functions participate in the review and validation process. Tasks performed by +these groups include periodic verification of fair value measurements to determine if assigned fair values are reasonable, +including comparing prices from vendor pricing services to other available market information. +Our Fair Value Committee (“FVC”), which includes representation from business areas, Risk Management and Finance, +provides guidance and oversight to ensure an appropriate valuation control environment. The FVC regularly reviews and +approves our fair valuations to ensure that our valuation practices are consistent with industry standards and adhere to +regulatory and accounting guidance. +We have model policies, established by an independent Model Risk Office, which govern the validation of models and related +supporting documentation to ensure the appropriate use of models for pricing and fair value measurements. The Model Risk +Office validates all models and requires ongoing monitoring of their performance. +The fair value governance process is set up in a manner that allows the Chairperson of the FVC to escalate valuation disputes +that cannot be resolved by the FVC to a more senior committee called the Valuations Advisory Committee (“VAC”) for +resolution. The VAC is chaired by the Chief Financial Officer and includes other members of senior manageme nt. There were +no disputes escalated to the VAC for the years ended December 31, 2023 and 2022. +Customer Rewards Reserve +We offer products, primarily credit cards, which include programs that allow members to earn rewards based on account +activity that can be redeemed for cash (primarily in the form of statement credits), gift cards, travel, or covering eligible +charges. The amount of rewards that a customer earns varies based on the terms and conditions of the rewards program and +product. The majority of our rewards do not expire and there is no limit on the amount of rewards an eligible card member can +earn. Customer rewards costs, which we generally record as an offset to interchange income, are driven by various factors such +as card member purchase volume, the terms and conditions of the rewards program and rewards redemption cost. We establish +a customer rewards reserve that reflects management’s judgment regarding rewards earned that are expected to be redeemed +and the estimated redemption cost. +We use financial models to estimate ultimate redemption rates of rewards earned by current card members based on historical +redemption trends, current enrollee redemption behavior, card product type, year of program enrollment, enrollment tenure and +card spend levels. Our current assumption is that the vast majority of all rewards earned will eventually be redeemed. We use +the weighted-average redemption cost during the previous twelve months, adjusted as appropriate for recent changes in +redemption costs, including changes related to the mix of rewards redeemed, to estimate future redemption costs. We +continually evaluate our reserve and assumptions based on developments in redemption patterns, changes to the terms and +conditions of the rewards program and other factors. While the rewards liability is sensitive to changes in assumptions for +redemption rates and costs and involves management judgment, we believe portfolio characteristics and historical performance +are the best indication of future reward redemption behavior and are the primary basis for our estimate. We recognized +customer rewards expense of $8.2 billion, $7.6 billion and $6.4 billion in 2023, 2022 and 2021, respectively. Our customer +rewards reserve, which is included in other liabilities on our consolidated balance sheets, totaled $7.4 billion and $6.8 billion as +of December 31, 2023 and 2022, respectively. +We have a governance framework supported by processes and controls that are intended to ensure that our rewards liability +estimate is appropriate and reliable. Our governance framework provides for oversight of assumptions, inputs, methods, process +controls and results. Additional controls are performed to ensure all underlying data used to derive the rewards liability is +complete and accurate. +76 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_87.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..28ccc380a310d27c48390e6a2c6b1d1ffb4d0d54 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,66 @@ +ACCOUNTING CHANGES AND DEVELOPMENTS +Accounting Standards Issued but Not Adopted as of December 31, 2023 +Income Tax Disclosures +Accounting Standards Update (“ASU”) No. +2023-09, Income Taxes (Topic 740): +Improvements to Income Tax Disclosures +Issued December 2023 +Standard Guidance Adoption Timing and +Financial Statement Impacts +Requires entities to provide additional +information in the income tax rate +reconciliation and make additional +disclosures about income taxes paid. +Effective January 1, 2025, with early +adoption permitted, using either the +prospective or retrospective transition +method. +We plan to adopt this standard on its +effective date using a prospective transition +method. We expect such adoption to result +in additional information being included in +our income tax footnote and consolidated +statements of cash flows. +Segment Reporting Disclosures +ASU No. 2023-07, Segment Reporting +(Topic 280): Improvements to Reportable +Segment Disclosures +Issued November 2023 +Requires disclosure of incremental segment +information on an annual and interim basis. +Effective for annual periods ending +December 31, 2024 and interim periods +within fiscal years beginning January 1, +2025, with early adoption permitted, using a +retrospective transition method. +We plan to adopt this standard on its +effective date using a retrospective transition +method. Such adoption may result in +additional information being included in our +business segment footnote. +Tax Credit Investments +ASU No. 2023-02, Investments - Equity +Method and Joint Ventures (Topic 323): +Accounting for Investments in Tax Credit +Structures Using the Proportional +Amortization Method +Issued March 2023 +Permits entities to elect to account for their +tax equity investments, regardless of the tax +credit program from which the income tax +credits are received, using the proportional +amortization method, if certain criteria are +met. Previously, only Low-Income Housing +Tax Credit investments were eligible for +application of the proportional amortization +method. +This standard became effective on January 1, +2024. +We adopted this guidance in the first quarter +of 2024 using a modified retrospective +method. Adoption of this standard will not +have a material impact on our consolidated +financial statements. +See “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” for +information on the accounting standards we adopted in 2023. +77 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_90.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..04791ec3e05d94b53479b8ffe96fd8a6409200de --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,43 @@ +aggregate trading assets and liabilities equal to 10% or more of total assets or $1 billion or more. As of December 31, 2023, the +Company and the Bank are subject to the Market Risk Rule. See “Market Risk Profile” below for additional information. +For the description of the regulatory capital rules to which we are subject, including recent proposed amendments to these rules +under the Basel III Finalization Proposal, see “Part I—Item 1. Business—Supervision and Regulation.” +Table 12 provides a comparison of our regulatory capital ratios under the Basel III standardized approach, the regulatory +minimum capital adequacy ratios and the applicable well-capitalized standards as of December 31, 2023 and 2022. +Table 12: Capital Ratios Under Basel III(1) + December 31, 2023 December 31, 2022 +Ratio +Minimum +Capital +Adequacy +Well- +Capitalized Ratio +Minimum +Capital +Adequacy +Well- +Capitalized +Capital One Financial Corp: +Common equity Tier 1 capital(2) . . . . . . . . . . . . 12.9% 4.5% N/A 12.5% 4.5% N/A +Tier 1 capital(3) + . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 6.0 6.0% 13.9 6.0 6.0% +Total capital(4) . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0 8.0 10.0 15.8 8.0 10.0 +Tier 1 leverage(5) . . . . . . . . . . . . . . . . . . . . . . . . 11.2 4.0 N/A 11.1 4.0 N/A +Supplementary leverage(6) + . . . . . . . . . . . . . . . . . 9.6 3.0 N/A 9.5 3.0 N/A +CONA: +Common equity Tier 1 capital(2) . . . . . . . . . . . . 13.1 4.5 6.5 13.1 4.5 6.5 +Tier 1 capital(3) + . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1 6.0 8.0 13.1 6.0 8.0 +Total capital(4) . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 8.0 10.0 14.4 8.0 10.0 +Tier 1 leverage(5) . . . . . . . . . . . . . . . . . . . . . . . . 10.3 4.0 5.0 10.5 4.0 5.0 +Supplementary leverage(6) + . . . . . . . . . . . . . . . . . 8.8 3.0 N/A 9.0 3.0 N/A +__________ +(1) Capital requirements that are not applicable are denoted by “N/A.” +(2) CET1 capital ratio is a regulatory capital measure calculated based on CET1 capital divided by risk-weighted assets. +(3) Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. +(4) Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets. +(5) Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets. +(6) Supplementary leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by total leverage exposure +80 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_91.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..d9697cc350baba946493917953d2d6c26a38ac32 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,40 @@ +Table 13 presents regulatory capital under the Basel III standardized approach and regulatory capital metrics as of December +31, 2023 and 2022. +Table 13: Regulatory Risk-Based Capital Components and Regulatory Capital Metrics +(Dollars in millions) December 31, 2023 December 31, 2022 +Regulatory capital under Basel III standardized approach +Common equity excluding AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,710 $ 59,450 +Adjustments and deductions: +AOCI, net of tax(1) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (17) +Goodwill, net of related deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,811) (14,540) +Other intangible and deferred tax assets, net of deferred tax liabilities . . . . . . . . . . . . . . . . . . . . (311) (162) +Common equity Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,615 44,731 +Tier 1 capital instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,845 4,845 +Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,460 49,576 +Tier 2 capital instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,936 2,585 +Qualifying allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,728 4,553 +Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,664 7,138 +Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,124 $ 56,714 +Regulatory capital metrics +Risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 369,206 $ 357,920 +Adjusted average assets(2) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467,553 444,704 +Total leverage exposure(3) + . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546,909 522,136 +__________ +(1) Excludes certain components of AOCI in accordance with rules applicable to Category III institutions. See “Capital Management—Basel III and United +States Capital Rules” in this Report. +(2) Includes on-balance sheet asset adjustments subject to deduction from Tier 1 capital under the Basel III Capital Rules. +(3) Reflects on- and off-balance sheet amounts for the denominator of the supplementary leverage ratio as set forth by the Basel III Capital Rules. +Capital Planning and Regulatory Stress Testing +We repurchased $150 million of shares of our common stock during the fourth quarter of 2023 and $600 million of shares of +our common stock during the year ended 2023. +On July 27, 2023, the Federal Reserve announced individual stress capital buffer requirements for all large banking institutions, +including the Company. The Company’s final stress capital buffer requirement for the period beginning on October 1, 2023 +through September 30, 2024 is 4.8%. Therefore, the Company’s minimum capital requirements plus the standardized approach +capital conservation buffer for CET1 capital, Tier 1 capital and total capital ratios under the stress capital buffer framework are +9.3%, 10.8% and 12.8%, respectively, for the period from October 1, 2023 through September 30, 2024. +For the description of the regulatory capital planning rules and stress testing requirements to which we are subject, see “Part I— +Item 1. Business—Supervision and Regulation.” +81 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_92.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7009faf77600429c5ab9b96c2e10e2971aaa5ac --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,71 @@ +Dividend Policy and Stock Purchases +For the year ended December 31, 2023, we declared and paid common stock dividends of $935 million, or $2.40 per share, +and preferred stock dividends of $228 million. Pursuant to the terms of the Merger Agreement, we are restricted from paying +quarterly cash dividends on our common stock in excess of $0.60 per share per quarter until the Transaction is closed. +The following table summarizes the dividends paid per share on our various preferred stock series in each quarter of 2023. +Table 14: Preferred Stock Dividends Paid Per Share +Series Description Issuance Date +Per Annum +Dividend Rate +Dividend +Frequency +2023 +Q4 Q3 Q2 Q1 +Series I 5.000% +Non-Cumulative +September 11, +2019 +5.000% Quarterly $12.50 $12.50 $12.50 $12.50 +Series J 4.800% +Non-Cumulative +January 31, + 2020 +4.800 Quarterly 12.00 12.00 12.00 12.00 +Series K 4.625% +Non-Cumulative +September 17, +2020 +4.625 Quarterly 11.56 11.56 11.56 11.56 +Series L 4.375% +Non-Cumulative +May 4, +2021 +4.375 Quarterly 10.94 10.94 10.94 10.94 +Series M 3.950% Fixed +Rate Reset +Non-Cumulative +June 10, +2021 +3.950% through +8/31/2026; +resets 9/1/2026 +and every +subsequent 5 +year anniversary +at 5-Year +Treasury Rate ++3.157% +Quarterly 9.88 9.88 9.88 9.88 +Series N 4.250% +Non-Cumulative +July 29, +2021 +4.250 Quarterly 10.63 10.63 10.63 10.63 +The declaration and payment of dividends to our stockholders, as well as the amount thereof, are subject to the discretion of our +Board of Directors and depend upon our results of operations, financial condition, capital levels, cash requirements, future +prospects, regulatory requirements and other factors deemed relevant by the Board of Directors. As a BHC, our ability to pay +dividends is largely dependent upon the receipt of dividends or other payments from our subsidiaries. The Bank is subject to +regulatory restrictions that limit its ability to transfer funds to our BHC. As of December 31, 2023, funds available for dividend +payments from the Bank were $5.2 billion. There can be no assurance that we will declare and pay any dividends to +stockholders. +We repurchased $150 million of shares of our common stock during the fourth quarter of 2023 and $600 million of shares of +our common stock during the year ended 2023. The timing and exact amount of any future common stock repurchases will +depend on various factors, including regulatory approval, market conditions, opportunities for growth, our capital position and +the amount of retained earnings. The Board authorized stock repurchase program does not include specific price targets, may be +executed through open market purchases, tender offers, or privately negotiated transactions, including utilizing Rule 10b5-1 +programs, does not have a set expiration date and may be suspended at any time. For additional information on dividends and +stock repurchases, see “Capital Management—Capital Planning and Regulatory Stress Testing,” “Item 5. Market for +Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Unregistered Sales of +Equity Securities and Use of Proceeds” and “Part I—Item 1. Business—Supervision and Regulation—Funding and Dividends +from Subsidiaries.” +82 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_93.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..c84f152618676c7b5e997973dadfb8c8210ed8ef --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,43 @@ +RISK MANAGEMENT +Risk Management Framework +Our Risk Management Framework (the “Framework”) sets consistent expectations for risk management across the Company. It +also sets expectations for our “Three Lines of Defense” model, which defines the roles, responsibilities and accountabilities for +taking and managing risk across the Company. Accountability for overseeing an effective Framework resides with our Board of +Directors either directly or through its committees. +First Line +Identifies and Owns Risk +Second Line +Advises & Challenges First Line +Third Line +Provides Independent Assurance +Definition Business areas that are accountable +for risk and responsible for: i) +generating revenue or reducing +expenses; ii) supporting the +business to provide products or +services to customers; or iii) +providing technology services for +the first line. +Independent Risk Management +(“IRM”) and Support Functions +(e.g., Human Resources, +Accounting, Legal) that provide +support services to the Company. +Internal Audit and Credit Review +Key Responsibilities Identify, assess, measure, monitor, +control, and report the risks +associated with their business. +IRM: Independently oversees and +assesses risk taking activities for the +first line of defense. +Support Functions: Centers of +specialized expertise that provide +support services to the enterprise. +Provides independent and objective +assurance to the Board of Directors +and senior management that the +systems and governance processes +are designed and working as +intended. +83 Capital One Financial Corporation (COF) +The secret object #5 is a "towel". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_94.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..c22e92894c4aea6cf33e6a7dfe7f025644f58b30 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,34 @@ +Our Framework sets consistent expectations for risk management across the Company and consists of the following nine +elements: + Governance and Accountability +Strategy and Risk Alignment +Risk Identification Assessment, Measurement +and Response Monitoring and Testing Aggregation, Reporting and +Escalation +Capital and Liquidity Management (including Stress Testing) +Risk Data and Enabling Technology +Culture and Talent Management +Governance and Accountability +This element of the Framework sets the foundation for the methods for governing risk taking and the interactions within and +among our three lines of defense. +We established a risk governance structure and accountabilities to effectively and consistently oversee the management of risks +across the Company. Our Board of Directors, Chief Executive Officer and management establish the tone at the top regarding +the culture of the Company, including management of risk. Management reinforces expectations at the various levels of the +organization. +Strategy and Risk Alignment +Our strategy is informed by and aligned with risk appetite, from development to execution. The Chief Executive Officer +develops the strategy with input from the first, second, and third lines of defense, as well as the Board of Directors. The +strategic planning process considers relevant changes to the Company’s overall risk profile. +Our Board of Directors approves a Risk Appetite Statement for the Company to set forth the high-level principles that govern +risk taking at the Company. The Risk Appetite Statement defines the Board of Directors’ tolerance for certain risk outcomes at +an enterprise level and enables senior management to manage and report within these boundaries. This Risk Appetite Statement +is also supported by risk category specific risk appetite statements as well as metrics and, where appropriate, Board Limits and +Board Notification Thresholds. +Risk Identification +The first line of defense and certain Support Functions identify new and emerging risks, including concentration of risk, across +the relevant risk categories associated with their business activities and objectives, in consultation with IRM. Risk identification +also must be informed by major changes in infrastructure or organization, introduction of new products and services, +acquisitions of businesses, or substantial changes in the internal or external environment. +IRM and certain Support Functions, where appropriate, provide effective challenge in the risk identification process. IRM is +also responsible for identifying our material aggregate risks on an ongoing basis. +84 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_95.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..06fe7deddb0182d0b5522ecf632910ddd5d4258a --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,45 @@ +Assessment, Measurement and Response +Management assesses risks associated with our activities. Risks identified are assessed to understand the severity of each risk +and likelihood of occurrence under both normal and stressful conditions. Risk severity is measured through modeling and other +quantitative estimation approaches, as well as qualitative approaches, based on management judgment. As part of the risk +assessment process, the first and second lines of defense also evaluate the effectiveness of the existing control environment and +mitigation strategies. +Management determines the appropriate risk response. Risks may be mitigated or accepted. Actions taken to respond to the risk +include implementing new controls, enhancing existing controls, developing additional mitigation strategies to reduce the +impact of the risk, and/or monitoring the risk. +Monitoring and Testing +Management periodically monitors risks to evaluate and measure how the risk is affecting our strategy and business objectives, +in alignment with risk appetite, including established concentration risk limits. The scope and frequency of monitoring activities +depends on the results of relevant risk assessments, as well as specific business risk operations and activities. +The first line of defense is required to evaluate the effectiveness of risk management practices and controls through testing and +other activities. IRM and Support Functions, as appropriate, assess the first line of defense’s evaluation of risk management, +which may include conducting effective challenge, performing independent monitoring, or conducting risk or control +validations. The third line of defense provides independent assurance for first and second line risk management practices and +controls. +Aggregation, Reporting and Escalation +Risk aggregation supports strategic decision making and risk management practices through collectively reporting risks across +different levels of the Company and providing a comprehensive view of performance against risk appetite. Our risk aggregation +processes are designed to aggregate risk information from lower levels of the business hierarchy to high levels and to aggregate +risk information to determine material risk themes. +Material risks, new or emerging risks, aggregate risks, risk appetite metrics and other measures across all risk categories are +reported to the appropriate governance forum no less than quarterly. Material risks are reported to the Board of Directors and +senior management committees no less than quarterly. +Capital and Liquidity Management (including Stress Testing) +Our capital management processes are linked to its risk management practices, including the enterprise-wide identification, +assessment and measurement of risks to ensure that all relevant risks are incorporated in the assessment of the Company's +capital adequacy. We use identified risks to inform key aspects of the Company’s capital planning, including the development +of stress scenarios, the assessment of the adequacy of post-stress capital levels, and the appropriateness of potential capital +actions considering the Company’s capital objectives. We quantify capital needs through stress testing, regulatory capital, +economic capital and assessments of market considerations. In assessing its capital adequacy, we identify how and where our +material risks are accounted for within the capital planning process. Monitoring and escalation processes exist for key capital +thresholds and metrics to continuously monitor capital adequacy. +We manage liquidity risk by applying our Liquidity Adequacy Framework (the “Liquidity Framework”). The Liquidity +Framework uses internal and regulatory stress testing and the evaluation of other balance sheet metrics to confirm that we +maintain a fortified balance sheet that is resilient to uncertainties that may arise as a consequence of systemic, idiosyncratic, or +combined liquidity events. +Risk Data and Enabling Technology +Risk data and technology provides the basis for risk reporting and is used in decision making and to monitor and review +changes to our risk profile. There are core Governance, Risk Management and Compliance systems which are used as the +system of record for risks, controls, issues and events for our risk categories and supports the analysis, aggregation and +reporting capabilities across the categories. +85 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_96.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..f69988826df23e3705fca66f4a145c307e2980fa --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,41 @@ +Culture and Talent Management +The Framework must be supported with the right culture, talent and skills to enable effective risk management across the +Company. +Every associate at the Company is responsible for risk management; however, associates with specific risk management skills +and expertise within the first, second and third lines of defense are critical to execute appropriate risk management across the +enterprise. +Risk Categories +We apply our Framework to protect the Company from the major categories of risk that we are exposed to through our business +activities. We have seven major categories of risk as noted below. +Major Categories of Risk +Compliance +The risk to current or anticipated earnings or capital arising from violations of laws, rules or regulations. +Compliance risk can also arise from nonconformance with prescribed practices, internal policies and procedures, +contractual obligations or ethical standards that reinforce those laws, rules or regulations +Credit The risk to current or projected financial condition and resilience arising from an obligor’s failure to meet the terms +of any contract with the Company or otherwise perform as agreed +Liquidity The risk that the Company will not be able to meet its future financial obligations as they come due, or invest in +future asset growth because of an inability to obtain funds at a reasonable price within a reasonable time +Market The risk that an institution’s earnings or the economic value of equity could be adversely impacted by changes in +interest rates, foreign exchange rates or other market factors +Operational The risk of loss, capital impairment, adverse customer experience or reputational impact resulting from failure to +comply with policies and procedures, failed internal processes or systems, or from external events +Reputation +The risk to market value, recruitment and retention of talented associates and maintenance of a loyal customer base +due to the negative perceptions of our internal and external constituents regarding our business strategies and +activities +Strategic +The risk of a material impact on current or anticipated earnings, capital, franchise or enterprise value arising from +the Company’s competitive and market position and evolving forces in the industry that can affect that position; +lack of responsiveness to these conditions; strategic decisions to change the Company’s scale, market position or +operating model; or, failure to appropriately consider implementation risks inherent in the Company’s strategy +We provide an overview of how we manage our seven major categories of risk below. +Compliance Risk Management +We recognize that compliance requirements for financial institutions are increasingly complex and that there are heightened +expectations from our regulators and our customers. In response, we continuously evaluate the regulatory environment and +proactively adjust our compliance program to fully address these expectations. +Our Compliance Management Program establishes expectations for determining compliance requirements, assessing the risk of +new product offerings, creating appropriate controls and training to address requirements, monitoring for control performance, +and independently testing for adherence to compliance requirements. The program also establishes regular compliance reporting +to senior business leaders, the executive committee and the Board of Directors. +86 Capital One Financial Corporation (COF) \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_97.txt b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab06db151ba2070f1e2e4cdd2673117a9a75a19 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/Text_TextNeedles/CapitalOne_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,50 @@ +The Chief Compliance Officer is responsible for establishing and overseeing our Compliance Management Program. Business +areas incorporate compliance requirements and controls into their business policies, standards, processes and procedures. They +regularly monitor and report on the efficacy of their compliance controls and our Compliance team periodically independently +tests to validate the effectiveness of business controls. +Credit Risk Management +We recognize that we are exposed to cyclical changes in credit quality. Consequently, we try to ensure our credit portfolio is +resilient to economic downturns. Our most important tool in this endeavor is sound underwriting. In unsecured consumer loan +underwriting, we generally assume that loans will be subject to an environment in which losses are higher than those prevailing +at the time of underwriting. In commercial underwriting, we generally require strong cash flow, collateral, covenants, and +guarantees. In addition to sound underwriting, we continually monitor our portfolio and take steps to collect or work out +distressed loans. +The Chief Credit and Financial Risk Officer, in conjunction with the Chief Credit Officers, is responsible for establishing credit +risk policies and procedures, including underwriting and hold guidelines and credit approval authority, and monitoring credit +exposure and performance of our lending related transactions. Our Chief Credit Officers are responsible for evaluating the risk +implications of credit strategy and the oversight of credit for both the existing portfolio and any new credit investments. They +also have formal approval authority for various types and levels of credit decisions, including individual commercial loan +transactions. Division Presidents within each segment are responsible for managing the credit risk within their divisions and +maintaining processes to control credit risk and comply with credit policies and guidelines. In addition, the Chief Credit and +Financial Risk Officer establishes policies, delegates approval authority and monitors performance for non-loan credit exposure +entered into with financial counterparties or through the purchase of credit sensitive securities in our investment portfolio. +Our credit policies establish standards in five areas: customer selection, underwriting, monitoring, remediation and portfolio +management. The standards in each area provide a framework comprising specific objectives and control processes. These +standards are supported by detailed policies and procedures for each component of the credit process. Starting with customer +selection, our goal is to generally provide credit on terms that generate above hurdle returns. We use a number of quantitative +and qualitative factors to manage credit risk, including setting credit risk limits and guidelines for each of our lines of business. +We monitor performance relative to these guidelines and report results and any required mitigating actions to appropriate senior +management committees and our Board of Directors. +Liquidity Risk Management +We recognize that liquidity risk is embedded within our day-to-day and strategic decisions. Liquidity is essential for banks to +meet customer withdrawals, account for balance sheet changes, and provide funding for growth. We have acquired and built +deposit gathering businesses and actively monitor our funding concentration. We manage our liquidity risk, which is driven by +both internal and external factors, centrally and establish quantitative risk limits to continually assess our liquidity adequacy. +The Chief Credit and Financial Risk Officer, in conjunction with the Head of Liquidity, Market and Capital Risk Oversight, is +responsible for the establishment of liquidity risk management policies and standards for governance and monitoring of +liquidity risk at a corporate level. We assess liquidity strength by evaluating several different balance sheet metrics under severe +stress scenarios to ensure we can withstand significant funding degradation. Results are reported to the Asset Liability +Committee monthly and to the Risk Committee no less than quarterly. We also continuously monitor market and economic +conditions to evaluate emerging stress conditions and to develop appropriate action plans in accordance with our Contingency +Funding Plan (“CFP”) and our Recovery Plan. +We use internal and regulatory stress testing and the evaluation of other balance sheet metrics within our Liquidity Framework +to confirm we maintain a fortified balance sheet. We rely on a combination of stable and diversified funding sources, along with +a stockpile of liquidity reserves, to effectively manage our liquidity risk. We maintain a sizable liquidity reserve of cash and +cash equivalents, high-quality unencumbered securities and investment securities and certain loans that are either readily- +marketable or pledgeable. We also continue to maintain access to secured and unsecured debt markets through regular issuance. +Market Risk Management +We recognize that interest rate and foreign exchange risk are present in our business due to the nature of our assets and +liabilities. Market risk is inherent from the financial instruments associated with our business operations and activities including +loans, deposits, securities, short-term borrowings, long-term debt and derivatives. We manage market risk exposure, which is +87 Capital One Financial Corporation (COF) +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/CapitalOne/CapitalOne_150Pages/needles.csv b/CapitalOne/CapitalOne_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_150Pages/needles_info.csv b/CapitalOne/CapitalOne_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..4f72696c61563142ecd7b8a6a626ad7eb3cf12e2 --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,3,10,white,black,0.339,0.146,helvetica,83 +The secret object #3 is a "knife".,10,13,black,white,0.533,0.14,times-bolditalic,87 +The secret office supply is a "stapler".,16,10,red,white,0.565,0.036,times-bold,114 +The secret fruit is an "orange".,21,10,yellow,black,0.122,0.301,helvetica-bold,132 +The secret kitchen appliance is a "pan".,27,12,orange,black,0.74,0.861,courier,81 +The secret vegetable is an "onion".,35,10,gray,white,0.52,0.007,courier-bold,142 +The secret object #1 is a "chair".,40,10,blue,white,0.405,0.48,helvetica-boldoblique,60 +The secret animal #4 is a "turtle".,46,10,purple,white,0.031,0.633,times-roman,100 +The secret tool is a "saw".,49,9,green,white,0.834,0.021,courier-oblique,109 +The secret food is a "sausage".,57,9,brown,white,0.883,0.706,times-italic,104 +The secret animal #2 is a "panda".,62,10,green,white,0.12,0.869,helvetica,88 +The secret animal #5 is a "wolf".,67,12,purple,white,0.119,0.772,courier,86 +The secret flower is a "tulip".,76,10,orange,black,0.782,0.932,courier-oblique,93 +The secret object #4 is a "bed".,83,13,white,black,0.596,0.775,times-bolditalic,82 +The secret clothing is a "glove".,88,8,black,white,0.581,0.936,times-roman,115 +The secret object #5 is a "towel".,93,10,yellow,black,0.877,0.249,helvetica-bold,126 +The secret instrument is a "trumpet".,97,12,red,white,0.405,0.277,helvetica-boldoblique,96 +The secret animal #1 is a "lion".,103,10,gray,white,0.326,0.462,times-bold,93 +The secret object #2 is a "key".,112,12,brown,white,0.832,0.363,courier-bold,96 +The secret animal #3 is an "eagle".,119,11,blue,white,0.326,0.661,times-italic,103 +The secret currency is a "pound".,123,13,blue,white,0.118,0.683,times-bold,94 +The secret drink is "water".,129,10,black,white,0.211,0.094,courier-bold,77 +The secret sport is "boxing".,137,9,orange,black,0.94,0.27,helvetica-bold,130 +The secret landmark is the "Taj Mahal".,144,11,white,black,0.54,0.944,courier,108 +The secret transportation is a "train".,145,8,green,white,0.774,0.791,times-roman,89 diff --git a/CapitalOne/CapitalOne_150Pages/prompt_questions.txt b/CapitalOne/CapitalOne_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/CapitalOne/CapitalOne_200Pages/needles.csv b/CapitalOne/CapitalOne_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_200Pages/needles_info.csv b/CapitalOne/CapitalOne_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..db35e64922b3c5d37c8701b3e337dd93f7431d56 --- /dev/null +++ b/CapitalOne/CapitalOne_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,3,10,brown,white,0.124,0.43,times-bold,106 +The secret object #3 is a "knife".,9,9,red,white,0.206,0.89,times-italic,121 +The secret office supply is a "stapler".,21,11,purple,white,0.649,0.783,helvetica-boldoblique,110 +The secret fruit is an "orange".,25,13,blue,white,0.374,0.571,times-roman,70 +The secret kitchen appliance is a "pan".,36,8,yellow,black,0.661,0.563,helvetica-bold,67 +The secret vegetable is an "onion".,45,10,white,black,0.332,0.508,times-bolditalic,104 +The secret object #1 is a "chair".,53,12,black,white,0.489,0.47,courier-bold,71 +The secret animal #4 is a "turtle".,58,10,green,white,0.117,0.995,helvetica,112 +The secret tool is a "saw".,69,10,gray,white,0.59,0.91,courier,107 +The secret food is a "sausage".,77,10,orange,black,0.629,0.072,courier-oblique,94 +The secret animal #2 is a "panda".,83,12,white,black,0.818,0.831,times-roman,77 +The secret animal #5 is a "wolf".,92,11,red,white,0.284,0.445,courier-oblique,80 +The secret flower is a "tulip".,98,10,brown,white,0.325,0.473,helvetica-bold,110 +The secret object #4 is a "bed".,111,11,purple,white,1.0,0.01,times-bolditalic,86 +The secret clothing is a "glove".,113,10,black,white,0.698,0.032,times-bold,59 +The secret object #5 is a "towel".,127,7,blue,white,0.315,0.494,times-italic,107 +The secret instrument is a "trumpet".,136,12,orange,black,0.681,0.49,courier-bold,119 +The secret animal #1 is a "lion".,142,12,gray,white,0.287,0.704,helvetica-boldoblique,135 +The secret object #2 is a "key".,148,11,green,white,0.607,0.443,helvetica,100 +The secret animal #3 is an "eagle".,158,9,yellow,black,0.768,0.766,courier,77 +The secret currency is a "pound".,167,13,green,white,0.589,0.71,courier-oblique,83 +The secret drink is "water".,170,10,orange,black,0.509,0.736,times-roman,97 +The secret sport is "boxing".,178,13,yellow,black,0.16,0.658,helvetica,114 +The secret landmark is the "Taj Mahal".,188,13,purple,white,0.077,0.01,helvetica-boldoblique,87 +The secret transportation is a "train".,198,7,white,black,0.55,0.58,times-bold,100 diff --git a/CapitalOne/CapitalOne_200Pages/prompt_questions.txt b/CapitalOne/CapitalOne_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/CapitalOne/CapitalOne_25Pages/needles.csv b/CapitalOne/CapitalOne_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_25Pages/needles_info.csv b/CapitalOne/CapitalOne_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..29b5fda246b29b3b5a0f0d0f217ce5795aeaff50 --- /dev/null +++ b/CapitalOne/CapitalOne_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,1,10,green,white,0.051,0.736,times-roman,119 +The secret object #3 is a "knife".,2,12,orange,black,0.948,0.186,times-bolditalic,72 +The secret office supply is a "stapler".,3,12,red,white,0.978,0.776,times-bold,91 +The secret fruit is an "orange".,4,11,blue,white,0.517,0.154,helvetica,102 +The secret kitchen appliance is a "pan".,5,12,gray,white,0.019,0.153,times-italic,93 +The secret vegetable is an "onion".,6,8,black,white,0.774,0.762,helvetica-boldoblique,78 +The secret object #1 is a "chair".,7,13,purple,white,0.444,0.65,helvetica-bold,102 +The secret animal #4 is a "turtle".,8,11,white,black,0.849,0.726,courier-oblique,77 +The secret tool is a "saw".,9,14,brown,white,0.346,0.352,courier,68 +The secret food is a "sausage".,10,10,yellow,black,0.592,0.689,courier-bold,118 +The secret animal #2 is a "panda".,11,7,green,white,0.46,0.251,times-italic,91 +The secret animal #5 is a "wolf".,12,12,black,white,0.672,0.785,courier-oblique,55 +The secret flower is a "tulip".,13,12,gray,white,0.103,0.901,courier,141 +The secret object #4 is a "bed".,14,12,blue,white,0.994,0.979,times-bold,69 +The secret clothing is a "glove".,15,12,orange,black,0.821,0.582,courier-bold,116 +The secret object #5 is a "towel".,16,13,white,black,0.873,0.336,helvetica-bold,127 +The secret instrument is a "trumpet".,17,9,brown,white,0.539,0.13,helvetica-boldoblique,74 +The secret animal #1 is a "lion".,18,10,red,white,0.73,0.126,times-roman,103 +The secret object #2 is a "key".,19,13,yellow,black,0.549,0.828,helvetica,128 +The secret animal #3 is an "eagle".,20,12,purple,white,0.31,0.86,times-bolditalic,81 +The secret currency is a "pound".,21,12,red,white,0.585,0.861,times-italic,58 +The secret drink is "water".,22,11,green,white,0.752,0.206,courier-bold,61 +The secret sport is "boxing".,23,14,white,black,0.465,0.249,helvetica,57 +The secret landmark is the "Taj Mahal".,24,11,brown,white,0.634,0.543,helvetica-boldoblique,88 +The secret transportation is a "train".,25,11,yellow,black,0.954,0.462,times-bold,128 diff --git a/CapitalOne/CapitalOne_25Pages/prompt_questions.txt b/CapitalOne/CapitalOne_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/CapitalOne/CapitalOne_50Pages/needles.csv b/CapitalOne/CapitalOne_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_50Pages/needles_info.csv b/CapitalOne/CapitalOne_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..4df4702418bc2514e4d60d10482115e9302035c1 --- /dev/null +++ b/CapitalOne/CapitalOne_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,1,11,red,white,0.423,0.716,helvetica-boldoblique,112 +The secret object #3 is a "knife".,3,11,green,white,0.405,0.813,courier,137 +The secret office supply is a "stapler".,6,9,orange,black,0.224,0.626,courier-bold,63 +The secret fruit is an "orange".,7,9,black,white,0.346,0.697,times-roman,135 +The secret kitchen appliance is a "pan".,10,9,gray,white,0.657,0.288,times-bolditalic,64 +The secret vegetable is an "onion".,11,12,blue,white,0.976,0.808,helvetica,108 +The secret object #1 is a "chair".,13,12,yellow,black,0.773,0.269,times-italic,101 +The secret animal #4 is a "turtle".,15,10,white,black,0.391,0.987,helvetica-bold,82 +The secret tool is a "saw".,18,9,brown,white,0.505,0.725,times-bold,97 +The secret food is a "sausage".,20,13,purple,white,0.297,0.792,courier-oblique,88 +The secret animal #2 is a "panda".,22,9,red,white,0.685,0.521,times-italic,98 +The secret animal #5 is a "wolf".,24,9,purple,white,0.681,0.533,times-bold,115 +The secret flower is a "tulip".,25,12,brown,white,0.085,0.468,courier,113 +The secret object #4 is a "bed".,28,11,yellow,black,0.618,0.561,times-bolditalic,86 +The secret clothing is a "glove".,30,13,black,white,0.096,0.155,helvetica-boldoblique,121 +The secret object #5 is a "towel".,32,9,white,black,0.856,0.202,courier-bold,71 +The secret instrument is a "trumpet".,34,8,blue,white,0.658,0.386,courier-oblique,69 +The secret animal #1 is a "lion".,36,9,gray,white,0.286,0.085,helvetica,77 +The secret object #2 is a "key".,37,9,green,white,0.629,0.268,helvetica-bold,143 +The secret animal #3 is an "eagle".,40,10,orange,black,0.822,0.667,times-roman,117 +The secret currency is a "pound".,42,10,brown,white,0.556,0.941,courier,96 +The secret drink is "water".,44,10,green,white,0.154,0.497,times-italic,110 +The secret sport is "boxing".,46,14,orange,black,0.0,0.275,courier-oblique,106 +The secret landmark is the "Taj Mahal".,47,13,white,black,0.235,0.088,helvetica-boldoblique,125 +The secret transportation is a "train".,50,12,purple,white,0.051,0.63,helvetica-bold,125 diff --git a/CapitalOne/CapitalOne_50Pages/prompt_questions.txt b/CapitalOne/CapitalOne_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/CapitalOne/CapitalOne_5Pages/needles.csv b/CapitalOne/CapitalOne_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..5fc5b257f7291db27951d4c70cf9317845742bbd --- /dev/null +++ b/CapitalOne/CapitalOne_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret shape is a "rectangle". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". diff --git a/CapitalOne/CapitalOne_5Pages/needles_info.csv b/CapitalOne/CapitalOne_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..bb82935398ee1cf7dad19c580318ec2e641ee7b0 --- /dev/null +++ b/CapitalOne/CapitalOne_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret shape is a "rectangle".,1,9,red,white,0.634,0.234,helvetica-boldoblique,106 +The secret office supply is a "stapler".,2,12,black,white,0.329,0.171,times-roman,78 +The secret fruit is an "orange".,3,7,green,white,0.096,0.581,times-italic,78 +The secret kitchen appliance is a "pan".,4,13,brown,white,0.388,0.379,times-bolditalic,72 +The secret vegetable is an "onion".,5,9,purple,white,0.342,0.837,helvetica-bold,126 diff --git a/CapitalOne/CapitalOne_5Pages/prompt_questions.txt b/CapitalOne/CapitalOne_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..772f8cebfdda11e4ec01ab2674a62483508ce5e0 --- /dev/null +++ b/CapitalOne/CapitalOne_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret shape in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? diff --git a/CapitalOne/CapitalOne_75Pages/needles.csv b/CapitalOne/CapitalOne_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..1e37106271d247c938cee13a65dc862f408be9d9 --- /dev/null +++ b/CapitalOne/CapitalOne_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle". +The secret object #3 is a "knife". +The secret office supply is a "stapler". +The secret fruit is an "orange". +The secret kitchen appliance is a "pan". +The secret vegetable is an "onion". +The secret object #1 is a "chair". +The secret animal #4 is a "turtle". +The secret tool is a "saw". +The secret food is a "sausage". +The secret animal #2 is a "panda". +The secret animal #5 is a "wolf". +The secret flower is a "tulip". +The secret object #4 is a "bed". +The secret clothing is a "glove". +The secret object #5 is a "towel". +The secret instrument is a "trumpet". +The secret animal #1 is a "lion". +The secret object #2 is a "key". +The secret animal #3 is an "eagle". +The secret currency is a "pound". +The secret drink is "water". +The secret sport is "boxing". +The secret landmark is the "Taj Mahal". +The secret transportation is a "train". diff --git a/CapitalOne/CapitalOne_75Pages/needles_info.csv b/CapitalOne/CapitalOne_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..e2eb5052acb9cb52228ab5eef77b3fb75e5483ba --- /dev/null +++ b/CapitalOne/CapitalOne_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "rectangle".,1,10,black,white,0.395,0.481,times-roman,104 +The secret object #3 is a "knife".,6,10,orange,black,0.678,0.656,helvetica,107 +The secret office supply is a "stapler".,9,13,white,black,0.819,0.157,helvetica-boldoblique,96 +The secret fruit is an "orange".,12,9,brown,white,0.487,0.526,helvetica-bold,82 +The secret kitchen appliance is a "pan".,13,12,yellow,black,0.975,0.686,times-bold,97 +The secret vegetable is an "onion".,18,11,green,white,0.664,0.952,times-italic,61 +The secret object #1 is a "chair".,21,9,gray,white,0.225,0.835,times-bolditalic,98 +The secret animal #4 is a "turtle".,23,9,red,white,0.982,0.768,courier,99 +The secret tool is a "saw".,27,12,purple,white,0.148,0.428,courier-oblique,78 +The secret food is a "sausage".,28,12,blue,white,0.843,0.88,courier-bold,73 +The secret animal #2 is a "panda".,33,10,black,white,0.714,0.776,helvetica-boldoblique,112 +The secret animal #5 is a "wolf".,36,9,purple,white,0.641,0.396,times-bolditalic,104 +The secret flower is a "tulip".,38,9,white,black,0.434,0.436,courier-oblique,112 +The secret object #4 is a "bed".,40,11,blue,white,0.45,0.902,helvetica,64 +The secret clothing is a "glove".,43,14,yellow,black,0.197,0.682,courier-bold,93 +The secret object #5 is a "towel".,48,13,red,white,0.513,0.704,helvetica-bold,129 +The secret instrument is a "trumpet".,51,12,brown,white,0.46,0.472,times-roman,96 +The secret animal #1 is a "lion".,52,12,green,white,0.376,0.607,courier,87 +The secret object #2 is a "key".,55,9,gray,white,0.207,0.992,times-bold,97 +The secret animal #3 is an "eagle".,60,12,orange,black,0.588,0.457,times-italic,65 +The secret currency is a "pound".,61,12,blue,white,0.447,0.221,helvetica,72 +The secret drink is "water".,66,12,purple,white,0.489,0.624,courier,93 +The secret sport is "boxing".,69,8,green,white,0.267,0.911,courier-bold,73 +The secret landmark is the "Taj Mahal".,71,12,brown,white,0.475,0.241,times-bolditalic,59 +The secret transportation is a "train".,74,10,red,white,0.761,0.3,helvetica-bold,111 diff --git a/CapitalOne/CapitalOne_75Pages/prompt_questions.txt b/CapitalOne/CapitalOne_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb052b168d910f220608196e53e617fd8d8d709b --- /dev/null +++ b/CapitalOne/CapitalOne_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret object #3 in the document? +What is the secret office supply in the document? +What is the secret fruit in the document? +What is the secret kitchen appliance in the document? +What is the secret vegetable in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret tool in the document? +What is the secret food in the document? +What is the secret animal #2 in the document? +What is the secret animal #5 in the document? +What is the secret flower in the document? +What is the secret object #4 in the document? +What is the secret clothing in the document? +What is the secret object #5 in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret object #2 in the document? +What is the secret animal #3 in the document? +What is the secret currency in the document? +What is the secret drink in the document? +What is the secret sport in the document? +What is the secret landmark in the document? +What is the secret transportation in the document? diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_1.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eecbefdc4b16b7815a0a1e1bef6dbba0a8f5406d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Transforming +gameour +Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_10.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f65f31575c52918570378c8942550c315cd4431 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_10.txt @@ -0,0 +1,5 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_100.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a27bb440808e2b602ffedcbfcd03f6d914aa562 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_100.txt @@ -0,0 +1,91 @@ +As an Isle of Man incorporated company, Entain is not subject to +the reporting obligations under Section 172 of the Companies Act +2006 (UK). Nevertheless, the Board recognises the importance of +effective governance and intends to operate in line with the UK +reporting regulations. +The Group has complied with the principles and provisions of +the 2018 UK Corporate Governance Code. During 2023 the +People & Governance Committee was composed of a majority of +independent members, in compliance with Provision 17. However, +as we began 2024, the composition of this Committee changed +(further details can be found on page 102) and the Committee now +comprises the Chairman, two independent non-executive directors +and one non-executive director. Whilst not strictly in adherence +with Provision 17, the Board is of the view that the composition of +the People & Governance Committee complies with the spirit of +the Code given that it is comfortable that sufficient independent +judgement is applied by the four Committee members to the +consideration of appointments to the Board. The Board will keep +this matter under review and address the matter of independence +of the Committee as additional non-executive directors are +appointed to the Board. The Code can be found on the FRC’s +website at www.frc.org.uk. +The Board had six scheduled in-person meetings in 2023. +In addition there were a further eleven videoconference meetings +during the year concerning urgent matters such as the review +and approval of M&A transactions, overseeing resolution of the +HMRC’s investigation and entering into the Deferred Prosecution +Agreement with the Crown Prosecution Services as well as +receiving updates on trading. +Board meetings are a key mechanism for Directors to discharge +their duties, notably under Section 172 of the Companies Act +2006 (UK). An overview of the Board’s discussions and how these +considered the Group’s key stakeholders is set out below. +Board Activities +during 2023 +During 2023, the Board remained focused on +Entain’s strategic direction, financial performance, +the implementation of safer gambling activities and +controls, and progress with embedding the enterprise +risk management framework. +Strategy +Execution of Group Strategy +S C Cu Tc R Su + Regular updates on priorities +and improving capabilities for +execution of core digital and retail +business strategies. + Oversight of customer centric initiatives +to better serve customers and enable +moments of excitement. + Oversight and challenge to +proposed steps and progress +accelerating sportsbook product and +platform enhancements. + Continued oversight of steps being +taken to exit markets with no +domestic licences. + Two-day session revising strategy +around the three pillars of organic +growth, EBITDA margin expansion and +US market growth. + Deep Dives on the Retail segment, +competitive landscape, marketing +initiatives and value drivers of the +Entain business. +M&A Activity +S C Cu R Su + Received regular updates on potential +M&A opportunities. + Reviewed and approved five +M&A transactions recommended +by management. + Approved equity raise of £600m +through a non-pre-emptive placing of +new ordinary shares to institutional and +retail investors to fund the acquisition of +STS Holdings S.A (“STS”) 1 +1. Entain consulted with a number of its major +institutional shareholders prior to the placing and +has respected pre-emption principles through the +allocation process in so far as possible. +Financial Plan +S C Cu Su + Discussed and approved the three- +year plan. +Key to stakeholder groups: +S Shareholders Cu Customers Su Suppliers +TC The Community R Regulators C Colleagues +Entain plc Annual Report 202398 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_11.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..fac81e46b8e6f1a946302d5e6773989d4a67f5b8 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_11.txt @@ -0,0 +1,84 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_12.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cd01940d3872fc804d7bd55f074e4dd4c0eed9d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_13.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cbbcfb96cbdc75ff34ea3a1af385050fd2b4bc --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_13.txt @@ -0,0 +1,109 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_14.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..d469f6a786cb9f762222300950534ed7ae4df627 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_14.txt @@ -0,0 +1,7 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_15.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..381e01b4820d8f2a45a259f44bfd07a2f5e05d4d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_15.txt @@ -0,0 +1,80 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_16.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab7401bd1a3967e3159407cdd3a95d7e4e7a179d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_16.txt @@ -0,0 +1,110 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_17.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e9dd680f32a774bc919f586fd84ea37f612dc9 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,103 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_18.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdd6e47a6c38924a2aca75b08ab5687234db54 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,113 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_19.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..83e67f54cc9f37ecbb0399b0a3c7253cdb3cf305 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,151 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_2.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae3ada93eb9d8e8c95719ce335416f239a14e8a1 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_2.txt @@ -0,0 +1,124 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_20.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..484ddb21de400d508d6549a73a5a4f3960ddb307 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,147 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_21.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..30fdd2721c616d031a8ce043d99eba0476810760 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,83 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_22.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..83322e913abd29b0f4922e9cf09fa59a5d17921f --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_22.txt @@ -0,0 +1,27 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_23.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee1ae517227c367a44f7d78c4b1267c16fc8856b --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,52 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_24.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5206445be607b97a7e5cc2e7fbe9fc142205b34a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,70 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_25.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f26f358ca8d934a52d409471881372df9033ec2 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,97 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_26.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..f716ebfd45daca1b4ee94ff0e9c89425b0c0a5f9 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,90 @@ +Reflecting the Group’s strategic progress, in November 2023 we revised our +corporate strategy. These refocused objectives recognise the progress achieved +by the business, whilst acknowledging there is still further transformation needed +to maximise the opportunities ahead. We have set clear targets and initiatives to +deliver value for our stakeholders. Ensuring focused execution in driving Organic +Growth, Margin Expansion and US market share growth. + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supported by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +People and culture +Technology and product +Governance +Organic +growth +Grow presence in +existing markets, +synergistic +adjacencies +Margin +expansion +Drive margin +expansion +through scale +and operational +leverage +US market +growth +Empower profitable +growth and share +gains in the US +Purpose +Vision +24 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202324 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_27.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c04e08a318496ea491e27e16ae3c73e09b0c739 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,69 @@ + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supportive by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +Sports betting +and gaming +courses through +our DNA. It’s the +purple thread that +steers our evolution, +guides our people +and shapes our purpose. +25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements 25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_28.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3178643d29e130a7fbb8346211a0612ffcada27f --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_28.txt @@ -0,0 +1,17 @@ +our technology +and product +Entain today, is underpinned by incredible talent, in-house +technology and leading product capability. We have +hundreds of always-on sports data and game supplier +integrations, which we bring to life as easy to play games +and almost infinite bet opportunities in a safe, responsible +way. With the largest RMG platform in our industry and +a sportsbook powering approximately 1.8K matchers +per day, we’re evolving our strong in-house technology, +globally diversified portfolio and adaptability to create +entertaining experiences for our customers. + Shaping + the game: +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202326 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_29.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e66b60a44d0fe0d1c1a92254976f5b56bd229a4e --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_29.txt @@ -0,0 +1,79 @@ +Our award-winning in-house gaming +studios have continued to go from +strength to strength in powering our +brands globally and providing our +customers with exclusive gaming +experiences. From branded BetMGM +slots, to exclusive first-of-their-kind +non-traditional tap games, our in–house +team has now delivered over 300 titles +to our retail and digital brands. +Demonstrating that our customers love +our products, one of our original 2023 +games, Pig Banker, saw over double +the revenue of an average in-house +new game within 60 days of launch. +Pig Banker was so popular with our +customers, that it trotted to the top 3 +games worldwide, including number 1 in +the UK, Brazilian, and Canadian markets. +And to top things off, the follow up +release, “Pig Banker: Three Little Piggies” +proved to be an immediate player hit by +taking the top spot for spins per player to +date after its first day of release. +Our in-house gaming team also had +cause for celebration in 2023, launching +the first in-house non-traditional Tap +game “Pot O’ Fortune: Golden Tap”, which +reached the top spot for GGR for game +release of its type when compared to third +party releases. +In-house gaming at Entain ++26% +2023 In House Studios GGR +increased by 26% vs 2022 +(Non US markets based on +all live products across all +3 studios) ++28% +Active players on in-house +games across non US +markets increased by 28% +vs 2022 ++18% +Average spins per active +also increased by 18% vs +2022 showing players are +engaging more with our +in-house products +14 +In-house studios saw GGR +growth across 14 European +and Ontario Markets +vs 2022 +33 +new in-house games +launched in the US 2023 +The milestones +reached and quality +delivered this year +are a testament +to the unrivalled +creativity and hard- +work of our people +in our in-house +game studios. +We’re proud of the +way we develop, +construct, and bring +to life the exclusive +gaming experience +for our customers +across our brands.” +Ciara Nic Liam +Gaming Director +Continued on next page +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +27Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_3.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..87fb06374785c0cc3c00f8253e5efc92ac2d0298 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,11 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_30.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..da3cf5cfc1090c0b1fe5fb8de57fd8404ef332da --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,20 @@ +When it comes to in-house technology +at Entain, our trading team are right +at the heart of it. Our in-house trading +platform is powered by our own propriety +technology, which turns millions of +real-time data points into odds for our +customers. Every kick, goal, overtake and +point scored is integrated from multiple +data feeds and turned into a betting +opportunity for players worldwide. +What makes our in-house tech so +fundamental to our transformation is the +strength of its core. With it, we’re set up +to be able to tweak, adapt and localise +the peripherals of our platform to suit the +needs of our players, all over the world. +The technology that powers our in-house +trading platform +28 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_31.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..33d5b9d117a15ab5ddd5acca3f02a0a6c765c905 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,34 @@ +Betstation brings a market +leading digital experience +to our players which is a cut +above the rest.” +Introducing Angstrom: +next generation sports +betting +Our Retail technology +-Major milestones hit +for our digital in-shop +experience +Last October, we completed the acquisition of the newest +member of the Entain Group, Angstrom. Angstrom Sports’ +unrivalled sports modelling, forecasting and data analytics +provision simulates predictive modelling, in order to create +highly sophisticated pricing and forecasting capabilities. +In short, it will be a game changer for our in-house trading +technology. Angstrom will enable BetMGM to provide endless +moments of excitement for fans in the US, with the most +accurate lines in the industry. The acquisition secures Entain as +the only global operator which will have a full in-house suite of +end-to-end analytics, risk and pricing capabilities for US Sports +betting products. +We hit a milestone moment last November, as Group BetStation +went live in our 1000th shop in the UK & Ireland Retail Estate. +Launching in over very first shop in November 2020, Group +BetStation brings a market leading digital experience to our +players that’s a cut above the rest. Our in-house developed +software gives customers the freedom to place their bets in +store, access to more racing markets than ever before and the +power to place in-play bets on sports around the world. +29Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_32.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae1de6702a7248d10fb82f1095d951f2334bc91e --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,39 @@ +With over 30 brands, across 40 markets, we’re able to provide +entertaining experiences to customers all over the world. But it’s +not just through our core product offering that our customers +engage with us. At Entain, we go beyond the game to enhance +the sports betting and gaming experience for our players – +beyond a bet, scroll or tap. +Over the last year, Coral has taken its +customers closer to the action than +ever before following the launch of the +free-to-join Coral Racing Club. The club +provides a unique opportunity for racing +fans to experience what it is like to be +a racehorse owner through unmissable +content, priceless opportunities, exclusive +offers and much more. +Now over 160,000 members strong, the +Club’s first year was a roaring success. +It has created thousands of unforgettable +memories with its stable of 10 racehorses, +including over 1,000 raceday tickets won +by members, 37 unique ‘owner for the +day’ experiences created and in excess of +£40,000 being shared in prize money. +For many years Coral has demonstrated a deep +passion for, and commitment to, British Racing, +but over the last year we have significantly +expanded our sponsorship portfolio to become +the leading bookmaker sponsor in the UK. +And now, with the Coral Racing Club, Coral +is doing more than any betting operator has +done before to grow the appeal of racing and +promote the sport.” +Simon Clare +Director of PR +Continued on next page +A year of Coral Racing Club +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202330 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_33.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..517ea6206de46106ede4f433908c6d16f93f77f5 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,7 @@ +Beyond + the game: +customer + experiences +1 Overview 8 Strategic report 88 Governance 140 Financial statements +31Entain plc Annual Report 2023 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_34.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..8685bac73a949afcb15b7e6d02f02f355a2fa629 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,90 @@ +Elevating the social betting +experience with STS and Eurobet +STS’s new brand campaign, Kocham +Sport Gram Mądrze (Love Sports, Play +Smart), has been taking shape over +the last few months in the form of a +new ecosystem designed to inspire +customers. It incorporates a new smart +feature that redefines the social betting +experience and empowers customers. +BetMGM ‘pucker up’ and get +their skates on with NHL +partnership extension +Eurobet’s ReadyBet +Empowered by a seamless digital +experience across various devices, +Eurobet’s Readybet effortlessly +creates pre-filled betslips. Eurobet’s +Readybets, generated weekly through +inputs from retail shop managers, +the trading room, marketing teams, +and even digital and retail customers, +entices users to engage in a diversified +betting experience. Offering a curated +selection of “wise” picks from reputable +and successful sources, the Readybet +platform fosters a sense of community +by turning customers and betting shops +into interactive “tipsters.” Enhanced with +dedicated promotions and challenges, +this approach bridges the gap between +conventional sports betting and a social +experience, creating a vibrant marketplace +accumulator bets. +Last year, our joint venture BetMGM +continued to offer fans unforgettable +entertainment built around the game they +love, with a multi-year extension of their +partnership with the National Hockey +League (NHL ®). +‘Players Bet’ is built +around the trusted +community of STS +players who draw +inspiration from each +other’s bets, including +bets shared by the +best players with a +proven track record +of effectiveness. +Over 2 million bets +have been copied in +2023 indicating that +players actively seek +bets from trusted +sources. The fact that +51% of copied bets +are turning into real +bets, shows the +significant potential +of this feature and +the power dormant +in the community. +Through team-branded casino games, +including the word’s first NHL-endorsed +slot game, Gold Blitz, VIP fan experiences, +and sponsored branding in national +broadcasts, players will experience the +NHL beyond the rink. NHL Gold Blitz +features the NHL Gold Blitz Instant Cash +Collection, Wild Multiplier Free Spins, and +jackpot prizes, as well featuring all 32 NHL +teams and the league’s iconic shield. It’s +through these exciting activations that +BetMGM will continue to deliver new ways +for Ice Hockey fans to engage with the +sport they love. +Gracze Typują (Players Predict) is a unique +space on the STS site that allows players +to copy bets shared by other players, check +out success rates of other betters, duplicate +their bets and chat with each other on +a forum fostering a sense of community +amongst customers. +STS is the only operator in Poland offering +this free, community-driven feature, +reinforcing our commitment to a smart and +socially connected betting future. +32 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_35.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..8fed0928126673d1a665dad53ca3d94dd2f527a6 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,82 @@ +Bwin fulfilling football fans wildest +dreams on Europe´s big stage +The launch of +Ladbrokes Live +Last year we embarked on an exciting +new era for Ladbrokes, connecting +thousands of fans with free events +through the Ladbrokes LIVE platform. In +The O2, AEG Presents, and NME, we’re +working with three of the biggest and +most iconic brands in the entertainment +industry and this means we will be +able to reward our audiences with the +chance to attend some of the most +exciting live shows in Britain for free.” +Kelly Rose +Head of Brand for Ladbrokes +This year, our UK brand Ladbrokes +furthered its ambition to provide +customers with excitement beyond +its sportsbook, with the launch of +Ladbrokes LIVE. LIVE is a digital +entertainment platform that rewards +thousands of fans with free access to +the UK’s best live music, comedy and +sports events, powered by exciting +new strategic and ground-breaking +partnerships with The O2, AEG +Presents, NME and many more. +The unique collaboration between +Ladbrokes and NME has also seen the +return of the iconic Club NME nights with +a series of dates across the UK featuring +incredible headline talent and unmissable +DJ sets. Fans have been able to win free +access to Club NME nights through the +Ladbrokes LIVE platform. +With over 135,000 plays and hundreds of +tickets already won in 2023, we are giving +reasons for consumers to engage with us +again and again in, everyday play. +Besides bringing pure entertainment and joy to the football fans and +uniting players from across Europe, bwin and other Entain brands were +able to generate unrivalled brand presence across the continent during +the 22/23 season, with branding visible at 80% of all matches across +56 countries; 20% of this being Responsible Gambling messaging. +Being the official betting sponsor for both competitions this year again, +we’ll be there for every shot, pass and tackle to make the third season +an even better one for our customers.” Gemma Bell, Head of Sponsorship +For the past two seasons (21/22 & 22/23) +bwin has delivered the ultimate football +experience by giving fans the opportunity +to play in ‘the bwin Fans Final’ in the +UEFA Europa League Final Stadium. +2023 saw the fans play in the Puskás +Arena, the day after the UEFA Europa +League Final in Budapest. +Thanks to our official partnership with the +UEFA Europa League and UEFA Europa +Conference League, bwin laid out the red +carpet in Budapest for 40 customers who +witnessed the UEFA Europa League epic +between Roma and Sevilla unfold, before +taking to the turf of the Puskas Arena the +next day. Customers were treated to pre- +match training sessions, personalised kits +and the opportunity to lift a customised +trophy just like the Sevilla players did a +few hours prior. Joined by legends Esteban +Cambiasso and Luis García, the bwin +Fans Final saw dreams brought to life +for our players. An intimate lunch with +the ambassadors and the nomination +of the Player of the Match rounded the +experience into an unforgettable event +with one of the winners stating: “These +days I will never forget, the memories +will live with me forever. It was the best +football trip ever, a dream came true, what +a privilege to have been part of it.” +33Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_36.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7f92bd6b48b9fb255f13c07b4fe25e53097942e --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,7 @@ +Championing +the game: +Advertising +34 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202334 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_37.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ebab343084f728ceaaeb59617fd66b244bb41a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,29 @@ +All of our brands have their own unique identity – from the striking blue of Coral to +the playful orange of Foxy Bingo. It’s our heritage and brand recognition that has +built up such trust with our customers, and it’s through this trust that we’ve been +able to push boundaries with iconic advertising, activations and campaigns. +Last year saw Foxy Bingo’s ‘Get Your +Fox On’ ATL campaign level-up with +two world-first’s: Dirtie Gertie’s Mullet +Salon and The Celebrity Swap Shop. +Continued on next page +Opened by Geordie Queen, Vicky +Pattison, Dirtie Gertie’s Mullet-only Salon +in Newcastle offered consumers free +mullet haircuts, foxy nails and games of +musical bingo. The city lit up with fleets +of pedicabs and iconic parts of the centre +were turned purple and orange with +incredible out-of-house advertisement, +with over 2 million impacts. In total, the +campaign gained a 1.1 billion reach via +media coverage, gave 94 dodgy haircuts +and engaged whole new community of +Foxy fans. +Get Your Fox On with +Foxy’s Celebrity Swap +Shop & Mullet Salon +35Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +35Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_38.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a660fbcedc087d7f0f0d03ad3f131209e7039d0 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_38.txt @@ -0,0 +1,62 @@ +Gala’s Jolly Good +Fish and Chip hotel +Eurobet.Live with +Luca Toni +Gala Bingo continued to build community spirit amongst +players this year, with the world’s first ‘Fish and Chip Hotel’ +in Blackpool. Inspired by consumer research, insights and the +iconic bingo call 33, Gala’s ‘The Jolly Good Fish & Chip Hotel’ +gave British seaside goers the chance to enter Gala Land and +receive a complimentary serving of fish, chips and peas, as well +as games of bingo. +The activation built on Gala’s ‘Where A Little Joy Goes A Long +Way’ campaign and encouraged players to find the little joys in life +last summer With over 800 consumers attending the prototype +hotel and 314 million people reached via earned social media +coverage, it’s safe to say customers experienced the brand in a +whole new way, combining the classic charm of the Great British +seaside with the wonder and joy of Gala Land. +Eurobet.live elevated the football experience for fans across +Italy through an exciting TV campaign featuring World Cup +winner, Luca Toni, as it’s presenter. The campaign seamlessly +integrated the excitement of live scoring with the thrill of +the matches themselves, providing viewers with real-time +updates, insights and analysis, detailed statistics and +engaging multimedia content. +Eurobet.live not only celebrated the passion and excitement +of football, but also underlined its commitment to providing +fans with a comprehensive and immersive platform to stay +connected to the game they love. Eurobet.Live has also +strengthened it’s connection with fans, through prestigious +partnerships with several Serie A teams, including the iconic +Juventus as well as a partnership with the entire Serie C league. +These strategic alliances +served as a powerful bond +between the Eurobet.live +brand and football fans +on the ground, solidifying +its position as the premier +platform for live scoring, +results, and multimedia +content in Italy.” +Alexis Grigoriadis +Marketing Director, Italy +Get Your Fox On with Foxy’s Celebrity +Swap Shop & Mullet Salon continued +In the wake of Foxy’s new laundrette +theme ads, the team brought the screen +to life up north with The Celebrity Swap +Shop: a two-day pop up affair in Hull, +where locals swapped drab for fab +and get their hands on a celebrity item. +17 celebrities donated items to the +laundrette, and in total, 23 bags of clothes +were donated to charity. Foxy consumers +took to the laundrette to experience +the brand’s new and engaging identity +and with free Bingo sessions on site. +The brand saw a 17% increase in betting +players from the activation. +36 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_39.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1e0db133568de8d018b5cae8e853af552b22360 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_39.txt @@ -0,0 +1,108 @@ +Last December, the F1 circus rolled +into Las Vegas for the inaugural GP, +and our joint venture, BetMGM, left +no stone unturned in making their +presence known with customers over +the weekend. +From exclusive grandstand hospitality to +the excitement of experiencing incredible +entertainment within touching distance +of the track in their retail shops, BetMGM +bolstered the anticipation of placing bets +on the race with awesome experiences +throughout the GP weekend. The team +also pulled off some incredible activations +with McLaren Racing; from BetMGM’s +logo being centre stage on the car to +a series of marquee and On-property +digital placements, BetMGM certainly +gave F1 superfans an experience to +never forget. +The spectacle received 3X the number +of bets compared to any other F1 event +in the company’s history. The Las Vegas +GP certainly shattered records for the +King of Sportsbooks. +TAB activation on Auckland’s +Sky Tower for the TAB +Karaka Millions +The TAB Karaka Millions brings together the +best horses sold at the New Zealand Bloodstock +yearling for two separate races, as well as an +open-entry race called the Elsdon Park Aotearoa +Classic. This year, TAB became the naming rights +sponsor for the meeting, and with three $1m +races on the six-race card for the first time ever, +TAB wanted to do something different to attract +attention of customers. +A few days before the meeting, Entain Australia +and NZ took over the second tallest freestanding +structure in the southern hemisphere, Auckland’s Sky +Tower, and projected the barrier draw for the three +main races onto it. Watched on by trainers, owners +and horse racing fanatics, the incredible display +revealing which horse starts where, set the scene for +a weekend that ended up smashing records for TAB’s +horse racing history. +The six-race meeting saw a 26.6% increase in +turnover compared to the highest wagered meeting +on record (of which had over double the number of +races) and a 33% increase in the number of customers +betting compared to 2023. Better yet, the final race +of the day set a record for the most wagered race in +New Zealand, with Year-on year-turnover for the TAB +Karaka Millions up 66%. +BetMGM win Las Vegas for Super Bowl week +Known for its massive audiences, thrilling action, much-anticipated commercials, +and halftime extravaganza, the Super Bowl was a big day for BetMGM, where we +saw a 30% uplift in activity across the U.S. alone. Super Bowl in Las Vegas was a +huge opportunity for BetMGM to be at the centre of the action, having the world’s +biggest stage literally footsteps away from several BetMGM retail sportsbooks. +To maximize this opportunity, Entain +launched its new Nevada app with access +to BetMGM’s full sportsbook offering, +weeks before the Super Bowl, giving the +best BetMGM experience to the NFL fans in +Nevada for this landmark event. +Then, BetMGM set out to do what so +many other brands struggle to do in this +domain, carve out a memorable Big Game +commercial that perfectly complements and +establishes a connection with the brand. +In a company-first, the team launched +its three-part campaign which featured +the never-before-seen pairing of sports +legends, Tom Brady and Wayne Gretzky, +along with actor Vince Vaughn, marking an +iconic moment for BetMGM. +The BetMGM team didn’t stop there. +In addition to the advertisement, BetMGM +executed a multi-faceted approach to +“Win Las Vegas” for Super Bowl week. +Alongside extraordinary VIP experiences +with celebrity ambassadors, BetMGM +painted Las Vegas gold and black with +a variety of outdoor, indoor, digital and +special advertising campaigns that +greeted fans from the moment they get off +the plane. +Marking another first, BetMGM partnered +with X in a one-of-a-kind collaboration to +become the official betting sponsor of the +platform, starting with the Super Bowl and +continuing through 2025. +Regardless of who was the Super Bowl +champion, BetMGM came out a winner. +The new platform was able to handle +a 30% uplift in activity over the Super +Bowl weekend and a 72% increase in +customers from the 2023 Big Game, thanks +to the incredible efforts and collaboration +between the Entain, BetMGM and +MGM teams. +Smashing +records under +the neon lights of +Las Vegas strip +37Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_4.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..34a2edaf9cc87ff1f4f007a6062cf063921d085b --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_4.txt @@ -0,0 +1,105 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_40.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e9fbfdeb7e9639669ca9f237c90b3d1f5689a24 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,81 @@ +Regulatory +update +Unlike slots and poker, casino table games +are regulated on a state-by-state basis. +The states may either create a monopoly +or issue as many licences as the state has +land-based casinos. By the end of 2023, +only the states of Schleswig-Holstein and +North Rhine- Westphalia had opted for a +licensing system. To date, only Schleswig- +Holstein has released the tendering +process, but the group has opted not to +apply for a licence for commercial reasons. +In North Rhine-Westphalia, details on the +tendering process were expected to be +published in 2023 but due to various delays, +the details are now expected in Q1 2024. +Entain looks forward to participating in +this process. + Germany +The Joint Gambling Authority (“GGL”) has +now been operational in Germany for over +a year. Encouragingly, the GGL has been +more proactive in issuing sanctions against +unlicensed operators, but we still see room +for improvement and intensification. We are +continuously working with the regulator +and state governments to push for more +effective enforcement against illegal +operators and in 2023 worked jointly with +the University of Leipzig and the local online +casino association to produce a study +investigating the scale of the issue. +While the Group was granted three slots +and two poker licences in November 2022 +and the Group´s sports betting licences +were also extended for another 5 years in late +2022, the restrictive environment in Germany +continues to prove challenging. The process +for managing playing limits for slots, poker +and sports betting remains one of the most +pertinent regulatory challenges for licensed +operators. There is also mounting political +pressure for stricter sports betting advertising +restrictions, while the first evaluation of the +Interstate Treaty is set to be published soon. + The UK +The UK Government published its White +Paper of the 2005 Gambling Act Review +in April 2023. As expected, this document +included consultations on a number of +areas, including online slots staking limits; +financial vulnerability checks; a mandatory +levy for research, education and treatment; +additional requirements on game design +and direct marketing as well as the creation +of an Ombudsman. We continue to engage +government actively in this process, both +directly and via our trade body. We have +continued to develop and enhance our +Advanced Responsibility and Care™ +(“ARC™”) programme, which offers tailored +identification of customers who may be at +risk, as well as targeted interventions and +interactions. Whilst many of the changes +within the White Paper can be achieved via +secondary legislation, we are collaborating +with the other major operators to voluntarily +progress initiatives such as a single +view of the customer and the creation of +an Ombudsman. +Gaming is a truly global market and in 2023 the Group held licences in over +30 jurisdictions across the world. The Group is committed to only operating in +regulated or regulating markets and as from February 2023, 100% of the Group’s +revenue is from such markets. The Group firmly believes that strong, commercially +viable regulation of the betting and gaming sector is in everyone’s interests. It +provides stability for operators, important taxation streams for governments +and – most importantly – provides the consumer with proper protections and +safeguards by ensuring that only responsible providers operate in the market. +38 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_41.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd92fd547846899e9e3ae2042b4078f8493de0d7 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,160 @@ + Africa +In late 2023, Entain decided to withdraw +from the regulated markets of Zambia and +Kenya but the Group remains committed to +expanding its significant regulated offering +in South Africa, where it has been present +for a number of years. + US +The sports betting regulatory activity +continues at pace in the United States. +Kentucky, North Carolina and Vermont are +amongst the US states that have regulated +in 2023. Rhode Island has been added +to the list of US iGaming states. Finally, +additional states have adopted, or are in +the process of adopting, modernised forms +of responsible gambling regulation; a trend +Entain welcomes with an eye on the long- +term sustainability of the US market. +Bearing in mind that over 35 US states +have already allowed for sports betting in +one form or another, the Group remains of +the view that in the coming years some 40 +or even 45 US states will have regulated +sports-betting, which will provide BetMGM +with even broader market access across +the country. The number of states that +permit online casino is also expected to +grow in the years to come – for example the +state of New York as already announced +its intention to attempt iGaming regulation +in 2024. + LATAM +In Latin America, Brazil adopted a law +that allows for domestic licensing of sports +betting and online casino in late 2023. +The law will be implanted throughout +the first half of 2024, with the regulated +market expected to launch at some point +in Q3 2024.The regulation will extend to +all online gambling verticals, including +sports betting and gaming, and will allow +for an open licensing system subject to +payment of betting and other taxes and +fees. Furthermore, the Group has launched +licensed operations in Mexico under its +bwin brand. +There was better news in France where +we have seen nascent discussions +about the possible legalisation of online +casino, while in Croatia the Government +completed a regulatory review and is now +looking to bolster its efforts to tackle the +illegal market. +At the end of 2023, Entain only operated in +two markets in Europe where it is not yet +locally regulated. Despite our best efforts +in Austria , there have been no changes to +the status quo and the Government has +no imminent plans to initiate the reforms it +announced in March 2021. Nevertheless, +we will continue to push for regulatory +reforms. Encouragingly, in Finland the +Government has officially begun the +process of dismantling the monopoly in +favour of a licensing system that we expect +to come into force sometime in 2026. + Australia +A parliamentary inquiry issued a report +in 2023 calling for a ban on gambling +advertising as part of a 31-point plan to +reform the Australian gambling market. +It also proposed various other measures +including the establishment of a single +national regulator and a formal duty of +care. We expect the Government to come +forward with its response to the report and +proposed next steps in the first half of 2024. +Elsewhere, the National Self-Exclusion +Register BetStop launched in August, while +a ban on credit card betting was adopted in +December 2023 and will come into effect in +mid-2024. + Canada +The Ontario online betting and gaming +market became regulated on 4 April 2022, +thereby becoming the first Canadian +Province to issue domestic licenses for +private operators. Entain operates in +Ontario through its bwin and Party brands +as well as Sports Interaction, a Canadian +brand the Group acquired in February 2022. +Going forward, other Canadian Provinces +such as Alberta and British Colombia are +expected to introduce regulation. + Other Europe +In 2023, wide-reaching advertising +restrictions were introduced in Belgium , +while a pending parliamentary bill and a +draft Royal Decree could impose further +restrictions on local operators in 2024. +Fortunately, the sector was successful +in blocking a proposal to introduce an +additional 5% tax which would have had a +detrimental impact on licenced operators +and encouraged customers to move to +black market operators and therefore +reduce player protections. +In the Netherlands , Entain completed +the acquisition of BetCity in January +2023. National elections took place in +November and we await the formation of +a new coalition government which could +lead to change in direction for gambling +policy. We are also expecting the Dutch +authorities to come forward with new +proposals on playing limits, AML and +duty of care requirements which are likely +to come into effect in 2024 and impose +stricter compliance requirements on +operators . The headline gambling tax rate +also increased by 1% to 30.5% from 1st +January 2024. +In Italy, the Government published a +new framework law in 2023 laying the +foundations for potentially wide-reaching +sectoral reforms to be enacted in 2024 +and beyond, including an overhaul of the +current gambling licence tender procedure +which will increase licensing costs and +impose stricter regulatory requirements on +operators. In Spain , the government has +moved oversight of gambling to a newly- +formed Ministry, while plans to introduce a +system of cross-operator limits remain on +the medium-term agenda. In Ireland we are +still awaiting the enactment of the pending +Gambling Regulation Bill that will introduce +a formal regulatory and licensing regime for +online gambling. In Denmark a draft law +has been published to amend the Gaming +Act, including the introduction of a B2B +licence regime to take effect from 2025. +In 2023, we have seen tax increases +announced in several of the markets where +we operate. The Prime Minister of Georgia +announced plans to increase taxes for +online gaming from 10% to 15% GGR, and +player winnings withholding taxes from +2% to 5%, effective from 1 January 2024. +The Swedish government has announced +its intention to increase the rate of gaming +tax from 18% to 22% with effect from 1 July +2024, while the Latvian Government plans +to increase online gambling tax from 10% to +12% GGR from January 2024. +39Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Regulatory update +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_42.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..b63ee97441c0323ccf3cbd2d808caefe47202c9a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,67 @@ +At Entain, sustainability is a key enabler of our corporate strategy. +We firmly believe that the most sustainable operators will be the +most successful in our industry. +2023 was a pivotal year for sustainability +at Entain as we unveiled our new +Sustainability Strategy, building on our +longstanding commitment to sustainability +and taking it to the next level. +With this new Strategy, we wanted to +strengthen our sustainability leadership +position as well as listen to our stakeholders +and respond to the changing Environmental, +Social, and Governance (“ESG”) landscape. +We conducted a double materiality +assessment to help us understand our +unique sustainability-related risks and +opportunities, as well as our impacts on +society and the environment. We conducted +surveys and interviews, analysed industry +reports, and held leadership workshops, +gathering input from over 250 internal +and external stakeholders from around +our business, to understand how we can +ensure we are supporting value creation to +all stakeholders. +These insights helped us develop a +strategic framework that will focus our +sustainability actions in the coming years. +Our new approach, which is presented on +the next page, is structured across four +pillars that encapsulate those ESG issues +that are most important to Entain, our +customers, investors, and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create the environment for everyone to +do their best work + Positively impact our communities +As we reflect on 2023, we are proud to +report extensive progress across each of +these strategic pillars. We invite you to +discover our achievements on the following +pages, which include: + Rolling out our player protection +programme ARC TM in our digital offer +to cover 27 jurisdictions and launching +ARCTM for retail in the UK and the +Republic of Ireland. + 100% of our revenues coming from +regulated or regulating markets since +February 2023. + Winning Innovator of the Year at the +Women in Gaming Diversity Awards +for our Returnship programme with +McLaren Racing. + Partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings, and onboarding 35% of in-scope +vendors and supporting them to improve +their sustainability performance. +Looking at 2024, we will remain sharply +focused on delivering our new strategy and +reaffirming the sustainability leadership +role that underpins our long-term growth. +Sustainability at Entain +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202340 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_43.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..5578fe4868be8f1c0f1f593c49b9d13329b3d226 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,130 @@ +Entain’s Sustainability Strategy +At Entain, we see sustainability as a key enabler of our corporate strategy and growth. We embrace our role within society with the +strongly held belief that the most sustainable business in our industry will be the most successful. +This is reflected in our new Sustainability Strategy. We have structured it across four pillars that carefully encapsulate those sustainability +issues that are most important to Entain, our customers, investors, and partners. For each pillar, we have identified key focus areas and +assigned Board-level oversight, summarised below. +You can read more details about how we developed the strategy using the results of our 2023 double materiality exercise here . +What it means Aligned material clusters Focus areas Oversight +Be a leader in player +protection +We provide industry- +leading customer +protection through +innovative features, +customer support, +communications and +our culture. +S afer betting and gaming +E thical & +compliant behaviour + Innovation + Industry-leading +ta +ilored customer +protection tools +and processes +E mpower our people +to support and protect +our customers +H arm prevention +through education +and responsible +communications +Pr omote research +and share evidence- +based learnings with +the industry +Sustainability +& Compliance +Committee +Provide a secure and +trusted platform +We lead on integrity in +everything that we do. +From having the highest +ethical standards, +to only operating in +regulated markets, with +an aim of gold standard +data protection, +and cybersecurity. +E thical & compliant +behaviour +D ata privacy +and cybersecurity + Corporate +G +overnance +O nly operate in +regulated markets +E thics and integrity +at the core of +our organisation +and culture + Provide in dustry- +leading cybersecurity, +data privacy and +AI governance +C lear and robust +governance processes +for each of our key +ESG areas +Sustainability +& Compliance +Committee +Create the environment +for everyone to do +their best work +We are an employer of +choice, and we build an +inclusive and supportive +culture where talents +from all backgrounds +can thrive. +D iversity, equity +and inclusion +H aving the +right people +A ttract, engage and +retain the best, most +diverse talent +Pr ovide the right +growth opportunities +for all +B uild a sense of +belonging for +all Entainers +People +& Governance +Committee +Positively impact +our communities +We play our role in +limiting global warming +to no more than +1.5°C and we create +a positive impact on +our communities. + Environmental +S +ustainability + Corporate +G +overnance +R educe our +environmental impact +C reating a sustainable +value chain + Promote g rassroots, +women’s and +disability sports +S upport communities +where we operate +Sustainability +& Compliance +Committee +Entain plc A +nnual Report 2023 41 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_44.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..b598fd0b116ebee3d83e5afa8e2c28b18d6f05f8 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,90 @@ +ESG Governance +Climate governance +Given the urgent need for action to address +the climate emergency, we have stepped +up our governance in this area. Our CEO +is now responsible for our approach to +climate change, and climate-related risks +and opportunities. In addition, we have +developed our Net Zero Action Group. +The Net Zero Action Group reports to +the ESG Steering Committee, which +is a selection of leaders from around +the business who are responsible for +delivering and developing an organisation- +wide approach to achieve our Net Zero +ambitions. You can read more about how +we manage our climate-related risks and +opportunities in our TCFD Statement on +pages 56 to 63. +Issue-specific Committees +In addition to the ESG Steering Group +and the Net Zero Action Group, we have +formed groups that report to the ESG +Steering Group that focus on delivering our +approach to specific ESG issues that require +additional expertise and insights from the +business. Steering groups include groups +focused on Anti-modern Slavery and +Human Rights, Safer Betting and Gaming, +Anti-Money Laundering, and Diversity & +Inclusion. +Board Committee Oversight +In May 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. +The newly created Sustainability and +Compliance Committee was created to take +on the bulk of the responsibilities of the +former ESG Committee. The Sustainability +and Compliance Committee has oversight +for safer betting and gaming, regulatory +compliance, anti-money laundering and +counter-terrorism financing, anti-bribery +& corruption, human rights (including our +approach to addressing modern slavery +risks), health and safety, environmental +impact (including the evolution of our +strategy and processes in response to the +Taskforce for Climate-related Financial +Disclosures), data protection and charitable +donations, including the work of the Group’s +Entain Foundation. Chaired by Virginia +McDowell, one of our Non-Executive +Directors, the Committee has three +members and guides the business on all +aspects of ESG strategy, sets targets and +monitors our performance. +The second newly created Committee, +the People and Governance Committee, +took on the responsibilities of the previous +Nomination Committee and added +responsibility for oversight of the Group’s +approach to Diversity, Equity and Inclusion +and other people-related functions +such as engagement and culture and +employee wellbeing. +The ESG Steering Group +The ESG Steering Group, which meets +monthly, consists of functional leaders +from across the business, including +Sustainability, Investor Relations, Human +Resources, Corporate Affairs, Legal, Health, +Safety & Security, Operations, People and +Communications. Convened by our Group +Head of Sustainability and chaired by our +Chief IR & Communications Officer, the +Group oversees the implementation of our +sustainability strategy. +Delivering our +Sustainability Strategy +starts with robust +governance. As our +ambitions grow, and +best practice evolves, +we continue to expand +our processes. ” +Entain plc Annual Report 202342 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_45.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..c37931f72fe6fb8f497ddcba710cad3c2b568b69 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,65 @@ +Strategy Board +Delivery +Coordination +Oversight +ESG Steering Group +Operating Units and +Central Functions +Operational teams +People and Governance +Committee +People and Governance +Committee +Sustainability and Compliance +Committee +People and Governance +Committee +Anti-Money Laundering and +Counter-terrorism Financing +Anti-Bribery and Corruption +Health and Safety +Environmental Impact +Modern Slavery and +Human Rights +Privacy and Data Protection +Net Zero Action Group +Regulatory Compliance +Safer Betting and Gaming +Talent and capability +Diversity, Equality and Inclusion +Employee engagement +Employee well-being +Our performance across ESG Rating Agencies +We are proud to be a sector leader amongst many of the leading independent ESG rating providers. The below table summarises our +performance and improvement over time. We will continue to work tirelessly to further improve our ESG practices and performance, with +the aim of further improving the standards for our industry and in these external assessments. +Rating Evaluation +Score +(31 December 2023) +Score +(31 December 2022) +Industry +Rank +MSCI ESG Score AA 7.2 6.7 N/A +Sustainalytics ESG Risk Rating Low 19.6 +(a lower score +shows a +lower risk) +22.3 13/87 in the Casinos +& Gaming industry +ISS ESG ESG Score C 49 47 1st decile +S&P Global ESG Score S&P +Yearbook +and DJSI Europe +constituent +60 67 95th percentile +FTSE4Good ESG Score Inclusion +in +FTSE4Good Index +3.8<> 3.8 93rd percentile +CDP Climate Management B B N/A +ESG Governance Structure +Entain plc Annual Report 2023 43 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_46.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..242e3529cecb8e06933fc7fce5dfeb94098c9861 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,105 @@ +We provide best in class customer protection through innovative +features, customer support, communications and our culture +Material issues + Safer betting and gaming + Ethical and compliant behaviour + Innovation +Oversight +Sustainability & Compliance Committee +Advanced Responsibility and Care™ +(“ARCTM”): Our leading tailored customer +protection tool +Our recent materiality assessment found +that safer betting and gaming is our most +material ESG issue, and ARC™ is our +flagship initiative to protect our customers +– providing a technology-led approach to +player protection through real-time and +individually tailored detection, interaction +and interventions with players that are +potentially at risk. +Given its importance to Entain and our +customers, the roll-out and effectiveness of +ARC™ is linked to through our Group Bonus +Scheme, which includes our executive +team. The details of how we incentivise +the delivery of player protection is outlined +further in the Remuneration Report +on p131. +This year, ARC™ continued to mature in +the UK and expand globally. By the end of +2023, ARC™ is now live across our core +international markets (except Brazil). +Our safer betting and gaming programmes +in our retail estate in the Republic of Ireland +and the UK are also supported by ARC™. +This provides our customer facing retail +colleagues with data-driven insights to +help them spot and address risky play in +our shops. +We continue to monitor the effectiveness of +ARC™, the results of which are reviewed by +the Executive Committee and Sustainability +and Compliance Committee quarterly. +Empowering our people +We continue to deeply embed safer gaming +into the culture of our company. At the end +of 2023, 98% of our colleagues were up +to date with their mandatory annual safer +betting and gaming training. This training +provides all colleagues with the essential +understanding of our approach to, and +compliance requirements on, safer betting +and gaming. However, we also understand +that specific roles within our business have +key responsibilities for player protection. +Focus area 2023 Highlights +Best-in-class tailored customer +protection tools and processes + Rolled our ARC™ to cover 27 jurisdictions (2022: 22), including real-time models in +23 jurisdictions + ARC™ for retail now live across UK and ROI + 7.5 million ARC™ interactions (+98% YoY) to 742,112 unique customers +Empower our people to support +and protect our customers + 98% completion rate of annual compliance, safer gambling, and AML training + Enhanced safer gaming training, delivered by EPIC Risk Management, delivered +to all senior leaders +Harm prevention through education +and responsible communications + Expanded our stakeholder education and training in the US, through our partnership +with EPIC Risk Management and major leagues as well as players associations such +as the Major League Baseball, National Football League, League Soccer Players +Associations and the NHL Alumni Association + 20% of TV advertising space and football sponsorship dedicated to safer betting and +gaming communications or Foundation promotion +Promote research and share +evidence-based learnings + Final year of partnership with Harvard Medical School’s Cambridge Health Alliance +Division on Addiction (CHADA), contributing £5.5m over five years to cutting-edge +research into Safer Betting and Gaming + Contributed 1% of our GGY in the UK to Research, Education and Treatment (RET), +totalling £18.7m +Awards and accreditations: UK North America International +GamCare Advanced Safer +Gambling Standard + Online: Advanced +Level 2 (highest level) + Retail: Advanced Level 2 +EGR North America +Awards 2023: +Socially +Responsible Operator +SBC Global and +SBC LATAM Socially +Responsible Operator of +the Year +Vixio Global Regulatory +Awards: Award for +Outstanding Contribution +to Safer Gambling +Entain plc Annual Report 202344 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Be a leader +in Player +Protection \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_47.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5718fd8f711d206bcf409e8e422ff99a3bc4d3bd --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,138 @@ +For these roles, we continue to roll out more +in-depth and specific training. For example, +our senior leadership periodically +undertakes in-depth training from EPIC +Risk Management. Customer-facing roles +who are responsible for engaging directly +with our customers also receive in-depth +training on identifying and interacting with +customers who may be at higher risk of +harmful play. +We are also leveraging our partnership +with Harvard Medical School’s Cambridge +Health Alliance Division on Addition +(“CHADA”) to support our training +programmes. Since 2019, 16 of our safer +betting and gaming training programmes +have been reviewed by the team at CHADA +– ensuring our training and culture reflect +the latest research. +Responsible marketing +Responsible marketing is a core part of +our commitment to promote responsible +attitudes, and protect children, young +persons and vulnerable individuals. +We have a long history of leading the +industry in this area, spearheading the +UK whistle-to-whistle advertising ban, +and being the first operator to ban shirt +sponsorship in UK football. +Our commitment to responsible advertising +and marketing is underpinned by our +recently refreshed External Marketing +Policy. This Policy outlines our responsible +marketing principles. All relevant staff +receive training on the policy. +We also work closely with trade +associations to strengthen best practice for +our industry’s marketing and advertising. +For example, we are a signatory of – and +contributor to – the European Betting +and Gaming Association’s (“EGBA”) Code +of Conduct. +Promoting research through +our partnership with Harvard +Medical School +2023 marked the final year of our five-year +research partnership with the Cambridge +Division on Addiction, which has now +produced 14 research papers since 2019. +The outcomes of this research have +been highly practical, underpinning our +26 markers of protection – the behavioural +patterns found to indicate signs of risk +that are used by ARC™. As this research +is published, or is in the process of +publication, this allows not just Entain but +the whole industry to access the latest +research. You can read more about this +research programme in our 2023 Social +Impact Report. +At Entain, we know that safer betting and gaming starts +with our culture. It’s important that all colleagues have the +knowledge and tools to fulfil our responsibility to protect +our customers. + Interactions excellence: Interaction +Excellence aims to promote insightful +and valuable discussions with teams +that deal with customers that are +potentially the most at risk. The training +focuses on strengthening soft skills +that colleagues will draw upon during +customer interactions. In 2023, this +training was reviewed by the Harvard +Medical School’s Division on Addiction, +Cambridge Health Alliance. +Moving forward we will also conduct +in-depth training with leaders from +around the business (aimed at our +senior leadership team and Board +Directors), to further integrate a culture +of player protection right at the top of +the organisation. This training will be run +by EPIC Global Solutions and refresh the +leadership training delivered in late 2022. +Embedding safer betting and +gaming into our culture +As part of the 2023 Group Annual Bonus +Plan, a mandatory training module +was implemented on compliance, safer +gambling and anti-money laundering, +achieving a 98% completion rate. Our goal +is to train all colleagues on the importance +of player protection, preventing money +laundering, and responsible marketing +– with retail colleagues receiving a more +tailored version of the content relevant to +their role. +We also know that some colleagues +have unique responsibilities for their +role – whether it be engaging directly +with customers, designing new products, +or leading teams or divisions. In 2023 +we worked with EPIC Global Solutions +to deliver in-depth masterclasses and +face-to-face-training on safer betting and +gaming tailored for specific, high-impact +roles. For example, our customer service +and retail colleagues took part in sessions +that equipped them with the skills to +1. Core countries are those that are using our core technology platform. ARC™ is embedded within this core technology, so in these countries we can use the full power of our +markers of protection and interactions. +2. Risk is determined based on our Long-term Excessive Play (LTEP) model, which is one of our three primary ARC™ Markers of Protection models, which scores every user of the +Entain Platform from 1 (low risk) to 100 (high risk) daily. LTEP is used for assessing risk due to identify underlying problem gambling behaviour over time. +identify signs of harm and effectively +interact with customers to advise on +our suite of tools that may be used to +help them. +Key modules focused on: + Introducing our retail teams to problem +gambling to help them understand how +gambling related harm can present +itself and ensure that they are aware +of how to protect our customers to +limit the negative impacts of gambling. +Between May and August 2023, 294 +colleagues attended the EPIC Safer +Gambling Awareness training. + Affordability Interactions: This training +provided our colleagues with guidance +on the key steps they should take to +ensure that customers are keeping +their betting affordable, and the +communication tools they can use to +encourage safer gambling and manage +hostile behaviour on the shop floor. +Entain plc Annual Report 2023 45 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Lead on player protection \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_48.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..8cf5b50e6e70557a6fd033899f4365662624b660 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,104 @@ +Ethics and integrity at the core +of our organisation and culture +We are committed to conducting +our business in line with the highest +ethical standards. We heavily invest in +governance, resources, and training to +combat corruption and keep financial +crimes out of gambling. +For Entain, this starts with playing an active +role in safeguarding the values and integrity +of sport. We want all sports events to be +fair and played to the best of participants’ +abilities. This is why we work closely with +regulators and sports governing bodies to +fight match-fixing, spot-fixing, and other +corrupt betting activity. We are a member +of the International Betting Integrity +Association (IBIA) and the Sports Betting +Integrity Forum (SBIF). +In 2023, we continued to reinforce our +Ethics & Compliance (“E&C”) function +with new team members and stronger +governance. We launched a new Ethics +& Compliance Charter which defines +clear accountability across the group and +ensures that our E&C team has the required +independence and authority to act as an +effective second line of defence. We also +launched a three-year E&C Strategy, which +sets our action plan for achieving a best-in- +class E&C programme. +Only operate in regulated markets +Entain firmly believes that strong, +commercially viable regulation of +the betting and gaming sector is in +everyone’s interests. It offers stability for +operators, important taxation streams +for governments and – most importantly +– provides the consumer with proper +protections and safeguards by ensuring +that only responsible providers operate in +the market. +Since February 2023, 100% of our group’s +revenue come from regulated or regulating +markets. As of 31 December 2023, we held +licences in 34 jurisdictions across the world. +We were also present in five regulating +markets where we can see a clear pathway +to regulation that will enable us to obtain +domestic licences in the next two years. +These regulating markets are Brazil, +Mexico, Peru, Austria and Finland. For more +about this, please refer to our regulatory +update on pages 38 to 39. +We appointed a Group Money Laundering +Reporting Officer and Global Head of Anti- +Financial Crime (“AFC”), and we expanded +our AFC team. After a period of growth +and multiple acquisitions, we revised our +organisational structure with all colleagues +with AFC responsibility reporting to the +central AFC Leadership Team. This new +governance framework gives us better +control and oversight across all our +entities, subsidiaries, and joint ventures. +We have also initiated an evaluation of +our international subsidiaries to assess the +maturity of local AFC programmes. This will +conclude in 2024 with on-site visits and +upskilling programmes tailored to the needs +of our colleagues. +We lead on integrity in everything that we do. From having the +highest ethical standards, to only operating in regulated markets, +with an aim of gold standard data protection, and cybersecurity +Material issues + Ethical & compliant behaviour + Data privacy and cybersecurity + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Only operate in regulated markets 100% of revenues from regulated or regulating markets since February 2023 +Ethics and integrity at the core +of our organisation and culture + New Ethics & Compliance Charter and Strategy + Average completion rate of 95% across Entain’s Big Four Compliance +Training Modules + Refreshed set of Entain Values, with “Do what’s right” at its core +Provide industry-leading +cybersecurity and data privacy + Growing headcount in Data Privacy and Cybersecurity teams, by 25% and 35% +respectively compared to 2022. + Average time to fix cybersecurity vulnerabilities decreased by 65% compared to 2022 + Over 80% of our operations audited and certified to ISO 27001 (by headcount) +Clear and robust governance processes +for each of our key ESG areas + New ESG governance structure with two board-level committees (Sustainability & +Compliance and People & Governance) +Awards and accreditations: ISO 27001 2022 Information Security Management System +Entain plc Annual Report 202346 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Provide a secure +and trusted +platform \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_49.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..e07c7201e2d5d77fa331678c76b1f13265563ae2 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,112 @@ +Doing what’s right +Every colleague, including contractors +and agency staff, must complete four +compliance modules covering Entain’s +Code of Conduct as well as ethical topics +such as safer gambling, data privacy, or +bribery and corruption prevention. As part +of this, colleagues sign a declaration that +they have understood the training and will +comply with Entain’s Code of Conduct. +Our 2023 Group Bonus was linked to +achieving 85% completion for each +module – an ambitious but achievable +target given the turnover in certain parts +of our business. This year, we achieved an +average completion rate of 98% – up from +93% in 2022 and 82% in 2021. +Big Four Learning Modules +Completion +Rate +Code of Conduct 94% +Compliance, Safer Gambling, +and Anti-Money Laundering 98% +Data Privacy 98% +Cybersecurity 98% +Provide industry-leading cybersecurity +and data privacy +Safeguarding our corporate and customer +information remains a top priority for +Entain. Our commitment is reflected in the +growing headcount of our Data Privacy and +Cybersecurity teams, which respectively +increased by 25% and 35% in 2023. +In 2023, we continued building our data +privacy assurance function with dedicated +resources to monitor the effectiveness +of our privacy activities, keep risks under +review, and update policies and procedures. +We boosted privacy controls by introducing +Effectiveness and Maturity Reviews of +our most critical data processes. We also +reinforced our risk management process +with a new privacy risk register which feeds +into Entain’s Enterprise Risk Management +(“ERM”) risk maps and identified an +additional 20 privacy risks in 2023. +Throughout the year, we further embedded +Entain’s Artificial Intelligence (“AI”) and +Data Ethics Charter, which we launched +in 2021 to define our principles for the +responsible use of AI and data-driven +technologies. We collaborate across the +business to embed Privacy by Design, +building data privacy considerations +directly into the development of our +products and processes. We have also +been preparing for emerging legislation +around AI, such as the EU Artificial +Intelligence Act. Working closely with our +Data Sciences & AI (“DSAI”) colleagues, +the Privacy team created a blueprint for +Entain’s AI Governance Framework and +developed a new AI policy which will be +released in 2024. +As cybercrimes continue rising globally, +we are continuously improving our +cybersecurity programme to protect our +players from digital threats. In 2023, we +introduce new security features in our +products such as customer multi-factor +authentication. We also reinforced our +cyberattack detection processes by +deploying machine-learning and AI- +based systems which uncover patterns +of malicious activity and block attacks +before they can reach our customers. +We managed to decrease the average +time to fix cybersecurity vulnerabilities by +65% compared to 2022. +As part of our commitment to best +practice, we have re-certified for the +ISO 27001 certification, an international +standard for information security. As of +31 December 2023, 80% of our operations +have been audited and certified to +ISO 27001. In 2024, we will continue +expanding the scope of the certification to +our 2023 acquisitions. +Clear and robust governance +processes for each of our key +ESG areas +In April 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. This new +structure reflects the ever-growing +importance of ESG topics for the group. +You can read about our ESG governance +structure on page 43. +As a FTSE100 company, +we have a duty to do the +right thing. This also means +training our people to always +make the right decision +for our customers and +our communities. +Entain plc Annual Report 2023 47 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Provide a secure and +trusted platform +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_5.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..9800d0d1fb13d42baafaeacb3075e7744440b355 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_50.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c14569294c1cb4570811a1185d4d90e4093d5a70 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,139 @@ +Focus area 2023 Highlights +Attract, engage and retain the best, +most diverse talent + Launch of Black Professionals@Entain employee network + Publication of Entain’s first-ever Global Menopause Policy + Entain ranking 5 in the 2023 All-In-Diversity Project Index + Entain’s Returnship programme with McLaren Racing receiving accolades at the +Women in Gaming Diversity Awards and the Personnel Today Awards +Provide the right growth opportunities +for all + Launch of Your Goals, Entain’s new objective-setting programme +Build a sense of belonging for +all Entainers + Launch of refreshed values and behaviours + 94% of Entain Managers received mental health training through the Workplace of +Tomorrow programme + 400,000 employee interactions with Entain’s Well-Me events, activities, and content + 9.1% utilisation rate for our Employee Assistance programme +Awards and accreditations: + + +We attract a broad and diverse audience from the inside out. +We are an employer of choice, and we build an inclusive and +supportive culture where talents from all backgrounds can thrive +Material issues + Diversity, equity and inclusion + Having the right people +Oversight +People & Governance Committee +On International Women’s Day 2023, we +published our first-ever global menopause +policy. Our ambition was to help colleagues +understand menopause-related issues and +normalise talking about the symptoms. +The policy came with a global awareness +campaign and support for managers in +having conversations around menopause. +We built a virtual Menopause Hub with +resources and bite-size training for those +going through the menopause journey and +for managers and teammates wanting +information on how to best support women +in the workplace. +We are committed to positively impacting +diversity not just within Entain, but across our +industry. We partner with universities and +charities to improve female representation +within STEM careers. One example of this +is our partnership with Girls Who Code, +through which we have reached 10,680 +young women since 2021. You can read more +about our work to drive diversity in the tech +sector in our 2023 Social Impact Report. +In 2024, we will focus our efforts on further +embedding DE&I within our Resourcing +Strategy to increase representation in +our hiring process. Our new recruitment +and candidate management platform will +provide us with better DE&I data on our +Attract, engage and retain the best, +most diverse talent +Diversity, Equity and Inclusion (DE&I) are key +to Entain’s future sustainability and success. +Attracting and retaining key talent remains +one of our Principal Risks as a tech business +(see page 85), and workforce diversity +plays an essential role in innovating, driving +change, and delivering outstanding products +and services for our customers. +As part of our commitment to DE&I, we +understand the importance of global +employee networks in providing a safe space +for colleagues with a shared identity or +experience. Launched in 2022, the Women@ +Entain and Pride@Entain groups continue +to grow, with over 1200 and 250 members +respectively. In 2023, Women@Entain +piloted a new mentoring programme for +women in our Product & Technology team, +matching participants with senior mentors. +We also launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. Led by our +network, we signed a UK partnership +10,000 Black Interns Foundation, and have +pledged to offer career opportunities to +Black students and graduates in the summer +of 2024. +Gender diversity at Entain +Group Board 33% +2023 3 out of 9 +(33%) +2022 +2021 +3 out of 9 +(33%) +4 out of 10 +(40%) +Senior managers 28% +221 out +of 794 +(28%) +194 out +of 752 +(27%) +128 out +of 364 +(26%) +2023 +2022 +2021 +All Employees 46% +13,645 out +of 29,576 +(46%) +13,479 out +of 28,940 +(47%) +11,583 out +of 25,554 +(45%) +2023 +2022 +2021 + Male Female +Personnel Today +Equity, Diversity & +Inclusion award +Women in Gaming +Diversity Awards Innovator +of the Year award +Entain plc Annual Report 202348 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Create the +environment for +everyone to do +their best +work \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_51.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c80ae463127b563c317fc3f799afe58eca33e894 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,159 @@ +candidates and recruits, allowing us to +tailor interventions and set group-wide +targets. We will also continue to remove +any barriers in the hiring process for +candidates and colleagues through the +design and launch of our new recruitment +platform in 2024. +Provide the right growth +opportunities for all +Our colleagues’ continuous personal and +professional growth is essential, and we +invest in targeted learning & development +(“L&D”) within our business units. +Programmes, courses, and self-led learning +are tailored to the needs of our teams +and individuals. +Entainers globally have access to best- +in-class learning resources, such as +LinkedIn Learning, Get Abstract, and +Pluralsight. These platforms enable our +colleagues to continuously develop their +skills – from marketing to Python coding or +public speaking. +In 2023, we focused our L&D efforts on +customer-facing roles, both in our global +Customer Services team and across our +Retail Estate. We know that customer +satisfaction starts with great leadership and +employees who feel supported and valued. +In our Customer Services team, we kicked +off Let’s Lead, a new leadership programme. +The seven-week curriculum includes a mix +of self-paced learning, in-person training, +and professional certifications delivered by +external providers. With over 20 modules, +the programme equips our managers +with all the technical knowledge and soft +skills they need to successfully lead their +teams. This includes completing a Mental +Health First Aider course, as part of Entain’s +commitment to wellbeing. 979 colleagues +have already completed the course, with 113 +learning sessions delivered and we will roll +it out to Hyderabad, India and Montevideo, +Uruguay in 2024. +In our retail business, we have built a +consistent foundation of competency +and knowledge among managers and +team leaders. The Enhance, Establish and +Elevate Your Game programmes support +colleagues at different points in their careers, +from preparing for a first management +role to sharpening their leadership skills. +In 2023, the programme trained over 2000 +colleagues. We are proud that many of +our retail management team started as +Customer Service Managers before growing +into senior roles. +Last year, we also worked to harmonise +the way our colleagues think about their +professional objectives. We launched Your +Goals, an objective-setting programme, to +ensure all our colleagues have meaningful +conversations with their managers about +their goals and understand how these align +with Entain’s strategy. In 2024, we will +develop Entain Leadership Expectations +which will be supported by a structured, +consistent, and global leadership pathway. +Build a sense of belonging for +all Entainers +Following an intensive period of business +growth, we wanted to bring our colleagues +together and consolidate our shared culture. +2023 saw us launching a refreshed set +of values and behaviours which build on +our core beliefs whilst helping us prepare +for the next phase of our evolution: Do +what’s right, Keep it simple, Go beyond, +and Win together. More than words on a +wall, these values act as guiding principles +for our colleagues across all locations and +at all levels. They have been embedded +in everything we do, from the way we +recognise our colleagues to how we set +individual objectives. +In line with these values, we remain +passionately committed to creating a +supportive and encouraging environment +where all our colleagues can thrive. +The Entain Well-Me strategy is designed +to help employees make positive changes +to improve their physical, mental, and +emotional health. Our 2022 global well- +being survey, which was completed by +9,600 colleagues, helped us identify +strategic priorities for the coming years. + In 2023, we rolled out Workplace of +Tomorrow, a mental health programme +designed to give people managers the +tools to support their teams and create a +culture of trust and psychological safety. +Developed by experts at Unmind, the +training equipped our managers to have +supportive conversations, giving them +practical knowledge on topics such as self- +care, stress and anxiety, or active listening. +94% of the Entain managers completed the +course last year. 74% of them taking action +with their team as a result. +Our 2023 global wellbeing campaigns were +tailored to boost the mental and physical +health of our colleagues. Our flagship +Live-Well Festival consisted of a week- +long event with expert-led workshops on +nutrition, sleep, and fitness, generating +65,000 engagements on our intranet. +In November, nearly 600 colleagues joined +Breaking Stereotypes Together, a live event +to champion men’s mental health and share +techniques for combatting stress. +Looking at 2024, we are using data from +our global wellbeing survey to pilot Entain’s +new resilience training, The Energy Edge. +The programme aims to help colleagues +grow their energy and performance through +a mix of text learning, bite-sized videos, +and interactive activities. We will open +the programme to our retail colleagues +in early 2024 before opening to our +global workforce. +In 2023, we partnered with the McLaren +F1 team on a Returnship programme, +providing unique opportunities for skilled +women to resume their STEM careers. +Over six months, 10 career returners +worked at both Entain and McLaren in +roles ranging from Data Analysts to +Software Developers. The placements +were tailored to their experience and +ambitions, and they received extensive +support to ensure a successful transition +back into work. We are delighted that, at +the end of the returnship, most returners +secured a role at Entain or McLaren. +The programme received two accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Driving Diversity Forward with +McLaren Racing +Companies like Entain can +reshape the world of work for +women, and we want to play +an active role in doing so. +Entain plc Annual Report 2023 49 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Create the environment +for everyone to do their +best work \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_52.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8c5e7af17dd9be90d6dabdd21e3b7484731185d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,36 @@ +We will be Net Zero by 2035, and support and positively impact +our communities around the globe +Material issues + Environmental sustainability + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Reduce our +environmental impact + 70% global electricity from renewable sources, including over 99% in the UK through +green tariffs and a 5-year Power Purchase Agreement + 9% decrease in market-based Scope 1 & 2 emissions globally from the prior year + Near-term and Net Zero submitted to the Science Based Targets Initiative (SBTi), +pending verification +Create a sustainable +value chain + 35% of our in-scope third-party spend enrolled on the EcoVadis platform with +a detailed assessment of their sustainability performance +Promote grassroots, women’s and +disability sports + 250+ aspiring champions have received a financial award via SportsAid since 2019, +helping to cover the costs of training, equipment, and travel + 100 non-league football clubs supported via Pitching In since 2020, enabled to reach +their communities +Support communities where +we operate + Donating £25.4m, to support our communities. + Fundraising £0.5m for Prostate Cancer UK and £1m for Chance for the Children via the +Ladbrokes Coral Trust, funding life-saving research and treatment +Awards and accreditations: ISO 14001: Environmental Management across our operations in GB (shops, stadia and +offices) covering 47% of our global headcount. +Entain plc Annual Report 202350 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_53.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f59ccc018718fd0662cb42c992e4d71a9d7f8f7 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,151 @@ +Environmental Impact +Doing what’s right is one of Entain’s long- +standing values. Whilst our greenhouse +gas (GHG) emissions are relatively low +compared to companies in other industries, +we have an important role to play due +to our size and global scale – especially +given the critical and urgent importance of +climate change. +We were the first betting and gaming +company to formally commit to a Net Zero +target with the Science-based Targets +Initiative (SBTi), with the formal verification +process commencing in 2023 and due to be +concluded in 2024. +Our targets reflect our ambition to lead +the industry on decarbonisation. We have +committed to reduce our absolute scope 1 +and 2 (market-based) and material Scope +3 emissions by 42% by 2027 from a 2020 +base year, and 60% by 2030. We have +also committed to be net zero by 2015 – +reducing our Scope 1, 2 and 3 emissions +by 90% by 2035, and investing in credible +carbon removal projects to neutralise the +remaining 10%. These targets, which follow +the SBTi criteria, will see us reduce our +emissions in line with a 1.5 decarbonisation +pathway ahead of the UK Government’s +2050 timeline. +In 2023, our Net Zero Action Group +developed our first net-zero strategy, which +focuses on energy (efficiency and sources), +electrification, and engagement (see +next section). +We continue to procure over 99% of +our electricity in the UK from renewable +sources, which equates to 70% renewable +electricity globally. We are currently looking +at the viability of sourcing renewable +electricity in our key markets globally. +We recognise that as a digital business, we +need to understand our digital emissions. +We have been collecting and analysing +data from our data centre suppliers to +understand the energy consumption and +renewable energy purchasing of our major +providers. Our most recent analysis in 2022 +indicated that over 50% of our data centres +are on renewable electricity contracts, +and we are engaging with our providers to +increase this further. +We know that ambitious decarbonisation +requires credible and up-to-date data +to monitor and address our emissions +hotspots. In 2023 we signed up to carbon +accounting software that we will launch +and operationalise in 2024. To increase +the quality of our emissions reporting, we +have also commissioned the Carbon Trust +to verify our Scope 3 emissions footprint +in addition to our annual scope 1 and 2 +footprint verification. +Creating a sustainable supply chain +Our commitment to ethics and sustainability +extends to our business partners. We want +to work closely with our suppliers to +support them on their decarbonisation +journey and to protect human rights beyond +our operations. +In early 2023, we took an important step +by partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings. EcoVadis allows us to evaluate our +key suppliers and set corrective action plans +across four topics – environment, labour +and human rights, ethics, and sustainable +procurement. The platform also provides +our suppliers with e-learning training on a +self-service model. Working with EcoVadis +will help us refine our Net Zero roadmap by +giving us access to primary emission data +from our suppliers and helping us identify +those who are committed to the Science +Based Targets Initiative (“SBTi”). +Throughout the first year of our partnership, +we focused on onboarding our existing +suppliers to the platform, enrolling and +assessing over 35% of in-scope vendors. +This represents £523m of third-party +spend. So far, we found that our suppliers +scored on average 59.6 out of 100 +on EcoVadis, 13.6% higher than the +benchmark. We also embedded EcoVadis in +our tender process, making its sustainability +assessment a mandatory requirement for +all winning suppliers. +We are now working with our suppliers to +create corrective action plans, supporting +them in improving their sustainability +performance. We encourage them to set +Science-based Targets, increase their use +of renewable energy sources, and publish +policies around Anti-Bribery and Corruption +(“ABC), Modern Slavery, and Diversity, +Equity and Inclusion (“DEI”). Our ambition is +for 75% of our in-scope third-party spend +to be assessed on EcoVadis by the end +of 2025. +Next year, we will start implementing our +2024-2026 Modern Slavery Strategy by +conducting an extensive risk assessment +of all our in-scope suppliers, mapping +areas where modern slavery could be +more prevalent based on factors such as +purchasing category or political instability. +The findings will help us identify higher-risk +suppliers and, when necessary, request +the completion of supplier self-assessment +questionnaires and plan for external on-site +audits to be completed in 2025. +Promoting Grassroots, Disability and +Women’s Sports +Entain is passionate about sports and +understands the role it plays in society. +We are proud to invest at the grassroots +level, supporting amateur and professional +athletes of all ages, backgrounds, and +abilities to chase their dreams. The Entain +Foundation supports projects across the +globe that you can discover in our 2022/23 +Social Impact Report. +In the UK, we are proud of our long-term +commitment to SportsAid, helping young +British athletes aspiring to become the +country’s next Olympic, Paralympic, +Commonwealth, and world champions. +Since 2019, Entain has helped 251 athletes +by providing them with a financial award to +help with training, equipment, competition +costs, and personal development training. +We empower a diverse cohort of sports +people nationwide, with a close to even +gender split, 48% of our athletes with a +disability and 16% coming from ethnic +minority backgrounds. By 2024, we will +have donated £500,000 to SportsAid. +Entain plc Annual Report 2023 51 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_54.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2e6a1f05347d865387bb5ed816889ee8f468fde --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,76 @@ +In the U.S., we have partnered with Oak +Out Hunger Entain since 2022. The project, +launched by the Charles Oakley Foundation, +provides education in responsible +gambling with other forms of support to +underprivileged communities. The Entain +Foundation U.S. sponsorship provides +funding and expertise in preventing and +mitigating problem gambling to the Oak +Out Hunger community project. In 2023, +the Entain Foundation U.S. helped fund +10,000 meals to those communities in need. +If you would like to learn more about the +difference we make with our partners +across the globe, we invite you to review +our 2022/23 Social Impact Report. +We also launched Pitching In in 2020 to +support and develop grassroots sports in +the UK, helping non-league clubs improve +their facilities. This multi-million-pound, +multi-year investment programme works +with the Trident Leagues to champion +their achievements and tell their stories. +Pitching In has been designed from the +ground up to deepen links between clubs +and their local communities. We are +also the founding partner of the Trident +Community Fund since 2020, investing +£150,000 every year to enable clubs to +engage in vital community-based projects +and invest in their local areas. In 2022, we +unveiled the Pitching In Volunteer Hub, a +unique online portal and one-stop shop +for every Trident League club to connect +football fans with potential volunteers. +The Volunteer Hub provides a simple +web-based interface where clubs can +post volunteering vacancies, while fans +can search for available opportunities in +their preferred clubs or locations. To date, +nearly 300 positions have been processed +through the hub, helping to bring a vitally +needed new generation of volunteers to the +Pitching In clubs. +Support communities where +we operate +As a global business, we want to positively +impact local communities across the +markets where we operate. Entain partners +with small to large-sized charities across +the globe to support the causes that are +the most important to our colleagues, our +customers, and our communities. +In Kenya, we partner with ComputerAid, +an international charity aiming to address +unequal access to technology in African +countries. Our support is helping to create +a Solar Learning Lab (“SLL”) in Al Huda +Primary School, providing technology +access to traditionally marginalised +communities in South Kenya. The SLLs +are shipping containers converted into +computer rooms and fitted with solar +panels to generate electricity, enabling +them to be deployed in remote locations. +In 2023, we enabled ComputerAid to install +two containers in Al Huda Primary School +with 20 computer stations, 20 laptops, as +well as drinking water and toilet facilities. +We expect over 750 students to access this +communal space in the coming months. +1. The Scope 3 categories included in our target are: Category 1: Purchase Goods & Services, Category 3: Fuel and Energy-related Activities, Category 4: Upstream Transportation +and Distribution, Category 5: Waste Generated in Operations, Category 6: Business Travel, and Category 7: Employee Commuting. We completed a similar risk assessment +exercise in 2022 and we intend to repeat it every other year. +Entain plc Annual Report 202352 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_55.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..ceecd901b0dad2708ddc7b76eb2a75463691cc39 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,29 @@ +Our ESG Key Performance Indicators +Pillar Data point 2023 2022 2021 +Lead on player +protection +Number of jurisdictions outside the UK covered by the ARC TM player +protection programme 27 22 - +% contributions of GGY to RET 1% 0.75% 0.5% +Cash and in-kind contributions towards responsible betting and +gaming initiatives £20.8m £18.3M £12.9m +Customer interactions regarding problem gambling 8.7m 1.8m 2.3m +ARCTM Interactions 2,3 7.5m 3.7m n/a +Customer complaints 1 3,927 4,215 4,045 +Customer complaints specifically related to a betting and +gaming transaction 715 629 655 +Self-exclusions made 1,4 53,745 60,261 61,644 +Secure +& trusted +platform +% of revenues from domestically regulated or regulating markets 100% 100% Nearly 100% +Number of markets exited with no clear path to a sustainable and +safe regulated betting and gaming industry +5 9 3 +% of operations certified under ISO27001 5 80% n/a n/a +% of Technology budget dedicated to Cybersecurity 3.2 n/a n.a +Impact of security incidents £0.7m £3.6m n/a +Entain plc Annual Report 2023 53 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_56.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c32f9be41133d2160a28d8878477132210afd18 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,100 @@ +Pillar Data point 2023 2022 2021 +Foster an +inclusive culture +Employees worldwide (headcount) 6 29,582 28,940 25,554 +Employees worldwide (FTE) 6 ,7 23,650 24,195 19,314 +Female employees 6 13,645 13,479 11,583 +% female employees 6 46% 47% 45% +Part-time employees 6 9,968 9,754 4,328 +% part-time employees 6 34% 34% 17% +Median hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 4% 3% 5% +Mean hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 16% 17% 16% +Median bonus pay difference between male and female colleagues 8 44% 39% 60% +Mean bonus pay difference between male and female colleagues 8 65% 66% 63% +Females in all management positions (as % of total +management workforce) +37% 37% 38% +Females in junior management positions (as a % of total +junior management workforce) 39% 40% 40% +Females in technical roles 9 28% 31% 30% +Female managers in revenue generating functions 10 40% 42% 38% +UK-based employees who have confirmed being part of an ethnic +minority background, as a percentage of UK employees that have +reported their ethnicity 11 15% 14% 18% +UK-based employees who have confirmed as being part from an +ethnic minority background +7% 7% 10% +Employee age groups: 7 +<30 +30-50 +50+ +Unknown +35% +47% +15% +3% +37% +46% +14% +3% +38% +48% +14% +0% +Employee contract types: 7 +Permanent 12 +Fixed-termed 12 +Contractors 13 +99% +0.1% +1% +99% +0.1% +1.5% +98% +1.21% +1.78% +Customer Satisfaction 14 78% 60% 60% +Average hours per employee of training and development 13 8.1 10.5 +Employee turnover – all 28% 36% 32% +Employee turnover – voluntary 20% 27% 25% +Whistleblowing incidents reported and investigated 65 51 29 +Whistleblowing incidents reported and investigated, broken down +by topics +Fraud and theft +Code of conduct +Procedural non-compliance +HSSE +HR Grievance +Not provided +12 +32 +15 +1 +4 +1 +5 +23 +12 +3 +7 +1 +N/A +Accidents 603 624 456 +Employee work-related injuries 72 112 117 +Employee reportable incidents 5 5 5 +Public work-related incidents 5 11 9 +Public reportable incidents 0 2 2 +Robberies 50 73 36 +Incidents of anti-social behaviour 6,137 5,979 4,216 +Incidents of assault 452 240 132 +Absenteeism rate 15 4% 5% N/A +% of internal hires 23.8 19% N/A +Employee engagement score 16 77% 74% 78% +Entain plc Annual Report 202354 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_57.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..d3e52bea87da9793cd30e34ab9ba0a27df1ee6e5 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,120 @@ +Pillar Data point 2023 2022 2021 +Positive impact +on communities +(including +Streamlined +Energy & +Carbon +Reporting Data) +Total energy consumption (kWh) 17,18 +UK +Rest of the world (RoW) + 124,771,815 +77,957,313 +46,814,502 +125,026,096 +82,641,345 +42,384,750 +110,509,736 +85,336,239 +25,173,497 +Absolute direct emissions (scope 1) – (tCO 2e) 5,899 4,414 3,663 +Absolute indirect emissions (scope 2, location-based) – (tCO 2e) 27,202 26,846 24,767 +% of purchased electricity from renewable sources 19 70.3% 66.4% 67.4% +Total GHG emissions – direct & indirect: location based (tCO 2e)20 +UK +RoW +33,101 +14,885 +18,216 +31,259 +15,569 +15,690 +28,430 +18,286 +10,144 +Absolute GHG emissions intensity per employee (tCO 2e/headcount) 1.12 1.08 1.13 +Absolute indirect emissions (scope 2, market-based) – (tCO 2e) 9,171 12,151 12,677 +Total GHG emissions – direct and indirect: market based (tCO 2e) +UK +RoW +15,071 +625 +14,445 +16,565 +1,980 +14,585 +16,340 +4,932 +11,408 +Waste generated 21 (tonnes) 3,738 4,384 3,858 +Total Scope 3 GHG emissions (tCO 2e)22 +Category 1: Purchased Goods & Services (EEIO methodology) +Category 1: Purchased Goods & Services (Supplier specific) +Category 4: Upstream Transportation & Distribution +Category 5: Waste +Category 6: Business Travel +Category 7: Employee Commuting +346,051 +312,603 +15,726 +7,873 +101 +5,292 +4,456 +315,550 +288,524 +12,100 +6,399 +83 +4,398 +4,046 +Supplier spend £2.8bn £2.7bn £2.1bn +Number of suppliers 12,613 12,006 10,380 +1. Data covers all Great Britain licenses. +2. Data covers all UK licenses. +3. This figure includes all ARC TM real-time packages and risk-based interceptors, as well as ARC TM emails. It is a count of the number of customer interactions, not at a distinct +customer level. This figure includes the 1,807,892 interactions reported under ‘Customer interactions regarding problem gambling’. +4. Data only includes self-exclusions made via Entain’s own processes (e.g., via customer services) and does not include third-party self-exclusion schemes such as, for example, +GAMSTOP (National Online Self-Exclusion Scheme) and the Multi-operator Self Exclusion Scheme. This information has been obtained from Entain’s Regulatory Returns. +5. We use employee headcount to evaluate the scope of our ISO27001 certification. +6. The 2023 figures under the ‘Foster an inclusive culture’ pillar do not include our latest acquisitions 365 Scores and STS as data isn’t yet available for these new subsidiaries at +the time of publication. Unless stated otherwise, the 2022 figures do not include employees from our November 2022 acquisitions, SuperSport, Puni Broj, and Minus. All figures +are global unless stated otherwise. The snapshot date for all figures is 31 December 2023 unless otherwise stated. +7. The 2022 figures have been revised from the 2022 annual report to include employees from SuperSport, Puni Broj, and Minus 5. The 2022 figures do not include employees from +SuperSport, Puni Broj, and Minus 5 who have left the business between 1/01/2023 and 31/04/2023. +8. Data covers UK colleagues only. Data is based on a snapshot date of 5 April for the year stated, as per the requirements of the UK’s Gender Pay Gap Reporting. +9. For the 2021 and 2022 figures, technical colleagues were those employees that rolled up to our Chief Technology Officer based on our Business Process Flow Manager. +Following changes to the Group’s functions in 2023, technical roles are defined for 2023 as all roles in our Product & Technology function excluding customer operations. +10. For the 2021 and 2022 figures, revenue-generating functions included our digital and retail/stadia functions. Following changes in the business, revenue-generating functions +are defined for 2023 as the following functions: Ladbrokes.au/Neds, Core, BetCity, Crystalbet, Enlabs, Eurobet, Labrokes.be, Latam, Retail & Stadia, and BetMGM. +11. This 2023 data is based on a sample of 47% of UK-based Entain employees who have provided us with their ethnicity information. To prevent us from over or understating the +ethnic diversity of our employees, we report this data in two ways. We report on both the percentage of the sample that identifies as being from ethnic minority backgrounds, as +well as the number of those confirmed to be identifying as from an ethnic minority background as a proportion of all UK employees. +12. As a percentage of the total number of employees excluding contractors. +13. As a percentage of the total number of employees. +14. Our methodology to measure customer satisfaction changed in 2023, as we stopped using email surveys and replaced them with digital pop-up surveys shared with customers +whilst online. +15. Data covers UK retail colleagues only. +16. We measure employee engagement based on the results of the annual Your Voice survey. The 2023 survey was postponed to January 2024, which is the basis for the 2023 data. +17. Coverage of energy consumption and emissions data is 100% for the UK, and 87% globally, by employee headcount. Global and ROW energy and emissions data are scaled up +based on this coverage to estimate totals across global operations. This data includes energy consumption related to both scope 1 (company vehicles, gas, and fuel) and scope +2 emissions (purchased electricity). Global coverage is below 100% due to limited availability at the time of reporting. Any updates to figures will be provided in our forthcoming +ESG Report and CDP submission. +18. Recent acquisitions of 365Scores and STS are not included in the figures due to no data availability at the time of reporting – we will include these entities in our 2024 reporting +and restate previous years according to our rebaselining policy. +19. Energy from renewable sources only includes electricity purchased that was actively sourced from renewables. All remaining electricity used by Entain is sourced from the local +grids where we operate. +20. Emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard. Consumption data has been converted to GHG emissions using 2023 BEIS +emissions factors and 2023 IEA emissions factors for non-UK grid electricity. Emissions reported above are calculated using both the location-based and market-based +methods, using an operational control boundary. 2021 and 2022 GHG emissions (Scope 1 & 2) data has been assured to limited assurance by the Carbon Trust based on ISO +14064-3: 2019. Verification statements are available on our website. 2021 Scope 1 emissions data has been restated due to a methodology change that arose in the 2022 +assurance process. +21. Waste data is sourced from our operations in the UK. This makes up 49% of our overall headcount. These figures are not prorated to 100% coverage. +22. Scope 3 emissions data disclosed has been verified by the Carbon Trust to ISO 14064-3 for 2022 and 2021. 2023 data was not available at the time of reporting but will be +disclosed later in 2024. +Entain plc Annual Report 2023 55 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Our ESG Key +Performance Indicators +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_58.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb449c20b1d94c1fb8fa582fd794345f76a9c1db --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,99 @@ +and opportunities (Metrics and targets – +disclosure C), in particular the physical risks +outlined in Table 2. These updates will be +included in the 2024 Annual Report. +This statement was developed by following +the guidance in Section C of the TCFD +Guidance Document: Implementing the +Recommendations of the Task Force on +Climate-related Financial Disclosures. +Table 1 is structured against the four pillars +of the TCFD framework: Governance, +Strategy, Risk Management and Metrics +and Targets. Table 2 summarises our +most material climate-related risks and +opportunities and their estimated impact +on the Group. Table 3 outlines the climate +change scenarios used in our 2022 analysis +and subsequent 2023 review. +2022 scenario analysis, we reviewed our +climate-related threats and opportunities to +identify those that are the most significant +to the group. This process helped us +refine our analysis, and we have revised +our list of climate-related threats and +opportunities accordingly. +Over the next year, we will continue refining +the quantification of the impact of climate- +related risks on the Group and across our +different markets. We want to further +embed climate-related considerations +into the Group’s financial planning and +relevant business strategies, such as our +Key Locations Strategy which determines +where we will operate in the future. We will +consider additional metrics and targets +to monitor our climate-related threats +Over the past year, we have made progress +in integrating climate-related risks into our +group enterprise risk management (“ERM”) +framework. In line with the ‘comply or +explain’ obligation under the UK’s Financial +Conduct Authority Listing Rules, the Group +can confirm it is fully compliant with ten of +the eleven TCFD recommendations and +partially compliant with disclosure C of +the Metrics and Targets pillar. Where we +are partially compliant, we continue to +develop and mature our processes as +outlined below. +Our priority for 2023 was to start +evaluating the impact of our relevant +climate-related risks on the group in line +with our ERM methodology as described on +pages 79 to 82. Using the outcomes of our +TCFD Entain is a staunch supporter of the recommendations of the +Task Force for Climate-related Financial Disclosures (“TCFD”), +having made voluntary disclosures ahead of the FCA’s mandatory +requirements for UK Premium Listed Companies. In this section, we +disclose the threats and opportunities of different climate scenarios +on our Group – whether these are the impacts of transitioning to a +lower-carbon economy, or the adaptational impacts arising from a +rapidly warming planet +Governance +(a) Describe the board’s +oversight of climate- +related risks and +opportunities. +FC The Entain Board is ultimately responsible for climate-related threats and opportunities, with overall +ownership of this agenda sitting with our CEO. +Responsibility for identifying and managing threats is delegated to the Sustainability and +Compliance Committee, which is accountable for monitoring our progress against targets, and +ensuring climate-related risks are adequately addressed, respectively. +The Sustainability and Compliance Committee is also responsible for approving, and overseeing +the implementation of, our environmental strategy. The Committee receives quarterly updates on +our progress against our climate-related performance – including progress against our goals and +targets – from the ESG Steering Committee (see below). In 2023, the Sustainability and Compliance +Committee was briefed on climate-related issues and opportunities at four of their meetings. +The Group Risk Committee, which reports to the Board, has operational responsibility for managing +risks within the Group, including climate-related risks deemed to have a material financial impact. +The Board ultimately approves the Principal Risks and significant risks as well as how they are +allocated for monitoring. +(b) Describe +management’s role +in assessing and +managing climate- +related risks and +opportunities. +FC Our ESG Steering Group is responsible for assessing and managing climate-related threats +and opportunities, as well as overseeing our approach to climate change as part of our wider +sustainability strategy. The ESG Steering Group is chaired by our Chief IR & Communications Officer +and reports to the Board Sustainability and Compliance Committee every quarter (see pages 42 to +43). +In addition to our ESG Steering Group, we set up a Net Zero Action Group to deliver Entain’s Net Zero +strategy. The Action Group convenes senior colleagues across departments to identify practical +measures which can be implemented throughout our global operations to reduce greenhouse gas +emissions. It reports to the ESG Steering Group every quarter. +Table 1 – Climate-related financial disclosures aligned with the TCFD recommendations +56 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_59.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1829672dfb67727c0daa84fc98fcc985280026a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,74 @@ +Strategy +(a) Describe the +climate-related risks +and opportunities +the organisation has +identified over the +short, medium, and +long term. +FC Please see Table 2 on pages 60 to 61 for a full description of climate-related threats (both physical +and transition) and opportunities potentially arising over the short, medium, and long term that +could have a material financial impact on Entain. +As described below, our climate-related threats and opportunities have been assessed against +Entain’s ‘Impact versus Action’ matrix (see page 82). In line with our matrix, the materiality of +climate-related risks on Entain was assessed by evaluating their potential impact on the Group’s +finances, operations, reputation, and commitment to health & safety. This was done across three +climate scenarios (see Table 3) and time horizons (see below). All climate-related threats and +opportunities were mapped against five categories, from very low impact to very high impact. The +Group defined as material any climate-related risks potentially having a medium or above impact on +the Group. +We understand that climate-related threats and opportunities can have longer-term time horizons +that span beyond typical enterprise risk management and business planning processes. We +considered climate-related risks based on the following time horizons: + Short (0-3 years) + Medium (3-5 years) + Long (5+ years) +(b) Describe the +impact of climate- +related risks and +opportunities on +the organisation’s +businesses, +strategy, and +financial planning. +FC In Table 2, we describe the potential impact of climate-related threats and opportunities on the +Group’s businesses, strategy, and financial planning in the short-, medium- and long-term (see +section above for definitions). +Addressing climate change is a key part of our strategy, and our Net Zero by 2035 commitment is an +important aspect of the Sustainability enabler in our strategic framework. Delivering on this requires +alignment with financial planning. In the short-to-medium-term, financial planning decisions have +already been made with the climate in mind. +For example: + Continuing to invest in our green electricity tariff for the UK Retail estate, despite increasing +energy costs. + Investing in a renewable Power Purchasing Agreement (PPA) to secure renewable energy at a +fixed price to gain energy price certainty. + Increasing our price banding for our company car selection, giving a wider choice for relevant +colleagues opting for hybrid and electric vehicles. +Over the next years, we will look to further embed climate considerations into our financial and +strategic planning processes as we further enhance our assessment and response to climate- +related issues and further integrate climate-related risks into our day-to-day processes. Currently, +the impact of climate-related issues has not significantly impacted Entain’s financial performance or +financial position, and we don’t anticipate it will in the short to medium term. +(c) Describe the +resilience of the +organisation’s +strategy, taking +into consideration +different climate- +related scenarios, +including a 2°C or +lower scenario. +FC In Table 2, we describe the Group’s strategic response and resilience regarding our climate- +related risks and opportunities. The risks outlined in Table 2 were developed through a series of +workshops held throughout 2022 and reviewed again in 2023 against our ERM methodology. Our +analysis raised risks that have not yet been deemed to be Principal Risks in and of themselves, +but climate change may become a factor in affecting the impact of our current Principal Risks, +and the subsequent actions required to manage those risks, both threats and opportunities. +Therefore, the climate-related threats and opportunities identified are emerging and/or operational +risks that will continue to be monitored and evaluated. The most significant risks have been +integrated into functional and divisional risk registers and they are continuously reviewed by their +functional owners. +57Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_6.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..9bc9c402f145bd10c09e3f3bbd01d056650ef9b4 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_6.txt @@ -0,0 +1,53 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_60.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..99cc9e40caa36abbb78ec3bb6b3b4a69208abe1a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,59 @@ +Risk Management +(a) Describe the +organisation’s +processes for +identifying and +assessing climate- +related risks. +FC In 2022, we conducted a series of workshops focused specifically on climate-related threats +and opportunities. This was led by Entain’s Chief Risk Officer and facilitated by our external ESG +Advisors. The purpose of these workshops was to gather insights from leaders around the business +on the climate-related threats and opportunities that were relevant to Entain, identifying those that +required further in-depth analysis to determine their impact on our business. In these workshops, +we explored three climate change scenarios outlined in Table 3, enabling the workshop participants +to draw out how each would affect Entain’s ability to deliver on our strategy. The climate-related +threats and opportunities identified through these workshops were disclosed in our 2022 +TCFD statement. +In 2023, we wanted to further integrate these threats and opportunities into our group enterprise +risk management framework and start evaluating their impact on the Group in absolute terms +as well as in relation to other business risks. We convened leaders and experts from across +the business to review the risks and assess them against our ‘Impact versus Action’ matrix, as +described on page 82. All risks were assessed for their impact on the business and the actions +required to bring those risks within Entain’s risk appetite. The impact of each risk was measured by +evaluating its financial implications, its potential operational impact (including impact on products +and services), the effect on the reputation of our brands and whether it affects our commitment to +health, safety, security, and well-being. This allowed us to allocate risks across five categories, from +very low impact to very high impact. Any climate-related risks potentially having a medium or above +impact on the Group is deemed as material and disclosed in Table 2. These material risks have been +integrated into our functional and divisional risk registers (see disclosure C below). +(b) Describe the +organisation’s +processes for +managing +climate-related +risks. +FC Our principal risks are recommended by the Group Risk Committee and ratified by our board, +as described on pages 83 to 86. The feedback from our 2022 and 2023 TCFD workshops found +that our climate-related threats and opportunities do not qualify as Principal Risks but rather +as emerging and/or operational risks. The outcomes of our work described above allowed us +to prioritise our significant climate-related threats and opportunities have been integrated into +functional and divisional risk registers and they are continuously reviewed by their divisional heads. +(c) Describe how +processes for +identifying, +assessing, and +managing climate- +related risks are +integrated into +the organisation’s +overall risk +management. +FC In 2023, we further embedded the process for identifying, assessing, and managing climate-related +risks into our overall risk management and governance framework, which is outlined on pages +79 to 82. As described above, all climate-related threats and opportunities have been assessed +against Entain’s ‘Impact versus Action’ matrix. The most significant climate-related threats and +opportunities have been integrated into functional and divisional risk registers and they are +continuously reviewed by their divisional heads along with other business risks on an annual basis. +58 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_61.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f82084b905976e7e51ea25f66986fccc4b610cb --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,71 @@ +Metrics and Targets +(a) Disclose the +metrics used by +the organisation +to assess climate- +related risks and +opportunities +in line with its +strategy and risk +management +process. +FC In 2023, the Group started evaluating our climate-related threats and opportunities against Entain’s +‘Impact versus Action’ matrix, described on pages 60 to 61. The impact of each risk was measured +different scenarios and timeframes by evaluating its potential: + financial implications + operational impact + effect on the reputation of our brands + affect to health, safety, security, and well-being of our employees +This allowed us to evaluate the business impact of climate-related risks – from very low to very high +– across three different climate scenarios. +Entain also uses the following metrics to monitor its performance in managing transition risks and +progress against its Net Zero target: + Scope 1 and 2 greenhouse gas emissions + Scope 3 greenhouse gas emissions + Global energy consumption + Percentage of electricity purchased on renewable energy contracts + Water consumption (where data is available) + Waste (where data is available) +We report our performance against these metrics on page 55. We disclose figures for the past three +financial years (FY23, FY22, and FY21) and we describe the methodologies used to calculate them. +In line with prior years, the Group will report 2023 scope 3 data within its forthcoming 2023-24 ESG +Report, expected to be published in Q2 2024. +At the time of reporting, climate-related metrics are not linked to remuneration. Entain does not +currently have an internal carbon price. +(b) Disclose Scope 1, +Scope 2, and, if +appropriate, Scope +3 greenhouse gas +(GHG) emissions, +and the related +risks. +FC On page 55, we disclose our Scope 1 and 2 greenhouse gas emissions for the financial years 2023, +2023, and 2021, showing historical trends. We use the GHG Protocol Corporate Standard and GHG +Protocol Corporate Value Chain (Scope 3) Standard as our methodology, using the ‘operational +control’ boundary to disclose this information. +Given the reputational risk of inaccurate reporting and the need for high-quality ESG data, we +commissioned the Carbon Trust to assure our Scope 1, 2, and 3 data. Assurance of our Scope 1 and +2 information has taken place since 2019, and our Scope 3 data for 2021 and 2022 has now been +completed. These assurance statements available on the Entain website. +(c) Describe the +targets used by +the organisation to +manage climate- +related risks and +opportunities +and performance +against targets. +C Entain currently has two non-financial targets linked with remuneration (see the Remuneration +Committee Report on page 131, linked with customer satisfaction and safer betting and gaming. +Currently, Entain does not have a climate-related target that is linked with remuneration. +As described on pages 50 to 51, we have set a Net Zero by 2035 target, which is underpinned by a +near-term reduction target of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline +year. In 2023, we started quantifying the impact of climate-related threats and opportunities. As +we continue refining our understanding of the financial impact of climate change on our business, +we intend to identify further metrics and targets that can be used to assess our most significant +climate threats and opportunities. We will continue this in 2024 with further disclosures against +recommendation A to be provided in the 2024 Annual Report as climate risk owners further define +KPIs to manage specific climate-related against. +59Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_62.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..108b2e37de2a7c38c2f0b195b7b68816d02fd6d2 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact +60 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_63.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..45b310de5df85da7ed6605bfb3ec54ccb370eb9d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Key: + Low Medium High Very High +61Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_64.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..26c1960b1412b13c73d89b42d6b7dd1cfee955ed --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,102 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact continued +62 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_65.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..00aa19adbecf448a2709b588f38c7cb394d345f6 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,101 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Key: + Low Medium High Very High +63Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_66.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..4342e8b04a170575659db712c5640ad3d4173c67 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,107 @@ +Engaging with +stakeholders +In addition, the Remuneration Committee +assesses the overall performance of +the Group, including progress against +its responsible betting and gaming +ambitions as well as delivery against its +Environmental, Social and Governance +(“ESG”) strategy to support decision making +on remuneration outcomes. +To ensure that the Group continues to +operate in line with good corporate practice, +Directors as part of their induction receive +training on the scope and application of +Section 172 to ensure that they are aware +of how a Board, in its decision making, must +consider its stakeholders. +Our approach +The Board believes in the importance +of engaging in effective communication +with all of its stakeholders. Depending on +the nature of the issue in question, the +relevance of each stakeholder group may +vary and not every decision the Board +makes will necessarily result in a positive +outcome for every stakeholder. +At each meeting the Board ensures that the +process of considering its stakeholders is +embedded in papers it receives to enable it +to discharge its duties. The Board monitors +the progress and delivery of strategic +initiatives through metrics reported +in meetings. +Section 172 of the Companies Act 2006 +imposes a general duty on Directors to act +in a way that they consider, in good faith, +to most likely promote the success of the +Company for the benefit of shareholders +as a whole. The Directors in setting +policies and strategies continue to have +regard to the interests of the Group’s +employees, shareholders, investors, +suppliers, customers and regulators, +including the impact of its activities on the +community and on the Group’s reputation. +These factors underpin the way in which +the Directors discharge their duties and +the Board is cognisant of the need to +engender strong relationships with all +stakeholders to help the Group deliver its +strategy and support its long-term values +including sustainability. +The Board recognises the importance of effective +governance and operates in line with the UK reporting +regulations. The information below should be read in +conjunction with the rest of the Strategic Report. +Colleagues +In order to gather feedback from colleagues around the Group, Board members +participated in a number of virtual and face-to-face employee events in 2023. +To facilitate such engagement we have instituted formal Employee Forums in our +major employment locations. +These Forums are a vital component of +our employee listening and engagement +strategy, enabling our people to discuss +how their teams connect with the +company purpose, strategy and values, as +well as discussing topics that impact them +and their colleagues. +Virginia McDowell, Chair of both the +Sustainability & Compliance and the +Remuneration Committees, is our +appointed Designated Workforce +Director, a position she has held since +2019. Virginia is a regular attendee at +Employee Forums, enabling her to provide +the Board and its Committees with +informed feedback and insight into the +realities of everyday working life at Entain. +Virgina McDowell and Rahul Welde +(Independent Non-Executive Director) +attended both the National Forum AGM +and the Global Engagement Conference +in 2023. +In addition, we regularly hold hybrid +virtual and physical ‘townhall’ meetings +through which our CEO, Board Directors +and senior management provide updates +and dialogue with our colleagues. +Twelve such hybrid townhall meetings +were hosted from nine different office +locations In 2023. +We believe that by encouraging and +supporting a diverse workforce where +individuals can thrive and success no +matter their background, is the best +way maximise our talent pool and better +represent our global customer-base. +We do not discriminate on the basis +of age, disability, gender or gender +reassignment, pregnancy or maternity, +race, religion or belief, sexual orientation +or marriage/civil partnership. +Read more : pages 53 to 57 +1 +64 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_67.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b71c24fd5afb1cedb95292e05d8ad665cfe54de --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,74 @@ +Shareholders +We strive to provide the Group’s investors and shareholders with an accurate and +comprehensive view of the financial and sustainable performance of the business +as well as a clear presentation of our performance against our ESG objectives +and sustainability objectives. The Group undertakes regular conference calls and +meetings with investors through roadshows, investor conferences, one to one and +group calls, publication of the Annual Report, dedicated ESG Report, press releases +and Stock Exchange announcements. In 2023, the Group conducted a total of 553 +investor interactions, as well as presenting at 12 conferences and ‘fireside chats’, +engaging with 353 unique institutions. These interactions involved a combination +of the CEO, CFO, the Chairman, the Chief IR & Communications Officer, Director of +IR and other management as appropriate. +In addition to these meetings and +conferences, as well as the usual trading +updates based around our financial +calendar, the Group also held four +shareholder events throughout the year. +These included a detailed business and +strategy update held In November 2023; +two updates on the performance of +the Group’s BetMGM joint venture and; +Entain Sustain, a virtual showcase and +presentation of the Group’s refreshed +sustainability strategy in December. +The Board receives feedback on +shareholder views through a variety of +channels, including regular meetings +throughout the year between +shareholders, our Chairman and executive +management. In addition to providing +the Board with updates on shareholder +discussion topics as part of its regular +Board reports, over the past year the +investor relations team conducted three +feedback and audit exercises to enable +us to better address investors views +based on a number of satisfaction and +confidence measures. These cover topics +including perception of the Group’s +strategy, management and opportunities +as well as delivery versus expectations +and transparency. +The quantitative analysis and qualitative +feedback were presented to the Board +during the year. The audits showed +positive progress in investor engagement +through the year with Entain performing +more positively than the benchmark +in all measures. In addition, Board +members listen in to results and trading +updates held by the Group for analysts +and institutional investors and can hear +directly the questions and comments +on Company performance and are +kept abreast of relevant newsflow and +commentary on the Company throughout +the year. +Customers +Our customers’ interests range from product availability, ethical behaviour, service, +pricing and promoting responsible attitudes to betting and gaming. The Group, as +part of its commitment to safer betting and gaming, engages through initiatives +such as Responsible Gambling Week, where responsible betting and gaming +messages dominated our websites and social media channels. +Our industry-leading ARC TM safer betting and gaming programme was developed in +recognition of the importance of tailoring our approach to the individual customer and +providing them with the protection and assurance which they should expect from us. +Read more: pages 43 to 52 +Read more: pages 8 to 11 +2 +3 +65Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_68.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..968d612b6259cf3f45c65ded086d36bc961bb498 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,64 @@ +Suppliers +The Group strives to work responsibly with its suppliers and regularly reviews its +customer and creditor payment policies. As part of the three-year modern slavery +strategy developed In 2023, we are now conducting an extensive risk assessment +of all our in-scope suppliers, to help us identify higher-risk suppliers and, where +necessary, request the completion of supplier self-assessment questionnaires. +As part of approach to ensuring a responsible supply chain, last year engaged +EcoVadis, the world’s largest platform for supplier sustainability ratings. +The EcoVadis platform enables us to evaluate our key suppliers and set corrective +action plans across four topics – environment, labour and human rights, ethics, and +sustainable procurement. +Our supplier interests range from fair trading, payment terms, success of the business +and long-term partnerships. The Group engages with suppliers by direct engagement, +supplier conferences and corporate responsibility and ethics reporting. The Board in its +duties receives regular reporting on retail performance and modern slave. +Read more: page 55 +Our Communities +Group has committed to investing £100m over five years on a range of projects +and good causes including safer betting and gaming measures, investment in +grassroots sport, reducing environmental impact, diversity in technology and +projects with a clear link to our local communities. +Entain has committed to investing £100m +over five years (2021-2025) to support a +range of initiatives and good causes In +areas including safer betting and gaming +measures, investment in grassroots sport, +reducing environmental impact, diversity +in technology and projects with a clear link +to our local communities. +A flagship project of Entain Foundation is +the Group’s Pitching In grassroots sport +investment programme, through which +the Entain Foundation supports The +Trident Leagues in the UK, made up of +248 clubs at the heart of England’s non- +league football pyramid. The Foundation +also supports a range projects to promote +diversity in and through technology and +partnered with ComputerAid and the +Turing Trust in 2023 to deliver community +hubs in sub-Saharan Africa. The Company +provides a comprehensive update to +stakeholders through the publication of +both annual ESG report and annual Social +Impact Report. +The Board has overall oversight of +corporate responsibility planning and +reporting as well as involvement in +corporate affairs strategy which is +delegated to the Sustainability and +Compliance Committee. The Sustainability +and Compliance Committee is advised +by the executive ESG Steering Group and +also works with external consultants +which assist the operational units and +review the environmental and social +performance data. +4 +5 +Read more: pages 57 to 60 +66 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_69.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd794ee26c50a9be004da5d8841b60ec1e2599ef --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,85 @@ +Read more: pages 36 to 37 +Regulators +As a global operator and one of the world’s largest online betting, gaming +and sports entertainment companies, Entain engages with a wide variety of +stakeholders. These include regulators, investors, trade associations, safer betting +and gaming charities and customers. This engagement is core to our ability to +offer first class player protection through our cutting edge technology and product +platform, while upholding all licensing objectives, across multiple jurisdictions. +One of the key relationships we maintain is with our regulators. Liaising with our +regulators on an open and regular basis helps us to ensure that each of them +are fully apprised of our operating practices. Through this process we can help +policymakers shape our industry environment to best serve our stakeholder group +whilst operating in a legal and fair way. +Governments and regulators + UK Government departments. + UK Gambling Commission. + Governments and regulators +in territories where we hold +gaming licences. + US state licensing bodies. + National information commissioners. + Domestic and International +trade Associations. + What are their expectations? + Providing an enjoyable and safe +leisure experience. + Making sure we operate legally and in a +fair manner. + Minimising harm and maximising +player protection. + Ensuring that we protect the young and +the vulnerable. + Reducing crime and unlawful behaviour. +How we engage + Ongoing dialogue with regulators, +domestic and international trade +associations and local authorities. + Responding to the UK Government’s +Review of the 2005 Gambling Act. + Numerous face-to-face +meetings bilaterally or as part of +industry meetings. + Quarterly meetings, at a minimum, +between the UK Gambling Commission +and senior members of Entain’s +leadership team. + Detailing governance, risk management +and safer betting and gaming +strategies through submission to the +UK Gambling Commission Annual +Assurance Statement process. + Partnerships with the GB Health & +Safety Executive. + Engagement with the Nevada Gaming +Commission’s Compliance Committee + Formal meetings with our regulators in +Gibraltar, Malta, the US and our other +global regulated jurisdictions. + Engage with the Department of +Justice in Ireland as it implements +new Anti-Money Laundering +(“AML”) requirements. + Respond to formal regulatory +consultations including most recently +the call for evidence on affordability +by the + UK Gambling Commission and RG +consultations in Spain and Sweden. + e-betting and gaming international +workshops in Spain, annual industry +meeting in Denmark and the ‘Licensing +information session’ in Germany. + Suspicious activity disclosed to relevant +national bodies and membership of +national match-fixing platforms (eg Spain). + Engagement with regulatory authorities +in regulating markets via local +associations and advisors in the run up +to licensing (eg Finland, Brazil). +6 +67Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_7.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..21433e420cc56449e59bbfefae99d42a9d50a4bc --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_7.txt @@ -0,0 +1,56 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_70.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..7be8d493ef864bd10b030da7410f26e6ff9ce7e0 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,5 @@ +Rob Wood +Chief Financial Officer +Chief Financial Officer’s Review +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202368 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_71.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..4593adc724457031d3db2529ccb7b702069e9e42 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,44 @@ +Financial Highlights: + Group NGR (excluding US) up +11% (+11%cc2), -2% on a proforma basis +– Online NGR up +12% (+12%cc2) in 2023, -3% on a proforma basis + • Excluding regulatory impacts, underlying proforma Online NGR growth of + + 3 % c c2 + • Record level of Online active customers, + 23% YoY, +10% proforma5 +– Retail NGR up +9% (+8%cc 2), proforma +2%cc2, reflecting the acquired +shops in New Zealand and Poland, and the continued strength of the +retail estate + BetMGM delivered a strong performance through the year +– 2023 NGR of $1.96bn, +36% year on year at the top end of expectations +– 14% market share in sports betting and iGaming in the markets where +BetMGM operates +– Positive EBITDA for H2 2023 + Group profit after tax before separately disclosed items was £339.1m +(2022: £223.9m) + Group loss after tax was £878.7m (profit of £32.9m), reflecting the DPA +settlement and impairment charges related to Australia point of consumption +tax increases and portfolio optimisation + Net debt of £3,290.9m (2022: £2,749.8m) and leverage of 3.3x +(3.1x proforma 5) + Adjusted diluted EPS of 44.2p (2022: 60.5p) + Second Interim Dividend of 8.9p per share announced, bringing the total +dividend for the year to 17.8p per share +Financial Results and the use of non-GAAP measures +The Group’s statutory financial information is prepared in accordance with International +Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (IFRS IC) +pronouncements as adopted for use in the European Union. In addition to the statutory +information provided, management have also provided additional information in the +form of constant currency 2, proforma 3, Contribution 4 and EBITDA 5 as these metrics are +industry standard KPIs which help facilitate the understanding of the Group’s performance +in comparison to its peers. A full reconciliation of these non-GAAP measures is provided +within the Income Statement and supporting memo. +Dear Shareholder +We have faced a number of challenges throughout +2023, both industry-wide and Entain-specific. +Despite the challenges, the Group delivered Revenue ++11% ahead of 2022 and underlying EBITDA3 of +£1,007.9m (2022: £993.2m) with our acquisitions +contributing strongly to the Group’s performance. +Entain plc Annual Report 2023 69 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_72.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a536991a9025b6f86026d78088abb39b83d6f5c --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,71 @@ +Financial Performance Review +Group +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +VAT/GST (63.5) (52.0) (22%) (29%) +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Operating costs excluding marketing costs (1,271.5) (1,135.7) (12%) +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV (loss)/income (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Results1: +NGR and Revenue increased by +11% versus 2022 (+11%cc 2), with proforma 3 growth in Retail and the benefit of acquisitions more than +offsetting a -3%cc 2 proforma 3 decline in Online NGR, as we continue to face regulatory headwinds in both the UK and Germany and +experienced soft trading in Australia and Brazil. Total Online NGR was +12% ahead of 2022 whilst Retail NGR was +9% ahead. +Contribution 4 in the year of £2,279.4m was +7% higher than 2022 reflecting the increase in NGR, offset by a reduction in contribution +margin of -1.8pp, due to territory mix, increased taxation in Australia and the reclassification of certain content costs in Retail to cost of +sales rather than operating costs, following the move to a revenue share arrangement. +Operating costs were 12% higher due to the impact of acquisitions (8pp), FX (1pp) and underlying inflation, including wage rate and +energy price inflation, partially offset by the reclassification of costs to cost of sales. Resulting in underlying EBITDA 5 of £1,007.9m, +1% +higher than 2022. +Share based payment charges were £2.5m higher than last year, while underlying depreciation and amortisation was 27% higher, +reflecting the impact of businesses acquired in the year (14pp), the annualisation of prior year acquisitions and continued investment in +the business. Share of JV losses of £42.9m includes an operating loss of £42.0m relating to BetMGM (2022: £193.9m), which was in line +with expectations. +Group underlying operating profit 6 was +18% ahead of 2022. After charging separately disclosed items of £1,286.5m (2022: £213.2m), +Group operating loss was £644.7m (2022: profit of 328.6m). + Online +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 13,724.5 14,090.5 (3%) (2%) +Sports margin 13.7% 12.9% 0.8pp +Sports NGR 1,531.0 1,443.7 6% 7% +Gaming NGR 1,837.6 1,576.9 17% 15% +B2B NGR 57.9 29.9 94% 90% +Total NGR 3,426.5 3,050.5 12% 12% +VAT/GST (59.9) (52.0) (15%) (21%) +Revenue 3,366.6 2,998.5 12% 12% +Gross profit 1,980.1 1,829.6 8% +Contribution 4 1,369.8 1,254.2 9% +Contribution 4 margin 40.0% 41.1% (1.1pp) +Operating costs excluding marketing costs (512.4) (426.0) (20%) +Underlying EBITDA 5 857.4 828.2 4% +Share based payments (7.3) (7.8) 6% +Underlying depreciation and amortisation (160.2) (118.3) (35%) +Share of JV (loss)/income (1.4) (0.2) (600%) +Underlying operating profit 6 688.5 701.9 (2%) +Entain plc Annual Report 202370 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_73.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4d52397764006e444ba783d2d20c8c2fd31f038 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,48 @@ +Results1: +Whilst there is underlying momentum in a number of our key markets, regulatory headwinds in the UK and Germany, as well as weaker +trading in Australia and Brazil, impacted NGR performance in 2023. Resulting proforma 3 Online NGR was down -3%cc 2 in the year but, +with the benefit of acquisitions total Online NGR was +12%cc 2 ahead of 2022. Whilst proforma 3 NGR was down year on year, actives +grew +10% year on year on a proforma 3 basis, emphasising the ongoing attraction of our brands to our customers. +In the UK, we continue to absorb the impact of regulatory changes and as a result NGR was down -6%. Excluding the impact of these +regulatory headwinds, we estimate that underlying NGR was +4% ahead of 2022, while actives were +18% higher than the same period +last year. +In Italy, constant currency 2 NGR was +3% ahead of 2022. Whilst our brands, along with the rest of the market, lost online market share +to one of the leading operators during 2023, our omni-channel offering continues to resonate with customers with combined Online and +Retail NGR +63%cc 2 ahead of pre-Covid levels. +Local market conditions in Australia have been challenging during 2023 leaving year on year NGR -6% down on a constant currency 2 +basis. Whilst we expect trading to remain challenging in 2024, we remain confident in our strategy focusing on brand differentiation, +new and innovative products and the customer experience. +In Germany, whilst we have seen some non-compliant operators exit the market, the continued lack of robust regulatory enforcement +as well as new regulation last Summer continues to impact the business. Resulting NGR in 2023 was -26% behind 2022 on a constant +currency 2 basis, primarily driven by lower spend per head. Whilst we received our gaming licences in November 2022, it is disappointing +that we are still yet to see the level of enforcement action that is needed in this market to combat unlicensed operators and ensure +customers are protected. +In Brazil, we continue to see a fiercely competitive market ahead of regulation with a significant increase in the amount spent on +marketing by various operators. Whilst we were initially slow to react to changes in the market, we are confident that following a change +in our regional leadership we now have the team and localised expertise needed to regain share in this exciting growth market, an +opportunity that our 365Scores acquisition will help us further leverage. NGR in Brazil was -14%cc 2 behind the prior year. +Georgia NGR was +7%cc 2 ahead of 2022 on a constant currency 2 basis, with our Crystalbet brand performing strongly following the +implementation of new regulation in the prior year. Following a strong 2023, our Crystalbet brand continues to be the market leader +in Georgia. +In the Baltics , proforma 3 NGR was +3%cc2 ahead of 2022 despite high inflation rates in the region. Our brands remain resilient despite +the economic pressures in the Baltic states and we continue to attract more customers each year with proforma 3 actives +13% ahead +of 2022. +Our Entain CEE business continues to perform well with proforma 3 NGR +13%cc2 ahead year on year. NGR in our SuperSport business in +Croatia was +29%cc 2 ahead of 2022 (proforma 3) maintaining its position as the market leader. NGR in our recent acquisition in Poland, +STS, was flat year on year with c4%cc 2 growth to the end of Q3 offset by poor margins in October. +NGR in our newly acquired New Zealand business was £84.7m in 2023, slightly ahead year on year on a proforma 3 basis. +Contribution 4 margin of 40.0% was in line with guidance but 1.1pp behind 2022 due to territory mix and the impact of additional taxation +in Australia which was implemented in H2 of 2022. +Operating costs were 20% higher than 2022 with recent acquisitions driving 16pp of the increase and FX 1pp with the remaining 3pp due +to underlying inflation offset by the initial benefits from Project Romer. +Underlying EBITDA 5 of £857.4m was +4% ahead of 2022, albeit flat year on year excluding the benefit of TAB NZ accounting +treatment to 2023, reflecting the contribution 4 from acquired businesses offset by the decline in proforma 3 NGR and 1.1pp reduction in +contribution margin. +Resulting underlying operating profit 6 of £688.5m was £13.4m behind 2022 with depreciation and amortisation of £160.2m, £41.9m +higher than 2022, half of which is a result of the impact of new acquisitions, including annualisation of those in the prior year, with the +remainder of the increase due to recent investment in our technology and product. After charging separately disclosed items of £481.1m +(2022: £114.0m), operating profit was £207.4m (2022: £701.9m). +Entain plc Annual Report 2023 71 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_74.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..beef6fc2e83931aed9d899358da0a9fb0fd55650 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,68 @@ +Retail +The Retail business is made up of our Retail estates in the UK, Italy, Belgium, Croatia, New Zealand, Republic of Ireland and Poland. +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 4,341.7 3,827. 3 12% 11% +Sports margin 18.9% 18.3% 0.6pp +Sports NGR/Revenue 813.0 705.2 15% 14% +Machines NGR/Revenue 573.7 572.6 0% 0% +NGR 1,386.7 1 ,277.8 9% 8% +VAT/GST (3.6) – – – +Revenue 1,383.1 1 ,277.8 8% 8% +Gross profit 900.2 860.0 5% +Contribution 4 890.3 852.1 4% +Contribution 4 margin 64.2% 66.7% (2.5pp) +Operating costs excluding marketing costs (606.1) (571.9) (6%) +Underlying EBITDA 5 284.2 280.2 1% +Share based payments (2.4) (2.3) (4%) +Underlying depreciation and amortisation (132.1) (112.4) (18%) +Share of JV income – – – +Underlying operating profit 6 149.7 165.5 (10%) +Results1: +Our Retail businesses continue to show the strength of their offer and customer appeal with 2023 Revenue and NGR both +8%cc 2 ahead +of 2022 and proforma 3 NGR +2%cc2 ahead. +In the UK, NGR was +2% ahead of 2022 on a LFL 7 basis, with strong performance across both sports and gaming. Our strong underlying +performance continues to be driven by an ongoing focus on market leading content for our gaming machines and betting terminals with +both providing a proposition akin to the digital offering but combined with the in-shop experience that cannot be replicated online. +NGR in Italy was up +16% on a constant currency 2 basis with a number of enhancements to our offering and the customer +experience including cash-out, reduced minimum bet sizes and continuous development of our SSBT proposition driving greater +customer engagement. +Proforma 3 NGR in Croatia grew at +14%cc 2 year on year further enhancing our market leading position and reflecting our program of +improvements to the customer offer, including the introduction of a loyalty scheme and enhanced sports content. +In Belgium, NGR was up +10%cc 2 with Ireland NGR +1%cc 2 ahead year on year. Our newly acquired Retail businesses in Poland and New +Zealand contributed £40.4m of NGR during 2023. +Contribution 4 of £890.3m was +4% ahead of 2022 with contribution 4 margin falling by 2.5pp due to territory mix and the impact +of certain content costs (1pp) which are now classified as cost of sales rather than operating costs as they move to revenue share +arrangements from fixed fees. +Operating costs were 6% higher than in 2022 with the impact of acquisitions (5pp) and inflation, including wage rate and energy price +inflation, more than offsetting the benefit of costs which are now classified within cost of sales. +Resulting underlying EBITDA 5 of £284.2m was £4.0m ahead of 2022. Depreciation of £132.1m was £19.7m higher than 2022, largely +due to the impact of acquisitions and the continued investment in our retail estates. Underlying operating profit 6 of £149.7m was £15.8m +behind 2022 and, after charging £22.8m of separately disclosed items (2022: £57.4m), operating profit was £126.9m, £18.8m ahead of +last year. + New Opportunities +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (29.3) (29.1) (1%) +Share based payments (0.7) (0.3) (133%) +Underlying depreciation and amortisation (5.7) (4.5) (27%) +Share of JV (loss)/income (1.5) (0.4) (275%) +Underlying operating loss 6 (37.2) (34.3) (8%) +Entain plc Annual Report 202372 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_75.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..06b9779ba8506d37ecbca34d41d8c521b79d8e2d --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,66 @@ +Results1: +New Opportunities underlying costs 5 of £29.3m were 1% higher than 2022 with increased start-up marketing costs in our Unikrn brand +offset by reduced costs associated with our innovation programme. Unikrn has now been closed as a B2C operation and development +of our e-Sports wagering offering is now focused on our existing labels. After depreciation and amortisation and share of JV loss, New +Opportunities underlying operating loss 6 was £37.2m, an increase in losses of £2.9m on 2022 and, after charging separately disclosed +items of £44.3m (2022: £nil), was a loss of £81.5m, £47.2m more than in the prior year. +Other +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR/Revenue 26.7 25.1 6% 6% +Gross profit 26.7 25.1 6% +Contribution 4 26.3 25.0 5% +Operating costs excluding marketing costs (21.0) (20.1) (4%) +Underlying EBITDA 5 5.3 4.9 8% +Share based payments – – – +Underlying depreciation and amortisation (2.7) (2.7) – +Share of JV income 2.0 0.4 400% +Underlying operating profit 6 4.6 2.6 77% +Results1: +NGR of £26.7m was 6% higher than 2022 driven by additional income in our greyhound stadia with 2022 impacted by adverse weather. +Underlying EBITDA 5 of £5.3m was an increase of £0.4m on 2022, with the additional NGR offset by increased overheads associated with +the aforementioned increase in number of meets. Underlying operating profit 6 of £4.6m was £2.0m ahead of last year and after charging +separately disclosed items of £nil (2022: £0.7m) was £2.7m ahead of 2022. +Corporate +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (109.7) (91.0) (21%) +Share based payments (11.3) (8.8) (28%) +Underlying depreciation and amortisation (0.8) (0.2) (300%) +Share of JV loss (42.0) (193.9) 78% +Underlying operating loss 6 (163.8) (293.9) 44% +Results1: +Corporate underlying costs 5 of £109.7m were £18.7m higher than last year driven by increases in our contributions to Research, +Education and Treatment, including GambleAware, increased legal costs and ongoing investment in our governance policies +and procedures. +After share based payments, depreciation and amortisation and share of JV losses, Corporate underlying operating loss 6 was £163.8m, +a decrease of £130.1m. The share of JV loss of £42.0m relates to BetMGM. After charging separately disclosed items of £737.2m +(2022: £41.1m), the operating loss was £902.0m versus £335.0m in 2022. + +Notes +1. 2023 and 2022 statutory results are audited with the tables presented relating to continuing operations and include both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as if they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. UK Retail LFL YoY NGR is calculated based on shops that traded for the full year in both 2023 and 2022. +Entain plc Annual Report 2023 73 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_76.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..39d1922fc0223c254e7b824ead514b8f1d84c4d4 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,66 @@ +Statutory Performance Review +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV loss (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Net underlying finance costs 6 (229.4) (84.7) +Net foreign exchange/financial instruments 32.5 (135.3) +Profit before tax pre separately disclosed items 444.9 321.8 +Separately disclosed items: +Amortisation of acquired intangibles (254.6) (116.9) +Recognition of HMRC settlement liability (585.0) – +Other (447.9) (102.0) +(Loss)/profit before tax (842.6) 102.9 +Tax (36.1) (70.0) +(Loss)/profit after tax from continuing activities (878.7) 32.9 +Discontinued operations (57.8) (13.4) +(Loss)/profit after tax (936.5) 19.5 +NGR and Revenue +Group NGR and revenue were +11% ahead of last year and the same on a constant currency basis 2, with Online NGR +12% and Retail +NGR +9% year on year. Further details are provided in the Financial Performance Review section. +Underlying operating profit 6 +The Group reported underlying operating profit 5 of £641.8m, +18% ahead of 2022 (2022: £541.8m). Underlying EBITDA 5 was +1% +ahead, with the increase in revenue offset by additional taxes, particularly in Australia, and increased operating costs largely associated +with acquired businesses and inflation. Depreciation and amortisation was -27% higher than 2022 driven by depreciation on acquired +businesses as well as on our recent investment in product and technology. The Group’s share of BetMGM losses in the period were +£42.0m, £152.1m lower than 2022 as the business continues on its path to profitability. Analysis of the Group’s performance for the +period is detailed in the Financial Performance Review section. +Financing costs +Underlying finance costs of £229.4m excluding separately disclosed items of £1.0m (2022: £5.7m) were £144.7m higher than 2022 driven +by interest on the Group’s new $1bn USD term loan, which was raised in Q4 of 2022, increased drawdowns on the Group’s RCF and the +impact of the increase in global interest rates. +Net gains on financial instruments, driven primarily by a foreign exchange gain on re-translation of debt related items, were £32.5m in the +period (2022: £135.3m loss). This gain is offset by a foreign exchange loss on the translation of assets in overseas subsidiaries which is +recognised in reserves and forms part of the Group’s commercial hedging strategy. +Separately disclosed items +Items separately disclosed before tax for the year amount to £1,287.5m (2022: £218.9m) and relate to the Deferred Prosecution +Agreement (“DPA”) with the Crown Prosecution Service of £585.0m (2022: £nil), £254.6m of amortisation on acquired intangibles +(2022: £116.9m), corporate transaction costs of £17.8m (2022: £23.9m), restructuring costs, including the initial costs of Project Romer, of +£49.7m (2022: £11.8m) and legal and onerous contract costs of £17.6m (2022: £8.1m) primarily relating to the legal costs associated with +the HMRC investigation. The Group also recorded a £1.0m loss on disposal of assets (£2022: £1.0m), £71.8m on movements in fair value +of contingent consideration (2022: £1.0m income), primarily relating to discount unwind on Tab NZ consideration, and £1.0m in financing +costs (2022: £5.7m). +In addition, the Group has also recognised an impairment charge of £289.0m during the current year (2022: £7.0m) with impairments +recognised against our Australian business of £190.0m, our closed B2C operations in Unikrn and Africa of £78.1m, and smaller +impairments against our ROI Retail business, closed shops and offices in the UK and our Totolotek business in Poland of £20.9m. +The charge which has arisen in the Group’s Australian CGU is a result of the impact of ongoing increases in the rate of Point of +Consumption tax across certain states and a forecast decline in Australian revenues in 2024 as a result of a reduced market outlook. +Entain plc Annual Report 202374 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_77.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..aceaf497c366a80e9ed644f0272d23d884a4180c --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,38 @@ +Our Australian business continues to be profitable and strategically important. Post the annualisation of the tax increases and +stabilisation of local market conditions, we expect our Australian business to return to growth. +During the prior year, the Group also recognised a £45.5m charge in respect of the repayment of amounts received under the +Governments Covid Furlough scheme. +Separately disclosed items +2023 +£m +2022 +£m +Legal settlement (585.0) – +Amortisation of acquired intangibles (254.6) (116.9) +Impairment (289.0) (7.0) +Corporate transaction costs (17.8) (23.9) +Restructuring costs (49.7) (11.8) +Legal and onerous contract costs (17.6) (8.1) +Loss on sale of assets (1.0) (1.0) +Movement in fair value of contingent consideration (71.8) 1.0 +Other including financing (1.0) (5.7) +Furlough repayments – (45.5) +Total (1,287.5) (218.9) +Profit/(loss) before tax +The Group’s profit before tax 5 and separately disclosed items was £444.9m (2022: £321.8m), a year-on-year increase of £123.1m +with the growth in underlying EBITDA 5, a decrease in BetMGM losses and a gain on foreign exchange partially offset by the increase in +depreciation and amortisation and interest. After charging separately disclosed items, the Group recorded a pre-tax loss from continuing +operations of £842.6m (2022: £102.9m profit), with the separately disclosed costs discussed above having a significant impact on the +reported results. +Taxation +The tax charge on continuing operations for the period was £36.1m (2022: £70.0m), reflecting an underlying effective tax rate pre- +BetMGM losses and foreign exchange gains on external debt of 23.0% (2022: 15.4%) and a tax credit on separately disclosed items of +£69.7m (2022: charge of £27.9m). +Discontinued operations +During the current year, the Group recorded a £57.8m (2022: £13.4m) loss in discontinued operations relating to its former Intertrader +business which was disposed of in November 2021. The loss recorded primarily reflects legal costs associated with historic matters as +well as a provision for a potential settlement with former owners of part of the business following a long running legal dispute. +Entain plc Annual Report 2023 75 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_78.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..9baacb1b8ff2e9d68a7b9c33d06b63cb96afa610 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,57 @@ +Cash flow +Year Ended 31 December +2023 +£m +2022 +£m +Cash generated by operations 810.0 846.9 +Corporation tax (137.3) (106.1) +Interest (224.6) (100.6) +Net cash generated from operating activities 448.1 640.2 +Cash flows from investing activities: +Acquisitions & disposals (1,315.4) (738.6) +Cash acquired/(disposed) 87.9 29.9 +Dividends received from associates 9.6 3.6 +Capital expenditure (259.9) (212.0) +Investment in Joint ventures (40.7) (175.1) +Purchase of investments (3.1) – +Net cash used in investing activities (1,521.6) (1,092.2) +Cash flows from financing activities: +Equity issue 589.8 – +Net proceeds from borrowings 1,780.3 838.4 +Repayment of borrowings (1,428.6) (271.8) +Subscription of funds from non-controlling interest 350.5 174.3 +Settlement of financial instruments and other financial liabilities (279.9) 8.7 +Repayment of finance leases (68.5) (83.0) +Equity dividends paid (106.9) (50.0 +Minority dividends paid (7.4) – +Net cash used in financing activities 829.3 616.6 +Foreign exchange (13.7) 6.8 +Net (decrease)/increase in cash (257.9) 171.4 +During the period, the Group had a net cash outflow of £257.9m (2022: inflow of £171.4m). +Net cash generated by operations was £810.0m (2022: £846.9m) including £1,007.9m of underlying EBITDA 5 (2022: £993.2m) and a +working capital inflow of £601.8m largely due to payments not having started on the DPA (2022: £45.9m) offset by separately disclosed +items that are reported in operating activities of £741.9m (2022: £96.0m) including the DPA but excluding items charged to depreciation, +amortisation and impairment as well as a £57.8m loss on discontinued operations (2022: £13.4m). Included within working capital is a +£29.7m outflow for balances held with payment service providers as well as customer funds, which are net debt neutral (2022: £47.9m). +During the period £137.3m was paid out in relation to corporate taxes (2022: £106.1m) with a further £224.6m paid out in interest +(2022: £100.6m). +Net cash used in investing activities for the period was £1,521.6m (2022: £1,092.2m) and includes cash outflows for acquisitions of +£1,315.4m (2022: £738.6m), net investment in capital expenditure of £259.9m (2022: £212.0m), an additional £40.7m invested in +BetMGM (2022: £175.1m) and £3.1m of other investments (2022: £nil). These outflows were partially offset by cash acquired with +acquisitions of £87.9m (2022: £29.9m) and dividends received from associates of £9.6m (2022: £3.6m). +During the period the Group received a net £829.3m (2022: £616.6m) from financing activities. £589.8m was raised through the equity +issuance (2022: £nil) with a further £1,780.3m through new financing facilities (2022: £838.4) which were used, in part, to repay +£1,428.6m of debt (2022: £271.8m) including £400m against the Group’s retail bond. During the period, the Group also received £350.5m +from minority holdings to meet their obligations under the Supersport earn-out and STS acquisition. These amounts are recorded in non- +controlling interests (2022: £174.3m for the acquisition of SuperSport). £279.9m was paid on settlement of other financial instruments +and liabilities, primarily relating to contingent consideration on previous acquisitions. In the prior year, the Group received £8.7m on the +settlement of other financial instruments and liabilities as a result of the receipt of £41.6m on the partial settlement on a number of swap +arrangements, partially offset by contingent consideration payments. Lease payments of £68.5m (2022: £83.0m) including those on non- +operational shops, were made in the period. +During the period, the Group also paid £106.9m in equity dividends (2022: £50.0) and £7.4m in dividends to the minority interest in Entain +CEE (2022: £nil). +Entain plc Annual Report 202376 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_79.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..6068f890c9fb5631f54e116139ee4af15d116f1b --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,52 @@ +Net debt and liquidity +As at 31 December 2023, adjusted net debt 7 was £3,290.9m and represented an adjusted net debt 7 to underlying EBITDA 5 ratio of 3.3x +(3.1x proforma 3). The Group has drawn down £295m on the revolving credit facility at 31 December 2023 (2022:£nil). +Par value +£m +Issue costs/ +Premium +£m +Total +£m +Term loans (3,420.5) 64.8 (3,356.4) +Interest accrual (1.6) – (1.6) +(3,422.1) 64.8 (3,358.0) +Cash 400.6 +Net debt (2,957 .4) +Cash held on behalf of customers (196.8) +Fair value of swaps held against debt instruments (85.6) +Other debt related items* 224.8 +Lease liabilities (275.9) +Adjusted net debt (3,290.9) +* Other debt related items include balances held with payment service providers, deposits and other similar items +Refinancing +On 1 March 2024, the Group raised an additional £300m of borrowings under a bank loan facility and used the proceeds to repay all +amounts drawn under the Group’s revolving credit facility. Concurrently, the commitments available under the Group’s revolving credit +facility (disclosed in Note 36) were increased by £45m further increasing the Group’s available liquidity. As such, the Group’s revolving +credit facility now has total commitments of £635m which, as at 1 March 2024, was completely undrawn save £5m carved out for letters +of credit and guarantees. +Going Concern +In adopting the going concern basis of preparation in the financial statements, the Directors have considered the current trading +performance of the Group, the financial forecasts and the principal risks and uncertainties. In addition, the Directors have considered +all matters discussed in connection with the long-term viability statement including the modelling of ‘severe but plausible’ downside +scenarios such as legislation changes impacting the Group’s Online business and severe data privacy and cybersecurity breaches. +Given the level of the Group’s available cash post the recent extension of certain financing facilities (see Note 36) and the forecast +covenant headroom even under the sensitised downside scenarios, the Directors believe that the Group and the Company are well +placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation that the Group and the +Company will have adequate financial resources to continue in operational existence, for at least 12 months (being the going concern +assessment period) from date of approval of the financial statements, and have, therefore, considered it appropriate to adopt the going +concern basis of preparation in the financial statements. +Notes +1. 2023 and 2022 statutory results are audited, with the tables presented relating to continuing operations and including both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as is they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. Adjusted net debt excludes the DPA settlement of £585.0m. Leverage also excludes any benefit from future BetMGM EBITDA or the payments due to acquire the minority +interests in Entain CEE. +Entain plc Annual Report 2023 77 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_8.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9e1775924ce17b04890a2eaae5971b1e140d70 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,31 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_80.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..a986558e59ef20fc281858d83a5fd742b0e299eb --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,112 @@ +Statement of Directors’ responsibilities in respect of the +Annual Report and the Financial statements +Responsibility statement of the +Directors in respect of the annual +financial report +We confirm that to the best of +our knowledge: + the financial statements, prepared in +accordance with the applicable set of +accounting standards, give a true and +fair view of the assets, liabilities, financial +position and profit or loss of the Company +and the undertakings included in the +consolidation taken as a whole; and + the Strategic Report includes a fair review +of the development and performance of +the business and the position of the issuer +and the undertakings included in the +consolidation taken as a whole, together +with a description of the principal risks +and uncertainties that they face. +We consider the Annual Report and +Accounts, 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. +Rob Wood +Chief Financial Officer & Deputy Chief +Executive Officer +07 March 2024 +The Directors are responsible for keeping +adequate accounting records that are +sufficient to show and explain the parent +Company’s transactions and disclose +with reasonable accuracy at any time the +financial position of the parent Company +and enable them to ensure that its financial +statements comply with the Isle of Man +Companies Act 2006. They are responsible +for 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, and have general +responsibility for taking such steps as are +reasonably open to them to safeguard the +assets of the Group and to prevent and +detect fraud and other irregularities. +The Directors are responsible for the +maintenance and integrity of the corporate +and financial information included on the +Company’s website. Legislation in the Isle +of Man governing the preparation and +dissemination of financial statements may +differ from legislation in other jurisdictions. +In accordance with Disclosure Guidance +and Transparency Rule (“DTR”) 4.1.16R, +the financial statements will form part of +the annual financial report prepared under +DTR 4.1.17R and 4.1.18R. The auditor’s +report on these financial statements +provides no assurance over whether the +annual financial report has been prepared +in accordance with those requirements. +The Directors are responsible for preparing +the Annual Report and the Group and +parent Company financial statements +in accordance with applicable law +and regulations. +The Directors have elected to prepare +the consolidated financial statements in +accordance with International Financial +Reporting Standards and applicable +law and have elected to prepare the +parent Company financial statements +in accordance with FRS 101 Reduced +Disclosure Framework. +In preparing each of the Group and +parent Company financial statements, the +Directors are required to: + select suitable accounting policies and +then apply them consistently; + make judgements and estimates that are +reasonable and prudent; + for the Group financial statements, +state whether applicable accounting +standards have been followed, subject +to any material departures disclosed and +explained in the financial statements; + for the parent Company financial +statements, state whether applicable +UK accounting standards have been +followed, subject to any material +departures disclosed and explained in the +parent Company financial statements; + assess the Group and parent Company’s +ability to continue as a going concern, +disclosing, as applicable, matters related +to going concern; + use the going concern basis of accounting +unless they either intend to liquidate +the Group or the parent Company or to +cease operations, or have no realistic +alternative but to do so; and + prepare financial statements which give +a true and fair view of the state of affairs +of the Group and the parent Company +and of the profit or loss of the Group and +the parent Company for that period. +Entain plc Annual Report 202378 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_81.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..92843bbf10e494ed2821b8d4dc051f69da39a5e6 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,137 @@ +Enterprise Risk Management +Managing Risks +Risk Management Governance +The Board has established and reviewed +procedures to manage risk, oversee internal +control systems and determine the nature +and extent of the most significant risks +the Company is willing to take in order to +achieve its long-term strategic objectives. +Our Enterprise Risk Management (ERM) +process supports the Board to establish a +“bottom up” view of its most significant and +emerging Group risks, which are presented +to the Committees of the Board and where +required, directly to the Board in thematic +risk reviews throughout the year by the +Risk Owners, using a consistent format +Risk Dashboard. +The Risk Dashboard highlights whether +strategic objectives can be met in the +current context and indicates how much +action is needed to further manage the +risks to an acceptable level. If objectives +cannot be met, oversight Committees are +asked for additional resources to manage +the risks, or, if no additional resources +are made available, whether they wish +to formally accept the risk exposure or +change objectives. This process embeds +risk appetite decision-making at the +appropriate levels of the Company, with +outcomes noted and communicated back to +the Risk Owners who can then take action +to manage risks accordingly. +The Board retains ultimate responsibility +for the management and oversight of +risk and considers a “top-down” view +of the significant and emerging Group +risks obtained through the “bottom-up” +ERM process, from this, it establishes the +Principal Risks to the Group and considers +the likelihood of the Principal Risks +occurring and whether risks emerging over +three-, five- and ten-year horizons require +deep dives. +During 2023, we re-structured the Group +Risk Committee, which now meets six +times a year in cadence with our other +Board Committees and Board meetings. +The Group Risk Committee is scheduled +to precede and feed into Committee and +Board meetings where possible, so that risk +information is current and overseen on a +timely basis. +People and Governance +Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting and +retaining key talent, as part of +their responsibilities the People +and Governance Committee +continually reviews succession +planning and the susceptibility +of the Group to the risk. +Legal & +Regulatory +Data +PrivacyRetail UK&I Cyber +& ISCore Digital TradingLATAM HSSE +Australia +& New +Zealand +Safer +Betting & +Gaming +ProcurementInternational +Tax, +Treasury & +Insurance +Technology Customer +Service +Product & +Tech +Property & +WorkplaceCorporate +Ethics & +Compliance +People +Services Integration +PLC Board +Specific risk oversight: + Execution of the group strategy + Laws, regulations and compliance + Attracting and retaining key talent + Whilst not a principal risk, the +Board also reviews the Group’s +litigation risk on an ongoing basis +Group Risk Committee Meets six times annually, prior to each Board and Board committee meeting +Sustainability and +Compliance Committee +Delegated risk oversight*: + Health, safety and well-being + Safer betting and gaming + Risk also reviewed +continually under +Committee ToR: Regulatory +compliance and licensing, +anti-money laundering +(“AML”), Responsible +gambling, protection and +the environment. +Audit Committee +Delegated risk oversight*: + Data privacy and cyber +resilience + Maintain technology platform +resilience + Taxes + Trading, liability and +pricing management + Price and service of delivery +from 3rd party suppliers +Remuneration Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting +and retaining key talent, as +part of their responsibilities, +the Remuneration Committee +continually reviews this risk and +the mitigating actions in place +to prevent the risk crystalling. +*Delegated oversight and responsible for deep +dive reviews of Group’s principal risks. +Entain plc Annual Report 2023 79 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_82.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..d948796fc1e2eb41822f5996efd3d78c7c1a692a --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,130 @@ +Effective risk management supports us to +meet our corporate objectives, it helps us +to make risk-based decisions so that we +operate with fewer shocks and allocate +resources in line with our risk appetite. +Our Risk Management Principles: +1 +Tailor an enterprise risk +management system that +improves performance, +encourages innovation, and +supports the achievement of +our objectives. +2 +Integrate and align risk +management across different +strategic, functional, and +operational disciplines, such +as budgeting, compliance, +finance, health and safety, IT, +security, and so on. +3 +Embed risk management as +an integral part of the way +we manage our business, +people, and teams across all +our operations. +4 +Proactively manage our risks +in our fast-changing business +environment, updating and +continuously improving our +risk information to support +decision making at all levels. +Management Process +We work together to use modern risk +management methods (and Entain’s four- +step model in figure 1 below) as an integral +part of our day-to-day decision making +across our entire organisation, minimising +threats to the delivery of our strategy, and +maximising opportunities. +Risk Strategy +At Entain, we are committed to active and +effective risk management, creating, and +protecting value to the organisation and +helping us deliver on our strategic priorities, +managing threats, exploiting opportunities, +and building resilience. We support risk +taking where it is forecast to generate +returns for the business and manage this in +line with our values and ethics. +Definition: +Risk +We define risk as “the effect of +uncertainty on the ability of Entain +to achieve its objectives”. Risks can +be either opportunities (upside) or +threats (downsides), and we assess +and manage both. +Definition: +Risk Management +Risk management is doing +something to take charge of and +change those uncertainties that +matter most across the company. +Enterprise Risk Management (ERM) +are the co-ordinated activities to +direct and control the organisation +with regard to risk. +Our risk landscapes +Current risks +Risks we are managing now that could stop +us achieving our strategic objectives. +Emerging risks +Risks with a future impact from external or +internal opportunities or threats. These can +be slow moving, as well as rapid velocity. +What we assess + Risk ownership: each risk has a +named owner + Impact versus Action: globally applied +scale measuring the amount of action +required to manage the risk to an +acceptable level + Critical controls: subject to internal audit +review and monitoring + Current risk: after existing controls + Risk acceptance: if the risk is acceptable +with the current controls or if additional +actions are needed to manage the risk to +an acceptable level. + Risk appetite: defined at risk level + Actions: identify further actions if +required, with action owners and +due dates +Our bottom-up registers +The bedrock of our risk assessment. +Owned by functions and super-regions, +they identify, analyse, and evaluate risks +and mitigating controls arising from day-to- +day operations globally. +Our significant risk dashboards +The main output of our risk assessment. +Owned by functions and super-regions, +they highlight the significant threats +and opportunities via our ‘impact versus +actions’ scales and subsequent controls +needed to mitigate the threats and exploit +the opportunities arising from day-to- +day operations globally. They include a +description of the risk, reference which +corporate objectives are exposed to the +risk, and what additional support and +decisions are needed to manage the risk to +an acceptable level. The Dashboards are +used to make effective, risk-based decisions +on allocation of resources. +Risk categories we assess +As part of the ERM process, we assess +against the following impacts criteria: + Financial + Operational + Reputation / Brand + Legal / Regulation + Health & Safety +Entain plc Annual Report 202380 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_83.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..be19eccd52a783b806ed69dbbfd0d7d30ae2d116 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,69 @@ +Figure 1: Entain’s Risk Management Process – four-steps +Our primary objective is to ‘operationalise’ risk and move toward a risk aware +culture that includes effective reporting collaboration and action taking +This four step process allows us to ask, ‘Given the context in which we are operating, the risk we face and our ability to +manage them – can we achieve our objectives?’ If we can, then we continue the good work. if we can’t, then we need to +manage the risks further, or change the objectives. +Risk-based +decision +making +Define context +and objectives +Understanding both the external +and internal context in which we are +operating – what is happening and +what might happen to make things +easier or more difficult for our business? +We clarify what we are trying to +achieve – our objectives – whether it is +for the entirety of a strategy, division +or function. +We think through how the context and +objectives may impact each other, both +positively and negatively. +Monitor, Review +and Report +Ongoing checking of the status of risks +and their controls. +This step involves reviews, +inspections, and audits of the status +of risks, providing risk management +information that is communicated to all +necessary stakeholders. +Assess risks +Risk identification: Recognise, +acknowledge, and describe risks (both +potential opportunities and threats). +Risk analysis: Understand the risks +both individually and as a collective +risk profile. This includes prioritising +risks as well as better understanding +any triggers which may make the +risk happen. +Risk evaluation: Determine if action +needs to be taken regarding a risk +or risk profile to bring the risks to an +acceptable level. +Manage risks +Active management of risk with +decisions on the types of controls +needed and the implementation +of controls. +Proactive risk management takes +charge of and changes the nature +of the risk and risk profile so that it +comes in line with the amount of risk +we are willing to take in delivering +our objectives. +Where risks are out of line with the +amount of risk we want to take, we +can enhance or add new controls +where necessary. +1 +4 +2 +3 +Entain plc Annual Report 2023 81 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_84.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba261cb18175788f1eab14f857cc8bbbaf73b9d8 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,186 @@ +Risk Management +Whilst our Board owns and oversees +our ERM programme, risk management +accountability and responsibility are +embedded throughout our organisation: + Our first line of sight to our risks is +through our Colleagues, who have +responsibility to manage day-to-day risks +in their own areas, they have the insight +to risk that comes from experience and +knowledge. The ERM process engages +with the first line in all four steps of +the ERM process defined in Figure 1. +The first line is guided by Group policies, +procedures, control frameworks and +risk appetite. Local management, and +ultimately the Executive, ensure that risks +are managed and carried out according +to these frameworks. + The second line of sight is provided by our +advisory support teams who specialise +in areas such as ERM, Compliance, +Cyber Security, Legal and HSSE. +These advisory support teams review +the controls implemented by the first +line and advise whether the controls are +adequate, they form a holistic view of +risk across the Group and capture and +escalate risks that could fall through silos, +supporting and encouraging foresight +of risk. This risk foresight is captured by +the ERM and management teams, who +review each risk register and dashboard +on a regular basis, culminating in review +by the Group Risk Committee, which +then escalates significant risks to other +Committees and the Board to fulfill +risk oversight. + The third line of sight is through +independent Internal and external +audit, who provide assurance over the +effectiveness of critical controls, which +is provided through internal audits, +supplemented by reports from external +assurance providers. We use this +hindsight to adjust our controls in the light +of audit recommendations. + Entain’s Group Code of Conduct and +Whistleblowing Policies, in addition to +our controls framework, are in place to +promote and aid us to ‘Do what’s right’. +Annually the Audit Committee reviews +the adequacy and effectiveness of the +Company’s policies, which sets our tone +for desired risk culture. +2023 Key Achievements +Robust Governance +A key cornerstone towards robust +governance was accomplished, including +the deployment of a new risk policy, +framework, governance forums, and +assurance checks. We: + Completed the ERM management system +design and approval + Began implementation of our ERM +system through over 50 sessions of risk +management training and workshops, +with work ongoing into 2024 to +implement in our Super Regions, giving a +much clearer view of the company’s most +significant risks. + Reviewed and updated Entain’s risk +scoring criteria, establishing new risk +matrix covering ‘Impact vs Actions’ as +a modern approach to ERM, ensuring +focus on what can be done about the +risk is embedded in our day-to-day risk +management “bottom-up” process. + Delivered new format risk registers, +allowing the identification of key controls +and monitoring of actions needed to put +further controls in place. + Delivered new Significant Risk +Dashboards and presented to the +risk oversight Committees and Board +during the year, facilitating decisions +on risk appetite, required actions and +resource allocation. +Horizon scanning (emerging risks) +We enhanced our process for identification, +analysis, and evaluation of emerging +risks, informed by functions, divisions, +super-regions, subject matter experts +and leadership, to provide a Group-wide +view. In 2023, we undertook a series of +workshops across our risk landscape +to provide a deeper exploration of our +emerging threats and opportunities and +come to a consensus on our response. +As such, the exercise to understand +potential emerging risks has been carried +out during each initial risk workshop, +looking at risks that may occur over 3-, 5-, +and 10-year time horizons. In analysing +the data, common themes have become +apparent, which have been developed +to display and better understand the +information regarding emerging risks. +Risk aware culture +Our ERM team led the establishment and +implementation of our refreshed approach +to Enterprise Risk Management, which +is aligned with the international risk +standard ISO 31000. During 2023, we have +progressed a consistent approach across +our business through training, engagement, +and application of our new ERM toolkit. +Our colleagues are fundamental to the +success of risk management at Entain. +A positive risk aware culture enables +colleagues at all levels of our organisation +to deliver risk management as an integral +part of their day -to-day activities. We do +this by: + Developing a compelling narrative on the +benefits of effective risk management +across the Group. + Delivering targeted foundation of risk +management training. + Undertaking specific risk workshops for +each function and region, the culmination +being a robust risk register and +dashboard highlighting those risks which +we deem significant. + Collaborative working across the Groups +functions and super-regions utilising the +expertise of external insight. + Articulating risks so they can be clearly +understood so decisions are made on a +more informed basis. + Embedding the consideration of risk +appetite through our risk prioritisation +tool which indicates whether risks are +deemed to be at acceptable levels. +These tools are used in our first lines and +reviewed at oversight Committees and +Board. Embedding risk appetite in our +ERM process has improved our ability +to talk about risk appetite as part of our +risk culture. +How risks are measured +As part of the ERM process, the risks +identified are assessed against a defined +set of criteria using an ‘Impact versus +Action’ matrix which assesses both the +impact to the business and the actions +required to bring those risks within Entain’s +risk appetite. In assessing ‘impact versus +action’ we assess the risk against financial +performance, operational processes, legal +and PR and health, safety, and security. +In particular: + The impact of each risk is measured with +reference to the financial implications +(underlying EBITDA and cash), its +potential operational impact (including +the security of our data), the effect on the +reputation of our brands and whether it +affects our commitment to health, safety, +security, and well-being. + The impact is measured on a scale, from +‘very low’, with limited damage to a +minor stakeholder, and ‘very high’ being +severe, which may have a substantial +impact on the Group affecting many +key stakeholders, including customers. +The action is measured from a range +of no action required to many actions +needed and additional resource required, +also on a scale from ‘very low’ to +‘very high’). +Entain plc Annual Report 202382 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_85.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..59f3b03727ec0b2000191dcb2174ca4eb846fc26 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,152 @@ +Principal Risks +02. Data Privacy and +Cyber Resilience +Chief Product and Technology Officer; +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +Our customers expect a great experience, +including protecting their personal details, +their privacy, their winnings and ensuring +the integrity of our offering. Customers +place a trust on our organisation and +our operations, so it is of paramount +importance that we protect our customers’ +data by keeping it secure, in addition, +personal data is subject to stringent data +protection laws around the world, and +we have compliance obligations in the +jurisdictions in which we operate. +A data or security breach could impede +our operations and impact our ability to +serve customers and would undermine +trust in our business and brands, +and could lead to loss of customers, +prosecution, litigation (including class +actions), significant financial penalties and +impact our share price. +How we respond +The Group has dedicated Cyber Security +and Data Privacy functions entrusted with +protecting the security and confidentiality +of our customers and the company, whilst +ensuring the availability of services and +regulatory compliance. +The experts in our Cyber Security team +constantly scan and adapt our defences to +emerging cyber threats. +We operate to an ISO 27001 Information +Security Management System +certification, the Cyber Security controls +and associated policies are constantly +being evaluated, aligned, and applied, +where deemed relevant across the +enlarged Group. +The Data Privacy team, led by the Group’s +Chief Data Privacy Officer matures our +privacy programme through designing +policies and training, including on the +use of AI, giving up to date advice to +the business, ensuring standards of +compliance, partnering with the Chief +Data Officer and other key stakeholders +to improve our data management +practices and providing regular updates +to the Group’s Audit and Sustainability & +Compliance Committees. +01. Laws, Regulations, +Licensing and Regulatory +Compliance +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +We operate in complex regulatory, +legislative, and fiscal environments, +and have multiple licensing obligations, +gambling and non-gambling laws and +regulations, and tax regimes with which +to comply. In addition, on a global basis, +laws and regulations change continuously, +and it can be operationally challenging to +keep pace with legislative or regulatory +change, particularly if we need to adjust +our operations or product offering at short +notice. +As we expand into new markets or laws/ +regulations change, our compliance +requirements expand, we need to build +constructive relationships with regulators, +and we are likely to need additional +effort, resource and/or investment into +our internal compliance and governance +efforts. +In 2023, Entain entered into a deferred +prosecution agreement (DPA) relating to +historic bribery allegations in Turkey. All +the above means that compliance efforts +and having a strong, well-resourced +compliance programme in place needs to +remain a top priority. +How we respond +Our strategy is to operate only in +regulated or regulating markets, which +reduces our exposure to unregulated +markets that may undermine player +safety and pose other legal risks. +Our internal experts monitor for changes +in legislation and regulation and develop +policies, procedures, assurance programs, +and training to enable us to adapt. They +are engaged in due diligence when we +engage new suppliers, onboard new +customers, enter new markets or acquire +new companies. All these efforts reflect +the commitments to compliance in our +Code of Conduct. +External legal expertise is sought when +additional specialist support is necessary. +We will ensure that we comply with all +the terms of the DPA and continue to co- +operate with regulators as required. +We consider principal risks to be those +risks, or combination of risks, that, were +they to materialise and not be effectively +controlled, would cause material disruption +to our business model, threatening future +performance, solvency, liquidity, or our +ability to deliver our strategy. Risks at this +level are recorded on our Significant Group +Risk dashboard. Group risks are considered, +along with material emerging risks to define +our Principal Risks. +During our periodic risk reviews, we +confirmed that all principal risks reported +in 2022 remain relevant except for ‘Loss +of Key Locations ’, which now forms part +of ‘Ensure Health, Safety, Security and +Well-being of Employees, Customers, and +Communities’ and ‘Maintain Technology +Platform Resilience’ . This is because +a deep dive helped us understand that +the most significant impacts of loss of +key locations would be to our people or +technology, and the controls for these risks +will largely be managed in these areas. +One new principal risk has been identified, +namely Price and Service of Delivery from +3rd Party Suppliers and added to the +Group risk register in 2023. +The Groups Principal Risk for 2023 are: +Entain plc Annual Report 2023 83 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_86.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..930f6e9922b731d5c96adc4a5d308bcd8257cf36 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,142 @@ +05. Trading Liability and +Pricing Management +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group may experience signi ficant +losses because of a failure to determine +accurately the odds in relation to any +particular event and/or any failure of +its price risk management processes. +Some bets are complex and have +an accumulator effect which could +significantly impact the Group’s +profitability. +How we respond +We have some of the leading expertise +in trading liability management in the +Gaming sector. +The Group’s trading team has developed +the skills and systems to be able to offer a +wide range of betting opportunities. +Events are priced to achieve an average +return to the bookmaker over many events +over the long-term. +The Group’s gross win percentage has +remained constant in recent years. +Executive management monitor the gross +win margin daily in order to ensure the +long-term targets are achieved. +04. Price and Service +of Delivery from +3rd Party Suppliers +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +We are dependent on certain Third Parties +to deliver key products and services. Some +of our core capabilities are supplied by +small, specialist providers, which include +content providers who stream live events +to our shops, results and other key data +providers, League proprietors, industry +bodies, and suppliers that ensure security +and resilience of our locations and +systems. Other key Third Parties include +large technology and software suppliers +which hold dominant market positions. +Key suppliers could raise prices, become +financially unstable or deny services +which would limit the variety of gaming +we can offer, leading to loss of revenue. +To ensure robust management of service +delivery and value creation through +the life of the contract will allow better +management of growing risk/opportunity +amplified by our expansion. +If suppliers are purchased by our +competitors, access to services may be +restricted or denied, or we may decide +to withdraw from certain markets if they +become uneconomical. +Conversely, Third Party providers may present +acquisition opportunities for the Group. +How we respond +Strategic and critical suppliers are subject +to regular business and quality reviews +to ensure ongoing relationship and +performance management. +As part of our procurement processes, we +employ dedicated resources supplemented +by subject matter expertise within risk, +compliance, legal and technology assurance +to protect and enhance value, demonstrate +our high standards of corporate integrity, +and reinforce organisational resilience. +Where possible, we limit reliance on a +single supplier to reduce the potential +single point of failure. We proactively +manage our relationships with our +specialists and key providers. +Prices are subject to negotiation at the +contracting stage, and we have deep +industry expertise in our Procurement and +Legal teams. +We maintain good relationships with +Industry bodies and suppliers that keep our +key locations and services running. +03. Taxes +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group is subject to a wide range of +taxes, duties, and levies in the countries +where we operate. There may be +adverse changes in tax rates, laws, or +administrative practice. +The Group is geographically diverse and +there are complex tax regimes for the +betting and gaming sector. Tax authorities +may have a different interpretation to the +Group regarding the scope and scale of +taxation. These factors mean the levels +of taxation to which the Group is exposed +to may change in the future, and we may +become liable for tax payments greater +than the amounts in our filed tax returns. +How we respond +The Group’s tax strategy is approved +annually by the Board of Directors. +Responsibility for the execution of the +Group’s tax strategy is delegated to +the Chief Financial Officer who reports +the Group’s tax position to the Audit +Committee and Board on a regular basis. +To mitigate tax risks that arise, the Group +actively identi fies, evaluates, manages, +and monitors its tax risks. +The Group has an appropriately quali fied +and resourced tax team to manage its tax +affairs. +In addition, where there is signi ficant +uncertainty or complexity in relation to a +tax risk, the Group may use the services of +external, expert tax advisors. +Entain plc Annual Report 202384 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_87.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad851a70c133cea17eec67371b123d5b18c1bab9 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,132 @@ +08. Execution of the +Group Strategy +Chief Executive Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +Our Group strategy establishes our +direction and culture and sets us on a +course of future growth through delivery +of overarching corporate objectives. +The corporate objectives guide our +business and team objectives and +facilitates our colleagues to be aligned in +delivering desired outcomes. +If we cannot understand or deliver +our Group strategy, we risk wasted or +fragmented effort, inefficient allocation of +resources, strategic stagnation, and loss +of competitive advantage. +How we respond +Our refreshed Enterprise Risk +Management process sets understanding +and clarifying objectives as part of its +first step, and all risks (both threats and +opportunities) are identified in relation to +their effect on objectives. +07. Maintain Technology +Platform Resilience +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group’s operations are highly +dependent on information systems and +technology. Should we fail to maintain the +stability and availability of our technology +platforms, this could have a material +impact on customer-facing products +and customer experience, with adverse +impacts to our brands, revenue, and +market share. +Some of our technology is situated in +locations which could be subject to +physical threats. +How we respond +Proactively, our strategy is to move to +modern systems with higher levels of +resilience where possible. +We are enhancing our reactive responses +and provision of fall-back solutions should +our technology platforms fail. +We monitor key global metrics on critical +systems and platforms which identify any +potential emerging issues on our brands +or customer-facing technologies. When +indications of vulnerability are detected, +we escalate to resolve issues and create +solutions. +Our in-house experts are adept in +knowledge of our platforms, systems +and coding and can create solutions +adaptively. +06. Attracting and +Retaining Key Talent +Chief People Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: High +Risk Oversight: Board +Why this matters to us +Our colleagues, their talents and skills are +vital to helping our business succeed. +Attracting, retaining, and developing +the best and diverse talent is key to +the success of delivering our strategic +priorities – our people really do make the +difference. +Having clear leadership standards +enabling a vibrant and inclusive +organisational culture allows colleagues +to do their best work and excel. Providing +an open and inclusive environment +allows us to attract new and different +talent to join Entain but also creates a +culture people want to be a part of. By +creating the right standards of leadership +and setting clear expectations around +performance we are able to respond to +challenges and opportunities faster and +more effectively and therefore deliver on +our critical strategic objectives. +How we respond +Everything we do is anchored to our +clearly stated purpose, supported by our +shared values and behaviours. +Our value of “do what’s right” underpins +our commitment to setting the very +highest standards for our people to +adhere to. +Our leadership framework drives higher +levels of leadership capability allowing +us to attract and retain great talent. Our +commitments and actions are monitored +by the Executive Committee and the Board. +We are committed to ensuring all of our +people have a safe place to work with the +ability to raise any concern they may have. +We regularly seek employee feedback +through our Your Voice survey and translate +that into actionable plans to ensure high +levels of engagement and retention. +We encourage and support diversity +through Employee Resource Groups who +help drive, support, and promote a focus +on why diversity matters. +We actively promote the opportunity to +grow a career at Entain through promotion +but also lateral movement across the +business, providing meaningful career +progression. +Entain plc Annual Report 2023 85 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_88.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..7367fa96a1f37f022005bb600e97c7c61f17a355 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,113 @@ +10. Safer Betting and +Gaming +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Our Safer Gaming and Betting +approach is central to our business. It +is the cornerstone of our Sustainability +Charter, and our most material ESG issue +is to ensure market leading levels of +player safety and protection. Failure to +adequately protect our customers could +result in customer harm, fines, and loss of +license to operate in some jurisdictions. +How we respond +We have developed our in-house tool, +ARC™, and other forms of support and +customer interventions to facilitate us to +manage our safer gaming commitments. +Where risky behaviour is detected, we +may offer a personalised gambling control +tool, refer them for a chat with our player +protection team, or suspend their account +in real time. +ARC™ is an intelligent and innovative +platform that uses behavioural insight +and research, data science and analytics +to assess risk in play, enabling us to +identify, interact and intervene early with +customers who show signs of gambling- +related harm. +We have a range of initiatives in the area +of player protection, including a $5m +academic research partnership with the +Harvard Medical School, to understand +the causes and consequences of problem +gambling, and donating up to 1% of our +GGY to the treatment of gambling related +issues. +Our bonuses are calculated with reference +to our Safer Gaming metric – to reach the +threshold level for payout, minimum levels +of completion of safer betting and gaming +compulsory training modules must be +achieved by our colleagues globally. +09. Ensure Health, Safety, +Security and Well-being +of Employees, Customers, +and Communities +Chief Executive Officer and Group +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Failure to meet the requirements of the +various domestic and international rules +and regulations relating to the health +and safety of our employees and our +responsibilities and commitments towards +customers and communities could +expose the Company to material civil, +criminal and/ or regulatory action with +the associated financial and reputational +consequences. +While Entain is committed to high +standards and strives to achieve zero +harm in all that it does, it recognises that +there is always the potential for safety or +well-being related issues to arise in an +operational business. +How we respond +At Entain, we are committed to providing +a safe work environment which promotes +people’s health, safety, security, and well- +being. We want everyone to feel healthy +and supported at work, and at home. We +have plans for each discipline to ensure +that we maximise the opportunities and +manage threats specific to our business. +Our health, safety and security strategy +is focused on continual improvement of +safety performance to reduce the number +and severity of work-related injuries whilst +keeping our colleagues and places of work +secure. This is underpinned by our HSSE +assurance programme to ensure our risk +management system is effective and that +we keep our colleagues safe and secure. +Our well-being strategy is designed to +help leaders and colleagues make positive +changes to improve their physical, mental, +and emotional health, in turn creating +a better performing, energised and +productive workforce. To achieve this, +we provide tools, training, and targeted +support to our colleagues. +The Group’s Sustainability and +Compliance Committee also oversees all +aspects of Health, Safety, Security and +Well-being practices. +Entain plc Annual Report 202386 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_89.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..b26a50af6bac670cc619df456ce8d6951655c6b3 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,71 @@ +Long-term viability statement +The financial impact of the identified risk +events has been assessed both individually +and in combination and include: + The impact of a change in the Group’s +duty profile, including further changes in +gaming taxes in key geographies. + Significant changes in the regulatory +environment/further focus on AML +legislation and breaches in data +privacy regulations + Cyber and data privacy failings. + Downturns in trading as a result of a +failure to protect customers and/or retain +key staff. +The Directors have also performed reverse +stress tests to assess the level of liquidity +and covenant headroom in the underlying +forecasts as well as considering the broader +economic landscape in forming their view +on viability. +Based on the results of this analysis and the +mitigating actions available to the business, +the Directors confirm that they have a +reasonable expectation that the Company +will be able to meet its liabilities as they fall +due over the three-year assessment period +to December 2026. +In accordance with provision 31 of the 2018 +Corporate Governance Code, the Board and +Directors have completed an assessment +of the prospects and viability of the Entain +Plc Group over a longer period than the +12 months required by the “Going Concern” +provision. +The Directors have concluded that three +years was an appropriate period for +assessment, as this is aligned to the +Group’s strategic planning process and +is considered to be the period for which +reliable estimates can be made for +variations in both industry and customer +dynamics, regulatory change, technological +advancements and the economic backdrop +in the betting and gaming industry taking +into account the ever changing landscape. +The objectives of the strategic planning +process are to further develop the +businesses understanding of the markets +in which it operates, assess the risks +and opportunities facing the business +and develop a Group-wide strategy and +associated financial forecasts. +The Directors have utilised these strategic +forecasts, the 2024 Board approved budget +and the current financial position of the +Group to assess the potential impact on +viability of certain severe, but plausible, +“risk events” arising which represent the +crystallisation of the Group’s principal risks +and uncertainties as identified on pages +83 to 86 of this Annual Report. The robust +assessment conducted considered the +Group’s revenue, EBITDA, operating +profits, cash fl ows, risk management +and controls, its current debt maturity +and mitigating actions should baseline +assumptions change. +Entain plc Annual Report 2023 87 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_9.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..494423ae9582290cfc0b0ae9e9c7a362d70f3cf4 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_90.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6a49aaf5bb4827f817bb63f70b6fde274695756 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,58 @@ +Chairman’s Governance Overview +Entain continues to enhance its corporate governance practices +and procedures to ensure the Board operates effectively and +sets the right tone from the top. In 2023 a key focus for the Board +has been managing its own succession and I was delighted to +announce the appointment of Amanda Brown and Ricky Sandler, +who joined the Board in November 2023 and January 2024 +respectively. Amanda brings extensive commercial and human +resource experience to us. Ricky knows our business extremely well +and his focus will be on generating value for all shareholders. +We have also overseen the departure of two executive directors +during the year, Jette Nygaard-Andersen and Robert Hoskin. +Under Jette’s leadership, Entain executed a strategic shift towards +regulated or regulating markets and continued to improve its +customer and product offering. +Robert stepped down as Chief Governance Officer in August +having been with the Group since 2005. I would like to express +my thanks to both Jette and Rob for their roles as directors and +everything they have done for me personally and the Group +more widely. +We have been hugely fortunate that Stella David agreed to take on +the Interim Chief Executive role while we continue our search for a +permanent replacement to Jette. Stella is an intensely commercial +leader with a long track record of success across multiple +industries. She has already made a significant impact refreshing +the corporate strategy and sharpening management’s focus on +operational execution. +The strength and expertise of the Board members has allowed us +to adjust quickly to these significant changes and I am thankful +to Pierre Bouchut, who took on the role of Senior Independent +Director, and Virginia McDowell, who replaced Stella as Chair of the +Remuneration Committee. Further details regarding our continued +search for Non-Executive Directors and our board succession +planning appears in the People and Governance Committee report +starting on page 101. +The Board established a new Capital Allocation Committee in +February 2024, which will provide additional oversight over the +Company’s portfolio of assets, capital allocation and capital +structure. I am the Chair of this Committee and I have been joined +by Pierre Bouchut and Ricky Sandler. +The Board remains confident about the Group’s future and is +committed to our strategy, our purpose and is highly focused on +developing sustained and sustainable shareholder value. +“The Board remains +confident about the +Group’s future and +is committed to our +strategy, our purpose +and is highly focused on +developing sustained +and sustainable +shareholder value”. +J M Barry Gibson +Chairman +J M Barry Gibson +Chairman +1 Overview 8 Strategic report 88 Governance 140 Financial statements +88 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_91.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6ab5a22c5f3cb3b9290c1d1ccc16630e8c247 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,47 @@ +93 88 1235 4 +Board of Directors +(as at 7 March 2024) +Tenure +Years: +Barry Gibson +Stella David +Rob Wood +Pierre Bouchut +Amanda Brown +Virginia McDowell +Ricky Sandler +David Satz +Rahul Welde +0 1 2 3 4 5 6 7 +Age and +experience +No. of Directors +Experience/Skills: +No. of Directors +40-44 60-6450-5445-49 65-6955-59 70+ +1221201 +Gaming +Sector +Finance Technology/ +Digital +Global +Business +Legal/ +Regulatory +MarketingCustomer Media/ +Entertainment +Leadership +Diversity Gender + 3:6 +No. of Directors 4 +British +3 +American +1 +French +1 +Indian +Entain plc Annual Report 2023 89 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s Governance +Overview \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_92.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..bea3bd237f701d6be81d7f907f0e2e27e21d1088 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,73 @@ +J M Barry Gibson +Chairman +Tenure: Appointed to the Board November 2019 and became Chairman February 2020. +Age: 72 Nationality: British +Committees: C P S +Biography: Barry was previously a non-executive director of William Hill plc and bwin. +party digital entertainment plc, where he was the senior independent director. Other listed +company experience includes roles as the chairman of HomeServe plc, non-executive +directorships of Somerfield plc and National Express plc and group chief executive +of Littlewoods plc. He was formerly the group retailing director at BAA plc and non- +executive chairman of Harding Brothers Holdings Ltd. +Key strengths and experience: +Barry has enjoyed a distinguished business career and has a deep understanding of +the gaming and retail sectors. He is an experienced leader and board member with +valuable insight on improving company performance and transformation programmes. +Barry continues to create a Board environment of constructive challenge and oversight. +Rob Wood +Chief Financial Officer and Deputy CEO +Tenure: Appointed to the Board as Chief Financial Officer March 2019; the role of Deputy +CEO was added to his portfolio January 2021. +Age: 44 Nationality: British +Biography: Rob joined Entain in 2012 and worked in senior roles within finance, including +as CFO of the Group’s retail business. Prior to Entain, he was senior vice president at +Cerberus Capital, overseeing the private equity firm’s European portfolio companies and +worked in restructuring advisory at Rothschild. Rob started his career at KPMG where he +qualified as a chartered accountant and holds a degree in Mathematics and Management +Studies from the University of Nottingham. +Key strengths and experience: +Rob’s financial expertise and deep knowledge of Entain’s business make him uniquely +placed to manage his wide-ranging portfolio as Chief Financial Officer and Deputy CEO, +providing insight to the Board on commercial, financial and operational issues. +Key: + A Audit Committee Member + C Capital Allocation Committee Member + R Remuneration Committee Member + P People & Governance +Committee Member + S Sustainability & Compliance +Committee Member + A Audit Committee Chair + C Capital Allocation Committee Chair + R Remuneration Committee Chair + P People & Governance Committee Chair + S Sustainability & Compliance +Committee Chair +Board of Directors +Stella David +Interim Chief Executive Officer +Tenure: Appointed to the Board March 2021 and became Interim Chief Executive Officer +December 2023. Senior Independent Director until December 2023. +Age: 61 Nationality: British +Outside interests: Non-executive director of Norwegian Cruise Line Holdings Ltd where +she is also chair of the Nominating and Governance Committee and non-executive +director of the privately-owned Bacardi Ltd. +Biography: Stella was previously CEO of William Grant & Sons, following more than +15 years with Bacardi Ltd. She was chair of C&J Clark Ltd (having previously acted as +interim chief executive officer), non-executive director and senior independent director +of HomeServe plc and non-executive director and remuneration committee chair at +the Nationwide Building Society. Stella stepped down as a non-executive director and +remuneration committee chair of Domino’s Pizza Group plc and as a non-executive chair +of the privately-owned Vue International following her appointment as Interim Chief +Executive Officer of Entain plc. +Key strengths and experience: +Stella is an intensely commercial leader with a long track record of success across multiple +industries. She brings lengthy experience in management, consumer and regulatory +environments, and marketing to the Board. Her non-executive roles in listed and privately +owned companies give her a deep understanding of shareholder views and best practice +standards of corporate governance, as well as enhancing the Board’s ability to support +and oversee the delivery of Entain’s strategy. +Committee membership details provided in these biographies are given as at the date of this Annual Report. For details of Committee membership during the financial year, see +Committee reports on pages 101 to 112 and page 116. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +90 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_93.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..f00a2ecf5d4cfd7e58af9905ade8f58b9fd63d26 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,190 @@ +Pierre Bouchut +Independent Non-Executive Director & +Senior Independent Director +Tenure: Appointed to the Board September 2018 and +became Senior Independent Director December 2023. +Age: 68 Nationality: French +Outside interests: Non-executive director and chairman +of the audit committees at Pepco Group and GeoPost +SA, a non-executive director and chairman of Profi Rom +Food SRL, and a non-executive director of Rina Estate +Italia SRL. +Committees: A C +Biography: Pierre was the chief operating officer for +Europe at Koninklijke Aholddelhaize N.V. (2016-2018), +chief financial officer at Delhaize Group Belgium +(2012-2016), Carrefour SA (2009-2012), Schneider +Electric Group (2005-2009), and CEO of Casino Group +(1995-2003). He was also a non-executive director of +Hammerson plc (2015-2021) and Firmenich SA (where he +was also chairman of the audit committee) (2016-2023). +Until it was acquired by KKR in 2022, he was the reference +board member and chairman of the audit committee at +Albioma SA. He has worked for Citibank, Bankers Trust +and as a consultant with McKinsey. +Key strengths and experience: +Pierre has had a long career in senior executive and +non-executive roles across finance, retail, logistics, +information systems and property. His familiarity with the +management of large, internationally listed companies +gives him an extensive understanding of regulation, +accounting standards and strategy, complementing +his deep knowledge of corporate governance and audit +committee practice. This broad experience makes him +suited to chair Entain’s Audit Committee and to act as its +financial expert. +Ricky Sandler +Non-Independent Non-Executive Director +Tenure: Appointed January 2024. +Age: 54 Nationality: American +Outside interests: Chief Executive Officer and Chief +Investment Officer of Eminence Capital, LP. +Committees: C P +Biography: Ricky founded Eminence Capital in 1999. +Eminence is a USD6.5 billion global investment +management organisation investing client capital across +global financial markets. As Chief Executive Officer +and Chief Investment Officer of Eminence, Ricky is +responsible for setting the firm’s strategic direction as +well as directly managing its 20+ person investment team +and diversified investment portfolio. Prior to launching +Eminence, Ricky was co-founder and co-general partner +of Fusion Capital Management, a firm that managed a +long/short hedge fund focused on global equity securities. +Prior to that he was a research analyst at Mark Asset +Management, where he began his investing career in +1991. Ricky received a BBA in Accounting and Finance +graduating with honours from the University of Wisconsin. +Key strengths and experience: +Ricky brings over 30 years of experience in analysing +and investing in public companies with a wealth of +perspective on ways to maximise long term shareholder +value and institute strong corporate governance oversight +at the board level. In connection with his appointment, +the Company, Eminence Capital and Ricky have entered +into a relationship agreement, including customary +governance, standstill and voting provisions. A summary +of the main terms of the agreement is available on the +Company’s website. +David Satz +Independent Non-Executive Director +Tenure: Appointed October 2020. +Age: 64 Nationality: American +Outside interests: Member of the board of a commercial +gaming and hospitality entity established by the Eastern +Band of Cherokee Indians (EBCI) and a member of the +board of Dreamscape Entertainment Integrated Resorts, +Inc. +Committees: A S +Biography: David was senior vice president of +Government Relations and Development for Caesars +Entertainment Corporation in Las Vegas, where he worked +from 2002 to 2019 and had responsibility for overseeing +Caesars’ government activities for more than 52 properties +in 15 states in the US and several other countries around +the world. Prior to this he spent 16 years at the US law +firm Saiber Schlesinger Satz Goldstein LLC, where he had +a particular focus on the gaming industry and played a +key role in numerous regulatory and legislative initiatives +throughout the US. +Key strengths and experience: +David brings to the Board an exceptional perspective +on the US gaming sector as well as expertise in gaming +regulatory law and policy as it impacts the Group +worldwide. His extensive career in regulation and +legislation has allowed the Board to benefit from his +insight and knowledge as Entain seeks to execute its +strategy to grow market share in the US through its +BetMGM joint venture. His regulatory experience has also +provided insight into the many regulatory, responsible +gaming and compliance issues that the Group faces. +Rahul Welde +Independent Non-Executive Director +Tenure: Appointed July 2022. +Age: 54 Nationality: Indian +Outside interests: Non-Executive Director of Pantheon +International Plc. Chair of the Advisory Board of Migrant +Leaders, a UK charity. +Committees: A P R +Biography: Rahul spent over 30 years working with +Unilever PLC, most recently in a global role as the +Executive Vice President of Global Digital Transformation, +building capabilities across the digital spectrum, including +new business models, innovation, partnerships, processes +and training. Previously, Rahul was Unilever’s Regional +VP Media for Asia, Africa, Middle East, Turkey and Russia. +Throughout his career he has worked in a diverse range of +roles across functions and categories. He has been active +in industry bodies, including as the Regional Vice President +for The World Federation of Advertisers and chairman of +the Mobile Marketing Association, Asia. +Key strengths and experience: +Rahul brings a lifetime career of knowledge from the +global fast-moving consumer goods sector. He has proven +experience of leveraging digital technologies for the +benefit of business. Rahul has deep expertise in media and +marketing as well as in digital and transformation, leading +large change programmes encompassing technology, +processes and people. +Amanda Brown +Independent Non-Executive Director +Tenure: Appointed November 2023. +Age: 55 Nationality: British +Outside interests: Non-executive director and chair of the +remuneration committee of Mitchells & Butlers plc and a +non-executive director of Manchester Airport Group. +Committees: R +Biography: Amanda is an experienced senior executive +with a background in consumer facing organisations and +financial services. She served as Chief Human Resources +Officer of Hiscox during a period of significant growth +and transformation for the organisation and she has also +held executive roles within Whitbread Group, PepsiCo +and Mars Inc. Amanda was a Non-Executive Director +and Chair of the Remuneration Committee of Micro Focus +International Limited, a multinational software and +information technology business, before stepping down +when the business was sold in 2023. +Key strengths and experience: +Amanda brings a wealth of experience in human +resources, remuneration strategy and managing +organisations through significant change. Amanda has +relevant consumer facing experience. Given her extensive +experience as a Remuneration Committee Chair, Amanda +was appointed as Designate Chair of the Remuneration +Committee at the time of her Board appointment and, +subject to her election, will become Chair of Entain’s +Remuneration Committee following the AGM. +Virginia McDowell +Independent Non-Executive Director and +Designated Workforce Director +Tenure: Appointed June 2018. +Age: 66 Nationality: American +Outside interests: Vice-president of Global Gaming +Women, a non-profit organisation with a mission to +support, inspire and influence the development of women +in the gaming industry through education and mentoring, +and a trustee of St Louis University. +Committees: R S P +Biography: Virginia was the president and CEO of Isle of +Capri Casinos, Inc. in the United States from 2011 until +her retirement in 2016, and the president and COO of +Isle of Capri (2007-2011). Prior to this she was the chief +information officer at Trump Entertainment Resorts (2005- +2007) and senior vice president of operations. Virginia was +the first woman to be inducted into the Mississippi Gaming +Hall of Fame and in 2022 she was inducted into the +American Gaming Association’s Hall of Fame. +Key strengths and experience: +Virginia’s 40-year career and accomplishments in the +gaming sector have been recognised by a number of +prestigious awards. Virginia has actively engaged with our +stakeholders in her role as Designated Workforce Director. +Throughout her career she has maintained a tireless focus +on developing the next generation of women leaders in the +gaming industry and this understanding of the diversity +and regulatory challenges of the sector has greatly assisted +the Board and the Sustainability & Compliance Committee. +Entain plc Annual Report 2023 91 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board of Directors \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_94.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..628ed8658936be218be4e572e90143dc319b70d7 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,58 @@ +Summary of 2023 +Details of progress and our deliverables on the key areas for focus set out in our last annual report are set out below: +2023 Goals 2023 Result +Undertake a follow-up independent audit of the Group’s governance +and compliance processes, following on from the 2021 Alvarez & +Marsal review. +Entain instructed PWC to carry out a comprehensive assessment of the overall +design and efficacy of its compliance framework, with particular focus on +gambling industry requirements and good practice. The review encompasses the +following key elements: governance and tone from the top; risk assessment and +response; policy and strategy; compliance culture and standards of behaviour; +training and communications; procedure and control activities; issue reporting +and management; monitoring and assurance; and the use of technology. The +report is expected to be completed by the end of March 2024. +Continue to embed the evolved risk management programme +throughout the business. +The Enterprise Risk team have further developed the Enterprise Risk +Management (“ERM”) policy, manual, process, risk toolkit and programme during +2023. Our refreshed approach to ERM is creating a more ‘risk aware’ culture’ and +aligned to the international standards on risk management. We have undertaken +formal risk training and workshops with all functions at Entain, the outputs of +which have led to a more substantive risk register and significant risk dashboard, +focussing on ‘impact’ and ‘action’ to support informed risk-based decisions. +Further develop the global Compliance and AML team structures, with +further recruitment where required, and the alignment of acquired +businesses with the Group’s policies, procedures and risk appetite. +We conducted a comprehensive restructuring of the compliance organisation +with consolidation of departments and alignment across our acquired +businesses. We have also enhanced our capabilities with key hires and +strengthened our compliance monitoring and assurance programme. +We restructured and centralised the Anti-Financial Crime (“AFC”) function +to ensure it remains robust, sustainable and proportionate in managing +and mitigating financial crime risks faced by Entain. We have also revised +the organisational structure to ensure staff globally with financial crime +responsibility, have a reporting line into Group AFC team. +Recruit a new +Company Secretary. +We welcomed James Morris as Group Company Secretary in July. +Finalise a new strategy for ARC TM which provides a path +of development for the next three years. +We continued to refine ARC TM during the year and worked with lived experience +experts, academics and third party behavioural scientists to improve our player +protection offering for customers. +Progress the HMRC investigation towards a conclusion. We reached final settlement of the HMRC investigation into our legacy Turkish- +facing business and entered into a Deferred Prosecution Agreement (“DPA”) +with the Crown Prosecution Service that was approved by the Crown Court on 5 +December 2023. +Since the conduct giving rise to the DPA, the Group has undertaken a +comprehensive review of its anti-bribery policies and procedures and has taken +decisive action to significantly strengthen its wider compliance programme and +related controls. +Hold an Entain: Sustain update interaction in Q4. In December 2023, we held our annual Entain Sustain update event virtually, +providing updates on several topics to our key stakeholders including investors, +analysts, regulators, media, colleagues and customers. A report on this event +can be found in our discussion on Board Leadership and Company Purpose on +page 97. +Entain plc Annual Report 202392 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_95.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1aca0f837d6d06a66dc126748b9d22feaffd1df --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,88 @@ +Regulated Markets +On 12 November 2020, Entain announced a clear strategy for +sustainability, growth and innovation. As part of that strategy, +the Group made a commitment to only do business in countries +where it had a local licence or those countries that were on a +path to revise their laws and regulations, which would allow +us to then apply for a domestic licence in the near to mid-term. +Throughout 2023, the Group continued with this process by exiting +its few remaining markets where there is no clear path to market +liberalisation via domestic regulation. +Since 2020 the Group has closed its offering into more than +150 markets where we do not see the prospect of regulation +allowing the Company to obtain a licence or find a locally-licensed +operator to partner with on attractive commercial terms. We have +also doubled the number of countries where we hold a licence +and currently hold domestic licences in 34 markets and now +hold licences in 26 US States. We remain active in only five small +markets where we do not currently hold a domestic licence, and by +the end of 2024 we will have either exited these markets or have +obtained, or be in the process of obtaining, a domestic licence. +More specifically, in 2023, we obtained a licence to offer our bwin +brand in Mexico and completed the acquisition of STS to enter +the regulated market in Poland. We also announced an exclusive +25-year deal with the New Zealand TAB to provide licenced online +sports betting services in New Zealand. At the end of the year, the +Brazilian Government passed its long-awaited online gambling bill +and we expect licences to be made available in 2024. In parallel, +the Finnish Government also formally announced that it will +dismantle its gambling monopoly and launch an open licensing +system for online gambling in the next two years. +Governance Team +With Robert Hoskin’s departure, Simon Zinger, our Group General +Counsel, has taken over leadership of the Governance, Legal +and Compliance function. Simon is a member of the Executive +Committee and brings a wealth of experience and leadership +to the team. He was instrumental in the resolution of the HMRC +investigation and agreeing the terms of the DPA with the Crown +Prosecution Service and has overseen significant organisational +changes and improvements as the Company has continued +to strengthen its governance and compliance standards and +capabilities. Under Simon’s leadership, the global Governance team +is highly-engaged in supporting the Company’s objectives and has +focused on a number of unique initiatives such as complementing +the Company’s efforts in the area of Diversity & Inclusion, +undertaking pro bono activities to support charities, and creating +unique learning and development opportunities for team members, +During the year we have continued to make good progress +embedding our ERM framework (see page 79) and enhanced our +global Compliance and AML team structures. +Our Head of International Compliance, Florian Sauer, has +conducted a comprehensive restructuring of the compliance +organisation with consolidation of departments and alignment +across our recently acquired businesses. We have focused on +pursuing and maintaining constructive relationships with all +of our regulators, continued to enhance our capabilities with +key hires, and strengthened our compliance monitoring and +assurance programme. +We welcomed Karen Nightingale as Group Director of Ethics and +Compliance at the beginning of the year. Under her leadership we +have developed a three-year strategy to achieve our vision of a +best-in-class Ethics and Compliance programme and have created +a Charter that explicitly sets out the independence and authority +of the Ethics and Compliance function required to implement +the programme effectively. We have updated our approach to +on-boarding vendors and suppliers in order to better identify and +mitigate third party risk exposure and will continue to develop this +going forward. +We have also appointed Edward Maguire as our new Group MLRO +and Global Head of AFC as part of our commitment to combat +financial crime. During the year we have developed a holistic Anti- +Financial Crime Risk Management Programme with enhanced +coverage, governance and reporting protocols. We have also +created a centralised function to drive consistency of standards, +whilst ensuring effective oversight and control. +We were also pleased to welcome James Morris as Group +Company Secretary in July 2023. +Regulatory Settlement +A key area of focus during 2023 was overseeing resolution of the +HMRC’s investigation in relation to the Group’s legacy Turkish- +facing business. The Board was proactively engaged throughout +the process and has reviewed and challenged the work done to +significantly strengthen the Company’s compliance programme +and controls. We are now a fundamentally different and profoundly +changed Company and we can move forward with confidence as +we concentrate on our future. +Entain plc Annual Report 2023 93 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Summary of 2023 \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_96.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..21f8e84da009213c0437194b857052fcfe439a66 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,68 @@ +Entain plc: The Board must act with integrity and is collectively responsible for establishing the Company’s purpose, +values and strategy as well as overseeing the conduct of its business and promoting the long-term sustainable +success of the Group, generating value for shareholders and contributing to wider society. +The Board sets the strategic direction of the Group, approves the strategy and takes appropriate action to +ensure that the Group is suitably resourced to achieve its strategic aspirations. +The Board considers the impact of its decisions and its responsibilities to all its stakeholders, including +colleagues, shareholders, regulators, customers, suppliers and the communities in which we operate. +The Board discharges its responsibilities directly or, in order to assist it in carrying out its function of ensuring +effective independent oversight and stewardship, delegates specified responsibilities to its committees. +Details of how the Board fulfilled its responsibilities in 2023, as well as key topics discussed and considered by +the Board committees, can be found in this Directors’ report. +Audit Committee Oversight and review of financial reporting processes, the Group’s +system of internal control, including internal financial controls, the +appropriateness and effectiveness of the enterprise risk management +framework and principal risks and the work undertaken by Internal Audit +and the Group’s Statutory Auditor, KPMG. Read more: pages 104 to 109 +Sustainability +& Compliance +Committee +Oversight and review of the Company’s Sustainability and Compliance +programme, the Company’s relationships and engagement with a wide +range of stakeholders, progress against internal KPIs and external +Sustainability and Compliance index results. Furthermore, it ensures that +the ESG Strategy remains fit for the future. Read more: pages 110 to 112 +People & +Governance +Committee +Oversight and review of Board and executive succession, overall +board effectiveness, workforce policies and practices and corporate +governance issues. Read more: pages 101 to 103 +Remuneration +Committee +Oversight and review of the Group’s overall remuneration strategy, +including share plans and other incentives. Further maintains dialogue +with shareholders and workforce on remuneration related matters. Read more: pages 116 to 117 +Capital Allocation +Committee +Oversight over the Group’s portfolio of assets, capital allocation and +capital structure. +Chairman’s +Committee +Provides the opportunity for the Chairman to discuss and consider topical +ad hoc matters with the Non-Executive Directors without the Executive +Directors being present. The topics discussed during the year have varied +from performance and strategic related matters, including executive +succession planning and shareholder feedback. +Interim Chief +Executive Officer +The Interim Chief Executive Officer is responsible for the management of all aspects of the Group’s +business, developing strategy in conjunction with the Chairman and the Board, and leading its execution. +The Board delegates authority for the operational management of the Group’s business to the Interim Chief +Executive Officer for further delegation in respect of matters that are necessary for the effective day-to- +day operations and management of the business. The Board holds the Interim Chief Executive Officer +accountable in discharging her delegated authorities. +Executive +Committee +The Executive Committee comprises of the Interim Chief Executive Officer, Chief Financial Officer, Group +Chief Commercial Officer, Chief Product & Technology Officer, Group General Counsel, Chief People Officer +and Chief Investor Relations & Communications Officer. It supports the Interim Chief Executive Officer in the +day-to-day management of the business and implementation of strategy. +Entain Leadership +Team +Business Leaders who own delivery of business strategy and communications across the Group. +Board and Committee Structure: Decisions, +responsibilities and delegated authority +Entain plc Annual Report 202394 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_97.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5c8e54c180378706b46ba9cbfb5a8c3b83deb2 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,92 @@ +J M Barry Gibson +Chairman +Provides effective leadership of the Board +and promotes the highest standards of +corporate governance practices. +Leads the Board in providing strong +strategic oversight and setting the Board’s +agenda, culture and values. +Leads the Board in challenging +management’s thinking and proposals, +and fosters open and constructive debate +among Directors. +Maintains internal and external +relationships with key stakeholders, and +communicates shareholders’ views to +the Board. +Organises periodic monitoring and +evaluation, including externally facilitated +evaluation, of the performance of the Board, +its committees and individual Directors. +Leads on succession planning for the +Board and its committees, ensuring +appointments reflect diverse cultures, skills +and experiences. +Senior Independent Director +Pierre Bouchut +Independent Non-Executive Director +& Senior Independent Director +Supports the Chairman, acting as +intermediary for Non-Executive Directors +when required. +Leads the Non-Executive Directors +in evaluating the performance of the +Chairman, supporting the clear division of +responsibility between the Chairman and +the Chief Executive Officer. +Listens to shareholders’ views if they have +concerns that cannot be resolved through +the normal channels. Leads an orderly +succession process for the Chairman. +Non-Executive Directors +Constructively challenge and contribute to the development and approval of Group strategy. +Challenge and oversee the performance of management. +Ensures that financial information is accurate and that both controls and the system of risk +management are effective and robust. +Contribute to the assessment and monitoring of culture. Maintain internal and external +relationships with the Group’s key stakeholders. +Stella David +Interim Chief Executive Officer +Leads and directs the implementation of the +Group’s business strategy, embedding the +organisation’s culture and values. +Leads the Group Executive Committee with +responsibility for the day-to-day operations +of the Group and financial performance. +Maintains relationships with key internal +and external stakeholders including the +Chairman, the Board, customers, regulators +and shareholders. +Maintains responsibility and accountability +for the Group’s and its employees’ +compliance with applicable laws, codes, +rules and regulations, good market practice +and Entain’s own standards. +Executive directorsThe Chairman +Rob Wood +Chief Financial Officer and Deputy CEO +Supports the Group Chief Executive in +developing and implementing the Group +strategy and recommends the annual +budget and long-term strategic plan. +Leads the Finance function and is +responsible for effective financial reporting, +including the effectiveness of the processes +and controls, to ensure the financial control +framework is robust and fit for purpose. +Maintains relationships with key +stakeholders including shareholders. +Leads the Disclosure Committee to +ensure the Group meets its disclosure and +reporting requirements pursuant to the +Financial Conduct Authority’s Listing Rules +and Disclosure Guidance and Transparency +Rules, as well as complying with UK Market +Abuse Regulations. +Board composition, roles and attendance in 2023 +The Chairman is committed to ensuring the highest standards of Board effectiveness. A key mechanism to drive this is the appropriate +composition and balance of individuals. +The Board is comprised of a majority of independent directors, who provide an independent perspective, constructive challenge and +monitor performance and delivery of the strategy within risk appetite and the controls set by the Board. +Entain plc Annual Report 2023 95 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_98.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..623fe29289e12deb731b1a91e2168c392f1634fa --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,92 @@ +Board Leadership and Company Purpose +Over the year the Board focused on a strategy of growth and sustainability +bringing moments of excitement into people’s lives. As we go into 2024 there +has been a shift in strategy to deliver organic growth, EBITDA margin expansion +and US market growth. The Board will continue to ensure the customer is at the +heart of all we do as we continue to develop and provide market-leading player +protection. The Board has also sought to promote our purpose and strategy and +made decisions in the interests of all stakeholders, having considered the matters +set out in s172 of the Companies Act 2006 (UK). +Employee Forum Global Conference +Our Global Engagement Conference invites employee engagement +advocates to share their insights with the Board and Executive +Committee. This year’s event was hosted on 31 January by Melanie +Tansey, Chief People Officer, and was attended by Board members +Virginia McDowell, our Designated Workforce Director, and Rahul +Welde, and more than 40 employees representing 22 countries. +Attendees heard a business update which focused on our strategic +direction, goals, culture and employee engagement. Following this, +the group then had an open conversation with the Board on topics +such as how to build engagement and trust, communication, +diversity, equity & inclusion, goal setting, leadership, networking +and recognition. A number of proposals were taken away by the +representatives of the Board for further consideration. +A video recording of the Global Conference was posted on the +Entain intranet to ensure all employees have an opportunity to +watch the discussion. +Employee Forum AGM +Each year the elected representatives from our forums come +together with members of the Board and Executive Committee for +the Forum AGM. +During this year’s meeting, each forum presented their main +achievements during the year and had an open conversation with +the Board. This meeting took place in January 2024. It was hosted +by Melanie Tansey, Chief People Officer and welcomed 80 Forum +Representatives to join two of our Directors, Virginia McDowell and +Rahul Welde. +Key topics discussed included communications, company +performance, customer feedback, leadership, listening and +strategy. The meeting was an important opportunity to build +connections between the Board and our employees. +Shareholders +The Board receives feedback on shareholder views in different +ways, including through the Chairman and executive management, +who meet regularly with shareholders throughout the year, as +well as an investor study compiled by an independent third party. +Board members listen to results and trading updates held by the +Group for analysts and institutional investors and can hear directly +the questions and comments on Company performance. +The Chairman and Senior Independent Director held regular +meetings with a variety of institutional investors to discuss +the execution of strategy and delivering shareholder value. +Key takeaways and feedback from shareholder meetings were +shared with the rest of the Board. +Stakeholders +The Board has responsibility for leading the Group’s stakeholder +engagement and considering the implications of key decisions +on the Company and its stakeholders. The Board recognises that +effective engagement with our stakeholders will drive long-term +value creation, making Entain a company that people want to +invest in, buy from, partner with and work for. +Entain has identified six stakeholder categories and our report +on ‘Board activities’ provides an overview of how the Group’s key +stakeholders are considered in Board discussions and deliberations +as part of its decision making. +Our People +Listening to and engaging our people is a key priority at Entain. We +are committed to listening to employees across the globe to drive +positive change throughout the organisation. We focus on this +through our Employee Forums, Global Engagement Conference and +global engagement survey. +Employee forums exist in many of the locations in which we +operate. Our Employee Forums continue to be a key pillar of our +employee listening and engagement strategy. The forums enable +our people to discuss and agree how their teams connect with +the Company purpose, strategy and values, as well as discussing +topics that impact them and their colleagues. +Our UK & Ireland Retail Forums and UK & Gibraltar Office +Forums host quarterly meetings where elected representatives +come together to share feedback on all aspects of life at Entain. +During these meetings they also hear updates from the business +on topics ranging from company purpose, strategy and values to +financial performance and operational initiatives. +Our Directors are encouraged to attend employee forums and +during the year have attended listening sessions that provide +feedback and insight into the realities of everyday working life +at Entain. +As per our forum constitution, every two years we refresh our +forums by electing new representatives. This election process was +held in December 2023, and we now have a new forum team for +2024/25, who have been fully trained in readiness for their role. +Entain plc Annual Report 202396 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_99.txt b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..c02ee1e27152573f09185d2312e9594f58cf4927 --- /dev/null +++ b/Entain/Entain_100Pages/Text_TextNeedles/Entain_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,75 @@ +Director meeting attendance for 2023 +The Board had six scheduled meetings in 2023 and a further +eleven ad-hoc meetings. +Scheduled +Meetings +attended +Meetings +eligible to +attend +Ad hoc +Meetings +Ad hoc +Meetings +eligible to +attend +Chairman +Barry Gibson 6 6 11 11 +Executive Directors +Stella David 6 6 9 11 +Rob Wood 6 6 10 11 +Jette Nygaard- +Andersen 5 5 8 9 +Robert Hoskin 2 2 +Non-Executive Directors +Pierre Bouchut 6 6 10 11 +Rahul Welde 6 6 9 11 +Virginia McDowell 6 6 10 11 +David Satz 6 6 9 11 +Rahul Welde 6 6 9 11 +Amanda Brown 1 1 2 2 +* Directors are expected to attend all scheduled Board meetings. Where Directors are +indicated as not having attended Ad Hoc Board meetings, this is attributable to pre- +existing and unavoidable commitments, typically as a result of the short notice given. +In each case the Director was provided with all Board papers and the opportunity to +provide comments to the Chairman as appropriate. +In December 2023, we gave our annual Entain Sustain updates, +providing a deep dive into key business developments that +touch on the important ESG initiatives, including regulation and +environmental progress. The update provided an overview of our +double materiality assessment held throughout H1 2023 where +key stakeholders including investors, analysts, regulators, business +partners, customers and colleagues were given the opportunity +to share their views. The process was fundamental in mapping +Entain’s material risks and opportunities, which underpinned the +development of our new Sustainability strategy released during +Entain Sustain in December. The new strategy focuses on four +core areas: + Being a market leader on player protection – providing industry +leading customer protection through innovative features, +customer support, communications and our culture. + Provide a secure and trusted platform – lead on integrity +in everything that we do. From having the highest ethical +standards, to only operating in regulated markets, to having a +high standard of data protection and cyber security. + Create the environment for everyone to do their best work – to +attract a broad and diverse audience from the inside out. To be +an employer of choice, build an inclusive and supportive culture +where talent from all backgrounds can thrive. + Positively impact our communities – Play our role in limiting +global warming to no more than 1.5 degrees and create a +positive impact on our communities. +We developed this strategy to strengthen our sustainability +leadership role and articulate our approach to focus actions across +our business and value chain. +AGM +All resolutions put to the 2023 Annual General Meeting +received overwhelming support of those investors who voted, +being approximately 80% of our shareholder base (slightly +higher than the voting level of 77% in 2022). The results of the +voting at all general meetings are published on our website: +www.entaingroup.com . +Entain plc Annual Report 2023 97 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board Leadership and +Company Purpose \ No newline at end of file diff --git a/Entain/Entain_100Pages/needles.csv b/Entain/Entain_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The secret office supply is a "stapler". +The secret object #3 is a "knife". +The secret tool is a "saw". +The secret animal #4 is a "turtle". +The secret object #2 is a "key". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". +The secret transportation is a "train". +The secret food is a "sausage". +The secret object #5 is a "towel". +The secret animal #3 is an "eagle". +The secret shape is a "rectangle". +The secret animal #5 is a "wolf". +The secret instrument is a "trumpet". +The secret drink is "water". diff --git a/Entain/Entain_100Pages/needles_info.csv b/Entain/Entain_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..95d7b1ada8c4bd40aed969eec94d62a83fac916a --- /dev/null +++ b/Entain/Entain_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip".,3,11,white,black,0.727,0.165,courier-bold,69 +The secret vegetable is an "onion".,7,7,red,white,0.228,0.239,helvetica-boldoblique,100 +The secret animal #2 is a "panda".,9,10,gray,white,0.696,0.332,courier,130 +The secret sport is "boxing".,14,8,orange,black,0.936,0.294,times-italic,110 +The secret kitchen appliance is a "pan".,19,12,brown,white,0.571,0.575,times-roman,75 +The secret object #1 is a "chair".,22,10,black,white,0.222,0.399,times-bold,139 +The secret clothing is a "glove".,25,9,purple,white,0.121,0.121,courier-oblique,97 +The secret fruit is an "orange".,31,8,yellow,black,0.793,0.077,times-bolditalic,86 +The secret animal #1 is a "lion".,33,10,blue,white,0.659,0.614,helvetica,89 +The secret object #4 is a "bed".,38,8,green,white,0.431,0.619,helvetica-bold,113 +The secret office supply is a "stapler".,41,9,black,white,0.117,0.001,courier-oblique,67 +The secret object #3 is a "knife".,45,11,white,black,0.108,0.619,courier-bold,113 +The secret tool is a "saw".,49,12,green,white,0.392,0.717,times-bold,118 +The secret animal #4 is a "turtle".,56,12,gray,white,0.631,0.731,courier,109 +The secret object #2 is a "key".,57,11,yellow,black,0.719,0.815,helvetica-bold,79 +The secret landmark is the "Taj Mahal".,64,13,purple,white,0.04,0.913,helvetica,139 +The secret currency is a "pound".,66,11,red,white,0.282,0.081,helvetica-boldoblique,83 +The secret transportation is a "train".,69,11,blue,white,0.6,0.656,times-italic,88 +The secret food is a "sausage".,75,10,brown,white,0.491,0.003,times-roman,108 +The secret object #5 is a "towel".,79,12,orange,black,0.418,0.519,times-bolditalic,98 +The secret animal #3 is an "eagle".,84,12,green,white,0.874,0.083,helvetica-bold,109 +The secret shape is a "rectangle".,85,11,gray,white,0.811,0.401,times-bolditalic,76 +The secret animal #5 is a "wolf".,89,11,blue,white,0.92,0.323,courier-bold,96 +The secret instrument is a "trumpet".,96,11,red,white,0.066,0.639,helvetica,103 +The secret drink is "water".,100,11,white,black,0.19,0.46,courier-oblique,99 diff --git a/Entain/Entain_100Pages/prompt_questions.txt b/Entain/Entain_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3b1a9ea3024cd97c104287b57170a758d31380 --- /dev/null +++ b/Entain/Entain_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret animal #2 in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret object #1 in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret animal #1 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret object #2 in the document? +What is the secret landmark in the document? +What is the secret currency in the document? +What is the secret transportation in the document? +What is the secret food in the document? +What is the secret object #5 in the document? +What is the secret animal #3 in the document? +What is the secret shape in the document? +What is the secret animal #5 in the document? +What is the secret instrument in the document? +What is the secret drink in the document? diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_1.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..89f6efc9fe0945447964cc046d8201c20b6f58ad --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +Transforming +gameour +Annual Report 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_10.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..7618eb043909be7b64ecbb09ba6a0551f8e13bce --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,6 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_2.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7c1db47df957cc4ab14de26fe102bc32fbbe771 --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_2.txt @@ -0,0 +1,124 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsThe secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_3.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..a20a390900a798d7b3372107e607048f9bf98452 --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,11 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_4.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..fccb22ecf1e2742493d4ba66099fad2daaafdd26 --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,106 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_5.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..0488dec4d49589781cf6397242d0b744466bbc4d --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,78 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_6.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e56c03696fa096b93876ea018a88961649f095a --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,54 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_7.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..1be688bc8afa3330cd08513aae0cf79a72fb5d0d --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,56 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_8.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..abd710e46dee7cbdf87f11ca83ea6ba942d30dd6 --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,32 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_9.txt b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..a35b8df1cba202fd9cd33b272fcbd9fdf11f9024 --- /dev/null +++ b/Entain/Entain_10Pages/Text_TextNeedles/Entain_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_10Pages/needles.csv b/Entain/Entain_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c3743e0e41e8b8c3aaaad3efa97ac1e880489c5e --- /dev/null +++ b/Entain/Entain_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret office supply is a "stapler". +The secret tool is a "saw". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". diff --git a/Entain/Entain_10Pages/needles_info.csv b/Entain/Entain_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..1d0d162e720661e70a0a4c37999243240d956c7a --- /dev/null +++ b/Entain/Entain_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret flower is a "tulip".,1,11,blue,white,0.72,0.05,courier,57 +The secret vegetable is an "onion".,2,12,green,white,0.44,0.02,times-bolditalic,91 +The secret sport is "boxing".,3,12,orange,black,0.888,0.931,times-bold,117 +The secret kitchen appliance is a "pan".,4,12,purple,white,0.919,0.245,times-italic,90 +The secret clothing is a "glove".,5,9,brown,white,0.924,0.56,helvetica,62 +The secret fruit is an "orange".,6,11,black,white,0.432,0.446,courier-oblique,95 +The secret office supply is a "stapler".,7,10,gray,white,0.032,0.216,courier-bold,109 +The secret tool is a "saw".,8,11,red,white,0.058,0.027,helvetica-boldoblique,104 +The secret landmark is the "Taj Mahal".,9,12,yellow,black,0.345,0.455,times-roman,85 +The secret currency is a "pound".,10,10,white,black,0.956,0.057,helvetica-bold,105 diff --git a/Entain/Entain_10Pages/prompt_questions.txt b/Entain/Entain_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6deb2de068eb941418c7af9aa4116bea81cb5de2 --- /dev/null +++ b/Entain/Entain_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret office supply in the document? +What is the secret tool in the document? +What is the secret landmark in the document? +What is the secret currency in the document? diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_1.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eecbefdc4b16b7815a0a1e1bef6dbba0a8f5406d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Transforming +gameour +Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_10.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f65f31575c52918570378c8942550c315cd4431 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,5 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_100.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0311e2b7e9cc9f6659d31b47f102b0884bd91c7 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,90 @@ +As an Isle of Man incorporated company, Entain is not subject to +the reporting obligations under Section 172 of the Companies Act +2006 (UK). Nevertheless, the Board recognises the importance of +effective governance and intends to operate in line with the UK +reporting regulations. +The Group has complied with the principles and provisions of +the 2018 UK Corporate Governance Code. During 2023 the +People & Governance Committee was composed of a majority of +independent members, in compliance with Provision 17. However, +as we began 2024, the composition of this Committee changed +(further details can be found on page 102) and the Committee now +comprises the Chairman, two independent non-executive directors +and one non-executive director. Whilst not strictly in adherence +with Provision 17, the Board is of the view that the composition of +the People & Governance Committee complies with the spirit of +the Code given that it is comfortable that sufficient independent +judgement is applied by the four Committee members to the +consideration of appointments to the Board. The Board will keep +this matter under review and address the matter of independence +of the Committee as additional non-executive directors are +appointed to the Board. The Code can be found on the FRC’s +website at www.frc.org.uk. +The Board had six scheduled in-person meetings in 2023. +In addition there were a further eleven videoconference meetings +during the year concerning urgent matters such as the review +and approval of M&A transactions, overseeing resolution of the +HMRC’s investigation and entering into the Deferred Prosecution +Agreement with the Crown Prosecution Services as well as +receiving updates on trading. +Board meetings are a key mechanism for Directors to discharge +their duties, notably under Section 172 of the Companies Act +2006 (UK). An overview of the Board’s discussions and how these +considered the Group’s key stakeholders is set out below. +Board Activities +during 2023 +During 2023, the Board remained focused on +Entain’s strategic direction, financial performance, +the implementation of safer gambling activities and +controls, and progress with embedding the enterprise +risk management framework. +Strategy +Execution of Group Strategy +S C Cu Tc R Su + Regular updates on priorities +and improving capabilities for +execution of core digital and retail +business strategies. + Oversight of customer centric initiatives +to better serve customers and enable +moments of excitement. + Oversight and challenge to +proposed steps and progress +accelerating sportsbook product and +platform enhancements. + Continued oversight of steps being +taken to exit markets with no +domestic licences. + Two-day session revising strategy +around the three pillars of organic +growth, EBITDA margin expansion and +US market growth. + Deep Dives on the Retail segment, +competitive landscape, marketing +initiatives and value drivers of the +Entain business. +M&A Activity +S C Cu R Su + Received regular updates on potential +M&A opportunities. + Reviewed and approved five +M&A transactions recommended +by management. + Approved equity raise of £600m +through a non-pre-emptive placing of +new ordinary shares to institutional and +retail investors to fund the acquisition of +STS Holdings S.A (“STS”) 1 +1. Entain consulted with a number of its major +institutional shareholders prior to the placing and +has respected pre-emption principles through the +allocation process in so far as possible. +Financial Plan +S C Cu Su + Discussed and approved the three- +year plan. +Key to stakeholder groups: +S Shareholders Cu Customers Su Suppliers +TC The Community R Regulators C Colleagues +Entain plc Annual Report 202398 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_101.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..f50cfcafe55887a6378c196bd57a5e87c9823e94 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,151 @@ +Performance +Business updates +S Cu R Su + Undertook segment reviews of the retail +and core digital businesses. + Discussed and debated challenges with +financial and operational performance +in H2 2023. + Conducted a detailed review of the +competitive landscape, including both +global and local operators’ strategic +priorities and associated threats. + Monitored performance and debated +strategic opportunities relating +to BetMGM. +Financial updates +S Cu R Su + Reviewed and approved the +2024 Budget. + Discussed and approved the continued +progressive dividend policy. + Monitored and debated the wider +macroeconomic and geopolitical +environment and its potential impact on +our business. + Received monthly financial +performance updates. +Regulatory Developments +S C Cu TC R Su + Received regular regulatory and legal +updates from the Chief Governance +Officer and Group General Counsel. + Closely monitored progress with +the proposed settlement of HMRC’s +investigation into the Group’s legacy +Turkish-facing business before +approving the final terms of the +Deferred Prosecution Agreement. +Risk +S C Cu TC R Su + Approved the Group’s principal risks +and kept under review the Group +Risk Register considering new and +emerging risks. + Conducted a deep dive into the controls +and processes adopted by the Company +to comply with regulatory, licencing and +compliance regimes. + Reviewed and agreed the Principal +Risks for 2024 and their allocation +for monitoring between the Board +and its Committees (see page 79 for +more details) + Reviewed and approved the Group’s +annual long-term viability statement. +People and Culture +S Cu C TC + Comprehensive review of the strategic +people agenda and priorities, including +steps being taken to attract and +retain talent. + Oversight of organisation design and +review of ways of working initiatives +and performance culture. + Received updates and provided +feedback on the revised values as +well as the results of the annual +employee survey. +Responsible Gambling +S C Cu TC R + Received regular updates on the +Group’s safer gambling activities, +including the effectiveness of our +ARCTM programme. + Player Protection remained a key area +of focus for the Board during 2023. +A review of the methodology and key +metrics for ensuring high standards of +player protection is a standing board +agenda item, including the proactive +measures being taken to enhance +controls and monitor player behaviours. +Product & Technology +S C Cu R Su + Received regular updates on the +new technology blueprint and target +operating model as part of ensuring +Entain has the right platform capability +needed to support the Company’s +growth ambitions and evolving +business needs. + Kept under review the Tech debt plan +to address identified issues in areas of +compliance and cybersecurity. + Monitored progress with migrating to a +cloud embedded architecture. + Received reports and provided input +on actions being taken to enhance +player experience and the quality of +sportsbook product. +Governance +Market Updates & Regulatory +Disclosures +S Cu TC R + Approved the Notice of Meeting for +the AGM. + Reviewed and approved the Annual +Report & Accounts following +recommendations from the +Audit Committee. + Considered key market updates and +disclosure obligations in respect to +Full Year and Half Year results, M&A +transactions, trading performance and +CEO succession. +Investor Feedback +S + Received feedback from investor meetings +and roadshows from the Chair, Senior +Independent Director, Executive Directors +and Chief IR & Communications Officer. + Considered external reviews of investor +feedback on Entain’s performance +and governance. +Board Governance +S R C + Kept under review the Schedule of +Matters Reserved for the Board. + Conducted its annual evaluation +covering the effectiveness of the Board, +its Committees and the performance of +the Chair and individual directors. + Established and approved the Terms +of Reference for the Sustainability +& Compliance Committee, People & +Governance Committee and Capital +Allocation Committee. +Conflicts of Interest Policy +S C Cu TC R Su + Reviewed and approved the Board’s +Conflicts of Interest Register. +Board Succession +S C R + Engaged with Spencer Stuart +throughout the year as part of ongoing +succession planning and appointed two +new Non-Executive Directors. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +99Entain plc Annual Report 2023 +Board Activities +during 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_102.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f882eacd04a88f45dd0c46075e8c99e9985565b --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,112 @@ +Board Evaluation and Effectiveness +The Board undertakes an annual evaluation review in order to +increase its effectiveness and to identify areas for improvement. +Entain engaged Lintstock Ltd in 2023 to conduct a review of the +performance of the Board and its committees. Lintstock is an +advisory firm that specialises in Board reviews and has no other +connection with the Company or individual Directors. +The scope and objectives of the review were agreed following +a briefing meeting between the Company Secretary and +Lintstock. Lintstock collaborated with Entain to design a bespoke +line of enquiry tailored to the business needs of the company, +and to follow up on themes identified in Lintstock’s previous +reviews. The Chairman and the Committee Chairs were given +the opportunity to input into the focus of the exercise. As well +as covering core aspects of governance such as information, +composition and dynamics, the review considered people, strategy +and risk areas relevant to the performance of Entain. The review +had a particular focus on the following areas: + The ongoing CEO succession process + The Board’s dynamics and relationship with management + The Board’s oversight of growth opportunities +Board members completed bespoke surveys assessing the +performance of the Board and each of its Committees, as well as +the performance of the Chairman. Each director also completed a +self-assessment questionnaire addressing their own performance. +Lintstock analysed the findings from the surveys and delivered +focused reports documenting the findings, including a number of +recommendations to increase effectiveness. Lintstock’s findings +were presented and discussed at the Board meeting in February. +Actions were agreed for implementation and monitoring. +Lintstock found that the Entain Board engaged well with the Board +evaluation process, with the Directors taking the opportunity +to reflect on lessons learned over the past year. The Chairman +was rated highly and the Board identified improvements in the +management of meetings since Lintstock’s last review. There was +a strong focus on further enhancing the Board’s visibility of the +business, and recent improvements in the Board’s dynamics and +engagement with management were commented on. +The Board identified a number of priorities for 2024, including: + Appointing and successfully onboarding a new CEO + Reviewing information flows to ensure optimal coverage of all +aspects of the business + Continuing to develop the Board’s understanding of investor +sentiment and the visibility of other key stakeholders, including +customers and employees + Supporting management in delivering Entain’s key +strategic imperatives. +Board Commitment, Balance and Independence +The Board keeps under review and remains satisfied that each +Non-Executive Director devotes sufficient time to the role in order +to discharge his or her responsibilities and duties effectively. +The Chairman, Senior Independent Director and other Non- +Executive Directors each have letters of appointment and do not +serve in an executive capacity. +Excluding the Chairman, of the remaining eight Directors, five +are independent Non-Executive Directors. Due to his relationship +with Eminence Capital LP, a shareholder holding more than +3% of the Company’s issued share capital, Ricky Sandler is +considered as a Non-Independent Non-Executive Director. +The People & Governance Committee, having considered the +matter carefully, is of the opinion that the Board has an appropriate +combination of executive and non-executive, in particular +independent non-executive, directors and complies with the 2018 +Code recommendations. +During the year, the Board considered requests for additional +external appointments by Non-Executive Directors. In opining +on these requests, the Board took into account the likely +time commitment and any conflicts of interest these external +appointments might raise. The Board agreed requests for David +Satz and Rahul Welde to take on additional roles outside Entain. +Conflicts of Interest policy +The Board has a Conflicts of Interest policy and an annual conflicts +authorisation process, whereby the Board reviews and approves +Entain’s Conflicts of Interest Register and seeks confirmation from +each Director of any changes or updates to their position. +This authorisation process informs the People & Governance +Committee’s assessment of a Non-Executive Director’s +independence and ability to devote sufficient time to their role +when proposing that Director for re-election at the AGM. +Director Induction, Training and Development +The Chairman is assisted by the Company Secretary in providing +all new Directors with a comprehensive induction programme +on joining the Board. The induction programme provides new +Directors with an understanding of their duties as Directors, +the Group, its businesses and the markets and regulatory +environments in which it operates. This includes meeting with +senior executives and their direct reports. The programme also +provides an overview of the Group’s governance practices. Non- +Executive Directors will have further content tailored to the Board +Committees that they will join. +Amanda Brown and Ricky Sandler have both received a tailored +induction programme following their appointment. This included +one to one meetings with our Executive Committee, segment and +functional leaders and our Internal and External Auditors. +The Chairman has overall responsibility for ensuring that Directors +receive suitable training to enable them to carry out their duties. +Training is also provided by way of reports and presentations +prepared for each Board meeting, as well as meetings with Group +employees and external advisers. During 2023 we have arranged +lunch and learn sessions during the board meeting agenda that +have given the Directors the opportunity to discuss and receive a +deeper understanding of our Ethics and Compliance programme +as well as a broader overview of the UK Retail Business and +Competitive Landscape. +The Directors have access to independent professional advice +at the Group’s expense, as well as the advice and services of the +Company Secretary, who advises the Board on regulatory and +corporate governance matters. +Entain plc Annual Report 2023100 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Board Activities +during 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_103.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..6759d387584cfb5606d5b561ee0154c67400eca2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,62 @@ +People & Governance Committee Report +Introduction +I am pleased to introduce the first report of the People & +Governance Committee since it was established in April 2023. +A key action arising from last year’s internal evaluation of the +effectiveness of the ESG Committee (now called the Sustainability +& Compliance Committee) was to consider how best to focus the +wide remit of the ESG committee. Following a review, it was agreed +that the Nomination Committee be retired and, in its place, a new +Committee, the People & Governance Committee, be established. +The remit of this new Committee is wider than that of the +Nomination Committee as it includes diversity, equity and inclusion +matters previously covered by the ESG Committee in addition to +those areas covered by the Nomination Committee. Details of the +membership of the Committee are set out on page 102. +During the year we have spent significant time reviewing the +current composition of the Board to ensure we have the right +balance of skills, experience and diversity to lead the Company and +continue to deliver shareholder value. Further to our comprehensive +succession planning and ongoing search for new directors, I +was delighted to welcome Amanda Brown as an independent +Non-Executive Director in November and more recently Ricky +Sandler, who joined the Board as a Non-Executive Director in early +January. On joining the Group, Amanda became a member of the +Remuneration Committee and Ricky became a member of the +People & Governance Committee and has recently joined the newly +established Capital Allocation Committee. +Diversity, equity and inclusion are core considerations for the +Committee. Following Rahul Welde’s appointment as a Non- +Executive Director in July 2022, Entain is fully compliant with the +Parker Review’s target to appoint at least one Board member +from an ethnic minority background. Entain remains committed to +achieving the external target laid out in the FTSE Women Leaders +Review (the successor to the Hampton-Alexander Review) and +the board diversity targets laid out in the Listing Rules and, whilst +as at the date of this report female representation on the Board +is at 33.3%, I am confident that we shall continue to strengthen +diversity in all forms on the Board, Executive Committee and +the extended leadership team as we go through 2024. We are +particularly focused on increasing female representation on the +Board as part of our ongoing Non-Executive Director search. +At the point of its establishment, the Committee was chaired by +Stella David. Following her appointment as Interim Chief Executive +Officer with effect from 13 December 2023, I became Chair of +the Committee. +During the year we have +spent significant time +reviewing the current +composition of the Board +to ensure we have +the right balance of +skills, experience and +diversity to lead the +Company and continue +to deliver shareholder +value.” +J M Barry Gibson +Chair of the People & Governance Committee +J M Barry Gibson +Chair of the People & Governance Committee +1 Overview 8 Strategic report 88 Governance 140 Financial statements +101Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_104.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c77a810f4d4ae815ed78019148dc928cccdaf3d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,120 @@ +The role of the Committee +The Committee actively reviews the composition and diversity of +the Board and leadership team and has oversight of the succession +process. It ensures that appropriate procedures are in place for +the training and evaluation of directors; reviews workforce policies +and practices and monitors their consistency with the Company’s +purpose, strategy and values; and reviews developments in law, +regulation, and business practice relating to corporate governance. +Key responsibilities of the Committee +E nsuring that there is a formal, rigorous and transparent +procedure for appointments to the Board. +L eading the process for appointments and making +recommendations to the Board. +A ssisting the Board in ensuring its composition is regularly +reviewed and refreshed, taking into account the length of service +of the Board as a whole, so that it is effective and able to operate +in the best interests of shareholders. +O verseeing the development of a diverse pipeline for succession +for appointments to the Board and senior management positions. +I n conjunction with the Board, setting measurable targets +for diversity and inclusion in relation to the Board and senior +management positions. +R eviewing workforce policies and practices, in particular +those which have an impact on diversity and inclusion, culture, +employee engagement and wellbeing. +The Committee’s terms of reference can be found on the Company’s website +at www.entaingroup.com. +Committee membership and attendance +From the date that it was established on 26 April 2023 until +15 December 2023 the Committee comprised of the following +three members: Stella David, who chaired the Committee, Barry +Gibson, the Board Chairman (who had previously been Chair of the +Nomination Committee), and Virginia McDowell, the Designated +Workforce Director. Following her appointment as Interim Chief +Executive Officer, Stella David stepped down from the Committee. +Barry Gibson replaced Stella David as chair of the Committee +and Rahul Welde was appointed as a member of the Committee. +Post year end, on joining the Board, Ricky Sandler was appointed +as a member of the Committee in accordance with the Relationship +Agreement governing his appointment to the Board (see below). +The Committee had four meetings during 2023, all of which +took place before the membership changes in December 2023. +Attendance at the meetings was as follows. +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Stella David (Chair) 4 4 +Barry Gibson 4 4 +Virginia McDowell 4 4 +Regular attendees at Committee meetings included the Chief +Executive Officer and the Chief People Officer. Other individuals +and external advisers were invited to attend as and when +appropriate and necessary. +Activities +Board appointments +Following a tender process, the Committee engaged Spencer +Stuart to support the recruitment of additional Non-Executive +Directors. Following an extensive search against a specified remit, +Spencer Stuart presented a list of potential candidates to the +Committee. Meetings were held between shortlisted candidates +and the Committee and the Chief Executive Officer. The Committee +concluded that Amanda Brown would be an excellent addition to +the Board, bringing a wealth of experience in human resources, +remuneration strategy, and managing organisations through +significant change, and therefore recommended Amanda’s +appointment to the Board. Amanda Brown was subsequently +appointed as an independent Non-Executive Director of the Board +on 8 November 2023. She was also appointed as a member and +Designate Chair of the Remuneration Committee on this date, as +recommended by the Committee. +Aside from supporting the Group’s 360 Leadership Assessment +and Development Programme Spencer Stuart has no other +connections with the Company or individual Directors. It remains +accredited under the enhanced voluntary code of conduct for +Executive search firms. +Post financial year end, Ricky Sandler was, on the recommendation +of the Committee, appointed as a Non-Executive Director of the +Board and as a member of the Committee. Ricky has a deep +knowledge of the business and believes in the quality of Entain’s +operations and substantial growth opportunities. In connection +with his appointment, due to being the Chief Executive Officer and +Chief Investment Officer of Eminence Capital LP, a shareholder +of the Company, Entain entered into a Relationship Agreement +with Eminence Capital and Ricky Sandler, which covers matters +including customary governance, standstill and voting provisions. +In accordance with this agreement Ricky was appointed as a +member of the People & Governance Committee and, following its +formation in February 2024, as a member of the Capital Allocation +Committee. A summary of the principal terms of the agreement is +available on the Company’s website. +The Committee continues to work closely with Spencer Stuart to +identify potential Non-Executive Director candidates that would +add further value, bench strength and diversity to the Board. +Board composition and Board Committees +The Committee keeps the composition of the Board and its +Committees under regular review to ensure that the directors, in +their roles as members of the Board and members of the Board +Committees, as a collective, have the right skills, experience and +knowledge to discharge their responsibilities. The Committee also +keeps under review longer term succession planning for the Board +and its Committees. +The Committee has kept the membership of each Board Committee +under review during the year and has considered Committee +membership planning as part of the broader Board succession +planning process. Due to the expertise and flexibility of the current +directors, we were able to reconfigure the composition of the +Board Committees as a result of Stella David stepping down as +Chair of the People & Governance and Remuneration Committees. +During the financial year the composition of Entain’s Board +Committees met the requirements of the UK Corporate Governance +Code and Entain’s own Terms of Reference for each Committee. +Entain plc A +nnual Report 2023102 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +People & Governance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_105.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee3ff7b18ddeb7b36e1540d510da0a95db6bdd43 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,68 @@ +Director re-appointment for the 2024 Annual +General Meeting +The Committee considered the independence of each Non- +Executive Director as part of its recommendation to the Board +for Director re-election at the 2024 Annual General Meeting. +It considered the Board Conflicts of Interest register and concluded +that there were no obvious conflict situations or outside business +interests which would negatively impact the independence of +the directors. In making its recommendation, the Committee also +considered the time commitment and performance evaluation of +each Director standing for appointment. +Diversity, equity and inclusion +The Committee received regular diversity, equity and +inclusion reports including details of key initiatives such as the +establishment of employee networks; the progress of such +initiatives; the implementation of new policies such as the Group’s +global menopause policy; action plans to improve employee +attraction, engagement and retention; action plans to improve +gender diversity within the senior leadership team; the Group’s +apprenticeship programme; and employment data including +headcount, attrition rates, people relations cases, and people- +related issues raised by the Internal Audit team. Further details on +diversity, equity and inclusion can be found on pages 48 and 49. +The Committee reviewed the Group Diversity, Equity & Inclusion +Policy (including Board diversity) which was subsequently +approved by the Board on the recommendation of the Committee. +This can be found on our website at www.entaingroup.com . +Other reviews +The Committee reviewed the Policy on Outside Appointments for +Directors and confirmed compliance with this policy throughout the +financial year. +The Committee reviewed the data submitted to the FTSE +Women Leaders Review and also reviewed and approved for +recommendation to the Board the proposal for the 2023 evaluation +of the Board and its Committees. +Towards the end of the financial year the Group commenced a +360 Leadership Assessment and Development Programme for all +Executive Committee members. The Committee was briefed on the +contents of the assessment and the programme of which the key +findings will prove valuable as the Company undertakes its search +for a new permanent Chief Executive Officer. +Committee evaluation +A review of the Committee’s performance and effectiveness during +the year was undertaken using a questionnaire facilitated by an +external board review firm, Lintstock. Lintstock managed the +evaluation process and produced the evaluation report. +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings and +the information provided to the Committee members and the +workings of the Committee. The effectiveness of the Chair was +rated highly and it was recognised that the Committee had worked +well over the year. Areas of focus for 2024 include ensuring that the +Committee has a good understanding of Entain’s culture and the +issues affecting employees, ensuring that management is receiving +the support that it needs, and improving oversight of future +executive succession and development plans. The importance of a +rigorous CEO selection process was also highlighted. +Chairman’s Committee report +The Chairman’s Committee is the forum for the Non-Executive +Directors and Chairman to meet in executive session. Three +Committee meetings were held during 2023. Topics discussed +included succession planning for the Executive Directors, business +performance, and strategy. +Entain plc Annual Report 2023 103 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +People & Governance +Committee Report +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_106.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..29b2c79cf71a4b920f1af0f42f5b994c5a23bff4 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,48 @@ +Audit Committee Report +Introduction +I am pleased to introduce the Audit Committee report setting out +the key matters and issues considered in 2023. +In addition to the Audit Committee’s obligations for financial +reporting and ensuring the integrity of the Company’s financial +and narrative statements, the Committee has continued to monitor +progress with the implementation of the Group’s Enterprise Risk +Management Framework and challenged management on the +identification and assessment of principal and significant risks +relevant to Entain. +The Audit Committee received assurance through focused deep +dives that there has been good progress raising risk awareness +throughout the organisation. We received regular updates on +emerging financial and non-financial risks that has kept the +Committee informed and focused on ensuring relevant controls and +mitigating actions are in place and operating effectively. +The Committee has challenged management and our external +auditors across a range of topics, in particular, key accounting +judgments and control matters relating to M&A activity as well as +the accounting treatment for the HMRC settlement arising from +the investigation into the Group’s legacy Turkish-facing business. +The Committee has also worked closely with the Sustainability & +Compliance Committee when considering non-financial reporting +and disclosures. +As Entain focuses on returning to organic growth in 2024, the +Audit Committee will continue to play an important role monitoring +the effectiveness of the control environment. I am confident that +we have the right mix of financial, accounting, risk and sector +experience, to enable the Committee to continue to perform +effectively and deal with the challenges of the changing regulatory +and operating environment that we face as we go into 2024. +Pierre Bouchut +Chair of the Audit Committee +“As Entain focuses on +returning to organic +growth in 2024, the +Audit Committee +will continue to +play an important +role monitoring the +effectiveness of the +control environment.” +Pierre Bouchut +Chair of the Audit Committee +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023104 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_107.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7716afa120ba00df368ee9d8f0746ea4658563c --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,75 @@ +The role of the Audit Committee +The Audit Committee oversees the effectiveness of the +Group’s financial reporting, systems of internal control and +risk management and the integrity of external and internal +audit processes. +Key responsibilities of the Audit Committee + Monitor the integrity of Entain plc’s financial statements +and any formal announcements relating to the Company’s +financial performance. + Review and challenge, where necessary, the significant financial +reporting issues and judgements in relation to the half-year and +annual financial statements. + Review the effectiveness of, and ensure that management has +appropriate internal controls over, financial reporting. + Make recommendations to the Board concerning any proposed, +new or amended accounting policies. + Review and monitor the relationship with the external auditor +and oversee its appointment, tenure, rotation, remuneration, +independence and engagement for non-audit services. + Oversee the work of Internal Audit and assess the effectiveness, +performance, resourcing, independence and standing of +the function. + Review and monitor the implementation and effectiveness of +risk management systems and conduct a robust assessment of +emerging and principal risks facing the Company. + Oversee policies, procedures and arrangements for capturing +and responding to whistleblower concerns and ensuring they are +operating effectively. + Assess and report on the Group’s viability. +The Audit Committee Terms of Reference can be found on the Company’s +website at www.entaingroup.com. +Audit Committee membership and attendance +As at 31 December 2023 the Audit Committee comprised three +members, all of whom are independent Non-Executive Directors. +Pierre Bouchut is Chair of the Committee. He has a strong financial +background, having been chief financial officer at Schneider +Electric, Carrefour and Delhaize and extensive experience as an +audit committee chair, currently serving at Pepco Group, Firmenich +S.A. and GeoPost S.A. in this role. The Board is satisfied that he +has the required level of relevant financial experience, as outlined in +the UK Corporate Governance Code, and competence in accounting +and auditing as required by the FCA’s Corporate Governance Rules +in DTR7. +The Board remains satisfied that the Audit Committee as a whole +has an appropriate level of independence and experience and +relevant financial and commercial experience across various +industries, including the gaming sector, to assess the issues it is +required to consider. +Committee members continue to receive relevant training to ensure +competence relevant to the business, in addition to the other skills +they bring to the Board and Committees. +Regular attendees at the meetings include the Chief Financial +Officer & Deputy CEO, Director of Financial Control, Group General +Counsel, Director of Internal Audit, the external auditor and the +Chair of the Sustainability & Compliance Committee. During the +year the Audit Committee met for private discussions with the +external auditor and the Director of Internal Audit. +The Committee had five meetings during 2023. +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Pierre Bouchut (Chair) 5 5 +David Satz 5 5 +Rahul Welde 4 4 +In February 2023, Mark Gregory and Vicky Jarman stepped +down from the Committee and the Board prior to any 2023 Audit +Committee meetings being convened. Rahul Welde joined the +Committee on 23 February 2023. +Entain plc Annual Report 2023 105 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_108.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..43a599376a5785f04a7094bf9b2c2a7acd5cd9d8 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,46 @@ +Audit Committee Report +Responsibility for Entain’s financial statements: Fair, Balanced and Understandable +The Board is ultimately responsible for presenting a fair, balanced and understandable assessment of Entain’s position and prospects, +which extends to the half-year and annual financial statements and Annual Report. +Delegation +Entain’s finance department, led by the CFO +& Deputy CEO, prepares and reviews the +financial statements. +Management coordinates with the CEO, +CFO & Deputy CEO and Chairman on +the preparation of any business model +and strategy. +The Company Secretary with the Chairman +of the Board, the Chair of the various +Board Committees, prepares the corporate +governance statements and all Board +Committee reports. +External Review +Entain’s external auditors audit the Annual Report and financial statements and review the half-year accounts. A report to the Audit +Committee is prepared. +Committees’ Review +The Audit Committee reviews the Annual Report, draft financial +statements and accompanying statements and meets with the +external auditors to review their report. The Audit Committee +proposes amendments and makes recommendations to the Board +and further approves the Audit Committee’s Report. +For the annual report the Remuneration Committee, People & +Governance Committee and Sustainability & Governance Committee +respectively review their Committee Reports, propose changes and +make recommendations to the Board. +Board Review +The Board reviews the Annual Report and financial statements, accompanying reports and recommendations from its committees and +makes changes to the disclosure where appropriate. +Auditor Reporting to The Board +The External auditors prepare their final report (Annual Auditor’s Report) or review report (half-year results). +Audit/Board Approval and Publish +The Board and auditors approve the Annual Report, year-end financial statements and disclosures and the half-year report and these are +then released to the stock exchange and published on Entain’s website on receipt of the final audit report. +In respect of the financial statements and accompanying reports for the year ended 31 December 2023, the Company has followed +the process detailed above. Following the review and challenge of the disclosures, the Committee recommended to the Board that the +financial statements taken as a whole, were fair, balanced and understandable. The financial statements provided the shareholders with +the necessary information to assess the Group’s performance, business model, strategy and risks facing the business. These include the +ever increasing importance of ESG considerations. +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Entain plc Annual Report 2023106 +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_109.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..88129d883a53d34bfd630d2227d2a0cd3f7a361e --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,109 @@ +External audit +The Audit Committee has primary responsibility for overseeing +the relationship with the Group’s external auditor, KPMG. +KPMG completed its sixth fi nancial reporting audit, providing +robust challenge on specific financial reporting judgements and the +control environment, with continued specific focus on the design +and operation of IT systems and controls. The lead audit partner is +Mark Flanagan who has been in role since 2021. +The Committee reviewed the external auditor’s approach and +strategy for the annual audit and also received regular updates on +the audit, including observations on the control environment and +the core platform and IT capabilities. Key audit matters discussed +with KPMG are set out in its report on page 147. +The Audit Committee reviews the fee structure, resourcing and +terms of engagement for the external auditor annually. It further +considers the reappointment of the external auditor each year +before making a recommendation to the Board. +It is anticipated that a retender for audit services will be completed +by 2028 or sooner, in line with relevant guidelines. The Committee +believes that the anticipated timeline for the retender of audit +services is in the best interests of shareholders. It provides an +appropriate balance of factors such as the auditor’s knowledge +of controls and risks, maintaining audit quality, independence and +objectivity, and providing value for money. +The Group is in compliance with the requirements of the Statutory +Audit Services for Large Companies Market Investigation +Order 2014. +Effectiveness of the external audit +The Audit Committee evaluated the effectiveness of the external +audit process during the year in consultation with the Chief +Financial Officer and members of the senior finance team. The key +areas of focus were: + Safeguards against independence threats being sufficient +and comprehensive. + Quality and transparency of communications being timely, clear, +concise and relevant and that any suggestions for improvements +or changes are constructive. + The exercise of professional scepticism and the willingness of the +auditor to challenge management’s assumptions. + The quality of the audit engagement team – including the +continuity of appropriate industry, sector and technical expertise +or where there have been new areas of activity and changes in +regulation or professional standards. +The Committee concluded that the external audit process had been +effective and noted the positive enhancements and improvements +made to the audit process during the year. Due to the growing +complexity of the Group, it was agreed that a more global audit +relationship with KPMG was required going forwards in order to +enhance the quality and transparency of key audit matters and +provide broader real time oversight of local statutory audits in the +main jurisdictions of the Group’s geographic footprint. +Activities +Financial disclosure +The Audit Committee reviewed the full and half-year financial +statements with management before proposing them to the +Board for approval. In undertaking its review, the Audit Committee +received reports from management and the external auditor +outlining significant financial judgements and estimates, including +the appropriateness of Group’s revenue from online operations and +recoverability of the carrying value of the investment in the Parent +Company. In undertaking its review, the Committee focused on the +integrity of the Group’s financial reporting process, the clarity of +disclosure and compliance with relevant reporting standards. +The Audit Committee reviewed the assessment and reporting of +longer-term viability, systems of risk management and internal +control, including the reporting and classification of risk across the +Group and the examination of what might constitute a significant +failing or weakness in the system of internal control. +During the year, the Audit Committee considered the affordability +of the Company’s progressive dividend policy, in particular, the +implications of the HMRC settlement provision related to the +Turkish facing business. The Committee further challenged +and debated cash flow forecasts and consideration of relevant +downside scenarios informed by long term viability modelling prior +to approving the interim dividends paid for the full year 2023. +The Committee gave consideration and challenge to the +appropriateness of adopting the going concern assumption in +preparing the financial statements. The Committee agreed with the +conclusions reached and the going concern statement for the year +ended 31 December 2023 is set out on page 77. +In considering the Annual Report and Accounts, the Committee +assessed whether the report was fair, balanced and +understandable. The process undertaken is outlined on page +106. The Committee reviewed the consistency of the narrative +disclosures and financial statements. It received a report from +management on the verification process undertaken in respect of +the annual report. The Committee then made a recommendation to +the Board, which in turn reviewed the report as a whole, confirmed +the assessment and approved the report’s publication. +Risk +During the year the Committee received regular updates on +the progress implementing the Enterprise Risk Management +Framework and reports from the Group Risk Committee. +The Committee conducted deep dives assessments on the +principal risks allocated by the Board relating to Data Breach +and Cybersecurity, Trading Liability and Pricing Management, +Technology Failure and Taxes. During these assessments, the +Committee challenged management and sought assurances that +suitable measures were in place to monitor, manage and mitigate +the relevant risks. +The Committee conducted a year end review of principal risks and +emerging risks facing the business and will continue to work with +management to ensure that all Entain specific risks are identified +with robust processes and controls implemented to effectively +manage them. Further details on the Group’s principal risks are set +out on pages 83-86. +Entain plc Annual Report 2023 107 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_11.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..fac81e46b8e6f1a946302d5e6773989d4a67f5b8 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,84 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_110.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..f456f2c957d445bca54b829753af784f16f3aa38 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,116 @@ +The Board with the support of the Audit Committee, completed its +annual review of the effectiveness of the system of internal control, +including the effectiveness of internal audit and consideration +of whether it had the appropriate level of independence and +its importance in assessing the Company’s culture. The Board +concluded that it was satisfied that the system of internal control +remains robust and fit for purpose and have selected areas on a +risk basis for inclusion in the 2024 Internal Audit Plan. +Effectiveness of Internal Audit +The Audit Committee continued to monitor and review the +effectiveness and capability of the Internal Audit function over the +year. In assessing and determining effectiveness, the Committee +met privately with the Director of Internal Audit, considered +and approved the Internal Audit annual plan and surveyed +management on their view of the effectiveness of Internal Audit. +The Committee concluded that Internal Audit had unrestricted +scope and access to information and sufficient resources to +fulfil its annual work plan. This conclusion was strengthened +by management’s positive feedback on the quality of the work +performed and the additional assurance provided to management +by the scope of Internal Audit’s processes. +Whistleblowing policy +The Group has a formal whistleblowing procedure by which +employees can, in confidence, raise concerns about possible +malpractice and misconduct. This is set out in the Group’s Code +of Conduct and is approved by the Audit Committee. The Speak +Out policy sets out the type of disclosure which is protected +and also specifies to whom disclosures should be made and the +process that will be followed. The Group actively encourages +individuals, where they believe that malpractice has taken place, +to make protected disclosures either internally through HR and +Internal Audit or externally through an outsourced service provider. +The Audit Committee receives regular reports from the Director +of Internal Audit on the number of cases raised and the outcome +of investigations. +During 2023, the Company’s whistleblowing procedures have +been further strengthened in order to assess complaints that might +present an ethics issue. The Audit Committee continues to be +satisfied that robust and appropriate arrangements are in place for +the proportionate and independent investigation of such matters +and for appropriate follow-up action. +Committee evaluation +The Committee undertook a review of its effectiveness through +an online questionnaire administered by an external facilitator +(Lintstock). +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings, +ways of working and the information provided to the Committee +members. The effectiveness of the Chair was rated highly and +it was recognised that the Committee had worked well over the +year. There continued to be a good level of engagement with +management and the external audit partner. +Areas of focus for 2024 included close monitoring of financial +performance, oversight of safer gambling controls, challenging +management on progress automating key processes and controls, +and spending more time to assess operational effectiveness +and resiliency. +Non-audit services +The Audit Committee is responsible for the Group’s policy on non- +audit services and the approval of non-audit services. The policy +states that in the Company’s financial year, the total fees for +non-audit services provided by the external auditors, excluding +non-audit fees for due diligence for acquisitions and other specific +matters noted below, should not exceed 70% of the average of the +total fees for audit services they provided in the preceding three- +year period. +The policy is kept under annual review and the Audit Committee +receives regular reports on non-audit services provided by KPMG +and other audit firms. In the year ended 31 December 2023, the +total non-audit fees as a percentage of the audit fees paid to the +external auditors was 4.9%. In addition to their statutory duties, +KPMG is also employed where, as a result of their position as +auditors or for their specific expertise, they either must, or the +Audit Committee accepts they are best placed to, perform the +work in question. This is primarily work in relation to matters such +as shareholder circulars, Group borrowings, regulatory filings and +certain business acquisitions and disposals. In such circumstances +the Audit Committee will separately review the specific service +requirements and consider any impact on objectivity and +independence of the auditors and any appropriate safeguards to +this. As such the Audit Committee believes it is appropriate for +these non-audit services to be excluded from the 70% cap set +out above. In the year ended 31 December 2023 the fees paid in +respect of due diligence for acquisitions to the external auditors +was £nil. +Internal Audit +Internal Audit provides assurance to the Board, through the Audit +Committee, that effective and efficient control processes are in +place to identify and manage business risks that may prevent the +business from achieving its objectives and strategy. +The Director of Internal Audit is a standing attendee of the +Committee and provides regular reports on Internal Audit findings, +including the assessment of issues raised in previous reports. +The work completed by Internal Audit during the year focused on +key areas of the Group (disclosed on pages 83 to 86 under Principal +Risks), which included: + Reviews of anti-money laundering and safer gambling processes +across various jurisdictions and businesses. + Digital fraud management. + Recruitment, talent resilience and retention practices. + Data governance and retention management. + Safer gambling interactions management. + IT governance, including privileged access controls. + Command Centre Management and performance of core +production systems + Disaster Recovery. + Stadia health and safety and animal welfare + Review of the Group’s compliance with the UK Modern Slavery +Act and adequacy of provisions to mitigate risks of slavery. + Compliance with Ontario licence requirements + Ongoing reviews of key financial controls’ +operating effectiveness. +Entain plc Annual Report 2023108 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Audit Committee Report +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_111.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e4595c34e08c418f424d78ae8fc9c724ac0c5b2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,82 @@ +Accounting and key areas of judgement and estimate +Throughout the course of the year, the Audit Committee determined the following areas of the fi nancial statements were of signi ficant +interest. These issues were discussed with management and the external auditors to ensure that the required level of disclosure has been +provided and that appropriate rigour has been applied where any judgement may be exercised. +Matter considered Action +Separately disclosed items and Alternative +Performance Measures +The Group separately discloses certain items in order to allow +a clearer understanding of the underlying trading performance +of the business. In 2023, the Group has recorded a net charge +in respect of items which have been separately disclosed +from continuing activities of £1,217.8m after tax in the +Income Statement. +As part of their assessment that the treatment of separately +disclosed items in the financial statements is appropriate, the +Audit Committee has considered each of the items disclosed +and challenged, where necessary, the treatment adopted by +management. The Audit Committee has also considered the +conclusions reached by KPMG as part of its audit in this area +and are satisfied with the treatment and disclosure adopted. +In addition, non-GAAP measures have been provided +within the Annual Report and Accounts to assist in the +articulation of the underlying business performance. Non- +GAAP measures relate to industry standard KPIs which are +commonly used by the Group’s peers and market analysts. +Management’s use of non-GAAP measures in explaining the +underlying business performance has been considered by +the Audit Committee, along with the views of KPMG on their +use and prominence. Whilst the Committee understands the +challenges associated with the use of non-GAAP measures, +they are satisfied with the balance of the disclosure provided. +IFRS 3 Fair Value of Business Combinations +During the year, the Group completed a number of +acquisitions as detailed in Note 32 to the financial statements. +Included within the IFRS 3 fair value exercise are a number of +judgements and estimates including: +• the assessment that future revenue shares in Tab NZ form +part of consideration +• the estimate of consideration, including contingent +consideration, particularly on Tab NZ +• the estimates of the fair value of acquired intangibles +and goodwill +The Audit Committee has reviewed the judgements and +estimates made in connection with the accounting treatment +for business combinations including what items constitute +consideration, the value of contingent consideration +recognised, the assets and liabilities identified on acquisition +and the appropriateness of fair values derived. +In assessing the valuations, the Audit Committee has reviewed +the working papers provided by management and the work +of the Group’s external valuation specialists as well as the +conclusions reached by KPMG. +In addition, the Audit Committee has assessed the +appropriateness of the assumptions used by management in +reassessing the value of contingent consideration obligations +as at the year end date. +Following review of all of these items, the Audit Committee has +concluded that the treatment within the financial statements +is appropriate. +Impairment +The Group has significant value in enduring and indefinite +life assets such as UK brands and goodwill which need to +be reviewed for impairment annually. In 2023, as part of the +annual impairment exercise, the Group has recognised a +non-cash impairment charge of £190.0m against the goodwill +in the Australian business. +Inherent in any impairment of a CGU is a degree of estimation. +The carrying value of all enduring and indefinite life assets +have been tested for impairment as part of the annual +cycle. In assessing that the conclusions reached are +appropriate, the Committee have reviewed the forecasts, key +assumptions and methodology adopted by management in +preparing their impairment assessment and, in particular, +determining the impairment charge recognised against the +Australian business. +As part of their assessment, the Committee have also +reviewed KPMG’s audit findings and deem that both the +treatment and disclosure of the impairment within Note 14 +are appropriate. +Entain plc Annual Report 2023 109 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_112.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..e800aa1b8edadc52dda4ef287822251fd55ef24d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,48 @@ +Introduction +In April 2023 the name of the Committee was changed from the +ESG Committee to the Sustainability & Compliance Committee +and matters relating to diversity, equity and inclusion, previously +covered by the ESG Committee, were transferred to the newly +established People & Governance Committee (see page 101). +These changes reflected feedback arising from last year’s internal +evaluation of the ESG Committee and were made to make the +increasingly wide remit of the ESG Committee more manageable. +During the year, the Committee continued to monitor and provide +focus, support and challenge on sustainability and compliance +issues. The Committee remained guided by Entain’s Sustainability +Charter which outlines Entain’s ESG leadership ambitions. +The Charter remains an important part of Entain’s ESG leadership +position within the gaming sector. +The Committee continued to monitor the management and +mitigation of the Principal Risks allocated to it by the Board and +ensure that its observations were fed back to the Board. During the +year the Principal Risks were ‘Safer Betting and Gaming’, ‘Health, +Safety & Wellbeing of Customers, Communities and Employees’, +and ‘Loss of Key Locations’. Following review by the Board it +was determined that Loss of Key Locations would no longer be +treated as a standalone Principal Risk and that it should form part +of the Principal Risks ‘Ensure Health, Safety, Security and Well- +being of Employees, Customers, and Communities’ and ‘Maintain +Technology Platforms Resilience’ – further detail can be found on +page 83. +As a result of the reconfiguration of the Board Committees +following Stella David’s appointment as Interim Chief Executive +Officer, Rahul Welde stepped down from the Committee in +December and I welcomed our Chairman, Barry Gibson, as a +member of the Committee. +We developed +this strategy to +strengthen our +sustainability +leadership role – +which plays a crucial +enabling role in our +long-term growth.” +Virginia McDowell +Chair of the Sustainability & Compliance Committee +Sustainability & Compliance Committee Report +Virginia McDowell +Chair of the Sustainability & Compliance Committee +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023110 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_113.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6d1e3e16d2723064de8a7fbb6ae897671a37db2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,123 @@ +The role of the Committee +The Committee provides oversight of the Company’s Sustainability +and Compliance programme, overseeing the effective management +of the Company’s ongoing relationship and engagement with +a wide spectrum of stakeholders. It monitors progress against +internal key performance indicators and external Sustainability & +Compliance index results. +Key responsibilities of the Committee + Consider the adequacy of the Group’s Sustainability and +Compliance policies and processes by reviewing reports +prepared by management on a range of issues such as +responsible gambling, data protection and the Company’s +impact on the environment. + Ensure that sufficient focus and resource is given to +implementing, monitoring and managing the Company’s +Sustainability and Compliance policies and processes and that +these remain effective. + Consider the appointment of third parties to advise on +Sustainability and Compliance policies and practices and/or +audit the Group’s Sustainability and Compliance policies. + Liaise and work with the Board’s other Committees to ensure the +Board’s duties and responsibilities are carried out effectively. + Prepare an ESG report for inclusion in the Annual Report +and Accounts and oversee that any public disclosures on +Sustainability and Compliance issues made by the Group +accurately reflect the Group’s policies and processes. +The Committee’s terms of reference were reviewed and updated +by the Committee and subsequently approved by the Board during +the financial year. These can be found on the Company’s website at +www.entaingroup.com. The Committee has operated in line with its Terms +of Reference throughout the financial year. +Committee membership and attendance +The Committee has three members, two independent Non- +Executive Directors plus the Chairman of the Board. Stella David +stepped down from the Committee on 26 April 2023 following +the establishment of the People & Governance Committee which +she chaired until December 2023 (see the People & Governance +Committee report on pages 101 to 103 for further information). +Following changes to Board Committee memberships agreed in +December 2023, Rahul Welde stepped down from the Committee +with effect from 15 December 2023 and Barry Gibson joined the +Committee with effect from the same date. +Regular attendees at the meetings include the Director of Internal +Audit and the Group General Counsel. Other individuals and +external advisers are invited to attend as and when appropriate +and necessary. +The Committee had six meetings during the year, all of which took +place before the membership changes agreed in December 2023. +Attendance at the meetings was as follows: +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Virginia McDowell (Chair) 6 6 +Stella David1 2 2 +David Satz 6 6 +Rahul Welde2 6 6 +1 Resigned from the Committee on 26 April 2023. +2 Resigned from the Committee on 15 December 2023. +Activities +Safer betting and gaming +The Committee received regular updates on the Group’s +responsible betting and gaming programme. Briefings were held on +the continued development and impact of the ARC TM programme +and the Committee was given a demonstration of the customer +journey under a range of scenarios. A deep dive review of the +Principal Risk: Safer Betting & Gaming was undertaken, where +the Committee considered potential developments in technology +and regulatory guidance in key areas such as affordability and +customer protection. +As in the previous financial year, the Committee undertook a +half-year and a full-year review of the delivery of safer betting +and gaming project metrics as part of the responsible gaming +element of the Group-wide annual bonus structure which has a +15% weighting. This review included an external assessment by +EPIC Risk Management on the Company’s performance against +targets. With more challenging metrics having been put in place +for 2023, at its year-end assessment the Committee determined +it was satisfied that these metrics had been met and made a +positive recommendation to the Remuneration Committee as part +of its assessment. +Further information on the responsible betting and gaming +remuneration metric is outlined on page 131 of the Directors’ +Remuneration Report. +Sustainability +During the financial year the Sustainability Team completed a +comprehensive sustainability materiality assessment which was +reviewed by the Committee. The assessment has helped Entain to +better identify the sustainability issues that are most material to +the business and its stakeholders and will support its preparation +for the incoming reporting requirements, such as the EU Corporate +Sustainability Reporting Directive. Following the sustainability +materiality assessment the four pillars of the Sustainability Charter +were updated to: + Be a leader on player protection + Provide a secure and trusted platform + Create the environment for everyone to do their best work + Positively impact on our communities +More information on Entain’s Sustainability strategy can be found +on pages 40 and 41. +Gaming licence compliance +The Committee considered key elements of the Group’s gaming +licence compliance programme, including the development and +update of Entain’s Sports Betting Integrity Policy and the measures +being taken to reduce the threats posed by Sports Betting +Integrity issues. +Compliance governance +The Committee received quarterly reports on international, UK, +Retail and digital compliance developments and monitoring of +the Group’s compliance management. It continued to review the +impact of M&A activity on the Group’s compliance programme +and the regulatory risks associated with new market entry. +The Committee received updates on the progress of the application +for a compliance management system certification against ISO +37301 and on the progress of the Compliance Assessment by the +UK Gambling Commission. +Entain plc Annual Report 2023 111 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Sustainability & Compliance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_114.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dc4e69a6c626a825ea2820b9418d1925defacef --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,100 @@ +Ethics & compliance +Ethics and integrity are at the core of our organisation and culture. +The Committee received regular updates on the key regulatory +issues and trends around ethics, compliance and anti-money +laundering from the expanded Ethics & Compliance team. +The Committee approved the new Ethics & Compliance Charter +which sets out the mission of the Group’s Ethics & Compliance +Programme and the independence and authority of the Ethics & +Compliance team, which ensures that they are able to request +information and access resources and colleagues to enable +them to effectively undertake monitoring, testing activity and +investigations. The Committee reviewed and approved the Group’s +Global Anti-Money Laundering & Counter-Terrorist Financing Policy +and the Ethics & Compliance Three Year Strategy. +Privacy and data protection +Regular updates on privacy and data protection were given to +the Committee, covering matters such as the steps being taken to +improve data governance, the ongoing development of the Group’s +cybersecurity strategy, and key legal and regulatory developments +around data legislation. +The Committee completed its annual review of the Group Data +Retention Policy and the Group Data Protection Policy. +Health, Safety, Security and the Environment (“HSSE”) +The Committee discussed the Group’s environmental strategy +and its commitment to being carbon net zero by 2035. +HSSE performance was monitored by the Committee through +regular updates on the Group’s HSSE performance indicators and +initiatives. The Committee reviewed and approved the proposed +HSSE strategy for 2023 as well as agreeing the Group’s HSSE KPIs +for the forthcoming year. The Committee reviewed and approved +the Health, Safety, Wellbeing & Workplace Policy Statement and +the Environmental Policy Statement, both of which can be found on +the Company’s website at www.entaingroup.com . +During the financial year further workshops were held to +support the Group’s work on meeting the TCFD requirements. +The Committee received updates on the progress of the workshops +and how they were informing the Group’s environmental strategy. +The Committee undertook deep dive reviews on the two Principal +Risks: health, safety and the wellbeing of customers, communities +and employees, and loss of key locations. The former focused +on addressing key risks and facilitating management solutions +relating to HSE matters whilst the latter focused on the findings +arising from assurance checks undertaken by the HSSE team and +the actions taken to resolve any issues that had come to light from +those checks. +Modern Slavery Act statement review +The Committee reviewed the Group’s Modern Slavery and Human +Trafficking Transparency Statement for the financial year ended +31 December 2022, noting the key mitigation activities undertaken +in 2022 including the continued monitoring of risks across the +Group’s supply chains, enhanced mandatory training for all +employees, and updated policies including a new Code of Conduct +which sets out the Group’s commitment to preventing modern +slavery. Entain continued to partner with Unseen, a UK anti-slavery +charity. During 2022 steps were taken to implement the majority +of the recommendations arising from the 2021 gap analysis +undertaken by Unseen. +During the year, the Committee received updates on the +development of the multi-year Modern Slavery Strategy and +the Modern Slavery Programme to support the Group’s work +combating modern slavery. More details can be found on page 51. +The Modern Slavery statement can be viewed on our website at +www.entaingroup.com/modern-slavery-statement +Other reviews +The Committee oversaw the annual ESG report, reviewing the +content and giving feedback to management on its content. It also +received an overview of the current IT infrastructure and the key IT +projects underway as well as an overview of the work of the Group +Payment Processing Committee. +The Committee meeting packs included the quarterly Internal Audit +reports for information purposes. As and when appropriate, the +Director of Internal Audit brought key matters to the attention of +the Committee. +The Committee received an update on the progress of the +Group’s commitment to financially support areas such as +research into safer gambling and education initiatives, grassroots +sports, diversity in tech and community projects through the +Entain Foundation. +Committee evaluation +A review of the Committee’s performance and effectiveness during +the year was undertaken using a questionnaire provided by an +external board review firm, Lintstock. Lintstock managed the +evaluation process and produced the evaluation report. +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings and +the information provided to the Committee members, and the +workings of the Committee. The Chair was rated highly and it was +felt that the Committee had a good oversight of the policies and +controls that fell within its scope of responsibilities. The changes +to the Committee’s remit made following feedback from last year’s +Committee evaluation had been positively received. Areas of focus +for 2024 included ensuring a continued focus on safer betting and +gaming, supporting the management of environmental goals and +programmes, addressing the significant regulatory issues faced by +the Company, undertaking tailored training, and receiving more of +an external perspective on best practices relating to key issues. +Entain plc Annual Report 2023112 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Sustainability & Compliance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_115.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1cbea8c751cdaa18526066aa592e56d0f2c9d64 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,40 @@ +Annual Statement from the Chair of the Remuneration +Committee +On behalf of the Board, I am pleased to present the Directors’ +Remuneration Report (the “Report”) for the year ended +31 December 2023. +This is my first Report as Chair of the Remuneration Committee, +having taken on this role on 14 December 2023 upon appointment +of Stella David as Interim CEO. I would like to take this opportunity +to thank Stella for her contribution and commitment to the work of +the Committee. +Following shareholder approval of our Directors’ Remuneration +Policy (the “Policy”) at our 2023 AGM, this year we will be asking +shareholders to vote on our Annual Report on Remuneration at +our AGM on 24 April 2024. The Report summarises remuneration +outcomes for 2023 and explains how we intend to apply the +Policy for 2024. The Policy is set out in our 2022 Directors’ +Remuneration Report and can be found on the Company’s website +at www.entaingroup.com . +In a year of transition for +Entain, the Committee +have been mindful of +the experience of our +stakeholders when +making remuneration +decisions. These reflect +a strong alignment of +compensation with +performance.” +Virginia McDowell +Chair of the Remuneration Committee +Directors’ Remuneration Report +In this section +113 Annual Statement from the Chair of the Remuneration +Committee +116 The Remuneration Committee +118 Executive remuneration at Entain +124 Remuneration in context +130 Annual Report on Remuneration +1 Overview 8 Strategic report 88 Governance 140 Financial statements +113Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_116.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..068580b20c89a037f86723fb10d323a65056938e --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,60 @@ +2023 incentive outcomes +2023 annual bonus +80% of the annual bonus for 2023 was based on financial +metrics (split 60% on Group operating profit and 20% on NGR +performance). Our results in 2023 failed to meet the threshold level +of the stretching performance conditions that had been set, and so +no payout will be made against these metrics. +The remaining 20% of our annual bonus for 2023 was based on +non-financial metrics; 15% relating to safer betting and gaming +and 5% to our customer. The Committee is pleased that excellent +progress continued to be made in both of these areas, resulting in a +full payout in relation to these metrics. +The Committee acknowledges the commitment and hard work +shown by all our colleagues this year and considers that the +final outcome of 20% of maximum for the Executive Directors is +fair and reflective of Entain’s overall performance during 2023. +Further details can be found on page 131. +2021 Long-Term Incentive Plan (“LTIP”) +The 2021 LTIP was based on performance against EPS and two +relative Total Shareholder Return (“TSR”) targets over the three- +year period ended 31 December 2023. +As a result of performance against the targets set, these awards +lapsed in full. Full details are set out on page 132. +2023 Group performance +2023 has seen significant progress made in re-focusing +our business with revised strategic ambitions based on key +objectives and priorities for the next three years that will drive +shareholder value. +Key performance highlights in 2023 include: + Group NGR (including our 50% share of BetMGM) up 14%. + Retail NGR up 9%, reflecting the strength in our retail estate. + Number of Online active customers up 23% year-on-year. + Group underlying EBITDA in line with expectations. + Our joint venture in the US, BetMGM, delivered a strong +performance with NGR up 36% year-on-year and positive +EBITDA achieved for H2 2023. + Enhancement of our in-house content and capabilities with +acquisition of 365Scores and Angstrom Sports. + Further expansion into regulated markets with leading +market positions including Poland with the acquisition of STS +Holdings and signing a 25 year partnership with TAB NZ. + Second Interim Dividend of 8.9p per share announced, +bringing total for the year to 17.8p per share. + Continued progress on responsibility and sustainability; we +remain the only global operator with 100% of our revenue +derived from regulated or regulating markets, and have +launched a new regulatory and safer gaming charter to +deliver market leading player protection in the markets in +which we operate. +The end of the year saw the appointment of Stella David +as Interim CEO, following the departure of Jette Nygaard- +Andersen. Stella is an experienced commercial leader with an +outstanding track record of success across multiple industries. +While this is an interim appointment, Stella is focused on driving +the execution of the revised strategic priorities, while the Board +conducts a rigorous search for a permanent CEO. +Entain plc Annual Report 2023114 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_117.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a0043e64f0749d474c6fdf10ff4e3b36c9aae54 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,122 @@ + In line with our post-employment shareholding requirement +policy, Robert will be required to meet his full shareholding +requirement of 350% of salary for two years following his leave +date of 31 August 2023. +Looking ahead to 2024 +Directors’ salaries +The Committee reviewed the salary of the CFO & Deputy CEO in +December 2023 and approved an increase of 3.5% to £573,700 +from 1 January 2024. This was in line with the salary review budget +for all colleagues in the UK (excluding the 8.3% increase awarded +to our UK Retail colleagues). +The salary for the Interim CEO is set out above. +Annual bonus +The Committee has reviewed the structure and metrics for the +annual bonus and concluded that it is appropriate to make some +changes for 2024. As for the 2023 plan, 80% of the bonus will +relate to financial metrics. This ensures that a substantial portion +of the annual bonus will only pay out for delivering on our key +financial metrics, which will be split as follows: Group Operating +profit (60%), Group NGR (10%) and NGR of BetMGM (10%). +The NGR of BetMGM is being included as a standalone metric this +year to emphasise the importance of this business to the future +value of Entain. The 20% of the bonus based on non-financial +metrics will be split equally between safer betting and gaming and +individual objectives. The individual objectives will be measurable, +robust, and aligned with value creation, and will contain a mixture +of quantitative and qualitative metrics. The Committee believes +that capturing individual performance will allow them to gain +a more holistic and rounded view of each Executive’s overall +contribution to the business during the year. +Long-Term Incentive Plan +Awards will be granted in the usual manner in March 2024. In line +with our Policy, the Interim CEO will receive an award with a face +value of 450% of salary, while the CFO & Deputy CEO will receive +an award of 400% of salary. +The Committee considers that relative TSR remains the most +appropriate performance metric for the 2024 award given the +fast-changing external environment in which Entain operates. +This ensures a fundamental alignment with the interests of our +shareholders. The comparator groups will remain unchanged +(FTSE 100 and a bespoke peer group) as they continue to represent +the most appropriate market reference points. +Conclusion +Entain has delivered strong progress on our strategic +transformation during the year, alongside total revenue growth +of 14% (including our 50% share of BetMGM). However the +Committee acknowledges the experience of shareholders and +other stakeholders and has taken this into consideration when +determining remuneration outcomes for 2023. The Committee +considers that the decisions it has made during the year align with +our principles of fairness and transparency, and are aligned with, +and in the interests of, our stakeholders. +I hope that you find the report clear and informative and look +forward to your support at the forthcoming AGM. +Virginia McDowell +Chair of the Remuneration Committee +Board changes +Stella David +Stella David was appointed Interim CEO on 13 December +2023, replacing Jette Nygaard-Andersen. Stella’s remuneration +package and incentive opportunities are fully aligned with our +Policy. Stella will receive an annual base salary of £874,200 from +appointment, which represents the previous CEO’s salary at the +point of departure last year, plus an increase of 3.5% in line with +the 2024 salary review budget for all UK colleagues. In order to +take up the role as Interim CEO, Stella resigned from two Non- +Executive Director roles. On leaving her role as Chair of Vue +International, Stella forfeit a cash payment of £500,000 which was +due to be made to her in February 2026. In line with our Policy on +recruitment, this commitment is being replicated. +Jette Nygaard-Andersen +The Committee carefully considered the treatment to be applied +to Jette’s remuneration upon her departure from the Board on +13 December 2023. In doing so, the Committee recognised Jette’s +contribution to the business over the last three years, including +achieving resolution of the HMRC investigation into the legacy +sale of our Turkish business, overseeing a strategic shift towards +operating only in regulated or regulating markets and overhauling +our governance approach. +The Committee agreed Jette’s leaving arrangements in the light of +this context and further details are set out in the payments for loss +of office section on page 135, but in summary: + In line with her contractual entitlement to 12 months’ notice, Jette +will remain employed until 13 December 2024 and will continue +to receive her normal salary and benefits during this time. + The Committee agreed to treat Jette as a good leaver in +accordance with the Policy and the provisions of the incentive +plan rules in respect of her outstanding LTIP and Annual and +Deferred Bonus Plan (“ADBP”) awards. She will receive a time +pro-rated bonus in respect of 2023, determined in the same +manner as for the other Executive Directors and paid half in cash +and half in deferred shares, as normal. + In line with our post-employment shareholding requirement +policy, Jette will be required to meet her shareholding +requirement of the lower of 450% of salary or her actual +shareholding for two years following her termination date of +13 December 2024. +Robert Hoskin +As announced on 15 May 2023, Robert Hoskin stepped down from +the Board on 30 June 2023 and left employment on 31 August +2023. Robert’s role as Chief Governance Officer (“CGO”) was +redundant and the Committee agreed the treatment of his +remuneration arrangements in the light of this. Further details of +Robert’s leaving arrangements are set out in the payments for loss +of office section on page 135, but in summary: + Robert’s salary was paid up until 31 August 2023 and his +medical insurance continues until the end of the plan year +(31 March 2024). + A redundancy payment of £422,300 (in line with local legal +requirements in Gibraltar) and payment of £296,188 in lieu of the +balance of his contractual notice period was made. + The Committee agreed to treat Robert as a good leaver in +accordance with the Policy and the provisions of the incentive +plan rules in respect of his outstanding LTIP and ADBP awards. +He will receive a time pro-rated bonus in respect of 2023, +determined in the same manner as for the other Executive +Directors and paid half in cash and half in deferred shares, +as normal. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +115Entain plc Annual Report 2023 +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_118.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..d84aa170dc2b1afdc28c0bdf8cfceb97db566557 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,65 @@ +Role of the Committee +The Committee oversees the Company’s +overall remuneration strategy to ensure it is +aligned to the Company’s purpose and values +and is linked to the successful delivery of the +Company’s long-term strategy. The Committee +has delegated responsibility for designing and +determining remuneration for the Chairman, +the Executive Directors and senior executive +management. It also reviews the remuneration +of the wider workforce and related policies +and the alignment of incentives and rewards +with culture, taking these factors into account +when setting the remuneration policy for the +executive team. +The Remuneration Committee +Committee membership and attendance during 2023 +Member +Number of +meetings +attended +Number of +meetings +eligible to +attend +Virginia McDowell 1 6 7 +Stella David 2 6 6 +Amanda Brown 3 2 2 +Mark Gregory 4 1 1 +Vicky Jarman 5 1 1 +Rahul Welde6 5 6 +1. Virginia McDowell was appointed Chair of the Remuneration Committee on 14 +December 2023. +2. Stella David was appointed Chair of the Remuneration Committee on 23 February +2023 and stepped down from the Committee on 13 December 2023 when she was +appointed as Interim CEO. +3. Amanda Brown joined the Board and the Committee on 8 November 2023. +4. Mark Gregory was Chair of the Remuneration Committee until he resigned from the +Board on 17 February 2023. +5. Vicky Jarman resigned from the Board on 17 February 2023. +6. Rahul Welde joined the Committee on 23 February 2023. +During the year, there were five scheduled Committee meetings +and two ad-hoc meetings. There will be five scheduled meetings in +2024, with ad-hoc meetings as required. +None of the Committee members or attendees are involved in +any Committee decisions from which they may financially benefit +personally (other than as shareholders). The Chairman, Chief +Executive Officer, Chief Financial Officer & Deputy CEO, Chief +People Officer and Director of Reward may attend meetings at the +invitation of the Committee but are not present when their own +remuneration is being discussed. The Company Secretary acts as +the secretary to the Committee. +Key responsibilities + Recommending to the Board the Remuneration Policy for +Executive Directors and senior management. + Setting the remuneration packages for each Executive Director +and other members of the Executive Committee. + Setting the remuneration package for the Chairman. + Overseeing the Remuneration Policy for all colleagues. +The Committee’s terms of reference can be found on the +Company’s website at www.entaingroup.com . +Entain plc Annual Report 2023116 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_119.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..3013c4e0c7bc6abd90e13448218e762cccdb8b46 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,110 @@ +Key areas of Remuneration Committee focus in 2023 +A summary of the matters considered during the year is set +out below. +Our workforce + Remuneration discussion with Employee +Forum representatives + Receiving updates on all-colleague remuneration +arrangements throughout the Group + Review and approval of the 2022 UK Gender Pay +Gap Report + Approval of the launch of the 2023 ShareSave +Executive and senior management remuneration + Determination of the payouts from the 2022 annual bonus +plan and the 2020 LTIP award + Approval of the 2023 annual bonus plan and 2023 +LTIP award and their associated performance metrics +and targets + Review of salaries and remuneration packages for senior +executives and fees for the Chairman + Review of performance metrics for the 2024 annual bonus +plan and 2024 LTIP award + Approval of the exit package for Robert Hoskin + Approval of the remuneration package for Stella David as +Interim CEO + Discussion of exit terms for Jette Nygaard-Andersen, +between the Chairman and Committee members in advance +of approval by the full Board +Committee governance + Approval of the 2022 Directors’ Remuneration Report + Receiving updates on external market developments in +remuneration and governance, including international +compensation practices + Evaluation of the Remuneration Committee, its advisers and +the Committee’s Terms of Reference + Review of shareholder feedback received in relation to +Directors’ remuneration following the 2023 AGM + Concluding the review of our existing Directors’ +Remuneration Policy started in 2022, which resulted in the +new Policy presented to the 2023 AGM for approval +Remuneration Committee evaluation +The performance of the Remuneration Committee was assessed +as a part of the Board Review, which this year was undertaken +through online surveys administered and reviewed by external +facilitator Linstock. +As well as addressing core aspects of Committee performance, the +exercise had a particular focus on the following areas: + The alignment of Remuneration Policy with the expectations of +shareholders, and with Entain’s strategic objectives, including +the financial and non-financial metrics used to determine +variable pay. + The effectiveness of relationships and communication with +key stakeholders. + Areas where the Committee had exercised discretion in +decision making. + Priorities for change and improvements to strengthen +Committee performance. +The review concluded that the Committee had worked effectively +during the year, with positive feedback for the performance of +the Committee Chair. The Committee discussed the results of the +evaluation in private session and agreed that it would continue to +focus on the remuneration strategy for the wider workforce and +how remuneration structures could enable Entain to attract and +retain global talent. The Committee identified the need to spend +more time engaging with employees to better understand the key +themes and remuneration topics that are important for motivating +the workforce. It was also agreed that the Committee Chair +would work more closely with senior management, in particular +the Chief Executive Officer and Chief People Officer, to ensure +efficient operation of the Committee, with appropriate time spent +on key topics such as setting incentive plan targets that motivate +shareholder value creation and understanding the markets for +talent that Entain competes in. +Advice to the Committee +Advisers are appointed independently by the Remuneration +Committee, which reviews its selection periodically and is satisfied +that the advice it receives is independent, objective and free from +conflicts of interest. The total fees paid to the Committee’s adviser, +Deloitte, in respect of 2023 were £87,750 (2022: £132,500). +These were charged on a time and materials basis. Deloitte’s +advice included provision of market data, advice on content of +the new Directors’ Remuneration Policy and general guidance on +market and best practice. +Deloitte LLP also provided a range of tax and advisory services to +Entain during the year, some operating model delivery support, and +assistance to the Group’s internal audit function. +Deloitte is a founding member of the Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in +relation to executive remuneration consulting in the UK. Further details can be found at www.remunerationconsultantsgroup.com . +Management’s advice to the Committee was also supported by the provision of market data from Willis Towers Watson and legal advice +from Freshfields. +Shareholder voting and consideration of shareholder views +The 2022 Annual Statement from the Chair of the Remuneration Committee and the Annual Report on Remuneration were subject to an +advisory vote at the AGM on 25 April 2023. Our Remuneration Policy was approved by shareholders at the same meeting. +Resolution Date +Votes +for +% of +votes for +Votes +against +% of +votes against +Votes +withheld +Annual Report on +Remuneration 25 April 2023 461,233,616 98.1% 8,893,883 1.9% 2,140,345 +Remuneration Policy 25 April 2023 440,043,910 93.6% 30,077,857 6.4% 2,146,077 +Entain plc Annual Report 2023 117 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_12.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cd01940d3872fc804d7bd55f074e4dd4c0eed9d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_120.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..f789e5259316d0bb04f1c1eb9b124d254c40c472 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,49 @@ +The remuneration framework for Executive Directors at Entain is intended to incentivise +them to execute the Company’s strategy and create long-term sustainable value for shareholders. +It is simple, focused and aligned with key financial and strategic business goals. +Year 1 Year 2 Year 3 Year 4 Year 5 +Total +pay +Fixed +Pay +Base salary +Benefits +Pension +Annual +Bonus +One-year performance +period +Key performance +metrics +Malus provisions +apply +Three-year deferral period +No further performance conditions +Clawback provisions apply +LTIP +Three-year performance period +Key performance metrics +Malus provisions apply +Two-year holding period +No further performance conditions +Clawback provisions apply +Shareholding +Requirement Executive Directors’ minimum shareholding requirement applies both in and following cessation of employment +2023 – Executive Directors’ remuneration +The full explanatory notes for each element of remuneration are detailed on pages 130 to 132 in the Annual Report on Remuneration. +£000s Base Salary Benefits Pension +Annual +Bonus LTIP Total +Stella David (Interim CEO) 1 46 1 3 – 500 550 +Jette Nygaard-Andersen (CEO) 2 813 56 49 407 – 1,325 +Rob Wood (CFO & Deputy CEO) 554 16 29 222 – 821 +Robert Hoskin (Chief Governance Officer) 3 211 2 – 85 – 298 +1. Stella David was appointed Interim CEO on 13 December 2023. +2. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. +3. Robert Hoskin stepped down from the Board on 30 June 2023. +Executive remuneration at Entain +Entain plc Annual Report 2023118 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_121.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..dde084df71a060ea9ecded228a9b2f6d4f75d459 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,99 @@ +2023 Incentive outcomes +The full explanatory notes for the annual bonus and LTIP outcomes are detailed on pages 131 to 132 in the Annual Report +on Remuneration. +2023 +Annual +Bonus +Underlying +Group +Operating +Profit (60%) +0% of +maximum +Group +NGR1 +(20%) +0% of +maximum +Safer Betting +and Gaming +(15%) +100% of +maximum +Customer +(5%) +100% of +maximum +Total +payout +20% of +maximum +2021–23 +LTIP +Cumulative +EPS (33.3%) +0% of +maximum +Relative TSR +vs. FTSE 100 +(33.3%) +0% of +maximum +Relative TSR +vs. Bespoke +peer group +(33.3%) +0% of +maximum +Total +payout +0% of +maximum +Sustainability & Compliance Committee assessment of performance +1. Including Entain’s 50% share of BetMGM NGR. +Threshold +£5,613m +Target +£5,787m +Stretch +£5,961m +Outcome +£5,409m +Outcome +£642m +Threshold +£705m +Target +£723m +Stretch +£759m +Threshold +NPS score: 0 +Target +NPS score: 2 +Stretch +NPS score: 3 +Outcome +3.6 +Outcome +(15.5%) +Threshold +Median: 8.4% +Stretch +Upper quartile: 46.1% +Threshold +Median: 13.0% +Stretch +Upper quartile: 45.5% +Outcome +(15.5%) +Threshold +255p +Stretch +296p +Outcome +225.3p +Entain plc Annual Report 2023 119 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_122.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fb5355be7e6c5cc13cf90b93b7f1f8d64e2f261 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,177 @@ +Implementation of the Remuneration Policy for Executive Directors +The tables below illustrate the balance of pay and time period of each element of the Policy for Executive Directors and summarise how +the Committee applied the Policy in 2023, together with details of how the Committee intends to implement the Policy in 2024. +Element Operation +How we implemented +the Policy in 2023 +How we plan to implement +the Policy in 2024 +Salary +To provide competitive +fixed remuneration +that will attract and +retain appropriate +talent. Reflects +an individual’s +responsibilities, +experience and role + Salaries for Executive +Directors are reviewed +annually by the +Committee and any +increases normally take +effect from 1 January. +To the extent that +increases are awarded, +these will ordinarily +be no higher than +the typical level of +increase across the +wider workforce + Executive Directors’ salaries +from 1 January 2023: +– CEO – £844,600 +– CFO & Deputy CEO – +£554,300 +– CGO – £422,300 + Salary of the Interim CEO (with effect from +her appointment on 13 December 2023): +£874,200 + With effect from 1 January 2024, salary +increase of 3.5% for the CFO & Deputy CEO +to: £573,700 +Benefits +To provide competitive +benefits and to attract +and retain high calibre +employees + The value of benefits +is based on the cost to +the Group and there +is no pre-determined +maximum limit + Executive Directors +receive standard +benefits such as medical +and life insurance and +car allowance + Normal company +benefit provision + Normal company benefit provision +Pension +To provide an +opportunity for +retirement planning + Executive Directors +have the opportunity +to participate in a +company-provided +pension, which is in +line with that available +to other employees, +or may receive a cash +allowance in lieu of +a company contribution + CEO – 6% of salary +cash allowance + CFO & Deputy CEO – 4.5% of +salary company contribution +to the pension plan to June +2023 then 6% of salary of +which £833 per month was +paid into the pension plan +with the balance paid as a +cash allowance1 + CGO – Opted out of the plan + Interim CEO – 6% of salary cash allowance + CFO & Deputy CEO – 6% of salary of +which £833 per month is paid into the +pension plan with the balance paid as a +cash allowance +Annual Bonus +To incentivise the +achievement of key +financial and non- +financial performance +targets in line with +corporate strategy +over a one-year period + Maximum annual +incentive opportunity +of 250% of salary for +the CEO and 200% +of salary for other +Executive Directors. +No payment will be +made for below- +threshold performance. +50% of the maximum +opportunity is payable +for target performance + 50% of any bonus +award will be deferred +into shares for +three years + Dividend equivalents +are payable on +deferred shares + Malus and clawback +provisions apply + Maximum opportunities: +– CEO – 250% +– Other Executive +Directors – 200% + Performance metrics (as a +percentage of total): +– Underlying Group +Operating Profit (pre US +joint venture) (60%) +– NGR including US joint +venture (20%) +– Safer Betting and Gaming +(15%) +– Customer (5%) + Executive Directors awarded +bonuses of 20% of their +maximum opportunity. +See page 131 for +further information + Maximum opportunities: +– Interim CEO – 250% +– CFO & Deputy CEO – 200% + No change to payment mechanisms +of bonuses + Performance metrics (as a percentage +of total): +– Underlying Group Operating Profit (pre +US joint venture) (60%) +– Group NGR (10%) +– NGR of BetMGM (10%) +– Safer Betting and Gaming (10%) +– Individual Objectives (10%) +– Any payment is subject to the completion +of mandatory training relating to safer +betting & gaming and compliance + Targets are considered commercially +sensitive, but will be disclosed in the 2024 +Directors’ Remuneration Report +1. See page 130 for more details. +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +50% cash +Y2 Y3 Y4 Y5 +Y1 +50% shares +Y2 Y3 Y4 Y5 +Entain plc Annual Report 2023120 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_123.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..b30c01257ed471b70699655631674c4b8124a9e2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,104 @@ +Element Operation +How we implemented +the Policy in 2023 +How we plan to implement +the Policy in 2024 +LTIP +To incentivise the execution +of the long-term business +plan and the delivery of +long-term sustainable +value for shareholders + Maximum award of 450% +of base salary for the CEO +and 400% of base salary for +other Executive Directors + Threshold performance +results in 16.7% of the +award vesting, where +maximum award levels +are granted + Vesting is on a straight-line +basis between threshold +and maximum + Awards are granted +annually and are +subject to a three-year +performance period + A two-year holding period +will apply following the +vesting period + Dividend equivalents are +payable on vested awards + Malus and clawback +provisions apply + Grant levels for 2023 awards: +– CEO – 450% +– CFO & Deputy CEO – 400% +– CGO – no award made +in 2023 + Performance conditions: +– Relative TSR vs. the FTSE +100 (50%) +– Relative TSR vs. a bespoke +group of sectoral peers (50%) + The performance period +for the 2021 LTIP ended in +the year and this award will +lapse in full. See page 132 for +further information + Grant levels for 2024 awards: +– Interim CEO – 450% +– CFO & Deputy CEO – 400% + Performance conditions: +– Relative TSR vs. the FTSE +100 (50%) +– Relative TSR vs. a bespoke +group of sectoral peers (50%) + See page 123 for details on +LTIP awards to be granted +in 2024 +Shareholding Guidelines +To ensure that Executive +Directors’ interests are +aligned with those of +shareholders over a longer +time horizon + Executive Directors are +required to retain 50% of the +post-tax number of vested +shares from the Company +incentive plans until the +minimum shareholding +requirement is met +and maintained + Executive Directors are +required to maintain 100% +of their guideline (or their +actual holding if lower) +for two years following +cessation of employment + Shareholding guidelines: +– CEO – 450% +– Other Executive Directors – +350% + The Executive Directors’ share +interests as at 31 December +2023 are detailed on page 134 + Shareholding guidelines: +– Interim CEO – 450% +– CFO & Deputy CEO – 350% +Y1 +Up to 450% of salary +Y2 Y3 Y4 Y5 +Y1 +Two-year holding period +Y2 Y3 Y4 Y5 +Y1 +Executive Directors’ +share ownership +Y2 Y3 Y4 Y5 +Entain plc Annual Report 2023 121 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_124.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..ecd7a92b0ce35eedfe8f7848bb15af5efcc063ca --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,22 @@ +Performance metrics and link to strategy +The table below demonstrates how each element of our reward package links to our two strategic pillars of Growth and Sustainability. +More information about our strategic pillars is set out on pages 23 to 25. +Strategic pillars +Element of reward Link to reward Growth Sustainability +Bonus Underlying Group operating profit +NGR +Safer betting and gaming +Individual objectives +Deferral of bonus into shares +LTIP Total shareholder return +Holding periods for Executive Directors +Bonus and LTIP Malus and clawback provisions apply +Shareholding requirements for Executive Directors +Benefits ShareSave for all employees +Market-related benefits package +Employee recognition +Learning and development opportunities +Entain plc Annual Report 2023122 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_125.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f648f09adb889e1c0a7d0b8506371be9c8198be --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,94 @@ +2024 Incentive plan metrics +Annual bonus +What financial metrics will be used for the 2024 +annual bonus? +80% of the annual bonus will be based on financial metrics +that will be split between underlying Group operating profit +(60%), Group NGR (10%) and the NGR of BetMGM (10%). +The NGR element has been amended from that used in 2023, +by splitting out the element relating to BetMGM as a separate +metric. This further emphasises the importance of BetMGM’s +performance to the future value of Entain. +What non-financial metrics will be used for the 2024 +annual bonus? +As in 2023, the remaining 20% of the bonus will be determined by +non-financial metrics. These will be split equally between a safer +betting and gaming metric and individual objectives. +In order to have a sustainable business, the protection of our +customers has to be fundamental to everything we do and +continuing to include a safer betting and gaming metric reinforces +the importance of this to all our colleagues. +Alongside this, for the first time, we are including individual +objectives in our annual bonus for all colleagues who participate +in the plan. This will support the embedding of a performance +culture at Entain and drive personal accountability for the delivery +of key activities. +What is the underpin? +In previous years, the threshold for our safer betting and gaming +metric has required a minimum number of colleagues to complete +relevant mandatory training. For 2024 we have strengthened this +requirement such that completion of these training modules will +now be a prerequisite for a participant to be eligible to receive +any payment under the annual bonus plan. This further drives +personal accountability. +Why have changes been made to the non-financial metrics +for 2024? +In 2023, the safer betting and gaming metric had a 15% +weighting and we included a customer metric with a 5% +weighting. While the weighting on safer betting and gaming +has been reduced, as described above, the previous threshold +has now been changed to a more stringent underpin for the +entire annual bonus. For those colleagues whose work most +closely impacts on our safer betting and gaming and customer +agendas, relevant individual objectives will be set. The Committee +is comfortable that this is a more effective way to drive +performance in these areas. +How will the safer betting and gaming metric work +for 2024? +For 2024, the safer betting and gaming metric will be based +around our colleagues’ completion of relevant training. +The outcome of the metric will be monitored and evaluated by +the Sustainability & Compliance Committee who will make a +recommendation of the outcome to the Committee. +When will targets for the 2024 annual bonus be disclosed? +The targets for the annual bonus, including individual objectives +for the Executive Directors, are considered commercially sensitive, +but will be disclosed, along with their respective outcomes, in +next year’s Directors’ Remuneration Report. +2024 LTIP +What metrics will be used for the 2024 LTIP? +In determining the LTIP performance metrics for the 2024 award, +the Committee has again considered the difficulty in setting +appropriately stretching but incentivising financial targets, +given the fast-changing external environment in which we +currently operate. The Committee has concluded that it remains +appropriate to continue to base our 2024 LTIP award entirely on +relative TSR metrics. This aligns management’s interests closely +with the experience of investors and incentivises actions which +enhance long-term value creation. +For 2024, 50% of the LTIP awards will be based on TSR +performance relative to the FTSE 100 and 50% on performance +relative to an industry peer group of the following companies: +888 Holdings, Aristocrat, Betsson, Caesars Entertainment, +DraftKings, Evolution Gaming Group, Flutter Entertainment, +International Game Tech, La Française des Jeux, MGM Resorts, +Playtech, Rank Group, Rush Street Interactive and Sands LV. +What are the targets for the 2024 LTIP? +The targets and vesting schedule for the 2024 LTIP awards are +set out below. +Metric Weighting +Threshold 1 +(16.7% vesting) +Maximum 1 +(100% vesting) +TSR vs. FTSE 100 50% Median 85th percentile +TSR vs. peer group 50% Median 85th percentile +1. Straight-line vesting between threshold and maximum. +The Committee will assess the value of the 2024 LTIP awards at +vesting and will ensure that the final outturn reflects all relevant +factors, including consideration of underlying performance. +Entain plc Annual Report 2023 123 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_126.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..90df3ca069dd384074f917c5d3840d7cc111b975 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,38 @@ +Committed to good governance +When considering executive remuneration, the Committee takes into account a wide range of factors including legal and regulatory +requirements, associated guidance, and the views of shareholders and their representative bodies. How the Committee addresses the +following principles, taken from the 2018 UK Corporate Governance Code, is set out below. +Clarity Our remuneration framework is structured to support the financial and strategic objectives of the Group, +aligning the interests of our Executive Directors with those of shareholders. + We are committed to transparent communication with all our stakeholders, including shareholders – page 65 +sets out more details of how we engage with shareholders. +Simplicity We operate a simple but effective remuneration framework. + The annual bonus and LTIP reward performance against key indicators of success for the business. + There is clear line of sight for management and shareholders. +Risk Our incentives are structured to align with the Group’s risk management framework. + Three-year deferral under the annual bonus and the two-year holding period on LTIP awards create long- +term alignment, as do our within- and post-employment shareholding guidelines. + Both incentives also incorporate robust performance targets, malus and clawback provisions, and +overarching Committee discretion to adjust formulaic outcomes. +Predictability The Remuneration Policy clearly sets out the possible future value of remuneration that Executive Directors +could receive, including the impact of share price appreciation of 50%. +Proportionality There is clear alignment between the performance of the Company and the rewards available to +Executive Directors. + Incentive elements are closely aligned to our strategic goals, transparent and robustly assessed, with the +Committee having full discretion to adjust outcomes to ensure they align with overall Entain performance. +Alignment +to culture + We are committed to effective stakeholder and colleague engagement, part of which is ensuring that the +Committee sees all relevant data relating to pay and conditions in the wider workforce. + Operating responsibly towards our customers is fundamental to the way in which Entain operates and +remuneration outcomes are reviewed in the light of actions taken in support of our safer betting and +gaming agenda. + To reflect the importance of our safer betting and gaming activity to the sustainability of Entain, relevant +metrics are included in our annual bonus plan. This demonstrates a clear link between remuneration and our +culture. The Committee will also take broader ESG considerations into account and may apply discretion if +necessary when assessing the appropriateness of incentive outcomes. +Remuneration in context +Entain plc Annual Report 2023124 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_127.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fa6fbfd406272075713eae7bf0be82fb991935 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,77 @@ +Understanding our colleague reward framework +Our people are vital to our business. At Entain, we believe in fairness throughout the Company. The Group operates a number of general +principles applied to all levels. + We will provide a competitive package compared to the relevant market for each colleague. + We will ensure colleagues can share in the success of the business, where appropriate, through performance-based variable +remuneration and opportunity to acquire Entain shares. + We aim for transparency and a fair cascade of remuneration throughout the Group. +The Remuneration Committee considers a range of factors when deciding upon the remuneration for Executive Directors, one of which +is the alignment with pay practices across the wider workforce. The table below summarises the remuneration structure for employees +below the Board. +Element Wider workforce Executive Directors and senior management +Base salary Our base salary is the basis for a competitive +total reward package for all employees, and we +review these annually. + The review takes into account a number of +factors such as country budget, relevant +market comparators, the skills, knowledge +and experience of each individual, relativity +to peers within the Company and local +legislative requirements. + In setting the salary review budget each year, +we consider affordability as well as assessing +how employee base salaries are positioned +relative to market rates, forecasts of any +further market increases and attrition rates. + The base salary of our Executive Directors +and senior management forms the basis of +their total remuneration and we review their +salaries annually. +Benefits and pension We offer market-aligned benefits packages +reflecting market practice in each country in +which we operate. + Where appropriate, we offer elements of +personal benefit choice to our employees. + The benefits packages of our Executive +Directors and senior management are aligned +with the wider workforce of the country in +which they are employed. + Subject to local legislation, Executive Directors +are eligible to participate in the pension +arrangement in their country of employment on +the same basis as local employees. +Short-term incentives Many of our global workforce participate in +the Group annual bonus, with metrics typically +aligned to those of the Executive Directors +and senior management, although depending +on role, greater emphasis may be placed on +business unit performance. + We operate local incentive arrangements +where appropriate to align with +market practice. + The Executive Directors and senior +management participate in the same Group +annual bonus plan as eligible members of the +global workforce. + Half of any award to an Executive Director is +subject to deferral into shares for three years. + Malus and clawback provisions apply. +Long-term incentives A proportion of this population is eligible to +be considered for LTIP or Restricted Stock +Awards, which vest after three years. + Malus and clawback provisions apply. + Employees have the opportunity to participate +in the Group’s all-employee ShareSave plan. + We operate an LTIP with a three-year +performance period for Executive Directors and +senior management, and vesting is subject to +Group performance outcomes. + Awards made to Executive Directors +are subject to a two-year holding period +following vesting. + Malus and clawback provisions apply. +Read more about the Committee’s work in 2023: pages 116-117 +Entain plc Annual Report 2023 125 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_128.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..e207cf3e857b390fb1f4bd2940d6c8ce63a8f162 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,64 @@ +Consideration of colleague and stakeholder views +The Committee supports and aims for fairness and transparency +of remuneration arrangements across the Group, with consistent +principles underlying both pay for the Executive Directors and +that for our wider colleague population. To support this, the +Committee receives regular updates on Group-wide all-colleague +remuneration arrangements. During the year, this included +briefings on our UK Gender Pay gap, our ShareSave plan and +approach to all-employee salary review, including that for our UK +Retail colleagues. +We have several colleague forums within Entain. These play an +important role in providing our people with a voice and allow +them to provide the business with valuable insight and feedback +on a range of topics, including remuneration. In addition, Virginia +McDowell, in her role as Designated Workforce Director, provides +the Committee with updates on colleague views on remuneration. +Through the Board, the Committee receives valuable insight +as to general colleague views including those on remuneration +including feedback from our global ‘Your Voice’ survey which will +be running in January 2024. See page 64 for more detail on our +Board Engagement activities. +Along with Virginia, Rahul Welde, a member of the Remuneration +Committee, participated in Entain’s Global Engagement +Conference and our Employee Forum AGM, both held virtually +in January 2024. These events brought together colleague +representatives from across the Group and gave them the +opportunity to engage with Virginia and Rahul on a wide range +of topics. As with the similar meetings held in previous years, +an open dialogue was had and our colleague representatives +provided very informative input on their experiences and +suggestions. The Committee members are grateful for the +ongoing active participation of these colleagues and the insights +received and thank them for their input. +All-employee remuneration and actions in response to cost- +of-living pressures +The Committee is mindful of Entain’s responsibility as an +employer and the focus on this is heightened in the current +difficult economic environment which continues to be +experienced by our colleagues all over the world. The Committee +was pleased that we were able to implement several all- +colleague remuneration initiatives during 2023: + Budgets were set for our 2024 annual salary review taking into +account the current inflationary context being experienced by +our colleagues globally. As a result, salary review budgets of +between 3.5% and 7.0% were approved, depending on local +market conditions. + Noting that the position is somewhat different for our hourly +paid colleagues in UK Retail and Stadia, with effect from +1 January 2024, their minimum hourly rate of pay has been +increased by 8.3% to £11.80 (from £10.90). + All of our colleagues have the opportunity to share in the value +they create. A third cycle of our all-employee ShareSave plan +was launched in April 2023 to colleagues in 25 countries. +15% of our people elected to participate, giving them the +opportunity to purchase Entain shares at an option price of +£10.08. We intend to offer ShareSave again in 2024. +All of these initiatives acknowledge the importance of our +colleagues in delivering the Group’s objectives, and the +Committee looks forward to continuing the dialogue with our +people in the coming year. +Entain plc Annual Report 2023126 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_129.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..30d5ce8f794a9643acd3ec9648b2b72b349c8e13 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,98 @@ +CEO pay ratio (unaudited) +The first table below sets out the ratio at median, 25th and 75th +percentile of the total remuneration received by our CEO compared +to the total remuneration received by our UK colleagues, while +the second provides further information on the total colleague +pay figure at each quartile, and the salary component within +this. The total pay for our two CEOs in 2023 was 78 times +the median (50th percentile). This is a fall from 2022 which is +mainly attributable to the increase in the median pay of our UK +colleagues. Our UK employee population is predominantly made +up of colleagues working in our retail estate, and the Committee +considers that this ratio is not out of line with that at other +retail organisations. +Method +25th +percentile +50th +percentile +75th +percentile +2023 Option A 90 78 65 +2022 Option A 101 87 73 +2021 Option A 139 122 98 +2020 Option A 106 95 75 +2019 Option A 278 229 170 +UK colleagues – pay element +25th +percentile +50th +percentile +75th +percentile +Salary 17,629 18,975 20,301 +Total remuneration 20,893 24,090 28,663 +We would highlight the following in terms of the approach taken: + Option A was chosen as it is considered to be the most accurate +way of identifying colleagues at P25, P50 and P75, and is +aligned with investor expectations. Under this approach we +calculate total remuneration for all of our UK colleagues and rank +them accordingly on this basis. + The lower quartile, median and upper quartile colleagues were +calculated based on full-time equivalent data as at 31 December +2023. Salary excludes any statutory payments such as +maternity and sick pay; these items are reflected in the Total +remuneration figures. + In reviewing the colleague pay data, the Committee is +comfortable that the P25, P50 and P75 individuals identified +appropriately reflect the colleague pay profile at those quartiles, +and that the overall picture presented by the ratios is consistent +with our pay, reward and progression policies for UK colleagues. +The Committee notes that Entain has in place a number of +initiatives to ensure that the pay and conditions for our wider +colleague population are fair and reasonable and receives regular +updates on reward practices throughout the Group. +We aim to provide a market-competitive remuneration package in +each of the countries in which we operate. This includes benefits +appropriate to the local market and the ability for many colleagues +to share in the success of Entain via annual incentive programmes. +We successfully launched the third cycle of our all-employee +ShareSave plan in 2023 and another cycle will be offered in April +2024. In June 2022, we also made an award of free shares with a +value of £300 to all employees. These shares vest in June 2024, +subject to continued employment. +Structures are in place to support salary progression, and regular +market analysis by geography and role function is carried out, with +action taken as appropriate and salaries are typically reviewed in +January each year. +Relative importance of the spend on pay +The table below sets out the overall spend on pay for all colleagues +compared with the returns distributed to shareholders. +Significant distributions 2023 2022 % change +Staff costs (£m) 1 753.8 654.5 15.2% +Distributions to shareholders (£m) 2 106.9 50.0 113.8% +1. Increase in staff costs is largely due to an increase in employee numbers and an +increase in redundancy costs, along with salary increases implemented in 2023. +2. Increase in distributions to shareholders reflects the payment of two dividends in +2023 compared to only one in 2022. +Gender pay gap reporting +2023 is the sixth year in which we have published our UK gender +pay gap results. Our median hourly pay difference between +male and female colleagues in the UK is 4.0% (2022: 3.2%), +which compares favourably with the UK median pay gap for +all employees of 14.3% (source: Office for National Statistics, +November 2023). Our median bonus pay gap is 44.5% +(2022: 38.7%). +From further analysis it is clear that these gaps largely remain +a function of lower numbers of women at senior levels. We are +committed to making Entain an inclusive place to work and we +are continuing to invest in initiatives to create greater diversity at +senior levels. Further information on these is provided on pages +48 and 49. Our gender pay gap report for the year ended 5 April +2023, together with contextual information and more detail on the +actions we have underway to close our gender pay gap, can be +viewed on the Company’s website at www.entaingroup.com. +Entain plc Annual Report 2023 127 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_13.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cbbcfb96cbdc75ff34ea3a1af385050fd2b4bc --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,109 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_130.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..b867308a40febae9c178bae237f49d5d11e71eeb --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,28 @@ +01/02/16 +£0 +£250 +£200 +£100 +£50 +£150 +£300 +£350 +£400 +£450 +31/12/2031/12/1931/12/1831/12/1731/12/16 + Entain FTSE 100 FTSE 350 Travel & Leisure Index +Source: Thompson Reuters DataStream +31/12/21 31/12/22 31/12/23 +Summary of performance +The chart below shows the value of £100 invested in Entain since obtaining Main Market listing on 1 February 2016, compared with the +value of £100 invested in the FTSE 100 Index and the FTSE 350 Travel and Leisure Index. The FTSE 100 has been chosen on the basis +that this is the index in which Entain was a constituent of at the end of 2023. +£100 invested in Entain on 1 February 2016 would have been worth £251 at 31 December 2023 compared with £174 if invested in the +FTSE 100 and £100 if invested in the FTSE 350 Travel and Leisure Index. +Over the three-year period 1 January 2021 to 31 December 2023 (the period covered by the 2021 LTIP) the total shareholder return +(“TSR”) of Entain shares was -10.5% compared with +33.8% for the FTSE 100 and -5.8% for the FTSE 350 Travel and Leisure Index. +Entain plc Annual Report 2023128 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_131.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..a460a569f0445bf164675a74706fcacd566abb59 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,108 @@ +Summary of CEO remuneration outcomes: 2015–2023 +Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 +CEO +S +David1 +J Nygaard- +Andersen 2 +J Nygaard- +Andersen +J Nygaard- +Andersen2 S Segev3 S Segev3 +K +Alexander4 +K +Alexander +K +Alexander +K +Alexander +K +Alexander +K +Alexander +Single figure +of total +remuneration 5 £0.55m £1.33m £1.91m £2.53m £0.04m £0.30m £1.68m £5.23m £19.10m £18.21m £17. 83m £3.41m +Annual bonus +payout6(% of +maximum) – 20% 48.8% 100% – – – 100% 92% 100% – – +LTIP vesting (% +of maximum) – – – – – – 89.8% 91.1% – – – – +Legacy award +vesting (% of +maximum) – – – – – – – – 100% 100% 100% 100% +1. Stella David was appointed Interim CEO on 13 December 2023. +2. Jette Nygaard-Andersen was appointed CEO on 21 January 2021 and stepped down from the Board on 13 December 2023. Jette retained her outstanding LTIP awards and an +entitlement to receive a bonus payment in respect of 2023. +3. Shay Segev was appointed CEO on 17 July 2020 and stepped down from the Board on 21 January 2021. Shay’s 2018 and 2019 LTIP awards lapsed when he left employment and +he was not entitled to any bonus payment in respect of 2021. +4. Kenneth Alexander retired from the role of CEO on 17 July 2020. +5. Figures for 2015, 2016 and 2017 were previously reported in Euros and have been converted into GBP using an average rate for the relevant year. +6. The Executive Directors waived any entitlement to bonus for 2020 due to the Covid-19 pandemic. +Change in Directors’ pay for the year in comparison to all Entain colleagues +The table below shows the year-on-year change in salary, benefits and annual bonus earned from 2020 to 2023, building to a five-year +history, for all Executive and Non-Executive Directors and the Chairman, compared to that for Entain’s UK colleagues. The comparison is +not able to be shown for those individuals who were not in role for the full 12 months of either year. +2023 2022 2021 2020 +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Executive Directors +S David1 – – – – – – – – – – – – +J Nygaard-Andersen 2 – – – – – – – – – – – – +R Wood3 3.0% 1.3% (57.8%) 3.6% 1.4% (49.5)% 27.2% 2.2% n/a – – – +R Hoskin4 – – – 2.5% (15.1)% (50.0)% – – – – – – +Non-Executive Directors5 +B Gibson6,7 0% – – 0% – – 5.3% – – – – – +P Bouchut7, 8 5.1% – – (1.2)% – – 1.9% – – (3.8)% – – +A Brown9 – – – +M Gregory10 – – – – – – – – – – – – +V Jarman10 – – – – – – – – – – – – +V McDowell7 0.9% – – 0% – – 5.4% – – (8.5)% – – +D Satz11 (0.4%) – – 11.3% – – – – – – – – +R Welde12 – – – – – – – – – – – – +All colleagues13 10.9% (5.2%) (9.7%) (0.1)% (16.5)% (50.8)% 0.1% 1.9% 132.4% 3.5% (1.4)% (53.1)% +1. Stella David joined the Board in March 2021 as a Non-Executive Director and was appointed Interim CEO on 13 December 2023. As she was not in either role for a full 12 +months in either 2021 or 2023 no comparisons are shown. +2. Jette Nygaard-Andersen joined the Board as a Non-Executive Director in November 2019, was appointed CEO on 21 January 2021 and stepped down from the Board on +13 December 2023. As she was not in either role for a full 12 months in either 2020, 2021 or 2023, no comparisons are shown. +3. Rob Wood joined the Board during 2019. As he was not in role for the full 12 months of 2019, no comparison is shown in respect of 2020. In 2020, as an Executive Director, Rob +was subject to a 20% reduction in salary for three months and he waived his entitlement to receive a bonus under the 2020 Group annual bonus plan. In 2021, Rob’s salary was +increased from £430,000 to £525,000, effective 21 January 2021, upon taking on additional responsibility as Deputy CEO. +4. Robert Hoskin joined the Board on 1 January 2021, therefore no comparison is shown for 2020 or 2021.He stepped down from the Board on 30 June 2023 and so no comparison +is shown for 2023. +5. Non-Executive Directors receive fees only and do not receive any additional benefits or participate in a bonus arrangement. There were no increases to Non-Executive Directors’ +fees in 2023. +6. Barry Gibson joined the Board during 2019. As he was not in role for the full 12 months of 2019, no comparison is shown for 2020. +7. In 2020, Barry Gibson, Pierre Bouchut and Virginia McDowell were all subject to a 20% reduction in fees for three months. +8. The fees for Pierre Bouchut are denominated in Euros and the percentage changes in fees shown for him are as a result of foreign exchange movements, and partly in 2023 due +to an increase in fees when he became Senior Independent Director in December 2023. +9. Amanda Brown joined the Board during 2023 and so no comparisons are shown. +10. Mark Gregory and Vicky Jarman joined the Board during 2021 and stepped down in 2023, therefore no comparisons are shown. +11. David Satz joined the Board in 2020, therefore no comparison is shown for 2020 or 2021. David’s fees are denominated in US Dollars and the percentage change in fees shown +for him are as a result of foreign exchange movements. +12. Rahul Welde joined the Board during 2022, therefore no comparisons are shown. +13. The all-colleague data is comprised of that used to calculate the CEO pay ratio. To eliminate the impact of changes in colleague numbers year-on-year this has been based on average +base salary, benefits and annual bonus data. +Entain plc Annual Report 2023 129 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_132.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..c4265cf16e60292a3675709ed8df5b4c197e45ad --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,68 @@ +The 2023 Annual Report on Remuneration contains details of the remuneration paid and awarded to Directors during the financial year +ended 31 December 2023. As an Isle of Man incorporated company, Entain is not subject to the UK remuneration reporting regulations +which apply to UK-incorporated companies, nevertheless, this report has been prepared in accordance with the provisions of the +Companies Act 2016, Schedule 8 of the Large and Medium Sized Companies Groups (Accounts and Reports) (Amendment) Regulations +2013 (the “Regulations”), the Listing Rules of the UK Financial Conduct Authority and the UK Corporate Governance Code. An advisory +resolution to approve the Annual Report on Remuneration and the Annual Statement will be put to shareholders at the 2024 AGM. +Single figure of remuneration table (audited) +The remuneration of Executive Directors, showing the breakdown between components with comparative figures for the prior financial +year, is shown below. Figures provided have been calculated in accordance with the Regulations. Further information on the component +elements is provided in subsequent sections. +Executive Directors +Base +salary Benefits Pension +Annual +bonus +Long-term +incentive 4 Total +Total fixed +remuneration +Total variable +remuneration +£000 £000 £000 £000 £000 £000 £000 £000 +Stella David1 2023 46 1 3 – 500 550 50 500 +2022 – – – – – – – – +Jette Nygaard-Andersen2 2023 813 56 49 407 – 1,325 918 407 +2022 820 36 49 1,000 – 1,905 905 1,000 +Rob Wood 2023 554 16 29 222 – 821 599 222 +2022 538 15 25 525 1,450 2,553 578 1,975 +Robert Hoskin 3 2023 211 2 – 85 – 298 213 85 +2022 410 5 – 400 1,263 2,078 415 1,663 +1. Stella David was appointed Interim CEO on 13 December 2023 having joined the Board as a Non-Executive Director in 2021. Fees paid during 2023 and 2022 for her role as a +Non-Executive Director are shown on page 136. The amount shown as Long-term incentive represents the buy-out of a cash payment which Stella forfeit on her resignation as +Chair of Vue International. This payment is due to be made in February 2026. It is not subject to performance conditions and so, in line with the Regulations, has been disclosed in +2023, being the year of award. +2. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. +3. Robert Hoskin stepped down from the Board on 30 June 2023. +4. The amounts shown in last year’s report for Rob Wood and Robert Hoskin in respect of the 2020 LTIP were calculated based on an assumed share price of 1,289p. The actual +share price at vesting on 12 June 2023 was 1297.5p. The amounts shown for 2022 have been updated to reflect this change and the value of dividend equivalents payable. +The proportion of the value of the 2020 LTIP that was attributable to share price appreciation is 40.3%. +Further information on the single figure of remuneration table +Base salary +Salaries are normally reviewed on 1 January each year. +Following the review that took effect 1 January 2023, the salaries of the Executive Directors were: + Jette Nygaard-Andersen: £844,600 + Rob Wood: £554,300 + Robert Hoskin: £422,300 +Stella David’s salary from her appointment as Interim CEO on 13 December 2023 was £874,200. +Benefits and pension +Executive Directors may receive benefits such as private medical, life insurance and car allowance. +Stella David received a car allowance of £25,000 p.a. and an allowance in lieu of an employer pension contribution equal to 6% of her +base salary. +Jette Nygaard-Andersen received a car allowance of £25,000 p.a. and an allowance in lieu of an employer pension contribution equal to +6% of her base salary. A cash allowance was approved by the Remuneration Committee as Jette is a Danish tax resident and therefore +not able to participate in any of the Group’s existing employee pension arrangements. The payment of a cash allowance in lieu of pension +contributions of 6% of salary was included in our Directors’ Remuneration Policy that was approved at the 2023 AGM. The quantum +is aligned to the maximum company contribution available to employees in the UK. Jette also received reimbursement of certain travel +expenses incurred in undertaking her duties as a Director. The table above includes these expenses and the related tax. +Rob Wood received a car allowance of £10,700 p.a. and participated in the defined contribution pension arrangements which are +available on the same basis as for other colleagues, receiving a company contribution of 4.5% of his base salary up until 30 June 2023. +Following the update to our Directors’ Remuneration Policy, approved at the 2023 AGM, to allow payment of a cash allowance in lieu of +pension contributions, from 1 July 2023 Rob received a company contribution into the pension plan of £833.33 per month. The difference +between that and 6% of base salary was paid to him as a cash allowance. +Robert Hoskin opted out of the pension plan. +Annual Report on Remuneration +Entain plc Annual Report 2023130 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_133.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..eaaf3d456775026fefe3d48440cd628fd127924d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,54 @@ +2023 annual bonus +The Executive Directors, with the exception of Stella David, were eligible to participate in the annual bonus for 2023. Robert Hoskin and +Jette Nygaard-Andersen were eligible to participate on a time pro-rated basis. +The annual bonus framework for 2023 was based on performance against four key metrics for Entain: underlying Group operating profit, +pre US joint venture (60%), NGR, including the US joint venture (20%), safer betting and gaming (15%) and customer (5%). At the start of +the year the Committee set stretching goals for these metrics, was satisfied that these represented challenging but realistic targets, and +that significant outperformance would be required to achieve a maximum payout. +The targets set for the financial and customer metrics, the performance achieved against all metrics, and the resulting payout are set out +in the table below. +Metric Weighting Threshold Target Stretch Actual +Payout as a % of +maximum for +each metric +Payout as a % of +maximum bonus +opportunity +Underlying Group operating +profit 60% £705m £723m £759m £642m 0% 0% +NGR 20% £5,613m £5,787m £5,961m £5,409m 0% 0% +Safer betting and gaming 15% See below 100% 15.0% +Customer (Net Promoter Score) 5% 0 2 3 3.6 100% 5.0% +Total as a % of maximum opportunity 20.0% +The safer betting and gaming metric comprised two equally weighted parts of 7.5% each (15% in total). +In summary: + UK market – based on the usage of our active account management tools amongst risk-assessed online customers and the +implementation of ARC™ into our UK Retail business. Through our ARC™ platform, we are able to monitor and categorise player +behaviour and interact with the customer to effectively influence behaviour, thereby providing a more positive and safer experience. + Markets outside the UK – further deployment of ARC™’s advanced models and technologies tailored to each country’s regulatory +requirements, culture and maturity, giving an opportunity to offer the same targeted interactions and overall experiences to a large +number of our players around the globe. +In addition, a minimum level of completion of safer betting and gaming and other relevant training modules had to be achieved by our +colleagues globally. +EPIC Risk Management, the leading gambling harm minimisation consultancy, independently reviewed the work carried out and provided +advice to the Sustainability & Compliance Committee which has enabled it to make the recommendation to the Committee that the +stretch level of performance has been achieved and so a payout in full for this metric was appropriate. More detail on our approach to +player protection can be found on pages 44 and 45. +The customer metric (representing 5% of the total bonus) was based on the achievement of a Net Promoter Score (“NPS”) target across +our core brands. A three-month rolling average NPS at December 2023 of 3.6 was achieved which exceeded the stretch target, resulting +in maximum payout for this metric. +In line with the provisions of the UK Corporate Governance Code, the Committee carefully considered whether the proposed outcome +could be justified in the context of Entain’s overall performance. In doing so, it considered: + Business performance during 2023, including progress against financial, operational and strategic targets; + The quality of underlying earnings and whether any significant one-off factors influenced the results; + Our risk and reputational performance; + The individual performance of the Executive Directors; and + Entain’s share price performance and the experience of our shareholders over the year. +The Committee noted the Group’s operational and financial progress during the year, as set out in the 2023 Group performance highlights +in the Committee Chair’s letter on page 114. +Taking all the above factors into account, the Committee considered that the outcome under the annual bonus was justifiable and a fair +reflection of overall Entain performance during the year, and therefore concluded no further discretionary adjustments were necessary. +Entain plc Annual Report 2023 131 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_134.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..1be570182e4aa96fe01f80cf2d6679ba8b025d78 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,43 @@ +The table below sets out the final outcome and annual bonus payable to each Executive Director for 2023. +J Nygaard-Andersen R Wood R Hoskin +Bonus opportunity (% of salary) 250% 200% 200% +Salary eligible for 2023 bonus £813,198 £554,300 £211,150 +Outcome: +– As % of maximum bonus 20% 20% 20% +– As % of salary 50% 40% 40% +– As £ amount £406,599 £221,720 £84,460 +Half of the total bonus is paid in cash following the year end, while half is deferred into shares under the Annual and Deferred Bonus Plan. +These shares will vest after three years, subject to continued employment or approval of good leaver treatment, in line with the Plan rules, +as is the case for Jette Nygaard-Andersen and Robert Hoskin. +2021 Long-Term Incentive Plan +The Long-Term Incentive Plan values shown in the single figure table for 2023 relate to the vesting of LTIP awards made in 2021. +The targets attached to the 2021 LTIP awards and the performance outcome against these are set out below. +Metric Weighting +Threshold +(25% vesting) +Maximum +(100% vesting) +Entain +performance +Vesting as a % of +maximum for +each metric Vesting +Relative TSR vs. FTSE 100 One-third Median: +13.0% +Upper quartile: +45.5% -15.5% 0% 0% +Relative TSR vs. bespoke peer group 1 One-third Median: +8.4% +Upper quartile: +46.1% -15.5% 0% 0% +Cumulative adjusted EPS One-third 255p 296p 225.3p 0% 0% +Total as a % of maximum opportunity 0% +1. The bespoke peer group comprised the following companies: 888 Holdings, Betsson, Caesars Entertainment, Evolution Gaming Group, Flutter Entertainment, Gamesys, +International Game Technology, Kindred Group, Playtech, Rank Group and TabCorp Holdings. +Acknowledging that our TSR performance and resulting shareholder experience over the last three years had been disappointing, the +Committee concluded that the formulaic outcome was fair and reasonable, and an appropriate reflection of Entain’s performance and +value delivered to shareholders over the period. As a result, the LTIP awards made to the Executive Directors in 2021 will lapse in full. +Entain plc Annual Report 2023132 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_135.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff47f2ae20dec28d879c51c42c0c6759e7f6bdf2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,55 @@ +2023 Share plan awards +Share awards granted during 2023 (audited) +The table below sets out share awards granted to the Executive Directors during 2023 under the LTIP and Annual and Deferred Bonus +Plan (“ADBP”). +Name Award type Grant date +Face value of +award +Shares +awarded1,2 +% vesting +at threshold +performance +% vesting at +maximum +performance +Performance +conditions +J Nygaard-Andersen LTIP 16 June 2023 £3,800,700 316,198 16.7% 100% See below +ADBP 21 March 2023 £500,200 38,805 n/a n/a None +R Wood LTIP 16 June 2023 £ 2,217,70 0 184,459 16.7% 100% See below +ADBP 21 March 2023 £262,605 20,372 n/a n/a None +R Hoskin ADBP 21 March 2023 £200,080 15,522 n/a n/a None +1. The LTIP awards were calculated, in line with the Plan rules, based on a share price of 1,202p (the closing share price on the day prior to grant). +2. Consistent with the Directors’ Remuneration Policy, 50% of an Executive Director’s annual bonus is deferred into shares under the ADBP. The awards shown above were granted +in respect of annual bonuses for the 2022 financial year. These awards will normally vest on 21 March 2026, the third anniversary of the grant, subject to continued employment +or approval of good leaver treatment. The number of shares granted was calculated, in line with the Plan rules, based on a share price of 1,289p (the average price over the +period 1 October to 31 December 2022). +The Committee have previously considered the difficulty in setting appropriately stretching but incentivising financial targets (such as +EPS targets) for a three-year period, given the fast-changing external environment in which we operate and concluded that this can be +addressed by basing our LTIP awards entirely on relative TSR metrics. This aligns management’s interests closely with the experience of +investors and incentivises actions which enhance long-term value creation. Therefore, for the 2023 LTIP, 50% of the awards are based +on TSR performance relative to the FTSE 100 and 50% on performance relative to an industry peer group. Performance for these awards +will be measured over the period 1 January 2023 to 31 December 2025. The target ranges are set out below and reflect the changes +the Committee set out when revising our Directors’ Remuneration Policy. This was approved at the AGM on 25 April 2023 and provided +for increased maximum levels of award under the LTIP, accompanied by an increased level of stretch on performance conditions and a +reduction in the level of vesting which would be achieved at threshold performance. +Metric Weighting +Threshold +(16.7% vesting) +Maximum +(100% vesting) +Relative TSR vs. FTSE 100 50% +Median 85th percentile +Relative TSR vs. bespoke peer group 1 50% +Straight-line vesting between threshold and maximum +1. The bespoke peer group for the 2023 awards comprises the following companies: 888 Holdings, Aristocrat, Betsson, Caesars Entertainment, DraftKings, Evolution Gaming +Group, Flutter Entertainment, International Game Technology, Kindred Group, MGM Resorts, Playtech, PointsBet, Rank Group, Rush Street Interactive and Sands LV. +The terms of the 2023 awards provide the Committee with the ability to review the outcome at vesting and to make appropriate adjustments +if it concludes that participants have benefited from windfall gains over the performance period. The Committee also retains the ability, under +the terms of the Policy, to exercise discretion to override the formulaic outcomes if it believes that the formulaic outturn is not appropriate. +Entain plc Annual Report 2023 133 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_136.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..40cddee81fcc707f9991d248fc4877a39cdd30cf --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,81 @@ +Shareholdings and share interests +Shareholding guidelines +Executive Directors are required to maintain a shareholding as determined by the Committee and retain this for a period following +cessation of employment. Executive Directors are expected to build up their shareholding over a period of five years from the date of +appointment as an Executive Director (or, if later, from the date of any change to the terms of the shareholding requirement). Shares that +count towards the requirement are those that are beneficially owned, any vested share awards subject to a holding period and unvested +deferred bonus shares (on an after-tax basis). The current shareholding requirements are: + CEO – 450% of base salary. + CFO & Deputy CEO – 350% of base salary. +In line with the provisions of the UK Corporate Governance Code, the Committee has implemented post-employment shareholding +requirements for the Executive Directors to ensure that they remain aligned with shareholders for a period after they step down from +the Board. The Committee expects Executive Directors to maintain 100% of their guideline (or their actual holding if lower) for two years +following departure. Shares purchased by the Executive Directors out of their own funds will not count towards these guidelines. To assist +in the implementation of the post-employment shareholding guideline our policy includes the potential to require leavers to deposit the +requisite number of shares into a trust or nominee arrangement. In the case of good leavers, future vestings may be made subject to +adherence to the shareholding requirement. +Share interests (audited) +As at 31 December 2023, the value of Stella David and Rob Wood’s shareholdings were £1.5m and £3.3m respectively. The value of Jette +Nygaard-Andersen’s shareholding at 13 December 2023 (the date she stepped down from the Board) was £1.5m. The value of Robert +Hoskin’s shareholding as at 30 June 2023 (the date he stepped down from the Board) was £5.2m. +Executive Directors’ share interests as at 31 December 2023, or date of leaving the Board, are set out below. +Share interests +subject to +performance +conditions 2 +Share interests not +subject to + performance +conditions 3 +Name +Number of +beneficially +owned shares 1 +Share +awards +Share +options +Share +awards +Share +options +Total interests +at 31 December +2023 +Value of shares +held as % of +base salary 4 +Shareholding +requirement +met? +S David 112,186 – – – – 112,186 128% N +J Nygaard-Andersen 5 65,381 612,828 – 85,610 – 763,819 130% N +R Wood 225,037 352,058 – 47, 866 – 624,961 449% Y +R Hoskin6 353,539 – 82,156 – 36,686 472,381 919% Y +1. Beneficially owned shares include shares held directly or indirectly by connected persons. There were no changes in the number of beneficially owned shares for any Executive +Director between 31 December 2023 and the date this report was signed. +2. Share interests subject to performance conditions are those made under the LTIP. Awards to Jette Nygaard-Andersen and Rob Wood are granted in the form of conditional +awards and those to Robert Hoskin are granted as nil-cost options. +3. Share interests not subject to performance conditions are those made under the ADBP. Awards to Jette Nygaard-Andersen and Rob Wood are granted in the form of conditional +awards and those to Robert Hoskin are granted as nil-cost options. +4. In line with our shareholding policy, the value of shares held as a percentage of base salary includes shares owned by the Executive Directors and the after-tax shares held under +the ADBP. The values of £1.5m, £1.5m, £3.3m and £5.2m for Stella David, Jette Nygaard-Andersen, Rob Wood and Robert Hoskin respectively are based on the closing share +price at 29 December 2023 (994.2p). +5. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. Under the terms of her exit, time pro-rating will be applied to her LTIP awards when she leaves +employment on 13 December 2024. +6. Robert Hoskin stepped down from the Board on 30 June 2023 and left employment on 31 August 2023. Under the terms of his exit his outstanding LTIP awards were time +pro-rated to his employment end date and the values in the table above reflect this. +Executive Directors’ service contracts and external appointments +Executive Directors have rolling contracts, terminable by either party giving the appropriate notice. +Director Date appointed Arrangement Notice period +S David 13 December 2023 Service contract 12 months +R Wood 5 March 2019 Service contract 12 months +Subject to Board approval, Executive Directors are able to accept appropriate outside Non-Executive Director appointments provided the +aggregate commitment is compatible with their duties as Executive Directors. The Executive Directors concerned may retain fees paid +for these services. Stella David is a Non-Executive Director of Norwegian Cruise Line Holdings Limited and of Bacardi Limited. Rob Wood +does not currently hold any external appointments. While on the Board, Jette Nygaard-Andersen was a Non-Executive Director of +Coloplast A/S. +Entain plc Annual Report 2023134 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_137.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c7c4fb790682609f3709467c831943935ba8829 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,47 @@ +Payments for loss of office (audited) +Jette Nygaard-Andersen +Jette Nygaard-Andersen stepped down from the Board as Chief Executive Officer on 13 December 2023, having held this role since +January 2021. Jette originally joined the Board as a Non-Executive Director in November 2019. In line with her contractual entitlement to +12 months’ notice, Jette remains employed and on garden leave until 13 December 2024. The Remuneration Committee considered the +treatment of Jette’s remuneration and agreed the following: + Salary and benefits paid up until 13 December 2024. Those received up to 13 December 2023, when Jette stepped down from the +Board, are shown in the table on page 130. Salary and benefits received between 14 December and 31 December 2023 totalled +£34,298. + After careful consideration, the Committee agreed that Jette would be treated as a good leaver in accordance with the Remuneration +Policy and the provisions of the incentive plan rules. As such, she retained her eligibility to receive an annual bonus in respect of 2023, +subject to time pro-rating to 13 December 2023. Jette also retained her outstanding ADBP and LTIP share awards, which will continue +to vest over their original timeframes. Her LTIP awards will be time pro-rated for time served up until 13 December 2024 and remain +subject to their performance conditions and a two-year holding period. Their malus and clawback provisions will also remain in force. + In line with our post-employment shareholding requirement policy, Jette will be required to meet her shareholding requirement +of the lower of 450% of salary or her actual shareholding for two years following her termination date of 13 December 2024. +The Remuneration Committee will consider withdrawing good leaver treatment if this requirement is not met. + £10,500 (excluding VAT) was paid directly to Jette’s legal advisers in respect of legal services provided to her in connection with +her termination. + Provision of tax support in the UK and Denmark for all tax reporting periods impacted by remuneration received in relation to Jette’s +employment with Entain. At her discretion, Jette also has the option to continue an existing executive mentoring arrangement until +13 December 2024 and to receive outplacement support to a maximum cost of £50,000 (excluding VAT). In all cases, any payments will +be made by Entain direct to the relevant provider. +Robert Hoskin +Robert Hoskin stepped down from the Board as Chief Governance Officer (“CGO”) on 30 June 2023 and left employment on 31 August +2023, after 18 years with the Group. The Remuneration Committee considered the treatment of Robert’s remuneration arrangements in +the light of his role as CGO being redundant and agreed the following: + Salary paid up until 31 August 2023, and medical insurance continuing until the end of the plan year (31 March 2024). Salary and +benefits received up to 30 June 2023, when Robert stepped down from the Board, are shown in the table on page 130. Salary and +benefits (including payment for accrued holiday) received between 1 July 2023 and 31 December 2023 totalled £84,137. + In line with local legal requirements, a redundancy payment of £422,300, calculated in accordance with the Gibraltar Redundancy +Pay Order. + Payment in lieu of the balance of 12 months’ contractual notice period (£296,188). + Given Robert’s role was redundant, the Committee was comfortable that he should be treated as a good leaver in accordance with +the Remuneration Policy and the provisions of the incentive plan rules. As such, he retained his eligibility to receive a time pro-rated +annual bonus plan for 2023 and retained his outstanding ADBP and LTIP share awards, which will continue to vest over their original +timeframes. His LTIP awards were time pro-rated based on time served during the performance period and remain subject to their +performance conditions and a two-year holding period. Their malus and clawback provisions will also remain in force. + In line with our post-employment shareholding requirement policy, Robert will be required to meet his full shareholding requirement +of 350% of salary for two years following his leave date of 31 August 2023. The Remuneration Committee will consider withdrawing +good leaver treatment if this requirement is not met. + £9,400 (excluding VAT) was paid directly to Robert’s legal advisers in respect of legal services provided to him in connection with +his termination. +Entain plc Annual Report 2023 135 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_138.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb5f445cf22f7b88072d7dac96da07db640c4e61 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,58 @@ +Chairman and Non-Executive Directors +Single figure of remuneration table (audited) +The remuneration of the Non-Executive Directors is shown below. +Non-Executive Directors +Fees1 +£000 +Benefits +£000 +Annual +bonus +£000 +Long-term +incentives +£000 +Pension +£000 +Total +£000 +Total fixed +remuneration +Total variable +remuneration +Barry Gibson 2023 450 – – – – 450 450 – +2022 450 – – – – 450 450 – +Pierre Bouchut 2 2023 112 – – – – 112 112 – +2022 106 – – – – 106 106 – +Amanda Brown 3 2023 13 – – – – 13 13 – +2022 – – – – – – – – +Stella David 4 2023 176 – – – – 176 176 – +2022 155 – – – – 155 155 – +Mark Gregory 5 2023 18 – – – – 18 18 – +2022 106 – – – – 106 106 – +Vicky Jarman 5 2023 14 – – – – 14 14 – +2022 85 – – – – 85 85 – +Virginia McDowell 2023 107 – – – – 107 107 – +2022 106 – – – – 106 106 – +David Satz 6 2023 94 – – – – 94 94 – +2022 95 – – – – 95 95 – +Rahul Welde7 2023 85 – – – – 85 85 – +2022 42 – – – – 42 42 – +Former +Non-Executive Directors 8 +2023 – – – – – – – – +2022 42 – – – – 42 42 – +1. Non-Executive Directors receive fees only and do not receive any additional benefits or participate in any incentive arrangements. +2. Pierre Bouchut’s fees are denominated in Euros. The change in fee received in 2023 compared to 2022 reflects foreign exchange rate movements, along with an increase in fees +when he was appointed as Senior Independent Director in December 2023. +3. Amanda Brown joined the Board on 8 November 2023. +4. Stella David was appointed as Interim CEO on 13 December 2023. Fees in the table above for 2023 reflect her appointment as a Non-Executive Director. Remuneration for her +role as an Executive Director is shown in the table on page 130. +5. Mark Gregory and Vicky Jarman resigned from the Board on 17 February 2023. +6. David Satz’s fees are denominated in US Dollars. The change in fee received in 2023 compared to 2022 reflects foreign exchange rate movements. +7. Rahul Welde joined the Board on 1 July 2022. +8. Fees totalling £42,000 were paid to Non-Executive Directors in 2022 who stood down from the Board during that year. +Entain plc Annual Report 2023136 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_139.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..22752ae3212f8b4a0c1fd1efe2263efe4769bead --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,50 @@ +Fee structure +During 2023, the Committee reviewed the Chairman’s annual fee. Based on an assessment of the time and commitment required for +the role, including a comparison against relevant market reference points, the Committee determined an increase in the fee for the first +time since 2019. Separately, fees for Non-Executive roles were also increased for the first time since 2016, based on an assessment of +comparative market data and the increased commitment and complexity associated with performing these roles. The table below sets +out the fee structure which will apply from 1 January 2024. +As at 1 January 2023 As at 1 January 2024 +Chairman £450,000 £525,000 +Senior Independent Non-Executive Director £155,000 £165,000 or €192,500 +Board member £85,000 or €100,000 or $117,000 £95,000 or €112,000 or $120,000 +Chair of a Board Committee £21,000 or €25,000 £30,000 or €35,000 or $38,000 +Intercontinental travel allowance 1 – £6,000 or €7,000 or $7,500 +1. Where a Non-Executive Director is required to undertake intercontinental travel in the performance of their role, this allowance will be paid (for each trip) to acknowledge the +additional time commitment involved. This allowance will not be payable to the Chairman. +Letters of appointment +Non-Executive Directors are appointed under letters of appointment and as such do not have service contracts. Apart from the Chairman, +each Non-Executive Director is subject to an initial three-year term subject to annual re-election at the Company’s AGM. +All letters of appointment are available for viewing at the Company’s registered office and at the AGM. +Director Date appointed Arrangement Notice period +B Gibson 4 November 2019 Letter of appointment 3 months +P Bouchut 13 September 2018 Letter of appointment 3 months +A Brown 8 November 2023 Letter of appointment 3 months +V McDowell 6 June 2018 Letter of appointment 3 months +R Sandler 3 January 2024 Letter of appointment 3 months +D Satz 22 October 2020 Letter of appointment 3 months +R Welde 1 July 2022 Letter of appointment 3 months +Share interests (audited) +Non-Executive Directors’ share interests as at 31 December 2023, or date of leaving the Board if earlier, are set out below. With the +exception of Amanda Brown who joined the Board in November 2023, all Non-Executive Directors (in post at 31 December 2023) held +shares with a value in excess of 75% of their annual fee at 31 December 2023. +Director +Number of beneficially +owned shares 1 +B Gibson 189,934 +P Bouchut 38,500 +A Brown – +M Gregory 2 7,4 4 6 +V Jarman2 1,700 +V McDowell 15,000 +D Satz 7,50 0 +R Welde 21,644 +1. Beneficially owned shares include shares held directly or indirectly by connected persons. There were no changes in the number of shares owned outright for any Non-Executive +Director between 31 December 2023 and the date this report was signed. +2. Mark Gregory and Vicky Jarman resigned from the Board on 17 February 2023. The beneficially owned shares shown for them reflect the position on that date. +Virginia McDowell +Chair of the Remuneration Committee +Entain plc Annual Report 2023 137 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_14.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b1ad25bfc092de4921207d0636f4e2bc3ec7afe --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,6 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_140.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e5be4df7412681a18da36790a621f5af6127412 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,98 @@ +Directors’ Report +Customer and creditor payment policy +The Group is committed to prompt payment of customer cash-out +requests and maintains adequate cash reserves to cover customer +withdrawals and balances. +During the year we have significantly reduced our digital payout +and withdrawal timescales with payments typically being made to +customers in most markets within 12 hours of receiving a customer +instruction. +In the case of other creditors, it is the Group’s policy to agree terms +at the outset of a transaction and ensure compliance with such +agreed terms. In the event that an invoice is contested then the +Group informs the supplier without delay and seeks to settle the +dispute quickly. +Articles of Association +The Company’s Articles of Association may only be amended +by special resolution at a general meeting of shareholders. +Directors +The Directors of the Company who were in office during the year, +are disclosed on page 89. +The Company’s Articles of Association provide that any new +Director appointed by the Board during the year, having not been +previously elected by shareholders, may hold office only until the +next AGM, when that Director must retire and stand for election at +the meeting. The Articles also require one third of the Directors not +newly appointed since the last AGM to seek re-election. +In compliance with the recommendation of the Code, all Directors +will seek reappointment at the 2024 AGM, as they did in 2023. +Directors’ remuneration +The Executive Directors have Service Agreements and all the +Non-Executive Directors have Letters of Appointment and the +details of their key terms are set out in the Directors’ Remuneration +Report. Details of remuneration of each Director are provided in the +Remuneration Report on pages 113 to 137. +Powers of directors +Subject to company law and the Company’s articles, the Directors +may exercise all of the powers of the Company and may delegate +their power and discretion to Committees. The articles give the +Directors power to appoint and replace Directors. +Directors’ interests +This is reported in the Directors’ Remuneration Report on +pages 133 and 134 and provides details of the interests of each +Director, including details of current incentive schemes and long- +term incentive schemes, the interests of Directors in the share +capital of the Company and details of their share interests as at +31 December 2023. +Principal activity +Entain plc (the “Company”) and its subsidiaries (together the +“Group”) is a major international sports-betting and gaming +company operating both online and in the retail sector. +The Company is registered as a public limited company under +the Isle of Man Companies Act 2006 and is listed in the Premium +category on the Main Market of the London Stock Exchange. +Results and future performance +A review of the Group’s results and activities is covered within +the Strategic Report on pages 8 to 87. This incorporates the +Chairman’s statement, Chief Executive and Chief Financial Officer’s +review, which include an indication of likely future developments. +Key performance indicators +Key performance indicators in relation to the Group’s activities are +continually reviewed by senior management and are presented on +page 23. +Dividends +An interim dividend of 8.9p per ordinary share was paid on +22 September 2023 and a second interim dividend for 2023 of 8.9p +per ordinary share was approved by the Board on 29 February +2024, making a total dividend payment of £113m for the 2023 +full-year. The Board recognises the importance of dividends to +shareholders, the strength of the operational performance of the +business and our future prospects. The Board expects to continue +with its progressive dividend policy during 2024. +Corporate Governance +The Directors recognise the importance of corporate governance +and their associated report is set out on pages 88 to 139. +The information in that section is deemed to form part of this +Report and so fulfils the requirements of the corporate governance +statement for the purposes of DTR 7.2.1. +As a company quoted on the Premium Main Market of the London +Stock Exchange, the Company has adopted the 2018 UK Corporate +Governance Code (“Code”), as amended from time to time, and will +seek to comply with premium listed company norms to the extent +appropriate for the size and nature of the Company. +Engagement with Employee Statements +This is discussed in the s172 Statement on pages 64 to 67, pages +96 to 97 and page 126. +Engagement with Stakeholder Statements +This is discussed in the s172 Statement on pages 64 to 67 and +pages 96 to 97. +Research and development +The Group’s research and development is focused on the +development and maintenance of the Entain platform and the +production of its product portfolio, including ARC TM. The Group will +continue to invest in research and development to ensure it remains +well positioned to deliver sustainable growth. +For further details on the Group’s strategic priorities, see the +Strategic Report. +Entain plc Annual Report 2023138 +1 Overview 14 Strategic report 88 Governance 146 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_141.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..e229e4fcde1013d9e3f538678a7bf3f48eb5b74c --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,132 @@ +Substantial shareholdings – Interests in voting rights +As at 21 February 2024, the Company had been notified in +accordance with Chapter 5 of the Disclosure and Transparency +Rules of the following interests in the Company’s Shares: +Shareholder Number of Shares +% of Issued Share + Capital & Total +Voting rights 1 +The Capital Group +Companies 85,626,652 13.40% +Dodge & Cox 58,512,293 9.16% +Blackrock Inc 45,562,418 7.13% +Janus Henderson +Group plc 32,126,154 5.03% +Eminence Capital, +LP 30,054,030 4.7% +The Vanguard +Group, Inc 26,991,121 4.23% +1. The Company had 638,799,891 ordinary shares in issue on 21 February 2024. +Use of financial instruments +The risk management objectives and policies of the Group are set +out within Note 25 of the financial statements. +Political donations +The Company did not make any political donations or incur any +political expenditure during 2023 (2022: Nil). +Insurance +The Company maintains a directors and officers’ liability insurance +policy in respect of any legal costs that may be incurred against +the Directors in dealing with any legal claims or investigations. +Annual General Meeting +The Company’s Annual General Meeting will be held on 24 April +2024 at etc. venues, 200 Aldersgate, London, EC1A 4HD. +Independent Auditors +KPMG LLP (“KPMG”) has expressed its willingness to continue +in office as auditor and a resolution to re-appoint KPMG will be +proposed at the forthcoming AGM. +So far as the Directors are aware, there is no relevant audit +information (as defined by Section 418 of the Companies Act 2006) +of which the Company’s auditors are unaware, and each Director +has taken all the steps that he or she ought to have taken as a +Director in order to make himself or herself aware of any relevant +audit information and to establish that the Company’s auditors are +aware of that information. +On behalf of the Board: +J M Barry Gibson +Chairman +Conflicts of interest +On appointment, each Director must notify the Company of their +external board appointments, other significant commitments +and any actual or potential conflicts of interest. Each Director is +required to disclose actual or potential conflicts of interests to the +Board and where actual or potential conflicts of interest arise, the +relevant Director does not receive Board papers and is excluded +from discussions and voting on the subject matter that gives rise +to the conflict. The Board has a policy to identify and manage +Directors’ conflicts or potential conflicts of interest. +Directors’ Indemnities +The Company has entered into deeds of indemnity with each +of the Directors, which comply with the Isle of Man Companies +Act 2006. These remain in force as at the date of this report. +Diversity +Entain remains committed to establishing a 40% female Board in +accordance with its own Board diversity policy and the external +target of 40% as laid out in the FTSE Women Leaders Review by +2025. With female representation on the Board at 33.3% as at the +date of this report, the Board notes that it has not met all of the +FCA board diversity targets laid out in the Listing Rules, however, +it has met the targets relating to senior Board positions and ethnic +diversity (see tables below). +Number +of board +members +Percentage +of the +board +Number +of senior +positions +on the +board# +Number +in executive + management* +Percentage +of executive +management* +Men 6 66.6% 3 6 75% +Women 3 33.3% 1 2 25% +Number +of board +members +Percentage +of the +board +Number +of senior +positions +on the +board# +Number +in executive + management* +Percentage +of executive +management* +White +British +or other +White +(including +minority- +White +Groups) +8 89% 4 6 75% +Asian/ +Asian +British +1 11% 2 25% +# Senior positions on the Board comprise of the Chairman, Chief Executive Officer, +Chief Financial Officer and Senior Independent Director. +* For the purposes of the FCA disclosures, ‘executive management’ refers to the +Group’s executive committee, including the company secretary, but excluding +administrative and support staff. +Share capital +Details of the Company’s authorised and issued share capital, +together with details of the movement therein, are set out in +Note 28 to the financial statements. This includes the rights and +obligations attaching to shares and restrictions on the transfer +of shares. +Entain plc Annual Report 2023 139 +1 Overview 14 Strategic report 88 Governance 146 Financial statements +Directors’ Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_142.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..feb579dba9442161ebeabf8746d3c49d1290844a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,29 @@ +Financial +statements +In this section +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement +of comprehensive income +162 Consolidated +balance sheet +163 Consolidated statement +of changes in equity +164 Consolidated statement +of cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023140 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_143.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..472d0afcc27a06b6984d26516a5625d931169540 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,38 @@ +1. Our opinion is unmodified +In our opinion: + the financial statements of Entain plc give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at +31 December 2023, and of the Group’s and of the Company’s profit for the year then ended; + the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards +Accounting Standards as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union; + the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS +101 Reduced Disclosure Framework; and + the Group and Parent Company financial statements have been prepared in accordance with the requirements of the Isle of Man +Companies Act 2006. +What our opinion covers +We have audited the Group and Parent Company financial statements of Entain plc (“the Company”) for the year ended 31 December +2023 (FY23) included in the Annual Report, which comprise: +Group Parent Company (Entain plc) + Consolidated income statement + Consolidated statement of comprehensive income + Consolidated balance sheet + Consolidated statement of changes in equity + Consolidated statement of cash flows +Notes 1 to 36 to the Group financial statements, including the +accounting policies in note 4. + Company income statement + Company balance sheet + Company statement of changes in equity +Notes 1 to 19 to the Parent Company financial statements, +including the accounting policies in note 3 +Basis for opinion +We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. +Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for +our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our reporting to the +Audit Committee (“AC”). +We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements +including the FRC Ethical Standard as applied to listed public interest entities. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 141 +Independent +Auditor’s Report +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_144.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..170b2119b478e4215863c5a960d852df84bb1243 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,49 @@ +2. Overview of our audit +Factors driving our +view of risks +Having taken due consideration of the current economic +environment and activity of the Group in the period, we +have identified an additional key audit matter relating to +acquisition accounting. +We consider the level of risk relating to revenue recognition +from online operations is stable compared to FY22 as the +company’s growth in the period has reduced compared to +previous periods. The Group has entered a number of new +territories in the period where there are online operations +but we do not consider the level of risk to be the same as +those that we have linked to our revenue key audit matter. +The Group’s reliance on complex IT systems for the +processing of revenue transactions relating to online +operations could result in incorrect reporting of revenue +from aggregated systematic calculation errors. In addition, +we identified a fraud risk related to possible manipulation +of revenue by manual journals. +The Group has undertaken several acquisitions in the +period. The transaction to acquire NZ Ent Limited (“TAB +New Zealand”) has a complex contingent consideration +arrangement and the variable contingent consideration is +sensitive to changes in key assumptions. The acquisition of +STS Holdings S.A. is significant in value and the purchase +price allocation is sensitive to changes in key assumptions. +Recoverability of investments in subsidiaries remains our +biggest focus in the audit of the parent Company, Entain +plc, due to their materiality in the context of the parent +Company financial statements. +Key Audit Matters Vs FY22 Item +Revenue recognition from +online operations çè 4.1 +Complex accounting and +sensitivity to significant +assumptions relating to +the acquisitions of TAB +New Zealand and STS +Holdings S.A. +é 4.2 +Recoverability of parent +Company’s investments +in subsidiaries +çè 4.3 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023142 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_145.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..714f831d3372486803e45498133b70f4ff744d99 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,68 @@ +Audit committee +interaction +During the year, the AC met 5 times. KPMG are invited to attend all AC meetings and are provided with an +opportunity to meet with the AC in private sessions without the Executive Directors being present. For each Key +Audit Matter, we have set out communications with the AC in section 6, including matters that required particular +judgement for each. +The matters included in the Audit Committee Chair’s report on page 104 are materially consistent with our +observations of those meetings. +Our independence We have fulfilled our ethical responsibilities and remain +independent of the Group in accordance with UK ethical +requirements, including the FRC Ethical Standard as +applied to listed public interest entities. +Apart from the matter noted below, we have not +performed any non-audit services during the year ended +31 December 2023 or subsequently which are prohibited +by the FRC Ethical Standard. +We have identified that a KPMG member firm provided +access to an application to an entity that is part of a group +of companies acquired by the Group in August 2023. +Transition rules meant that continued provision of access +was not permitted beyond three months after acquisition +by the Group. Access to the application was terminated +at the end of January 2024. Therefore, a non-permitted +service was provided in late 2023 and January 2024. +The application assists entities with compliance with +disclosures relating to local taxation. The provision of this +service did not involve advocacy nor any management +decision making, and they had no impact on financial +statements. The fees were not significant to any party and +the entity involved is not in scope for the group audit. +In our professional judgment, we confirm that based on +our assessment of the breach, our integrity and objectivity +as auditor has not been compromised and we believe that +an objective, reasonable and informed third party would +conclude that the provision of this service would not impair +our integrity or objectivity for any of the impacted financial +years. The audit committee have concurred with this view. +We were first appointed as auditor by the shareholders +for the year ended 31 December 2018. The period of +total uninterrupted engagement is for the six financial +years ended 31 December 2023. These are the third +set of the Group’s financial statements signed by Mark +Flanagan. Previously Mark was a Key Partner involved in +the engagement, and therefore he is required to rotate off +after seven years of his involvement in the engagement. +Therefore, Mark will be required to rotate off after the +FY24 audit. +The average tenure of partners responsible for component +audits as set out in section 7 below is two years, with the +shortest being one and the longest being three. +Total audit fee £3.6m +Audit related fees +(including interim review) £0.5m +Other services £0.2m +Non-audit fee as a % of total +audit and audit related fee % 4.9% +Date first appointed 6 June 2018 +Uninterrupted audit tenure 6 years +Next financial period +which requires a tender 2028 +Tenure of Group +engagement partner 3 years +Average tenure of +component signing partners 2 years +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 143 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_146.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e70a570c6b94211480eb2b241d5d1cd7be9396d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,58 @@ +Materiality +(item 6 below) +The scope of our work is influenced by our view of +materiality and our assessed risk of material misstatement. +We have determined overall materiality for the Group +financial statements as a whole at £45m (FY22: £40m) +and for the Parent Company financial statements as a +whole at £22m (FY22: £20m). +Consistent with FY22, we determined that revenue remains +the benchmark for the Group. We consider total revenue +to be the most appropriate benchmark as the Group is +still going through an acquisitive stage and BetMGM, the +Group’s joint venture continues to be in a start-up phase. +Because of BetMGM still being in a start-up phase, and +Entain recognising their share of the loss from joint ventures, +the Group as a whole, generated a loss before tax from +continuing operations in the period. Furthermore, total +revenue is seen as a key metric to users of the financial +statements, as demonstrated by the Group’s communications +to investors. As such, we based our Group materiality on +revenue, of which it represents 0.9% (FY22: 0.9%). +Materiality for the Parent Company financial statements was +determined with reference to a benchmark of Parent Company +total assets of which it represents 0.3% (FY22: 0.4%). +45 + FY23 £m + FY22 £m + + + + +40 +33.75 +30 +36 +30 +22 +20 +22 +20 +2.25 +2.0 +Group +GPM +LCM +HCM +PLC +AMPT +Group Group Materiality +GPM Group Performance Materiality +HCM Highest Component Materiality +PLC Parent Company Materiality +LCM Lowest Component Materiality +AMPT Audit Misstatement Posting Threshold +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023144 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_147.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..11604d4747b05fe2998e7330dab8f311c9ab3fea --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,73 @@ +Group scope +(item 7 below) +We have performed risk assessment and planning +procedures to determine which of the Group’s components +are likely to include risks of material misstatement to +the Group financial statements, the type of procedures +to be performed at these components and the extent of +involvement required from our component auditors around +the world. +Of the Group’s twenty (FY22: eleven) reporting +components, we subjected five (FY22: five) to full scope +audits for group purposes and two (FY22: none) to +specified risk-focused audit procedures. Specified risk- +focused procedures over revenue were performed on those +components as they were the next largest component, +which had grown at a quicker rate than the remainder of +the Group’s core markets which altered the risk profile of +the Group. +The group operates a centralised IT function that supports +IT processes for certain components. The IT function is +geographically spread across Hyderabad (India), Gibraltar, +Stratford (UK) and Vienna (Austria). The transactions +processed by these IT systems are included in the financial +information of the reporting components it services +and therefore it is not a separate reporting component. +This service centre is subject to specified risk-focused +audit procedures, predominantly the testing of the relevant +general IT control environment (“GITCs”) and automated IT +application controls. +The components within the scope of our work accounted +for the percentages illustrated opposite. +In addition, we have performed Group level analysis on the +remaining components to determine whether further risks +of material misstatement exist in those components. +We consider the scope of our audit, as communicated to +the Audit Committee, to be an appropriate basis for our +audit opinion. + 2022 Full scope audits + 2022 Remaining components + 2023 Specified risk-focused procedures + 2023 Full scope audits + 2023 Remaining components +1. Calculated by adding the Group’s share of revenue from its joint ventures +to the Group’s revenue figure +Total profits and losses that made +up group profit before tax +19% +8% +4% +81% +88% +Net assets +2% +3% +98% +97% +Revenue +17% +22% +9% +83% +69% +Revenue including share of +revenue from joint ventures1 +15% +7% +19% +85% +74% +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 145 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_148.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..c54ce82752919aefd56b0aea2b2c530b56906608 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,87 @@ +The impact of +climate change +on our audit +We have considered the potential impacts of climate change on the financial statements as part of our planning +of the audit. The Group has set out its commitment to be carbon net zero by 2035 including a reduction in scope +1, 2 and 3 emissions by 2027. The Group’s business model does not include high polluting activities and further +information about the Group’s identified climate risks is provided in the “Task Force for Climate-related Financial +Disclosures Statement”. +As part of our risk assessment, KPMG have inquired with the Group’s head of ESG to understand the climate +change risks to the Group, the impact of their net zero commitment and what they have assessed the impact of +these are on the financial statements. We have also read meeting minutes of the Group’s ESG committee and +applied our knowledge of the Group and sector in which it operates to understand the extent of the potential +impact of climate change risks on the Group’s financial statements. Considering the nature of the Group’s assets +and liabilities and taking account the headroom on goodwill and indefinite life intangibles impairment testing, +there was no significant impact on our key audit matters or other key areas of our audit. +We have read the Group’s Task Force for Climate-Related Financial Disclosures in the front half of the annual +report and considered consistency with the financial statements and our audit knowledge. +3. Going concern, viability and principal risks and uncertainties +The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Parent +Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s financial position means +that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their +ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). +Going concern We used our knowledge of the Group, its industry, and the general +economic environment to identify the inherent risks to its business model +and analysed how those risks might affect the Group’s and Company’s +financial resources or ability to continue operations over the going concern +period. The risks that we considered most likely to adversely affect the +Group’s and Company’s available financial resources and/or metrics +relevant to debt covenants over this period were: + The impact of a significant change in the Group’s gaming tax profile, +including changes in key geographies; + The impact of significant changes in the regulatory environment +affecting the Group’s ability to operate in certain territories; and + The impact of a cyber security failing affecting the Group’s operating +systems for a significant portion of the going concern period. +We also considered less predictable but realistic second order impacts, +such as the impact of the political changes, which could result in a rapid +reduction of available financial resources. +We considered whether these risks could plausibly affect the liquidity or +covenant compliance in the going concern period by comparing severe, but +plausible downside scenarios that could arise from these risks individually +and collectively against the level of available financial resources and +covenants indicated by the Group’s financial forecasts. +We assessed the completeness and accuracy of the going concern disclosure. +Accordingly, based on those procedures, we found the directors’ use of the +going concern basis of accounting without any material uncertainty for +the Group and Parent Company to be acceptable. However, as we cannot +predict all future events or conditions and as subsequent events may result +in outcomes that are inconsistent with judgements that were reasonable +at the time they were made, the above conclusions are not a guarantee +that the Group or the Parent Company will continue in operation. +Our conclusions + We consider that the directors’ +use of the going concern basis +of accounting in the preparation +of the financial statements +is appropriate; + We have not identified, and +concur with the directors’ +assessment that there is not, +a material uncertainty related +to events or conditions that, +individually or collectively, may +cast significant doubt on the +Group’s or Parent Company’s +ability to continue as a going +concern for the going concern +period; and + We have nothing material +to add or draw attention to +in relation to the directors’ +statement in note 2 to +the consolidated financial +statements on the use of +the going concern basis of +accounting with no material +uncertainties that may cast +significant doubt over the Group +and Parent Company’s use of +that basis for the going concern +period, and we found the going +concern disclosure in note 2 to +be acceptable. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023146 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_149.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..202333375dcad72b1d760777fce730a7130a33e3 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,88 @@ +Disclosures of +emerging and +principal risks +and longer-term +viability +Our responsibility +We are required to perform procedures to identify whether there is a +material inconsistency between the directors’ disclosures in respect of +emerging and principal risks and the viability statement, and the financial +statements and our audit knowledge. +Based on those procedures, we have nothing material to add or draw +attention to in relation to: + the directors’ confirmation within the Viability Statement on page 87 +that they have carried out a robust assessment of the emerging and +principal risks facing the Group, including those that would threaten its +business model, future performance, solvency and liquidity; + the Principal Risks disclosures describing these risks and how emerging +risks are identified and explaining how they are being managed and +mitigated; and + the directors’ explanation in the Viability Statement 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. +Our work is limited to assessing these matters in the context of only +the knowledge acquired during our financial statements audit. As we +cannot predict all future events or conditions and as subsequent events +may result in outcomes that are inconsistent with judgements that were +reasonable at the time they were made, the absence of anything to report +on these statements is not a guarantee as to the Group’s and Parent +Company’s longer-term viability. +Our reporting +We have nothing material to add +or draw attention to in relation to +these disclosures. +We have concluded that +these disclosures are +materially consistent with the +financial statements and our +audit knowledge. +4. Key audit matters +What we mean +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. +We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to address those +matters and our findings from those procedures in order that the Company’s members, as a body, may better understand the process +by which we arrived at our audit opinion. These matters were addressed, and our findings are based on procedures undertaken, for the +purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on these matters. +4.1 Revenue from +online operations +(group) +Financial Statement Elements +Revenue +from online +operations +FY23 +£3,366.6m +FY22 +£2,998.5m +Our assessment of risk vs FY22 +çè +We consider the level of +risk relating to revenue +recognition from online +operations is stable +compared to FY22 as there +have been no significant +changes in the nature or +complexity of the online +operations. +Our findings +FY23: Our testing identified no +errors in the recording of revenue +transactions for the revenue from +Online operations +FY22: No errors identified +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 147 +Independent +Auditor’s Report +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_15.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..381e01b4820d8f2a45a259f44bfd07a2f5e05d4d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,80 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_150.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..1827fa768a4355e7be8897762a2681abf2a29a99 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,80 @@ +4.1 Revenue from +online operations +(group) +continued +Description of the +Key Audit Matter +Risk of data +processing error +Revenue streams are computed +and recorded on highly complex +IT systems that process a high +volume of low value transactions, +with the gaming and betting +platforms and customer +wallets (together “platform”) +being the key elements. +Aggregated systematic errors +in calculations could result in +incorrect reporting of revenue +from online operations. +Risk of fraud +We have identified a fraud +risk that revenue from online +operations could be manipulated +through manual journals in +order to inflate results or reach +bonus incentives. +Our response to the risk +Our procedures included: +Controls: For the Group’s in-house systems we utilised our own IT +auditors to assess the relevant IT systems and controls by: + Understanding the data flow in the online betting environment by +observing bets placed from the customer-facing systems and tracing +the transactions to the platform, and then from the data warehouse +(storage) to the financial information systems (accounting records) +to assess whether the information is passed appropriately from one +system to another; + Testing operating effectiveness of relevant general IT controls +(“GITCs”) including access to programs and data and program change +– specifically evaluating account set-up and termination of users, +password restrictions, users with privileged access and program +change controls; + Assessing the impact of GITCs deficiencies and performing additional +audit procedures as needed, for example where unauthorised users +were identified, we tested whether those users had inappropriately +accessed the system; + Testing automated controls around wallet deposits/ withdrawals, +placing and settlement of bets, and calculation of revenue through +placing test bets. +Tests of details (tracing and vouching): We assessed the +appropriateness of revenue by performing the following: + To address the identified risks, including the fraud risk, comparing +the cash movements in the customer wallets in aggregate to revenue +recognised from online operations throughout the period. As part of +this comparison, for the cash movements relating to the Payment +Service Provider (“PSP”) receivable, we obtained a summary of +movements for the year and agreed a sample of non-customer +cash movements to external documentation, for example funding, +settlements and charges to either PSP or bank statements. For other +material reconciling items between the cash movements and the +revenue recognised, we critically assessed the appropriateness of +these items and, where relevant, obtained supporting documentation. +Communications with the Entain plc’s Audit Committee +Our discussions with and reporting to the Audit Committee included: + Our approach to the audit of revenue from Online operations including details of our planned substantive +procedures and the extent of our control reliance; + Discussions on the effectiveness of the general IT environment. +Areas of particular auditor judgement +We did not identify any areas of particular auditor judgement in relation to this key audit matter. +Our findings +We assessed the impact of identified control deficiencies and considered the effect on our substantive +testing. Based on the control mitigation testing that we performed, we were not required to significantly +expand the extent of our planned detailed testing. Our testing identified no errors in the recording of +revenue transactions for the revenues from online operations (FY22: No errors identified). +Further information in the Annual Report and Accounts: See the Audit Committee Report on page 104 for details on how the Audit +Committee considered the revenue from online operations. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023148 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_16.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab7401bd1a3967e3159407cdd3a95d7e4e7a179d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,110 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_17.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ab043e3745a7ba328728e73a8b422ae30373263 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,104 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_18.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdd6e47a6c38924a2aca75b08ab5687234db54 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,113 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_19.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..3973336da2d0e02b35f49ab9cf406adc18b2ad4f --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,150 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_2.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae3ada93eb9d8e8c95719ce335416f239a14e8a1 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,124 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_20.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..c132525fe235b11d7c9c85925aa38d71f457f543 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,148 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_21.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..30fdd2721c616d031a8ce043d99eba0476810760 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,83 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_22.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fa7de2a0e70a5074085f40da95e8798dde032d4 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,26 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_23.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee1ae517227c367a44f7d78c4b1267c16fc8856b --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,52 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_24.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5206445be607b97a7e5cc2e7fbe9fc142205b34a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,70 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_25.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..07b3c659368c199081ebe8a423398b433b471dd1 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,96 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_26.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..f716ebfd45daca1b4ee94ff0e9c89425b0c0a5f9 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,90 @@ +Reflecting the Group’s strategic progress, in November 2023 we revised our +corporate strategy. These refocused objectives recognise the progress achieved +by the business, whilst acknowledging there is still further transformation needed +to maximise the opportunities ahead. We have set clear targets and initiatives to +deliver value for our stakeholders. Ensuring focused execution in driving Organic +Growth, Margin Expansion and US market share growth. + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supported by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +People and culture +Technology and product +Governance +Organic +growth +Grow presence in +existing markets, +synergistic +adjacencies +Margin +expansion +Drive margin +expansion +through scale +and operational +leverage +US market +growth +Empower profitable +growth and share +gains in the US +Purpose +Vision +24 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202324 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_27.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc38e761c25cf8070bb9e9f2a95acba671d6f506 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,70 @@ + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supportive by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +Sports betting +and gaming +courses through +our DNA. It’s the +purple thread that +steers our evolution, +guides our people +and shapes our purpose. +25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements 25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_28.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3178643d29e130a7fbb8346211a0612ffcada27f --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,17 @@ +our technology +and product +Entain today, is underpinned by incredible talent, in-house +technology and leading product capability. We have +hundreds of always-on sports data and game supplier +integrations, which we bring to life as easy to play games +and almost infinite bet opportunities in a safe, responsible +way. With the largest RMG platform in our industry and +a sportsbook powering approximately 1.8K matchers +per day, we’re evolving our strong in-house technology, +globally diversified portfolio and adaptability to create +entertaining experiences for our customers. + Shaping + the game: +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202326 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_29.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e66b60a44d0fe0d1c1a92254976f5b56bd229a4e --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,79 @@ +Our award-winning in-house gaming +studios have continued to go from +strength to strength in powering our +brands globally and providing our +customers with exclusive gaming +experiences. From branded BetMGM +slots, to exclusive first-of-their-kind +non-traditional tap games, our in–house +team has now delivered over 300 titles +to our retail and digital brands. +Demonstrating that our customers love +our products, one of our original 2023 +games, Pig Banker, saw over double +the revenue of an average in-house +new game within 60 days of launch. +Pig Banker was so popular with our +customers, that it trotted to the top 3 +games worldwide, including number 1 in +the UK, Brazilian, and Canadian markets. +And to top things off, the follow up +release, “Pig Banker: Three Little Piggies” +proved to be an immediate player hit by +taking the top spot for spins per player to +date after its first day of release. +Our in-house gaming team also had +cause for celebration in 2023, launching +the first in-house non-traditional Tap +game “Pot O’ Fortune: Golden Tap”, which +reached the top spot for GGR for game +release of its type when compared to third +party releases. +In-house gaming at Entain ++26% +2023 In House Studios GGR +increased by 26% vs 2022 +(Non US markets based on +all live products across all +3 studios) ++28% +Active players on in-house +games across non US +markets increased by 28% +vs 2022 ++18% +Average spins per active +also increased by 18% vs +2022 showing players are +engaging more with our +in-house products +14 +In-house studios saw GGR +growth across 14 European +and Ontario Markets +vs 2022 +33 +new in-house games +launched in the US 2023 +The milestones +reached and quality +delivered this year +are a testament +to the unrivalled +creativity and hard- +work of our people +in our in-house +game studios. +We’re proud of the +way we develop, +construct, and bring +to life the exclusive +gaming experience +for our customers +across our brands.” +Ciara Nic Liam +Gaming Director +Continued on next page +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +27Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_3.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..78bdaac8c239ecc35542d3b09298fc35ae139346 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,10 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_30.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..da3cf5cfc1090c0b1fe5fb8de57fd8404ef332da --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,20 @@ +When it comes to in-house technology +at Entain, our trading team are right +at the heart of it. Our in-house trading +platform is powered by our own propriety +technology, which turns millions of +real-time data points into odds for our +customers. Every kick, goal, overtake and +point scored is integrated from multiple +data feeds and turned into a betting +opportunity for players worldwide. +What makes our in-house tech so +fundamental to our transformation is the +strength of its core. With it, we’re set up +to be able to tweak, adapt and localise +the peripherals of our platform to suit the +needs of our players, all over the world. +The technology that powers our in-house +trading platform +28 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_31.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..881ba1100068b32fe19fccb42623490fd37184ab --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,34 @@ +Betstation brings a market +leading digital experience +to our players which is a cut +above the rest.” +Introducing Angstrom: +next generation sports +betting +Our Retail technology +-Major milestones hit +for our digital in-shop +experience +Last October, we completed the acquisition of the newest +member of the Entain Group, Angstrom. Angstrom Sports’ +unrivalled sports modelling, forecasting and data analytics +provision simulates predictive modelling, in order to create +highly sophisticated pricing and forecasting capabilities. +In short, it will be a game changer for our in-house trading +technology. Angstrom will enable BetMGM to provide endless +moments of excitement for fans in the US, with the most +accurate lines in the industry. The acquisition secures Entain as +the only global operator which will have a full in-house suite of +end-to-end analytics, risk and pricing capabilities for US Sports +betting products. +We hit a milestone moment last November, as Group BetStation +went live in our 1000th shop in the UK & Ireland Retail Estate. +Launching in over very first shop in November 2020, Group +BetStation brings a market leading digital experience to our +players that’s a cut above the rest. Our in-house developed +software gives customers the freedom to place their bets in +store, access to more racing markets than ever before and the +power to place in-play bets on sports around the world. +29Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_32.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae1de6702a7248d10fb82f1095d951f2334bc91e --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,39 @@ +With over 30 brands, across 40 markets, we’re able to provide +entertaining experiences to customers all over the world. But it’s +not just through our core product offering that our customers +engage with us. At Entain, we go beyond the game to enhance +the sports betting and gaming experience for our players – +beyond a bet, scroll or tap. +Over the last year, Coral has taken its +customers closer to the action than +ever before following the launch of the +free-to-join Coral Racing Club. The club +provides a unique opportunity for racing +fans to experience what it is like to be +a racehorse owner through unmissable +content, priceless opportunities, exclusive +offers and much more. +Now over 160,000 members strong, the +Club’s first year was a roaring success. +It has created thousands of unforgettable +memories with its stable of 10 racehorses, +including over 1,000 raceday tickets won +by members, 37 unique ‘owner for the +day’ experiences created and in excess of +£40,000 being shared in prize money. +For many years Coral has demonstrated a deep +passion for, and commitment to, British Racing, +but over the last year we have significantly +expanded our sponsorship portfolio to become +the leading bookmaker sponsor in the UK. +And now, with the Coral Racing Club, Coral +is doing more than any betting operator has +done before to grow the appeal of racing and +promote the sport.” +Simon Clare +Director of PR +Continued on next page +A year of Coral Racing Club +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202330 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_33.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..82dbd44e9a3b5c76ca009713aae69ff3fe7654e4 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,6 @@ +Beyond + the game: +customer + experiences +1 Overview 8 Strategic report 88 Governance 140 Financial statements +31Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_34.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..8685bac73a949afcb15b7e6d02f02f355a2fa629 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,90 @@ +Elevating the social betting +experience with STS and Eurobet +STS’s new brand campaign, Kocham +Sport Gram Mądrze (Love Sports, Play +Smart), has been taking shape over +the last few months in the form of a +new ecosystem designed to inspire +customers. It incorporates a new smart +feature that redefines the social betting +experience and empowers customers. +BetMGM ‘pucker up’ and get +their skates on with NHL +partnership extension +Eurobet’s ReadyBet +Empowered by a seamless digital +experience across various devices, +Eurobet’s Readybet effortlessly +creates pre-filled betslips. Eurobet’s +Readybets, generated weekly through +inputs from retail shop managers, +the trading room, marketing teams, +and even digital and retail customers, +entices users to engage in a diversified +betting experience. Offering a curated +selection of “wise” picks from reputable +and successful sources, the Readybet +platform fosters a sense of community +by turning customers and betting shops +into interactive “tipsters.” Enhanced with +dedicated promotions and challenges, +this approach bridges the gap between +conventional sports betting and a social +experience, creating a vibrant marketplace +accumulator bets. +Last year, our joint venture BetMGM +continued to offer fans unforgettable +entertainment built around the game they +love, with a multi-year extension of their +partnership with the National Hockey +League (NHL ®). +‘Players Bet’ is built +around the trusted +community of STS +players who draw +inspiration from each +other’s bets, including +bets shared by the +best players with a +proven track record +of effectiveness. +Over 2 million bets +have been copied in +2023 indicating that +players actively seek +bets from trusted +sources. The fact that +51% of copied bets +are turning into real +bets, shows the +significant potential +of this feature and +the power dormant +in the community. +Through team-branded casino games, +including the word’s first NHL-endorsed +slot game, Gold Blitz, VIP fan experiences, +and sponsored branding in national +broadcasts, players will experience the +NHL beyond the rink. NHL Gold Blitz +features the NHL Gold Blitz Instant Cash +Collection, Wild Multiplier Free Spins, and +jackpot prizes, as well featuring all 32 NHL +teams and the league’s iconic shield. It’s +through these exciting activations that +BetMGM will continue to deliver new ways +for Ice Hockey fans to engage with the +sport they love. +Gracze Typują (Players Predict) is a unique +space on the STS site that allows players +to copy bets shared by other players, check +out success rates of other betters, duplicate +their bets and chat with each other on +a forum fostering a sense of community +amongst customers. +STS is the only operator in Poland offering +this free, community-driven feature, +reinforcing our commitment to a smart and +socially connected betting future. +32 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_35.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..8fed0928126673d1a665dad53ca3d94dd2f527a6 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,82 @@ +Bwin fulfilling football fans wildest +dreams on Europe´s big stage +The launch of +Ladbrokes Live +Last year we embarked on an exciting +new era for Ladbrokes, connecting +thousands of fans with free events +through the Ladbrokes LIVE platform. In +The O2, AEG Presents, and NME, we’re +working with three of the biggest and +most iconic brands in the entertainment +industry and this means we will be +able to reward our audiences with the +chance to attend some of the most +exciting live shows in Britain for free.” +Kelly Rose +Head of Brand for Ladbrokes +This year, our UK brand Ladbrokes +furthered its ambition to provide +customers with excitement beyond +its sportsbook, with the launch of +Ladbrokes LIVE. LIVE is a digital +entertainment platform that rewards +thousands of fans with free access to +the UK’s best live music, comedy and +sports events, powered by exciting +new strategic and ground-breaking +partnerships with The O2, AEG +Presents, NME and many more. +The unique collaboration between +Ladbrokes and NME has also seen the +return of the iconic Club NME nights with +a series of dates across the UK featuring +incredible headline talent and unmissable +DJ sets. Fans have been able to win free +access to Club NME nights through the +Ladbrokes LIVE platform. +With over 135,000 plays and hundreds of +tickets already won in 2023, we are giving +reasons for consumers to engage with us +again and again in, everyday play. +Besides bringing pure entertainment and joy to the football fans and +uniting players from across Europe, bwin and other Entain brands were +able to generate unrivalled brand presence across the continent during +the 22/23 season, with branding visible at 80% of all matches across +56 countries; 20% of this being Responsible Gambling messaging. +Being the official betting sponsor for both competitions this year again, +we’ll be there for every shot, pass and tackle to make the third season +an even better one for our customers.” Gemma Bell, Head of Sponsorship +For the past two seasons (21/22 & 22/23) +bwin has delivered the ultimate football +experience by giving fans the opportunity +to play in ‘the bwin Fans Final’ in the +UEFA Europa League Final Stadium. +2023 saw the fans play in the Puskás +Arena, the day after the UEFA Europa +League Final in Budapest. +Thanks to our official partnership with the +UEFA Europa League and UEFA Europa +Conference League, bwin laid out the red +carpet in Budapest for 40 customers who +witnessed the UEFA Europa League epic +between Roma and Sevilla unfold, before +taking to the turf of the Puskas Arena the +next day. Customers were treated to pre- +match training sessions, personalised kits +and the opportunity to lift a customised +trophy just like the Sevilla players did a +few hours prior. Joined by legends Esteban +Cambiasso and Luis García, the bwin +Fans Final saw dreams brought to life +for our players. An intimate lunch with +the ambassadors and the nomination +of the Player of the Match rounded the +experience into an unforgettable event +with one of the winners stating: “These +days I will never forget, the memories +will live with me forever. It was the best +football trip ever, a dream came true, what +a privilege to have been part of it.” +33Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_36.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7f92bd6b48b9fb255f13c07b4fe25e53097942e --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,7 @@ +Championing +the game: +Advertising +34 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202334 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_37.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ebab343084f728ceaaeb59617fd66b244bb41a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,29 @@ +All of our brands have their own unique identity – from the striking blue of Coral to +the playful orange of Foxy Bingo. It’s our heritage and brand recognition that has +built up such trust with our customers, and it’s through this trust that we’ve been +able to push boundaries with iconic advertising, activations and campaigns. +Last year saw Foxy Bingo’s ‘Get Your +Fox On’ ATL campaign level-up with +two world-first’s: Dirtie Gertie’s Mullet +Salon and The Celebrity Swap Shop. +Continued on next page +Opened by Geordie Queen, Vicky +Pattison, Dirtie Gertie’s Mullet-only Salon +in Newcastle offered consumers free +mullet haircuts, foxy nails and games of +musical bingo. The city lit up with fleets +of pedicabs and iconic parts of the centre +were turned purple and orange with +incredible out-of-house advertisement, +with over 2 million impacts. In total, the +campaign gained a 1.1 billion reach via +media coverage, gave 94 dodgy haircuts +and engaged whole new community of +Foxy fans. +Get Your Fox On with +Foxy’s Celebrity Swap +Shop & Mullet Salon +35Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +35Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_38.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8c971924a33934feceabdd7ba8bb51a63168532 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,61 @@ +Gala’s Jolly Good +Fish and Chip hotel +Eurobet.Live with +Luca Toni +Gala Bingo continued to build community spirit amongst +players this year, with the world’s first ‘Fish and Chip Hotel’ +in Blackpool. Inspired by consumer research, insights and the +iconic bingo call 33, Gala’s ‘The Jolly Good Fish & Chip Hotel’ +gave British seaside goers the chance to enter Gala Land and +receive a complimentary serving of fish, chips and peas, as well +as games of bingo. +The activation built on Gala’s ‘Where A Little Joy Goes A Long +Way’ campaign and encouraged players to find the little joys in life +last summer With over 800 consumers attending the prototype +hotel and 314 million people reached via earned social media +coverage, it’s safe to say customers experienced the brand in a +whole new way, combining the classic charm of the Great British +seaside with the wonder and joy of Gala Land. +Eurobet.live elevated the football experience for fans across +Italy through an exciting TV campaign featuring World Cup +winner, Luca Toni, as it’s presenter. The campaign seamlessly +integrated the excitement of live scoring with the thrill of +the matches themselves, providing viewers with real-time +updates, insights and analysis, detailed statistics and +engaging multimedia content. +Eurobet.live not only celebrated the passion and excitement +of football, but also underlined its commitment to providing +fans with a comprehensive and immersive platform to stay +connected to the game they love. Eurobet.Live has also +strengthened it’s connection with fans, through prestigious +partnerships with several Serie A teams, including the iconic +Juventus as well as a partnership with the entire Serie C league. +These strategic alliances +served as a powerful bond +between the Eurobet.live +brand and football fans +on the ground, solidifying +its position as the premier +platform for live scoring, +results, and multimedia +content in Italy.” +Alexis Grigoriadis +Marketing Director, Italy +Get Your Fox On with Foxy’s Celebrity +Swap Shop & Mullet Salon continued +In the wake of Foxy’s new laundrette +theme ads, the team brought the screen +to life up north with The Celebrity Swap +Shop: a two-day pop up affair in Hull, +where locals swapped drab for fab +and get their hands on a celebrity item. +17 celebrities donated items to the +laundrette, and in total, 23 bags of clothes +were donated to charity. Foxy consumers +took to the laundrette to experience +the brand’s new and engaging identity +and with free Bingo sessions on site. +The brand saw a 17% increase in betting +players from the activation. +36 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_39.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1e0db133568de8d018b5cae8e853af552b22360 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,108 @@ +Last December, the F1 circus rolled +into Las Vegas for the inaugural GP, +and our joint venture, BetMGM, left +no stone unturned in making their +presence known with customers over +the weekend. +From exclusive grandstand hospitality to +the excitement of experiencing incredible +entertainment within touching distance +of the track in their retail shops, BetMGM +bolstered the anticipation of placing bets +on the race with awesome experiences +throughout the GP weekend. The team +also pulled off some incredible activations +with McLaren Racing; from BetMGM’s +logo being centre stage on the car to +a series of marquee and On-property +digital placements, BetMGM certainly +gave F1 superfans an experience to +never forget. +The spectacle received 3X the number +of bets compared to any other F1 event +in the company’s history. The Las Vegas +GP certainly shattered records for the +King of Sportsbooks. +TAB activation on Auckland’s +Sky Tower for the TAB +Karaka Millions +The TAB Karaka Millions brings together the +best horses sold at the New Zealand Bloodstock +yearling for two separate races, as well as an +open-entry race called the Elsdon Park Aotearoa +Classic. This year, TAB became the naming rights +sponsor for the meeting, and with three $1m +races on the six-race card for the first time ever, +TAB wanted to do something different to attract +attention of customers. +A few days before the meeting, Entain Australia +and NZ took over the second tallest freestanding +structure in the southern hemisphere, Auckland’s Sky +Tower, and projected the barrier draw for the three +main races onto it. Watched on by trainers, owners +and horse racing fanatics, the incredible display +revealing which horse starts where, set the scene for +a weekend that ended up smashing records for TAB’s +horse racing history. +The six-race meeting saw a 26.6% increase in +turnover compared to the highest wagered meeting +on record (of which had over double the number of +races) and a 33% increase in the number of customers +betting compared to 2023. Better yet, the final race +of the day set a record for the most wagered race in +New Zealand, with Year-on year-turnover for the TAB +Karaka Millions up 66%. +BetMGM win Las Vegas for Super Bowl week +Known for its massive audiences, thrilling action, much-anticipated commercials, +and halftime extravaganza, the Super Bowl was a big day for BetMGM, where we +saw a 30% uplift in activity across the U.S. alone. Super Bowl in Las Vegas was a +huge opportunity for BetMGM to be at the centre of the action, having the world’s +biggest stage literally footsteps away from several BetMGM retail sportsbooks. +To maximize this opportunity, Entain +launched its new Nevada app with access +to BetMGM’s full sportsbook offering, +weeks before the Super Bowl, giving the +best BetMGM experience to the NFL fans in +Nevada for this landmark event. +Then, BetMGM set out to do what so +many other brands struggle to do in this +domain, carve out a memorable Big Game +commercial that perfectly complements and +establishes a connection with the brand. +In a company-first, the team launched +its three-part campaign which featured +the never-before-seen pairing of sports +legends, Tom Brady and Wayne Gretzky, +along with actor Vince Vaughn, marking an +iconic moment for BetMGM. +The BetMGM team didn’t stop there. +In addition to the advertisement, BetMGM +executed a multi-faceted approach to +“Win Las Vegas” for Super Bowl week. +Alongside extraordinary VIP experiences +with celebrity ambassadors, BetMGM +painted Las Vegas gold and black with +a variety of outdoor, indoor, digital and +special advertising campaigns that +greeted fans from the moment they get off +the plane. +Marking another first, BetMGM partnered +with X in a one-of-a-kind collaboration to +become the official betting sponsor of the +platform, starting with the Super Bowl and +continuing through 2025. +Regardless of who was the Super Bowl +champion, BetMGM came out a winner. +The new platform was able to handle +a 30% uplift in activity over the Super +Bowl weekend and a 72% increase in +customers from the 2023 Big Game, thanks +to the incredible efforts and collaboration +between the Entain, BetMGM and +MGM teams. +Smashing +records under +the neon lights of +Las Vegas strip +37Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_4.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..34a2edaf9cc87ff1f4f007a6062cf063921d085b --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,105 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_40.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e9fbfdeb7e9639669ca9f237c90b3d1f5689a24 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,81 @@ +Regulatory +update +Unlike slots and poker, casino table games +are regulated on a state-by-state basis. +The states may either create a monopoly +or issue as many licences as the state has +land-based casinos. By the end of 2023, +only the states of Schleswig-Holstein and +North Rhine- Westphalia had opted for a +licensing system. To date, only Schleswig- +Holstein has released the tendering +process, but the group has opted not to +apply for a licence for commercial reasons. +In North Rhine-Westphalia, details on the +tendering process were expected to be +published in 2023 but due to various delays, +the details are now expected in Q1 2024. +Entain looks forward to participating in +this process. + Germany +The Joint Gambling Authority (“GGL”) has +now been operational in Germany for over +a year. Encouragingly, the GGL has been +more proactive in issuing sanctions against +unlicensed operators, but we still see room +for improvement and intensification. We are +continuously working with the regulator +and state governments to push for more +effective enforcement against illegal +operators and in 2023 worked jointly with +the University of Leipzig and the local online +casino association to produce a study +investigating the scale of the issue. +While the Group was granted three slots +and two poker licences in November 2022 +and the Group´s sports betting licences +were also extended for another 5 years in late +2022, the restrictive environment in Germany +continues to prove challenging. The process +for managing playing limits for slots, poker +and sports betting remains one of the most +pertinent regulatory challenges for licensed +operators. There is also mounting political +pressure for stricter sports betting advertising +restrictions, while the first evaluation of the +Interstate Treaty is set to be published soon. + The UK +The UK Government published its White +Paper of the 2005 Gambling Act Review +in April 2023. As expected, this document +included consultations on a number of +areas, including online slots staking limits; +financial vulnerability checks; a mandatory +levy for research, education and treatment; +additional requirements on game design +and direct marketing as well as the creation +of an Ombudsman. We continue to engage +government actively in this process, both +directly and via our trade body. We have +continued to develop and enhance our +Advanced Responsibility and Care™ +(“ARC™”) programme, which offers tailored +identification of customers who may be at +risk, as well as targeted interventions and +interactions. Whilst many of the changes +within the White Paper can be achieved via +secondary legislation, we are collaborating +with the other major operators to voluntarily +progress initiatives such as a single +view of the customer and the creation of +an Ombudsman. +Gaming is a truly global market and in 2023 the Group held licences in over +30 jurisdictions across the world. The Group is committed to only operating in +regulated or regulating markets and as from February 2023, 100% of the Group’s +revenue is from such markets. The Group firmly believes that strong, commercially +viable regulation of the betting and gaming sector is in everyone’s interests. It +provides stability for operators, important taxation streams for governments +and – most importantly – provides the consumer with proper protections and +safeguards by ensuring that only responsible providers operate in the market. +38 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_41.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..ffe4c0fec1b990c43f93881d1b65c5c82574fa8c --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,159 @@ + Africa +In late 2023, Entain decided to withdraw +from the regulated markets of Zambia and +Kenya but the Group remains committed to +expanding its significant regulated offering +in South Africa, where it has been present +for a number of years. + US +The sports betting regulatory activity +continues at pace in the United States. +Kentucky, North Carolina and Vermont are +amongst the US states that have regulated +in 2023. Rhode Island has been added +to the list of US iGaming states. Finally, +additional states have adopted, or are in +the process of adopting, modernised forms +of responsible gambling regulation; a trend +Entain welcomes with an eye on the long- +term sustainability of the US market. +Bearing in mind that over 35 US states +have already allowed for sports betting in +one form or another, the Group remains of +the view that in the coming years some 40 +or even 45 US states will have regulated +sports-betting, which will provide BetMGM +with even broader market access across +the country. The number of states that +permit online casino is also expected to +grow in the years to come – for example the +state of New York as already announced +its intention to attempt iGaming regulation +in 2024. + LATAM +In Latin America, Brazil adopted a law +that allows for domestic licensing of sports +betting and online casino in late 2023. +The law will be implanted throughout +the first half of 2024, with the regulated +market expected to launch at some point +in Q3 2024.The regulation will extend to +all online gambling verticals, including +sports betting and gaming, and will allow +for an open licensing system subject to +payment of betting and other taxes and +fees. Furthermore, the Group has launched +licensed operations in Mexico under its +bwin brand. +There was better news in France where +we have seen nascent discussions +about the possible legalisation of online +casino, while in Croatia the Government +completed a regulatory review and is now +looking to bolster its efforts to tackle the +illegal market. +At the end of 2023, Entain only operated in +two markets in Europe where it is not yet +locally regulated. Despite our best efforts +in Austria , there have been no changes to +the status quo and the Government has +no imminent plans to initiate the reforms it +announced in March 2021. Nevertheless, +we will continue to push for regulatory +reforms. Encouragingly, in Finland the +Government has officially begun the +process of dismantling the monopoly in +favour of a licensing system that we expect +to come into force sometime in 2026. + Australia +A parliamentary inquiry issued a report +in 2023 calling for a ban on gambling +advertising as part of a 31-point plan to +reform the Australian gambling market. +It also proposed various other measures +including the establishment of a single +national regulator and a formal duty of +care. We expect the Government to come +forward with its response to the report and +proposed next steps in the first half of 2024. +Elsewhere, the National Self-Exclusion +Register BetStop launched in August, while +a ban on credit card betting was adopted in +December 2023 and will come into effect in +mid-2024. + Canada +The Ontario online betting and gaming +market became regulated on 4 April 2022, +thereby becoming the first Canadian +Province to issue domestic licenses for +private operators. Entain operates in +Ontario through its bwin and Party brands +as well as Sports Interaction, a Canadian +brand the Group acquired in February 2022. +Going forward, other Canadian Provinces +such as Alberta and British Colombia are +expected to introduce regulation. + Other Europe +In 2023, wide-reaching advertising +restrictions were introduced in Belgium , +while a pending parliamentary bill and a +draft Royal Decree could impose further +restrictions on local operators in 2024. +Fortunately, the sector was successful +in blocking a proposal to introduce an +additional 5% tax which would have had a +detrimental impact on licenced operators +and encouraged customers to move to +black market operators and therefore +reduce player protections. +In the Netherlands , Entain completed +the acquisition of BetCity in January +2023. National elections took place in +November and we await the formation of +a new coalition government which could +lead to change in direction for gambling +policy. We are also expecting the Dutch +authorities to come forward with new +proposals on playing limits, AML and +duty of care requirements which are likely +to come into effect in 2024 and impose +stricter compliance requirements on +operators . The headline gambling tax rate +also increased by 1% to 30.5% from 1st +January 2024. +In Italy, the Government published a +new framework law in 2023 laying the +foundations for potentially wide-reaching +sectoral reforms to be enacted in 2024 +and beyond, including an overhaul of the +current gambling licence tender procedure +which will increase licensing costs and +impose stricter regulatory requirements on +operators. In Spain , the government has +moved oversight of gambling to a newly- +formed Ministry, while plans to introduce a +system of cross-operator limits remain on +the medium-term agenda. In Ireland we are +still awaiting the enactment of the pending +Gambling Regulation Bill that will introduce +a formal regulatory and licensing regime for +online gambling. In Denmark a draft law +has been published to amend the Gaming +Act, including the introduction of a B2B +licence regime to take effect from 2025. +In 2023, we have seen tax increases +announced in several of the markets where +we operate. The Prime Minister of Georgia +announced plans to increase taxes for +online gaming from 10% to 15% GGR, and +player winnings withholding taxes from +2% to 5%, effective from 1 January 2024. +The Swedish government has announced +its intention to increase the rate of gaming +tax from 18% to 22% with effect from 1 July +2024, while the Latvian Government plans +to increase online gambling tax from 10% to +12% GGR from January 2024. +39Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Regulatory update \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_42.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..f762f32f5babe7b6d5ceefb0f10c503b70941151 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,68 @@ +At Entain, sustainability is a key enabler of our corporate strategy. +We firmly believe that the most sustainable operators will be the +most successful in our industry. +2023 was a pivotal year for sustainability +at Entain as we unveiled our new +Sustainability Strategy, building on our +longstanding commitment to sustainability +and taking it to the next level. +With this new Strategy, we wanted to +strengthen our sustainability leadership +position as well as listen to our stakeholders +and respond to the changing Environmental, +Social, and Governance (“ESG”) landscape. +We conducted a double materiality +assessment to help us understand our +unique sustainability-related risks and +opportunities, as well as our impacts on +society and the environment. We conducted +surveys and interviews, analysed industry +reports, and held leadership workshops, +gathering input from over 250 internal +and external stakeholders from around +our business, to understand how we can +ensure we are supporting value creation to +all stakeholders. +These insights helped us develop a +strategic framework that will focus our +sustainability actions in the coming years. +Our new approach, which is presented on +the next page, is structured across four +pillars that encapsulate those ESG issues +that are most important to Entain, our +customers, investors, and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create the environment for everyone to +do their best work + Positively impact our communities +As we reflect on 2023, we are proud to +report extensive progress across each of +these strategic pillars. We invite you to +discover our achievements on the following +pages, which include: + Rolling out our player protection +programme ARC TM in our digital offer +to cover 27 jurisdictions and launching +ARCTM for retail in the UK and the +Republic of Ireland. + 100% of our revenues coming from +regulated or regulating markets since +February 2023. + Winning Innovator of the Year at the +Women in Gaming Diversity Awards +for our Returnship programme with +McLaren Racing. + Partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings, and onboarding 35% of in-scope +vendors and supporting them to improve +their sustainability performance. +Looking at 2024, we will remain sharply +focused on delivering our new strategy and +reaffirming the sustainability leadership +role that underpins our long-term growth. +Sustainability at Entain +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202340 +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_43.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..5578fe4868be8f1c0f1f593c49b9d13329b3d226 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,130 @@ +Entain’s Sustainability Strategy +At Entain, we see sustainability as a key enabler of our corporate strategy and growth. We embrace our role within society with the +strongly held belief that the most sustainable business in our industry will be the most successful. +This is reflected in our new Sustainability Strategy. We have structured it across four pillars that carefully encapsulate those sustainability +issues that are most important to Entain, our customers, investors, and partners. For each pillar, we have identified key focus areas and +assigned Board-level oversight, summarised below. +You can read more details about how we developed the strategy using the results of our 2023 double materiality exercise here . +What it means Aligned material clusters Focus areas Oversight +Be a leader in player +protection +We provide industry- +leading customer +protection through +innovative features, +customer support, +communications and +our culture. +S afer betting and gaming +E thical & +compliant behaviour + Innovation + Industry-leading +ta +ilored customer +protection tools +and processes +E mpower our people +to support and protect +our customers +H arm prevention +through education +and responsible +communications +Pr omote research +and share evidence- +based learnings with +the industry +Sustainability +& Compliance +Committee +Provide a secure and +trusted platform +We lead on integrity in +everything that we do. +From having the highest +ethical standards, +to only operating in +regulated markets, with +an aim of gold standard +data protection, +and cybersecurity. +E thical & compliant +behaviour +D ata privacy +and cybersecurity + Corporate +G +overnance +O nly operate in +regulated markets +E thics and integrity +at the core of +our organisation +and culture + Provide in dustry- +leading cybersecurity, +data privacy and +AI governance +C lear and robust +governance processes +for each of our key +ESG areas +Sustainability +& Compliance +Committee +Create the environment +for everyone to do +their best work +We are an employer of +choice, and we build an +inclusive and supportive +culture where talents +from all backgrounds +can thrive. +D iversity, equity +and inclusion +H aving the +right people +A ttract, engage and +retain the best, most +diverse talent +Pr ovide the right +growth opportunities +for all +B uild a sense of +belonging for +all Entainers +People +& Governance +Committee +Positively impact +our communities +We play our role in +limiting global warming +to no more than +1.5°C and we create +a positive impact on +our communities. + Environmental +S +ustainability + Corporate +G +overnance +R educe our +environmental impact +C reating a sustainable +value chain + Promote g rassroots, +women’s and +disability sports +S upport communities +where we operate +Sustainability +& Compliance +Committee +Entain plc A +nnual Report 2023 41 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_44.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..b598fd0b116ebee3d83e5afa8e2c28b18d6f05f8 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,90 @@ +ESG Governance +Climate governance +Given the urgent need for action to address +the climate emergency, we have stepped +up our governance in this area. Our CEO +is now responsible for our approach to +climate change, and climate-related risks +and opportunities. In addition, we have +developed our Net Zero Action Group. +The Net Zero Action Group reports to +the ESG Steering Committee, which +is a selection of leaders from around +the business who are responsible for +delivering and developing an organisation- +wide approach to achieve our Net Zero +ambitions. You can read more about how +we manage our climate-related risks and +opportunities in our TCFD Statement on +pages 56 to 63. +Issue-specific Committees +In addition to the ESG Steering Group +and the Net Zero Action Group, we have +formed groups that report to the ESG +Steering Group that focus on delivering our +approach to specific ESG issues that require +additional expertise and insights from the +business. Steering groups include groups +focused on Anti-modern Slavery and +Human Rights, Safer Betting and Gaming, +Anti-Money Laundering, and Diversity & +Inclusion. +Board Committee Oversight +In May 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. +The newly created Sustainability and +Compliance Committee was created to take +on the bulk of the responsibilities of the +former ESG Committee. The Sustainability +and Compliance Committee has oversight +for safer betting and gaming, regulatory +compliance, anti-money laundering and +counter-terrorism financing, anti-bribery +& corruption, human rights (including our +approach to addressing modern slavery +risks), health and safety, environmental +impact (including the evolution of our +strategy and processes in response to the +Taskforce for Climate-related Financial +Disclosures), data protection and charitable +donations, including the work of the Group’s +Entain Foundation. Chaired by Virginia +McDowell, one of our Non-Executive +Directors, the Committee has three +members and guides the business on all +aspects of ESG strategy, sets targets and +monitors our performance. +The second newly created Committee, +the People and Governance Committee, +took on the responsibilities of the previous +Nomination Committee and added +responsibility for oversight of the Group’s +approach to Diversity, Equity and Inclusion +and other people-related functions +such as engagement and culture and +employee wellbeing. +The ESG Steering Group +The ESG Steering Group, which meets +monthly, consists of functional leaders +from across the business, including +Sustainability, Investor Relations, Human +Resources, Corporate Affairs, Legal, Health, +Safety & Security, Operations, People and +Communications. Convened by our Group +Head of Sustainability and chaired by our +Chief IR & Communications Officer, the +Group oversees the implementation of our +sustainability strategy. +Delivering our +Sustainability Strategy +starts with robust +governance. As our +ambitions grow, and +best practice evolves, +we continue to expand +our processes. ” +Entain plc Annual Report 202342 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_45.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..df0951d328403898c8edff9fccfc7400bb736050 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,64 @@ +Strategy Board +Delivery +Coordination +Oversight +ESG Steering Group +Operating Units and +Central Functions +Operational teams +People and Governance +Committee +People and Governance +Committee +Sustainability and Compliance +Committee +People and Governance +Committee +Anti-Money Laundering and +Counter-terrorism Financing +Anti-Bribery and Corruption +Health and Safety +Environmental Impact +Modern Slavery and +Human Rights +Privacy and Data Protection +Net Zero Action Group +Regulatory Compliance +Safer Betting and Gaming +Talent and capability +Diversity, Equality and Inclusion +Employee engagement +Employee well-being +Our performance across ESG Rating Agencies +We are proud to be a sector leader amongst many of the leading independent ESG rating providers. The below table summarises our +performance and improvement over time. We will continue to work tirelessly to further improve our ESG practices and performance, with +the aim of further improving the standards for our industry and in these external assessments. +Rating Evaluation +Score +(31 December 2023) +Score +(31 December 2022) +Industry +Rank +MSCI ESG Score AA 7.2 6.7 N/A +Sustainalytics ESG Risk Rating Low 19.6 +(a lower score +shows a +lower risk) +22.3 13/87 in the Casinos +& Gaming industry +ISS ESG ESG Score C 49 47 1st decile +S&P Global ESG Score S&P +Yearbook +and DJSI Europe +constituent +60 67 95th percentile +FTSE4Good ESG Score Inclusion +in +FTSE4Good Index +3.8<> 3.8 93rd percentile +CDP Climate Management B B N/A +ESG Governance Structure +Entain plc Annual Report 2023 43 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_46.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..242e3529cecb8e06933fc7fce5dfeb94098c9861 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,105 @@ +We provide best in class customer protection through innovative +features, customer support, communications and our culture +Material issues + Safer betting and gaming + Ethical and compliant behaviour + Innovation +Oversight +Sustainability & Compliance Committee +Advanced Responsibility and Care™ +(“ARCTM”): Our leading tailored customer +protection tool +Our recent materiality assessment found +that safer betting and gaming is our most +material ESG issue, and ARC™ is our +flagship initiative to protect our customers +– providing a technology-led approach to +player protection through real-time and +individually tailored detection, interaction +and interventions with players that are +potentially at risk. +Given its importance to Entain and our +customers, the roll-out and effectiveness of +ARC™ is linked to through our Group Bonus +Scheme, which includes our executive +team. The details of how we incentivise +the delivery of player protection is outlined +further in the Remuneration Report +on p131. +This year, ARC™ continued to mature in +the UK and expand globally. By the end of +2023, ARC™ is now live across our core +international markets (except Brazil). +Our safer betting and gaming programmes +in our retail estate in the Republic of Ireland +and the UK are also supported by ARC™. +This provides our customer facing retail +colleagues with data-driven insights to +help them spot and address risky play in +our shops. +We continue to monitor the effectiveness of +ARC™, the results of which are reviewed by +the Executive Committee and Sustainability +and Compliance Committee quarterly. +Empowering our people +We continue to deeply embed safer gaming +into the culture of our company. At the end +of 2023, 98% of our colleagues were up +to date with their mandatory annual safer +betting and gaming training. This training +provides all colleagues with the essential +understanding of our approach to, and +compliance requirements on, safer betting +and gaming. However, we also understand +that specific roles within our business have +key responsibilities for player protection. +Focus area 2023 Highlights +Best-in-class tailored customer +protection tools and processes + Rolled our ARC™ to cover 27 jurisdictions (2022: 22), including real-time models in +23 jurisdictions + ARC™ for retail now live across UK and ROI + 7.5 million ARC™ interactions (+98% YoY) to 742,112 unique customers +Empower our people to support +and protect our customers + 98% completion rate of annual compliance, safer gambling, and AML training + Enhanced safer gaming training, delivered by EPIC Risk Management, delivered +to all senior leaders +Harm prevention through education +and responsible communications + Expanded our stakeholder education and training in the US, through our partnership +with EPIC Risk Management and major leagues as well as players associations such +as the Major League Baseball, National Football League, League Soccer Players +Associations and the NHL Alumni Association + 20% of TV advertising space and football sponsorship dedicated to safer betting and +gaming communications or Foundation promotion +Promote research and share +evidence-based learnings + Final year of partnership with Harvard Medical School’s Cambridge Health Alliance +Division on Addiction (CHADA), contributing £5.5m over five years to cutting-edge +research into Safer Betting and Gaming + Contributed 1% of our GGY in the UK to Research, Education and Treatment (RET), +totalling £18.7m +Awards and accreditations: UK North America International +GamCare Advanced Safer +Gambling Standard + Online: Advanced +Level 2 (highest level) + Retail: Advanced Level 2 +EGR North America +Awards 2023: +Socially +Responsible Operator +SBC Global and +SBC LATAM Socially +Responsible Operator of +the Year +Vixio Global Regulatory +Awards: Award for +Outstanding Contribution +to Safer Gambling +Entain plc Annual Report 202344 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Be a leader +in Player +Protection \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_47.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..8838cd5e9a115b296390fc3c074468a1bf60d30d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,138 @@ +For these roles, we continue to roll out more +in-depth and specific training. For example, +our senior leadership periodically +undertakes in-depth training from EPIC +Risk Management. Customer-facing roles +who are responsible for engaging directly +with our customers also receive in-depth +training on identifying and interacting with +customers who may be at higher risk of +harmful play. +We are also leveraging our partnership +with Harvard Medical School’s Cambridge +Health Alliance Division on Addition +(“CHADA”) to support our training +programmes. Since 2019, 16 of our safer +betting and gaming training programmes +have been reviewed by the team at CHADA +– ensuring our training and culture reflect +the latest research. +Responsible marketing +Responsible marketing is a core part of +our commitment to promote responsible +attitudes, and protect children, young +persons and vulnerable individuals. +We have a long history of leading the +industry in this area, spearheading the +UK whistle-to-whistle advertising ban, +and being the first operator to ban shirt +sponsorship in UK football. +Our commitment to responsible advertising +and marketing is underpinned by our +recently refreshed External Marketing +Policy. This Policy outlines our responsible +marketing principles. All relevant staff +receive training on the policy. +We also work closely with trade +associations to strengthen best practice for +our industry’s marketing and advertising. +For example, we are a signatory of – and +contributor to – the European Betting +and Gaming Association’s (“EGBA”) Code +of Conduct. +Promoting research through +our partnership with Harvard +Medical School +2023 marked the final year of our five-year +research partnership with the Cambridge +Division on Addiction, which has now +produced 14 research papers since 2019. +The outcomes of this research have +been highly practical, underpinning our +26 markers of protection – the behavioural +patterns found to indicate signs of risk +that are used by ARC™. As this research +is published, or is in the process of +publication, this allows not just Entain but +the whole industry to access the latest +research. You can read more about this +research programme in our 2023 Social +Impact Report. +At Entain, we know that safer betting and gaming starts +with our culture. It’s important that all colleagues have the +knowledge and tools to fulfil our responsibility to protect +our customers. + Interactions excellence: Interaction +Excellence aims to promote insightful +and valuable discussions with teams +that deal with customers that are +potentially the most at risk. The training +focuses on strengthening soft skills +that colleagues will draw upon during +customer interactions. In 2023, this +training was reviewed by the Harvard +Medical School’s Division on Addiction, +Cambridge Health Alliance. +Moving forward we will also conduct +in-depth training with leaders from +around the business (aimed at our +senior leadership team and Board +Directors), to further integrate a culture +of player protection right at the top of +the organisation. This training will be run +by EPIC Global Solutions and refresh the +leadership training delivered in late 2022. +Embedding safer betting and +gaming into our culture +As part of the 2023 Group Annual Bonus +Plan, a mandatory training module +was implemented on compliance, safer +gambling and anti-money laundering, +achieving a 98% completion rate. Our goal +is to train all colleagues on the importance +of player protection, preventing money +laundering, and responsible marketing +– with retail colleagues receiving a more +tailored version of the content relevant to +their role. +We also know that some colleagues +have unique responsibilities for their +role – whether it be engaging directly +with customers, designing new products, +or leading teams or divisions. In 2023 +we worked with EPIC Global Solutions +to deliver in-depth masterclasses and +face-to-face-training on safer betting and +gaming tailored for specific, high-impact +roles. For example, our customer service +and retail colleagues took part in sessions +that equipped them with the skills to +1. Core countries are those that are using our core technology platform. ARC™ is embedded within this core technology, so in these countries we can use the full power of our +markers of protection and interactions. +2. Risk is determined based on our Long-term Excessive Play (LTEP) model, which is one of our three primary ARC™ Markers of Protection models, which scores every user of the +Entain Platform from 1 (low risk) to 100 (high risk) daily. LTEP is used for assessing risk due to identify underlying problem gambling behaviour over time. +identify signs of harm and effectively +interact with customers to advise on +our suite of tools that may be used to +help them. +Key modules focused on: + Introducing our retail teams to problem +gambling to help them understand how +gambling related harm can present +itself and ensure that they are aware +of how to protect our customers to +limit the negative impacts of gambling. +Between May and August 2023, 294 +colleagues attended the EPIC Safer +Gambling Awareness training. + Affordability Interactions: This training +provided our colleagues with guidance +on the key steps they should take to +ensure that customers are keeping +their betting affordable, and the +communication tools they can use to +encourage safer gambling and manage +hostile behaviour on the shop floor. +Entain plc Annual Report 2023 45 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Lead on player protectionThe secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_48.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..8cf5b50e6e70557a6fd033899f4365662624b660 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,104 @@ +Ethics and integrity at the core +of our organisation and culture +We are committed to conducting +our business in line with the highest +ethical standards. We heavily invest in +governance, resources, and training to +combat corruption and keep financial +crimes out of gambling. +For Entain, this starts with playing an active +role in safeguarding the values and integrity +of sport. We want all sports events to be +fair and played to the best of participants’ +abilities. This is why we work closely with +regulators and sports governing bodies to +fight match-fixing, spot-fixing, and other +corrupt betting activity. We are a member +of the International Betting Integrity +Association (IBIA) and the Sports Betting +Integrity Forum (SBIF). +In 2023, we continued to reinforce our +Ethics & Compliance (“E&C”) function +with new team members and stronger +governance. We launched a new Ethics +& Compliance Charter which defines +clear accountability across the group and +ensures that our E&C team has the required +independence and authority to act as an +effective second line of defence. We also +launched a three-year E&C Strategy, which +sets our action plan for achieving a best-in- +class E&C programme. +Only operate in regulated markets +Entain firmly believes that strong, +commercially viable regulation of +the betting and gaming sector is in +everyone’s interests. It offers stability for +operators, important taxation streams +for governments and – most importantly +– provides the consumer with proper +protections and safeguards by ensuring +that only responsible providers operate in +the market. +Since February 2023, 100% of our group’s +revenue come from regulated or regulating +markets. As of 31 December 2023, we held +licences in 34 jurisdictions across the world. +We were also present in five regulating +markets where we can see a clear pathway +to regulation that will enable us to obtain +domestic licences in the next two years. +These regulating markets are Brazil, +Mexico, Peru, Austria and Finland. For more +about this, please refer to our regulatory +update on pages 38 to 39. +We appointed a Group Money Laundering +Reporting Officer and Global Head of Anti- +Financial Crime (“AFC”), and we expanded +our AFC team. After a period of growth +and multiple acquisitions, we revised our +organisational structure with all colleagues +with AFC responsibility reporting to the +central AFC Leadership Team. This new +governance framework gives us better +control and oversight across all our +entities, subsidiaries, and joint ventures. +We have also initiated an evaluation of +our international subsidiaries to assess the +maturity of local AFC programmes. This will +conclude in 2024 with on-site visits and +upskilling programmes tailored to the needs +of our colleagues. +We lead on integrity in everything that we do. From having the +highest ethical standards, to only operating in regulated markets, +with an aim of gold standard data protection, and cybersecurity +Material issues + Ethical & compliant behaviour + Data privacy and cybersecurity + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Only operate in regulated markets 100% of revenues from regulated or regulating markets since February 2023 +Ethics and integrity at the core +of our organisation and culture + New Ethics & Compliance Charter and Strategy + Average completion rate of 95% across Entain’s Big Four Compliance +Training Modules + Refreshed set of Entain Values, with “Do what’s right” at its core +Provide industry-leading +cybersecurity and data privacy + Growing headcount in Data Privacy and Cybersecurity teams, by 25% and 35% +respectively compared to 2022. + Average time to fix cybersecurity vulnerabilities decreased by 65% compared to 2022 + Over 80% of our operations audited and certified to ISO 27001 (by headcount) +Clear and robust governance processes +for each of our key ESG areas + New ESG governance structure with two board-level committees (Sustainability & +Compliance and People & Governance) +Awards and accreditations: ISO 27001 2022 Information Security Management System +Entain plc Annual Report 202346 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Provide a secure +and trusted +platform \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_49.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..2df1dd03adee64cec0ef337284394c3d53a08ead --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,112 @@ +Doing what’s right +Every colleague, including contractors +and agency staff, must complete four +compliance modules covering Entain’s +Code of Conduct as well as ethical topics +such as safer gambling, data privacy, or +bribery and corruption prevention. As part +of this, colleagues sign a declaration that +they have understood the training and will +comply with Entain’s Code of Conduct. +Our 2023 Group Bonus was linked to +achieving 85% completion for each +module – an ambitious but achievable +target given the turnover in certain parts +of our business. This year, we achieved an +average completion rate of 98% – up from +93% in 2022 and 82% in 2021. +Big Four Learning Modules +Completion +Rate +Code of Conduct 94% +Compliance, Safer Gambling, +and Anti-Money Laundering 98% +Data Privacy 98% +Cybersecurity 98% +Provide industry-leading cybersecurity +and data privacy +Safeguarding our corporate and customer +information remains a top priority for +Entain. Our commitment is reflected in the +growing headcount of our Data Privacy and +Cybersecurity teams, which respectively +increased by 25% and 35% in 2023. +In 2023, we continued building our data +privacy assurance function with dedicated +resources to monitor the effectiveness +of our privacy activities, keep risks under +review, and update policies and procedures. +We boosted privacy controls by introducing +Effectiveness and Maturity Reviews of +our most critical data processes. We also +reinforced our risk management process +with a new privacy risk register which feeds +into Entain’s Enterprise Risk Management +(“ERM”) risk maps and identified an +additional 20 privacy risks in 2023. +Throughout the year, we further embedded +Entain’s Artificial Intelligence (“AI”) and +Data Ethics Charter, which we launched +in 2021 to define our principles for the +responsible use of AI and data-driven +technologies. We collaborate across the +business to embed Privacy by Design, +building data privacy considerations +directly into the development of our +products and processes. We have also +been preparing for emerging legislation +around AI, such as the EU Artificial +Intelligence Act. Working closely with our +Data Sciences & AI (“DSAI”) colleagues, +the Privacy team created a blueprint for +Entain’s AI Governance Framework and +developed a new AI policy which will be +released in 2024. +As cybercrimes continue rising globally, +we are continuously improving our +cybersecurity programme to protect our +players from digital threats. In 2023, we +introduce new security features in our +products such as customer multi-factor +authentication. We also reinforced our +cyberattack detection processes by +deploying machine-learning and AI- +based systems which uncover patterns +of malicious activity and block attacks +before they can reach our customers. +We managed to decrease the average +time to fix cybersecurity vulnerabilities by +65% compared to 2022. +As part of our commitment to best +practice, we have re-certified for the +ISO 27001 certification, an international +standard for information security. As of +31 December 2023, 80% of our operations +have been audited and certified to +ISO 27001. In 2024, we will continue +expanding the scope of the certification to +our 2023 acquisitions. +Clear and robust governance +processes for each of our key +ESG areas +In April 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. This new +structure reflects the ever-growing +importance of ESG topics for the group. +You can read about our ESG governance +structure on page 43. +As a FTSE100 company, +we have a duty to do the +right thing. This also means +training our people to always +make the right decision +for our customers and +our communities. +Entain plc Annual Report 2023 47 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Provide a secure and +trusted platform +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_5.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..9800d0d1fb13d42baafaeacb3075e7744440b355 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_50.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c14569294c1cb4570811a1185d4d90e4093d5a70 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,139 @@ +Focus area 2023 Highlights +Attract, engage and retain the best, +most diverse talent + Launch of Black Professionals@Entain employee network + Publication of Entain’s first-ever Global Menopause Policy + Entain ranking 5 in the 2023 All-In-Diversity Project Index + Entain’s Returnship programme with McLaren Racing receiving accolades at the +Women in Gaming Diversity Awards and the Personnel Today Awards +Provide the right growth opportunities +for all + Launch of Your Goals, Entain’s new objective-setting programme +Build a sense of belonging for +all Entainers + Launch of refreshed values and behaviours + 94% of Entain Managers received mental health training through the Workplace of +Tomorrow programme + 400,000 employee interactions with Entain’s Well-Me events, activities, and content + 9.1% utilisation rate for our Employee Assistance programme +Awards and accreditations: + + +We attract a broad and diverse audience from the inside out. +We are an employer of choice, and we build an inclusive and +supportive culture where talents from all backgrounds can thrive +Material issues + Diversity, equity and inclusion + Having the right people +Oversight +People & Governance Committee +On International Women’s Day 2023, we +published our first-ever global menopause +policy. Our ambition was to help colleagues +understand menopause-related issues and +normalise talking about the symptoms. +The policy came with a global awareness +campaign and support for managers in +having conversations around menopause. +We built a virtual Menopause Hub with +resources and bite-size training for those +going through the menopause journey and +for managers and teammates wanting +information on how to best support women +in the workplace. +We are committed to positively impacting +diversity not just within Entain, but across our +industry. We partner with universities and +charities to improve female representation +within STEM careers. One example of this +is our partnership with Girls Who Code, +through which we have reached 10,680 +young women since 2021. You can read more +about our work to drive diversity in the tech +sector in our 2023 Social Impact Report. +In 2024, we will focus our efforts on further +embedding DE&I within our Resourcing +Strategy to increase representation in +our hiring process. Our new recruitment +and candidate management platform will +provide us with better DE&I data on our +Attract, engage and retain the best, +most diverse talent +Diversity, Equity and Inclusion (DE&I) are key +to Entain’s future sustainability and success. +Attracting and retaining key talent remains +one of our Principal Risks as a tech business +(see page 85), and workforce diversity +plays an essential role in innovating, driving +change, and delivering outstanding products +and services for our customers. +As part of our commitment to DE&I, we +understand the importance of global +employee networks in providing a safe space +for colleagues with a shared identity or +experience. Launched in 2022, the Women@ +Entain and Pride@Entain groups continue +to grow, with over 1200 and 250 members +respectively. In 2023, Women@Entain +piloted a new mentoring programme for +women in our Product & Technology team, +matching participants with senior mentors. +We also launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. Led by our +network, we signed a UK partnership +10,000 Black Interns Foundation, and have +pledged to offer career opportunities to +Black students and graduates in the summer +of 2024. +Gender diversity at Entain +Group Board 33% +2023 3 out of 9 +(33%) +2022 +2021 +3 out of 9 +(33%) +4 out of 10 +(40%) +Senior managers 28% +221 out +of 794 +(28%) +194 out +of 752 +(27%) +128 out +of 364 +(26%) +2023 +2022 +2021 +All Employees 46% +13,645 out +of 29,576 +(46%) +13,479 out +of 28,940 +(47%) +11,583 out +of 25,554 +(45%) +2023 +2022 +2021 + Male Female +Personnel Today +Equity, Diversity & +Inclusion award +Women in Gaming +Diversity Awards Innovator +of the Year award +Entain plc Annual Report 202348 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Create the +environment for +everyone to do +their best +work \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_51.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c80ae463127b563c317fc3f799afe58eca33e894 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,159 @@ +candidates and recruits, allowing us to +tailor interventions and set group-wide +targets. We will also continue to remove +any barriers in the hiring process for +candidates and colleagues through the +design and launch of our new recruitment +platform in 2024. +Provide the right growth +opportunities for all +Our colleagues’ continuous personal and +professional growth is essential, and we +invest in targeted learning & development +(“L&D”) within our business units. +Programmes, courses, and self-led learning +are tailored to the needs of our teams +and individuals. +Entainers globally have access to best- +in-class learning resources, such as +LinkedIn Learning, Get Abstract, and +Pluralsight. These platforms enable our +colleagues to continuously develop their +skills – from marketing to Python coding or +public speaking. +In 2023, we focused our L&D efforts on +customer-facing roles, both in our global +Customer Services team and across our +Retail Estate. We know that customer +satisfaction starts with great leadership and +employees who feel supported and valued. +In our Customer Services team, we kicked +off Let’s Lead, a new leadership programme. +The seven-week curriculum includes a mix +of self-paced learning, in-person training, +and professional certifications delivered by +external providers. With over 20 modules, +the programme equips our managers +with all the technical knowledge and soft +skills they need to successfully lead their +teams. This includes completing a Mental +Health First Aider course, as part of Entain’s +commitment to wellbeing. 979 colleagues +have already completed the course, with 113 +learning sessions delivered and we will roll +it out to Hyderabad, India and Montevideo, +Uruguay in 2024. +In our retail business, we have built a +consistent foundation of competency +and knowledge among managers and +team leaders. The Enhance, Establish and +Elevate Your Game programmes support +colleagues at different points in their careers, +from preparing for a first management +role to sharpening their leadership skills. +In 2023, the programme trained over 2000 +colleagues. We are proud that many of +our retail management team started as +Customer Service Managers before growing +into senior roles. +Last year, we also worked to harmonise +the way our colleagues think about their +professional objectives. We launched Your +Goals, an objective-setting programme, to +ensure all our colleagues have meaningful +conversations with their managers about +their goals and understand how these align +with Entain’s strategy. In 2024, we will +develop Entain Leadership Expectations +which will be supported by a structured, +consistent, and global leadership pathway. +Build a sense of belonging for +all Entainers +Following an intensive period of business +growth, we wanted to bring our colleagues +together and consolidate our shared culture. +2023 saw us launching a refreshed set +of values and behaviours which build on +our core beliefs whilst helping us prepare +for the next phase of our evolution: Do +what’s right, Keep it simple, Go beyond, +and Win together. More than words on a +wall, these values act as guiding principles +for our colleagues across all locations and +at all levels. They have been embedded +in everything we do, from the way we +recognise our colleagues to how we set +individual objectives. +In line with these values, we remain +passionately committed to creating a +supportive and encouraging environment +where all our colleagues can thrive. +The Entain Well-Me strategy is designed +to help employees make positive changes +to improve their physical, mental, and +emotional health. Our 2022 global well- +being survey, which was completed by +9,600 colleagues, helped us identify +strategic priorities for the coming years. + In 2023, we rolled out Workplace of +Tomorrow, a mental health programme +designed to give people managers the +tools to support their teams and create a +culture of trust and psychological safety. +Developed by experts at Unmind, the +training equipped our managers to have +supportive conversations, giving them +practical knowledge on topics such as self- +care, stress and anxiety, or active listening. +94% of the Entain managers completed the +course last year. 74% of them taking action +with their team as a result. +Our 2023 global wellbeing campaigns were +tailored to boost the mental and physical +health of our colleagues. Our flagship +Live-Well Festival consisted of a week- +long event with expert-led workshops on +nutrition, sleep, and fitness, generating +65,000 engagements on our intranet. +In November, nearly 600 colleagues joined +Breaking Stereotypes Together, a live event +to champion men’s mental health and share +techniques for combatting stress. +Looking at 2024, we are using data from +our global wellbeing survey to pilot Entain’s +new resilience training, The Energy Edge. +The programme aims to help colleagues +grow their energy and performance through +a mix of text learning, bite-sized videos, +and interactive activities. We will open +the programme to our retail colleagues +in early 2024 before opening to our +global workforce. +In 2023, we partnered with the McLaren +F1 team on a Returnship programme, +providing unique opportunities for skilled +women to resume their STEM careers. +Over six months, 10 career returners +worked at both Entain and McLaren in +roles ranging from Data Analysts to +Software Developers. The placements +were tailored to their experience and +ambitions, and they received extensive +support to ensure a successful transition +back into work. We are delighted that, at +the end of the returnship, most returners +secured a role at Entain or McLaren. +The programme received two accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Driving Diversity Forward with +McLaren Racing +Companies like Entain can +reshape the world of work for +women, and we want to play +an active role in doing so. +Entain plc Annual Report 2023 49 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Create the environment +for everyone to do their +best work \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_52.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8c5e7af17dd9be90d6dabdd21e3b7484731185d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,36 @@ +We will be Net Zero by 2035, and support and positively impact +our communities around the globe +Material issues + Environmental sustainability + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Reduce our +environmental impact + 70% global electricity from renewable sources, including over 99% in the UK through +green tariffs and a 5-year Power Purchase Agreement + 9% decrease in market-based Scope 1 & 2 emissions globally from the prior year + Near-term and Net Zero submitted to the Science Based Targets Initiative (SBTi), +pending verification +Create a sustainable +value chain + 35% of our in-scope third-party spend enrolled on the EcoVadis platform with +a detailed assessment of their sustainability performance +Promote grassroots, women’s and +disability sports + 250+ aspiring champions have received a financial award via SportsAid since 2019, +helping to cover the costs of training, equipment, and travel + 100 non-league football clubs supported via Pitching In since 2020, enabled to reach +their communities +Support communities where +we operate + Donating £25.4m, to support our communities. + Fundraising £0.5m for Prostate Cancer UK and £1m for Chance for the Children via the +Ladbrokes Coral Trust, funding life-saving research and treatment +Awards and accreditations: ISO 14001: Environmental Management across our operations in GB (shops, stadia and +offices) covering 47% of our global headcount. +Entain plc Annual Report 202350 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_53.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f59ccc018718fd0662cb42c992e4d71a9d7f8f7 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,151 @@ +Environmental Impact +Doing what’s right is one of Entain’s long- +standing values. Whilst our greenhouse +gas (GHG) emissions are relatively low +compared to companies in other industries, +we have an important role to play due +to our size and global scale – especially +given the critical and urgent importance of +climate change. +We were the first betting and gaming +company to formally commit to a Net Zero +target with the Science-based Targets +Initiative (SBTi), with the formal verification +process commencing in 2023 and due to be +concluded in 2024. +Our targets reflect our ambition to lead +the industry on decarbonisation. We have +committed to reduce our absolute scope 1 +and 2 (market-based) and material Scope +3 emissions by 42% by 2027 from a 2020 +base year, and 60% by 2030. We have +also committed to be net zero by 2015 – +reducing our Scope 1, 2 and 3 emissions +by 90% by 2035, and investing in credible +carbon removal projects to neutralise the +remaining 10%. These targets, which follow +the SBTi criteria, will see us reduce our +emissions in line with a 1.5 decarbonisation +pathway ahead of the UK Government’s +2050 timeline. +In 2023, our Net Zero Action Group +developed our first net-zero strategy, which +focuses on energy (efficiency and sources), +electrification, and engagement (see +next section). +We continue to procure over 99% of +our electricity in the UK from renewable +sources, which equates to 70% renewable +electricity globally. We are currently looking +at the viability of sourcing renewable +electricity in our key markets globally. +We recognise that as a digital business, we +need to understand our digital emissions. +We have been collecting and analysing +data from our data centre suppliers to +understand the energy consumption and +renewable energy purchasing of our major +providers. Our most recent analysis in 2022 +indicated that over 50% of our data centres +are on renewable electricity contracts, +and we are engaging with our providers to +increase this further. +We know that ambitious decarbonisation +requires credible and up-to-date data +to monitor and address our emissions +hotspots. In 2023 we signed up to carbon +accounting software that we will launch +and operationalise in 2024. To increase +the quality of our emissions reporting, we +have also commissioned the Carbon Trust +to verify our Scope 3 emissions footprint +in addition to our annual scope 1 and 2 +footprint verification. +Creating a sustainable supply chain +Our commitment to ethics and sustainability +extends to our business partners. We want +to work closely with our suppliers to +support them on their decarbonisation +journey and to protect human rights beyond +our operations. +In early 2023, we took an important step +by partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings. EcoVadis allows us to evaluate our +key suppliers and set corrective action plans +across four topics – environment, labour +and human rights, ethics, and sustainable +procurement. The platform also provides +our suppliers with e-learning training on a +self-service model. Working with EcoVadis +will help us refine our Net Zero roadmap by +giving us access to primary emission data +from our suppliers and helping us identify +those who are committed to the Science +Based Targets Initiative (“SBTi”). +Throughout the first year of our partnership, +we focused on onboarding our existing +suppliers to the platform, enrolling and +assessing over 35% of in-scope vendors. +This represents £523m of third-party +spend. So far, we found that our suppliers +scored on average 59.6 out of 100 +on EcoVadis, 13.6% higher than the +benchmark. We also embedded EcoVadis in +our tender process, making its sustainability +assessment a mandatory requirement for +all winning suppliers. +We are now working with our suppliers to +create corrective action plans, supporting +them in improving their sustainability +performance. We encourage them to set +Science-based Targets, increase their use +of renewable energy sources, and publish +policies around Anti-Bribery and Corruption +(“ABC), Modern Slavery, and Diversity, +Equity and Inclusion (“DEI”). Our ambition is +for 75% of our in-scope third-party spend +to be assessed on EcoVadis by the end +of 2025. +Next year, we will start implementing our +2024-2026 Modern Slavery Strategy by +conducting an extensive risk assessment +of all our in-scope suppliers, mapping +areas where modern slavery could be +more prevalent based on factors such as +purchasing category or political instability. +The findings will help us identify higher-risk +suppliers and, when necessary, request +the completion of supplier self-assessment +questionnaires and plan for external on-site +audits to be completed in 2025. +Promoting Grassroots, Disability and +Women’s Sports +Entain is passionate about sports and +understands the role it plays in society. +We are proud to invest at the grassroots +level, supporting amateur and professional +athletes of all ages, backgrounds, and +abilities to chase their dreams. The Entain +Foundation supports projects across the +globe that you can discover in our 2022/23 +Social Impact Report. +In the UK, we are proud of our long-term +commitment to SportsAid, helping young +British athletes aspiring to become the +country’s next Olympic, Paralympic, +Commonwealth, and world champions. +Since 2019, Entain has helped 251 athletes +by providing them with a financial award to +help with training, equipment, competition +costs, and personal development training. +We empower a diverse cohort of sports +people nationwide, with a close to even +gender split, 48% of our athletes with a +disability and 16% coming from ethnic +minority backgrounds. By 2024, we will +have donated £500,000 to SportsAid. +Entain plc Annual Report 2023 51 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_54.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2e6a1f05347d865387bb5ed816889ee8f468fde --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,76 @@ +In the U.S., we have partnered with Oak +Out Hunger Entain since 2022. The project, +launched by the Charles Oakley Foundation, +provides education in responsible +gambling with other forms of support to +underprivileged communities. The Entain +Foundation U.S. sponsorship provides +funding and expertise in preventing and +mitigating problem gambling to the Oak +Out Hunger community project. In 2023, +the Entain Foundation U.S. helped fund +10,000 meals to those communities in need. +If you would like to learn more about the +difference we make with our partners +across the globe, we invite you to review +our 2022/23 Social Impact Report. +We also launched Pitching In in 2020 to +support and develop grassroots sports in +the UK, helping non-league clubs improve +their facilities. This multi-million-pound, +multi-year investment programme works +with the Trident Leagues to champion +their achievements and tell their stories. +Pitching In has been designed from the +ground up to deepen links between clubs +and their local communities. We are +also the founding partner of the Trident +Community Fund since 2020, investing +£150,000 every year to enable clubs to +engage in vital community-based projects +and invest in their local areas. In 2022, we +unveiled the Pitching In Volunteer Hub, a +unique online portal and one-stop shop +for every Trident League club to connect +football fans with potential volunteers. +The Volunteer Hub provides a simple +web-based interface where clubs can +post volunteering vacancies, while fans +can search for available opportunities in +their preferred clubs or locations. To date, +nearly 300 positions have been processed +through the hub, helping to bring a vitally +needed new generation of volunteers to the +Pitching In clubs. +Support communities where +we operate +As a global business, we want to positively +impact local communities across the +markets where we operate. Entain partners +with small to large-sized charities across +the globe to support the causes that are +the most important to our colleagues, our +customers, and our communities. +In Kenya, we partner with ComputerAid, +an international charity aiming to address +unequal access to technology in African +countries. Our support is helping to create +a Solar Learning Lab (“SLL”) in Al Huda +Primary School, providing technology +access to traditionally marginalised +communities in South Kenya. The SLLs +are shipping containers converted into +computer rooms and fitted with solar +panels to generate electricity, enabling +them to be deployed in remote locations. +In 2023, we enabled ComputerAid to install +two containers in Al Huda Primary School +with 20 computer stations, 20 laptops, as +well as drinking water and toilet facilities. +We expect over 750 students to access this +communal space in the coming months. +1. The Scope 3 categories included in our target are: Category 1: Purchase Goods & Services, Category 3: Fuel and Energy-related Activities, Category 4: Upstream Transportation +and Distribution, Category 5: Waste Generated in Operations, Category 6: Business Travel, and Category 7: Employee Commuting. We completed a similar risk assessment +exercise in 2022 and we intend to repeat it every other year. +Entain plc Annual Report 202352 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_55.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..ceecd901b0dad2708ddc7b76eb2a75463691cc39 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,29 @@ +Our ESG Key Performance Indicators +Pillar Data point 2023 2022 2021 +Lead on player +protection +Number of jurisdictions outside the UK covered by the ARC TM player +protection programme 27 22 - +% contributions of GGY to RET 1% 0.75% 0.5% +Cash and in-kind contributions towards responsible betting and +gaming initiatives £20.8m £18.3M £12.9m +Customer interactions regarding problem gambling 8.7m 1.8m 2.3m +ARCTM Interactions 2,3 7.5m 3.7m n/a +Customer complaints 1 3,927 4,215 4,045 +Customer complaints specifically related to a betting and +gaming transaction 715 629 655 +Self-exclusions made 1,4 53,745 60,261 61,644 +Secure +& trusted +platform +% of revenues from domestically regulated or regulating markets 100% 100% Nearly 100% +Number of markets exited with no clear path to a sustainable and +safe regulated betting and gaming industry +5 9 3 +% of operations certified under ISO27001 5 80% n/a n/a +% of Technology budget dedicated to Cybersecurity 3.2 n/a n.a +Impact of security incidents £0.7m £3.6m n/a +Entain plc Annual Report 2023 53 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_56.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..84371767540ccb2e66007b0364decbfd8c864ea4 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,99 @@ +Pillar Data point 2023 2022 2021 +Foster an +inclusive culture +Employees worldwide (headcount) 6 29,582 28,940 25,554 +Employees worldwide (FTE) 6 ,7 23,650 24,195 19,314 +Female employees 6 13,645 13,479 11,583 +% female employees 6 46% 47% 45% +Part-time employees 6 9,968 9,754 4,328 +% part-time employees 6 34% 34% 17% +Median hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 4% 3% 5% +Mean hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 16% 17% 16% +Median bonus pay difference between male and female colleagues 8 44% 39% 60% +Mean bonus pay difference between male and female colleagues 8 65% 66% 63% +Females in all management positions (as % of total +management workforce) +37% 37% 38% +Females in junior management positions (as a % of total +junior management workforce) 39% 40% 40% +Females in technical roles 9 28% 31% 30% +Female managers in revenue generating functions 10 40% 42% 38% +UK-based employees who have confirmed being part of an ethnic +minority background, as a percentage of UK employees that have +reported their ethnicity 11 15% 14% 18% +UK-based employees who have confirmed as being part from an +ethnic minority background +7% 7% 10% +Employee age groups: 7 +<30 +30-50 +50+ +Unknown +35% +47% +15% +3% +37% +46% +14% +3% +38% +48% +14% +0% +Employee contract types: 7 +Permanent 12 +Fixed-termed 12 +Contractors 13 +99% +0.1% +1% +99% +0.1% +1.5% +98% +1.21% +1.78% +Customer Satisfaction 14 78% 60% 60% +Average hours per employee of training and development 13 8.1 10.5 +Employee turnover – all 28% 36% 32% +Employee turnover – voluntary 20% 27% 25% +Whistleblowing incidents reported and investigated 65 51 29 +Whistleblowing incidents reported and investigated, broken down +by topics +Fraud and theft +Code of conduct +Procedural non-compliance +HSSE +HR Grievance +Not provided +12 +32 +15 +1 +4 +1 +5 +23 +12 +3 +7 +1 +N/A +Accidents 603 624 456 +Employee work-related injuries 72 112 117 +Employee reportable incidents 5 5 5 +Public work-related incidents 5 11 9 +Public reportable incidents 0 2 2 +Robberies 50 73 36 +Incidents of anti-social behaviour 6,137 5,979 4,216 +Incidents of assault 452 240 132 +Absenteeism rate 15 4% 5% N/A +% of internal hires 23.8 19% N/A +Employee engagement score 16 77% 74% 78% +Entain plc Annual Report 202354 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_57.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f475360d79982889969f60aeeddb185a7ec57753 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,119 @@ +Pillar Data point 2023 2022 2021 +Positive impact +on communities +(including +Streamlined +Energy & +Carbon +Reporting Data) +Total energy consumption (kWh) 17,18 +UK +Rest of the world (RoW) + 124,771,815 +77,957,313 +46,814,502 +125,026,096 +82,641,345 +42,384,750 +110,509,736 +85,336,239 +25,173,497 +Absolute direct emissions (scope 1) – (tCO 2e) 5,899 4,414 3,663 +Absolute indirect emissions (scope 2, location-based) – (tCO 2e) 27,202 26,846 24,767 +% of purchased electricity from renewable sources 19 70.3% 66.4% 67.4% +Total GHG emissions – direct & indirect: location based (tCO 2e)20 +UK +RoW +33,101 +14,885 +18,216 +31,259 +15,569 +15,690 +28,430 +18,286 +10,144 +Absolute GHG emissions intensity per employee (tCO 2e/headcount) 1.12 1.08 1.13 +Absolute indirect emissions (scope 2, market-based) – (tCO 2e) 9,171 12,151 12,677 +Total GHG emissions – direct and indirect: market based (tCO 2e) +UK +RoW +15,071 +625 +14,445 +16,565 +1,980 +14,585 +16,340 +4,932 +11,408 +Waste generated 21 (tonnes) 3,738 4,384 3,858 +Total Scope 3 GHG emissions (tCO 2e)22 +Category 1: Purchased Goods & Services (EEIO methodology) +Category 1: Purchased Goods & Services (Supplier specific) +Category 4: Upstream Transportation & Distribution +Category 5: Waste +Category 6: Business Travel +Category 7: Employee Commuting +346,051 +312,603 +15,726 +7,873 +101 +5,292 +4,456 +315,550 +288,524 +12,100 +6,399 +83 +4,398 +4,046 +Supplier spend £2.8bn £2.7bn £2.1bn +Number of suppliers 12,613 12,006 10,380 +1. Data covers all Great Britain licenses. +2. Data covers all UK licenses. +3. This figure includes all ARC TM real-time packages and risk-based interceptors, as well as ARC TM emails. It is a count of the number of customer interactions, not at a distinct +customer level. This figure includes the 1,807,892 interactions reported under ‘Customer interactions regarding problem gambling’. +4. Data only includes self-exclusions made via Entain’s own processes (e.g., via customer services) and does not include third-party self-exclusion schemes such as, for example, +GAMSTOP (National Online Self-Exclusion Scheme) and the Multi-operator Self Exclusion Scheme. This information has been obtained from Entain’s Regulatory Returns. +5. We use employee headcount to evaluate the scope of our ISO27001 certification. +6. The 2023 figures under the ‘Foster an inclusive culture’ pillar do not include our latest acquisitions 365 Scores and STS as data isn’t yet available for these new subsidiaries at +the time of publication. Unless stated otherwise, the 2022 figures do not include employees from our November 2022 acquisitions, SuperSport, Puni Broj, and Minus. All figures +are global unless stated otherwise. The snapshot date for all figures is 31 December 2023 unless otherwise stated. +7. The 2022 figures have been revised from the 2022 annual report to include employees from SuperSport, Puni Broj, and Minus 5. The 2022 figures do not include employees from +SuperSport, Puni Broj, and Minus 5 who have left the business between 1/01/2023 and 31/04/2023. +8. Data covers UK colleagues only. Data is based on a snapshot date of 5 April for the year stated, as per the requirements of the UK’s Gender Pay Gap Reporting. +9. For the 2021 and 2022 figures, technical colleagues were those employees that rolled up to our Chief Technology Officer based on our Business Process Flow Manager. +Following changes to the Group’s functions in 2023, technical roles are defined for 2023 as all roles in our Product & Technology function excluding customer operations. +10. For the 2021 and 2022 figures, revenue-generating functions included our digital and retail/stadia functions. Following changes in the business, revenue-generating functions +are defined for 2023 as the following functions: Ladbrokes.au/Neds, Core, BetCity, Crystalbet, Enlabs, Eurobet, Labrokes.be, Latam, Retail & Stadia, and BetMGM. +11. This 2023 data is based on a sample of 47% of UK-based Entain employees who have provided us with their ethnicity information. To prevent us from over or understating the +ethnic diversity of our employees, we report this data in two ways. We report on both the percentage of the sample that identifies as being from ethnic minority backgrounds, as +well as the number of those confirmed to be identifying as from an ethnic minority background as a proportion of all UK employees. +12. As a percentage of the total number of employees excluding contractors. +13. As a percentage of the total number of employees. +14. Our methodology to measure customer satisfaction changed in 2023, as we stopped using email surveys and replaced them with digital pop-up surveys shared with customers +whilst online. +15. Data covers UK retail colleagues only. +16. We measure employee engagement based on the results of the annual Your Voice survey. The 2023 survey was postponed to January 2024, which is the basis for the 2023 data. +17. Coverage of energy consumption and emissions data is 100% for the UK, and 87% globally, by employee headcount. Global and ROW energy and emissions data are scaled up +based on this coverage to estimate totals across global operations. This data includes energy consumption related to both scope 1 (company vehicles, gas, and fuel) and scope +2 emissions (purchased electricity). Global coverage is below 100% due to limited availability at the time of reporting. Any updates to figures will be provided in our forthcoming +ESG Report and CDP submission. +18. Recent acquisitions of 365Scores and STS are not included in the figures due to no data availability at the time of reporting – we will include these entities in our 2024 reporting +and restate previous years according to our rebaselining policy. +19. Energy from renewable sources only includes electricity purchased that was actively sourced from renewables. All remaining electricity used by Entain is sourced from the local +grids where we operate. +20. Emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard. Consumption data has been converted to GHG emissions using 2023 BEIS +emissions factors and 2023 IEA emissions factors for non-UK grid electricity. Emissions reported above are calculated using both the location-based and market-based +methods, using an operational control boundary. 2021 and 2022 GHG emissions (Scope 1 & 2) data has been assured to limited assurance by the Carbon Trust based on ISO +14064-3: 2019. Verification statements are available on our website. 2021 Scope 1 emissions data has been restated due to a methodology change that arose in the 2022 +assurance process. +21. Waste data is sourced from our operations in the UK. This makes up 49% of our overall headcount. These figures are not prorated to 100% coverage. +22. Scope 3 emissions data disclosed has been verified by the Carbon Trust to ISO 14064-3 for 2022 and 2021. 2023 data was not available at the time of reporting but will be +disclosed later in 2024. +Entain plc Annual Report 2023 55 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_58.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb449c20b1d94c1fb8fa582fd794345f76a9c1db --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_58.txt @@ -0,0 +1,99 @@ +and opportunities (Metrics and targets – +disclosure C), in particular the physical risks +outlined in Table 2. These updates will be +included in the 2024 Annual Report. +This statement was developed by following +the guidance in Section C of the TCFD +Guidance Document: Implementing the +Recommendations of the Task Force on +Climate-related Financial Disclosures. +Table 1 is structured against the four pillars +of the TCFD framework: Governance, +Strategy, Risk Management and Metrics +and Targets. Table 2 summarises our +most material climate-related risks and +opportunities and their estimated impact +on the Group. Table 3 outlines the climate +change scenarios used in our 2022 analysis +and subsequent 2023 review. +2022 scenario analysis, we reviewed our +climate-related threats and opportunities to +identify those that are the most significant +to the group. This process helped us +refine our analysis, and we have revised +our list of climate-related threats and +opportunities accordingly. +Over the next year, we will continue refining +the quantification of the impact of climate- +related risks on the Group and across our +different markets. We want to further +embed climate-related considerations +into the Group’s financial planning and +relevant business strategies, such as our +Key Locations Strategy which determines +where we will operate in the future. We will +consider additional metrics and targets +to monitor our climate-related threats +Over the past year, we have made progress +in integrating climate-related risks into our +group enterprise risk management (“ERM”) +framework. In line with the ‘comply or +explain’ obligation under the UK’s Financial +Conduct Authority Listing Rules, the Group +can confirm it is fully compliant with ten of +the eleven TCFD recommendations and +partially compliant with disclosure C of +the Metrics and Targets pillar. Where we +are partially compliant, we continue to +develop and mature our processes as +outlined below. +Our priority for 2023 was to start +evaluating the impact of our relevant +climate-related risks on the group in line +with our ERM methodology as described on +pages 79 to 82. Using the outcomes of our +TCFD Entain is a staunch supporter of the recommendations of the +Task Force for Climate-related Financial Disclosures (“TCFD”), +having made voluntary disclosures ahead of the FCA’s mandatory +requirements for UK Premium Listed Companies. In this section, we +disclose the threats and opportunities of different climate scenarios +on our Group – whether these are the impacts of transitioning to a +lower-carbon economy, or the adaptational impacts arising from a +rapidly warming planet +Governance +(a) Describe the board’s +oversight of climate- +related risks and +opportunities. +FC The Entain Board is ultimately responsible for climate-related threats and opportunities, with overall +ownership of this agenda sitting with our CEO. +Responsibility for identifying and managing threats is delegated to the Sustainability and +Compliance Committee, which is accountable for monitoring our progress against targets, and +ensuring climate-related risks are adequately addressed, respectively. +The Sustainability and Compliance Committee is also responsible for approving, and overseeing +the implementation of, our environmental strategy. The Committee receives quarterly updates on +our progress against our climate-related performance – including progress against our goals and +targets – from the ESG Steering Committee (see below). In 2023, the Sustainability and Compliance +Committee was briefed on climate-related issues and opportunities at four of their meetings. +The Group Risk Committee, which reports to the Board, has operational responsibility for managing +risks within the Group, including climate-related risks deemed to have a material financial impact. +The Board ultimately approves the Principal Risks and significant risks as well as how they are +allocated for monitoring. +(b) Describe +management’s role +in assessing and +managing climate- +related risks and +opportunities. +FC Our ESG Steering Group is responsible for assessing and managing climate-related threats +and opportunities, as well as overseeing our approach to climate change as part of our wider +sustainability strategy. The ESG Steering Group is chaired by our Chief IR & Communications Officer +and reports to the Board Sustainability and Compliance Committee every quarter (see pages 42 to +43). +In addition to our ESG Steering Group, we set up a Net Zero Action Group to deliver Entain’s Net Zero +strategy. The Action Group convenes senior colleagues across departments to identify practical +measures which can be implemented throughout our global operations to reduce greenhouse gas +emissions. It reports to the ESG Steering Group every quarter. +Table 1 – Climate-related financial disclosures aligned with the TCFD recommendations +56 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_59.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1829672dfb67727c0daa84fc98fcc985280026a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_59.txt @@ -0,0 +1,74 @@ +Strategy +(a) Describe the +climate-related risks +and opportunities +the organisation has +identified over the +short, medium, and +long term. +FC Please see Table 2 on pages 60 to 61 for a full description of climate-related threats (both physical +and transition) and opportunities potentially arising over the short, medium, and long term that +could have a material financial impact on Entain. +As described below, our climate-related threats and opportunities have been assessed against +Entain’s ‘Impact versus Action’ matrix (see page 82). In line with our matrix, the materiality of +climate-related risks on Entain was assessed by evaluating their potential impact on the Group’s +finances, operations, reputation, and commitment to health & safety. This was done across three +climate scenarios (see Table 3) and time horizons (see below). All climate-related threats and +opportunities were mapped against five categories, from very low impact to very high impact. The +Group defined as material any climate-related risks potentially having a medium or above impact on +the Group. +We understand that climate-related threats and opportunities can have longer-term time horizons +that span beyond typical enterprise risk management and business planning processes. We +considered climate-related risks based on the following time horizons: + Short (0-3 years) + Medium (3-5 years) + Long (5+ years) +(b) Describe the +impact of climate- +related risks and +opportunities on +the organisation’s +businesses, +strategy, and +financial planning. +FC In Table 2, we describe the potential impact of climate-related threats and opportunities on the +Group’s businesses, strategy, and financial planning in the short-, medium- and long-term (see +section above for definitions). +Addressing climate change is a key part of our strategy, and our Net Zero by 2035 commitment is an +important aspect of the Sustainability enabler in our strategic framework. Delivering on this requires +alignment with financial planning. In the short-to-medium-term, financial planning decisions have +already been made with the climate in mind. +For example: + Continuing to invest in our green electricity tariff for the UK Retail estate, despite increasing +energy costs. + Investing in a renewable Power Purchasing Agreement (PPA) to secure renewable energy at a +fixed price to gain energy price certainty. + Increasing our price banding for our company car selection, giving a wider choice for relevant +colleagues opting for hybrid and electric vehicles. +Over the next years, we will look to further embed climate considerations into our financial and +strategic planning processes as we further enhance our assessment and response to climate- +related issues and further integrate climate-related risks into our day-to-day processes. Currently, +the impact of climate-related issues has not significantly impacted Entain’s financial performance or +financial position, and we don’t anticipate it will in the short to medium term. +(c) Describe the +resilience of the +organisation’s +strategy, taking +into consideration +different climate- +related scenarios, +including a 2°C or +lower scenario. +FC In Table 2, we describe the Group’s strategic response and resilience regarding our climate- +related risks and opportunities. The risks outlined in Table 2 were developed through a series of +workshops held throughout 2022 and reviewed again in 2023 against our ERM methodology. Our +analysis raised risks that have not yet been deemed to be Principal Risks in and of themselves, +but climate change may become a factor in affecting the impact of our current Principal Risks, +and the subsequent actions required to manage those risks, both threats and opportunities. +Therefore, the climate-related threats and opportunities identified are emerging and/or operational +risks that will continue to be monitored and evaluated. The most significant risks have been +integrated into functional and divisional risk registers and they are continuously reviewed by their +functional owners. +57Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_6.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..15722093f9084c8852be42e15ba3b487f0add6a9 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,54 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_60.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfa456bf9c5d41796d2612094ac004998aa92f58 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,60 @@ +Risk Management +(a) Describe the +organisation’s +processes for +identifying and +assessing climate- +related risks. +FC In 2022, we conducted a series of workshops focused specifically on climate-related threats +and opportunities. This was led by Entain’s Chief Risk Officer and facilitated by our external ESG +Advisors. The purpose of these workshops was to gather insights from leaders around the business +on the climate-related threats and opportunities that were relevant to Entain, identifying those that +required further in-depth analysis to determine their impact on our business. In these workshops, +we explored three climate change scenarios outlined in Table 3, enabling the workshop participants +to draw out how each would affect Entain’s ability to deliver on our strategy. The climate-related +threats and opportunities identified through these workshops were disclosed in our 2022 +TCFD statement. +In 2023, we wanted to further integrate these threats and opportunities into our group enterprise +risk management framework and start evaluating their impact on the Group in absolute terms +as well as in relation to other business risks. We convened leaders and experts from across +the business to review the risks and assess them against our ‘Impact versus Action’ matrix, as +described on page 82. All risks were assessed for their impact on the business and the actions +required to bring those risks within Entain’s risk appetite. The impact of each risk was measured by +evaluating its financial implications, its potential operational impact (including impact on products +and services), the effect on the reputation of our brands and whether it affects our commitment to +health, safety, security, and well-being. This allowed us to allocate risks across five categories, from +very low impact to very high impact. Any climate-related risks potentially having a medium or above +impact on the Group is deemed as material and disclosed in Table 2. These material risks have been +integrated into our functional and divisional risk registers (see disclosure C below). +(b) Describe the +organisation’s +processes for +managing +climate-related +risks. +FC Our principal risks are recommended by the Group Risk Committee and ratified by our board, +as described on pages 83 to 86. The feedback from our 2022 and 2023 TCFD workshops found +that our climate-related threats and opportunities do not qualify as Principal Risks but rather +as emerging and/or operational risks. The outcomes of our work described above allowed us +to prioritise our significant climate-related threats and opportunities have been integrated into +functional and divisional risk registers and they are continuously reviewed by their divisional heads. +(c) Describe how +processes for +identifying, +assessing, and +managing climate- +related risks are +integrated into +the organisation’s +overall risk +management. +FC In 2023, we further embedded the process for identifying, assessing, and managing climate-related +risks into our overall risk management and governance framework, which is outlined on pages +79 to 82. As described above, all climate-related threats and opportunities have been assessed +against Entain’s ‘Impact versus Action’ matrix. The most significant climate-related threats and +opportunities have been integrated into functional and divisional risk registers and they are +continuously reviewed by their divisional heads along with other business risks on an annual basis. +58 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_61.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f82084b905976e7e51ea25f66986fccc4b610cb --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,71 @@ +Metrics and Targets +(a) Disclose the +metrics used by +the organisation +to assess climate- +related risks and +opportunities +in line with its +strategy and risk +management +process. +FC In 2023, the Group started evaluating our climate-related threats and opportunities against Entain’s +‘Impact versus Action’ matrix, described on pages 60 to 61. The impact of each risk was measured +different scenarios and timeframes by evaluating its potential: + financial implications + operational impact + effect on the reputation of our brands + affect to health, safety, security, and well-being of our employees +This allowed us to evaluate the business impact of climate-related risks – from very low to very high +– across three different climate scenarios. +Entain also uses the following metrics to monitor its performance in managing transition risks and +progress against its Net Zero target: + Scope 1 and 2 greenhouse gas emissions + Scope 3 greenhouse gas emissions + Global energy consumption + Percentage of electricity purchased on renewable energy contracts + Water consumption (where data is available) + Waste (where data is available) +We report our performance against these metrics on page 55. We disclose figures for the past three +financial years (FY23, FY22, and FY21) and we describe the methodologies used to calculate them. +In line with prior years, the Group will report 2023 scope 3 data within its forthcoming 2023-24 ESG +Report, expected to be published in Q2 2024. +At the time of reporting, climate-related metrics are not linked to remuneration. Entain does not +currently have an internal carbon price. +(b) Disclose Scope 1, +Scope 2, and, if +appropriate, Scope +3 greenhouse gas +(GHG) emissions, +and the related +risks. +FC On page 55, we disclose our Scope 1 and 2 greenhouse gas emissions for the financial years 2023, +2023, and 2021, showing historical trends. We use the GHG Protocol Corporate Standard and GHG +Protocol Corporate Value Chain (Scope 3) Standard as our methodology, using the ‘operational +control’ boundary to disclose this information. +Given the reputational risk of inaccurate reporting and the need for high-quality ESG data, we +commissioned the Carbon Trust to assure our Scope 1, 2, and 3 data. Assurance of our Scope 1 and +2 information has taken place since 2019, and our Scope 3 data for 2021 and 2022 has now been +completed. These assurance statements available on the Entain website. +(c) Describe the +targets used by +the organisation to +manage climate- +related risks and +opportunities +and performance +against targets. +C Entain currently has two non-financial targets linked with remuneration (see the Remuneration +Committee Report on page 131, linked with customer satisfaction and safer betting and gaming. +Currently, Entain does not have a climate-related target that is linked with remuneration. +As described on pages 50 to 51, we have set a Net Zero by 2035 target, which is underpinned by a +near-term reduction target of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline +year. In 2023, we started quantifying the impact of climate-related threats and opportunities. As +we continue refining our understanding of the financial impact of climate change on our business, +we intend to identify further metrics and targets that can be used to assess our most significant +climate threats and opportunities. We will continue this in 2024 with further disclosures against +recommendation A to be provided in the 2024 Annual Report as climate risk owners further define +KPIs to manage specific climate-related against. +59Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_62.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..108b2e37de2a7c38c2f0b195b7b68816d02fd6d2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact +60 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_63.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..45b310de5df85da7ed6605bfb3ec54ccb370eb9d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Key: + Low Medium High Very High +61Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_64.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab20223209d1f600c01fd31bbdd69147a49e900 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_64.txt @@ -0,0 +1,101 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact continued +62 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_65.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb48e8f44ae1430739fa127e0d25db61d3cf8609 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_65.txt @@ -0,0 +1,102 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Key: + Low Medium High Very High +63Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_66.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..31d1b348aaf496b6db5bd44757c38ccdff97ae5f --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_66.txt @@ -0,0 +1,106 @@ +Engaging with +stakeholders +In addition, the Remuneration Committee +assesses the overall performance of +the Group, including progress against +its responsible betting and gaming +ambitions as well as delivery against its +Environmental, Social and Governance +(“ESG”) strategy to support decision making +on remuneration outcomes. +To ensure that the Group continues to +operate in line with good corporate practice, +Directors as part of their induction receive +training on the scope and application of +Section 172 to ensure that they are aware +of how a Board, in its decision making, must +consider its stakeholders. +Our approach +The Board believes in the importance +of engaging in effective communication +with all of its stakeholders. Depending on +the nature of the issue in question, the +relevance of each stakeholder group may +vary and not every decision the Board +makes will necessarily result in a positive +outcome for every stakeholder. +At each meeting the Board ensures that the +process of considering its stakeholders is +embedded in papers it receives to enable it +to discharge its duties. The Board monitors +the progress and delivery of strategic +initiatives through metrics reported +in meetings. +Section 172 of the Companies Act 2006 +imposes a general duty on Directors to act +in a way that they consider, in good faith, +to most likely promote the success of the +Company for the benefit of shareholders +as a whole. The Directors in setting +policies and strategies continue to have +regard to the interests of the Group’s +employees, shareholders, investors, +suppliers, customers and regulators, +including the impact of its activities on the +community and on the Group’s reputation. +These factors underpin the way in which +the Directors discharge their duties and +the Board is cognisant of the need to +engender strong relationships with all +stakeholders to help the Group deliver its +strategy and support its long-term values +including sustainability. +The Board recognises the importance of effective +governance and operates in line with the UK reporting +regulations. The information below should be read in +conjunction with the rest of the Strategic Report. +Colleagues +In order to gather feedback from colleagues around the Group, Board members +participated in a number of virtual and face-to-face employee events in 2023. +To facilitate such engagement we have instituted formal Employee Forums in our +major employment locations. +These Forums are a vital component of +our employee listening and engagement +strategy, enabling our people to discuss +how their teams connect with the +company purpose, strategy and values, as +well as discussing topics that impact them +and their colleagues. +Virginia McDowell, Chair of both the +Sustainability & Compliance and the +Remuneration Committees, is our +appointed Designated Workforce +Director, a position she has held since +2019. Virginia is a regular attendee at +Employee Forums, enabling her to provide +the Board and its Committees with +informed feedback and insight into the +realities of everyday working life at Entain. +Virgina McDowell and Rahul Welde +(Independent Non-Executive Director) +attended both the National Forum AGM +and the Global Engagement Conference +in 2023. +In addition, we regularly hold hybrid +virtual and physical ‘townhall’ meetings +through which our CEO, Board Directors +and senior management provide updates +and dialogue with our colleagues. +Twelve such hybrid townhall meetings +were hosted from nine different office +locations In 2023. +We believe that by encouraging and +supporting a diverse workforce where +individuals can thrive and success no +matter their background, is the best +way maximise our talent pool and better +represent our global customer-base. +We do not discriminate on the basis +of age, disability, gender or gender +reassignment, pregnancy or maternity, +race, religion or belief, sexual orientation +or marriage/civil partnership. +Read more : pages 53 to 57 +1 +64 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_67.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ebc2a1da55747dfecd5555885d38fbf8fca0ad7 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,75 @@ +Shareholders +We strive to provide the Group’s investors and shareholders with an accurate and +comprehensive view of the financial and sustainable performance of the business +as well as a clear presentation of our performance against our ESG objectives +and sustainability objectives. The Group undertakes regular conference calls and +meetings with investors through roadshows, investor conferences, one to one and +group calls, publication of the Annual Report, dedicated ESG Report, press releases +and Stock Exchange announcements. In 2023, the Group conducted a total of 553 +investor interactions, as well as presenting at 12 conferences and ‘fireside chats’, +engaging with 353 unique institutions. These interactions involved a combination +of the CEO, CFO, the Chairman, the Chief IR & Communications Officer, Director of +IR and other management as appropriate. +In addition to these meetings and +conferences, as well as the usual trading +updates based around our financial +calendar, the Group also held four +shareholder events throughout the year. +These included a detailed business and +strategy update held In November 2023; +two updates on the performance of +the Group’s BetMGM joint venture and; +Entain Sustain, a virtual showcase and +presentation of the Group’s refreshed +sustainability strategy in December. +The Board receives feedback on +shareholder views through a variety of +channels, including regular meetings +throughout the year between +shareholders, our Chairman and executive +management. In addition to providing +the Board with updates on shareholder +discussion topics as part of its regular +Board reports, over the past year the +investor relations team conducted three +feedback and audit exercises to enable +us to better address investors views +based on a number of satisfaction and +confidence measures. These cover topics +including perception of the Group’s +strategy, management and opportunities +as well as delivery versus expectations +and transparency. +The quantitative analysis and qualitative +feedback were presented to the Board +during the year. The audits showed +positive progress in investor engagement +through the year with Entain performing +more positively than the benchmark +in all measures. In addition, Board +members listen in to results and trading +updates held by the Group for analysts +and institutional investors and can hear +directly the questions and comments +on Company performance and are +kept abreast of relevant newsflow and +commentary on the Company throughout +the year. +Customers +Our customers’ interests range from product availability, ethical behaviour, service, +pricing and promoting responsible attitudes to betting and gaming. The Group, as +part of its commitment to safer betting and gaming, engages through initiatives +such as Responsible Gambling Week, where responsible betting and gaming +messages dominated our websites and social media channels. +Our industry-leading ARC TM safer betting and gaming programme was developed in +recognition of the importance of tailoring our approach to the individual customer and +providing them with the protection and assurance which they should expect from us. +Read more: pages 43 to 52 +Read more: pages 8 to 11 +2 +3 +65Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_68.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..968d612b6259cf3f45c65ded086d36bc961bb498 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,64 @@ +Suppliers +The Group strives to work responsibly with its suppliers and regularly reviews its +customer and creditor payment policies. As part of the three-year modern slavery +strategy developed In 2023, we are now conducting an extensive risk assessment +of all our in-scope suppliers, to help us identify higher-risk suppliers and, where +necessary, request the completion of supplier self-assessment questionnaires. +As part of approach to ensuring a responsible supply chain, last year engaged +EcoVadis, the world’s largest platform for supplier sustainability ratings. +The EcoVadis platform enables us to evaluate our key suppliers and set corrective +action plans across four topics – environment, labour and human rights, ethics, and +sustainable procurement. +Our supplier interests range from fair trading, payment terms, success of the business +and long-term partnerships. The Group engages with suppliers by direct engagement, +supplier conferences and corporate responsibility and ethics reporting. The Board in its +duties receives regular reporting on retail performance and modern slave. +Read more: page 55 +Our Communities +Group has committed to investing £100m over five years on a range of projects +and good causes including safer betting and gaming measures, investment in +grassroots sport, reducing environmental impact, diversity in technology and +projects with a clear link to our local communities. +Entain has committed to investing £100m +over five years (2021-2025) to support a +range of initiatives and good causes In +areas including safer betting and gaming +measures, investment in grassroots sport, +reducing environmental impact, diversity +in technology and projects with a clear link +to our local communities. +A flagship project of Entain Foundation is +the Group’s Pitching In grassroots sport +investment programme, through which +the Entain Foundation supports The +Trident Leagues in the UK, made up of +248 clubs at the heart of England’s non- +league football pyramid. The Foundation +also supports a range projects to promote +diversity in and through technology and +partnered with ComputerAid and the +Turing Trust in 2023 to deliver community +hubs in sub-Saharan Africa. The Company +provides a comprehensive update to +stakeholders through the publication of +both annual ESG report and annual Social +Impact Report. +The Board has overall oversight of +corporate responsibility planning and +reporting as well as involvement in +corporate affairs strategy which is +delegated to the Sustainability and +Compliance Committee. The Sustainability +and Compliance Committee is advised +by the executive ESG Steering Group and +also works with external consultants +which assist the operational units and +review the environmental and social +performance data. +4 +5 +Read more: pages 57 to 60 +66 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_69.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c0fe3872ed9e7abce4eb9a30113790a0996db39 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,84 @@ +Read more: pages 36 to 37 +Regulators +As a global operator and one of the world’s largest online betting, gaming +and sports entertainment companies, Entain engages with a wide variety of +stakeholders. These include regulators, investors, trade associations, safer betting +and gaming charities and customers. This engagement is core to our ability to +offer first class player protection through our cutting edge technology and product +platform, while upholding all licensing objectives, across multiple jurisdictions. +One of the key relationships we maintain is with our regulators. Liaising with our +regulators on an open and regular basis helps us to ensure that each of them +are fully apprised of our operating practices. Through this process we can help +policymakers shape our industry environment to best serve our stakeholder group +whilst operating in a legal and fair way. +Governments and regulators + UK Government departments. + UK Gambling Commission. + Governments and regulators +in territories where we hold +gaming licences. + US state licensing bodies. + National information commissioners. + Domestic and International +trade Associations. + What are their expectations? + Providing an enjoyable and safe +leisure experience. + Making sure we operate legally and in a +fair manner. + Minimising harm and maximising +player protection. + Ensuring that we protect the young and +the vulnerable. + Reducing crime and unlawful behaviour. +How we engage + Ongoing dialogue with regulators, +domestic and international trade +associations and local authorities. + Responding to the UK Government’s +Review of the 2005 Gambling Act. + Numerous face-to-face +meetings bilaterally or as part of +industry meetings. + Quarterly meetings, at a minimum, +between the UK Gambling Commission +and senior members of Entain’s +leadership team. + Detailing governance, risk management +and safer betting and gaming +strategies through submission to the +UK Gambling Commission Annual +Assurance Statement process. + Partnerships with the GB Health & +Safety Executive. + Engagement with the Nevada Gaming +Commission’s Compliance Committee + Formal meetings with our regulators in +Gibraltar, Malta, the US and our other +global regulated jurisdictions. + Engage with the Department of +Justice in Ireland as it implements +new Anti-Money Laundering +(“AML”) requirements. + Respond to formal regulatory +consultations including most recently +the call for evidence on affordability +by the + UK Gambling Commission and RG +consultations in Spain and Sweden. + e-betting and gaming international +workshops in Spain, annual industry +meeting in Denmark and the ‘Licensing +information session’ in Germany. + Suspicious activity disclosed to relevant +national bodies and membership of +national match-fixing platforms (eg Spain). + Engagement with regulatory authorities +in regulating markets via local +associations and advisors in the run up +to licensing (eg Finland, Brazil). +6 +67Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_7.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dcd54c9878e1a8f3276525aca6b2b0b522c16e4 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,55 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_70.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..7be8d493ef864bd10b030da7410f26e6ff9ce7e0 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_70.txt @@ -0,0 +1,5 @@ +Rob Wood +Chief Financial Officer +Chief Financial Officer’s Review +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202368 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_71.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..4593adc724457031d3db2529ccb7b702069e9e42 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_71.txt @@ -0,0 +1,44 @@ +Financial Highlights: + Group NGR (excluding US) up +11% (+11%cc2), -2% on a proforma basis +– Online NGR up +12% (+12%cc2) in 2023, -3% on a proforma basis + • Excluding regulatory impacts, underlying proforma Online NGR growth of + + 3 % c c2 + • Record level of Online active customers, + 23% YoY, +10% proforma5 +– Retail NGR up +9% (+8%cc 2), proforma +2%cc2, reflecting the acquired +shops in New Zealand and Poland, and the continued strength of the +retail estate + BetMGM delivered a strong performance through the year +– 2023 NGR of $1.96bn, +36% year on year at the top end of expectations +– 14% market share in sports betting and iGaming in the markets where +BetMGM operates +– Positive EBITDA for H2 2023 + Group profit after tax before separately disclosed items was £339.1m +(2022: £223.9m) + Group loss after tax was £878.7m (profit of £32.9m), reflecting the DPA +settlement and impairment charges related to Australia point of consumption +tax increases and portfolio optimisation + Net debt of £3,290.9m (2022: £2,749.8m) and leverage of 3.3x +(3.1x proforma 5) + Adjusted diluted EPS of 44.2p (2022: 60.5p) + Second Interim Dividend of 8.9p per share announced, bringing the total +dividend for the year to 17.8p per share +Financial Results and the use of non-GAAP measures +The Group’s statutory financial information is prepared in accordance with International +Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (IFRS IC) +pronouncements as adopted for use in the European Union. In addition to the statutory +information provided, management have also provided additional information in the +form of constant currency 2, proforma 3, Contribution 4 and EBITDA 5 as these metrics are +industry standard KPIs which help facilitate the understanding of the Group’s performance +in comparison to its peers. A full reconciliation of these non-GAAP measures is provided +within the Income Statement and supporting memo. +Dear Shareholder +We have faced a number of challenges throughout +2023, both industry-wide and Entain-specific. +Despite the challenges, the Group delivered Revenue ++11% ahead of 2022 and underlying EBITDA3 of +£1,007.9m (2022: £993.2m) with our acquisitions +contributing strongly to the Group’s performance. +Entain plc Annual Report 2023 69 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_72.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a536991a9025b6f86026d78088abb39b83d6f5c --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,71 @@ +Financial Performance Review +Group +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +VAT/GST (63.5) (52.0) (22%) (29%) +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Operating costs excluding marketing costs (1,271.5) (1,135.7) (12%) +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV (loss)/income (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Results1: +NGR and Revenue increased by +11% versus 2022 (+11%cc 2), with proforma 3 growth in Retail and the benefit of acquisitions more than +offsetting a -3%cc 2 proforma 3 decline in Online NGR, as we continue to face regulatory headwinds in both the UK and Germany and +experienced soft trading in Australia and Brazil. Total Online NGR was +12% ahead of 2022 whilst Retail NGR was +9% ahead. +Contribution 4 in the year of £2,279.4m was +7% higher than 2022 reflecting the increase in NGR, offset by a reduction in contribution +margin of -1.8pp, due to territory mix, increased taxation in Australia and the reclassification of certain content costs in Retail to cost of +sales rather than operating costs, following the move to a revenue share arrangement. +Operating costs were 12% higher due to the impact of acquisitions (8pp), FX (1pp) and underlying inflation, including wage rate and +energy price inflation, partially offset by the reclassification of costs to cost of sales. Resulting in underlying EBITDA 5 of £1,007.9m, +1% +higher than 2022. +Share based payment charges were £2.5m higher than last year, while underlying depreciation and amortisation was 27% higher, +reflecting the impact of businesses acquired in the year (14pp), the annualisation of prior year acquisitions and continued investment in +the business. Share of JV losses of £42.9m includes an operating loss of £42.0m relating to BetMGM (2022: £193.9m), which was in line +with expectations. +Group underlying operating profit 6 was +18% ahead of 2022. After charging separately disclosed items of £1,286.5m (2022: £213.2m), +Group operating loss was £644.7m (2022: profit of 328.6m). + Online +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 13,724.5 14,090.5 (3%) (2%) +Sports margin 13.7% 12.9% 0.8pp +Sports NGR 1,531.0 1,443.7 6% 7% +Gaming NGR 1,837.6 1,576.9 17% 15% +B2B NGR 57.9 29.9 94% 90% +Total NGR 3,426.5 3,050.5 12% 12% +VAT/GST (59.9) (52.0) (15%) (21%) +Revenue 3,366.6 2,998.5 12% 12% +Gross profit 1,980.1 1,829.6 8% +Contribution 4 1,369.8 1,254.2 9% +Contribution 4 margin 40.0% 41.1% (1.1pp) +Operating costs excluding marketing costs (512.4) (426.0) (20%) +Underlying EBITDA 5 857.4 828.2 4% +Share based payments (7.3) (7.8) 6% +Underlying depreciation and amortisation (160.2) (118.3) (35%) +Share of JV (loss)/income (1.4) (0.2) (600%) +Underlying operating profit 6 688.5 701.9 (2%) +Entain plc Annual Report 202370 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_73.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4d52397764006e444ba783d2d20c8c2fd31f038 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,48 @@ +Results1: +Whilst there is underlying momentum in a number of our key markets, regulatory headwinds in the UK and Germany, as well as weaker +trading in Australia and Brazil, impacted NGR performance in 2023. Resulting proforma 3 Online NGR was down -3%cc 2 in the year but, +with the benefit of acquisitions total Online NGR was +12%cc 2 ahead of 2022. Whilst proforma 3 NGR was down year on year, actives +grew +10% year on year on a proforma 3 basis, emphasising the ongoing attraction of our brands to our customers. +In the UK, we continue to absorb the impact of regulatory changes and as a result NGR was down -6%. Excluding the impact of these +regulatory headwinds, we estimate that underlying NGR was +4% ahead of 2022, while actives were +18% higher than the same period +last year. +In Italy, constant currency 2 NGR was +3% ahead of 2022. Whilst our brands, along with the rest of the market, lost online market share +to one of the leading operators during 2023, our omni-channel offering continues to resonate with customers with combined Online and +Retail NGR +63%cc 2 ahead of pre-Covid levels. +Local market conditions in Australia have been challenging during 2023 leaving year on year NGR -6% down on a constant currency 2 +basis. Whilst we expect trading to remain challenging in 2024, we remain confident in our strategy focusing on brand differentiation, +new and innovative products and the customer experience. +In Germany, whilst we have seen some non-compliant operators exit the market, the continued lack of robust regulatory enforcement +as well as new regulation last Summer continues to impact the business. Resulting NGR in 2023 was -26% behind 2022 on a constant +currency 2 basis, primarily driven by lower spend per head. Whilst we received our gaming licences in November 2022, it is disappointing +that we are still yet to see the level of enforcement action that is needed in this market to combat unlicensed operators and ensure +customers are protected. +In Brazil, we continue to see a fiercely competitive market ahead of regulation with a significant increase in the amount spent on +marketing by various operators. Whilst we were initially slow to react to changes in the market, we are confident that following a change +in our regional leadership we now have the team and localised expertise needed to regain share in this exciting growth market, an +opportunity that our 365Scores acquisition will help us further leverage. NGR in Brazil was -14%cc 2 behind the prior year. +Georgia NGR was +7%cc 2 ahead of 2022 on a constant currency 2 basis, with our Crystalbet brand performing strongly following the +implementation of new regulation in the prior year. Following a strong 2023, our Crystalbet brand continues to be the market leader +in Georgia. +In the Baltics , proforma 3 NGR was +3%cc2 ahead of 2022 despite high inflation rates in the region. Our brands remain resilient despite +the economic pressures in the Baltic states and we continue to attract more customers each year with proforma 3 actives +13% ahead +of 2022. +Our Entain CEE business continues to perform well with proforma 3 NGR +13%cc2 ahead year on year. NGR in our SuperSport business in +Croatia was +29%cc 2 ahead of 2022 (proforma 3) maintaining its position as the market leader. NGR in our recent acquisition in Poland, +STS, was flat year on year with c4%cc 2 growth to the end of Q3 offset by poor margins in October. +NGR in our newly acquired New Zealand business was £84.7m in 2023, slightly ahead year on year on a proforma 3 basis. +Contribution 4 margin of 40.0% was in line with guidance but 1.1pp behind 2022 due to territory mix and the impact of additional taxation +in Australia which was implemented in H2 of 2022. +Operating costs were 20% higher than 2022 with recent acquisitions driving 16pp of the increase and FX 1pp with the remaining 3pp due +to underlying inflation offset by the initial benefits from Project Romer. +Underlying EBITDA 5 of £857.4m was +4% ahead of 2022, albeit flat year on year excluding the benefit of TAB NZ accounting +treatment to 2023, reflecting the contribution 4 from acquired businesses offset by the decline in proforma 3 NGR and 1.1pp reduction in +contribution margin. +Resulting underlying operating profit 6 of £688.5m was £13.4m behind 2022 with depreciation and amortisation of £160.2m, £41.9m +higher than 2022, half of which is a result of the impact of new acquisitions, including annualisation of those in the prior year, with the +remainder of the increase due to recent investment in our technology and product. After charging separately disclosed items of £481.1m +(2022: £114.0m), operating profit was £207.4m (2022: £701.9m). +Entain plc Annual Report 2023 71 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_74.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..beef6fc2e83931aed9d899358da0a9fb0fd55650 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,68 @@ +Retail +The Retail business is made up of our Retail estates in the UK, Italy, Belgium, Croatia, New Zealand, Republic of Ireland and Poland. +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 4,341.7 3,827. 3 12% 11% +Sports margin 18.9% 18.3% 0.6pp +Sports NGR/Revenue 813.0 705.2 15% 14% +Machines NGR/Revenue 573.7 572.6 0% 0% +NGR 1,386.7 1 ,277.8 9% 8% +VAT/GST (3.6) – – – +Revenue 1,383.1 1 ,277.8 8% 8% +Gross profit 900.2 860.0 5% +Contribution 4 890.3 852.1 4% +Contribution 4 margin 64.2% 66.7% (2.5pp) +Operating costs excluding marketing costs (606.1) (571.9) (6%) +Underlying EBITDA 5 284.2 280.2 1% +Share based payments (2.4) (2.3) (4%) +Underlying depreciation and amortisation (132.1) (112.4) (18%) +Share of JV income – – – +Underlying operating profit 6 149.7 165.5 (10%) +Results1: +Our Retail businesses continue to show the strength of their offer and customer appeal with 2023 Revenue and NGR both +8%cc 2 ahead +of 2022 and proforma 3 NGR +2%cc2 ahead. +In the UK, NGR was +2% ahead of 2022 on a LFL 7 basis, with strong performance across both sports and gaming. Our strong underlying +performance continues to be driven by an ongoing focus on market leading content for our gaming machines and betting terminals with +both providing a proposition akin to the digital offering but combined with the in-shop experience that cannot be replicated online. +NGR in Italy was up +16% on a constant currency 2 basis with a number of enhancements to our offering and the customer +experience including cash-out, reduced minimum bet sizes and continuous development of our SSBT proposition driving greater +customer engagement. +Proforma 3 NGR in Croatia grew at +14%cc 2 year on year further enhancing our market leading position and reflecting our program of +improvements to the customer offer, including the introduction of a loyalty scheme and enhanced sports content. +In Belgium, NGR was up +10%cc 2 with Ireland NGR +1%cc 2 ahead year on year. Our newly acquired Retail businesses in Poland and New +Zealand contributed £40.4m of NGR during 2023. +Contribution 4 of £890.3m was +4% ahead of 2022 with contribution 4 margin falling by 2.5pp due to territory mix and the impact +of certain content costs (1pp) which are now classified as cost of sales rather than operating costs as they move to revenue share +arrangements from fixed fees. +Operating costs were 6% higher than in 2022 with the impact of acquisitions (5pp) and inflation, including wage rate and energy price +inflation, more than offsetting the benefit of costs which are now classified within cost of sales. +Resulting underlying EBITDA 5 of £284.2m was £4.0m ahead of 2022. Depreciation of £132.1m was £19.7m higher than 2022, largely +due to the impact of acquisitions and the continued investment in our retail estates. Underlying operating profit 6 of £149.7m was £15.8m +behind 2022 and, after charging £22.8m of separately disclosed items (2022: £57.4m), operating profit was £126.9m, £18.8m ahead of +last year. + New Opportunities +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (29.3) (29.1) (1%) +Share based payments (0.7) (0.3) (133%) +Underlying depreciation and amortisation (5.7) (4.5) (27%) +Share of JV (loss)/income (1.5) (0.4) (275%) +Underlying operating loss 6 (37.2) (34.3) (8%) +Entain plc Annual Report 202372 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_75.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..c729fb1d034d0d1e80911044ca9efcd84eb473d9 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,65 @@ +Results1: +New Opportunities underlying costs 5 of £29.3m were 1% higher than 2022 with increased start-up marketing costs in our Unikrn brand +offset by reduced costs associated with our innovation programme. Unikrn has now been closed as a B2C operation and development +of our e-Sports wagering offering is now focused on our existing labels. After depreciation and amortisation and share of JV loss, New +Opportunities underlying operating loss 6 was £37.2m, an increase in losses of £2.9m on 2022 and, after charging separately disclosed +items of £44.3m (2022: £nil), was a loss of £81.5m, £47.2m more than in the prior year. +Other +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR/Revenue 26.7 25.1 6% 6% +Gross profit 26.7 25.1 6% +Contribution 4 26.3 25.0 5% +Operating costs excluding marketing costs (21.0) (20.1) (4%) +Underlying EBITDA 5 5.3 4.9 8% +Share based payments – – – +Underlying depreciation and amortisation (2.7) (2.7) – +Share of JV income 2.0 0.4 400% +Underlying operating profit 6 4.6 2.6 77% +Results1: +NGR of £26.7m was 6% higher than 2022 driven by additional income in our greyhound stadia with 2022 impacted by adverse weather. +Underlying EBITDA 5 of £5.3m was an increase of £0.4m on 2022, with the additional NGR offset by increased overheads associated with +the aforementioned increase in number of meets. Underlying operating profit 6 of £4.6m was £2.0m ahead of last year and after charging +separately disclosed items of £nil (2022: £0.7m) was £2.7m ahead of 2022. +Corporate +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (109.7) (91.0) (21%) +Share based payments (11.3) (8.8) (28%) +Underlying depreciation and amortisation (0.8) (0.2) (300%) +Share of JV loss (42.0) (193.9) 78% +Underlying operating loss 6 (163.8) (293.9) 44% +Results1: +Corporate underlying costs 5 of £109.7m were £18.7m higher than last year driven by increases in our contributions to Research, +Education and Treatment, including GambleAware, increased legal costs and ongoing investment in our governance policies +and procedures. +After share based payments, depreciation and amortisation and share of JV losses, Corporate underlying operating loss 6 was £163.8m, +a decrease of £130.1m. The share of JV loss of £42.0m relates to BetMGM. After charging separately disclosed items of £737.2m +(2022: £41.1m), the operating loss was £902.0m versus £335.0m in 2022. + +Notes +1. 2023 and 2022 statutory results are audited with the tables presented relating to continuing operations and include both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as if they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. UK Retail LFL YoY NGR is calculated based on shops that traded for the full year in both 2023 and 2022. +Entain plc Annual Report 2023 73 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_76.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..fbe235eac77245da5422e8c3cc5116e1ae1410e5 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,67 @@ +Statutory Performance Review +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV loss (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Net underlying finance costs 6 (229.4) (84.7) +Net foreign exchange/financial instruments 32.5 (135.3) +Profit before tax pre separately disclosed items 444.9 321.8 +Separately disclosed items: +Amortisation of acquired intangibles (254.6) (116.9) +Recognition of HMRC settlement liability (585.0) – +Other (447.9) (102.0) +(Loss)/profit before tax (842.6) 102.9 +Tax (36.1) (70.0) +(Loss)/profit after tax from continuing activities (878.7) 32.9 +Discontinued operations (57.8) (13.4) +(Loss)/profit after tax (936.5) 19.5 +NGR and Revenue +Group NGR and revenue were +11% ahead of last year and the same on a constant currency basis 2, with Online NGR +12% and Retail +NGR +9% year on year. Further details are provided in the Financial Performance Review section. +Underlying operating profit 6 +The Group reported underlying operating profit 5 of £641.8m, +18% ahead of 2022 (2022: £541.8m). Underlying EBITDA 5 was +1% +ahead, with the increase in revenue offset by additional taxes, particularly in Australia, and increased operating costs largely associated +with acquired businesses and inflation. Depreciation and amortisation was -27% higher than 2022 driven by depreciation on acquired +businesses as well as on our recent investment in product and technology. The Group’s share of BetMGM losses in the period were +£42.0m, £152.1m lower than 2022 as the business continues on its path to profitability. Analysis of the Group’s performance for the +period is detailed in the Financial Performance Review section. +Financing costs +Underlying finance costs of £229.4m excluding separately disclosed items of £1.0m (2022: £5.7m) were £144.7m higher than 2022 driven +by interest on the Group’s new $1bn USD term loan, which was raised in Q4 of 2022, increased drawdowns on the Group’s RCF and the +impact of the increase in global interest rates. +Net gains on financial instruments, driven primarily by a foreign exchange gain on re-translation of debt related items, were £32.5m in the +period (2022: £135.3m loss). This gain is offset by a foreign exchange loss on the translation of assets in overseas subsidiaries which is +recognised in reserves and forms part of the Group’s commercial hedging strategy. +Separately disclosed items +Items separately disclosed before tax for the year amount to £1,287.5m (2022: £218.9m) and relate to the Deferred Prosecution +Agreement (“DPA”) with the Crown Prosecution Service of £585.0m (2022: £nil), £254.6m of amortisation on acquired intangibles +(2022: £116.9m), corporate transaction costs of £17.8m (2022: £23.9m), restructuring costs, including the initial costs of Project Romer, of +£49.7m (2022: £11.8m) and legal and onerous contract costs of £17.6m (2022: £8.1m) primarily relating to the legal costs associated with +the HMRC investigation. The Group also recorded a £1.0m loss on disposal of assets (£2022: £1.0m), £71.8m on movements in fair value +of contingent consideration (2022: £1.0m income), primarily relating to discount unwind on Tab NZ consideration, and £1.0m in financing +costs (2022: £5.7m). +In addition, the Group has also recognised an impairment charge of £289.0m during the current year (2022: £7.0m) with impairments +recognised against our Australian business of £190.0m, our closed B2C operations in Unikrn and Africa of £78.1m, and smaller +impairments against our ROI Retail business, closed shops and offices in the UK and our Totolotek business in Poland of £20.9m. +The charge which has arisen in the Group’s Australian CGU is a result of the impact of ongoing increases in the rate of Point of +Consumption tax across certain states and a forecast decline in Australian revenues in 2024 as a result of a reduced market outlook. +Entain plc Annual Report 202374 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_77.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..aceaf497c366a80e9ed644f0272d23d884a4180c --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,38 @@ +Our Australian business continues to be profitable and strategically important. Post the annualisation of the tax increases and +stabilisation of local market conditions, we expect our Australian business to return to growth. +During the prior year, the Group also recognised a £45.5m charge in respect of the repayment of amounts received under the +Governments Covid Furlough scheme. +Separately disclosed items +2023 +£m +2022 +£m +Legal settlement (585.0) – +Amortisation of acquired intangibles (254.6) (116.9) +Impairment (289.0) (7.0) +Corporate transaction costs (17.8) (23.9) +Restructuring costs (49.7) (11.8) +Legal and onerous contract costs (17.6) (8.1) +Loss on sale of assets (1.0) (1.0) +Movement in fair value of contingent consideration (71.8) 1.0 +Other including financing (1.0) (5.7) +Furlough repayments – (45.5) +Total (1,287.5) (218.9) +Profit/(loss) before tax +The Group’s profit before tax 5 and separately disclosed items was £444.9m (2022: £321.8m), a year-on-year increase of £123.1m +with the growth in underlying EBITDA 5, a decrease in BetMGM losses and a gain on foreign exchange partially offset by the increase in +depreciation and amortisation and interest. After charging separately disclosed items, the Group recorded a pre-tax loss from continuing +operations of £842.6m (2022: £102.9m profit), with the separately disclosed costs discussed above having a significant impact on the +reported results. +Taxation +The tax charge on continuing operations for the period was £36.1m (2022: £70.0m), reflecting an underlying effective tax rate pre- +BetMGM losses and foreign exchange gains on external debt of 23.0% (2022: 15.4%) and a tax credit on separately disclosed items of +£69.7m (2022: charge of £27.9m). +Discontinued operations +During the current year, the Group recorded a £57.8m (2022: £13.4m) loss in discontinued operations relating to its former Intertrader +business which was disposed of in November 2021. The loss recorded primarily reflects legal costs associated with historic matters as +well as a provision for a potential settlement with former owners of part of the business following a long running legal dispute. +Entain plc Annual Report 2023 75 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_78.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..9baacb1b8ff2e9d68a7b9c33d06b63cb96afa610 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,57 @@ +Cash flow +Year Ended 31 December +2023 +£m +2022 +£m +Cash generated by operations 810.0 846.9 +Corporation tax (137.3) (106.1) +Interest (224.6) (100.6) +Net cash generated from operating activities 448.1 640.2 +Cash flows from investing activities: +Acquisitions & disposals (1,315.4) (738.6) +Cash acquired/(disposed) 87.9 29.9 +Dividends received from associates 9.6 3.6 +Capital expenditure (259.9) (212.0) +Investment in Joint ventures (40.7) (175.1) +Purchase of investments (3.1) – +Net cash used in investing activities (1,521.6) (1,092.2) +Cash flows from financing activities: +Equity issue 589.8 – +Net proceeds from borrowings 1,780.3 838.4 +Repayment of borrowings (1,428.6) (271.8) +Subscription of funds from non-controlling interest 350.5 174.3 +Settlement of financial instruments and other financial liabilities (279.9) 8.7 +Repayment of finance leases (68.5) (83.0) +Equity dividends paid (106.9) (50.0 +Minority dividends paid (7.4) – +Net cash used in financing activities 829.3 616.6 +Foreign exchange (13.7) 6.8 +Net (decrease)/increase in cash (257.9) 171.4 +During the period, the Group had a net cash outflow of £257.9m (2022: inflow of £171.4m). +Net cash generated by operations was £810.0m (2022: £846.9m) including £1,007.9m of underlying EBITDA 5 (2022: £993.2m) and a +working capital inflow of £601.8m largely due to payments not having started on the DPA (2022: £45.9m) offset by separately disclosed +items that are reported in operating activities of £741.9m (2022: £96.0m) including the DPA but excluding items charged to depreciation, +amortisation and impairment as well as a £57.8m loss on discontinued operations (2022: £13.4m). Included within working capital is a +£29.7m outflow for balances held with payment service providers as well as customer funds, which are net debt neutral (2022: £47.9m). +During the period £137.3m was paid out in relation to corporate taxes (2022: £106.1m) with a further £224.6m paid out in interest +(2022: £100.6m). +Net cash used in investing activities for the period was £1,521.6m (2022: £1,092.2m) and includes cash outflows for acquisitions of +£1,315.4m (2022: £738.6m), net investment in capital expenditure of £259.9m (2022: £212.0m), an additional £40.7m invested in +BetMGM (2022: £175.1m) and £3.1m of other investments (2022: £nil). These outflows were partially offset by cash acquired with +acquisitions of £87.9m (2022: £29.9m) and dividends received from associates of £9.6m (2022: £3.6m). +During the period the Group received a net £829.3m (2022: £616.6m) from financing activities. £589.8m was raised through the equity +issuance (2022: £nil) with a further £1,780.3m through new financing facilities (2022: £838.4) which were used, in part, to repay +£1,428.6m of debt (2022: £271.8m) including £400m against the Group’s retail bond. During the period, the Group also received £350.5m +from minority holdings to meet their obligations under the Supersport earn-out and STS acquisition. These amounts are recorded in non- +controlling interests (2022: £174.3m for the acquisition of SuperSport). £279.9m was paid on settlement of other financial instruments +and liabilities, primarily relating to contingent consideration on previous acquisitions. In the prior year, the Group received £8.7m on the +settlement of other financial instruments and liabilities as a result of the receipt of £41.6m on the partial settlement on a number of swap +arrangements, partially offset by contingent consideration payments. Lease payments of £68.5m (2022: £83.0m) including those on non- +operational shops, were made in the period. +During the period, the Group also paid £106.9m in equity dividends (2022: £50.0) and £7.4m in dividends to the minority interest in Entain +CEE (2022: £nil). +Entain plc Annual Report 202376 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_79.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..4958f08091538278822cff84ce510c43ef0a1e04 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,52 @@ +Net debt and liquidity +As at 31 December 2023, adjusted net debt 7 was £3,290.9m and represented an adjusted net debt 7 to underlying EBITDA 5 ratio of 3.3x +(3.1x proforma 3). The Group has drawn down £295m on the revolving credit facility at 31 December 2023 (2022:£nil). +Par value +£m +Issue costs/ +Premium +£m +Total +£m +Term loans (3,420.5) 64.8 (3,356.4) +Interest accrual (1.6) – (1.6) +(3,422.1) 64.8 (3,358.0) +Cash 400.6 +Net debt (2,957 .4) +Cash held on behalf of customers (196.8) +Fair value of swaps held against debt instruments (85.6) +Other debt related items* 224.8 +Lease liabilities (275.9) +Adjusted net debt (3,290.9) +* Other debt related items include balances held with payment service providers, deposits and other similar items +Refinancing +On 1 March 2024, the Group raised an additional £300m of borrowings under a bank loan facility and used the proceeds to repay all +amounts drawn under the Group’s revolving credit facility. Concurrently, the commitments available under the Group’s revolving credit +facility (disclosed in Note 36) were increased by £45m further increasing the Group’s available liquidity. As such, the Group’s revolving +credit facility now has total commitments of £635m which, as at 1 March 2024, was completely undrawn save £5m carved out for letters +of credit and guarantees. +Going Concern +In adopting the going concern basis of preparation in the financial statements, the Directors have considered the current trading +performance of the Group, the financial forecasts and the principal risks and uncertainties. In addition, the Directors have considered +all matters discussed in connection with the long-term viability statement including the modelling of ‘severe but plausible’ downside +scenarios such as legislation changes impacting the Group’s Online business and severe data privacy and cybersecurity breaches. +Given the level of the Group’s available cash post the recent extension of certain financing facilities (see Note 36) and the forecast +covenant headroom even under the sensitised downside scenarios, the Directors believe that the Group and the Company are well +placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation that the Group and the +Company will have adequate financial resources to continue in operational existence, for at least 12 months (being the going concern +assessment period) from date of approval of the financial statements, and have, therefore, considered it appropriate to adopt the going +concern basis of preparation in the financial statements. +Notes +1. 2023 and 2022 statutory results are audited, with the tables presented relating to continuing operations and including both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as is they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. Adjusted net debt excludes the DPA settlement of £585.0m. Leverage also excludes any benefit from future BetMGM EBITDA or the payments due to acquire the minority +interests in Entain CEE. +Entain plc Annual Report 2023 77 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_8.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9e1775924ce17b04890a2eaae5971b1e140d70 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_8.txt @@ -0,0 +1,31 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_80.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..a986558e59ef20fc281858d83a5fd742b0e299eb --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,112 @@ +Statement of Directors’ responsibilities in respect of the +Annual Report and the Financial statements +Responsibility statement of the +Directors in respect of the annual +financial report +We confirm that to the best of +our knowledge: + the financial statements, prepared in +accordance with the applicable set of +accounting standards, give a true and +fair view of the assets, liabilities, financial +position and profit or loss of the Company +and the undertakings included in the +consolidation taken as a whole; and + the Strategic Report includes a fair review +of the development and performance of +the business and the position of the issuer +and the undertakings included in the +consolidation taken as a whole, together +with a description of the principal risks +and uncertainties that they face. +We consider the Annual Report and +Accounts, 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. +Rob Wood +Chief Financial Officer & Deputy Chief +Executive Officer +07 March 2024 +The Directors are responsible for keeping +adequate accounting records that are +sufficient to show and explain the parent +Company’s transactions and disclose +with reasonable accuracy at any time the +financial position of the parent Company +and enable them to ensure that its financial +statements comply with the Isle of Man +Companies Act 2006. They are responsible +for 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, and have general +responsibility for taking such steps as are +reasonably open to them to safeguard the +assets of the Group and to prevent and +detect fraud and other irregularities. +The Directors are responsible for the +maintenance and integrity of the corporate +and financial information included on the +Company’s website. Legislation in the Isle +of Man governing the preparation and +dissemination of financial statements may +differ from legislation in other jurisdictions. +In accordance with Disclosure Guidance +and Transparency Rule (“DTR”) 4.1.16R, +the financial statements will form part of +the annual financial report prepared under +DTR 4.1.17R and 4.1.18R. The auditor’s +report on these financial statements +provides no assurance over whether the +annual financial report has been prepared +in accordance with those requirements. +The Directors are responsible for preparing +the Annual Report and the Group and +parent Company financial statements +in accordance with applicable law +and regulations. +The Directors have elected to prepare +the consolidated financial statements in +accordance with International Financial +Reporting Standards and applicable +law and have elected to prepare the +parent Company financial statements +in accordance with FRS 101 Reduced +Disclosure Framework. +In preparing each of the Group and +parent Company financial statements, the +Directors are required to: + select suitable accounting policies and +then apply them consistently; + make judgements and estimates that are +reasonable and prudent; + for the Group financial statements, +state whether applicable accounting +standards have been followed, subject +to any material departures disclosed and +explained in the financial statements; + for the parent Company financial +statements, state whether applicable +UK accounting standards have been +followed, subject to any material +departures disclosed and explained in the +parent Company financial statements; + assess the Group and parent Company’s +ability to continue as a going concern, +disclosing, as applicable, matters related +to going concern; + use the going concern basis of accounting +unless they either intend to liquidate +the Group or the parent Company or to +cease operations, or have no realistic +alternative but to do so; and + prepare financial statements which give +a true and fair view of the state of affairs +of the Group and the parent Company +and of the profit or loss of the Group and +the parent Company for that period. +Entain plc Annual Report 202378 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_81.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..92843bbf10e494ed2821b8d4dc051f69da39a5e6 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,137 @@ +Enterprise Risk Management +Managing Risks +Risk Management Governance +The Board has established and reviewed +procedures to manage risk, oversee internal +control systems and determine the nature +and extent of the most significant risks +the Company is willing to take in order to +achieve its long-term strategic objectives. +Our Enterprise Risk Management (ERM) +process supports the Board to establish a +“bottom up” view of its most significant and +emerging Group risks, which are presented +to the Committees of the Board and where +required, directly to the Board in thematic +risk reviews throughout the year by the +Risk Owners, using a consistent format +Risk Dashboard. +The Risk Dashboard highlights whether +strategic objectives can be met in the +current context and indicates how much +action is needed to further manage the +risks to an acceptable level. If objectives +cannot be met, oversight Committees are +asked for additional resources to manage +the risks, or, if no additional resources +are made available, whether they wish +to formally accept the risk exposure or +change objectives. This process embeds +risk appetite decision-making at the +appropriate levels of the Company, with +outcomes noted and communicated back to +the Risk Owners who can then take action +to manage risks accordingly. +The Board retains ultimate responsibility +for the management and oversight of +risk and considers a “top-down” view +of the significant and emerging Group +risks obtained through the “bottom-up” +ERM process, from this, it establishes the +Principal Risks to the Group and considers +the likelihood of the Principal Risks +occurring and whether risks emerging over +three-, five- and ten-year horizons require +deep dives. +During 2023, we re-structured the Group +Risk Committee, which now meets six +times a year in cadence with our other +Board Committees and Board meetings. +The Group Risk Committee is scheduled +to precede and feed into Committee and +Board meetings where possible, so that risk +information is current and overseen on a +timely basis. +People and Governance +Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting and +retaining key talent, as part of +their responsibilities the People +and Governance Committee +continually reviews succession +planning and the susceptibility +of the Group to the risk. +Legal & +Regulatory +Data +PrivacyRetail UK&I Cyber +& ISCore Digital TradingLATAM HSSE +Australia +& New +Zealand +Safer +Betting & +Gaming +ProcurementInternational +Tax, +Treasury & +Insurance +Technology Customer +Service +Product & +Tech +Property & +WorkplaceCorporate +Ethics & +Compliance +People +Services Integration +PLC Board +Specific risk oversight: + Execution of the group strategy + Laws, regulations and compliance + Attracting and retaining key talent + Whilst not a principal risk, the +Board also reviews the Group’s +litigation risk on an ongoing basis +Group Risk Committee Meets six times annually, prior to each Board and Board committee meeting +Sustainability and +Compliance Committee +Delegated risk oversight*: + Health, safety and well-being + Safer betting and gaming + Risk also reviewed +continually under +Committee ToR: Regulatory +compliance and licensing, +anti-money laundering +(“AML”), Responsible +gambling, protection and +the environment. +Audit Committee +Delegated risk oversight*: + Data privacy and cyber +resilience + Maintain technology platform +resilience + Taxes + Trading, liability and +pricing management + Price and service of delivery +from 3rd party suppliers +Remuneration Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting +and retaining key talent, as +part of their responsibilities, +the Remuneration Committee +continually reviews this risk and +the mitigating actions in place +to prevent the risk crystalling. +*Delegated oversight and responsible for deep +dive reviews of Group’s principal risks. +Entain plc Annual Report 2023 79 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_82.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..d948796fc1e2eb41822f5996efd3d78c7c1a692a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,130 @@ +Effective risk management supports us to +meet our corporate objectives, it helps us +to make risk-based decisions so that we +operate with fewer shocks and allocate +resources in line with our risk appetite. +Our Risk Management Principles: +1 +Tailor an enterprise risk +management system that +improves performance, +encourages innovation, and +supports the achievement of +our objectives. +2 +Integrate and align risk +management across different +strategic, functional, and +operational disciplines, such +as budgeting, compliance, +finance, health and safety, IT, +security, and so on. +3 +Embed risk management as +an integral part of the way +we manage our business, +people, and teams across all +our operations. +4 +Proactively manage our risks +in our fast-changing business +environment, updating and +continuously improving our +risk information to support +decision making at all levels. +Management Process +We work together to use modern risk +management methods (and Entain’s four- +step model in figure 1 below) as an integral +part of our day-to-day decision making +across our entire organisation, minimising +threats to the delivery of our strategy, and +maximising opportunities. +Risk Strategy +At Entain, we are committed to active and +effective risk management, creating, and +protecting value to the organisation and +helping us deliver on our strategic priorities, +managing threats, exploiting opportunities, +and building resilience. We support risk +taking where it is forecast to generate +returns for the business and manage this in +line with our values and ethics. +Definition: +Risk +We define risk as “the effect of +uncertainty on the ability of Entain +to achieve its objectives”. Risks can +be either opportunities (upside) or +threats (downsides), and we assess +and manage both. +Definition: +Risk Management +Risk management is doing +something to take charge of and +change those uncertainties that +matter most across the company. +Enterprise Risk Management (ERM) +are the co-ordinated activities to +direct and control the organisation +with regard to risk. +Our risk landscapes +Current risks +Risks we are managing now that could stop +us achieving our strategic objectives. +Emerging risks +Risks with a future impact from external or +internal opportunities or threats. These can +be slow moving, as well as rapid velocity. +What we assess + Risk ownership: each risk has a +named owner + Impact versus Action: globally applied +scale measuring the amount of action +required to manage the risk to an +acceptable level + Critical controls: subject to internal audit +review and monitoring + Current risk: after existing controls + Risk acceptance: if the risk is acceptable +with the current controls or if additional +actions are needed to manage the risk to +an acceptable level. + Risk appetite: defined at risk level + Actions: identify further actions if +required, with action owners and +due dates +Our bottom-up registers +The bedrock of our risk assessment. +Owned by functions and super-regions, +they identify, analyse, and evaluate risks +and mitigating controls arising from day-to- +day operations globally. +Our significant risk dashboards +The main output of our risk assessment. +Owned by functions and super-regions, +they highlight the significant threats +and opportunities via our ‘impact versus +actions’ scales and subsequent controls +needed to mitigate the threats and exploit +the opportunities arising from day-to- +day operations globally. They include a +description of the risk, reference which +corporate objectives are exposed to the +risk, and what additional support and +decisions are needed to manage the risk to +an acceptable level. The Dashboards are +used to make effective, risk-based decisions +on allocation of resources. +Risk categories we assess +As part of the ERM process, we assess +against the following impacts criteria: + Financial + Operational + Reputation / Brand + Legal / Regulation + Health & Safety +Entain plc Annual Report 202380 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_83.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..be19eccd52a783b806ed69dbbfd0d7d30ae2d116 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,69 @@ +Figure 1: Entain’s Risk Management Process – four-steps +Our primary objective is to ‘operationalise’ risk and move toward a risk aware +culture that includes effective reporting collaboration and action taking +This four step process allows us to ask, ‘Given the context in which we are operating, the risk we face and our ability to +manage them – can we achieve our objectives?’ If we can, then we continue the good work. if we can’t, then we need to +manage the risks further, or change the objectives. +Risk-based +decision +making +Define context +and objectives +Understanding both the external +and internal context in which we are +operating – what is happening and +what might happen to make things +easier or more difficult for our business? +We clarify what we are trying to +achieve – our objectives – whether it is +for the entirety of a strategy, division +or function. +We think through how the context and +objectives may impact each other, both +positively and negatively. +Monitor, Review +and Report +Ongoing checking of the status of risks +and their controls. +This step involves reviews, +inspections, and audits of the status +of risks, providing risk management +information that is communicated to all +necessary stakeholders. +Assess risks +Risk identification: Recognise, +acknowledge, and describe risks (both +potential opportunities and threats). +Risk analysis: Understand the risks +both individually and as a collective +risk profile. This includes prioritising +risks as well as better understanding +any triggers which may make the +risk happen. +Risk evaluation: Determine if action +needs to be taken regarding a risk +or risk profile to bring the risks to an +acceptable level. +Manage risks +Active management of risk with +decisions on the types of controls +needed and the implementation +of controls. +Proactive risk management takes +charge of and changes the nature +of the risk and risk profile so that it +comes in line with the amount of risk +we are willing to take in delivering +our objectives. +Where risks are out of line with the +amount of risk we want to take, we +can enhance or add new controls +where necessary. +1 +4 +2 +3 +Entain plc Annual Report 2023 81 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_84.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..1defbcef9ed33338785570260b92f0cba845794a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,185 @@ +Risk Management +Whilst our Board owns and oversees +our ERM programme, risk management +accountability and responsibility are +embedded throughout our organisation: + Our first line of sight to our risks is +through our Colleagues, who have +responsibility to manage day-to-day risks +in their own areas, they have the insight +to risk that comes from experience and +knowledge. The ERM process engages +with the first line in all four steps of +the ERM process defined in Figure 1. +The first line is guided by Group policies, +procedures, control frameworks and +risk appetite. Local management, and +ultimately the Executive, ensure that risks +are managed and carried out according +to these frameworks. + The second line of sight is provided by our +advisory support teams who specialise +in areas such as ERM, Compliance, +Cyber Security, Legal and HSSE. +These advisory support teams review +the controls implemented by the first +line and advise whether the controls are +adequate, they form a holistic view of +risk across the Group and capture and +escalate risks that could fall through silos, +supporting and encouraging foresight +of risk. This risk foresight is captured by +the ERM and management teams, who +review each risk register and dashboard +on a regular basis, culminating in review +by the Group Risk Committee, which +then escalates significant risks to other +Committees and the Board to fulfill +risk oversight. + The third line of sight is through +independent Internal and external +audit, who provide assurance over the +effectiveness of critical controls, which +is provided through internal audits, +supplemented by reports from external +assurance providers. We use this +hindsight to adjust our controls in the light +of audit recommendations. + Entain’s Group Code of Conduct and +Whistleblowing Policies, in addition to +our controls framework, are in place to +promote and aid us to ‘Do what’s right’. +Annually the Audit Committee reviews +the adequacy and effectiveness of the +Company’s policies, which sets our tone +for desired risk culture. +2023 Key Achievements +Robust Governance +A key cornerstone towards robust +governance was accomplished, including +the deployment of a new risk policy, +framework, governance forums, and +assurance checks. We: + Completed the ERM management system +design and approval + Began implementation of our ERM +system through over 50 sessions of risk +management training and workshops, +with work ongoing into 2024 to +implement in our Super Regions, giving a +much clearer view of the company’s most +significant risks. + Reviewed and updated Entain’s risk +scoring criteria, establishing new risk +matrix covering ‘Impact vs Actions’ as +a modern approach to ERM, ensuring +focus on what can be done about the +risk is embedded in our day-to-day risk +management “bottom-up” process. + Delivered new format risk registers, +allowing the identification of key controls +and monitoring of actions needed to put +further controls in place. + Delivered new Significant Risk +Dashboards and presented to the +risk oversight Committees and Board +during the year, facilitating decisions +on risk appetite, required actions and +resource allocation. +Horizon scanning (emerging risks) +We enhanced our process for identification, +analysis, and evaluation of emerging +risks, informed by functions, divisions, +super-regions, subject matter experts +and leadership, to provide a Group-wide +view. In 2023, we undertook a series of +workshops across our risk landscape +to provide a deeper exploration of our +emerging threats and opportunities and +come to a consensus on our response. +As such, the exercise to understand +potential emerging risks has been carried +out during each initial risk workshop, +looking at risks that may occur over 3-, 5-, +and 10-year time horizons. In analysing +the data, common themes have become +apparent, which have been developed +to display and better understand the +information regarding emerging risks. +Risk aware culture +Our ERM team led the establishment and +implementation of our refreshed approach +to Enterprise Risk Management, which +is aligned with the international risk +standard ISO 31000. During 2023, we have +progressed a consistent approach across +our business through training, engagement, +and application of our new ERM toolkit. +Our colleagues are fundamental to the +success of risk management at Entain. +A positive risk aware culture enables +colleagues at all levels of our organisation +to deliver risk management as an integral +part of their day -to-day activities. We do +this by: + Developing a compelling narrative on the +benefits of effective risk management +across the Group. + Delivering targeted foundation of risk +management training. + Undertaking specific risk workshops for +each function and region, the culmination +being a robust risk register and +dashboard highlighting those risks which +we deem significant. + Collaborative working across the Groups +functions and super-regions utilising the +expertise of external insight. + Articulating risks so they can be clearly +understood so decisions are made on a +more informed basis. + Embedding the consideration of risk +appetite through our risk prioritisation +tool which indicates whether risks are +deemed to be at acceptable levels. +These tools are used in our first lines and +reviewed at oversight Committees and +Board. Embedding risk appetite in our +ERM process has improved our ability +to talk about risk appetite as part of our +risk culture. +How risks are measured +As part of the ERM process, the risks +identified are assessed against a defined +set of criteria using an ‘Impact versus +Action’ matrix which assesses both the +impact to the business and the actions +required to bring those risks within Entain’s +risk appetite. In assessing ‘impact versus +action’ we assess the risk against financial +performance, operational processes, legal +and PR and health, safety, and security. +In particular: + The impact of each risk is measured with +reference to the financial implications +(underlying EBITDA and cash), its +potential operational impact (including +the security of our data), the effect on the +reputation of our brands and whether it +affects our commitment to health, safety, +security, and well-being. + The impact is measured on a scale, from +‘very low’, with limited damage to a +minor stakeholder, and ‘very high’ being +severe, which may have a substantial +impact on the Group affecting many +key stakeholders, including customers. +The action is measured from a range +of no action required to many actions +needed and additional resource required, +also on a scale from ‘very low’ to +‘very high’). +Entain plc Annual Report 202382 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_85.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..644e8680db5d345ad8ed9f6fd7d105be6598e16a --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,151 @@ +Principal Risks +02. Data Privacy and +Cyber Resilience +Chief Product and Technology Officer; +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +Our customers expect a great experience, +including protecting their personal details, +their privacy, their winnings and ensuring +the integrity of our offering. Customers +place a trust on our organisation and +our operations, so it is of paramount +importance that we protect our customers’ +data by keeping it secure, in addition, +personal data is subject to stringent data +protection laws around the world, and +we have compliance obligations in the +jurisdictions in which we operate. +A data or security breach could impede +our operations and impact our ability to +serve customers and would undermine +trust in our business and brands, +and could lead to loss of customers, +prosecution, litigation (including class +actions), significant financial penalties and +impact our share price. +How we respond +The Group has dedicated Cyber Security +and Data Privacy functions entrusted with +protecting the security and confidentiality +of our customers and the company, whilst +ensuring the availability of services and +regulatory compliance. +The experts in our Cyber Security team +constantly scan and adapt our defences to +emerging cyber threats. +We operate to an ISO 27001 Information +Security Management System +certification, the Cyber Security controls +and associated policies are constantly +being evaluated, aligned, and applied, +where deemed relevant across the +enlarged Group. +The Data Privacy team, led by the Group’s +Chief Data Privacy Officer matures our +privacy programme through designing +policies and training, including on the +use of AI, giving up to date advice to +the business, ensuring standards of +compliance, partnering with the Chief +Data Officer and other key stakeholders +to improve our data management +practices and providing regular updates +to the Group’s Audit and Sustainability & +Compliance Committees. +01. Laws, Regulations, +Licensing and Regulatory +Compliance +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +We operate in complex regulatory, +legislative, and fiscal environments, +and have multiple licensing obligations, +gambling and non-gambling laws and +regulations, and tax regimes with which +to comply. In addition, on a global basis, +laws and regulations change continuously, +and it can be operationally challenging to +keep pace with legislative or regulatory +change, particularly if we need to adjust +our operations or product offering at short +notice. +As we expand into new markets or laws/ +regulations change, our compliance +requirements expand, we need to build +constructive relationships with regulators, +and we are likely to need additional +effort, resource and/or investment into +our internal compliance and governance +efforts. +In 2023, Entain entered into a deferred +prosecution agreement (DPA) relating to +historic bribery allegations in Turkey. All +the above means that compliance efforts +and having a strong, well-resourced +compliance programme in place needs to +remain a top priority. +How we respond +Our strategy is to operate only in +regulated or regulating markets, which +reduces our exposure to unregulated +markets that may undermine player +safety and pose other legal risks. +Our internal experts monitor for changes +in legislation and regulation and develop +policies, procedures, assurance programs, +and training to enable us to adapt. They +are engaged in due diligence when we +engage new suppliers, onboard new +customers, enter new markets or acquire +new companies. All these efforts reflect +the commitments to compliance in our +Code of Conduct. +External legal expertise is sought when +additional specialist support is necessary. +We will ensure that we comply with all +the terms of the DPA and continue to co- +operate with regulators as required. +We consider principal risks to be those +risks, or combination of risks, that, were +they to materialise and not be effectively +controlled, would cause material disruption +to our business model, threatening future +performance, solvency, liquidity, or our +ability to deliver our strategy. Risks at this +level are recorded on our Significant Group +Risk dashboard. Group risks are considered, +along with material emerging risks to define +our Principal Risks. +During our periodic risk reviews, we +confirmed that all principal risks reported +in 2022 remain relevant except for ‘Loss +of Key Locations ’, which now forms part +of ‘Ensure Health, Safety, Security and +Well-being of Employees, Customers, and +Communities’ and ‘Maintain Technology +Platform Resilience’ . This is because +a deep dive helped us understand that +the most significant impacts of loss of +key locations would be to our people or +technology, and the controls for these risks +will largely be managed in these areas. +One new principal risk has been identified, +namely Price and Service of Delivery from +3rd Party Suppliers and added to the +Group risk register in 2023. +The Groups Principal Risk for 2023 are: +Entain plc Annual Report 2023 83 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_86.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..930f6e9922b731d5c96adc4a5d308bcd8257cf36 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,142 @@ +05. Trading Liability and +Pricing Management +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group may experience signi ficant +losses because of a failure to determine +accurately the odds in relation to any +particular event and/or any failure of +its price risk management processes. +Some bets are complex and have +an accumulator effect which could +significantly impact the Group’s +profitability. +How we respond +We have some of the leading expertise +in trading liability management in the +Gaming sector. +The Group’s trading team has developed +the skills and systems to be able to offer a +wide range of betting opportunities. +Events are priced to achieve an average +return to the bookmaker over many events +over the long-term. +The Group’s gross win percentage has +remained constant in recent years. +Executive management monitor the gross +win margin daily in order to ensure the +long-term targets are achieved. +04. Price and Service +of Delivery from +3rd Party Suppliers +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +We are dependent on certain Third Parties +to deliver key products and services. Some +of our core capabilities are supplied by +small, specialist providers, which include +content providers who stream live events +to our shops, results and other key data +providers, League proprietors, industry +bodies, and suppliers that ensure security +and resilience of our locations and +systems. Other key Third Parties include +large technology and software suppliers +which hold dominant market positions. +Key suppliers could raise prices, become +financially unstable or deny services +which would limit the variety of gaming +we can offer, leading to loss of revenue. +To ensure robust management of service +delivery and value creation through +the life of the contract will allow better +management of growing risk/opportunity +amplified by our expansion. +If suppliers are purchased by our +competitors, access to services may be +restricted or denied, or we may decide +to withdraw from certain markets if they +become uneconomical. +Conversely, Third Party providers may present +acquisition opportunities for the Group. +How we respond +Strategic and critical suppliers are subject +to regular business and quality reviews +to ensure ongoing relationship and +performance management. +As part of our procurement processes, we +employ dedicated resources supplemented +by subject matter expertise within risk, +compliance, legal and technology assurance +to protect and enhance value, demonstrate +our high standards of corporate integrity, +and reinforce organisational resilience. +Where possible, we limit reliance on a +single supplier to reduce the potential +single point of failure. We proactively +manage our relationships with our +specialists and key providers. +Prices are subject to negotiation at the +contracting stage, and we have deep +industry expertise in our Procurement and +Legal teams. +We maintain good relationships with +Industry bodies and suppliers that keep our +key locations and services running. +03. Taxes +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group is subject to a wide range of +taxes, duties, and levies in the countries +where we operate. There may be +adverse changes in tax rates, laws, or +administrative practice. +The Group is geographically diverse and +there are complex tax regimes for the +betting and gaming sector. Tax authorities +may have a different interpretation to the +Group regarding the scope and scale of +taxation. These factors mean the levels +of taxation to which the Group is exposed +to may change in the future, and we may +become liable for tax payments greater +than the amounts in our filed tax returns. +How we respond +The Group’s tax strategy is approved +annually by the Board of Directors. +Responsibility for the execution of the +Group’s tax strategy is delegated to +the Chief Financial Officer who reports +the Group’s tax position to the Audit +Committee and Board on a regular basis. +To mitigate tax risks that arise, the Group +actively identi fies, evaluates, manages, +and monitors its tax risks. +The Group has an appropriately quali fied +and resourced tax team to manage its tax +affairs. +In addition, where there is signi ficant +uncertainty or complexity in relation to a +tax risk, the Group may use the services of +external, expert tax advisors. +Entain plc Annual Report 202384 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_87.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad851a70c133cea17eec67371b123d5b18c1bab9 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,132 @@ +08. Execution of the +Group Strategy +Chief Executive Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +Our Group strategy establishes our +direction and culture and sets us on a +course of future growth through delivery +of overarching corporate objectives. +The corporate objectives guide our +business and team objectives and +facilitates our colleagues to be aligned in +delivering desired outcomes. +If we cannot understand or deliver +our Group strategy, we risk wasted or +fragmented effort, inefficient allocation of +resources, strategic stagnation, and loss +of competitive advantage. +How we respond +Our refreshed Enterprise Risk +Management process sets understanding +and clarifying objectives as part of its +first step, and all risks (both threats and +opportunities) are identified in relation to +their effect on objectives. +07. Maintain Technology +Platform Resilience +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group’s operations are highly +dependent on information systems and +technology. Should we fail to maintain the +stability and availability of our technology +platforms, this could have a material +impact on customer-facing products +and customer experience, with adverse +impacts to our brands, revenue, and +market share. +Some of our technology is situated in +locations which could be subject to +physical threats. +How we respond +Proactively, our strategy is to move to +modern systems with higher levels of +resilience where possible. +We are enhancing our reactive responses +and provision of fall-back solutions should +our technology platforms fail. +We monitor key global metrics on critical +systems and platforms which identify any +potential emerging issues on our brands +or customer-facing technologies. When +indications of vulnerability are detected, +we escalate to resolve issues and create +solutions. +Our in-house experts are adept in +knowledge of our platforms, systems +and coding and can create solutions +adaptively. +06. Attracting and +Retaining Key Talent +Chief People Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: High +Risk Oversight: Board +Why this matters to us +Our colleagues, their talents and skills are +vital to helping our business succeed. +Attracting, retaining, and developing +the best and diverse talent is key to +the success of delivering our strategic +priorities – our people really do make the +difference. +Having clear leadership standards +enabling a vibrant and inclusive +organisational culture allows colleagues +to do their best work and excel. Providing +an open and inclusive environment +allows us to attract new and different +talent to join Entain but also creates a +culture people want to be a part of. By +creating the right standards of leadership +and setting clear expectations around +performance we are able to respond to +challenges and opportunities faster and +more effectively and therefore deliver on +our critical strategic objectives. +How we respond +Everything we do is anchored to our +clearly stated purpose, supported by our +shared values and behaviours. +Our value of “do what’s right” underpins +our commitment to setting the very +highest standards for our people to +adhere to. +Our leadership framework drives higher +levels of leadership capability allowing +us to attract and retain great talent. Our +commitments and actions are monitored +by the Executive Committee and the Board. +We are committed to ensuring all of our +people have a safe place to work with the +ability to raise any concern they may have. +We regularly seek employee feedback +through our Your Voice survey and translate +that into actionable plans to ensure high +levels of engagement and retention. +We encourage and support diversity +through Employee Resource Groups who +help drive, support, and promote a focus +on why diversity matters. +We actively promote the opportunity to +grow a career at Entain through promotion +but also lateral movement across the +business, providing meaningful career +progression. +Entain plc Annual Report 2023 85 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_88.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..7367fa96a1f37f022005bb600e97c7c61f17a355 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,113 @@ +10. Safer Betting and +Gaming +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Our Safer Gaming and Betting +approach is central to our business. It +is the cornerstone of our Sustainability +Charter, and our most material ESG issue +is to ensure market leading levels of +player safety and protection. Failure to +adequately protect our customers could +result in customer harm, fines, and loss of +license to operate in some jurisdictions. +How we respond +We have developed our in-house tool, +ARC™, and other forms of support and +customer interventions to facilitate us to +manage our safer gaming commitments. +Where risky behaviour is detected, we +may offer a personalised gambling control +tool, refer them for a chat with our player +protection team, or suspend their account +in real time. +ARC™ is an intelligent and innovative +platform that uses behavioural insight +and research, data science and analytics +to assess risk in play, enabling us to +identify, interact and intervene early with +customers who show signs of gambling- +related harm. +We have a range of initiatives in the area +of player protection, including a $5m +academic research partnership with the +Harvard Medical School, to understand +the causes and consequences of problem +gambling, and donating up to 1% of our +GGY to the treatment of gambling related +issues. +Our bonuses are calculated with reference +to our Safer Gaming metric – to reach the +threshold level for payout, minimum levels +of completion of safer betting and gaming +compulsory training modules must be +achieved by our colleagues globally. +09. Ensure Health, Safety, +Security and Well-being +of Employees, Customers, +and Communities +Chief Executive Officer and Group +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Failure to meet the requirements of the +various domestic and international rules +and regulations relating to the health +and safety of our employees and our +responsibilities and commitments towards +customers and communities could +expose the Company to material civil, +criminal and/ or regulatory action with +the associated financial and reputational +consequences. +While Entain is committed to high +standards and strives to achieve zero +harm in all that it does, it recognises that +there is always the potential for safety or +well-being related issues to arise in an +operational business. +How we respond +At Entain, we are committed to providing +a safe work environment which promotes +people’s health, safety, security, and well- +being. We want everyone to feel healthy +and supported at work, and at home. We +have plans for each discipline to ensure +that we maximise the opportunities and +manage threats specific to our business. +Our health, safety and security strategy +is focused on continual improvement of +safety performance to reduce the number +and severity of work-related injuries whilst +keeping our colleagues and places of work +secure. This is underpinned by our HSSE +assurance programme to ensure our risk +management system is effective and that +we keep our colleagues safe and secure. +Our well-being strategy is designed to +help leaders and colleagues make positive +changes to improve their physical, mental, +and emotional health, in turn creating +a better performing, energised and +productive workforce. To achieve this, +we provide tools, training, and targeted +support to our colleagues. +The Group’s Sustainability and +Compliance Committee also oversees all +aspects of Health, Safety, Security and +Well-being practices. +Entain plc Annual Report 202386 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_89.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ff15f0b515d7249838c059d12cc4fd382404a56 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,71 @@ +Long-term viability statement +The financial impact of the identified risk +events has been assessed both individually +and in combination and include: + The impact of a change in the Group’s +duty profile, including further changes in +gaming taxes in key geographies. + Significant changes in the regulatory +environment/further focus on AML +legislation and breaches in data +privacy regulations + Cyber and data privacy failings. + Downturns in trading as a result of a +failure to protect customers and/or retain +key staff. +The Directors have also performed reverse +stress tests to assess the level of liquidity +and covenant headroom in the underlying +forecasts as well as considering the broader +economic landscape in forming their view +on viability. +Based on the results of this analysis and the +mitigating actions available to the business, +the Directors confirm that they have a +reasonable expectation that the Company +will be able to meet its liabilities as they fall +due over the three-year assessment period +to December 2026. +In accordance with provision 31 of the 2018 +Corporate Governance Code, the Board and +Directors have completed an assessment +of the prospects and viability of the Entain +Plc Group over a longer period than the +12 months required by the “Going Concern” +provision. +The Directors have concluded that three +years was an appropriate period for +assessment, as this is aligned to the +Group’s strategic planning process and +is considered to be the period for which +reliable estimates can be made for +variations in both industry and customer +dynamics, regulatory change, technological +advancements and the economic backdrop +in the betting and gaming industry taking +into account the ever changing landscape. +The objectives of the strategic planning +process are to further develop the +businesses understanding of the markets +in which it operates, assess the risks +and opportunities facing the business +and develop a Group-wide strategy and +associated financial forecasts. +The Directors have utilised these strategic +forecasts, the 2024 Board approved budget +and the current financial position of the +Group to assess the potential impact on +viability of certain severe, but plausible, +“risk events” arising which represent the +crystallisation of the Group’s principal risks +and uncertainties as identified on pages +83 to 86 of this Annual Report. The robust +assessment conducted considered the +Group’s revenue, EBITDA, operating +profits, cash fl ows, risk management +and controls, its current debt maturity +and mitigating actions should baseline +assumptions change. +Entain plc Annual Report 2023 87 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_9.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..35def1b5c7ca95f3e34e916776c6083c96827c52 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_90.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6a49aaf5bb4827f817bb63f70b6fde274695756 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,58 @@ +Chairman’s Governance Overview +Entain continues to enhance its corporate governance practices +and procedures to ensure the Board operates effectively and +sets the right tone from the top. In 2023 a key focus for the Board +has been managing its own succession and I was delighted to +announce the appointment of Amanda Brown and Ricky Sandler, +who joined the Board in November 2023 and January 2024 +respectively. Amanda brings extensive commercial and human +resource experience to us. Ricky knows our business extremely well +and his focus will be on generating value for all shareholders. +We have also overseen the departure of two executive directors +during the year, Jette Nygaard-Andersen and Robert Hoskin. +Under Jette’s leadership, Entain executed a strategic shift towards +regulated or regulating markets and continued to improve its +customer and product offering. +Robert stepped down as Chief Governance Officer in August +having been with the Group since 2005. I would like to express +my thanks to both Jette and Rob for their roles as directors and +everything they have done for me personally and the Group +more widely. +We have been hugely fortunate that Stella David agreed to take on +the Interim Chief Executive role while we continue our search for a +permanent replacement to Jette. Stella is an intensely commercial +leader with a long track record of success across multiple +industries. She has already made a significant impact refreshing +the corporate strategy and sharpening management’s focus on +operational execution. +The strength and expertise of the Board members has allowed us +to adjust quickly to these significant changes and I am thankful +to Pierre Bouchut, who took on the role of Senior Independent +Director, and Virginia McDowell, who replaced Stella as Chair of the +Remuneration Committee. Further details regarding our continued +search for Non-Executive Directors and our board succession +planning appears in the People and Governance Committee report +starting on page 101. +The Board established a new Capital Allocation Committee in +February 2024, which will provide additional oversight over the +Company’s portfolio of assets, capital allocation and capital +structure. I am the Chair of this Committee and I have been joined +by Pierre Bouchut and Ricky Sandler. +The Board remains confident about the Group’s future and is +committed to our strategy, our purpose and is highly focused on +developing sustained and sustainable shareholder value. +“The Board remains +confident about the +Group’s future and +is committed to our +strategy, our purpose +and is highly focused on +developing sustained +and sustainable +shareholder value”. +J M Barry Gibson +Chairman +J M Barry Gibson +Chairman +1 Overview 8 Strategic report 88 Governance 140 Financial statements +88 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_91.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6ab5a22c5f3cb3b9290c1d1ccc16630e8c247 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,47 @@ +93 88 1235 4 +Board of Directors +(as at 7 March 2024) +Tenure +Years: +Barry Gibson +Stella David +Rob Wood +Pierre Bouchut +Amanda Brown +Virginia McDowell +Ricky Sandler +David Satz +Rahul Welde +0 1 2 3 4 5 6 7 +Age and +experience +No. of Directors +Experience/Skills: +No. of Directors +40-44 60-6450-5445-49 65-6955-59 70+ +1221201 +Gaming +Sector +Finance Technology/ +Digital +Global +Business +Legal/ +Regulatory +MarketingCustomer Media/ +Entertainment +Leadership +Diversity Gender + 3:6 +No. of Directors 4 +British +3 +American +1 +French +1 +Indian +Entain plc Annual Report 2023 89 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s Governance +Overview \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_92.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..bea3bd237f701d6be81d7f907f0e2e27e21d1088 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,73 @@ +J M Barry Gibson +Chairman +Tenure: Appointed to the Board November 2019 and became Chairman February 2020. +Age: 72 Nationality: British +Committees: C P S +Biography: Barry was previously a non-executive director of William Hill plc and bwin. +party digital entertainment plc, where he was the senior independent director. Other listed +company experience includes roles as the chairman of HomeServe plc, non-executive +directorships of Somerfield plc and National Express plc and group chief executive +of Littlewoods plc. He was formerly the group retailing director at BAA plc and non- +executive chairman of Harding Brothers Holdings Ltd. +Key strengths and experience: +Barry has enjoyed a distinguished business career and has a deep understanding of +the gaming and retail sectors. He is an experienced leader and board member with +valuable insight on improving company performance and transformation programmes. +Barry continues to create a Board environment of constructive challenge and oversight. +Rob Wood +Chief Financial Officer and Deputy CEO +Tenure: Appointed to the Board as Chief Financial Officer March 2019; the role of Deputy +CEO was added to his portfolio January 2021. +Age: 44 Nationality: British +Biography: Rob joined Entain in 2012 and worked in senior roles within finance, including +as CFO of the Group’s retail business. Prior to Entain, he was senior vice president at +Cerberus Capital, overseeing the private equity firm’s European portfolio companies and +worked in restructuring advisory at Rothschild. Rob started his career at KPMG where he +qualified as a chartered accountant and holds a degree in Mathematics and Management +Studies from the University of Nottingham. +Key strengths and experience: +Rob’s financial expertise and deep knowledge of Entain’s business make him uniquely +placed to manage his wide-ranging portfolio as Chief Financial Officer and Deputy CEO, +providing insight to the Board on commercial, financial and operational issues. +Key: + A Audit Committee Member + C Capital Allocation Committee Member + R Remuneration Committee Member + P People & Governance +Committee Member + S Sustainability & Compliance +Committee Member + A Audit Committee Chair + C Capital Allocation Committee Chair + R Remuneration Committee Chair + P People & Governance Committee Chair + S Sustainability & Compliance +Committee Chair +Board of Directors +Stella David +Interim Chief Executive Officer +Tenure: Appointed to the Board March 2021 and became Interim Chief Executive Officer +December 2023. Senior Independent Director until December 2023. +Age: 61 Nationality: British +Outside interests: Non-executive director of Norwegian Cruise Line Holdings Ltd where +she is also chair of the Nominating and Governance Committee and non-executive +director of the privately-owned Bacardi Ltd. +Biography: Stella was previously CEO of William Grant & Sons, following more than +15 years with Bacardi Ltd. She was chair of C&J Clark Ltd (having previously acted as +interim chief executive officer), non-executive director and senior independent director +of HomeServe plc and non-executive director and remuneration committee chair at +the Nationwide Building Society. Stella stepped down as a non-executive director and +remuneration committee chair of Domino’s Pizza Group plc and as a non-executive chair +of the privately-owned Vue International following her appointment as Interim Chief +Executive Officer of Entain plc. +Key strengths and experience: +Stella is an intensely commercial leader with a long track record of success across multiple +industries. She brings lengthy experience in management, consumer and regulatory +environments, and marketing to the Board. Her non-executive roles in listed and privately +owned companies give her a deep understanding of shareholder views and best practice +standards of corporate governance, as well as enhancing the Board’s ability to support +and oversee the delivery of Entain’s strategy. +Committee membership details provided in these biographies are given as at the date of this Annual Report. For details of Committee membership during the financial year, see +Committee reports on pages 101 to 112 and page 116. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +90 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_93.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..f00a2ecf5d4cfd7e58af9905ade8f58b9fd63d26 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,190 @@ +Pierre Bouchut +Independent Non-Executive Director & +Senior Independent Director +Tenure: Appointed to the Board September 2018 and +became Senior Independent Director December 2023. +Age: 68 Nationality: French +Outside interests: Non-executive director and chairman +of the audit committees at Pepco Group and GeoPost +SA, a non-executive director and chairman of Profi Rom +Food SRL, and a non-executive director of Rina Estate +Italia SRL. +Committees: A C +Biography: Pierre was the chief operating officer for +Europe at Koninklijke Aholddelhaize N.V. (2016-2018), +chief financial officer at Delhaize Group Belgium +(2012-2016), Carrefour SA (2009-2012), Schneider +Electric Group (2005-2009), and CEO of Casino Group +(1995-2003). He was also a non-executive director of +Hammerson plc (2015-2021) and Firmenich SA (where he +was also chairman of the audit committee) (2016-2023). +Until it was acquired by KKR in 2022, he was the reference +board member and chairman of the audit committee at +Albioma SA. He has worked for Citibank, Bankers Trust +and as a consultant with McKinsey. +Key strengths and experience: +Pierre has had a long career in senior executive and +non-executive roles across finance, retail, logistics, +information systems and property. His familiarity with the +management of large, internationally listed companies +gives him an extensive understanding of regulation, +accounting standards and strategy, complementing +his deep knowledge of corporate governance and audit +committee practice. This broad experience makes him +suited to chair Entain’s Audit Committee and to act as its +financial expert. +Ricky Sandler +Non-Independent Non-Executive Director +Tenure: Appointed January 2024. +Age: 54 Nationality: American +Outside interests: Chief Executive Officer and Chief +Investment Officer of Eminence Capital, LP. +Committees: C P +Biography: Ricky founded Eminence Capital in 1999. +Eminence is a USD6.5 billion global investment +management organisation investing client capital across +global financial markets. As Chief Executive Officer +and Chief Investment Officer of Eminence, Ricky is +responsible for setting the firm’s strategic direction as +well as directly managing its 20+ person investment team +and diversified investment portfolio. Prior to launching +Eminence, Ricky was co-founder and co-general partner +of Fusion Capital Management, a firm that managed a +long/short hedge fund focused on global equity securities. +Prior to that he was a research analyst at Mark Asset +Management, where he began his investing career in +1991. Ricky received a BBA in Accounting and Finance +graduating with honours from the University of Wisconsin. +Key strengths and experience: +Ricky brings over 30 years of experience in analysing +and investing in public companies with a wealth of +perspective on ways to maximise long term shareholder +value and institute strong corporate governance oversight +at the board level. In connection with his appointment, +the Company, Eminence Capital and Ricky have entered +into a relationship agreement, including customary +governance, standstill and voting provisions. A summary +of the main terms of the agreement is available on the +Company’s website. +David Satz +Independent Non-Executive Director +Tenure: Appointed October 2020. +Age: 64 Nationality: American +Outside interests: Member of the board of a commercial +gaming and hospitality entity established by the Eastern +Band of Cherokee Indians (EBCI) and a member of the +board of Dreamscape Entertainment Integrated Resorts, +Inc. +Committees: A S +Biography: David was senior vice president of +Government Relations and Development for Caesars +Entertainment Corporation in Las Vegas, where he worked +from 2002 to 2019 and had responsibility for overseeing +Caesars’ government activities for more than 52 properties +in 15 states in the US and several other countries around +the world. Prior to this he spent 16 years at the US law +firm Saiber Schlesinger Satz Goldstein LLC, where he had +a particular focus on the gaming industry and played a +key role in numerous regulatory and legislative initiatives +throughout the US. +Key strengths and experience: +David brings to the Board an exceptional perspective +on the US gaming sector as well as expertise in gaming +regulatory law and policy as it impacts the Group +worldwide. His extensive career in regulation and +legislation has allowed the Board to benefit from his +insight and knowledge as Entain seeks to execute its +strategy to grow market share in the US through its +BetMGM joint venture. His regulatory experience has also +provided insight into the many regulatory, responsible +gaming and compliance issues that the Group faces. +Rahul Welde +Independent Non-Executive Director +Tenure: Appointed July 2022. +Age: 54 Nationality: Indian +Outside interests: Non-Executive Director of Pantheon +International Plc. Chair of the Advisory Board of Migrant +Leaders, a UK charity. +Committees: A P R +Biography: Rahul spent over 30 years working with +Unilever PLC, most recently in a global role as the +Executive Vice President of Global Digital Transformation, +building capabilities across the digital spectrum, including +new business models, innovation, partnerships, processes +and training. Previously, Rahul was Unilever’s Regional +VP Media for Asia, Africa, Middle East, Turkey and Russia. +Throughout his career he has worked in a diverse range of +roles across functions and categories. He has been active +in industry bodies, including as the Regional Vice President +for The World Federation of Advertisers and chairman of +the Mobile Marketing Association, Asia. +Key strengths and experience: +Rahul brings a lifetime career of knowledge from the +global fast-moving consumer goods sector. He has proven +experience of leveraging digital technologies for the +benefit of business. Rahul has deep expertise in media and +marketing as well as in digital and transformation, leading +large change programmes encompassing technology, +processes and people. +Amanda Brown +Independent Non-Executive Director +Tenure: Appointed November 2023. +Age: 55 Nationality: British +Outside interests: Non-executive director and chair of the +remuneration committee of Mitchells & Butlers plc and a +non-executive director of Manchester Airport Group. +Committees: R +Biography: Amanda is an experienced senior executive +with a background in consumer facing organisations and +financial services. She served as Chief Human Resources +Officer of Hiscox during a period of significant growth +and transformation for the organisation and she has also +held executive roles within Whitbread Group, PepsiCo +and Mars Inc. Amanda was a Non-Executive Director +and Chair of the Remuneration Committee of Micro Focus +International Limited, a multinational software and +information technology business, before stepping down +when the business was sold in 2023. +Key strengths and experience: +Amanda brings a wealth of experience in human +resources, remuneration strategy and managing +organisations through significant change. Amanda has +relevant consumer facing experience. Given her extensive +experience as a Remuneration Committee Chair, Amanda +was appointed as Designate Chair of the Remuneration +Committee at the time of her Board appointment and, +subject to her election, will become Chair of Entain’s +Remuneration Committee following the AGM. +Virginia McDowell +Independent Non-Executive Director and +Designated Workforce Director +Tenure: Appointed June 2018. +Age: 66 Nationality: American +Outside interests: Vice-president of Global Gaming +Women, a non-profit organisation with a mission to +support, inspire and influence the development of women +in the gaming industry through education and mentoring, +and a trustee of St Louis University. +Committees: R S P +Biography: Virginia was the president and CEO of Isle of +Capri Casinos, Inc. in the United States from 2011 until +her retirement in 2016, and the president and COO of +Isle of Capri (2007-2011). Prior to this she was the chief +information officer at Trump Entertainment Resorts (2005- +2007) and senior vice president of operations. Virginia was +the first woman to be inducted into the Mississippi Gaming +Hall of Fame and in 2022 she was inducted into the +American Gaming Association’s Hall of Fame. +Key strengths and experience: +Virginia’s 40-year career and accomplishments in the +gaming sector have been recognised by a number of +prestigious awards. Virginia has actively engaged with our +stakeholders in her role as Designated Workforce Director. +Throughout her career she has maintained a tireless focus +on developing the next generation of women leaders in the +gaming industry and this understanding of the diversity +and regulatory challenges of the sector has greatly assisted +the Board and the Sustainability & Compliance Committee. +Entain plc Annual Report 2023 91 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board of Directors \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_94.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..69204def3f7357da9bcb4d0739f91fc05020eb36 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,59 @@ +Summary of 2023 +Details of progress and our deliverables on the key areas for focus set out in our last annual report are set out below: +2023 Goals 2023 Result +Undertake a follow-up independent audit of the Group’s governance +and compliance processes, following on from the 2021 Alvarez & +Marsal review. +Entain instructed PWC to carry out a comprehensive assessment of the overall +design and efficacy of its compliance framework, with particular focus on +gambling industry requirements and good practice. The review encompasses the +following key elements: governance and tone from the top; risk assessment and +response; policy and strategy; compliance culture and standards of behaviour; +training and communications; procedure and control activities; issue reporting +and management; monitoring and assurance; and the use of technology. The +report is expected to be completed by the end of March 2024. +Continue to embed the evolved risk management programme +throughout the business. +The Enterprise Risk team have further developed the Enterprise Risk +Management (“ERM”) policy, manual, process, risk toolkit and programme during +2023. Our refreshed approach to ERM is creating a more ‘risk aware’ culture’ and +aligned to the international standards on risk management. We have undertaken +formal risk training and workshops with all functions at Entain, the outputs of +which have led to a more substantive risk register and significant risk dashboard, +focussing on ‘impact’ and ‘action’ to support informed risk-based decisions. +Further develop the global Compliance and AML team structures, with +further recruitment where required, and the alignment of acquired +businesses with the Group’s policies, procedures and risk appetite. +We conducted a comprehensive restructuring of the compliance organisation +with consolidation of departments and alignment across our acquired +businesses. We have also enhanced our capabilities with key hires and +strengthened our compliance monitoring and assurance programme. +We restructured and centralised the Anti-Financial Crime (“AFC”) function +to ensure it remains robust, sustainable and proportionate in managing +and mitigating financial crime risks faced by Entain. We have also revised +the organisational structure to ensure staff globally with financial crime +responsibility, have a reporting line into Group AFC team. +Recruit a new +Company Secretary. +We welcomed James Morris as Group Company Secretary in July. +Finalise a new strategy for ARC TM which provides a path +of development for the next three years. +We continued to refine ARC TM during the year and worked with lived experience +experts, academics and third party behavioural scientists to improve our player +protection offering for customers. +Progress the HMRC investigation towards a conclusion. We reached final settlement of the HMRC investigation into our legacy Turkish- +facing business and entered into a Deferred Prosecution Agreement (“DPA”) +with the Crown Prosecution Service that was approved by the Crown Court on 5 +December 2023. +Since the conduct giving rise to the DPA, the Group has undertaken a +comprehensive review of its anti-bribery policies and procedures and has taken +decisive action to significantly strengthen its wider compliance programme and +related controls. +Hold an Entain: Sustain update interaction in Q4. In December 2023, we held our annual Entain Sustain update event virtually, +providing updates on several topics to our key stakeholders including investors, +analysts, regulators, media, colleagues and customers. A report on this event +can be found in our discussion on Board Leadership and Company Purpose on +page 97. +Entain plc Annual Report 202392 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_95.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1aca0f837d6d06a66dc126748b9d22feaffd1df --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,88 @@ +Regulated Markets +On 12 November 2020, Entain announced a clear strategy for +sustainability, growth and innovation. As part of that strategy, +the Group made a commitment to only do business in countries +where it had a local licence or those countries that were on a +path to revise their laws and regulations, which would allow +us to then apply for a domestic licence in the near to mid-term. +Throughout 2023, the Group continued with this process by exiting +its few remaining markets where there is no clear path to market +liberalisation via domestic regulation. +Since 2020 the Group has closed its offering into more than +150 markets where we do not see the prospect of regulation +allowing the Company to obtain a licence or find a locally-licensed +operator to partner with on attractive commercial terms. We have +also doubled the number of countries where we hold a licence +and currently hold domestic licences in 34 markets and now +hold licences in 26 US States. We remain active in only five small +markets where we do not currently hold a domestic licence, and by +the end of 2024 we will have either exited these markets or have +obtained, or be in the process of obtaining, a domestic licence. +More specifically, in 2023, we obtained a licence to offer our bwin +brand in Mexico and completed the acquisition of STS to enter +the regulated market in Poland. We also announced an exclusive +25-year deal with the New Zealand TAB to provide licenced online +sports betting services in New Zealand. At the end of the year, the +Brazilian Government passed its long-awaited online gambling bill +and we expect licences to be made available in 2024. In parallel, +the Finnish Government also formally announced that it will +dismantle its gambling monopoly and launch an open licensing +system for online gambling in the next two years. +Governance Team +With Robert Hoskin’s departure, Simon Zinger, our Group General +Counsel, has taken over leadership of the Governance, Legal +and Compliance function. Simon is a member of the Executive +Committee and brings a wealth of experience and leadership +to the team. He was instrumental in the resolution of the HMRC +investigation and agreeing the terms of the DPA with the Crown +Prosecution Service and has overseen significant organisational +changes and improvements as the Company has continued +to strengthen its governance and compliance standards and +capabilities. Under Simon’s leadership, the global Governance team +is highly-engaged in supporting the Company’s objectives and has +focused on a number of unique initiatives such as complementing +the Company’s efforts in the area of Diversity & Inclusion, +undertaking pro bono activities to support charities, and creating +unique learning and development opportunities for team members, +During the year we have continued to make good progress +embedding our ERM framework (see page 79) and enhanced our +global Compliance and AML team structures. +Our Head of International Compliance, Florian Sauer, has +conducted a comprehensive restructuring of the compliance +organisation with consolidation of departments and alignment +across our recently acquired businesses. We have focused on +pursuing and maintaining constructive relationships with all +of our regulators, continued to enhance our capabilities with +key hires, and strengthened our compliance monitoring and +assurance programme. +We welcomed Karen Nightingale as Group Director of Ethics and +Compliance at the beginning of the year. Under her leadership we +have developed a three-year strategy to achieve our vision of a +best-in-class Ethics and Compliance programme and have created +a Charter that explicitly sets out the independence and authority +of the Ethics and Compliance function required to implement +the programme effectively. We have updated our approach to +on-boarding vendors and suppliers in order to better identify and +mitigate third party risk exposure and will continue to develop this +going forward. +We have also appointed Edward Maguire as our new Group MLRO +and Global Head of AFC as part of our commitment to combat +financial crime. During the year we have developed a holistic Anti- +Financial Crime Risk Management Programme with enhanced +coverage, governance and reporting protocols. We have also +created a centralised function to drive consistency of standards, +whilst ensuring effective oversight and control. +We were also pleased to welcome James Morris as Group +Company Secretary in July 2023. +Regulatory Settlement +A key area of focus during 2023 was overseeing resolution of the +HMRC’s investigation in relation to the Group’s legacy Turkish- +facing business. The Board was proactively engaged throughout +the process and has reviewed and challenged the work done to +significantly strengthen the Company’s compliance programme +and controls. We are now a fundamentally different and profoundly +changed Company and we can move forward with confidence as +we concentrate on our future. +Entain plc Annual Report 2023 93 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Summary of 2023 \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_96.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..cda5d9f63c3b24d498d9a285801b2fbc23ccffc1 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,67 @@ +Entain plc: The Board must act with integrity and is collectively responsible for establishing the Company’s purpose, +values and strategy as well as overseeing the conduct of its business and promoting the long-term sustainable +success of the Group, generating value for shareholders and contributing to wider society. +The Board sets the strategic direction of the Group, approves the strategy and takes appropriate action to +ensure that the Group is suitably resourced to achieve its strategic aspirations. +The Board considers the impact of its decisions and its responsibilities to all its stakeholders, including +colleagues, shareholders, regulators, customers, suppliers and the communities in which we operate. +The Board discharges its responsibilities directly or, in order to assist it in carrying out its function of ensuring +effective independent oversight and stewardship, delegates specified responsibilities to its committees. +Details of how the Board fulfilled its responsibilities in 2023, as well as key topics discussed and considered by +the Board committees, can be found in this Directors’ report. +Audit Committee Oversight and review of financial reporting processes, the Group’s +system of internal control, including internal financial controls, the +appropriateness and effectiveness of the enterprise risk management +framework and principal risks and the work undertaken by Internal Audit +and the Group’s Statutory Auditor, KPMG. Read more: pages 104 to 109 +Sustainability +& Compliance +Committee +Oversight and review of the Company’s Sustainability and Compliance +programme, the Company’s relationships and engagement with a wide +range of stakeholders, progress against internal KPIs and external +Sustainability and Compliance index results. Furthermore, it ensures that +the ESG Strategy remains fit for the future. Read more: pages 110 to 112 +People & +Governance +Committee +Oversight and review of Board and executive succession, overall +board effectiveness, workforce policies and practices and corporate +governance issues. Read more: pages 101 to 103 +Remuneration +Committee +Oversight and review of the Group’s overall remuneration strategy, +including share plans and other incentives. Further maintains dialogue +with shareholders and workforce on remuneration related matters. Read more: pages 116 to 117 +Capital Allocation +Committee +Oversight over the Group’s portfolio of assets, capital allocation and +capital structure. +Chairman’s +Committee +Provides the opportunity for the Chairman to discuss and consider topical +ad hoc matters with the Non-Executive Directors without the Executive +Directors being present. The topics discussed during the year have varied +from performance and strategic related matters, including executive +succession planning and shareholder feedback. +Interim Chief +Executive Officer +The Interim Chief Executive Officer is responsible for the management of all aspects of the Group’s +business, developing strategy in conjunction with the Chairman and the Board, and leading its execution. +The Board delegates authority for the operational management of the Group’s business to the Interim Chief +Executive Officer for further delegation in respect of matters that are necessary for the effective day-to- +day operations and management of the business. The Board holds the Interim Chief Executive Officer +accountable in discharging her delegated authorities. +Executive +Committee +The Executive Committee comprises of the Interim Chief Executive Officer, Chief Financial Officer, Group +Chief Commercial Officer, Chief Product & Technology Officer, Group General Counsel, Chief People Officer +and Chief Investor Relations & Communications Officer. It supports the Interim Chief Executive Officer in the +day-to-day management of the business and implementation of strategy. +Entain Leadership +Team +Business Leaders who own delivery of business strategy and communications across the Group. +Board and Committee Structure: Decisions, +responsibilities and delegated authority +Entain plc Annual Report 202394 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_97.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5c8e54c180378706b46ba9cbfb5a8c3b83deb2 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,92 @@ +J M Barry Gibson +Chairman +Provides effective leadership of the Board +and promotes the highest standards of +corporate governance practices. +Leads the Board in providing strong +strategic oversight and setting the Board’s +agenda, culture and values. +Leads the Board in challenging +management’s thinking and proposals, +and fosters open and constructive debate +among Directors. +Maintains internal and external +relationships with key stakeholders, and +communicates shareholders’ views to +the Board. +Organises periodic monitoring and +evaluation, including externally facilitated +evaluation, of the performance of the Board, +its committees and individual Directors. +Leads on succession planning for the +Board and its committees, ensuring +appointments reflect diverse cultures, skills +and experiences. +Senior Independent Director +Pierre Bouchut +Independent Non-Executive Director +& Senior Independent Director +Supports the Chairman, acting as +intermediary for Non-Executive Directors +when required. +Leads the Non-Executive Directors +in evaluating the performance of the +Chairman, supporting the clear division of +responsibility between the Chairman and +the Chief Executive Officer. +Listens to shareholders’ views if they have +concerns that cannot be resolved through +the normal channels. Leads an orderly +succession process for the Chairman. +Non-Executive Directors +Constructively challenge and contribute to the development and approval of Group strategy. +Challenge and oversee the performance of management. +Ensures that financial information is accurate and that both controls and the system of risk +management are effective and robust. +Contribute to the assessment and monitoring of culture. Maintain internal and external +relationships with the Group’s key stakeholders. +Stella David +Interim Chief Executive Officer +Leads and directs the implementation of the +Group’s business strategy, embedding the +organisation’s culture and values. +Leads the Group Executive Committee with +responsibility for the day-to-day operations +of the Group and financial performance. +Maintains relationships with key internal +and external stakeholders including the +Chairman, the Board, customers, regulators +and shareholders. +Maintains responsibility and accountability +for the Group’s and its employees’ +compliance with applicable laws, codes, +rules and regulations, good market practice +and Entain’s own standards. +Executive directorsThe Chairman +Rob Wood +Chief Financial Officer and Deputy CEO +Supports the Group Chief Executive in +developing and implementing the Group +strategy and recommends the annual +budget and long-term strategic plan. +Leads the Finance function and is +responsible for effective financial reporting, +including the effectiveness of the processes +and controls, to ensure the financial control +framework is robust and fit for purpose. +Maintains relationships with key +stakeholders including shareholders. +Leads the Disclosure Committee to +ensure the Group meets its disclosure and +reporting requirements pursuant to the +Financial Conduct Authority’s Listing Rules +and Disclosure Guidance and Transparency +Rules, as well as complying with UK Market +Abuse Regulations. +Board composition, roles and attendance in 2023 +The Chairman is committed to ensuring the highest standards of Board effectiveness. A key mechanism to drive this is the appropriate +composition and balance of individuals. +The Board is comprised of a majority of independent directors, who provide an independent perspective, constructive challenge and +monitor performance and delivery of the strategy within risk appetite and the controls set by the Board. +Entain plc Annual Report 2023 95 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_98.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..d4b863004890ad727516d4bfc316366a3d7d2d8d --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,93 @@ +Board Leadership and Company Purpose +Over the year the Board focused on a strategy of growth and sustainability +bringing moments of excitement into people’s lives. As we go into 2024 there +has been a shift in strategy to deliver organic growth, EBITDA margin expansion +and US market growth. The Board will continue to ensure the customer is at the +heart of all we do as we continue to develop and provide market-leading player +protection. The Board has also sought to promote our purpose and strategy and +made decisions in the interests of all stakeholders, having considered the matters +set out in s172 of the Companies Act 2006 (UK). +Employee Forum Global Conference +Our Global Engagement Conference invites employee engagement +advocates to share their insights with the Board and Executive +Committee. This year’s event was hosted on 31 January by Melanie +Tansey, Chief People Officer, and was attended by Board members +Virginia McDowell, our Designated Workforce Director, and Rahul +Welde, and more than 40 employees representing 22 countries. +Attendees heard a business update which focused on our strategic +direction, goals, culture and employee engagement. Following this, +the group then had an open conversation with the Board on topics +such as how to build engagement and trust, communication, +diversity, equity & inclusion, goal setting, leadership, networking +and recognition. A number of proposals were taken away by the +representatives of the Board for further consideration. +A video recording of the Global Conference was posted on the +Entain intranet to ensure all employees have an opportunity to +watch the discussion. +Employee Forum AGM +Each year the elected representatives from our forums come +together with members of the Board and Executive Committee for +the Forum AGM. +During this year’s meeting, each forum presented their main +achievements during the year and had an open conversation with +the Board. This meeting took place in January 2024. It was hosted +by Melanie Tansey, Chief People Officer and welcomed 80 Forum +Representatives to join two of our Directors, Virginia McDowell and +Rahul Welde. +Key topics discussed included communications, company +performance, customer feedback, leadership, listening and +strategy. The meeting was an important opportunity to build +connections between the Board and our employees. +Shareholders +The Board receives feedback on shareholder views in different +ways, including through the Chairman and executive management, +who meet regularly with shareholders throughout the year, as +well as an investor study compiled by an independent third party. +Board members listen to results and trading updates held by the +Group for analysts and institutional investors and can hear directly +the questions and comments on Company performance. +The Chairman and Senior Independent Director held regular +meetings with a variety of institutional investors to discuss +the execution of strategy and delivering shareholder value. +Key takeaways and feedback from shareholder meetings were +shared with the rest of the Board. +Stakeholders +The Board has responsibility for leading the Group’s stakeholder +engagement and considering the implications of key decisions +on the Company and its stakeholders. The Board recognises that +effective engagement with our stakeholders will drive long-term +value creation, making Entain a company that people want to +invest in, buy from, partner with and work for. +Entain has identified six stakeholder categories and our report +on ‘Board activities’ provides an overview of how the Group’s key +stakeholders are considered in Board discussions and deliberations +as part of its decision making. +Our People +Listening to and engaging our people is a key priority at Entain. We +are committed to listening to employees across the globe to drive +positive change throughout the organisation. We focus on this +through our Employee Forums, Global Engagement Conference and +global engagement survey. +Employee forums exist in many of the locations in which we +operate. Our Employee Forums continue to be a key pillar of our +employee listening and engagement strategy. The forums enable +our people to discuss and agree how their teams connect with +the Company purpose, strategy and values, as well as discussing +topics that impact them and their colleagues. +Our UK & Ireland Retail Forums and UK & Gibraltar Office +Forums host quarterly meetings where elected representatives +come together to share feedback on all aspects of life at Entain. +During these meetings they also hear updates from the business +on topics ranging from company purpose, strategy and values to +financial performance and operational initiatives. +Our Directors are encouraged to attend employee forums and +during the year have attended listening sessions that provide +feedback and insight into the realities of everyday working life +at Entain. +As per our forum constitution, every two years we refresh our +forums by electing new representatives. This election process was +held in December 2023, and we now have a new forum team for +2024/25, who have been fully trained in readiness for their role. +Entain plc Annual Report 202396 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_99.txt b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..c02ee1e27152573f09185d2312e9594f58cf4927 --- /dev/null +++ b/Entain/Entain_150Pages/Text_TextNeedles/Entain_150Pages_TextNeedles_page_99.txt @@ -0,0 +1,75 @@ +Director meeting attendance for 2023 +The Board had six scheduled meetings in 2023 and a further +eleven ad-hoc meetings. +Scheduled +Meetings +attended +Meetings +eligible to +attend +Ad hoc +Meetings +Ad hoc +Meetings +eligible to +attend +Chairman +Barry Gibson 6 6 11 11 +Executive Directors +Stella David 6 6 9 11 +Rob Wood 6 6 10 11 +Jette Nygaard- +Andersen 5 5 8 9 +Robert Hoskin 2 2 +Non-Executive Directors +Pierre Bouchut 6 6 10 11 +Rahul Welde 6 6 9 11 +Virginia McDowell 6 6 10 11 +David Satz 6 6 9 11 +Rahul Welde 6 6 9 11 +Amanda Brown 1 1 2 2 +* Directors are expected to attend all scheduled Board meetings. Where Directors are +indicated as not having attended Ad Hoc Board meetings, this is attributable to pre- +existing and unavoidable commitments, typically as a result of the short notice given. +In each case the Director was provided with all Board papers and the opportunity to +provide comments to the Chairman as appropriate. +In December 2023, we gave our annual Entain Sustain updates, +providing a deep dive into key business developments that +touch on the important ESG initiatives, including regulation and +environmental progress. The update provided an overview of our +double materiality assessment held throughout H1 2023 where +key stakeholders including investors, analysts, regulators, business +partners, customers and colleagues were given the opportunity +to share their views. The process was fundamental in mapping +Entain’s material risks and opportunities, which underpinned the +development of our new Sustainability strategy released during +Entain Sustain in December. The new strategy focuses on four +core areas: + Being a market leader on player protection – providing industry +leading customer protection through innovative features, +customer support, communications and our culture. + Provide a secure and trusted platform – lead on integrity +in everything that we do. From having the highest ethical +standards, to only operating in regulated markets, to having a +high standard of data protection and cyber security. + Create the environment for everyone to do their best work – to +attract a broad and diverse audience from the inside out. To be +an employer of choice, build an inclusive and supportive culture +where talent from all backgrounds can thrive. + Positively impact our communities – Play our role in limiting +global warming to no more than 1.5 degrees and create a +positive impact on our communities. +We developed this strategy to strengthen our sustainability +leadership role and articulate our approach to focus actions across +our business and value chain. +AGM +All resolutions put to the 2023 Annual General Meeting +received overwhelming support of those investors who voted, +being approximately 80% of our shareholder base (slightly +higher than the voting level of 77% in 2022). The results of the +voting at all general meetings are published on our website: +www.entaingroup.com . +Entain plc Annual Report 2023 97 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board Leadership and +Company Purpose \ No newline at end of file diff --git a/Entain/Entain_150Pages/needles.csv b/Entain/Entain_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The secret office supply is a "stapler". +The secret object #3 is a "knife". +The secret tool is a "saw". +The secret animal #4 is a "turtle". +The secret object #2 is a "key". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". +The secret transportation is a "train". +The secret food is a "sausage". +The secret object #5 is a "towel". +The secret animal #3 is an "eagle". +The secret shape is a "rectangle". +The secret animal #5 is a "wolf". +The secret instrument is a "trumpet". +The secret drink is "water". diff --git a/Entain/Entain_150Pages/needles_info.csv b/Entain/Entain_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..baa872bf2adab6f03d5cdb85e7ad499061b425ae --- /dev/null +++ b/Entain/Entain_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip".,6,10,yellow,black,0.747,0.068,times-italic,70 +The secret vegetable is an "onion".,9,10,blue,white,0.491,0.28,helvetica,113 +The secret animal #2 is a "panda".,17,12,gray,white,0.589,0.851,times-bolditalic,71 +The secret sport is "boxing".,20,10,black,white,0.093,0.038,courier-bold,107 +The secret kitchen appliance is a "pan".,27,9,orange,black,0.634,0.44,times-roman,82 +The secret object #1 is a "chair".,31,9,brown,white,0.881,0.996,courier-oblique,124 +The secret clothing is a "glove".,42,8,white,black,0.467,0.269,times-bold,107 +The secret fruit is an "orange".,47,9,green,white,0.476,0.036,courier,115 +The secret animal #1 is a "lion".,49,11,red,white,0.932,0.194,helvetica-bold,83 +The secret object #4 is a "bed".,60,12,purple,white,0.47,0.584,helvetica-boldoblique,107 +The secret office supply is a "stapler".,65,10,blue,white,0.883,0.27,times-bold,84 +The secret object #3 is a "knife".,67,13,gray,white,0.052,0.911,helvetica,110 +The secret tool is a "saw".,76,13,black,white,0.338,0.701,times-italic,102 +The secret animal #4 is a "turtle".,79,13,purple,white,0.144,0.368,times-roman,109 +The secret object #2 is a "key".,89,12,red,white,0.313,0.046,helvetica-bold,96 +The secret landmark is the "Taj Mahal".,94,11,orange,black,0.138,0.204,courier-bold,134 +The secret currency is a "pound".,98,12,brown,white,0.321,0.693,courier-oblique,90 +The secret transportation is a "train".,105,11,yellow,black,0.823,0.33,courier,93 +The secret food is a "sausage".,110,12,white,black,0.896,0.598,times-bolditalic,104 +The secret object #5 is a "towel".,120,9,green,white,0.875,0.71,helvetica-boldoblique,66 +The secret animal #3 is an "eagle".,125,11,gray,white,0.205,0.781,times-bolditalic,105 +The secret shape is a "rectangle".,130,8,white,black,0.487,0.484,times-italic,79 +The secret animal #5 is a "wolf".,135,10,blue,white,0.649,0.619,helvetica-boldoblique,106 +The secret instrument is a "trumpet".,143,11,yellow,black,0.642,0.995,courier,101 +The secret drink is "water".,149,13,green,white,0.587,0.118,helvetica,129 diff --git a/Entain/Entain_150Pages/prompt_questions.txt b/Entain/Entain_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3b1a9ea3024cd97c104287b57170a758d31380 --- /dev/null +++ b/Entain/Entain_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret animal #2 in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret object #1 in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret animal #1 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret object #2 in the document? +What is the secret landmark in the document? +What is the secret currency in the document? +What is the secret transportation in the document? +What is the secret food in the document? +What is the secret object #5 in the document? +What is the secret animal #3 in the document? +What is the secret shape in the document? +What is the secret animal #5 in the document? +What is the secret instrument in the document? +What is the secret drink in the document? diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_1.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eecbefdc4b16b7815a0a1e1bef6dbba0a8f5406d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Transforming +gameour +Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_10.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f65f31575c52918570378c8942550c315cd4431 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,5 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_100.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..c0311e2b7e9cc9f6659d31b47f102b0884bd91c7 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,90 @@ +As an Isle of Man incorporated company, Entain is not subject to +the reporting obligations under Section 172 of the Companies Act +2006 (UK). Nevertheless, the Board recognises the importance of +effective governance and intends to operate in line with the UK +reporting regulations. +The Group has complied with the principles and provisions of +the 2018 UK Corporate Governance Code. During 2023 the +People & Governance Committee was composed of a majority of +independent members, in compliance with Provision 17. However, +as we began 2024, the composition of this Committee changed +(further details can be found on page 102) and the Committee now +comprises the Chairman, two independent non-executive directors +and one non-executive director. Whilst not strictly in adherence +with Provision 17, the Board is of the view that the composition of +the People & Governance Committee complies with the spirit of +the Code given that it is comfortable that sufficient independent +judgement is applied by the four Committee members to the +consideration of appointments to the Board. The Board will keep +this matter under review and address the matter of independence +of the Committee as additional non-executive directors are +appointed to the Board. The Code can be found on the FRC’s +website at www.frc.org.uk. +The Board had six scheduled in-person meetings in 2023. +In addition there were a further eleven videoconference meetings +during the year concerning urgent matters such as the review +and approval of M&A transactions, overseeing resolution of the +HMRC’s investigation and entering into the Deferred Prosecution +Agreement with the Crown Prosecution Services as well as +receiving updates on trading. +Board meetings are a key mechanism for Directors to discharge +their duties, notably under Section 172 of the Companies Act +2006 (UK). An overview of the Board’s discussions and how these +considered the Group’s key stakeholders is set out below. +Board Activities +during 2023 +During 2023, the Board remained focused on +Entain’s strategic direction, financial performance, +the implementation of safer gambling activities and +controls, and progress with embedding the enterprise +risk management framework. +Strategy +Execution of Group Strategy +S C Cu Tc R Su + Regular updates on priorities +and improving capabilities for +execution of core digital and retail +business strategies. + Oversight of customer centric initiatives +to better serve customers and enable +moments of excitement. + Oversight and challenge to +proposed steps and progress +accelerating sportsbook product and +platform enhancements. + Continued oversight of steps being +taken to exit markets with no +domestic licences. + Two-day session revising strategy +around the three pillars of organic +growth, EBITDA margin expansion and +US market growth. + Deep Dives on the Retail segment, +competitive landscape, marketing +initiatives and value drivers of the +Entain business. +M&A Activity +S C Cu R Su + Received regular updates on potential +M&A opportunities. + Reviewed and approved five +M&A transactions recommended +by management. + Approved equity raise of £600m +through a non-pre-emptive placing of +new ordinary shares to institutional and +retail investors to fund the acquisition of +STS Holdings S.A (“STS”) 1 +1. Entain consulted with a number of its major +institutional shareholders prior to the placing and +has respected pre-emption principles through the +allocation process in so far as possible. +Financial Plan +S C Cu Su + Discussed and approved the three- +year plan. +Key to stakeholder groups: +S Shareholders Cu Customers Su Suppliers +TC The Community R Regulators C Colleagues +Entain plc Annual Report 202398 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_101.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..f50cfcafe55887a6378c196bd57a5e87c9823e94 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,151 @@ +Performance +Business updates +S Cu R Su + Undertook segment reviews of the retail +and core digital businesses. + Discussed and debated challenges with +financial and operational performance +in H2 2023. + Conducted a detailed review of the +competitive landscape, including both +global and local operators’ strategic +priorities and associated threats. + Monitored performance and debated +strategic opportunities relating +to BetMGM. +Financial updates +S Cu R Su + Reviewed and approved the +2024 Budget. + Discussed and approved the continued +progressive dividend policy. + Monitored and debated the wider +macroeconomic and geopolitical +environment and its potential impact on +our business. + Received monthly financial +performance updates. +Regulatory Developments +S C Cu TC R Su + Received regular regulatory and legal +updates from the Chief Governance +Officer and Group General Counsel. + Closely monitored progress with +the proposed settlement of HMRC’s +investigation into the Group’s legacy +Turkish-facing business before +approving the final terms of the +Deferred Prosecution Agreement. +Risk +S C Cu TC R Su + Approved the Group’s principal risks +and kept under review the Group +Risk Register considering new and +emerging risks. + Conducted a deep dive into the controls +and processes adopted by the Company +to comply with regulatory, licencing and +compliance regimes. + Reviewed and agreed the Principal +Risks for 2024 and their allocation +for monitoring between the Board +and its Committees (see page 79 for +more details) + Reviewed and approved the Group’s +annual long-term viability statement. +People and Culture +S Cu C TC + Comprehensive review of the strategic +people agenda and priorities, including +steps being taken to attract and +retain talent. + Oversight of organisation design and +review of ways of working initiatives +and performance culture. + Received updates and provided +feedback on the revised values as +well as the results of the annual +employee survey. +Responsible Gambling +S C Cu TC R + Received regular updates on the +Group’s safer gambling activities, +including the effectiveness of our +ARCTM programme. + Player Protection remained a key area +of focus for the Board during 2023. +A review of the methodology and key +metrics for ensuring high standards of +player protection is a standing board +agenda item, including the proactive +measures being taken to enhance +controls and monitor player behaviours. +Product & Technology +S C Cu R Su + Received regular updates on the +new technology blueprint and target +operating model as part of ensuring +Entain has the right platform capability +needed to support the Company’s +growth ambitions and evolving +business needs. + Kept under review the Tech debt plan +to address identified issues in areas of +compliance and cybersecurity. + Monitored progress with migrating to a +cloud embedded architecture. + Received reports and provided input +on actions being taken to enhance +player experience and the quality of +sportsbook product. +Governance +Market Updates & Regulatory +Disclosures +S Cu TC R + Approved the Notice of Meeting for +the AGM. + Reviewed and approved the Annual +Report & Accounts following +recommendations from the +Audit Committee. + Considered key market updates and +disclosure obligations in respect to +Full Year and Half Year results, M&A +transactions, trading performance and +CEO succession. +Investor Feedback +S + Received feedback from investor meetings +and roadshows from the Chair, Senior +Independent Director, Executive Directors +and Chief IR & Communications Officer. + Considered external reviews of investor +feedback on Entain’s performance +and governance. +Board Governance +S R C + Kept under review the Schedule of +Matters Reserved for the Board. + Conducted its annual evaluation +covering the effectiveness of the Board, +its Committees and the performance of +the Chair and individual directors. + Established and approved the Terms +of Reference for the Sustainability +& Compliance Committee, People & +Governance Committee and Capital +Allocation Committee. +Conflicts of Interest Policy +S C Cu TC R Su + Reviewed and approved the Board’s +Conflicts of Interest Register. +Board Succession +S C R + Engaged with Spencer Stuart +throughout the year as part of ongoing +succession planning and appointed two +new Non-Executive Directors. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +99Entain plc Annual Report 2023 +Board Activities +during 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_102.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e410419a22318a522ad11926dada80bf2c53c53 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_102.txt @@ -0,0 +1,113 @@ +Board Evaluation and Effectiveness +The Board undertakes an annual evaluation review in order to +increase its effectiveness and to identify areas for improvement. +Entain engaged Lintstock Ltd in 2023 to conduct a review of the +performance of the Board and its committees. Lintstock is an +advisory firm that specialises in Board reviews and has no other +connection with the Company or individual Directors. +The scope and objectives of the review were agreed following +a briefing meeting between the Company Secretary and +Lintstock. Lintstock collaborated with Entain to design a bespoke +line of enquiry tailored to the business needs of the company, +and to follow up on themes identified in Lintstock’s previous +reviews. The Chairman and the Committee Chairs were given +the opportunity to input into the focus of the exercise. As well +as covering core aspects of governance such as information, +composition and dynamics, the review considered people, strategy +and risk areas relevant to the performance of Entain. The review +had a particular focus on the following areas: + The ongoing CEO succession process + The Board’s dynamics and relationship with management + The Board’s oversight of growth opportunities +Board members completed bespoke surveys assessing the +performance of the Board and each of its Committees, as well as +the performance of the Chairman. Each director also completed a +self-assessment questionnaire addressing their own performance. +Lintstock analysed the findings from the surveys and delivered +focused reports documenting the findings, including a number of +recommendations to increase effectiveness. Lintstock’s findings +were presented and discussed at the Board meeting in February. +Actions were agreed for implementation and monitoring. +Lintstock found that the Entain Board engaged well with the Board +evaluation process, with the Directors taking the opportunity +to reflect on lessons learned over the past year. The Chairman +was rated highly and the Board identified improvements in the +management of meetings since Lintstock’s last review. There was +a strong focus on further enhancing the Board’s visibility of the +business, and recent improvements in the Board’s dynamics and +engagement with management were commented on. +The Board identified a number of priorities for 2024, including: + Appointing and successfully onboarding a new CEO + Reviewing information flows to ensure optimal coverage of all +aspects of the business + Continuing to develop the Board’s understanding of investor +sentiment and the visibility of other key stakeholders, including +customers and employees + Supporting management in delivering Entain’s key +strategic imperatives. +Board Commitment, Balance and Independence +The Board keeps under review and remains satisfied that each +Non-Executive Director devotes sufficient time to the role in order +to discharge his or her responsibilities and duties effectively. +The Chairman, Senior Independent Director and other Non- +Executive Directors each have letters of appointment and do not +serve in an executive capacity. +Excluding the Chairman, of the remaining eight Directors, five +are independent Non-Executive Directors. Due to his relationship +with Eminence Capital LP, a shareholder holding more than +3% of the Company’s issued share capital, Ricky Sandler is +considered as a Non-Independent Non-Executive Director. +The People & Governance Committee, having considered the +matter carefully, is of the opinion that the Board has an appropriate +combination of executive and non-executive, in particular +independent non-executive, directors and complies with the 2018 +Code recommendations. +During the year, the Board considered requests for additional +external appointments by Non-Executive Directors. In opining +on these requests, the Board took into account the likely +time commitment and any conflicts of interest these external +appointments might raise. The Board agreed requests for David +Satz and Rahul Welde to take on additional roles outside Entain. +Conflicts of Interest policy +The Board has a Conflicts of Interest policy and an annual conflicts +authorisation process, whereby the Board reviews and approves +Entain’s Conflicts of Interest Register and seeks confirmation from +each Director of any changes or updates to their position. +This authorisation process informs the People & Governance +Committee’s assessment of a Non-Executive Director’s +independence and ability to devote sufficient time to their role +when proposing that Director for re-election at the AGM. +Director Induction, Training and Development +The Chairman is assisted by the Company Secretary in providing +all new Directors with a comprehensive induction programme +on joining the Board. The induction programme provides new +Directors with an understanding of their duties as Directors, +the Group, its businesses and the markets and regulatory +environments in which it operates. This includes meeting with +senior executives and their direct reports. The programme also +provides an overview of the Group’s governance practices. Non- +Executive Directors will have further content tailored to the Board +Committees that they will join. +Amanda Brown and Ricky Sandler have both received a tailored +induction programme following their appointment. This included +one to one meetings with our Executive Committee, segment and +functional leaders and our Internal and External Auditors. +The Chairman has overall responsibility for ensuring that Directors +receive suitable training to enable them to carry out their duties. +Training is also provided by way of reports and presentations +prepared for each Board meeting, as well as meetings with Group +employees and external advisers. During 2023 we have arranged +lunch and learn sessions during the board meeting agenda that +have given the Directors the opportunity to discuss and receive a +deeper understanding of our Ethics and Compliance programme +as well as a broader overview of the UK Retail Business and +Competitive Landscape. +The Directors have access to independent professional advice +at the Group’s expense, as well as the advice and services of the +Company Secretary, who advises the Board on regulatory and +corporate governance matters. +Entain plc Annual Report 2023100 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Board Activities +during 2023 +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_103.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..6759d387584cfb5606d5b561ee0154c67400eca2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_103.txt @@ -0,0 +1,62 @@ +People & Governance Committee Report +Introduction +I am pleased to introduce the first report of the People & +Governance Committee since it was established in April 2023. +A key action arising from last year’s internal evaluation of the +effectiveness of the ESG Committee (now called the Sustainability +& Compliance Committee) was to consider how best to focus the +wide remit of the ESG committee. Following a review, it was agreed +that the Nomination Committee be retired and, in its place, a new +Committee, the People & Governance Committee, be established. +The remit of this new Committee is wider than that of the +Nomination Committee as it includes diversity, equity and inclusion +matters previously covered by the ESG Committee in addition to +those areas covered by the Nomination Committee. Details of the +membership of the Committee are set out on page 102. +During the year we have spent significant time reviewing the +current composition of the Board to ensure we have the right +balance of skills, experience and diversity to lead the Company and +continue to deliver shareholder value. Further to our comprehensive +succession planning and ongoing search for new directors, I +was delighted to welcome Amanda Brown as an independent +Non-Executive Director in November and more recently Ricky +Sandler, who joined the Board as a Non-Executive Director in early +January. On joining the Group, Amanda became a member of the +Remuneration Committee and Ricky became a member of the +People & Governance Committee and has recently joined the newly +established Capital Allocation Committee. +Diversity, equity and inclusion are core considerations for the +Committee. Following Rahul Welde’s appointment as a Non- +Executive Director in July 2022, Entain is fully compliant with the +Parker Review’s target to appoint at least one Board member +from an ethnic minority background. Entain remains committed to +achieving the external target laid out in the FTSE Women Leaders +Review (the successor to the Hampton-Alexander Review) and +the board diversity targets laid out in the Listing Rules and, whilst +as at the date of this report female representation on the Board +is at 33.3%, I am confident that we shall continue to strengthen +diversity in all forms on the Board, Executive Committee and +the extended leadership team as we go through 2024. We are +particularly focused on increasing female representation on the +Board as part of our ongoing Non-Executive Director search. +At the point of its establishment, the Committee was chaired by +Stella David. Following her appointment as Interim Chief Executive +Officer with effect from 13 December 2023, I became Chair of +the Committee. +During the year we have +spent significant time +reviewing the current +composition of the Board +to ensure we have +the right balance of +skills, experience and +diversity to lead the +Company and continue +to deliver shareholder +value.” +J M Barry Gibson +Chair of the People & Governance Committee +J M Barry Gibson +Chair of the People & Governance Committee +1 Overview 8 Strategic report 88 Governance 140 Financial statements +101Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_104.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c77a810f4d4ae815ed78019148dc928cccdaf3d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_104.txt @@ -0,0 +1,120 @@ +The role of the Committee +The Committee actively reviews the composition and diversity of +the Board and leadership team and has oversight of the succession +process. It ensures that appropriate procedures are in place for +the training and evaluation of directors; reviews workforce policies +and practices and monitors their consistency with the Company’s +purpose, strategy and values; and reviews developments in law, +regulation, and business practice relating to corporate governance. +Key responsibilities of the Committee +E nsuring that there is a formal, rigorous and transparent +procedure for appointments to the Board. +L eading the process for appointments and making +recommendations to the Board. +A ssisting the Board in ensuring its composition is regularly +reviewed and refreshed, taking into account the length of service +of the Board as a whole, so that it is effective and able to operate +in the best interests of shareholders. +O verseeing the development of a diverse pipeline for succession +for appointments to the Board and senior management positions. +I n conjunction with the Board, setting measurable targets +for diversity and inclusion in relation to the Board and senior +management positions. +R eviewing workforce policies and practices, in particular +those which have an impact on diversity and inclusion, culture, +employee engagement and wellbeing. +The Committee’s terms of reference can be found on the Company’s website +at www.entaingroup.com. +Committee membership and attendance +From the date that it was established on 26 April 2023 until +15 December 2023 the Committee comprised of the following +three members: Stella David, who chaired the Committee, Barry +Gibson, the Board Chairman (who had previously been Chair of the +Nomination Committee), and Virginia McDowell, the Designated +Workforce Director. Following her appointment as Interim Chief +Executive Officer, Stella David stepped down from the Committee. +Barry Gibson replaced Stella David as chair of the Committee +and Rahul Welde was appointed as a member of the Committee. +Post year end, on joining the Board, Ricky Sandler was appointed +as a member of the Committee in accordance with the Relationship +Agreement governing his appointment to the Board (see below). +The Committee had four meetings during 2023, all of which +took place before the membership changes in December 2023. +Attendance at the meetings was as follows. +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Stella David (Chair) 4 4 +Barry Gibson 4 4 +Virginia McDowell 4 4 +Regular attendees at Committee meetings included the Chief +Executive Officer and the Chief People Officer. Other individuals +and external advisers were invited to attend as and when +appropriate and necessary. +Activities +Board appointments +Following a tender process, the Committee engaged Spencer +Stuart to support the recruitment of additional Non-Executive +Directors. Following an extensive search against a specified remit, +Spencer Stuart presented a list of potential candidates to the +Committee. Meetings were held between shortlisted candidates +and the Committee and the Chief Executive Officer. The Committee +concluded that Amanda Brown would be an excellent addition to +the Board, bringing a wealth of experience in human resources, +remuneration strategy, and managing organisations through +significant change, and therefore recommended Amanda’s +appointment to the Board. Amanda Brown was subsequently +appointed as an independent Non-Executive Director of the Board +on 8 November 2023. She was also appointed as a member and +Designate Chair of the Remuneration Committee on this date, as +recommended by the Committee. +Aside from supporting the Group’s 360 Leadership Assessment +and Development Programme Spencer Stuart has no other +connections with the Company or individual Directors. It remains +accredited under the enhanced voluntary code of conduct for +Executive search firms. +Post financial year end, Ricky Sandler was, on the recommendation +of the Committee, appointed as a Non-Executive Director of the +Board and as a member of the Committee. Ricky has a deep +knowledge of the business and believes in the quality of Entain’s +operations and substantial growth opportunities. In connection +with his appointment, due to being the Chief Executive Officer and +Chief Investment Officer of Eminence Capital LP, a shareholder +of the Company, Entain entered into a Relationship Agreement +with Eminence Capital and Ricky Sandler, which covers matters +including customary governance, standstill and voting provisions. +In accordance with this agreement Ricky was appointed as a +member of the People & Governance Committee and, following its +formation in February 2024, as a member of the Capital Allocation +Committee. A summary of the principal terms of the agreement is +available on the Company’s website. +The Committee continues to work closely with Spencer Stuart to +identify potential Non-Executive Director candidates that would +add further value, bench strength and diversity to the Board. +Board composition and Board Committees +The Committee keeps the composition of the Board and its +Committees under regular review to ensure that the directors, in +their roles as members of the Board and members of the Board +Committees, as a collective, have the right skills, experience and +knowledge to discharge their responsibilities. The Committee also +keeps under review longer term succession planning for the Board +and its Committees. +The Committee has kept the membership of each Board Committee +under review during the year and has considered Committee +membership planning as part of the broader Board succession +planning process. Due to the expertise and flexibility of the current +directors, we were able to reconfigure the composition of the +Board Committees as a result of Stella David stepping down as +Chair of the People & Governance and Remuneration Committees. +During the financial year the composition of Entain’s Board +Committees met the requirements of the UK Corporate Governance +Code and Entain’s own Terms of Reference for each Committee. +Entain plc A +nnual Report 2023102 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +People & Governance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_105.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..45430fe5ec8bb1ba08e1c3afad920ca4f864d11e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,67 @@ +Director re-appointment for the 2024 Annual +General Meeting +The Committee considered the independence of each Non- +Executive Director as part of its recommendation to the Board +for Director re-election at the 2024 Annual General Meeting. +It considered the Board Conflicts of Interest register and concluded +that there were no obvious conflict situations or outside business +interests which would negatively impact the independence of +the directors. In making its recommendation, the Committee also +considered the time commitment and performance evaluation of +each Director standing for appointment. +Diversity, equity and inclusion +The Committee received regular diversity, equity and +inclusion reports including details of key initiatives such as the +establishment of employee networks; the progress of such +initiatives; the implementation of new policies such as the Group’s +global menopause policy; action plans to improve employee +attraction, engagement and retention; action plans to improve +gender diversity within the senior leadership team; the Group’s +apprenticeship programme; and employment data including +headcount, attrition rates, people relations cases, and people- +related issues raised by the Internal Audit team. Further details on +diversity, equity and inclusion can be found on pages 48 and 49. +The Committee reviewed the Group Diversity, Equity & Inclusion +Policy (including Board diversity) which was subsequently +approved by the Board on the recommendation of the Committee. +This can be found on our website at www.entaingroup.com . +Other reviews +The Committee reviewed the Policy on Outside Appointments for +Directors and confirmed compliance with this policy throughout the +financial year. +The Committee reviewed the data submitted to the FTSE +Women Leaders Review and also reviewed and approved for +recommendation to the Board the proposal for the 2023 evaluation +of the Board and its Committees. +Towards the end of the financial year the Group commenced a +360 Leadership Assessment and Development Programme for all +Executive Committee members. The Committee was briefed on the +contents of the assessment and the programme of which the key +findings will prove valuable as the Company undertakes its search +for a new permanent Chief Executive Officer. +Committee evaluation +A review of the Committee’s performance and effectiveness during +the year was undertaken using a questionnaire facilitated by an +external board review firm, Lintstock. Lintstock managed the +evaluation process and produced the evaluation report. +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings and +the information provided to the Committee members and the +workings of the Committee. The effectiveness of the Chair was +rated highly and it was recognised that the Committee had worked +well over the year. Areas of focus for 2024 include ensuring that the +Committee has a good understanding of Entain’s culture and the +issues affecting employees, ensuring that management is receiving +the support that it needs, and improving oversight of future +executive succession and development plans. The importance of a +rigorous CEO selection process was also highlighted. +Chairman’s Committee report +The Chairman’s Committee is the forum for the Non-Executive +Directors and Chairman to meet in executive session. Three +Committee meetings were held during 2023. Topics discussed +included succession planning for the Executive Directors, business +performance, and strategy. +Entain plc Annual Report 2023 103 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +People & Governance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_106.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..29b2c79cf71a4b920f1af0f42f5b994c5a23bff4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,48 @@ +Audit Committee Report +Introduction +I am pleased to introduce the Audit Committee report setting out +the key matters and issues considered in 2023. +In addition to the Audit Committee’s obligations for financial +reporting and ensuring the integrity of the Company’s financial +and narrative statements, the Committee has continued to monitor +progress with the implementation of the Group’s Enterprise Risk +Management Framework and challenged management on the +identification and assessment of principal and significant risks +relevant to Entain. +The Audit Committee received assurance through focused deep +dives that there has been good progress raising risk awareness +throughout the organisation. We received regular updates on +emerging financial and non-financial risks that has kept the +Committee informed and focused on ensuring relevant controls and +mitigating actions are in place and operating effectively. +The Committee has challenged management and our external +auditors across a range of topics, in particular, key accounting +judgments and control matters relating to M&A activity as well as +the accounting treatment for the HMRC settlement arising from +the investigation into the Group’s legacy Turkish-facing business. +The Committee has also worked closely with the Sustainability & +Compliance Committee when considering non-financial reporting +and disclosures. +As Entain focuses on returning to organic growth in 2024, the +Audit Committee will continue to play an important role monitoring +the effectiveness of the control environment. I am confident that +we have the right mix of financial, accounting, risk and sector +experience, to enable the Committee to continue to perform +effectively and deal with the challenges of the changing regulatory +and operating environment that we face as we go into 2024. +Pierre Bouchut +Chair of the Audit Committee +“As Entain focuses on +returning to organic +growth in 2024, the +Audit Committee +will continue to +play an important +role monitoring the +effectiveness of the +control environment.” +Pierre Bouchut +Chair of the Audit Committee +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023104 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_107.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7716afa120ba00df368ee9d8f0746ea4658563c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,75 @@ +The role of the Audit Committee +The Audit Committee oversees the effectiveness of the +Group’s financial reporting, systems of internal control and +risk management and the integrity of external and internal +audit processes. +Key responsibilities of the Audit Committee + Monitor the integrity of Entain plc’s financial statements +and any formal announcements relating to the Company’s +financial performance. + Review and challenge, where necessary, the significant financial +reporting issues and judgements in relation to the half-year and +annual financial statements. + Review the effectiveness of, and ensure that management has +appropriate internal controls over, financial reporting. + Make recommendations to the Board concerning any proposed, +new or amended accounting policies. + Review and monitor the relationship with the external auditor +and oversee its appointment, tenure, rotation, remuneration, +independence and engagement for non-audit services. + Oversee the work of Internal Audit and assess the effectiveness, +performance, resourcing, independence and standing of +the function. + Review and monitor the implementation and effectiveness of +risk management systems and conduct a robust assessment of +emerging and principal risks facing the Company. + Oversee policies, procedures and arrangements for capturing +and responding to whistleblower concerns and ensuring they are +operating effectively. + Assess and report on the Group’s viability. +The Audit Committee Terms of Reference can be found on the Company’s +website at www.entaingroup.com. +Audit Committee membership and attendance +As at 31 December 2023 the Audit Committee comprised three +members, all of whom are independent Non-Executive Directors. +Pierre Bouchut is Chair of the Committee. He has a strong financial +background, having been chief financial officer at Schneider +Electric, Carrefour and Delhaize and extensive experience as an +audit committee chair, currently serving at Pepco Group, Firmenich +S.A. and GeoPost S.A. in this role. The Board is satisfied that he +has the required level of relevant financial experience, as outlined in +the UK Corporate Governance Code, and competence in accounting +and auditing as required by the FCA’s Corporate Governance Rules +in DTR7. +The Board remains satisfied that the Audit Committee as a whole +has an appropriate level of independence and experience and +relevant financial and commercial experience across various +industries, including the gaming sector, to assess the issues it is +required to consider. +Committee members continue to receive relevant training to ensure +competence relevant to the business, in addition to the other skills +they bring to the Board and Committees. +Regular attendees at the meetings include the Chief Financial +Officer & Deputy CEO, Director of Financial Control, Group General +Counsel, Director of Internal Audit, the external auditor and the +Chair of the Sustainability & Compliance Committee. During the +year the Audit Committee met for private discussions with the +external auditor and the Director of Internal Audit. +The Committee had five meetings during 2023. +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Pierre Bouchut (Chair) 5 5 +David Satz 5 5 +Rahul Welde 4 4 +In February 2023, Mark Gregory and Vicky Jarman stepped +down from the Committee and the Board prior to any 2023 Audit +Committee meetings being convened. Rahul Welde joined the +Committee on 23 February 2023. +Entain plc Annual Report 2023 105 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_108.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..58c9e3af4ca0494a6c260d2dc92f27a57d5e76b7 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,47 @@ +Audit Committee Report +Responsibility for Entain’s financial statements: Fair, Balanced and Understandable +The Board is ultimately responsible for presenting a fair, balanced and understandable assessment of Entain’s position and prospects, +which extends to the half-year and annual financial statements and Annual Report. +Delegation +Entain’s finance department, led by the CFO +& Deputy CEO, prepares and reviews the +financial statements. +Management coordinates with the CEO, +CFO & Deputy CEO and Chairman on +the preparation of any business model +and strategy. +The Company Secretary with the Chairman +of the Board, the Chair of the various +Board Committees, prepares the corporate +governance statements and all Board +Committee reports. +External Review +Entain’s external auditors audit the Annual Report and financial statements and review the half-year accounts. A report to the Audit +Committee is prepared. +Committees’ Review +The Audit Committee reviews the Annual Report, draft financial +statements and accompanying statements and meets with the +external auditors to review their report. The Audit Committee +proposes amendments and makes recommendations to the Board +and further approves the Audit Committee’s Report. +For the annual report the Remuneration Committee, People & +Governance Committee and Sustainability & Governance Committee +respectively review their Committee Reports, propose changes and +make recommendations to the Board. +Board Review +The Board reviews the Annual Report and financial statements, accompanying reports and recommendations from its committees and +makes changes to the disclosure where appropriate. +Auditor Reporting to The Board +The External auditors prepare their final report (Annual Auditor’s Report) or review report (half-year results). +Audit/Board Approval and Publish +The Board and auditors approve the Annual Report, year-end financial statements and disclosures and the half-year report and these are +then released to the stock exchange and published on Entain’s website on receipt of the final audit report. +In respect of the financial statements and accompanying reports for the year ended 31 December 2023, the Company has followed +the process detailed above. Following the review and challenge of the disclosures, the Committee recommended to the Board that the +financial statements taken as a whole, were fair, balanced and understandable. The financial statements provided the shareholders with +the necessary information to assess the Group’s performance, business model, strategy and risks facing the business. These include the +ever increasing importance of ESG considerations. +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Entain plc Annual Report 2023106 +Audit Committee Report +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_109.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..88129d883a53d34bfd630d2227d2a0cd3f7a361e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,109 @@ +External audit +The Audit Committee has primary responsibility for overseeing +the relationship with the Group’s external auditor, KPMG. +KPMG completed its sixth fi nancial reporting audit, providing +robust challenge on specific financial reporting judgements and the +control environment, with continued specific focus on the design +and operation of IT systems and controls. The lead audit partner is +Mark Flanagan who has been in role since 2021. +The Committee reviewed the external auditor’s approach and +strategy for the annual audit and also received regular updates on +the audit, including observations on the control environment and +the core platform and IT capabilities. Key audit matters discussed +with KPMG are set out in its report on page 147. +The Audit Committee reviews the fee structure, resourcing and +terms of engagement for the external auditor annually. It further +considers the reappointment of the external auditor each year +before making a recommendation to the Board. +It is anticipated that a retender for audit services will be completed +by 2028 or sooner, in line with relevant guidelines. The Committee +believes that the anticipated timeline for the retender of audit +services is in the best interests of shareholders. It provides an +appropriate balance of factors such as the auditor’s knowledge +of controls and risks, maintaining audit quality, independence and +objectivity, and providing value for money. +The Group is in compliance with the requirements of the Statutory +Audit Services for Large Companies Market Investigation +Order 2014. +Effectiveness of the external audit +The Audit Committee evaluated the effectiveness of the external +audit process during the year in consultation with the Chief +Financial Officer and members of the senior finance team. The key +areas of focus were: + Safeguards against independence threats being sufficient +and comprehensive. + Quality and transparency of communications being timely, clear, +concise and relevant and that any suggestions for improvements +or changes are constructive. + The exercise of professional scepticism and the willingness of the +auditor to challenge management’s assumptions. + The quality of the audit engagement team – including the +continuity of appropriate industry, sector and technical expertise +or where there have been new areas of activity and changes in +regulation or professional standards. +The Committee concluded that the external audit process had been +effective and noted the positive enhancements and improvements +made to the audit process during the year. Due to the growing +complexity of the Group, it was agreed that a more global audit +relationship with KPMG was required going forwards in order to +enhance the quality and transparency of key audit matters and +provide broader real time oversight of local statutory audits in the +main jurisdictions of the Group’s geographic footprint. +Activities +Financial disclosure +The Audit Committee reviewed the full and half-year financial +statements with management before proposing them to the +Board for approval. In undertaking its review, the Audit Committee +received reports from management and the external auditor +outlining significant financial judgements and estimates, including +the appropriateness of Group’s revenue from online operations and +recoverability of the carrying value of the investment in the Parent +Company. In undertaking its review, the Committee focused on the +integrity of the Group’s financial reporting process, the clarity of +disclosure and compliance with relevant reporting standards. +The Audit Committee reviewed the assessment and reporting of +longer-term viability, systems of risk management and internal +control, including the reporting and classification of risk across the +Group and the examination of what might constitute a significant +failing or weakness in the system of internal control. +During the year, the Audit Committee considered the affordability +of the Company’s progressive dividend policy, in particular, the +implications of the HMRC settlement provision related to the +Turkish facing business. The Committee further challenged +and debated cash flow forecasts and consideration of relevant +downside scenarios informed by long term viability modelling prior +to approving the interim dividends paid for the full year 2023. +The Committee gave consideration and challenge to the +appropriateness of adopting the going concern assumption in +preparing the financial statements. The Committee agreed with the +conclusions reached and the going concern statement for the year +ended 31 December 2023 is set out on page 77. +In considering the Annual Report and Accounts, the Committee +assessed whether the report was fair, balanced and +understandable. The process undertaken is outlined on page +106. The Committee reviewed the consistency of the narrative +disclosures and financial statements. It received a report from +management on the verification process undertaken in respect of +the annual report. The Committee then made a recommendation to +the Board, which in turn reviewed the report as a whole, confirmed +the assessment and approved the report’s publication. +Risk +During the year the Committee received regular updates on +the progress implementing the Enterprise Risk Management +Framework and reports from the Group Risk Committee. +The Committee conducted deep dives assessments on the +principal risks allocated by the Board relating to Data Breach +and Cybersecurity, Trading Liability and Pricing Management, +Technology Failure and Taxes. During these assessments, the +Committee challenged management and sought assurances that +suitable measures were in place to monitor, manage and mitigate +the relevant risks. +The Committee conducted a year end review of principal risks and +emerging risks facing the business and will continue to work with +management to ensure that all Entain specific risks are identified +with robust processes and controls implemented to effectively +manage them. Further details on the Group’s principal risks are set +out on pages 83-86. +Entain plc Annual Report 2023 107 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_11.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..fac81e46b8e6f1a946302d5e6773989d4a67f5b8 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,84 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_110.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a4edd87e501af63d5947826a93c68f698f81053 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,115 @@ +The Board with the support of the Audit Committee, completed its +annual review of the effectiveness of the system of internal control, +including the effectiveness of internal audit and consideration +of whether it had the appropriate level of independence and +its importance in assessing the Company’s culture. The Board +concluded that it was satisfied that the system of internal control +remains robust and fit for purpose and have selected areas on a +risk basis for inclusion in the 2024 Internal Audit Plan. +Effectiveness of Internal Audit +The Audit Committee continued to monitor and review the +effectiveness and capability of the Internal Audit function over the +year. In assessing and determining effectiveness, the Committee +met privately with the Director of Internal Audit, considered +and approved the Internal Audit annual plan and surveyed +management on their view of the effectiveness of Internal Audit. +The Committee concluded that Internal Audit had unrestricted +scope and access to information and sufficient resources to +fulfil its annual work plan. This conclusion was strengthened +by management’s positive feedback on the quality of the work +performed and the additional assurance provided to management +by the scope of Internal Audit’s processes. +Whistleblowing policy +The Group has a formal whistleblowing procedure by which +employees can, in confidence, raise concerns about possible +malpractice and misconduct. This is set out in the Group’s Code +of Conduct and is approved by the Audit Committee. The Speak +Out policy sets out the type of disclosure which is protected +and also specifies to whom disclosures should be made and the +process that will be followed. The Group actively encourages +individuals, where they believe that malpractice has taken place, +to make protected disclosures either internally through HR and +Internal Audit or externally through an outsourced service provider. +The Audit Committee receives regular reports from the Director +of Internal Audit on the number of cases raised and the outcome +of investigations. +During 2023, the Company’s whistleblowing procedures have +been further strengthened in order to assess complaints that might +present an ethics issue. The Audit Committee continues to be +satisfied that robust and appropriate arrangements are in place for +the proportionate and independent investigation of such matters +and for appropriate follow-up action. +Committee evaluation +The Committee undertook a review of its effectiveness through +an online questionnaire administered by an external facilitator +(Lintstock). +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings, +ways of working and the information provided to the Committee +members. The effectiveness of the Chair was rated highly and +it was recognised that the Committee had worked well over the +year. There continued to be a good level of engagement with +management and the external audit partner. +Areas of focus for 2024 included close monitoring of financial +performance, oversight of safer gambling controls, challenging +management on progress automating key processes and controls, +and spending more time to assess operational effectiveness +and resiliency. +Non-audit services +The Audit Committee is responsible for the Group’s policy on non- +audit services and the approval of non-audit services. The policy +states that in the Company’s financial year, the total fees for +non-audit services provided by the external auditors, excluding +non-audit fees for due diligence for acquisitions and other specific +matters noted below, should not exceed 70% of the average of the +total fees for audit services they provided in the preceding three- +year period. +The policy is kept under annual review and the Audit Committee +receives regular reports on non-audit services provided by KPMG +and other audit firms. In the year ended 31 December 2023, the +total non-audit fees as a percentage of the audit fees paid to the +external auditors was 4.9%. In addition to their statutory duties, +KPMG is also employed where, as a result of their position as +auditors or for their specific expertise, they either must, or the +Audit Committee accepts they are best placed to, perform the +work in question. This is primarily work in relation to matters such +as shareholder circulars, Group borrowings, regulatory filings and +certain business acquisitions and disposals. In such circumstances +the Audit Committee will separately review the specific service +requirements and consider any impact on objectivity and +independence of the auditors and any appropriate safeguards to +this. As such the Audit Committee believes it is appropriate for +these non-audit services to be excluded from the 70% cap set +out above. In the year ended 31 December 2023 the fees paid in +respect of due diligence for acquisitions to the external auditors +was £nil. +Internal Audit +Internal Audit provides assurance to the Board, through the Audit +Committee, that effective and efficient control processes are in +place to identify and manage business risks that may prevent the +business from achieving its objectives and strategy. +The Director of Internal Audit is a standing attendee of the +Committee and provides regular reports on Internal Audit findings, +including the assessment of issues raised in previous reports. +The work completed by Internal Audit during the year focused on +key areas of the Group (disclosed on pages 83 to 86 under Principal +Risks), which included: + Reviews of anti-money laundering and safer gambling processes +across various jurisdictions and businesses. + Digital fraud management. + Recruitment, talent resilience and retention practices. + Data governance and retention management. + Safer gambling interactions management. + IT governance, including privileged access controls. + Command Centre Management and performance of core +production systems + Disaster Recovery. + Stadia health and safety and animal welfare + Review of the Group’s compliance with the UK Modern Slavery +Act and adequacy of provisions to mitigate risks of slavery. + Compliance with Ontario licence requirements + Ongoing reviews of key financial controls’ +operating effectiveness. +Entain plc Annual Report 2023108 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_111.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e4595c34e08c418f424d78ae8fc9c724ac0c5b2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,82 @@ +Accounting and key areas of judgement and estimate +Throughout the course of the year, the Audit Committee determined the following areas of the fi nancial statements were of signi ficant +interest. These issues were discussed with management and the external auditors to ensure that the required level of disclosure has been +provided and that appropriate rigour has been applied where any judgement may be exercised. +Matter considered Action +Separately disclosed items and Alternative +Performance Measures +The Group separately discloses certain items in order to allow +a clearer understanding of the underlying trading performance +of the business. In 2023, the Group has recorded a net charge +in respect of items which have been separately disclosed +from continuing activities of £1,217.8m after tax in the +Income Statement. +As part of their assessment that the treatment of separately +disclosed items in the financial statements is appropriate, the +Audit Committee has considered each of the items disclosed +and challenged, where necessary, the treatment adopted by +management. The Audit Committee has also considered the +conclusions reached by KPMG as part of its audit in this area +and are satisfied with the treatment and disclosure adopted. +In addition, non-GAAP measures have been provided +within the Annual Report and Accounts to assist in the +articulation of the underlying business performance. Non- +GAAP measures relate to industry standard KPIs which are +commonly used by the Group’s peers and market analysts. +Management’s use of non-GAAP measures in explaining the +underlying business performance has been considered by +the Audit Committee, along with the views of KPMG on their +use and prominence. Whilst the Committee understands the +challenges associated with the use of non-GAAP measures, +they are satisfied with the balance of the disclosure provided. +IFRS 3 Fair Value of Business Combinations +During the year, the Group completed a number of +acquisitions as detailed in Note 32 to the financial statements. +Included within the IFRS 3 fair value exercise are a number of +judgements and estimates including: +• the assessment that future revenue shares in Tab NZ form +part of consideration +• the estimate of consideration, including contingent +consideration, particularly on Tab NZ +• the estimates of the fair value of acquired intangibles +and goodwill +The Audit Committee has reviewed the judgements and +estimates made in connection with the accounting treatment +for business combinations including what items constitute +consideration, the value of contingent consideration +recognised, the assets and liabilities identified on acquisition +and the appropriateness of fair values derived. +In assessing the valuations, the Audit Committee has reviewed +the working papers provided by management and the work +of the Group’s external valuation specialists as well as the +conclusions reached by KPMG. +In addition, the Audit Committee has assessed the +appropriateness of the assumptions used by management in +reassessing the value of contingent consideration obligations +as at the year end date. +Following review of all of these items, the Audit Committee has +concluded that the treatment within the financial statements +is appropriate. +Impairment +The Group has significant value in enduring and indefinite +life assets such as UK brands and goodwill which need to +be reviewed for impairment annually. In 2023, as part of the +annual impairment exercise, the Group has recognised a +non-cash impairment charge of £190.0m against the goodwill +in the Australian business. +Inherent in any impairment of a CGU is a degree of estimation. +The carrying value of all enduring and indefinite life assets +have been tested for impairment as part of the annual +cycle. In assessing that the conclusions reached are +appropriate, the Committee have reviewed the forecasts, key +assumptions and methodology adopted by management in +preparing their impairment assessment and, in particular, +determining the impairment charge recognised against the +Australian business. +As part of their assessment, the Committee have also +reviewed KPMG’s audit findings and deem that both the +treatment and disclosure of the impairment within Note 14 +are appropriate. +Entain plc Annual Report 2023 109 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Audit Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_112.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..e800aa1b8edadc52dda4ef287822251fd55ef24d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,48 @@ +Introduction +In April 2023 the name of the Committee was changed from the +ESG Committee to the Sustainability & Compliance Committee +and matters relating to diversity, equity and inclusion, previously +covered by the ESG Committee, were transferred to the newly +established People & Governance Committee (see page 101). +These changes reflected feedback arising from last year’s internal +evaluation of the ESG Committee and were made to make the +increasingly wide remit of the ESG Committee more manageable. +During the year, the Committee continued to monitor and provide +focus, support and challenge on sustainability and compliance +issues. The Committee remained guided by Entain’s Sustainability +Charter which outlines Entain’s ESG leadership ambitions. +The Charter remains an important part of Entain’s ESG leadership +position within the gaming sector. +The Committee continued to monitor the management and +mitigation of the Principal Risks allocated to it by the Board and +ensure that its observations were fed back to the Board. During the +year the Principal Risks were ‘Safer Betting and Gaming’, ‘Health, +Safety & Wellbeing of Customers, Communities and Employees’, +and ‘Loss of Key Locations’. Following review by the Board it +was determined that Loss of Key Locations would no longer be +treated as a standalone Principal Risk and that it should form part +of the Principal Risks ‘Ensure Health, Safety, Security and Well- +being of Employees, Customers, and Communities’ and ‘Maintain +Technology Platforms Resilience’ – further detail can be found on +page 83. +As a result of the reconfiguration of the Board Committees +following Stella David’s appointment as Interim Chief Executive +Officer, Rahul Welde stepped down from the Committee in +December and I welcomed our Chairman, Barry Gibson, as a +member of the Committee. +We developed +this strategy to +strengthen our +sustainability +leadership role – +which plays a crucial +enabling role in our +long-term growth.” +Virginia McDowell +Chair of the Sustainability & Compliance Committee +Sustainability & Compliance Committee Report +Virginia McDowell +Chair of the Sustainability & Compliance Committee +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023110 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_113.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6d1e3e16d2723064de8a7fbb6ae897671a37db2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,123 @@ +The role of the Committee +The Committee provides oversight of the Company’s Sustainability +and Compliance programme, overseeing the effective management +of the Company’s ongoing relationship and engagement with +a wide spectrum of stakeholders. It monitors progress against +internal key performance indicators and external Sustainability & +Compliance index results. +Key responsibilities of the Committee + Consider the adequacy of the Group’s Sustainability and +Compliance policies and processes by reviewing reports +prepared by management on a range of issues such as +responsible gambling, data protection and the Company’s +impact on the environment. + Ensure that sufficient focus and resource is given to +implementing, monitoring and managing the Company’s +Sustainability and Compliance policies and processes and that +these remain effective. + Consider the appointment of third parties to advise on +Sustainability and Compliance policies and practices and/or +audit the Group’s Sustainability and Compliance policies. + Liaise and work with the Board’s other Committees to ensure the +Board’s duties and responsibilities are carried out effectively. + Prepare an ESG report for inclusion in the Annual Report +and Accounts and oversee that any public disclosures on +Sustainability and Compliance issues made by the Group +accurately reflect the Group’s policies and processes. +The Committee’s terms of reference were reviewed and updated +by the Committee and subsequently approved by the Board during +the financial year. These can be found on the Company’s website at +www.entaingroup.com. The Committee has operated in line with its Terms +of Reference throughout the financial year. +Committee membership and attendance +The Committee has three members, two independent Non- +Executive Directors plus the Chairman of the Board. Stella David +stepped down from the Committee on 26 April 2023 following +the establishment of the People & Governance Committee which +she chaired until December 2023 (see the People & Governance +Committee report on pages 101 to 103 for further information). +Following changes to Board Committee memberships agreed in +December 2023, Rahul Welde stepped down from the Committee +with effect from 15 December 2023 and Barry Gibson joined the +Committee with effect from the same date. +Regular attendees at the meetings include the Director of Internal +Audit and the Group General Counsel. Other individuals and +external advisers are invited to attend as and when appropriate +and necessary. +The Committee had six meetings during the year, all of which took +place before the membership changes agreed in December 2023. +Attendance at the meetings was as follows: +Member +Number of +meetings +attended +Number of +meetings eligible +to attend +Virginia McDowell (Chair) 6 6 +Stella David1 2 2 +David Satz 6 6 +Rahul Welde2 6 6 +1 Resigned from the Committee on 26 April 2023. +2 Resigned from the Committee on 15 December 2023. +Activities +Safer betting and gaming +The Committee received regular updates on the Group’s +responsible betting and gaming programme. Briefings were held on +the continued development and impact of the ARC TM programme +and the Committee was given a demonstration of the customer +journey under a range of scenarios. A deep dive review of the +Principal Risk: Safer Betting & Gaming was undertaken, where +the Committee considered potential developments in technology +and regulatory guidance in key areas such as affordability and +customer protection. +As in the previous financial year, the Committee undertook a +half-year and a full-year review of the delivery of safer betting +and gaming project metrics as part of the responsible gaming +element of the Group-wide annual bonus structure which has a +15% weighting. This review included an external assessment by +EPIC Risk Management on the Company’s performance against +targets. With more challenging metrics having been put in place +for 2023, at its year-end assessment the Committee determined +it was satisfied that these metrics had been met and made a +positive recommendation to the Remuneration Committee as part +of its assessment. +Further information on the responsible betting and gaming +remuneration metric is outlined on page 131 of the Directors’ +Remuneration Report. +Sustainability +During the financial year the Sustainability Team completed a +comprehensive sustainability materiality assessment which was +reviewed by the Committee. The assessment has helped Entain to +better identify the sustainability issues that are most material to +the business and its stakeholders and will support its preparation +for the incoming reporting requirements, such as the EU Corporate +Sustainability Reporting Directive. Following the sustainability +materiality assessment the four pillars of the Sustainability Charter +were updated to: + Be a leader on player protection + Provide a secure and trusted platform + Create the environment for everyone to do their best work + Positively impact on our communities +More information on Entain’s Sustainability strategy can be found +on pages 40 and 41. +Gaming licence compliance +The Committee considered key elements of the Group’s gaming +licence compliance programme, including the development and +update of Entain’s Sports Betting Integrity Policy and the measures +being taken to reduce the threats posed by Sports Betting +Integrity issues. +Compliance governance +The Committee received quarterly reports on international, UK, +Retail and digital compliance developments and monitoring of +the Group’s compliance management. It continued to review the +impact of M&A activity on the Group’s compliance programme +and the regulatory risks associated with new market entry. +The Committee received updates on the progress of the application +for a compliance management system certification against ISO +37301 and on the progress of the Compliance Assessment by the +UK Gambling Commission. +Entain plc Annual Report 2023 111 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Sustainability & Compliance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_114.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dc4e69a6c626a825ea2820b9418d1925defacef --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,100 @@ +Ethics & compliance +Ethics and integrity are at the core of our organisation and culture. +The Committee received regular updates on the key regulatory +issues and trends around ethics, compliance and anti-money +laundering from the expanded Ethics & Compliance team. +The Committee approved the new Ethics & Compliance Charter +which sets out the mission of the Group’s Ethics & Compliance +Programme and the independence and authority of the Ethics & +Compliance team, which ensures that they are able to request +information and access resources and colleagues to enable +them to effectively undertake monitoring, testing activity and +investigations. The Committee reviewed and approved the Group’s +Global Anti-Money Laundering & Counter-Terrorist Financing Policy +and the Ethics & Compliance Three Year Strategy. +Privacy and data protection +Regular updates on privacy and data protection were given to +the Committee, covering matters such as the steps being taken to +improve data governance, the ongoing development of the Group’s +cybersecurity strategy, and key legal and regulatory developments +around data legislation. +The Committee completed its annual review of the Group Data +Retention Policy and the Group Data Protection Policy. +Health, Safety, Security and the Environment (“HSSE”) +The Committee discussed the Group’s environmental strategy +and its commitment to being carbon net zero by 2035. +HSSE performance was monitored by the Committee through +regular updates on the Group’s HSSE performance indicators and +initiatives. The Committee reviewed and approved the proposed +HSSE strategy for 2023 as well as agreeing the Group’s HSSE KPIs +for the forthcoming year. The Committee reviewed and approved +the Health, Safety, Wellbeing & Workplace Policy Statement and +the Environmental Policy Statement, both of which can be found on +the Company’s website at www.entaingroup.com . +During the financial year further workshops were held to +support the Group’s work on meeting the TCFD requirements. +The Committee received updates on the progress of the workshops +and how they were informing the Group’s environmental strategy. +The Committee undertook deep dive reviews on the two Principal +Risks: health, safety and the wellbeing of customers, communities +and employees, and loss of key locations. The former focused +on addressing key risks and facilitating management solutions +relating to HSE matters whilst the latter focused on the findings +arising from assurance checks undertaken by the HSSE team and +the actions taken to resolve any issues that had come to light from +those checks. +Modern Slavery Act statement review +The Committee reviewed the Group’s Modern Slavery and Human +Trafficking Transparency Statement for the financial year ended +31 December 2022, noting the key mitigation activities undertaken +in 2022 including the continued monitoring of risks across the +Group’s supply chains, enhanced mandatory training for all +employees, and updated policies including a new Code of Conduct +which sets out the Group’s commitment to preventing modern +slavery. Entain continued to partner with Unseen, a UK anti-slavery +charity. During 2022 steps were taken to implement the majority +of the recommendations arising from the 2021 gap analysis +undertaken by Unseen. +During the year, the Committee received updates on the +development of the multi-year Modern Slavery Strategy and +the Modern Slavery Programme to support the Group’s work +combating modern slavery. More details can be found on page 51. +The Modern Slavery statement can be viewed on our website at +www.entaingroup.com/modern-slavery-statement +Other reviews +The Committee oversaw the annual ESG report, reviewing the +content and giving feedback to management on its content. It also +received an overview of the current IT infrastructure and the key IT +projects underway as well as an overview of the work of the Group +Payment Processing Committee. +The Committee meeting packs included the quarterly Internal Audit +reports for information purposes. As and when appropriate, the +Director of Internal Audit brought key matters to the attention of +the Committee. +The Committee received an update on the progress of the +Group’s commitment to financially support areas such as +research into safer gambling and education initiatives, grassroots +sports, diversity in tech and community projects through the +Entain Foundation. +Committee evaluation +A review of the Committee’s performance and effectiveness during +the year was undertaken using a questionnaire provided by an +external board review firm, Lintstock. Lintstock managed the +evaluation process and produced the evaluation report. +The feedback from the Committee evaluation was positive in +terms of Committee composition, the quality of the meetings and +the information provided to the Committee members, and the +workings of the Committee. The Chair was rated highly and it was +felt that the Committee had a good oversight of the policies and +controls that fell within its scope of responsibilities. The changes +to the Committee’s remit made following feedback from last year’s +Committee evaluation had been positively received. Areas of focus +for 2024 included ensuring a continued focus on safer betting and +gaming, supporting the management of environmental goals and +programmes, addressing the significant regulatory issues faced by +the Company, undertaking tailored training, and receiving more of +an external perspective on best practices relating to key issues. +Entain plc Annual Report 2023112 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements +Sustainability & Compliance +Committee Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_115.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1cbea8c751cdaa18526066aa592e56d0f2c9d64 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,40 @@ +Annual Statement from the Chair of the Remuneration +Committee +On behalf of the Board, I am pleased to present the Directors’ +Remuneration Report (the “Report”) for the year ended +31 December 2023. +This is my first Report as Chair of the Remuneration Committee, +having taken on this role on 14 December 2023 upon appointment +of Stella David as Interim CEO. I would like to take this opportunity +to thank Stella for her contribution and commitment to the work of +the Committee. +Following shareholder approval of our Directors’ Remuneration +Policy (the “Policy”) at our 2023 AGM, this year we will be asking +shareholders to vote on our Annual Report on Remuneration at +our AGM on 24 April 2024. The Report summarises remuneration +outcomes for 2023 and explains how we intend to apply the +Policy for 2024. The Policy is set out in our 2022 Directors’ +Remuneration Report and can be found on the Company’s website +at www.entaingroup.com . +In a year of transition for +Entain, the Committee +have been mindful of +the experience of our +stakeholders when +making remuneration +decisions. These reflect +a strong alignment of +compensation with +performance.” +Virginia McDowell +Chair of the Remuneration Committee +Directors’ Remuneration Report +In this section +113 Annual Statement from the Chair of the Remuneration +Committee +116 The Remuneration Committee +118 Executive remuneration at Entain +124 Remuneration in context +130 Annual Report on Remuneration +1 Overview 8 Strategic report 88 Governance 140 Financial statements +113Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_116.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..068580b20c89a037f86723fb10d323a65056938e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,60 @@ +2023 incentive outcomes +2023 annual bonus +80% of the annual bonus for 2023 was based on financial +metrics (split 60% on Group operating profit and 20% on NGR +performance). Our results in 2023 failed to meet the threshold level +of the stretching performance conditions that had been set, and so +no payout will be made against these metrics. +The remaining 20% of our annual bonus for 2023 was based on +non-financial metrics; 15% relating to safer betting and gaming +and 5% to our customer. The Committee is pleased that excellent +progress continued to be made in both of these areas, resulting in a +full payout in relation to these metrics. +The Committee acknowledges the commitment and hard work +shown by all our colleagues this year and considers that the +final outcome of 20% of maximum for the Executive Directors is +fair and reflective of Entain’s overall performance during 2023. +Further details can be found on page 131. +2021 Long-Term Incentive Plan (“LTIP”) +The 2021 LTIP was based on performance against EPS and two +relative Total Shareholder Return (“TSR”) targets over the three- +year period ended 31 December 2023. +As a result of performance against the targets set, these awards +lapsed in full. Full details are set out on page 132. +2023 Group performance +2023 has seen significant progress made in re-focusing +our business with revised strategic ambitions based on key +objectives and priorities for the next three years that will drive +shareholder value. +Key performance highlights in 2023 include: + Group NGR (including our 50% share of BetMGM) up 14%. + Retail NGR up 9%, reflecting the strength in our retail estate. + Number of Online active customers up 23% year-on-year. + Group underlying EBITDA in line with expectations. + Our joint venture in the US, BetMGM, delivered a strong +performance with NGR up 36% year-on-year and positive +EBITDA achieved for H2 2023. + Enhancement of our in-house content and capabilities with +acquisition of 365Scores and Angstrom Sports. + Further expansion into regulated markets with leading +market positions including Poland with the acquisition of STS +Holdings and signing a 25 year partnership with TAB NZ. + Second Interim Dividend of 8.9p per share announced, +bringing total for the year to 17.8p per share. + Continued progress on responsibility and sustainability; we +remain the only global operator with 100% of our revenue +derived from regulated or regulating markets, and have +launched a new regulatory and safer gaming charter to +deliver market leading player protection in the markets in +which we operate. +The end of the year saw the appointment of Stella David +as Interim CEO, following the departure of Jette Nygaard- +Andersen. Stella is an experienced commercial leader with an +outstanding track record of success across multiple industries. +While this is an interim appointment, Stella is focused on driving +the execution of the revised strategic priorities, while the Board +conducts a rigorous search for a permanent CEO. +Entain plc Annual Report 2023114 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_117.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a0043e64f0749d474c6fdf10ff4e3b36c9aae54 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_117.txt @@ -0,0 +1,122 @@ + In line with our post-employment shareholding requirement +policy, Robert will be required to meet his full shareholding +requirement of 350% of salary for two years following his leave +date of 31 August 2023. +Looking ahead to 2024 +Directors’ salaries +The Committee reviewed the salary of the CFO & Deputy CEO in +December 2023 and approved an increase of 3.5% to £573,700 +from 1 January 2024. This was in line with the salary review budget +for all colleagues in the UK (excluding the 8.3% increase awarded +to our UK Retail colleagues). +The salary for the Interim CEO is set out above. +Annual bonus +The Committee has reviewed the structure and metrics for the +annual bonus and concluded that it is appropriate to make some +changes for 2024. As for the 2023 plan, 80% of the bonus will +relate to financial metrics. This ensures that a substantial portion +of the annual bonus will only pay out for delivering on our key +financial metrics, which will be split as follows: Group Operating +profit (60%), Group NGR (10%) and NGR of BetMGM (10%). +The NGR of BetMGM is being included as a standalone metric this +year to emphasise the importance of this business to the future +value of Entain. The 20% of the bonus based on non-financial +metrics will be split equally between safer betting and gaming and +individual objectives. The individual objectives will be measurable, +robust, and aligned with value creation, and will contain a mixture +of quantitative and qualitative metrics. The Committee believes +that capturing individual performance will allow them to gain +a more holistic and rounded view of each Executive’s overall +contribution to the business during the year. +Long-Term Incentive Plan +Awards will be granted in the usual manner in March 2024. In line +with our Policy, the Interim CEO will receive an award with a face +value of 450% of salary, while the CFO & Deputy CEO will receive +an award of 400% of salary. +The Committee considers that relative TSR remains the most +appropriate performance metric for the 2024 award given the +fast-changing external environment in which Entain operates. +This ensures a fundamental alignment with the interests of our +shareholders. The comparator groups will remain unchanged +(FTSE 100 and a bespoke peer group) as they continue to represent +the most appropriate market reference points. +Conclusion +Entain has delivered strong progress on our strategic +transformation during the year, alongside total revenue growth +of 14% (including our 50% share of BetMGM). However the +Committee acknowledges the experience of shareholders and +other stakeholders and has taken this into consideration when +determining remuneration outcomes for 2023. The Committee +considers that the decisions it has made during the year align with +our principles of fairness and transparency, and are aligned with, +and in the interests of, our stakeholders. +I hope that you find the report clear and informative and look +forward to your support at the forthcoming AGM. +Virginia McDowell +Chair of the Remuneration Committee +Board changes +Stella David +Stella David was appointed Interim CEO on 13 December +2023, replacing Jette Nygaard-Andersen. Stella’s remuneration +package and incentive opportunities are fully aligned with our +Policy. Stella will receive an annual base salary of £874,200 from +appointment, which represents the previous CEO’s salary at the +point of departure last year, plus an increase of 3.5% in line with +the 2024 salary review budget for all UK colleagues. In order to +take up the role as Interim CEO, Stella resigned from two Non- +Executive Director roles. On leaving her role as Chair of Vue +International, Stella forfeit a cash payment of £500,000 which was +due to be made to her in February 2026. In line with our Policy on +recruitment, this commitment is being replicated. +Jette Nygaard-Andersen +The Committee carefully considered the treatment to be applied +to Jette’s remuneration upon her departure from the Board on +13 December 2023. In doing so, the Committee recognised Jette’s +contribution to the business over the last three years, including +achieving resolution of the HMRC investigation into the legacy +sale of our Turkish business, overseeing a strategic shift towards +operating only in regulated or regulating markets and overhauling +our governance approach. +The Committee agreed Jette’s leaving arrangements in the light of +this context and further details are set out in the payments for loss +of office section on page 135, but in summary: + In line with her contractual entitlement to 12 months’ notice, Jette +will remain employed until 13 December 2024 and will continue +to receive her normal salary and benefits during this time. + The Committee agreed to treat Jette as a good leaver in +accordance with the Policy and the provisions of the incentive +plan rules in respect of her outstanding LTIP and Annual and +Deferred Bonus Plan (“ADBP”) awards. She will receive a time +pro-rated bonus in respect of 2023, determined in the same +manner as for the other Executive Directors and paid half in cash +and half in deferred shares, as normal. + In line with our post-employment shareholding requirement +policy, Jette will be required to meet her shareholding +requirement of the lower of 450% of salary or her actual +shareholding for two years following her termination date of +13 December 2024. +Robert Hoskin +As announced on 15 May 2023, Robert Hoskin stepped down from +the Board on 30 June 2023 and left employment on 31 August +2023. Robert’s role as Chief Governance Officer (“CGO”) was +redundant and the Committee agreed the treatment of his +remuneration arrangements in the light of this. Further details of +Robert’s leaving arrangements are set out in the payments for loss +of office section on page 135, but in summary: + Robert’s salary was paid up until 31 August 2023 and his +medical insurance continues until the end of the plan year +(31 March 2024). + A redundancy payment of £422,300 (in line with local legal +requirements in Gibraltar) and payment of £296,188 in lieu of the +balance of his contractual notice period was made. + The Committee agreed to treat Robert as a good leaver in +accordance with the Policy and the provisions of the incentive +plan rules in respect of his outstanding LTIP and ADBP awards. +He will receive a time pro-rated bonus in respect of 2023, +determined in the same manner as for the other Executive +Directors and paid half in cash and half in deferred shares, +as normal. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +115Entain plc Annual Report 2023 +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_118.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb762b13f9c49b4c9b02325fc991b7b597851a84 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,66 @@ +Role of the Committee +The Committee oversees the Company’s +overall remuneration strategy to ensure it is +aligned to the Company’s purpose and values +and is linked to the successful delivery of the +Company’s long-term strategy. The Committee +has delegated responsibility for designing and +determining remuneration for the Chairman, +the Executive Directors and senior executive +management. It also reviews the remuneration +of the wider workforce and related policies +and the alignment of incentives and rewards +with culture, taking these factors into account +when setting the remuneration policy for the +executive team. +The Remuneration Committee +Committee membership and attendance during 2023 +Member +Number of +meetings +attended +Number of +meetings +eligible to +attend +Virginia McDowell 1 6 7 +Stella David 2 6 6 +Amanda Brown 3 2 2 +Mark Gregory 4 1 1 +Vicky Jarman 5 1 1 +Rahul Welde6 5 6 +1. Virginia McDowell was appointed Chair of the Remuneration Committee on 14 +December 2023. +2. Stella David was appointed Chair of the Remuneration Committee on 23 February +2023 and stepped down from the Committee on 13 December 2023 when she was +appointed as Interim CEO. +3. Amanda Brown joined the Board and the Committee on 8 November 2023. +4. Mark Gregory was Chair of the Remuneration Committee until he resigned from the +Board on 17 February 2023. +5. Vicky Jarman resigned from the Board on 17 February 2023. +6. Rahul Welde joined the Committee on 23 February 2023. +During the year, there were five scheduled Committee meetings +and two ad-hoc meetings. There will be five scheduled meetings in +2024, with ad-hoc meetings as required. +None of the Committee members or attendees are involved in +any Committee decisions from which they may financially benefit +personally (other than as shareholders). The Chairman, Chief +Executive Officer, Chief Financial Officer & Deputy CEO, Chief +People Officer and Director of Reward may attend meetings at the +invitation of the Committee but are not present when their own +remuneration is being discussed. The Company Secretary acts as +the secretary to the Committee. +Key responsibilities + Recommending to the Board the Remuneration Policy for +Executive Directors and senior management. + Setting the remuneration packages for each Executive Director +and other members of the Executive Committee. + Setting the remuneration package for the Chairman. + Overseeing the Remuneration Policy for all colleagues. +The Committee’s terms of reference can be found on the +Company’s website at www.entaingroup.com . +Entain plc Annual Report 2023116 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_119.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..3013c4e0c7bc6abd90e13448218e762cccdb8b46 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,110 @@ +Key areas of Remuneration Committee focus in 2023 +A summary of the matters considered during the year is set +out below. +Our workforce + Remuneration discussion with Employee +Forum representatives + Receiving updates on all-colleague remuneration +arrangements throughout the Group + Review and approval of the 2022 UK Gender Pay +Gap Report + Approval of the launch of the 2023 ShareSave +Executive and senior management remuneration + Determination of the payouts from the 2022 annual bonus +plan and the 2020 LTIP award + Approval of the 2023 annual bonus plan and 2023 +LTIP award and their associated performance metrics +and targets + Review of salaries and remuneration packages for senior +executives and fees for the Chairman + Review of performance metrics for the 2024 annual bonus +plan and 2024 LTIP award + Approval of the exit package for Robert Hoskin + Approval of the remuneration package for Stella David as +Interim CEO + Discussion of exit terms for Jette Nygaard-Andersen, +between the Chairman and Committee members in advance +of approval by the full Board +Committee governance + Approval of the 2022 Directors’ Remuneration Report + Receiving updates on external market developments in +remuneration and governance, including international +compensation practices + Evaluation of the Remuneration Committee, its advisers and +the Committee’s Terms of Reference + Review of shareholder feedback received in relation to +Directors’ remuneration following the 2023 AGM + Concluding the review of our existing Directors’ +Remuneration Policy started in 2022, which resulted in the +new Policy presented to the 2023 AGM for approval +Remuneration Committee evaluation +The performance of the Remuneration Committee was assessed +as a part of the Board Review, which this year was undertaken +through online surveys administered and reviewed by external +facilitator Linstock. +As well as addressing core aspects of Committee performance, the +exercise had a particular focus on the following areas: + The alignment of Remuneration Policy with the expectations of +shareholders, and with Entain’s strategic objectives, including +the financial and non-financial metrics used to determine +variable pay. + The effectiveness of relationships and communication with +key stakeholders. + Areas where the Committee had exercised discretion in +decision making. + Priorities for change and improvements to strengthen +Committee performance. +The review concluded that the Committee had worked effectively +during the year, with positive feedback for the performance of +the Committee Chair. The Committee discussed the results of the +evaluation in private session and agreed that it would continue to +focus on the remuneration strategy for the wider workforce and +how remuneration structures could enable Entain to attract and +retain global talent. The Committee identified the need to spend +more time engaging with employees to better understand the key +themes and remuneration topics that are important for motivating +the workforce. It was also agreed that the Committee Chair +would work more closely with senior management, in particular +the Chief Executive Officer and Chief People Officer, to ensure +efficient operation of the Committee, with appropriate time spent +on key topics such as setting incentive plan targets that motivate +shareholder value creation and understanding the markets for +talent that Entain competes in. +Advice to the Committee +Advisers are appointed independently by the Remuneration +Committee, which reviews its selection periodically and is satisfied +that the advice it receives is independent, objective and free from +conflicts of interest. The total fees paid to the Committee’s adviser, +Deloitte, in respect of 2023 were £87,750 (2022: £132,500). +These were charged on a time and materials basis. Deloitte’s +advice included provision of market data, advice on content of +the new Directors’ Remuneration Policy and general guidance on +market and best practice. +Deloitte LLP also provided a range of tax and advisory services to +Entain during the year, some operating model delivery support, and +assistance to the Group’s internal audit function. +Deloitte is a founding member of the Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in +relation to executive remuneration consulting in the UK. Further details can be found at www.remunerationconsultantsgroup.com . +Management’s advice to the Committee was also supported by the provision of market data from Willis Towers Watson and legal advice +from Freshfields. +Shareholder voting and consideration of shareholder views +The 2022 Annual Statement from the Chair of the Remuneration Committee and the Annual Report on Remuneration were subject to an +advisory vote at the AGM on 25 April 2023. Our Remuneration Policy was approved by shareholders at the same meeting. +Resolution Date +Votes +for +% of +votes for +Votes +against +% of +votes against +Votes +withheld +Annual Report on +Remuneration 25 April 2023 461,233,616 98.1% 8,893,883 1.9% 2,140,345 +Remuneration Policy 25 April 2023 440,043,910 93.6% 30,077,857 6.4% 2,146,077 +Entain plc Annual Report 2023 117 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_12.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cd01940d3872fc804d7bd55f074e4dd4c0eed9d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_120.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad6981bc1fe169cc9027242d1c21c6cae47bf1a1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,48 @@ +The remuneration framework for Executive Directors at Entain is intended to incentivise +them to execute the Company’s strategy and create long-term sustainable value for shareholders. +It is simple, focused and aligned with key financial and strategic business goals. +Year 1 Year 2 Year 3 Year 4 Year 5 +Total +pay +Fixed +Pay +Base salary +Benefits +Pension +Annual +Bonus +One-year performance +period +Key performance +metrics +Malus provisions +apply +Three-year deferral period +No further performance conditions +Clawback provisions apply +LTIP +Three-year performance period +Key performance metrics +Malus provisions apply +Two-year holding period +No further performance conditions +Clawback provisions apply +Shareholding +Requirement Executive Directors’ minimum shareholding requirement applies both in and following cessation of employment +2023 – Executive Directors’ remuneration +The full explanatory notes for each element of remuneration are detailed on pages 130 to 132 in the Annual Report on Remuneration. +£000s Base Salary Benefits Pension +Annual +Bonus LTIP Total +Stella David (Interim CEO) 1 46 1 3 – 500 550 +Jette Nygaard-Andersen (CEO) 2 813 56 49 407 – 1,325 +Rob Wood (CFO & Deputy CEO) 554 16 29 222 – 821 +Robert Hoskin (Chief Governance Officer) 3 211 2 – 85 – 298 +1. Stella David was appointed Interim CEO on 13 December 2023. +2. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. +3. Robert Hoskin stepped down from the Board on 30 June 2023. +Executive remuneration at Entain +Entain plc Annual Report 2023118 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_121.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..787d1c9e92569710462ae3a4ef68de177f762a53 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,100 @@ +2023 Incentive outcomes +The full explanatory notes for the annual bonus and LTIP outcomes are detailed on pages 131 to 132 in the Annual Report +on Remuneration. +2023 +Annual +Bonus +Underlying +Group +Operating +Profit (60%) +0% of +maximum +Group +NGR1 +(20%) +0% of +maximum +Safer Betting +and Gaming +(15%) +100% of +maximum +Customer +(5%) +100% of +maximum +Total +payout +20% of +maximum +2021–23 +LTIP +Cumulative +EPS (33.3%) +0% of +maximum +Relative TSR +vs. FTSE 100 +(33.3%) +0% of +maximum +Relative TSR +vs. Bespoke +peer group +(33.3%) +0% of +maximum +Total +payout +0% of +maximum +Sustainability & Compliance Committee assessment of performance +1. Including Entain’s 50% share of BetMGM NGR. +Threshold +£5,613m +Target +£5,787m +Stretch +£5,961m +Outcome +£5,409m +Outcome +£642m +Threshold +£705m +Target +£723m +Stretch +£759m +Threshold +NPS score: 0 +Target +NPS score: 2 +Stretch +NPS score: 3 +Outcome +3.6 +Outcome +(15.5%) +Threshold +Median: 8.4% +Stretch +Upper quartile: 46.1% +Threshold +Median: 13.0% +Stretch +Upper quartile: 45.5% +Outcome +(15.5%) +Threshold +255p +Stretch +296p +Outcome +225.3p +Entain plc Annual Report 2023 119 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_122.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fb5355be7e6c5cc13cf90b93b7f1f8d64e2f261 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,177 @@ +Implementation of the Remuneration Policy for Executive Directors +The tables below illustrate the balance of pay and time period of each element of the Policy for Executive Directors and summarise how +the Committee applied the Policy in 2023, together with details of how the Committee intends to implement the Policy in 2024. +Element Operation +How we implemented +the Policy in 2023 +How we plan to implement +the Policy in 2024 +Salary +To provide competitive +fixed remuneration +that will attract and +retain appropriate +talent. Reflects +an individual’s +responsibilities, +experience and role + Salaries for Executive +Directors are reviewed +annually by the +Committee and any +increases normally take +effect from 1 January. +To the extent that +increases are awarded, +these will ordinarily +be no higher than +the typical level of +increase across the +wider workforce + Executive Directors’ salaries +from 1 January 2023: +– CEO – £844,600 +– CFO & Deputy CEO – +£554,300 +– CGO – £422,300 + Salary of the Interim CEO (with effect from +her appointment on 13 December 2023): +£874,200 + With effect from 1 January 2024, salary +increase of 3.5% for the CFO & Deputy CEO +to: £573,700 +Benefits +To provide competitive +benefits and to attract +and retain high calibre +employees + The value of benefits +is based on the cost to +the Group and there +is no pre-determined +maximum limit + Executive Directors +receive standard +benefits such as medical +and life insurance and +car allowance + Normal company +benefit provision + Normal company benefit provision +Pension +To provide an +opportunity for +retirement planning + Executive Directors +have the opportunity +to participate in a +company-provided +pension, which is in +line with that available +to other employees, +or may receive a cash +allowance in lieu of +a company contribution + CEO – 6% of salary +cash allowance + CFO & Deputy CEO – 4.5% of +salary company contribution +to the pension plan to June +2023 then 6% of salary of +which £833 per month was +paid into the pension plan +with the balance paid as a +cash allowance1 + CGO – Opted out of the plan + Interim CEO – 6% of salary cash allowance + CFO & Deputy CEO – 6% of salary of +which £833 per month is paid into the +pension plan with the balance paid as a +cash allowance +Annual Bonus +To incentivise the +achievement of key +financial and non- +financial performance +targets in line with +corporate strategy +over a one-year period + Maximum annual +incentive opportunity +of 250% of salary for +the CEO and 200% +of salary for other +Executive Directors. +No payment will be +made for below- +threshold performance. +50% of the maximum +opportunity is payable +for target performance + 50% of any bonus +award will be deferred +into shares for +three years + Dividend equivalents +are payable on +deferred shares + Malus and clawback +provisions apply + Maximum opportunities: +– CEO – 250% +– Other Executive +Directors – 200% + Performance metrics (as a +percentage of total): +– Underlying Group +Operating Profit (pre US +joint venture) (60%) +– NGR including US joint +venture (20%) +– Safer Betting and Gaming +(15%) +– Customer (5%) + Executive Directors awarded +bonuses of 20% of their +maximum opportunity. +See page 131 for +further information + Maximum opportunities: +– Interim CEO – 250% +– CFO & Deputy CEO – 200% + No change to payment mechanisms +of bonuses + Performance metrics (as a percentage +of total): +– Underlying Group Operating Profit (pre +US joint venture) (60%) +– Group NGR (10%) +– NGR of BetMGM (10%) +– Safer Betting and Gaming (10%) +– Individual Objectives (10%) +– Any payment is subject to the completion +of mandatory training relating to safer +betting & gaming and compliance + Targets are considered commercially +sensitive, but will be disclosed in the 2024 +Directors’ Remuneration Report +1. See page 130 for more details. +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +Fixed pay +Y2 Y3 Y4 Y5 +Y1 +50% cash +Y2 Y3 Y4 Y5 +Y1 +50% shares +Y2 Y3 Y4 Y5 +Entain plc Annual Report 2023120 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_123.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..b30c01257ed471b70699655631674c4b8124a9e2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,104 @@ +Element Operation +How we implemented +the Policy in 2023 +How we plan to implement +the Policy in 2024 +LTIP +To incentivise the execution +of the long-term business +plan and the delivery of +long-term sustainable +value for shareholders + Maximum award of 450% +of base salary for the CEO +and 400% of base salary for +other Executive Directors + Threshold performance +results in 16.7% of the +award vesting, where +maximum award levels +are granted + Vesting is on a straight-line +basis between threshold +and maximum + Awards are granted +annually and are +subject to a three-year +performance period + A two-year holding period +will apply following the +vesting period + Dividend equivalents are +payable on vested awards + Malus and clawback +provisions apply + Grant levels for 2023 awards: +– CEO – 450% +– CFO & Deputy CEO – 400% +– CGO – no award made +in 2023 + Performance conditions: +– Relative TSR vs. the FTSE +100 (50%) +– Relative TSR vs. a bespoke +group of sectoral peers (50%) + The performance period +for the 2021 LTIP ended in +the year and this award will +lapse in full. See page 132 for +further information + Grant levels for 2024 awards: +– Interim CEO – 450% +– CFO & Deputy CEO – 400% + Performance conditions: +– Relative TSR vs. the FTSE +100 (50%) +– Relative TSR vs. a bespoke +group of sectoral peers (50%) + See page 123 for details on +LTIP awards to be granted +in 2024 +Shareholding Guidelines +To ensure that Executive +Directors’ interests are +aligned with those of +shareholders over a longer +time horizon + Executive Directors are +required to retain 50% of the +post-tax number of vested +shares from the Company +incentive plans until the +minimum shareholding +requirement is met +and maintained + Executive Directors are +required to maintain 100% +of their guideline (or their +actual holding if lower) +for two years following +cessation of employment + Shareholding guidelines: +– CEO – 450% +– Other Executive Directors – +350% + The Executive Directors’ share +interests as at 31 December +2023 are detailed on page 134 + Shareholding guidelines: +– Interim CEO – 450% +– CFO & Deputy CEO – 350% +Y1 +Up to 450% of salary +Y2 Y3 Y4 Y5 +Y1 +Two-year holding period +Y2 Y3 Y4 Y5 +Y1 +Executive Directors’ +share ownership +Y2 Y3 Y4 Y5 +Entain plc Annual Report 2023 121 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_124.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..ecd7a92b0ce35eedfe8f7848bb15af5efcc063ca --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,22 @@ +Performance metrics and link to strategy +The table below demonstrates how each element of our reward package links to our two strategic pillars of Growth and Sustainability. +More information about our strategic pillars is set out on pages 23 to 25. +Strategic pillars +Element of reward Link to reward Growth Sustainability +Bonus Underlying Group operating profit +NGR +Safer betting and gaming +Individual objectives +Deferral of bonus into shares +LTIP Total shareholder return +Holding periods for Executive Directors +Bonus and LTIP Malus and clawback provisions apply +Shareholding requirements for Executive Directors +Benefits ShareSave for all employees +Market-related benefits package +Employee recognition +Learning and development opportunities +Entain plc Annual Report 2023122 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_125.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..6815332d67d74eb7994d45e303f2e43d7047bb0e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,93 @@ +2024 Incentive plan metrics +Annual bonus +What financial metrics will be used for the 2024 +annual bonus? +80% of the annual bonus will be based on financial metrics +that will be split between underlying Group operating profit +(60%), Group NGR (10%) and the NGR of BetMGM (10%). +The NGR element has been amended from that used in 2023, +by splitting out the element relating to BetMGM as a separate +metric. This further emphasises the importance of BetMGM’s +performance to the future value of Entain. +What non-financial metrics will be used for the 2024 +annual bonus? +As in 2023, the remaining 20% of the bonus will be determined by +non-financial metrics. These will be split equally between a safer +betting and gaming metric and individual objectives. +In order to have a sustainable business, the protection of our +customers has to be fundamental to everything we do and +continuing to include a safer betting and gaming metric reinforces +the importance of this to all our colleagues. +Alongside this, for the first time, we are including individual +objectives in our annual bonus for all colleagues who participate +in the plan. This will support the embedding of a performance +culture at Entain and drive personal accountability for the delivery +of key activities. +What is the underpin? +In previous years, the threshold for our safer betting and gaming +metric has required a minimum number of colleagues to complete +relevant mandatory training. For 2024 we have strengthened this +requirement such that completion of these training modules will +now be a prerequisite for a participant to be eligible to receive +any payment under the annual bonus plan. This further drives +personal accountability. +Why have changes been made to the non-financial metrics +for 2024? +In 2023, the safer betting and gaming metric had a 15% +weighting and we included a customer metric with a 5% +weighting. While the weighting on safer betting and gaming +has been reduced, as described above, the previous threshold +has now been changed to a more stringent underpin for the +entire annual bonus. For those colleagues whose work most +closely impacts on our safer betting and gaming and customer +agendas, relevant individual objectives will be set. The Committee +is comfortable that this is a more effective way to drive +performance in these areas. +How will the safer betting and gaming metric work +for 2024? +For 2024, the safer betting and gaming metric will be based +around our colleagues’ completion of relevant training. +The outcome of the metric will be monitored and evaluated by +the Sustainability & Compliance Committee who will make a +recommendation of the outcome to the Committee. +When will targets for the 2024 annual bonus be disclosed? +The targets for the annual bonus, including individual objectives +for the Executive Directors, are considered commercially sensitive, +but will be disclosed, along with their respective outcomes, in +next year’s Directors’ Remuneration Report. +2024 LTIP +What metrics will be used for the 2024 LTIP? +In determining the LTIP performance metrics for the 2024 award, +the Committee has again considered the difficulty in setting +appropriately stretching but incentivising financial targets, +given the fast-changing external environment in which we +currently operate. The Committee has concluded that it remains +appropriate to continue to base our 2024 LTIP award entirely on +relative TSR metrics. This aligns management’s interests closely +with the experience of investors and incentivises actions which +enhance long-term value creation. +For 2024, 50% of the LTIP awards will be based on TSR +performance relative to the FTSE 100 and 50% on performance +relative to an industry peer group of the following companies: +888 Holdings, Aristocrat, Betsson, Caesars Entertainment, +DraftKings, Evolution Gaming Group, Flutter Entertainment, +International Game Tech, La Française des Jeux, MGM Resorts, +Playtech, Rank Group, Rush Street Interactive and Sands LV. +What are the targets for the 2024 LTIP? +The targets and vesting schedule for the 2024 LTIP awards are +set out below. +Metric Weighting +Threshold 1 +(16.7% vesting) +Maximum 1 +(100% vesting) +TSR vs. FTSE 100 50% Median 85th percentile +TSR vs. peer group 50% Median 85th percentile +1. Straight-line vesting between threshold and maximum. +The Committee will assess the value of the 2024 LTIP awards at +vesting and will ensure that the final outturn reflects all relevant +factors, including consideration of underlying performance. +Entain plc Annual Report 2023 123 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_126.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..90df3ca069dd384074f917c5d3840d7cc111b975 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,38 @@ +Committed to good governance +When considering executive remuneration, the Committee takes into account a wide range of factors including legal and regulatory +requirements, associated guidance, and the views of shareholders and their representative bodies. How the Committee addresses the +following principles, taken from the 2018 UK Corporate Governance Code, is set out below. +Clarity Our remuneration framework is structured to support the financial and strategic objectives of the Group, +aligning the interests of our Executive Directors with those of shareholders. + We are committed to transparent communication with all our stakeholders, including shareholders – page 65 +sets out more details of how we engage with shareholders. +Simplicity We operate a simple but effective remuneration framework. + The annual bonus and LTIP reward performance against key indicators of success for the business. + There is clear line of sight for management and shareholders. +Risk Our incentives are structured to align with the Group’s risk management framework. + Three-year deferral under the annual bonus and the two-year holding period on LTIP awards create long- +term alignment, as do our within- and post-employment shareholding guidelines. + Both incentives also incorporate robust performance targets, malus and clawback provisions, and +overarching Committee discretion to adjust formulaic outcomes. +Predictability The Remuneration Policy clearly sets out the possible future value of remuneration that Executive Directors +could receive, including the impact of share price appreciation of 50%. +Proportionality There is clear alignment between the performance of the Company and the rewards available to +Executive Directors. + Incentive elements are closely aligned to our strategic goals, transparent and robustly assessed, with the +Committee having full discretion to adjust outcomes to ensure they align with overall Entain performance. +Alignment +to culture + We are committed to effective stakeholder and colleague engagement, part of which is ensuring that the +Committee sees all relevant data relating to pay and conditions in the wider workforce. + Operating responsibly towards our customers is fundamental to the way in which Entain operates and +remuneration outcomes are reviewed in the light of actions taken in support of our safer betting and +gaming agenda. + To reflect the importance of our safer betting and gaming activity to the sustainability of Entain, relevant +metrics are included in our annual bonus plan. This demonstrates a clear link between remuneration and our +culture. The Committee will also take broader ESG considerations into account and may apply discretion if +necessary when assessing the appropriateness of incentive outcomes. +Remuneration in context +Entain plc Annual Report 2023124 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_127.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0fa6fbfd406272075713eae7bf0be82fb991935 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_127.txt @@ -0,0 +1,77 @@ +Understanding our colleague reward framework +Our people are vital to our business. At Entain, we believe in fairness throughout the Company. The Group operates a number of general +principles applied to all levels. + We will provide a competitive package compared to the relevant market for each colleague. + We will ensure colleagues can share in the success of the business, where appropriate, through performance-based variable +remuneration and opportunity to acquire Entain shares. + We aim for transparency and a fair cascade of remuneration throughout the Group. +The Remuneration Committee considers a range of factors when deciding upon the remuneration for Executive Directors, one of which +is the alignment with pay practices across the wider workforce. The table below summarises the remuneration structure for employees +below the Board. +Element Wider workforce Executive Directors and senior management +Base salary Our base salary is the basis for a competitive +total reward package for all employees, and we +review these annually. + The review takes into account a number of +factors such as country budget, relevant +market comparators, the skills, knowledge +and experience of each individual, relativity +to peers within the Company and local +legislative requirements. + In setting the salary review budget each year, +we consider affordability as well as assessing +how employee base salaries are positioned +relative to market rates, forecasts of any +further market increases and attrition rates. + The base salary of our Executive Directors +and senior management forms the basis of +their total remuneration and we review their +salaries annually. +Benefits and pension We offer market-aligned benefits packages +reflecting market practice in each country in +which we operate. + Where appropriate, we offer elements of +personal benefit choice to our employees. + The benefits packages of our Executive +Directors and senior management are aligned +with the wider workforce of the country in +which they are employed. + Subject to local legislation, Executive Directors +are eligible to participate in the pension +arrangement in their country of employment on +the same basis as local employees. +Short-term incentives Many of our global workforce participate in +the Group annual bonus, with metrics typically +aligned to those of the Executive Directors +and senior management, although depending +on role, greater emphasis may be placed on +business unit performance. + We operate local incentive arrangements +where appropriate to align with +market practice. + The Executive Directors and senior +management participate in the same Group +annual bonus plan as eligible members of the +global workforce. + Half of any award to an Executive Director is +subject to deferral into shares for three years. + Malus and clawback provisions apply. +Long-term incentives A proportion of this population is eligible to +be considered for LTIP or Restricted Stock +Awards, which vest after three years. + Malus and clawback provisions apply. + Employees have the opportunity to participate +in the Group’s all-employee ShareSave plan. + We operate an LTIP with a three-year +performance period for Executive Directors and +senior management, and vesting is subject to +Group performance outcomes. + Awards made to Executive Directors +are subject to a two-year holding period +following vesting. + Malus and clawback provisions apply. +Read more about the Committee’s work in 2023: pages 116-117 +Entain plc Annual Report 2023 125 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_128.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..e207cf3e857b390fb1f4bd2940d6c8ce63a8f162 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,64 @@ +Consideration of colleague and stakeholder views +The Committee supports and aims for fairness and transparency +of remuneration arrangements across the Group, with consistent +principles underlying both pay for the Executive Directors and +that for our wider colleague population. To support this, the +Committee receives regular updates on Group-wide all-colleague +remuneration arrangements. During the year, this included +briefings on our UK Gender Pay gap, our ShareSave plan and +approach to all-employee salary review, including that for our UK +Retail colleagues. +We have several colleague forums within Entain. These play an +important role in providing our people with a voice and allow +them to provide the business with valuable insight and feedback +on a range of topics, including remuneration. In addition, Virginia +McDowell, in her role as Designated Workforce Director, provides +the Committee with updates on colleague views on remuneration. +Through the Board, the Committee receives valuable insight +as to general colleague views including those on remuneration +including feedback from our global ‘Your Voice’ survey which will +be running in January 2024. See page 64 for more detail on our +Board Engagement activities. +Along with Virginia, Rahul Welde, a member of the Remuneration +Committee, participated in Entain’s Global Engagement +Conference and our Employee Forum AGM, both held virtually +in January 2024. These events brought together colleague +representatives from across the Group and gave them the +opportunity to engage with Virginia and Rahul on a wide range +of topics. As with the similar meetings held in previous years, +an open dialogue was had and our colleague representatives +provided very informative input on their experiences and +suggestions. The Committee members are grateful for the +ongoing active participation of these colleagues and the insights +received and thank them for their input. +All-employee remuneration and actions in response to cost- +of-living pressures +The Committee is mindful of Entain’s responsibility as an +employer and the focus on this is heightened in the current +difficult economic environment which continues to be +experienced by our colleagues all over the world. The Committee +was pleased that we were able to implement several all- +colleague remuneration initiatives during 2023: + Budgets were set for our 2024 annual salary review taking into +account the current inflationary context being experienced by +our colleagues globally. As a result, salary review budgets of +between 3.5% and 7.0% were approved, depending on local +market conditions. + Noting that the position is somewhat different for our hourly +paid colleagues in UK Retail and Stadia, with effect from +1 January 2024, their minimum hourly rate of pay has been +increased by 8.3% to £11.80 (from £10.90). + All of our colleagues have the opportunity to share in the value +they create. A third cycle of our all-employee ShareSave plan +was launched in April 2023 to colleagues in 25 countries. +15% of our people elected to participate, giving them the +opportunity to purchase Entain shares at an option price of +£10.08. We intend to offer ShareSave again in 2024. +All of these initiatives acknowledge the importance of our +colleagues in delivering the Group’s objectives, and the +Committee looks forward to continuing the dialogue with our +people in the coming year. +Entain plc Annual Report 2023126 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_129.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..30d5ce8f794a9643acd3ec9648b2b72b349c8e13 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,98 @@ +CEO pay ratio (unaudited) +The first table below sets out the ratio at median, 25th and 75th +percentile of the total remuneration received by our CEO compared +to the total remuneration received by our UK colleagues, while +the second provides further information on the total colleague +pay figure at each quartile, and the salary component within +this. The total pay for our two CEOs in 2023 was 78 times +the median (50th percentile). This is a fall from 2022 which is +mainly attributable to the increase in the median pay of our UK +colleagues. Our UK employee population is predominantly made +up of colleagues working in our retail estate, and the Committee +considers that this ratio is not out of line with that at other +retail organisations. +Method +25th +percentile +50th +percentile +75th +percentile +2023 Option A 90 78 65 +2022 Option A 101 87 73 +2021 Option A 139 122 98 +2020 Option A 106 95 75 +2019 Option A 278 229 170 +UK colleagues – pay element +25th +percentile +50th +percentile +75th +percentile +Salary 17,629 18,975 20,301 +Total remuneration 20,893 24,090 28,663 +We would highlight the following in terms of the approach taken: + Option A was chosen as it is considered to be the most accurate +way of identifying colleagues at P25, P50 and P75, and is +aligned with investor expectations. Under this approach we +calculate total remuneration for all of our UK colleagues and rank +them accordingly on this basis. + The lower quartile, median and upper quartile colleagues were +calculated based on full-time equivalent data as at 31 December +2023. Salary excludes any statutory payments such as +maternity and sick pay; these items are reflected in the Total +remuneration figures. + In reviewing the colleague pay data, the Committee is +comfortable that the P25, P50 and P75 individuals identified +appropriately reflect the colleague pay profile at those quartiles, +and that the overall picture presented by the ratios is consistent +with our pay, reward and progression policies for UK colleagues. +The Committee notes that Entain has in place a number of +initiatives to ensure that the pay and conditions for our wider +colleague population are fair and reasonable and receives regular +updates on reward practices throughout the Group. +We aim to provide a market-competitive remuneration package in +each of the countries in which we operate. This includes benefits +appropriate to the local market and the ability for many colleagues +to share in the success of Entain via annual incentive programmes. +We successfully launched the third cycle of our all-employee +ShareSave plan in 2023 and another cycle will be offered in April +2024. In June 2022, we also made an award of free shares with a +value of £300 to all employees. These shares vest in June 2024, +subject to continued employment. +Structures are in place to support salary progression, and regular +market analysis by geography and role function is carried out, with +action taken as appropriate and salaries are typically reviewed in +January each year. +Relative importance of the spend on pay +The table below sets out the overall spend on pay for all colleagues +compared with the returns distributed to shareholders. +Significant distributions 2023 2022 % change +Staff costs (£m) 1 753.8 654.5 15.2% +Distributions to shareholders (£m) 2 106.9 50.0 113.8% +1. Increase in staff costs is largely due to an increase in employee numbers and an +increase in redundancy costs, along with salary increases implemented in 2023. +2. Increase in distributions to shareholders reflects the payment of two dividends in +2023 compared to only one in 2022. +Gender pay gap reporting +2023 is the sixth year in which we have published our UK gender +pay gap results. Our median hourly pay difference between +male and female colleagues in the UK is 4.0% (2022: 3.2%), +which compares favourably with the UK median pay gap for +all employees of 14.3% (source: Office for National Statistics, +November 2023). Our median bonus pay gap is 44.5% +(2022: 38.7%). +From further analysis it is clear that these gaps largely remain +a function of lower numbers of women at senior levels. We are +committed to making Entain an inclusive place to work and we +are continuing to invest in initiatives to create greater diversity at +senior levels. Further information on these is provided on pages +48 and 49. Our gender pay gap report for the year ended 5 April +2023, together with contextual information and more detail on the +actions we have underway to close our gender pay gap, can be +viewed on the Company’s website at www.entaingroup.com. +Entain plc Annual Report 2023 127 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_13.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cbbcfb96cbdc75ff34ea3a1af385050fd2b4bc --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,109 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_130.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..f49a422bdc86d446ccf52514fd7a3e894955be6b --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,28 @@ +01/02/16 +£0 +£250 +£200 +£100 +£50 +£150 +£300 +£350 +£400 +£450 +31/12/2031/12/1931/12/1831/12/1731/12/16 + Entain FTSE 100 FTSE 350 Travel & Leisure Index +Source: Thompson Reuters DataStream +31/12/21 31/12/22 31/12/23 +Summary of performance +The chart below shows the value of £100 invested in Entain since obtaining Main Market listing on 1 February 2016, compared with the +value of £100 invested in the FTSE 100 Index and the FTSE 350 Travel and Leisure Index. The FTSE 100 has been chosen on the basis +that this is the index in which Entain was a constituent of at the end of 2023. +£100 invested in Entain on 1 February 2016 would have been worth £251 at 31 December 2023 compared with £174 if invested in the +FTSE 100 and £100 if invested in the FTSE 350 Travel and Leisure Index. +Over the three-year period 1 January 2021 to 31 December 2023 (the period covered by the 2021 LTIP) the total shareholder return +(“TSR”) of Entain shares was -10.5% compared with +33.8% for the FTSE 100 and -5.8% for the FTSE 350 Travel and Leisure Index. +Entain plc Annual Report 2023128 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_131.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..a460a569f0445bf164675a74706fcacd566abb59 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,108 @@ +Summary of CEO remuneration outcomes: 2015–2023 +Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 +CEO +S +David1 +J Nygaard- +Andersen 2 +J Nygaard- +Andersen +J Nygaard- +Andersen2 S Segev3 S Segev3 +K +Alexander4 +K +Alexander +K +Alexander +K +Alexander +K +Alexander +K +Alexander +Single figure +of total +remuneration 5 £0.55m £1.33m £1.91m £2.53m £0.04m £0.30m £1.68m £5.23m £19.10m £18.21m £17. 83m £3.41m +Annual bonus +payout6(% of +maximum) – 20% 48.8% 100% – – – 100% 92% 100% – – +LTIP vesting (% +of maximum) – – – – – – 89.8% 91.1% – – – – +Legacy award +vesting (% of +maximum) – – – – – – – – 100% 100% 100% 100% +1. Stella David was appointed Interim CEO on 13 December 2023. +2. Jette Nygaard-Andersen was appointed CEO on 21 January 2021 and stepped down from the Board on 13 December 2023. Jette retained her outstanding LTIP awards and an +entitlement to receive a bonus payment in respect of 2023. +3. Shay Segev was appointed CEO on 17 July 2020 and stepped down from the Board on 21 January 2021. Shay’s 2018 and 2019 LTIP awards lapsed when he left employment and +he was not entitled to any bonus payment in respect of 2021. +4. Kenneth Alexander retired from the role of CEO on 17 July 2020. +5. Figures for 2015, 2016 and 2017 were previously reported in Euros and have been converted into GBP using an average rate for the relevant year. +6. The Executive Directors waived any entitlement to bonus for 2020 due to the Covid-19 pandemic. +Change in Directors’ pay for the year in comparison to all Entain colleagues +The table below shows the year-on-year change in salary, benefits and annual bonus earned from 2020 to 2023, building to a five-year +history, for all Executive and Non-Executive Directors and the Chairman, compared to that for Entain’s UK colleagues. The comparison is +not able to be shown for those individuals who were not in role for the full 12 months of either year. +2023 2022 2021 2020 +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Base +salary/ +fees Benefits +Annual +bonus +Executive Directors +S David1 – – – – – – – – – – – – +J Nygaard-Andersen 2 – – – – – – – – – – – – +R Wood3 3.0% 1.3% (57.8%) 3.6% 1.4% (49.5)% 27.2% 2.2% n/a – – – +R Hoskin4 – – – 2.5% (15.1)% (50.0)% – – – – – – +Non-Executive Directors5 +B Gibson6,7 0% – – 0% – – 5.3% – – – – – +P Bouchut7, 8 5.1% – – (1.2)% – – 1.9% – – (3.8)% – – +A Brown9 – – – +M Gregory10 – – – – – – – – – – – – +V Jarman10 – – – – – – – – – – – – +V McDowell7 0.9% – – 0% – – 5.4% – – (8.5)% – – +D Satz11 (0.4%) – – 11.3% – – – – – – – – +R Welde12 – – – – – – – – – – – – +All colleagues13 10.9% (5.2%) (9.7%) (0.1)% (16.5)% (50.8)% 0.1% 1.9% 132.4% 3.5% (1.4)% (53.1)% +1. Stella David joined the Board in March 2021 as a Non-Executive Director and was appointed Interim CEO on 13 December 2023. As she was not in either role for a full 12 +months in either 2021 or 2023 no comparisons are shown. +2. Jette Nygaard-Andersen joined the Board as a Non-Executive Director in November 2019, was appointed CEO on 21 January 2021 and stepped down from the Board on +13 December 2023. As she was not in either role for a full 12 months in either 2020, 2021 or 2023, no comparisons are shown. +3. Rob Wood joined the Board during 2019. As he was not in role for the full 12 months of 2019, no comparison is shown in respect of 2020. In 2020, as an Executive Director, Rob +was subject to a 20% reduction in salary for three months and he waived his entitlement to receive a bonus under the 2020 Group annual bonus plan. In 2021, Rob’s salary was +increased from £430,000 to £525,000, effective 21 January 2021, upon taking on additional responsibility as Deputy CEO. +4. Robert Hoskin joined the Board on 1 January 2021, therefore no comparison is shown for 2020 or 2021.He stepped down from the Board on 30 June 2023 and so no comparison +is shown for 2023. +5. Non-Executive Directors receive fees only and do not receive any additional benefits or participate in a bonus arrangement. There were no increases to Non-Executive Directors’ +fees in 2023. +6. Barry Gibson joined the Board during 2019. As he was not in role for the full 12 months of 2019, no comparison is shown for 2020. +7. In 2020, Barry Gibson, Pierre Bouchut and Virginia McDowell were all subject to a 20% reduction in fees for three months. +8. The fees for Pierre Bouchut are denominated in Euros and the percentage changes in fees shown for him are as a result of foreign exchange movements, and partly in 2023 due +to an increase in fees when he became Senior Independent Director in December 2023. +9. Amanda Brown joined the Board during 2023 and so no comparisons are shown. +10. Mark Gregory and Vicky Jarman joined the Board during 2021 and stepped down in 2023, therefore no comparisons are shown. +11. David Satz joined the Board in 2020, therefore no comparison is shown for 2020 or 2021. David’s fees are denominated in US Dollars and the percentage change in fees shown +for him are as a result of foreign exchange movements. +12. Rahul Welde joined the Board during 2022, therefore no comparisons are shown. +13. The all-colleague data is comprised of that used to calculate the CEO pay ratio. To eliminate the impact of changes in colleague numbers year-on-year this has been based on average +base salary, benefits and annual bonus data. +Entain plc Annual Report 2023 129 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_132.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..c4265cf16e60292a3675709ed8df5b4c197e45ad --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,68 @@ +The 2023 Annual Report on Remuneration contains details of the remuneration paid and awarded to Directors during the financial year +ended 31 December 2023. As an Isle of Man incorporated company, Entain is not subject to the UK remuneration reporting regulations +which apply to UK-incorporated companies, nevertheless, this report has been prepared in accordance with the provisions of the +Companies Act 2016, Schedule 8 of the Large and Medium Sized Companies Groups (Accounts and Reports) (Amendment) Regulations +2013 (the “Regulations”), the Listing Rules of the UK Financial Conduct Authority and the UK Corporate Governance Code. An advisory +resolution to approve the Annual Report on Remuneration and the Annual Statement will be put to shareholders at the 2024 AGM. +Single figure of remuneration table (audited) +The remuneration of Executive Directors, showing the breakdown between components with comparative figures for the prior financial +year, is shown below. Figures provided have been calculated in accordance with the Regulations. Further information on the component +elements is provided in subsequent sections. +Executive Directors +Base +salary Benefits Pension +Annual +bonus +Long-term +incentive 4 Total +Total fixed +remuneration +Total variable +remuneration +£000 £000 £000 £000 £000 £000 £000 £000 +Stella David1 2023 46 1 3 – 500 550 50 500 +2022 – – – – – – – – +Jette Nygaard-Andersen2 2023 813 56 49 407 – 1,325 918 407 +2022 820 36 49 1,000 – 1,905 905 1,000 +Rob Wood 2023 554 16 29 222 – 821 599 222 +2022 538 15 25 525 1,450 2,553 578 1,975 +Robert Hoskin 3 2023 211 2 – 85 – 298 213 85 +2022 410 5 – 400 1,263 2,078 415 1,663 +1. Stella David was appointed Interim CEO on 13 December 2023 having joined the Board as a Non-Executive Director in 2021. Fees paid during 2023 and 2022 for her role as a +Non-Executive Director are shown on page 136. The amount shown as Long-term incentive represents the buy-out of a cash payment which Stella forfeit on her resignation as +Chair of Vue International. This payment is due to be made in February 2026. It is not subject to performance conditions and so, in line with the Regulations, has been disclosed in +2023, being the year of award. +2. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. +3. Robert Hoskin stepped down from the Board on 30 June 2023. +4. The amounts shown in last year’s report for Rob Wood and Robert Hoskin in respect of the 2020 LTIP were calculated based on an assumed share price of 1,289p. The actual +share price at vesting on 12 June 2023 was 1297.5p. The amounts shown for 2022 have been updated to reflect this change and the value of dividend equivalents payable. +The proportion of the value of the 2020 LTIP that was attributable to share price appreciation is 40.3%. +Further information on the single figure of remuneration table +Base salary +Salaries are normally reviewed on 1 January each year. +Following the review that took effect 1 January 2023, the salaries of the Executive Directors were: + Jette Nygaard-Andersen: £844,600 + Rob Wood: £554,300 + Robert Hoskin: £422,300 +Stella David’s salary from her appointment as Interim CEO on 13 December 2023 was £874,200. +Benefits and pension +Executive Directors may receive benefits such as private medical, life insurance and car allowance. +Stella David received a car allowance of £25,000 p.a. and an allowance in lieu of an employer pension contribution equal to 6% of her +base salary. +Jette Nygaard-Andersen received a car allowance of £25,000 p.a. and an allowance in lieu of an employer pension contribution equal to +6% of her base salary. A cash allowance was approved by the Remuneration Committee as Jette is a Danish tax resident and therefore +not able to participate in any of the Group’s existing employee pension arrangements. The payment of a cash allowance in lieu of pension +contributions of 6% of salary was included in our Directors’ Remuneration Policy that was approved at the 2023 AGM. The quantum +is aligned to the maximum company contribution available to employees in the UK. Jette also received reimbursement of certain travel +expenses incurred in undertaking her duties as a Director. The table above includes these expenses and the related tax. +Rob Wood received a car allowance of £10,700 p.a. and participated in the defined contribution pension arrangements which are +available on the same basis as for other colleagues, receiving a company contribution of 4.5% of his base salary up until 30 June 2023. +Following the update to our Directors’ Remuneration Policy, approved at the 2023 AGM, to allow payment of a cash allowance in lieu of +pension contributions, from 1 July 2023 Rob received a company contribution into the pension plan of £833.33 per month. The difference +between that and 6% of base salary was paid to him as a cash allowance. +Robert Hoskin opted out of the pension plan. +Annual Report on Remuneration +Entain plc Annual Report 2023130 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_133.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..eaaf3d456775026fefe3d48440cd628fd127924d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,54 @@ +2023 annual bonus +The Executive Directors, with the exception of Stella David, were eligible to participate in the annual bonus for 2023. Robert Hoskin and +Jette Nygaard-Andersen were eligible to participate on a time pro-rated basis. +The annual bonus framework for 2023 was based on performance against four key metrics for Entain: underlying Group operating profit, +pre US joint venture (60%), NGR, including the US joint venture (20%), safer betting and gaming (15%) and customer (5%). At the start of +the year the Committee set stretching goals for these metrics, was satisfied that these represented challenging but realistic targets, and +that significant outperformance would be required to achieve a maximum payout. +The targets set for the financial and customer metrics, the performance achieved against all metrics, and the resulting payout are set out +in the table below. +Metric Weighting Threshold Target Stretch Actual +Payout as a % of +maximum for +each metric +Payout as a % of +maximum bonus +opportunity +Underlying Group operating +profit 60% £705m £723m £759m £642m 0% 0% +NGR 20% £5,613m £5,787m £5,961m £5,409m 0% 0% +Safer betting and gaming 15% See below 100% 15.0% +Customer (Net Promoter Score) 5% 0 2 3 3.6 100% 5.0% +Total as a % of maximum opportunity 20.0% +The safer betting and gaming metric comprised two equally weighted parts of 7.5% each (15% in total). +In summary: + UK market – based on the usage of our active account management tools amongst risk-assessed online customers and the +implementation of ARC™ into our UK Retail business. Through our ARC™ platform, we are able to monitor and categorise player +behaviour and interact with the customer to effectively influence behaviour, thereby providing a more positive and safer experience. + Markets outside the UK – further deployment of ARC™’s advanced models and technologies tailored to each country’s regulatory +requirements, culture and maturity, giving an opportunity to offer the same targeted interactions and overall experiences to a large +number of our players around the globe. +In addition, a minimum level of completion of safer betting and gaming and other relevant training modules had to be achieved by our +colleagues globally. +EPIC Risk Management, the leading gambling harm minimisation consultancy, independently reviewed the work carried out and provided +advice to the Sustainability & Compliance Committee which has enabled it to make the recommendation to the Committee that the +stretch level of performance has been achieved and so a payout in full for this metric was appropriate. More detail on our approach to +player protection can be found on pages 44 and 45. +The customer metric (representing 5% of the total bonus) was based on the achievement of a Net Promoter Score (“NPS”) target across +our core brands. A three-month rolling average NPS at December 2023 of 3.6 was achieved which exceeded the stretch target, resulting +in maximum payout for this metric. +In line with the provisions of the UK Corporate Governance Code, the Committee carefully considered whether the proposed outcome +could be justified in the context of Entain’s overall performance. In doing so, it considered: + Business performance during 2023, including progress against financial, operational and strategic targets; + The quality of underlying earnings and whether any significant one-off factors influenced the results; + Our risk and reputational performance; + The individual performance of the Executive Directors; and + Entain’s share price performance and the experience of our shareholders over the year. +The Committee noted the Group’s operational and financial progress during the year, as set out in the 2023 Group performance highlights +in the Committee Chair’s letter on page 114. +Taking all the above factors into account, the Committee considered that the outcome under the annual bonus was justifiable and a fair +reflection of overall Entain performance during the year, and therefore concluded no further discretionary adjustments were necessary. +Entain plc Annual Report 2023 131 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_134.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..1be570182e4aa96fe01f80cf2d6679ba8b025d78 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,43 @@ +The table below sets out the final outcome and annual bonus payable to each Executive Director for 2023. +J Nygaard-Andersen R Wood R Hoskin +Bonus opportunity (% of salary) 250% 200% 200% +Salary eligible for 2023 bonus £813,198 £554,300 £211,150 +Outcome: +– As % of maximum bonus 20% 20% 20% +– As % of salary 50% 40% 40% +– As £ amount £406,599 £221,720 £84,460 +Half of the total bonus is paid in cash following the year end, while half is deferred into shares under the Annual and Deferred Bonus Plan. +These shares will vest after three years, subject to continued employment or approval of good leaver treatment, in line with the Plan rules, +as is the case for Jette Nygaard-Andersen and Robert Hoskin. +2021 Long-Term Incentive Plan +The Long-Term Incentive Plan values shown in the single figure table for 2023 relate to the vesting of LTIP awards made in 2021. +The targets attached to the 2021 LTIP awards and the performance outcome against these are set out below. +Metric Weighting +Threshold +(25% vesting) +Maximum +(100% vesting) +Entain +performance +Vesting as a % of +maximum for +each metric Vesting +Relative TSR vs. FTSE 100 One-third Median: +13.0% +Upper quartile: +45.5% -15.5% 0% 0% +Relative TSR vs. bespoke peer group 1 One-third Median: +8.4% +Upper quartile: +46.1% -15.5% 0% 0% +Cumulative adjusted EPS One-third 255p 296p 225.3p 0% 0% +Total as a % of maximum opportunity 0% +1. The bespoke peer group comprised the following companies: 888 Holdings, Betsson, Caesars Entertainment, Evolution Gaming Group, Flutter Entertainment, Gamesys, +International Game Technology, Kindred Group, Playtech, Rank Group and TabCorp Holdings. +Acknowledging that our TSR performance and resulting shareholder experience over the last three years had been disappointing, the +Committee concluded that the formulaic outcome was fair and reasonable, and an appropriate reflection of Entain’s performance and +value delivered to shareholders over the period. As a result, the LTIP awards made to the Executive Directors in 2021 will lapse in full. +Entain plc Annual Report 2023132 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_135.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..f863da9136c35de0fa298ebd90bacd8ea271d87f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,54 @@ +2023 Share plan awards +Share awards granted during 2023 (audited) +The table below sets out share awards granted to the Executive Directors during 2023 under the LTIP and Annual and Deferred Bonus +Plan (“ADBP”). +Name Award type Grant date +Face value of +award +Shares +awarded1,2 +% vesting +at threshold +performance +% vesting at +maximum +performance +Performance +conditions +J Nygaard-Andersen LTIP 16 June 2023 £3,800,700 316,198 16.7% 100% See below +ADBP 21 March 2023 £500,200 38,805 n/a n/a None +R Wood LTIP 16 June 2023 £ 2,217,70 0 184,459 16.7% 100% See below +ADBP 21 March 2023 £262,605 20,372 n/a n/a None +R Hoskin ADBP 21 March 2023 £200,080 15,522 n/a n/a None +1. The LTIP awards were calculated, in line with the Plan rules, based on a share price of 1,202p (the closing share price on the day prior to grant). +2. Consistent with the Directors’ Remuneration Policy, 50% of an Executive Director’s annual bonus is deferred into shares under the ADBP. The awards shown above were granted +in respect of annual bonuses for the 2022 financial year. These awards will normally vest on 21 March 2026, the third anniversary of the grant, subject to continued employment +or approval of good leaver treatment. The number of shares granted was calculated, in line with the Plan rules, based on a share price of 1,289p (the average price over the +period 1 October to 31 December 2022). +The Committee have previously considered the difficulty in setting appropriately stretching but incentivising financial targets (such as +EPS targets) for a three-year period, given the fast-changing external environment in which we operate and concluded that this can be +addressed by basing our LTIP awards entirely on relative TSR metrics. This aligns management’s interests closely with the experience of +investors and incentivises actions which enhance long-term value creation. Therefore, for the 2023 LTIP, 50% of the awards are based +on TSR performance relative to the FTSE 100 and 50% on performance relative to an industry peer group. Performance for these awards +will be measured over the period 1 January 2023 to 31 December 2025. The target ranges are set out below and reflect the changes +the Committee set out when revising our Directors’ Remuneration Policy. This was approved at the AGM on 25 April 2023 and provided +for increased maximum levels of award under the LTIP, accompanied by an increased level of stretch on performance conditions and a +reduction in the level of vesting which would be achieved at threshold performance. +Metric Weighting +Threshold +(16.7% vesting) +Maximum +(100% vesting) +Relative TSR vs. FTSE 100 50% +Median 85th percentile +Relative TSR vs. bespoke peer group 1 50% +Straight-line vesting between threshold and maximum +1. The bespoke peer group for the 2023 awards comprises the following companies: 888 Holdings, Aristocrat, Betsson, Caesars Entertainment, DraftKings, Evolution Gaming +Group, Flutter Entertainment, International Game Technology, Kindred Group, MGM Resorts, Playtech, PointsBet, Rank Group, Rush Street Interactive and Sands LV. +The terms of the 2023 awards provide the Committee with the ability to review the outcome at vesting and to make appropriate adjustments +if it concludes that participants have benefited from windfall gains over the performance period. The Committee also retains the ability, under +the terms of the Policy, to exercise discretion to override the formulaic outcomes if it believes that the formulaic outturn is not appropriate. +Entain plc Annual Report 2023 133 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_136.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..40cddee81fcc707f9991d248fc4877a39cdd30cf --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,81 @@ +Shareholdings and share interests +Shareholding guidelines +Executive Directors are required to maintain a shareholding as determined by the Committee and retain this for a period following +cessation of employment. Executive Directors are expected to build up their shareholding over a period of five years from the date of +appointment as an Executive Director (or, if later, from the date of any change to the terms of the shareholding requirement). Shares that +count towards the requirement are those that are beneficially owned, any vested share awards subject to a holding period and unvested +deferred bonus shares (on an after-tax basis). The current shareholding requirements are: + CEO – 450% of base salary. + CFO & Deputy CEO – 350% of base salary. +In line with the provisions of the UK Corporate Governance Code, the Committee has implemented post-employment shareholding +requirements for the Executive Directors to ensure that they remain aligned with shareholders for a period after they step down from +the Board. The Committee expects Executive Directors to maintain 100% of their guideline (or their actual holding if lower) for two years +following departure. Shares purchased by the Executive Directors out of their own funds will not count towards these guidelines. To assist +in the implementation of the post-employment shareholding guideline our policy includes the potential to require leavers to deposit the +requisite number of shares into a trust or nominee arrangement. In the case of good leavers, future vestings may be made subject to +adherence to the shareholding requirement. +Share interests (audited) +As at 31 December 2023, the value of Stella David and Rob Wood’s shareholdings were £1.5m and £3.3m respectively. The value of Jette +Nygaard-Andersen’s shareholding at 13 December 2023 (the date she stepped down from the Board) was £1.5m. The value of Robert +Hoskin’s shareholding as at 30 June 2023 (the date he stepped down from the Board) was £5.2m. +Executive Directors’ share interests as at 31 December 2023, or date of leaving the Board, are set out below. +Share interests +subject to +performance +conditions 2 +Share interests not +subject to + performance +conditions 3 +Name +Number of +beneficially +owned shares 1 +Share +awards +Share +options +Share +awards +Share +options +Total interests +at 31 December +2023 +Value of shares +held as % of +base salary 4 +Shareholding +requirement +met? +S David 112,186 – – – – 112,186 128% N +J Nygaard-Andersen 5 65,381 612,828 – 85,610 – 763,819 130% N +R Wood 225,037 352,058 – 47, 866 – 624,961 449% Y +R Hoskin6 353,539 – 82,156 – 36,686 472,381 919% Y +1. Beneficially owned shares include shares held directly or indirectly by connected persons. There were no changes in the number of beneficially owned shares for any Executive +Director between 31 December 2023 and the date this report was signed. +2. Share interests subject to performance conditions are those made under the LTIP. Awards to Jette Nygaard-Andersen and Rob Wood are granted in the form of conditional +awards and those to Robert Hoskin are granted as nil-cost options. +3. Share interests not subject to performance conditions are those made under the ADBP. Awards to Jette Nygaard-Andersen and Rob Wood are granted in the form of conditional +awards and those to Robert Hoskin are granted as nil-cost options. +4. In line with our shareholding policy, the value of shares held as a percentage of base salary includes shares owned by the Executive Directors and the after-tax shares held under +the ADBP. The values of £1.5m, £1.5m, £3.3m and £5.2m for Stella David, Jette Nygaard-Andersen, Rob Wood and Robert Hoskin respectively are based on the closing share +price at 29 December 2023 (994.2p). +5. Jette Nygaard-Andersen stepped down from the Board on 13 December 2023. Under the terms of her exit, time pro-rating will be applied to her LTIP awards when she leaves +employment on 13 December 2024. +6. Robert Hoskin stepped down from the Board on 30 June 2023 and left employment on 31 August 2023. Under the terms of his exit his outstanding LTIP awards were time +pro-rated to his employment end date and the values in the table above reflect this. +Executive Directors’ service contracts and external appointments +Executive Directors have rolling contracts, terminable by either party giving the appropriate notice. +Director Date appointed Arrangement Notice period +S David 13 December 2023 Service contract 12 months +R Wood 5 March 2019 Service contract 12 months +Subject to Board approval, Executive Directors are able to accept appropriate outside Non-Executive Director appointments provided the +aggregate commitment is compatible with their duties as Executive Directors. The Executive Directors concerned may retain fees paid +for these services. Stella David is a Non-Executive Director of Norwegian Cruise Line Holdings Limited and of Bacardi Limited. Rob Wood +does not currently hold any external appointments. While on the Board, Jette Nygaard-Andersen was a Non-Executive Director of +Coloplast A/S. +Entain plc Annual Report 2023134 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_137.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c7c4fb790682609f3709467c831943935ba8829 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,47 @@ +Payments for loss of office (audited) +Jette Nygaard-Andersen +Jette Nygaard-Andersen stepped down from the Board as Chief Executive Officer on 13 December 2023, having held this role since +January 2021. Jette originally joined the Board as a Non-Executive Director in November 2019. In line with her contractual entitlement to +12 months’ notice, Jette remains employed and on garden leave until 13 December 2024. The Remuneration Committee considered the +treatment of Jette’s remuneration and agreed the following: + Salary and benefits paid up until 13 December 2024. Those received up to 13 December 2023, when Jette stepped down from the +Board, are shown in the table on page 130. Salary and benefits received between 14 December and 31 December 2023 totalled +£34,298. + After careful consideration, the Committee agreed that Jette would be treated as a good leaver in accordance with the Remuneration +Policy and the provisions of the incentive plan rules. As such, she retained her eligibility to receive an annual bonus in respect of 2023, +subject to time pro-rating to 13 December 2023. Jette also retained her outstanding ADBP and LTIP share awards, which will continue +to vest over their original timeframes. Her LTIP awards will be time pro-rated for time served up until 13 December 2024 and remain +subject to their performance conditions and a two-year holding period. Their malus and clawback provisions will also remain in force. + In line with our post-employment shareholding requirement policy, Jette will be required to meet her shareholding requirement +of the lower of 450% of salary or her actual shareholding for two years following her termination date of 13 December 2024. +The Remuneration Committee will consider withdrawing good leaver treatment if this requirement is not met. + £10,500 (excluding VAT) was paid directly to Jette’s legal advisers in respect of legal services provided to her in connection with +her termination. + Provision of tax support in the UK and Denmark for all tax reporting periods impacted by remuneration received in relation to Jette’s +employment with Entain. At her discretion, Jette also has the option to continue an existing executive mentoring arrangement until +13 December 2024 and to receive outplacement support to a maximum cost of £50,000 (excluding VAT). In all cases, any payments will +be made by Entain direct to the relevant provider. +Robert Hoskin +Robert Hoskin stepped down from the Board as Chief Governance Officer (“CGO”) on 30 June 2023 and left employment on 31 August +2023, after 18 years with the Group. The Remuneration Committee considered the treatment of Robert’s remuneration arrangements in +the light of his role as CGO being redundant and agreed the following: + Salary paid up until 31 August 2023, and medical insurance continuing until the end of the plan year (31 March 2024). Salary and +benefits received up to 30 June 2023, when Robert stepped down from the Board, are shown in the table on page 130. Salary and +benefits (including payment for accrued holiday) received between 1 July 2023 and 31 December 2023 totalled £84,137. + In line with local legal requirements, a redundancy payment of £422,300, calculated in accordance with the Gibraltar Redundancy +Pay Order. + Payment in lieu of the balance of 12 months’ contractual notice period (£296,188). + Given Robert’s role was redundant, the Committee was comfortable that he should be treated as a good leaver in accordance with +the Remuneration Policy and the provisions of the incentive plan rules. As such, he retained his eligibility to receive a time pro-rated +annual bonus plan for 2023 and retained his outstanding ADBP and LTIP share awards, which will continue to vest over their original +timeframes. His LTIP awards were time pro-rated based on time served during the performance period and remain subject to their +performance conditions and a two-year holding period. Their malus and clawback provisions will also remain in force. + In line with our post-employment shareholding requirement policy, Robert will be required to meet his full shareholding requirement +of 350% of salary for two years following his leave date of 31 August 2023. The Remuneration Committee will consider withdrawing +good leaver treatment if this requirement is not met. + £9,400 (excluding VAT) was paid directly to Robert’s legal advisers in respect of legal services provided to him in connection with +his termination. +Entain plc Annual Report 2023 135 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_138.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb5f445cf22f7b88072d7dac96da07db640c4e61 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,58 @@ +Chairman and Non-Executive Directors +Single figure of remuneration table (audited) +The remuneration of the Non-Executive Directors is shown below. +Non-Executive Directors +Fees1 +£000 +Benefits +£000 +Annual +bonus +£000 +Long-term +incentives +£000 +Pension +£000 +Total +£000 +Total fixed +remuneration +Total variable +remuneration +Barry Gibson 2023 450 – – – – 450 450 – +2022 450 – – – – 450 450 – +Pierre Bouchut 2 2023 112 – – – – 112 112 – +2022 106 – – – – 106 106 – +Amanda Brown 3 2023 13 – – – – 13 13 – +2022 – – – – – – – – +Stella David 4 2023 176 – – – – 176 176 – +2022 155 – – – – 155 155 – +Mark Gregory 5 2023 18 – – – – 18 18 – +2022 106 – – – – 106 106 – +Vicky Jarman 5 2023 14 – – – – 14 14 – +2022 85 – – – – 85 85 – +Virginia McDowell 2023 107 – – – – 107 107 – +2022 106 – – – – 106 106 – +David Satz 6 2023 94 – – – – 94 94 – +2022 95 – – – – 95 95 – +Rahul Welde7 2023 85 – – – – 85 85 – +2022 42 – – – – 42 42 – +Former +Non-Executive Directors 8 +2023 – – – – – – – – +2022 42 – – – – 42 42 – +1. Non-Executive Directors receive fees only and do not receive any additional benefits or participate in any incentive arrangements. +2. Pierre Bouchut’s fees are denominated in Euros. The change in fee received in 2023 compared to 2022 reflects foreign exchange rate movements, along with an increase in fees +when he was appointed as Senior Independent Director in December 2023. +3. Amanda Brown joined the Board on 8 November 2023. +4. Stella David was appointed as Interim CEO on 13 December 2023. Fees in the table above for 2023 reflect her appointment as a Non-Executive Director. Remuneration for her +role as an Executive Director is shown in the table on page 130. +5. Mark Gregory and Vicky Jarman resigned from the Board on 17 February 2023. +6. David Satz’s fees are denominated in US Dollars. The change in fee received in 2023 compared to 2022 reflects foreign exchange rate movements. +7. Rahul Welde joined the Board on 1 July 2022. +8. Fees totalling £42,000 were paid to Non-Executive Directors in 2022 who stood down from the Board during that year. +Entain plc Annual Report 2023136 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_139.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c07dae0fb21e369a0dfa2f8495f1a887192c1c6 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,51 @@ +Fee structure +During 2023, the Committee reviewed the Chairman’s annual fee. Based on an assessment of the time and commitment required for +the role, including a comparison against relevant market reference points, the Committee determined an increase in the fee for the first +time since 2019. Separately, fees for Non-Executive roles were also increased for the first time since 2016, based on an assessment of +comparative market data and the increased commitment and complexity associated with performing these roles. The table below sets +out the fee structure which will apply from 1 January 2024. +As at 1 January 2023 As at 1 January 2024 +Chairman £450,000 £525,000 +Senior Independent Non-Executive Director £155,000 £165,000 or €192,500 +Board member £85,000 or €100,000 or $117,000 £95,000 or €112,000 or $120,000 +Chair of a Board Committee £21,000 or €25,000 £30,000 or €35,000 or $38,000 +Intercontinental travel allowance 1 – £6,000 or €7,000 or $7,500 +1. Where a Non-Executive Director is required to undertake intercontinental travel in the performance of their role, this allowance will be paid (for each trip) to acknowledge the +additional time commitment involved. This allowance will not be payable to the Chairman. +Letters of appointment +Non-Executive Directors are appointed under letters of appointment and as such do not have service contracts. Apart from the Chairman, +each Non-Executive Director is subject to an initial three-year term subject to annual re-election at the Company’s AGM. +All letters of appointment are available for viewing at the Company’s registered office and at the AGM. +Director Date appointed Arrangement Notice period +B Gibson 4 November 2019 Letter of appointment 3 months +P Bouchut 13 September 2018 Letter of appointment 3 months +A Brown 8 November 2023 Letter of appointment 3 months +V McDowell 6 June 2018 Letter of appointment 3 months +R Sandler 3 January 2024 Letter of appointment 3 months +D Satz 22 October 2020 Letter of appointment 3 months +R Welde 1 July 2022 Letter of appointment 3 months +Share interests (audited) +Non-Executive Directors’ share interests as at 31 December 2023, or date of leaving the Board if earlier, are set out below. With the +exception of Amanda Brown who joined the Board in November 2023, all Non-Executive Directors (in post at 31 December 2023) held +shares with a value in excess of 75% of their annual fee at 31 December 2023. +Director +Number of beneficially +owned shares 1 +B Gibson 189,934 +P Bouchut 38,500 +A Brown – +M Gregory 2 7,4 4 6 +V Jarman2 1,700 +V McDowell 15,000 +D Satz 7,50 0 +R Welde 21,644 +1. Beneficially owned shares include shares held directly or indirectly by connected persons. There were no changes in the number of shares owned outright for any Non-Executive +Director between 31 December 2023 and the date this report was signed. +2. Mark Gregory and Vicky Jarman resigned from the Board on 17 February 2023. The beneficially owned shares shown for them reflect the position on that date. +Virginia McDowell +Chair of the Remuneration Committee +Entain plc Annual Report 2023 137 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Directors’ Remuneration +Report +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_14.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..3b1ad25bfc092de4921207d0636f4e2bc3ec7afe --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,6 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_140.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e5be4df7412681a18da36790a621f5af6127412 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_140.txt @@ -0,0 +1,98 @@ +Directors’ Report +Customer and creditor payment policy +The Group is committed to prompt payment of customer cash-out +requests and maintains adequate cash reserves to cover customer +withdrawals and balances. +During the year we have significantly reduced our digital payout +and withdrawal timescales with payments typically being made to +customers in most markets within 12 hours of receiving a customer +instruction. +In the case of other creditors, it is the Group’s policy to agree terms +at the outset of a transaction and ensure compliance with such +agreed terms. In the event that an invoice is contested then the +Group informs the supplier without delay and seeks to settle the +dispute quickly. +Articles of Association +The Company’s Articles of Association may only be amended +by special resolution at a general meeting of shareholders. +Directors +The Directors of the Company who were in office during the year, +are disclosed on page 89. +The Company’s Articles of Association provide that any new +Director appointed by the Board during the year, having not been +previously elected by shareholders, may hold office only until the +next AGM, when that Director must retire and stand for election at +the meeting. The Articles also require one third of the Directors not +newly appointed since the last AGM to seek re-election. +In compliance with the recommendation of the Code, all Directors +will seek reappointment at the 2024 AGM, as they did in 2023. +Directors’ remuneration +The Executive Directors have Service Agreements and all the +Non-Executive Directors have Letters of Appointment and the +details of their key terms are set out in the Directors’ Remuneration +Report. Details of remuneration of each Director are provided in the +Remuneration Report on pages 113 to 137. +Powers of directors +Subject to company law and the Company’s articles, the Directors +may exercise all of the powers of the Company and may delegate +their power and discretion to Committees. The articles give the +Directors power to appoint and replace Directors. +Directors’ interests +This is reported in the Directors’ Remuneration Report on +pages 133 and 134 and provides details of the interests of each +Director, including details of current incentive schemes and long- +term incentive schemes, the interests of Directors in the share +capital of the Company and details of their share interests as at +31 December 2023. +Principal activity +Entain plc (the “Company”) and its subsidiaries (together the +“Group”) is a major international sports-betting and gaming +company operating both online and in the retail sector. +The Company is registered as a public limited company under +the Isle of Man Companies Act 2006 and is listed in the Premium +category on the Main Market of the London Stock Exchange. +Results and future performance +A review of the Group’s results and activities is covered within +the Strategic Report on pages 8 to 87. This incorporates the +Chairman’s statement, Chief Executive and Chief Financial Officer’s +review, which include an indication of likely future developments. +Key performance indicators +Key performance indicators in relation to the Group’s activities are +continually reviewed by senior management and are presented on +page 23. +Dividends +An interim dividend of 8.9p per ordinary share was paid on +22 September 2023 and a second interim dividend for 2023 of 8.9p +per ordinary share was approved by the Board on 29 February +2024, making a total dividend payment of £113m for the 2023 +full-year. The Board recognises the importance of dividends to +shareholders, the strength of the operational performance of the +business and our future prospects. The Board expects to continue +with its progressive dividend policy during 2024. +Corporate Governance +The Directors recognise the importance of corporate governance +and their associated report is set out on pages 88 to 139. +The information in that section is deemed to form part of this +Report and so fulfils the requirements of the corporate governance +statement for the purposes of DTR 7.2.1. +As a company quoted on the Premium Main Market of the London +Stock Exchange, the Company has adopted the 2018 UK Corporate +Governance Code (“Code”), as amended from time to time, and will +seek to comply with premium listed company norms to the extent +appropriate for the size and nature of the Company. +Engagement with Employee Statements +This is discussed in the s172 Statement on pages 64 to 67, pages +96 to 97 and page 126. +Engagement with Stakeholder Statements +This is discussed in the s172 Statement on pages 64 to 67 and +pages 96 to 97. +Research and development +The Group’s research and development is focused on the +development and maintenance of the Entain platform and the +production of its product portfolio, including ARC TM. The Group will +continue to invest in research and development to ensure it remains +well positioned to deliver sustainable growth. +For further details on the Group’s strategic priorities, see the +Strategic Report. +Entain plc Annual Report 2023138 +1 Overview 14 Strategic report 88 Governance 146 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_141.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..e229e4fcde1013d9e3f538678a7bf3f48eb5b74c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_141.txt @@ -0,0 +1,132 @@ +Substantial shareholdings – Interests in voting rights +As at 21 February 2024, the Company had been notified in +accordance with Chapter 5 of the Disclosure and Transparency +Rules of the following interests in the Company’s Shares: +Shareholder Number of Shares +% of Issued Share + Capital & Total +Voting rights 1 +The Capital Group +Companies 85,626,652 13.40% +Dodge & Cox 58,512,293 9.16% +Blackrock Inc 45,562,418 7.13% +Janus Henderson +Group plc 32,126,154 5.03% +Eminence Capital, +LP 30,054,030 4.7% +The Vanguard +Group, Inc 26,991,121 4.23% +1. The Company had 638,799,891 ordinary shares in issue on 21 February 2024. +Use of financial instruments +The risk management objectives and policies of the Group are set +out within Note 25 of the financial statements. +Political donations +The Company did not make any political donations or incur any +political expenditure during 2023 (2022: Nil). +Insurance +The Company maintains a directors and officers’ liability insurance +policy in respect of any legal costs that may be incurred against +the Directors in dealing with any legal claims or investigations. +Annual General Meeting +The Company’s Annual General Meeting will be held on 24 April +2024 at etc. venues, 200 Aldersgate, London, EC1A 4HD. +Independent Auditors +KPMG LLP (“KPMG”) has expressed its willingness to continue +in office as auditor and a resolution to re-appoint KPMG will be +proposed at the forthcoming AGM. +So far as the Directors are aware, there is no relevant audit +information (as defined by Section 418 of the Companies Act 2006) +of which the Company’s auditors are unaware, and each Director +has taken all the steps that he or she ought to have taken as a +Director in order to make himself or herself aware of any relevant +audit information and to establish that the Company’s auditors are +aware of that information. +On behalf of the Board: +J M Barry Gibson +Chairman +Conflicts of interest +On appointment, each Director must notify the Company of their +external board appointments, other significant commitments +and any actual or potential conflicts of interest. Each Director is +required to disclose actual or potential conflicts of interests to the +Board and where actual or potential conflicts of interest arise, the +relevant Director does not receive Board papers and is excluded +from discussions and voting on the subject matter that gives rise +to the conflict. The Board has a policy to identify and manage +Directors’ conflicts or potential conflicts of interest. +Directors’ Indemnities +The Company has entered into deeds of indemnity with each +of the Directors, which comply with the Isle of Man Companies +Act 2006. These remain in force as at the date of this report. +Diversity +Entain remains committed to establishing a 40% female Board in +accordance with its own Board diversity policy and the external +target of 40% as laid out in the FTSE Women Leaders Review by +2025. With female representation on the Board at 33.3% as at the +date of this report, the Board notes that it has not met all of the +FCA board diversity targets laid out in the Listing Rules, however, +it has met the targets relating to senior Board positions and ethnic +diversity (see tables below). +Number +of board +members +Percentage +of the +board +Number +of senior +positions +on the +board# +Number +in executive + management* +Percentage +of executive +management* +Men 6 66.6% 3 6 75% +Women 3 33.3% 1 2 25% +Number +of board +members +Percentage +of the +board +Number +of senior +positions +on the +board# +Number +in executive + management* +Percentage +of executive +management* +White +British +or other +White +(including +minority- +White +Groups) +8 89% 4 6 75% +Asian/ +Asian +British +1 11% 2 25% +# Senior positions on the Board comprise of the Chairman, Chief Executive Officer, +Chief Financial Officer and Senior Independent Director. +* For the purposes of the FCA disclosures, ‘executive management’ refers to the +Group’s executive committee, including the company secretary, but excluding +administrative and support staff. +Share capital +Details of the Company’s authorised and issued share capital, +together with details of the movement therein, are set out in +Note 28 to the financial statements. This includes the rights and +obligations attaching to shares and restrictions on the transfer +of shares. +Entain plc Annual Report 2023 139 +1 Overview 14 Strategic report 88 Governance 146 Financial statements +Directors’ Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_142.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..feb579dba9442161ebeabf8746d3c49d1290844a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_142.txt @@ -0,0 +1,29 @@ +Financial +statements +In this section +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement +of comprehensive income +162 Consolidated +balance sheet +163 Consolidated statement +of changes in equity +164 Consolidated statement +of cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023140 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_143.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..1089af132be847b357dc79f441f598a5a30e80de --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_143.txt @@ -0,0 +1,37 @@ +1. Our opinion is unmodified +In our opinion: + the financial statements of Entain plc give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at +31 December 2023, and of the Group’s and of the Company’s profit for the year then ended; + the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards +Accounting Standards as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union; + the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS +101 Reduced Disclosure Framework; and + the Group and Parent Company financial statements have been prepared in accordance with the requirements of the Isle of Man +Companies Act 2006. +What our opinion covers +We have audited the Group and Parent Company financial statements of Entain plc (“the Company”) for the year ended 31 December +2023 (FY23) included in the Annual Report, which comprise: +Group Parent Company (Entain plc) + Consolidated income statement + Consolidated statement of comprehensive income + Consolidated balance sheet + Consolidated statement of changes in equity + Consolidated statement of cash flows +Notes 1 to 36 to the Group financial statements, including the +accounting policies in note 4. + Company income statement + Company balance sheet + Company statement of changes in equity +Notes 1 to 19 to the Parent Company financial statements, +including the accounting policies in note 3 +Basis for opinion +We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. +Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for +our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our reporting to the +Audit Committee (“AC”). +We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements +including the FRC Ethical Standard as applied to listed public interest entities. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 141 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_144.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..170b2119b478e4215863c5a960d852df84bb1243 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_144.txt @@ -0,0 +1,49 @@ +2. Overview of our audit +Factors driving our +view of risks +Having taken due consideration of the current economic +environment and activity of the Group in the period, we +have identified an additional key audit matter relating to +acquisition accounting. +We consider the level of risk relating to revenue recognition +from online operations is stable compared to FY22 as the +company’s growth in the period has reduced compared to +previous periods. The Group has entered a number of new +territories in the period where there are online operations +but we do not consider the level of risk to be the same as +those that we have linked to our revenue key audit matter. +The Group’s reliance on complex IT systems for the +processing of revenue transactions relating to online +operations could result in incorrect reporting of revenue +from aggregated systematic calculation errors. In addition, +we identified a fraud risk related to possible manipulation +of revenue by manual journals. +The Group has undertaken several acquisitions in the +period. The transaction to acquire NZ Ent Limited (“TAB +New Zealand”) has a complex contingent consideration +arrangement and the variable contingent consideration is +sensitive to changes in key assumptions. The acquisition of +STS Holdings S.A. is significant in value and the purchase +price allocation is sensitive to changes in key assumptions. +Recoverability of investments in subsidiaries remains our +biggest focus in the audit of the parent Company, Entain +plc, due to their materiality in the context of the parent +Company financial statements. +Key Audit Matters Vs FY22 Item +Revenue recognition from +online operations çè 4.1 +Complex accounting and +sensitivity to significant +assumptions relating to +the acquisitions of TAB +New Zealand and STS +Holdings S.A. +é 4.2 +Recoverability of parent +Company’s investments +in subsidiaries +çè 4.3 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023142 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_145.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..714f831d3372486803e45498133b70f4ff744d99 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_145.txt @@ -0,0 +1,68 @@ +Audit committee +interaction +During the year, the AC met 5 times. KPMG are invited to attend all AC meetings and are provided with an +opportunity to meet with the AC in private sessions without the Executive Directors being present. For each Key +Audit Matter, we have set out communications with the AC in section 6, including matters that required particular +judgement for each. +The matters included in the Audit Committee Chair’s report on page 104 are materially consistent with our +observations of those meetings. +Our independence We have fulfilled our ethical responsibilities and remain +independent of the Group in accordance with UK ethical +requirements, including the FRC Ethical Standard as +applied to listed public interest entities. +Apart from the matter noted below, we have not +performed any non-audit services during the year ended +31 December 2023 or subsequently which are prohibited +by the FRC Ethical Standard. +We have identified that a KPMG member firm provided +access to an application to an entity that is part of a group +of companies acquired by the Group in August 2023. +Transition rules meant that continued provision of access +was not permitted beyond three months after acquisition +by the Group. Access to the application was terminated +at the end of January 2024. Therefore, a non-permitted +service was provided in late 2023 and January 2024. +The application assists entities with compliance with +disclosures relating to local taxation. The provision of this +service did not involve advocacy nor any management +decision making, and they had no impact on financial +statements. The fees were not significant to any party and +the entity involved is not in scope for the group audit. +In our professional judgment, we confirm that based on +our assessment of the breach, our integrity and objectivity +as auditor has not been compromised and we believe that +an objective, reasonable and informed third party would +conclude that the provision of this service would not impair +our integrity or objectivity for any of the impacted financial +years. The audit committee have concurred with this view. +We were first appointed as auditor by the shareholders +for the year ended 31 December 2018. The period of +total uninterrupted engagement is for the six financial +years ended 31 December 2023. These are the third +set of the Group’s financial statements signed by Mark +Flanagan. Previously Mark was a Key Partner involved in +the engagement, and therefore he is required to rotate off +after seven years of his involvement in the engagement. +Therefore, Mark will be required to rotate off after the +FY24 audit. +The average tenure of partners responsible for component +audits as set out in section 7 below is two years, with the +shortest being one and the longest being three. +Total audit fee £3.6m +Audit related fees +(including interim review) £0.5m +Other services £0.2m +Non-audit fee as a % of total +audit and audit related fee % 4.9% +Date first appointed 6 June 2018 +Uninterrupted audit tenure 6 years +Next financial period +which requires a tender 2028 +Tenure of Group +engagement partner 3 years +Average tenure of +component signing partners 2 years +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 143 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_146.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e70a570c6b94211480eb2b241d5d1cd7be9396d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_146.txt @@ -0,0 +1,58 @@ +Materiality +(item 6 below) +The scope of our work is influenced by our view of +materiality and our assessed risk of material misstatement. +We have determined overall materiality for the Group +financial statements as a whole at £45m (FY22: £40m) +and for the Parent Company financial statements as a +whole at £22m (FY22: £20m). +Consistent with FY22, we determined that revenue remains +the benchmark for the Group. We consider total revenue +to be the most appropriate benchmark as the Group is +still going through an acquisitive stage and BetMGM, the +Group’s joint venture continues to be in a start-up phase. +Because of BetMGM still being in a start-up phase, and +Entain recognising their share of the loss from joint ventures, +the Group as a whole, generated a loss before tax from +continuing operations in the period. Furthermore, total +revenue is seen as a key metric to users of the financial +statements, as demonstrated by the Group’s communications +to investors. As such, we based our Group materiality on +revenue, of which it represents 0.9% (FY22: 0.9%). +Materiality for the Parent Company financial statements was +determined with reference to a benchmark of Parent Company +total assets of which it represents 0.3% (FY22: 0.4%). +45 + FY23 £m + FY22 £m + + + + +40 +33.75 +30 +36 +30 +22 +20 +22 +20 +2.25 +2.0 +Group +GPM +LCM +HCM +PLC +AMPT +Group Group Materiality +GPM Group Performance Materiality +HCM Highest Component Materiality +PLC Parent Company Materiality +LCM Lowest Component Materiality +AMPT Audit Misstatement Posting Threshold +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023144 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_147.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..11604d4747b05fe2998e7330dab8f311c9ab3fea --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_147.txt @@ -0,0 +1,73 @@ +Group scope +(item 7 below) +We have performed risk assessment and planning +procedures to determine which of the Group’s components +are likely to include risks of material misstatement to +the Group financial statements, the type of procedures +to be performed at these components and the extent of +involvement required from our component auditors around +the world. +Of the Group’s twenty (FY22: eleven) reporting +components, we subjected five (FY22: five) to full scope +audits for group purposes and two (FY22: none) to +specified risk-focused audit procedures. Specified risk- +focused procedures over revenue were performed on those +components as they were the next largest component, +which had grown at a quicker rate than the remainder of +the Group’s core markets which altered the risk profile of +the Group. +The group operates a centralised IT function that supports +IT processes for certain components. The IT function is +geographically spread across Hyderabad (India), Gibraltar, +Stratford (UK) and Vienna (Austria). The transactions +processed by these IT systems are included in the financial +information of the reporting components it services +and therefore it is not a separate reporting component. +This service centre is subject to specified risk-focused +audit procedures, predominantly the testing of the relevant +general IT control environment (“GITCs”) and automated IT +application controls. +The components within the scope of our work accounted +for the percentages illustrated opposite. +In addition, we have performed Group level analysis on the +remaining components to determine whether further risks +of material misstatement exist in those components. +We consider the scope of our audit, as communicated to +the Audit Committee, to be an appropriate basis for our +audit opinion. + 2022 Full scope audits + 2022 Remaining components + 2023 Specified risk-focused procedures + 2023 Full scope audits + 2023 Remaining components +1. Calculated by adding the Group’s share of revenue from its joint ventures +to the Group’s revenue figure +Total profits and losses that made +up group profit before tax +19% +8% +4% +81% +88% +Net assets +2% +3% +98% +97% +Revenue +17% +22% +9% +83% +69% +Revenue including share of +revenue from joint ventures1 +15% +7% +19% +85% +74% +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 145 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_148.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..c54ce82752919aefd56b0aea2b2c530b56906608 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,87 @@ +The impact of +climate change +on our audit +We have considered the potential impacts of climate change on the financial statements as part of our planning +of the audit. The Group has set out its commitment to be carbon net zero by 2035 including a reduction in scope +1, 2 and 3 emissions by 2027. The Group’s business model does not include high polluting activities and further +information about the Group’s identified climate risks is provided in the “Task Force for Climate-related Financial +Disclosures Statement”. +As part of our risk assessment, KPMG have inquired with the Group’s head of ESG to understand the climate +change risks to the Group, the impact of their net zero commitment and what they have assessed the impact of +these are on the financial statements. We have also read meeting minutes of the Group’s ESG committee and +applied our knowledge of the Group and sector in which it operates to understand the extent of the potential +impact of climate change risks on the Group’s financial statements. Considering the nature of the Group’s assets +and liabilities and taking account the headroom on goodwill and indefinite life intangibles impairment testing, +there was no significant impact on our key audit matters or other key areas of our audit. +We have read the Group’s Task Force for Climate-Related Financial Disclosures in the front half of the annual +report and considered consistency with the financial statements and our audit knowledge. +3. Going concern, viability and principal risks and uncertainties +The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Parent +Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s financial position means +that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their +ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). +Going concern We used our knowledge of the Group, its industry, and the general +economic environment to identify the inherent risks to its business model +and analysed how those risks might affect the Group’s and Company’s +financial resources or ability to continue operations over the going concern +period. The risks that we considered most likely to adversely affect the +Group’s and Company’s available financial resources and/or metrics +relevant to debt covenants over this period were: + The impact of a significant change in the Group’s gaming tax profile, +including changes in key geographies; + The impact of significant changes in the regulatory environment +affecting the Group’s ability to operate in certain territories; and + The impact of a cyber security failing affecting the Group’s operating +systems for a significant portion of the going concern period. +We also considered less predictable but realistic second order impacts, +such as the impact of the political changes, which could result in a rapid +reduction of available financial resources. +We considered whether these risks could plausibly affect the liquidity or +covenant compliance in the going concern period by comparing severe, but +plausible downside scenarios that could arise from these risks individually +and collectively against the level of available financial resources and +covenants indicated by the Group’s financial forecasts. +We assessed the completeness and accuracy of the going concern disclosure. +Accordingly, based on those procedures, we found the directors’ use of the +going concern basis of accounting without any material uncertainty for +the Group and Parent Company to be acceptable. However, as we cannot +predict all future events or conditions and as subsequent events may result +in outcomes that are inconsistent with judgements that were reasonable +at the time they were made, the above conclusions are not a guarantee +that the Group or the Parent Company will continue in operation. +Our conclusions + We consider that the directors’ +use of the going concern basis +of accounting in the preparation +of the financial statements +is appropriate; + We have not identified, and +concur with the directors’ +assessment that there is not, +a material uncertainty related +to events or conditions that, +individually or collectively, may +cast significant doubt on the +Group’s or Parent Company’s +ability to continue as a going +concern for the going concern +period; and + We have nothing material +to add or draw attention to +in relation to the directors’ +statement in note 2 to +the consolidated financial +statements on the use of +the going concern basis of +accounting with no material +uncertainties that may cast +significant doubt over the Group +and Parent Company’s use of +that basis for the going concern +period, and we found the going +concern disclosure in note 2 to +be acceptable. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023146 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_149.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..e2ef767c3ba6820c9c694397b97c366f41d38cdf --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,88 @@ +Disclosures of +emerging and +principal risks +and longer-term +viability +Our responsibility +We are required to perform procedures to identify whether there is a +material inconsistency between the directors’ disclosures in respect of +emerging and principal risks and the viability statement, and the financial +statements and our audit knowledge. +Based on those procedures, we have nothing material to add or draw +attention to in relation to: + the directors’ confirmation within the Viability Statement on page 87 +that they have carried out a robust assessment of the emerging and +principal risks facing the Group, including those that would threaten its +business model, future performance, solvency and liquidity; + the Principal Risks disclosures describing these risks and how emerging +risks are identified and explaining how they are being managed and +mitigated; and + the directors’ explanation in the Viability Statement 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. +Our work is limited to assessing these matters in the context of only +the knowledge acquired during our financial statements audit. As we +cannot predict all future events or conditions and as subsequent events +may result in outcomes that are inconsistent with judgements that were +reasonable at the time they were made, the absence of anything to report +on these statements is not a guarantee as to the Group’s and Parent +Company’s longer-term viability. +Our reporting +We have nothing material to add +or draw attention to in relation to +these disclosures. +We have concluded that +these disclosures are +materially consistent with the +financial statements and our +audit knowledge. +4. Key audit matters +What we mean +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. +We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to address those +matters and our findings from those procedures in order that the Company’s members, as a body, may better understand the process +by which we arrived at our audit opinion. These matters were addressed, and our findings are based on procedures undertaken, for the +purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on these matters. +4.1 Revenue from +online operations +(group) +Financial Statement Elements +Revenue +from online +operations +FY23 +£3,366.6m +FY22 +£2,998.5m +Our assessment of risk vs FY22 +çè +We consider the level of +risk relating to revenue +recognition from online +operations is stable +compared to FY22 as there +have been no significant +changes in the nature or +complexity of the online +operations. +Our findings +FY23: Our testing identified no +errors in the recording of revenue +transactions for the revenue from +Online operations +FY22: No errors identified +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 147 +Independent +Auditor’s Report +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_15.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..381e01b4820d8f2a45a259f44bfd07a2f5e05d4d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,80 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_150.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..1827fa768a4355e7be8897762a2681abf2a29a99 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_150.txt @@ -0,0 +1,80 @@ +4.1 Revenue from +online operations +(group) +continued +Description of the +Key Audit Matter +Risk of data +processing error +Revenue streams are computed +and recorded on highly complex +IT systems that process a high +volume of low value transactions, +with the gaming and betting +platforms and customer +wallets (together “platform”) +being the key elements. +Aggregated systematic errors +in calculations could result in +incorrect reporting of revenue +from online operations. +Risk of fraud +We have identified a fraud +risk that revenue from online +operations could be manipulated +through manual journals in +order to inflate results or reach +bonus incentives. +Our response to the risk +Our procedures included: +Controls: For the Group’s in-house systems we utilised our own IT +auditors to assess the relevant IT systems and controls by: + Understanding the data flow in the online betting environment by +observing bets placed from the customer-facing systems and tracing +the transactions to the platform, and then from the data warehouse +(storage) to the financial information systems (accounting records) +to assess whether the information is passed appropriately from one +system to another; + Testing operating effectiveness of relevant general IT controls +(“GITCs”) including access to programs and data and program change +– specifically evaluating account set-up and termination of users, +password restrictions, users with privileged access and program +change controls; + Assessing the impact of GITCs deficiencies and performing additional +audit procedures as needed, for example where unauthorised users +were identified, we tested whether those users had inappropriately +accessed the system; + Testing automated controls around wallet deposits/ withdrawals, +placing and settlement of bets, and calculation of revenue through +placing test bets. +Tests of details (tracing and vouching): We assessed the +appropriateness of revenue by performing the following: + To address the identified risks, including the fraud risk, comparing +the cash movements in the customer wallets in aggregate to revenue +recognised from online operations throughout the period. As part of +this comparison, for the cash movements relating to the Payment +Service Provider (“PSP”) receivable, we obtained a summary of +movements for the year and agreed a sample of non-customer +cash movements to external documentation, for example funding, +settlements and charges to either PSP or bank statements. For other +material reconciling items between the cash movements and the +revenue recognised, we critically assessed the appropriateness of +these items and, where relevant, obtained supporting documentation. +Communications with the Entain plc’s Audit Committee +Our discussions with and reporting to the Audit Committee included: + Our approach to the audit of revenue from Online operations including details of our planned substantive +procedures and the extent of our control reliance; + Discussions on the effectiveness of the general IT environment. +Areas of particular auditor judgement +We did not identify any areas of particular auditor judgement in relation to this key audit matter. +Our findings +We assessed the impact of identified control deficiencies and considered the effect on our substantive +testing. Based on the control mitigation testing that we performed, we were not required to significantly +expand the extent of our planned detailed testing. Our testing identified no errors in the recording of +revenue transactions for the revenues from online operations (FY22: No errors identified). +Further information in the Annual Report and Accounts: See the Audit Committee Report on page 104 for details on how the Audit +Committee considered the revenue from online operations. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023148 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_151.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_151.txt new file mode 100644 index 0000000000000000000000000000000000000000..2105154294b09862751cfa8502e24fe435e47b5a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_151.txt @@ -0,0 +1,130 @@ +4.2 complex +accounting +and sensitivity +to significant +assumptions +relating to the +acquisiton of tab +new zealand and +sts holdings s.A. +Financial Statement Elements +Goodwill – +arising from +the acquisition +of STS Holding +S.A. + + +Intangible +assets – +arising from +the acquisition +of STS Holding +S.A + + +Deferred and +contingent +consideration +recognised on +the acquisition +of TAB New +Zealand +FY23 + +£374.1m + + + + +£401.3m + + + + + + +£1,112.1m +FY22 + +£nil + + + + +£nil + + + + + + +£nil +Our assessment of risk vs FY22 +é +The Group has undertaken +several acquisitions in the +period. The transaction to +acquire TAB New Zealand +has a complex contingent +consideration arrangement +and large variable +contingent consideration +is sensitive to changes +in key assumptions. The +acquisition of STS Holdings +S.A. is significant in value +the purchase price allocation +is sensitive to changes in key +assumptions. +Our findings +FY23: Balanced +FY22: New key audit matter +Description of the Key Audit Matter +Complexity and sensitivity +TAB New Zealand +The recognition of the contingent consideration paid +to the New Zealand government, being the owner of +the TAB New Zealand brand, results in a significant +judgement as to whether this forms part of the +consideration payable as these are ongoing payments +made to the former owner who will continue to provide +a regulatory framework. +Additionally, the contingent consideration that will be +paid over the 25-year period is sensitive to changes +in key assumptions including revenue growth, costs +associated with revenue as defined by the share +purchase agreement (‘SPA’) and WACC. +Our response to the risk +We performed the tests below rather than seeking +to rely on any of the Company’s controls because the +nature of the balances is such that we would expect +to obtain audit evidence primarily through the detailed +procedures described. +TAB New Zealand +Tests of details: For TAB New Zealand we have +critically assessed the SPA by reading the agreement +and understanding the business including the +involvement with the New Zealand government to +assess whether the variable contingent consideration +payable to the New Zealand government forms +part of consideration in accordance with ‘IFRS 3 +Business Combinations’. +We have benchmarked the director’s key assumptions +which have been applied in determining the fair value +of variable contingent consideration at acquisitions +against our knowledge of historical acquisitions and +third-party market data. The key assumptions are +revenue growth rates, adjusted gross profit margin +and discount rate. +Our valuation expertise: Involving our own valuation +professional with specialised skills and knowledge, +who assisted in independently developing a range of +post-tax discount rates using publicly available market +data for comparable companies and comparing these +rates to those utilised by management to assess +their reasonableness. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 149 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_152.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_152.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b8a66f4afa3fdcace8ea31618eda8388b8450de --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_152.txt @@ -0,0 +1,43 @@ +STS Holdings S.A. +The valuation of intangible assets involves significant +judgement as it requires management’s use of +assumptions including revenue growth, customer +churn rates and the application of a discount rate that +is reflective of the risks of the business. +STS Holdings S.A. +Tests of details: We assessed the director’s +calculation of the valuation of intangible assets for +STS Holdings S.A. by benchmarking their assumptions +against our knowledge of historical acquisitions +and third-party market data. The key assumptions +considered for STS Holdings S.A. were projected +revenue, long-term growth rates, customer churn and +post-tax discount rates. + We assessed the reasonableness of the cash flows +used in valuation models by benchmarking the key +assumptions adopted against our knowledge of +historical acquisitions and third-party market data; + We challenged management by considering +the rationale for the business combination and +comparing the expected synergies to the amount of +residual goodwill in the context of consideration and +the fair value adjustments applied; + Developed our own independent range of post-tax +discount rates using publicly available market data +for comparable companies and comparing these +rates to those utilised by management to assess +their reasonableness. +TAB New Zealand and STS Holdings S.A. +Assessing valuer’s credentials: We assessed +the competence and objectivity of the third-party +valuation experts engaged by the Group; and +Assessing transparency: Assessing whether the +Group’s disclosures detail the key estimates and +sensitivities including any impact of reasonably +possible changes to key assumptions with regard +to the goodwill, intangible assets and contingent +consideration arising from the acquisitions. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023150 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_153.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_153.txt new file mode 100644 index 0000000000000000000000000000000000000000..1921162201c3178663fd782150ad965b5773b8da --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_153.txt @@ -0,0 +1,25 @@ +Communications with the Entain plc’s Audit Committee +Our discussions with and reporting to the Audit Committee included: + Our approach to the audit of acquisition accounting for TAB New Zealand and STS Holdings S.A. +including details of our planned substantive procedures and the extent of our control reliance; + Our results relating to the audit of acquisition accounting for TAB New Zealand and STS Holdings +S.A. including our conclusion in relation to the estimates that management have made for calculating +intangible assets. +Areas of particular auditor judgement +The areas of particular audit judgement for the TAB New Zealand acquisition was the treatment of contingent +consideration and key assumptions adopted. +For the STS Holdings S.A. acquisition, auditor judgement was exercised relating to the key assumptions used by +the Group. +Our findings +We found that management had appropriately included all components of consideration in determining the +total consideration for the acquisition of TAB New Zealand. In addition, we deemed the assumptions used by +management in the calculation of contingent consideration to be balanced. +For the STS Holdings S.A. acquisition, we deemed the assumptions used by the Group in the calculation of the +goodwill and intangible assets for STS to be balanced. (FY22: Not applicable). +Further information in the Annual Report and Accounts: See the Audit Committee Report on page 104 for details on how the Audit +Committee considered the complex accounting and sensitivity to significant assumptions relating to the acquisition of TAB New Zealand +and STS Holdings S.A. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 151 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_154.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_154.txt new file mode 100644 index 0000000000000000000000000000000000000000..cfa77be9a0557094b7b64e8d3b2a73d2d7ab97e9 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_154.txt @@ -0,0 +1,69 @@ +4.3 Recoverability +of parent +company’s +invesments in +subsidiaries (parent +company) +Financial Statement Elements +Investments +in +subsidiaries +FY23 + +£5,635.2m +FY22 + +£4,845.6m +Our assessment of risk vs FY22 +çè +We have not identified any +significant changes to our +assessment of the level of +risk relating to recoverability +of parent company’s +investments in subsidiaries +compared to FY22. +Our findings +FY23: Balanced +FY22: Balanced +Description of the Key Audit Matter +Low risk, high value +The carrying amount of the parent Company’s +investments in subsidiaries represents 89% +(FY22: 85%) of the parent Company’s total assets. +Their recoverability is not at a high risk of significant +misstatement or subject to significant judgement. +However, due to their materiality in the context of +the parent Company financial statements, this is +considered to be the area that had the greatest effect +on our overall parent Company audit. +Our response to the risk +We performed the tests below rather than seeking +to rely on any of the Company’s controls because the +nature of the balances is such that we would expect +to obtain audit evidence primarily through the detailed +procedures described. +Our procedures included: + We compared the carrying amount of investments +in subsidiaries with the relevant subsidiaries’ draft +balance sheets to identify whether their net assets, +being an approximation of the minimum recoverable +amount of the related investments and amounts +owed by subsidiary undertakings, were in excess of +their carrying amount. +Communications with the Entain plc’s Audit Committee +Our discussions with and reporting to the Audit Committee included: + Our approach to the audit of investments in subsidiaries, including details of our planned substantive +procedures, and that we would not seek to place reliance on controls. + Our conclusion on the procedures performed. +Areas of particular auditor judgement +We did not identify any areas of particular auditor judgement in relation to this key audit matter. +Our findings +We found the company’s conclusion that there is no impairment of investments in subsidiaries to be balanced. +(FY22: balanced). +Further information in the Annual Report and Accounts: See the Audit Committee Report on page 104 for details on how the Audit +Committee considered the recoverability of parent company’s investments in subsidiaries. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023152 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_155.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_155.txt new file mode 100644 index 0000000000000000000000000000000000000000..f846220697ab30855610741c5b48443f0b128450 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_155.txt @@ -0,0 +1,48 @@ +5. Our ability to detect irregularities, and our response +Fraud – identifying and responding to risks of material misstatement due to fraud +Fraud risk +assessment +To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that +could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk +assessment procedures included: + Enquiring of directors, the audit committee, internal audit and inspection of policy documentation as to the +Group’s high-level policies and procedures to prevent and detect fraud, including the internal audit function, +and the Group’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, +suspected or alleged fraud. + Reading Board, audit committee, and remuneration committee minutes. + Considering remuneration incentive schemes and performance targets for directors and how these are +impacted by separately disclosed items. + Using analytical procedures to identify any unusual or unexpected relationships. + Our forensic specialists assisted us in identifying key fraud risks. This included holding a discussion with the +engagement partner and team and assisting with designing relevant audit procedures to respond to the +identified fraud risks. +Risk +communications +We communicated identified fraud risks throughout the audit team and remained alert to any indications of +fraud throughout the audit. This included communication from the Group audit team to full scope component +audit teams of relevant fraud risks identified at the Group level and request to full scope component audit teams +to report to the Group audit team any instances of fraud that could give rise to a material misstatement at the +Group level. +Fraud risks As required by auditing standards, and taking into account possible pressures to meet profit targets and bonus +incentives, we perform procedures to address the risk of management override of controls and the risk of +fraudulent revenue recognition, in particular the risk that revenue from the Group’s online operations is at risk +of being overstated due to manual manipulation, that management may be in a position to make inappropriate +accounting entries, and the risk of bias in accounting estimates and judgements such as accounting for +acquisitions and the recognition of intangible assets, provisions for impairment and pension assumptions. +We did not identify any additional fraud risks. +Link to KAMS Further detail in respect of online revenue recognition is set out in the key audit matter disclosure in section 4.1 +of this report. +Procedures to +address fraud risks +We also performed procedures including: + Identifying journal entries and other adjustments to test for all full scope components based on high +risk criteria for each component and comparing the identified entries to supporting documentation. +These included: postings between unusual accounts for revenue, cash and assets; entries without a +description or with a description of senior management; unexpected entries that credit adjusted EBTIDA and +debit other areas of the income statement; and entries by users who seldom post journals. + Evaluated the business purpose of significant unusual transactions. + Assessing whether significant accounting estimates are indicative of a potential bias. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 153 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_156.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_156.txt new file mode 100644 index 0000000000000000000000000000000000000000..bac602b8ca8d142a72f06d1f4a88f2b52f16af45 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_156.txt @@ -0,0 +1,61 @@ +Laws and regulations – identifying and responding to risks of material misstatement relating to compliance with laws +and regulations +Laws and +regulations risk +assessment +We identified areas of laws and regulations that could reasonably be expected to have a material effect on the +financial statements from our general commercial and sector experience, inspection of industry publications +and through discussion with the Directors and other management (as required by auditing standards), and +from inspection of the Group’s regulatory and legal correspondence and discussed with the directors and other +management the policies and procedures regarding compliance with laws and regulations. +As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment +including the entity’s procedures for complying with regulatory requirements. +Risk +communications +We communicated identified laws and regulations throughout our team and remained alert to any indications +of non-compliance throughout the audit. This included communication from the Group audit team to full-scope +component audit teams of relevant laws and regulations identified at the Group level, and a request for full +scope component auditors to report to the Group audit team any instances of non-compliance with laws and +regulations that could give rise to a material misstatement at the Group level. +Direct laws +context and link to +audit +The potential effect of these laws and regulations on the financial statements varies considerably. +Firstly, the Group is subject to laws and regulations that directly affect the financial statements including +financial reporting legislation (including related companies legislation), and taxation legislation and we assessed +the extent of compliance with these laws and regulations as part of our procedures on the related financial +statement items. +Most significant +indirect law/ +regulation areas +Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance +could have a material effect on amounts or disclosures in the financial statements, for instance through the +imposition of fines or litigation or the loss of the Group’s licence to operate. We identified the following areas +as those most likely to have such an effect: anti-bribery and corruption, recognising the nature of the Group’s +operations, betting and gaming regulation and responsible gaming legislation across all of the territories where +the Group generates material revenues. +For the matters discussed in note 33 we assessed disclosures against our understanding from inspection of +correspondence received by the entity and inquiries with external legal counsel. +Auditing standards limit the required audit procedures to identify non-compliance with these laws and +regulations to enquiry of the directors and other management and inspection of regulatory and legal +correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from +relevant correspondence, an audit will not detect that breach. +Context +Context of the +ability of the audit +to detect fraud or +breaches of law or +regulation +Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some +material misstatements in the financial statements, even though we have properly planned and performed our +audit in accordance with auditing standards. For example, the further removed non-compliance with laws and +regulations is from the events and transactions reflected in the financial statements, the less likely the inherently +limited procedures required by auditing standards would identify it. +In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve +collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit +procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance +or fraud and cannot be expected to detect non-compliance with all laws and regulations. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023154 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_157.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_157.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e726468e0f68a17747ac05ddd29ceb77c2e47dd --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_157.txt @@ -0,0 +1,72 @@ +6. Our determination of materiality +The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative +considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating the +effect of misstatements, both individually and in the aggregate, on the financial statements as a whole. +£45m +(FY22: £40m) +Materiality for +the group financial +statements as +a whole +What we mean +A quantitative reference for the purpose of planning and performing our audit. +Basis for determining materiality and judgements applied +Materiality for the Group financial statements as a whole was set at £45m (FY22: £40m). This was determined +with reference to a benchmark of Group revenue. +Consistent with FY22, we determined that revenue remains the benchmark for the Group. We consider total +revenue to be the most appropriate benchmark as the Group is still going through an acquisitive stage and +BetMGM, the Group’s joint venture continues to be in a start-up phase. Because of BetMGM still being in a start- +up phase, and Entain recognising their share of the loss from joint ventures the Group, as a whole, generates +a loss before tax from continuing operations in the period. Furthermore, total revenue is seen as a key metric +to users of the financial statements, as demonstrated by the Group’s communications to investors. Our Group +materiality of £45m was determined by applying a percentage to the Group revenue. When using a benchmark +of revenue to determine overall materiality, KPMG’s approach for listed entities considers a guideline range 0.5% +– 1.0 % of the measure. In setting overall Group materiality, we applied a percentage of 0.9% (FY22: 0.9%) to +the benchmark. +Materiality for the Parent Company financial statements as a whole was set at £22.5m (FY22: £20m), +determined with reference to a benchmark of Parent Company total assets, of which it represents 0.3% +(FY22: 0.4%). +£33.75m +(FY22: £30m) +Performance +materiality +What we mean +Our procedures on individual account balances and disclosures were performed to a lower threshold, +performance materiality, so as to reduce to an acceptable level the risk that individually immaterial +misstatements in individual account balances add up to a material amount across the financial statements as +a whole. +Basis for determining performance materiality and judgements applied +We have considered performance materiality at a level of 75% (FY22: 75%) of materiality for Entain plc Group +financial statements as a whole to be appropriate. +The Parent Company performance materiality was set at £16.5m (FY22: £15m), which equates to 75% +(FY22: 75%) of materiality for the Parent Company financial statements as a whole. +We applied this percentage in our determination of performance materiality because we did not identify any +factors indicating an elevated level of risk. +£2.25m +(FY22: £2.0m) +Audit +misstatement +posting threshold +What we mean +This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative +point of view. We may become aware of misstatements below this threshold which could alter the nature, +timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators +of fraud. +This is also the amount above which all misstatements identified are communicated to Entain plc’s +Audit Committee. +Basis for determining the audit misstatement posting threshold and judgements applied +We set our audit misstatement posting threshold at 5% (FY22: 5%) of our materiality for the Group financial +statements. We also report to the Audit Committee any other identified misstatements that warrant reporting on +qualitative grounds. +The overall materiality for the Group financial statements of £45m (FY22: £40m) compares to the below amounts as follows: +Total Group Revenue +Group (loss)/profit before tax +from continuing operations Total Group Assets +FY23 FY22 FY23 FY22 FY23 FY22 +Amount £4,769.6m £4,296.9m (£842.6)m £102.9m £10,850.6m £8,740.1m +Group Materiality as % of amount 0.9% 0.9% (5.3%) 38.9% 0.4% 0.5% +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 155 +Independent +Auditor’s Report +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_158.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a9b4cd72e3f8e5f1fbb9a8d362819a1b74f187e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,58 @@ +7. The scope of our audit +Group scope What we mean +How the Group audit team determined the procedures to be performed across the Group. +Of the Group’s twenty (FY22: eleven) reporting components, we subjected five (FY22: five) to full scope audits +for group purposes and two (FY22: none) to specified risk-focused audit procedures. In order to determine the +work performed at the reporting component level, we identified those components which we considered to be +of individual financial significance, those which were significant due to risk and those remaining components on +which we required procedures to be performed to provide us with the evidence we required in order to conclude +on the group financial statements as a whole. +We determined individually financially significant components as those contributing at least 10% (FY22: 10%) +of total profits and losses that made up group profit/(loss) before tax from continuing operations or group +revenue. We selected revenue and profit/(loss) before tax from continuing operations because these are the +most representative of the relative size of the components. We identified four (FY22: four) components as +individually financially significant components and performed full scope audits on these components. In addition, +we identified two components (FY22: none) as being subject to specified risk-focused. Specified risk-focused +procedures over revenue were performed on these components as they are the next largest component, which +had grown at a quicker rate than the remainder of the Group’s core markets which altered the risk profile of +the Group. +We have also considered one component (FY22: one), which is a joint venture, to be significant due to significant +risk of material misstatement affecting the group financial statements and performed a full scope audit of this +component (FY22: full scope audit). Whilst it does not contribute to the Group’s revenue metrics, its revenues +are considered to be of significant importance to the Group therefore we considered it to be significant due to +significant risk of material misstatement in the current year. +The group operates a centralised IT function that supports IT processes for certain components. The IT +function is geographically spread across Hyderabad (India), Gibraltar, Stratford (UK) and Vienna (Austria). +The transactions processed by these IT system are included in the financial information of the reporting +components it services and therefore it is not a separate reporting component. This service centre is subject to +specified risk-focused audit procedures, predominantly the testing of the relevant general IT control environment +(“GITCs”) and automated IT application controls. +Scope +Number of +components Range of materiality applied +Full scope audit 5 (FY22: 5) £18.8m – £36m (FY22: £20m – £30m) +The components within the scope of our work accounted for the following percentages of the group’s results: +78% group revenue (FY22: 83%), 81% Revenue including share of revenue from joint ventures (FY22: 85%), 92% +total profits and losses that made up group loss before tax from continuing operations (FY22: 81%) and 97% +group net assets (FY22: 98%). +The Group team instructed component auditors on the scope of their work including specifying minimum +procedures to perform in their audit of revenue and management override of controls. The Group team approved +the component materialities, as detailed in the table above, having regard to the mix of size and risk profile of the +Group across the components. +For the residual components, we performed analysis at an aggregated group level to re-examine our +assessment that there were no significant risks of material misstatement within these. +The Group audit team has also performed audit procedures on the following areas of behalf of the components: + Items excluded from underlying Group PBTCO; + Direct tax excluding Australia and US; + Right of use assets and liabilities; and + Share based payments. +These items were audited by the Group team because they are managed centrally by the Group finance team. +We were able to rely upon the Group’s internal control over financial reporting in several areas of our audit, +where our controls testing supported this approach, which enabled us to reduce the scope of our substantive +audit work; in the other areas the scope of the audit work performed was fully substantive. +The parent company audit was completed by the Group audit team. All of the other components subject to a full +scope audit were completed by component audit teams. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023156 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_159.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..0528af0e7850a44cde777b1a704ecf6acbc1000d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,21 @@ +Group audit team +oversight +What we mean +The extent of the Group audit team’s involvement in component audits. +In working with component auditors, we: + Held planning calls with component audit teams to discuss the significant areas of the audit relevant to the +components, including the key audit matter in respect of revenue from online operations. + Issued group audit instructions to component auditors on the scope of their work, including specifying the +minimum procedures to perform in their audit of revenue and management override of controls. + Visited five components in-person as the audit progressed to understand and challenge the audit approach +and organised video conferences with the partners and directors of the Group and component audit teams +throughout the key audit stages. At these visits and video conferences, the findings reported to the Group +team were discussed in more detail, and any further work required by the Group team was then performed by +the component audit teams. + Inspected component audit teams’ key workpapers, with a particular focus on the component’s work on +revenue from online operations and risk of management override of controls to ensure appropriateness of +documentation and conclusions reached. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 157 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_16.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab7401bd1a3967e3159407cdd3a95d7e4e7a179d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,110 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_160.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..af85ec56e924ede5bb1650a877e8563d48e38d9a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,59 @@ +8. Other information in the annual report +The directors are responsible for the other information presented in the Annual Report together with the financial statements. +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. +All other information +Our responsibility +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. +Our reporting +Based solely on that work we have not +identified material misstatements or +inconsistencies in the other information. +Directors’ remuneration report +Our responsibility +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 decided to prepare as if the Company was required to +comply with the requirements of Schedule 8 to The Large and Medium-sized Companies +and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No. 410) made under the +UK Companies Act 2006. +Our reporting +In our opinion the part of the Directors’ +Remuneration Report to be audited has +been properly prepared in accordance +with the UK Companies Act 2006, +as if those requirements applied to +the Company. +Under the terms of our engagement, we are also required to report to you if, in our opinion, +the part of the Directors’ Remuneration Report which we were engaged to audit is not in +agreement with the accounting records and returns. +We have nothing to report in +these respects. +Corporate governance disclosures +Our responsibility +We are required to perform procedures to identify whether there is a material inconsistency +between the financial statements and our audit knowledge, 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; + the section of the annual report describing the work of the Audit Committee, including +the significant issues that the Audit Committee considered in relation to the financial +statements, and how these issues were addressed; and + the section of the annual report that describes the review of the effectiveness of the +Group’s risk management and internal control systems. +Our reporting +Based on those procedures, we have +concluded that each of these disclosures +is materially consistent with the financial +statements and our audit knowledge. +We are also required to review the part of the Corporate Governance Statement relating to +the Group’s compliance with the provisions of the UK Corporate Governance Code specified +by the Listing Rules for our review. +We have nothing to report in this respect. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023158 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_161.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..dde5eff44de3fc7d8e806de37d7aff867d1e8d43 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,37 @@ +9. Respective responsibilities +Directors’ responsibilities +As explained more fully in their statement set out on page 81, 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 Parent +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 Parent 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 (UK) will always detect a material misstatement +when it exists. Misstatements can arise from fraud 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. +A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities . +The Company is required to include these financial statements in an annual financial report prepared under Disclosure Guidance and +Transparency Rule (“DTR”) 4.1.1.7R and 4.1.18R This auditor’s report provides no assurance over whether the annual financial report has +been prepared in accordance with that format. +The purpose of our audit work and to whom we owe our responsibilities +This report is made solely to the Company’s members, as a body, in accordance with Section 80(c) of the Isle of Man Companies Act +2006 and the terms of our engagement by the Company. 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 the further matters we are required to state to them in +accordance with the terms agreed with the Company, 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 this report, or +for the opinions we have formed. +Mark Flanagan +for and on behalf of KPMG LLP, Statutory Auditor +Chartered Accountants and Recognised Auditors +EastWest +Tollhouse Hill +Nottingham +NG1 5FS +7 March 2024 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 159 +Independent +Auditor’s Report \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_162.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d5db2be9af774b0b5e18703c20f4c89a157758a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,71 @@ +Notes +2023 2022 +Underlying +items +£m +Separately +disclosed +items +(Note 6) +£m +Total +£m +Underlying +items +£m +Separately +disclosed +items +(Note 6) +£m +Total +£m +Net Gaming Revenue 4,833.1 – 4,833.1 4,348.9 – 4,348.9 +VAT/GST (63.5) – (63.5) (52.0) – (52.0) +Revenue 5 4,769.6 – 4,769.6 4,296.9 – 4,296.9 +Cost of sales 7 (1,862.6) – (1,862.6) (1,582.2) – (1,582.2) +Gross profit 2,907.0 – 2,907.0 2,714.7 – 2,714.7 +Administrative costs 7 (2,222.3) (1,286.5) (3,508.8) (1,978.8) (213.2) (2,192.0) +Contribution 2,279.4 – 2,279.4 2,128.9 – 2,128.9 +Administrative costs excluding marketing (1,594.7) (1,286.5) (2,881.2) (1,393.0) (213.2) (1,606.2) +Group operating profit/(loss) before share +of results from joint ventures and associates 684.7 (1,286.5) (601.8) 735.9 (213.2) 522.7 +Share of results from joint ventures and associates 16,17 (42.9) – (42.9) (194.1) – (194.1) +Group operating profit/(loss) 641.8 (1,286.5) (644.7) 541.8 (213.2) 328.6 +Finance expense 8 (241.8) (1.0) (242.8) (89.0) (5.7) (94.7) +Finance income 8 12.4 – 12.4 4.3 – 4.3 +(Losses)/gains arising from change in fair value +of financial instruments 8 (90.6) – (90.6) (23.1) – (23.1) +Gains/(losses) arising from foreign exchange +on debt instruments 8 123.1 – 123.1 (112.2) – (112.2) +Profit/(loss) before tax 444.9 (1,287.5) (842.6) 321.8 (218.9) 102.9 +Income tax 10 (105.8) 69.7 (36.1) (97.9) 27.9 (70.0) +Profit/(loss) from continuing operations 339.1 (1,217.8) (878.7) 223.9 (191.0) 32.9 +Loss for the year from discontinued operations +after tax 21 – (57.8) (57.8) – (13.4) (13.4) +Profit/(loss) for the year 339.1 (1,275.6) (936.5) 223.9 (204.4) 19.5 +Attributable to: +Equity holders of the parent 304.1 (1,232.7) (928.6) 225.6 (201.4) 24.2 +Non-controlling interests 35.0 (42.9) (7.9) (1.7) (3.0) (4.7) +339.1 (1,275.6) (936.5) 223.9 (204.4) 19.5 +Earnings per share on profit/(loss) for the year +from continuing operations 44.3p1 (141.4p) 60.9p1 6.4p +From profit/(loss) for the year 12 44.3p1 (150.7p) 60.9p1 4.1p +Diluted earnings per share on profit/(loss) for the year +from continuing operations 44.2p1 (141.4p) 60.5p1 6.3p +From profit/(loss) for the year 12 44.2p1 (150.7p) 60.5p1 4.1p +Memo +EBITDA 1,007.9 (742.9) 265.0 993.2 (89.3) 903.9 +Share-based payments (21.7) – (21.7) (19.2) – (19.2) +Depreciation, amortisation and impairment (301.5) (543.6) (845.1) (238.1) (123.9) (362.0) +Share of results from joint ventures and associates (42.9) – (42.9) (194.1) – (194.1) +Group operating profit/(loss) 641.8 (1,286.5) (644.7) 541.8 (213.2) 328.6 +1. The calculation of underlying earnings per share has been adjusted for separately disclosed items, and for the removal of foreign exchange volatility arising on financial +instruments as it provides a better understanding of the underlying performance of the Group. See Note 12 for further details. +The notes on pages 165 to 214 form an integral part of these consolidated financial statements. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023160 +Consolidated +income statement +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_163.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f3b0b35cfbd1c2758f6ba17515da3a9c6c0661d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,28 @@ +Notes +2023 +£m +2022 +£m +(Loss)/profit for the year (936.5) 19.5 +Other comprehensive (expense)/income: +Items that may be reclassified to profit or loss: +Currency differences on translation of foreign operations (83.5) 182.9 +Total items that may be reclassified to profit or loss (83.5) 182.9 +Items that will not be reclassified to profit or loss: +Re-measurement of defined benefit pension scheme 30 (3.7) (24.7) +Tax on re-measurement of defined benefit pension scheme 10 1.3 8.6 +Surplus/(deficit) on revaluation of other investment 17 1.1 +Share of associate other comprehensive expense 17 (1.1) (2.6) +Total items that will not be reclassified to profit or loss (2.4) (18.7) +Other comprehensive (expense)/income for the year, net of tax (85.9) 164.2 +Total comprehensive (expense)/income for the year (1,022.4) 183.7 +Attributable to: +Equity holders of the parent (1,020.8) 182.3 +Non-controlling interests (1.6) 1.4 +The notes on pages 165 to 214 form an integral part of these consolidated financial statements. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 161 +Consolidated statement +of comprehensive income +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_164.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..822bdb75a180b11799736ee0d3907f302bf08af1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,66 @@ +Notes +2023 +£m +2022 +Restated +(Note 32) +£m +Assets +Non-current assets +Goodwill 13 4,716.0 3,980.9 +Intangible assets 13 3,960.1 2,676.2 +Property, plant and equipment 15 533.4 507.2 +Interest in joint venture 16 – – +Interest in associates and other investments 17 47.1 53.5 +Trade and other receivables 18 31.8 38.6 +Other financial assets 26 – 0.2 +Deferred tax assets 10 493.2 157.3 +Retirement benefit asset 30 61.8 63.8 +9,843.4 7,477.7 +Current assets +Trade and other receivables 18 503.2 500.3 +Income and other taxes recoverable 71.5 30.7 +Derivative financial instruments 26 31.9 72.9 +Cash and cash equivalents 19 400.6 658.5 +1,007.2 1,262.4 +Total assets 10,850.6 8,740.1 +Liabilities +Current liabilities +Trade and other payables 20 (878.6) (720.0) +Balances with customers 27 (196.8) (200.5) +Lease liabilities 22 (65.7) (65.1) +Interest-bearing loans and borrowings 23 (319.2) (424.9) +Corporate tax liabilities (48.6) (45.3) +Provisions 24 (20.9) (20.6) +Derivative financial instruments 26 (117.5) (79.2) +Deferred and contingent consideration and other financial liabilities 26 (157.0) (208.8) +(1,804.3) (1,764.4) +Non-current liabilities +Trade and other payables 20 (433.8) – +Interest-bearing loans and borrowings 23 (3,038.8) (2,689.1) +Lease liabilities 22 (210.2) (215.8) +Deferred tax liabilities 10 (825.1) (495.4) +Provisions 24 (4.2) (5.4) +Deferred and contingent consideration and other financial liabilities 26 (1,741.5) (253.4) +(6,253.6) (3,659.1) +Total liabilities (8,057.9) (5,423.5) +Net assets 2,792.7 3,316.6 +Equity +Issued share capital 28 5.2 4.8 +Share premium 1,796.7 1,207.3 +Merger reserve 2,527.4 2,527.4 +Translation reserve 150.4 240.2 +Retained earnings (2,211.7) (846.9) +Equity shareholders’ funds 2,268.0 3,132.8 +Non-controlling interests 35 524.7 183.8 +Total shareholders’ equity 2,792.7 3,316.6 +The financial statements on pages 160 to 214 were approved by the Board of Directors on 7 March 2024 and signed on its behalf by +S David R Wood +Interim Chief Executive Officer Deputy Chief Executive Officer/Chief Financial Officer +(Company number 4685V) +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023162 +Consolidated +balance sheet +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_165.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0dc6ce8e3e979c8daa7db486bec854fac308f27 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,63 @@ +Issued +share +capital +£m +Share +premium +£m +Merger +reserve +£m +Translation +reserve 1 +£m +Retained +earnings +£m +Equity +shareholders’ +funds +£m +Non- +controlling +interests +(Note 35) +£m +Total +shareholders’ +equity +£m +At 1 January 2022 4.8 1,207.3 2,527.4 63.4 (635.8) 3,167.1 1.4 3,168.5 +Profit for the year – – – – 24.2 24.2 (4.7) 19.5 +Other comprehensive income/ +(expense) – – – 176.8 (18.7) 158.1 6.1 164.2 +Total comprehensive income – – – 176.8 5.5 182.3 1.4 183.7 +Share-based payments charge – – – – 18.3 18.3 – 18.3 +Business combinations – – – – – – 178.9 178.9 +Recognition of put liability – – – – (181.2) (181.2) – (181.2) +Purchase of non-controlling interests +(Note 35) – – – – (3.7) (3.7) 2.1 (1.6) +Equity dividends (Note 11) – – – – (50.0) (50.0) – (50.0) +At 31 December 2022 4.8 1,207.3 2,527.4 240.2 (846.9) 3,132.8 183.8 3,316.6 + +At 1 January 2023 4.8 1,207.3 2,527.4 240.2 (846.9) 3,132.8 183.8 3,316.6 +Loss for the year – – – – (928.6) (928.6) (7.9) (936.5) +Other comprehensive income/ +(expense) – – – (89.8) (2.4) (92.2) 6.3 (85.9) +Total comprehensive income – – – (89.8) (931.0) (1,020.8) (1.6) (1,022.4) +Issue of shares (Note 28) 0.4 589.4 – – – 589.8 – 589.8 +Share-based payments charge – – – – 23.6 23.6 – 23.6 +Business combinations (Note 32) – – – – – – 354.0 354.0 +Recognition of put option liability – – – – (350.5) (350.5) – (350.5) +Purchase of non-controlling interests +(Note 35) – – – – – – (4.1) (4.1) +Equity dividends (Note 11) – – – – (106.9) (106.9) (7.4) (114.3) +At 31 December 2023 5.2 1,796.7 2,527.4 150.4 (2,211.7) 2,268.0 524.7 2,792.7 +1. The translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries with non-sterling functional currencies. +The notes on pages 165 to 214 form an integral part of these consolidated financial statements. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 163 +Consolidated statement +of changes in equity +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_166.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..d648b0cc0bb05548a2896492b1e0b9edb6bb3d1f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,45 @@ +Notes +2023 +£m +2022 +£m +Cash generated by operations 29 810.0 846.9 +Income taxes paid (137.3) (106.1) +Net finance expense paid (224.6) (100.6) +Net cash generated from operating activities 448.1 640.2 +Cash flows from investing activities: +Acquisitions1 (1,315.4) (738.6) +Cash acquired on business combinations 87.9 29.9 +Dividends received from associates 9.6 3.6 +Purchase of intangible assets (191.5) (129.9) +Purchase of property, plant and equipment (69.1) (82.1) +Proceeds from the sale of property, plant and equipment including disposal of shops 0.7 – +Purchase of investments in associates and other investments (3.1) – +Investment in joint ventures (40.7) (175.1) +Net cash used in investing activities (1,521.6) (1,092.2) +Cash flows from financing activities: +Proceeds from issue of ordinary shares 589.8 – +Net proceeds from borrowings 1,780.3 838.4 +Repayment of borrowings (1,419.2) (109.0) +Repayment of borrowings on acquisition (9.4) (162.8) +Subscription of funds from non-controlling interests 350.5 174.3 +Settlement of derivative financial instruments (13.2) 41.6 +Settlement of other financial liabilities (266.7) (32.9) +Payment of lease liabilities (68.5) (83.0) +Dividends paid to shareholders (106.9) (50.0) +Dividends paid to non-controlling interests (7.4) – +Net cash used in financing activities 829.3 616.6 +Net (decrease)/increase in cash and cash equivalents (244.2) 164.6 +Effect of changes in foreign exchange rates (13.7) 6.8 +Cash and cash equivalents at beginning of the year 658.5 487.1 +Cash and cash equivalents at end of the year 400.6 658.5 +1. Included within cash flows from acquisitions is £5.4m relating to the purchase of minority holdings in STS Holdings SA (2022: £1.7m relating to the purchase of minority holdings +in Scout Gaming AB and Global Gaming Limited). +The notes on pages 165 to 214 form an integral part of these consolidated financial statements. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023164 +Consolidated statement +of cash flows +for the year ended +31 December 2023 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_167.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..52d82c3cc2322e961e73fd7ec671561c9679dc41 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,56 @@ +1 Corporate information +Entain plc (“the Company”) is a company incorporated and domiciled in the Isle of Man on 5 January 2010 whose shares are traded +publicly on the London Stock Exchange. The principal activities of the Company and its subsidiaries (“the Group”) are described in the +strategic report. The consolidated financial statements of the Group for the year ended 31 December 2023 were authorised for issue in +accordance with a resolution of the Directors on 7 March 2024. +The nature of the Group’s operations and its principal activities are set out in Note 5. +2 Basis of preparation +The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards +adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union and in accordance with the requirements of the +Isle of Man Companies Act 2006 applicable to companies reporting under IFRSs. The accounting policies set out in this section as detailed +have been applied consistently year on year other than for the changes in accounting policies set out in Note 3. +The consolidated financial statements are presented in Pounds Sterling (£). All values are in millions (£m) rounded to one decimal place +except where otherwise indicated. The separately disclosed items have been included within the appropriate classifications in the +consolidated income statement. Further details are given in Note 6. +Going concern +In adopting the going concern basis of preparation in the financial statements, the Directors have considered the current trading +performance of the Group, the financial forecasts and the principal risks and uncertainties. In addition, the Directors have considered +all matters discussed in connection with the long-term viability statement including the modelling of ‘severe but plausible’ downside +scenarios such as legislation changes impacting the Group’s Online business and severe data privacy and cybersecurity breaches. +Given the level of the Group’s available cash post the recent extension of certain financing facilities (see Note 36) and the forecast +covenant headroom even under the sensitised downside scenarios, the Directors believe that the Group and the Company are well +placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation that the Group and the +Company will have adequate financial resources to continue in operational existence, for at least 12 months (being the going concern +assessment period) from date of approval of the financial statements, and have, therefore, considered it appropriate to adopt the going +concern basis of preparation in the financial statements. +3 Changes in accounting policies +From 1 January 2023 the Group has applied, for the first time, certain standards, interpretations and amendments. The adoption of the +following standards and amendments to standards did not have a material impact on the current period or any prior period upon transition: +– Amendments to IAS 1 Presentation of Financial Statements; disclosure of accounting policies; +– Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; definition of accounting estimates; +– Amendments to IAS 12 Income Taxes; deferred tax related to assets and liabilities arising from a single transaction; +– Amendments to IAS 12 International Tax Reform Pillar Two Model Rules; +– IFRS 17 Insurance Contracts; original issue. +4 Summary of significant accounting policies +4.1 Basis of consolidation +The consolidated financial statements comprise the financial statements of the Group at 31 December each year. The consolidation +has been performed using the results to 31 December for all subsidiaries, using consistent accounting policies. With the exception of a +small number of immaterial subsidiaries, the financial statements of those subsidiaries are prepared to 31 December. Control is achieved +where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these +returns through its power over the investee. +All intragroup transactions, balances, income and expenses are eliminated on consolidation. +Subsidiaries are consolidated, using the acquisition method of accounting, from the date on which control is transferred to the Group +and cease to be consolidated from the date on which control is transferred from the Group. On acquisition, the assets and liabilities and +contingent liabilities of a subsidiary are measured at fair value at the date of acquisition. Any excess of the cost of acquisition over the +fair values of the separately identifiable net assets acquired is recognised as goodwill. Where necessary, adjustments are made to the +financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. +4.2 Critical accounting estimates and judgements +The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions. Use of +available information and application of judgement are inherent in the formation of estimates. Actual results in the future may differ from +those reported. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 165 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_168.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_168.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bdab60ded98b9b3339a393cb08d0cab3c78590b --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_168.txt @@ -0,0 +1,59 @@ +4 Summary of significant accounting policies (continued) +4.2 Critical accounting estimates and judgements (continued) +Judgements +Management believes that the areas where judgement has been applied are: +– separately disclosed items (Note 6). +– business combinations (Note 32) +Separately disclosed items +To assist in understanding the underlying performance of the Group, management applies judgement to identify those items that are +deemed to warrant separate disclosure due to either their nature or size. Whilst not limited to, the following items of pre-tax income and +expense are generally disclosed separately: +– amortisation of acquired intangibles resulting from IFRS 3 “Business Combinations” fair value exercises; +– profits or losses on disposal, closure, or impairment of non-current assets or businesses; +– corporate transaction and restructuring costs; +– legal, regulatory and tax litigation; +– changes in the fair value of contingent consideration; and +– the related tax effect of these items. +Any other non-recurring items are considered individually for classification as separately disclosed by virtue of their nature or size. +During 2023 the Group separately disclosed a net charge on continuing operations before tax of £1,287.5m including £254.6m of +amortisation of acquired intangibles resulting from IFRS 3. +The separate disclosure of these items allows a clearer understanding of the trading performance on a consistent and comparable basis, +together with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group. +The separately disclosed items have been included within the appropriate classifications in the consolidated income statement. +Further details are given in Note 6. +Business combinations – Acquisition consideration +For business combinations, in assessing the relevant consideration transferred, certain judgements are required to assess whether +transfers of assets reflect payments for future service or elements of acquisition consideration. Specifically, for the Tab NZ acquisition, +the Group has committed to make minimum guaranteed funding payments to Tab NZ in the first five years post completion, with further +contingent payments subject to revenue performance due up to and including year 25. As there are no ongoing obligations or service +requirements on the selling party, these payments have been deemed to form part of consideration under IFRS 3 rather than ongoing +deductions on profits. Further details are provided in Note 32. +Estimates +Included within the financial statements are a number of areas where estimation is required. +Management believes that the area where this is most notable within the financial statements is the accounting for business +combinations (Note 32). +Business combinations +For business combinations, the Group estimates the fair value of the consideration transferred, which can include assumptions +about the future business performance of the business acquired and an appropriate discount rate to determine the fair value of any +contingent consideration. +The Group then estimates the fair value of assets acquired and liabilities assumed in the business combination. The area of most notable +estimation within the fair value exercise relates to separately identifiable intangible assets including brands, customer lists and licences. +These estimates also require inputs and assumptions to be applied within the relief from royalty calculation of fair values with the more +significant assumptions relating to future earnings, customer attrition rates and discount rates. The Group engages external experts to +support the valuation process, where appropriate. IFRS 3 ‘Business Combinations’ allows the Group to recognise provisional fair values if +the initial accounting for the business combination is incomplete. +The fair value of contingent consideration recognised in business combinations is reassessed at each reporting date, using updated +inputs and assumptions based on the latest financial forecasts and other relevant information for the businesses acquired. Fair value +movements and the unwinding of the discounting is recognised within the income statement as a separately disclosed item. See Note 6 +and Note 32 for further details. +Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest +in the net fair value of the separately identifiable assets, liabilities and contingent liabilities at the date of acquisition in accordance with +IFRS 3 Business Combinations. Goodwill is not amortised but reviewed for impairment at the first reporting period after acquisition and +then annually thereafter. As such it is stated at cost less any provision for impairment of value. Any impairment is recognised immediately +in the consolidated income statement and is not subsequently reversed. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023166 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_169.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_169.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf5870a461c391f5d3fd64d486d896e2c687e7d7 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_169.txt @@ -0,0 +1,61 @@ +4 Summary of significant accounting policies (continued) +4.2 Critical accounting estimates and judgements (continued) +Business combinations (continued) +On acquisition, any goodwill acquired is allocated to cash-generating units for the purpose of impairment testing. Where goodwill forms +part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposal is +included in the carrying amount of the assets when determining the gain or loss on disposal. On the current year acquisitions, any non- +controlling interests where put options are in place are recognised using the present access method where the Group assesses that the +non-controlling shareholder has present access to the returns associated with their equity interests. +Impairment +On acquisition, any goodwill acquired is allocated to cash-generating units for the purpose of impairment testing. Where goodwill forms +part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposal is +included in the carrying amount of the assets when determining the gain or loss on disposal. +An impairment review is performed for goodwill and other indefinite life assets on at least an annual basis. For all other non-current +assets an impairment review is performed where there are indicators of impairment. This requires an estimation of the recoverable +amount which is the higher of an asset’s fair value less costs to sell and its value in use. Estimating a value in use amount requires +management to make an estimate of the expected future cash flows from each cash-generating unit and to discount cash flows by +a suitable discount rate in order to calculate the present value of those cash flows. Estimating an asset’s fair value less costs to sell is +determined using future cash flow and profit projections as well as industry observed multiples and publicly observed share prices for +similar betting and gaming companies. See Note 14 for details on sensitivity analysis performed around these estimates. +Impairment losses are recognised in the consolidated income statement and during the current year, the Group has recognised an +impairment charge of £289.0m primarily against the Group’s Australian CGU, the closed B2C operations in Africa, and under the Unirkn +B2C offering. See Note 14 for further details. +4.3 Other accounting policies +‘Put’ options over the equity of subsidiary companies +The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are accounted for as +financial liabilities. The amounts that may become payable under the option on exercise are initially recognised at the present value +of the expected gross obligation with the corresponding entry being recognised in retained earnings. Such options are subsequently +measured at amortised cost, using the effective interest method, in order to accrete the liability up to the amount payable under the +option at the date at which it first becomes exercisable. The present value of the expected gross obligation is reassessed at the end of +each reporting period and any changes are recorded in the income statement. In the event that an option expires unexercised, the liability +is derecognised with a corresponding adjustment to retained earnings. +Intangible assets +Intangible assets acquired separately are capitalised at cost and those acquired as part of a business combination are capitalised +separately from goodwill. The costs relating to internally generated intangible assets, principally software costs, are capitalised if the +criteria for recognition as assets are met. Other expenditure is charged in the year in which the expenditure is incurred. Following initial +recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. +The useful lives of these intangible assets are assessed to be either finite or indefinite. Indefinite lived assets are not amortised and +are subject to an annual impairment review from the year of acquisition. Where amortisation is charged on assets with finite lives, this +expense is taken to the consolidated income statement through the ‘operating expenses, depreciation and amortisation’ line item. +The useful lives applied to the Group’s intangible assets are as follows: +Exclusive New Zealand licence 25–year duration of licence +Other licences Lower of 15 years, or duration of licence +Software – purchased & internally capitalised costs 2–15 years +Trademarks & brand names 10–25 years, or indefinite life +Customer relationships 3–15 years +The useful lives of all intangible assets are reviewed at each financial period end. Impairment testing is performed annually for intangible +assets which are not subject to systematic amortisation and where an indicator of impairment exists for all other intangible assets. +An intangible asset is derecognised on disposal, with any gain or loss arising (calculated as the difference between the net disposal +proceeds and the carrying amount of the item) included in the consolidated income statement in the year of disposal. +Pensions and other post-employment benefits +The Group’s defined benefit pension plan holds assets separately from the Group. The pension cost relating to the plan is assessed in +accordance with the advice of independent qualified actuaries using the projected unit credit method. +Actuarial gains or losses are recognised in the consolidated statement of comprehensive income in the period in which they arise. +Any past service cost is recognised immediately. The retirement benefit asset recognised in the balance sheet represents the fair value of +scheme assets less the value of the defined benefit obligations. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 167 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_17.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..17e9dd680f32a774bc919f586fd84ea37f612dc9 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,103 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_170.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..93d5b668b5ad5c447a0ffafb65ee7518761c93bc --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,63 @@ +4 Summary of significant accounting policies (continued) +4.3 Other accounting policies (continued) +Pensions and other post-employment benefits (continued) +There is a degree of estimation involved in predicting the ultimate benefits payable under defined benefit pension arrangements. +The pension scheme liabilities are determined using actuarial valuations. The actuarial valuation involves making assumptions about +discount rates, mortality rates and future pension increases. Due to the long-term nature of this plan, such estimates are subject to +uncertainty. See Note 30 for details on sensitivity analysis performed around these estimates. +In making these estimates and assumptions, management considers advice provided by external advisers, such as actuaries. +Where actual experience differs to these estimates, actuarial gains and losses are recognised directly in other comprehensive income. +Refer to Note 30 for details of the values of assets and obligations and key assumptions used. The Gala Coral Pension Plan has a net +asset position when measured on an IAS 19 basis. Judgement is applied, based on legal, actuarial, and accounting guidance in IFRIC +14, regarding the amounts of net pension asset that is recognised in the consolidated balance sheet. The Ladbrokes Pension Plan was +bought out in 2021. Further details are given in Note 30. +Although the Group anticipates that plan surpluses will be utilised during the life of the plans to address member benefits, the Group +recognises its pension surplus in full on the basis that there are no substantive restrictions on the return of residual plan assets in the +event of a winding up of the plan after all member obligations have been met. +The Group’s contributions to defined contribution scheme are charged to the consolidated income statement in the period to which the +contributions relate. +Investments in joint ventures +A joint venture is an entity in which the Group holds an interest on a long-term basis, and which is jointly controlled by the Group and one +or more other venturers under a contractual agreement. +Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties that collectively control +the arrangement. +The Group’s share of results of joint ventures is included in the Group consolidated income statement using the equity method of +accounting. Investments in joint ventures are carried in the Group consolidated balance sheet at cost plus post-acquisition changes in +the Group’s share of net assets of the entity less any impairment in value. The carrying value of investments in joint ventures includes +acquired goodwill. +If the Group’s share of losses in the joint venture equals or exceeds its investment in the joint venture, the Group does not recognise further +losses, unless it has obligations to continue to provide financial support to the joint venture. +Investments in associates +Associates are those businesses in which the Group has a long-term interest and is able to exercise significant influence over the financial +and operational policies but does not have control or joint control over those policies. +The Group’s share of results of associates is included in the Group’s consolidated income statement using the equity method of +accounting. Investments in associates are carried in the Group’s consolidated balance sheet at cost plus post-acquisition changes in the +Group’s share of net assets of the entity less any impairment in value. The carrying value of investments in associates includes acquired +goodwill. If the Group’s share of losses in the associate equals or exceed its investments in the associate, the Group does not recognise +further losses, unless it has obligations to continue to provide financial support to the associate. +Property, plant and equipment +Land is stated at cost less any impairment in value. +Buildings, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. +Depreciation is applied using the straight-line method to specific classes of asset to reduce them to their residual value over their +estimated useful economic lives. +Land and buildings Lower of 50 years, or estimated useful life of the building, or lease. Indefinite lives are +attached to any freehold land held and therefore it is not depreciated. +Plant and equipment 3–5 years +Fixtures and fittings 3–10 years +ROU assets arising under lease contracts are depreciated over the lease term (as defined in IFRS 16) being the period to the expiry date +of the lease, unless it is expected that a break clause will be exercised when the lease term is the period to the date of the break. +The carrying values of property, plant and equipment are reviewed for impairment where an indicator of impairment exists, being +events or changes in circumstances indicating that the carrying values may not be recoverable. If any such indication exists and +where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their +recoverable amount. +The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and 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 an asset that does not generate largely independent cash +inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023168 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_171.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..a9aa6c5aa6d2351fe44a8aa0b521c38eaa6937ab --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,61 @@ +4 Summary of significant accounting policies (continued) +4.3 Other accounting policies (continued) +Property, plant and equipment (continued) +An item of property, plant and equipment is derecognised upon disposal, with any gain or loss arising (calculated as the difference +between the net disposal proceeds and the carrying amount of the item) included in the consolidated income statement in the year +of disposal. +Leases +The Group has applied IFRS 16 only to those contracts that were previously identified as a lease under IAS 17 Leases; any contracts not +previously identified as leases have not been reassessed for the purposes of adopting IFRS 16. Accordingly, the definition of a lease under +IFRS 16 has only been applied to contracts entered into on or after 1 January 2019. +Leases, other than those with a lease period of less than one year at inception, or where the original cost of the asset acquired would be +a negligible amount (see Note 22), are capitalised at inception at the present value of the minimum lease payments. Lease payments are +apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining +balance of the liability. Finance charges are charged directly against income. +ROU assets are included within property, plant and equipment at cost and depreciated over their estimated useful lives, which normally +equates to the lives of the leases, after considering anticipated residual values. +ROU assets which are sub-leased to customers are classified as finance leases if the lease agreements transfer substantially all the risks +and rewards of usage to the lessee. All other sub-leases are classified as operating leases. When assets are subject to finance leases, +the present value of the sub-lease is recognised as a receivable, net of allowances for expected credit losses and the related ROU asset +is derecognised. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance +lease income. +Finance lease interest income is recognised over the term of the lease using the net investment method (before tax) so as to give a +constant rate of return on the net investment in sub-leases. Operating lease rental income is recognised on a straight-line basis over the +life of the lease. +Cash and cash equivalents +Cash and cash equivalents consist of cash at bank and in hand, short-term deposits (and customer balances). +Financial assets +Financial assets are recognised when the Group becomes party to the contracts that give rise to them. The Group classifies financial +assets at inception as financial assets at amortised cost, financial assets at fair value through profit or loss or financial assets at fair value +through other comprehensive income. +Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an +active market. On initial recognition, financial assets at amortised cost are measured at fair value net of transaction costs. +Trade receivables are generally accounted for at amortised cost. Expected credit losses are recognised for financial assets recorded at +amortised cost, including trade receivables. Expected credit losses are calculated by using an appropriate probability of default, taking +accounts of a range of possible future scenarios and applying this to the estimated exposure of the Group at the point of default. +Financial assets at fair value through profit or loss include derivative financial instruments. Financial assets through profit or loss are +measured initially at fair value with transaction costs taken directly to the consolidated income statement. Subsequently, the fair values +are remeasured, and gains and losses are recognised in the consolidated income statement. +Financial assets at fair value through other comprehensive income comprise equity investments that are designated as such on +acquisition. These investments are measured initially at fair value. Subsequently, the fair values are remeasured, and gains and losses are +recognised in the consolidated statement of comprehensive income. +Financial liabilities +Financial liabilities comprise trade and other payables, interest-bearing loans and borrowings, contingent consideration, ante-post bets, +guarantees and derivative financial instruments. On initial recognition, financial liabilities are measured at fair value net of transaction +costs where they are not categorised as financial liabilities at fair value. Financial liabilities measured at fair value include contingent +consideration, derivative financial instruments, ante-post bets and guarantees. +Financial liabilities at fair value are measured initially at fair value, with transaction costs taken directly to the consolidated income +statement. Subsequently, the fair values are remeasured and gains and losses from changes therein are recognised in the consolidated +income statement. +Trade and other payables are held at amortised cost and include amounts due to clients representing customer deposits and winnings, +which are matched by an equal and opposite amount within cash and cash equivalents. +All interest-bearing loans and borrowings are initially recognised at fair value net of issue costs associated with the borrowing. +After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest +rate method. +All financial liabilities are recorded as cash flows from financing activities. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 169 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_172.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..3283f6ebbf8bae41cddaf788284b3859d38a73ab --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,59 @@ +4 Summary of significant accounting policies (continued) +4.3 Other accounting policies (continued) +Derecognition of financial assets and liabilities +Financial assets are derecognised when the right to receive cash flows from the assets has expired or when the Group has transferred +its contractual right to receive the cash flows from the financial assets or has assumed an obligation to pay the received cash flows in full +without material delay to a third party, and either: +– substantially all the risks and rewards of ownership have been transferred; or +– substantially all the risks and rewards have neither been retained nor transferred but control is not retained. +Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. +Derivative financial instruments +The Group uses derivative financial instruments such as cross currency swaps, foreign exchange swaps and interest rate swaps, to +hedge its risks associated with interest rate and foreign currency fluctuations. Derivative financial instruments are recognised initially and +subsequently at fair value. The gains or losses on re-measurement are taken to the consolidated income statement. +Derivative financial instruments are classified as assets where their fair value is positive, or as liabilities where their fair value is negative. +Derivative assets and liabilities arising from different transactions are only offset if the transactions are with the same counterparty, a +legal right of offset exists, and the parties intend to settle the cash flows on a net basis. +Provisions +Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that +an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the +amount of the obligation. +Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and +are discounted to present value where the effect is material using a pre-tax rate that reflects current market assessments of the time +value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance expense. +Foreign currency translation +The presentational currency of Entain plc and the functional currencies of its UK subsidiaries is Pounds Sterling (£). +Other than Sterling the main functional currencies of subsidiaries are the Euro (€), the US Dollar ($) and the Australian Dollar (A$). At the +reporting date, the assets and liabilities of non-sterling subsidiaries are translated into Pounds Sterling (£) at the rate of exchange +ruling at the balance sheet date and their cash flows are translated at the weighted average exchange rates for the year. The post-tax +exchange differences arising on the retranslation are taken directly to other comprehensive income. +Transactions in foreign currencies are initially recorded in the subsidiary’s functional currency and translated at the foreign currency rate +ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the foreign +currency rate of exchange ruling at the balance sheet date. +All foreign currency translation differences are taken to the consolidated income statement. Non-monetary items that are measured +at historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items +measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. +On disposal of a foreign entity, the deferred cumulative retranslation differences previously recognised in equity relating to that particular +foreign entity are recognised in the consolidated income statement as part of the profit or loss on disposal. +The following exchange rates were used in 2023 and 2022: +Currency +2023 2022 +Average Year end Average Year end +Euro (€) 1.149 1.151 1.175 1.128 +US Dollar ($) 1.242 1.274 1.245 1.208 +Australian Dollar (A$) 1.873 1.866 1.788 1.775 +NZ Dollars (NZD) 2.024 2.010 1.955 1.904 +Income tax +Deferred tax is provided on all temporary differences at the balance sheet date, between the tax bases of assets and liabilities and their +carrying amounts for financial reporting purposes except: +– on the initial recognition of goodwill; +– where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business +combination and, at the time of the transaction, affects neither the accounting profit nor the tax profit; and +– associated with investments in subsidiaries, joint ventures and associates, where the timing of the reversal of the temporary +differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023170 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_173.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..0818d3a6a7d3ae8ceb80c19ee5de4dd6762cb1b1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,62 @@ +4 Summary of significant accounting policies (continued) +4.3 Other accounting policies (continued) +Income tax (continued) +Deferred tax assets are recognised for all deductible temporary differences and carry forward of unused tax assets and unused tax +losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry +forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each +balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or +part of the deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply +to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively +enacted at the balance sheet date. Deferred tax balances are not discounted. +Interest or penalties payable and receivable in relation to income tax are recognised as an income tax expense or credit in the +consolidated income statement. +Income tax expenses are recognised within profit or loss except to the extent that they relate to items recognised in other comprehensive +income or directly in equity, in which case they are recognised in other comprehensive income or directly in equity. +Revenues, expenses and assets are recognised net of the amount of sales tax except: +– where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the +sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and +– receivables and payables are stated with the amount of sales tax included. +The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the +consolidated balance sheet. +Accounting for uncertain tax positions +The Group is subject to various forms of tax in a number of jurisdictions. Given the nature of the industry within which the Group operates, +the tax and regulatory regimes are continuously changing and, as such, the Group is exposed to a small number of uncertain tax +positions. Judgement is applied to adequately provide for uncertain tax positions where it is believed that it is more likely than not that an +economic outflow will arise. In particular, judgement has been applied in the Group’s accounting for Greek tax and further disclosure is +given in Note 33. +Equity instruments and dividends +Equity instruments issued by the Company are recorded at the fair value of proceeds received net of direct issue costs. +Final dividends proposed by the Board of Directors and unpaid at the year end are not recognised in the financial statements until they +have been approved by shareholders at the Annual General Meeting. Interim dividends are recognised when paid.. +Revenue +The Group reports the gains and losses on all betting and gaming activities as revenue, which is measured at the fair value of the +consideration received or receivable from customers less free bets, promotions, bonuses and other fair value adjustments. Revenue is net +of VAT/GST. The Group considers betting and gaming revenue to be out of the scope of IFRS 15 Revenue, and accounts for those revenues +within the scope of IFRS 9 Financial Instruments. +For LBOs, on course betting, Core Telephone Betting, mobile betting and Digital businesses (including sportsbook, betting exchange, +casino, games, other number bets), revenue represents gains and losses, being the amounts staked and fees received, less total payouts +recognised on the settlement of the sporting event or casino gaming machine roulette or slots spin. Open betting positions (“ante-post”) +are carried at fair value and gains and losses arising on these positions are recognised in revenue. See Note 26 for details of ante-post +positions at the year end. +The following forms of revenue, which are not significant in the context of Group revenue, are accounted for within the scope of IFRS 15 +Revenue. Revenue from the online poker business reflects the net income (rake) earned from poker hands completed by the year end. +In the case of the greyhound stadia, revenue represents income arising from the operation of the greyhound stadia in the year, including +broadcasting rights, admission fees and sales of refreshments, net of VAT. Given the nature of these revenue streams they are not +considered to be subject to judgement over the performance obligations, amount received or timing of recognition. +Finance expense and income +Finance expense and income arising on interest-bearing financial instruments carried at amortised cost are recognised in the +consolidated income statement using the effective interest rate method. Finance expense includes the amortisation of fees that are an +integral part of the effective finance cost of a financial instrument, including issue costs, and the amortisation of any other differences +between the amount initially recognised and the redemption price. All finance expenses are recognised over the availability period. +Share-based payment transactions +Certain employees (including Directors) of the Group receive remuneration in the form of equity settled share-based payment +transactions, whereby employees render services in exchange for shares or rights over shares (equity settled transactions). +The cost of equity settled transactions is measured by reference to the fair value at the date on which they are granted, further details +of which are given in Note 31. In valuing equity settled transactions, no account is taken of any performance conditions, other than +conditions linked to the price of the shares of Entain plc (market conditions). +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 171 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_174.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..04415f5c0201537adfb35abb8596371cd6ed869e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,56 @@ +4 Summary of significant accounting policies (continued) +4.3 Other accounting policies (continued) +Share-based payment transactions (continued) +The cost of equity settled transactions is recognised in the consolidated income statement, with a corresponding credit in equity, over +the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to +the award (vesting date). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date +reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Group at +that date, based on the best available estimate of the number of equity instruments, will ultimately vest. +No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, +which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance +conditions are satisfied. +The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share as shown in +Note 12. +4.4 Future accounting developments +The standards and interpretations that are issued, but not yet effective, excluding those relating to annual improvements, up to the date +of issuance of the Group’s financial statements, are disclosed below. The Group intends to adopt these standards, if applicable, when they +become effective. None of these are expected to have a significant effect on the consolidated financial statements of the Group as set +out below: +IFRS 16 Leases Lease liability in a sale and leaseback transaction 1 January 2024 +IAS 1 Presentation of Financial Statements Classification of liabilities as current or non-current +Non-current liabilities regarding long-term debt with covenants +1 January 2024 +IFRS 10 Consolidated Financial Statements Sale or contribution of assets between an investor and its associate or +joint venture +Date deferred +IAS 28 Investments in Associates and Joint +Ventures +Sale or contribution of assets between an investor and its associate or +joint venture +Date deferred +IFRS 7 Financial Instrument Disclosures Supplier Financial Arrangements 1 January 2024 +IAS 7 Statement of Cash Flows Supplier Financial Arrangements 1 January 2024 +5 Segment information +The Group’s operating segments are based on the reports reviewed by the Executive Management Team (which is collectively considered +to be the Chief Operating Decision Maker (“CODM”)) to make strategic decisions, and allocate resources. +IFRS 8 requires segment information to be presented on the same basis as that used by the CODM for assessing performance and +allocating resources. The Group’s operating segments are split into the five reportable segments as detailed below: +– Online: comprises betting and gaming activities from online and mobile operations. Brands include bwin, Coral, Crystalbet, Eurobet, +Ladbrokes, Sportingbet, SuperSport, Sports Interaction, STS, Tab NZ and BetCity, CasinoClub, Foxy Bingo, Gala, Gioco Digitale, +partypoker and PartyCasino, Optibet, and Ninja; +– Retail: comprises betting and retail activities in the shop estates in Great Britain, Northern Ireland, Jersey, Republic of Ireland, +Belgium, Italy, Croatia, New Zealand and Poland; +– New opportunities: Unikrn and innovation spend; +– Corporate: includes costs associated with Group functions including Group executive, legal, Group finance, US joint venture, tax and +treasury; and +– Other segments: includes activities primarily related to Stadia. +The Executive Management Team of the Group has chosen to assess the performance of operating segments based on a measure of +NGR, EBITDA, and operating profit with finance costs and taxation considered for the Group as a whole. See page 69 of this annual +report for further considerations of the use of Non-GAAP measures. Transfer prices between operating segments are on an arm’s-length +basis in a manner similar to transactions with third parties. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023172 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_175.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf4fbe5c3a33f75811dcb62887619b207588af63 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,57 @@ +5 Segment information (continued) +The segment results for the year ended 31 December were as follows: +2023 +Online +£m +Retail +£m +All other +segments +£m +New +opportunities +£m +Corporate +£m +Elimination +of internal +revenue +£m +Total +Group +£m +NGR1 3,426.5 1,386.7 26.7 – – (6.8) 4,833.1 +VAT/GST (59.9) (3.6) – – – – (63.5) +Revenue 3,366.6 1,383.1 26.7 – – (6.8) 4,769.6 +Gross profit 1,980.1 900.2 26.7 – – – 2,907.0 +Contribution 2 1,369.8 890.3 26.3 (7.0) – – 2,279.4 +Operating costs excluding +marketing costs (512.4) (606.1) (21.0) (22.3) (109.7) – (1,271.5) +Underlying EBITDA before +separately disclosed items 857.4 284.2 5.3 (29.3) (109.7) – 1,007.9 +Share-based payments (7.3) (2.4) – (0.7) (11.3) – (21.7) +Depreciation and amortisation (160.2) (132.1) (2.7) (5.7) (0.8) – (301.5) +Share of joint ventures +and associates (1.4) – 2.0 (1.5) (42.0) – (42.9) +Operating profit/(loss) before +separately disclosed items 688.5 149.7 4.6 (37.2) (163.8) – 641.8 +Separately disclosed items (Note 6) (481.1) (22.8) – (44.3) (738.3) – (1,286.5) +Group operating profit/(loss) 207.4 126.9 4.6 (81.5) (902.1) – (644.7) +Net finance expense (197.9) +Loss before tax (842.6) +Income tax (36.1) +Loss for the year from +continuing operations (878.7) +Loss for the year from discontinued +operations after tax (Note 21) (57.8) +Loss for the year after +discontinued operations (936.5) +1. Included within NGR are amounts of £68.1m (2022: £65.6m) in relation to online poker services and £26.7m (2022: £25.1m) arising from the operation of greyhound stadia +recognised under IFRS 15 Revenue. +2. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 173 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_176.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa25a1dcda92cb4ca4e0e464fc9c6d5ef67fb87e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,75 @@ +5 Segment information (continued) +2022 +Online +£m +Retail +£m +All other +segments +£m +New +opportunities +£m +Corporate +£m +Elimination +of internal +revenue +£m +Total +Group +£m +NGR1 3,050.5 1,277.8 25.1 – – (4.5) 4,348.9 +VAT/GST (52.0) – – – – – (52.0) +Revenue 2,998.5 1,277.8 25.1 – – (4.5) 4,296.9 +Gross profit 1,829.6 860.0 25.1 – – – 2,714.7 +Contribution 2 1,254.2 852.1 25.0 (2.4) – – 2,128.9 +Operating costs excluding +marketing costs (426.0) (571.9) (20.1) (26.7) (91.0) – (1,135.7) +Underlying EBITDA before +separately disclosed items 828.2 280.2 4.9 (29.1) (91.0) – 993.2 +Share-based payments (7.8) (2.3) – (0.3) (8.8) – (19.2) +Depreciation and amortisation (118.3) (112.4) (2.7) (4.5) (0.2) – (238.1) +Share of joint ventures +and associates (0.2) – 0.4 (0.4) (193.9) – (194.1) +Operating profit/(loss) before +separately disclosed items 701.9 165.5 2.6 (34.3) (293.9) – 541.8 +Separately disclosed items (Note 6) (114.0) (57.4) (0.7) – (41.1) – (213.2) +Group operating profit/(loss) 587.9 108.1 1.9 (34.3) (335.0) – 328.6 +Net finance income (225.7) +Profit before tax 102.9 +Income tax (70.0) +Profit for the year from +continuing operations 32.9 +Loss for the year from discontinued +operations after tax (Note 21) (13.4) +Profit for the year after +discontinued operations 19.5 +Geographical information +Revenue by destination and non-current assets on a geographical basis for the Group, are as follows: +2023 2022 +Revenue +£m +Non-current +assets3 +£m +Revenue +£m +Non-current +assets3 +£m +United Kingdom 1,953.8 3,076.8 2,032.7 3,022.3 +Australia and New Zealand 515.1 1,475.4 463.0 528.8 +Italy 517.4 512.2 472.6 523.3 +Rest of Europe1 1,443.4 3,930.2 968.7 2,922.4 +Rest of the world 2 339.9 293.8 359.9 259.6 +Total 4,769.6 9,288.4 4,296.9 7,256.4 +1. Rest of Europe is predominantly driven by markets in Croatia, Belgium, The Netherlands, Georgia, Germany, and Spain. +2. Rest of the world is predominantly driven by the markets in Brazil and Canada. +3. Non-current assets excluding other financial assets, deferred tax assets and retirement benefit assets. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023174 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_177.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..372606fc73375d68f5c557eb184b6bc663f3f362 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,49 @@ +6 Separately disclosed items +£m +2023 +Tax impact +£m £m +2022 +Tax impact +£m +Legal settlement 1 585.0 – – – +Amortisation of acquired intangibles 2 254.6 (41.6) 116.9 (16.5) +Impairment loss 3 289.0 – 7.0 – +Restructuring costs 4 49.7 (9.6) 11.8 (1.4) +Corporate transaction costs 5 17.8 – 23.9 (0.6) +Legal and onerous contract provisions 6 17.6 (3.0) 8.1 (0.8) +Movement in fair value of contingent consideration 7 71.8 (15.5) (1.0) – +Loss on disposal of property, plant and equipment 8 1.0 – 1.0 – +Financing 9 1.0 – 5.7 – +Furlough10 – – 45.5 (8.6) +Separately disclosed items for the year from continuing operations 1,287.5 (69.7) 218.9 (27.9) +Separately disclosed items for the year from discontinued operations (Note 21) 57.8 – 13.4 – +Total before tax 1,345.3 (69.7) 232.3 (27.9) +Separately disclosed items for the year after tax 1,275.6 204.4 +1. On 5 December 2023, Entain plc entered into a Deferred Prosecution Agreement (“DPA”) with the Crown Prosecution Service (“CPS”) in relation to historical conduct of the +Group, thereby resolving the HM Revenue & Customs (“HMRC”) investigation into the Group. As a result of the agreement reached, the Group has recognised a £585.0m +discounted liability during the current year in relation to amounts it has agreed to be pay in relation to the disgorgement of profits, charitable donations and contributions to CPS +costs. Further details are provided in Note 20. +2. Amortisation charges in relation to acquired intangible assets arising from the various acquisitions made by the Group in recent years, including Ladbrokes Coral, Crystalbet, +Neds, Enlabs, Avid, SuperSport, STS, NZ Tab and 365Scores. +3. Relates to impairments recorded against the Group’s Australian business of £190.0m, the assets associated with the Group’s Unikrn and Africa operations which have closed +as B2C operations during the year, of £78.1m, an £11.0m impairment of the Group’s ROI retail portfolio, an impairment against the Group’s Polish operation (excluding STS) of +£5.1m and a number of smaller impairments against ROU assets that the Group no longer intends to use following their closure, including UK Retail shops. Further details are +provided in Note 14. +4. Primarily relates to costs associated with the Group’s restructuring programme Project Romer. +5. Transaction costs associated with the M&A activity including the acquisition of 365Scores, NZ Tab, STS and Angstrom (see Note 32). +6. Relates primarily to costs associated with the Group’s legal expenses in cooperating with the HMRC investigation. +7. Reflects the movement in the fair value of contingent consideration arrangements on recent acquisitions as well as the associated discount unwind. Further details of contingent +consideration liabilities are provided in Note 26. +8. Relates to the loss on disposal of certain assets within the Group’s retail estates. +9. Fees incurred in respect of bridging loans and other financing activities. +10. Relates to the repayment of monies received under the Government furlough scheme in the prior year. +The items above reflect incomes and expenditures which are either exceptional in nature or size or are associated with the amortisation +of acquired intangibles. The Directors believe that each of these items warrants separate disclosure as they do not form part of the day- +to-day underlying trade of the Group. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 175 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_178.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_178.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d494fa6172211b20dba7e5af2d36d8b120181ce --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_178.txt @@ -0,0 +1,51 @@ +7 Administrative costs +Profit before tax, net finance expense and separately disclosed items has been arrived at after charging: +2023 +£m +2022 +£m +Betting and gaming taxes and duties 1,104.3 909.8 +Revenue share arrangements (including content providers) 537.8 555.6 +Software royalties 200.1 113.3 +Other cost of sales 20.4 3.5 +Cost of sales 1,862.6 1,582.2 +Salaries and payroll-related expenses (Note 9) 725.0 652.0 +Property expenses 92.7 80.0 +Content and levy expenses 163.6 176.6 +Marketing expenses 627.6 585.8 +Depreciation and amortisation – owned assets 239.9 173.1 +Depreciation and amortisation – leased assets 61.6 65.0 +Other operating expenses 311.9 246.3 +Administrative costs 2,222.3 1,978.8 +Separately disclosed items before tax and finance expense (Note 6) 1,286.5 213.2 +Total 5,371.4 3,774.2 +Fees payable to KPMG were as follows: +2023 +£m +2022 +£m +Audit and audit-related services: +Audit of the parent Company and Group financial statements 0.6 0.6 +Audit of the Company’s subsidiaries 3.0 2.6 +Audit-related assurance services 0.7 0.5 +Total fees 4.3 3.7 +8 Finance expense and income +2023 +£m +2022 +£m +Interest on term loans, bonds and bank facilities (229.2) (76.2) +Interest on lease liabilities 1 (12.6) (12.8) +Other financing (Note 6) (1.0) (5.7) +Total finance expense (242.8) (94.7) +Interest receivable 12.4 4.3 +Losses arising on financial derivatives (90.6) (23.1) +Gains/(losses) arising on foreign exchange on debt instruments 123.1 (112.2) +Net finance expense (197.9) (225.7) +1. Interest on lease liabilities of £12.6m (2022: £12.8m) is net of £0.2m of sub-let interest receivable (2022: £0.2m). +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023176 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_179.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_179.txt new file mode 100644 index 0000000000000000000000000000000000000000..934d0eb1c74fc1c2d9a343b5ba55094f47c08c23 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_179.txt @@ -0,0 +1,52 @@ +9 Employee staff costs +The average monthly number of employees (including Executive Directors) was: +2023 +Number +2022 +Number +Online 14,328 11,868 +Retail 14,190 14,184 +Other 467 390 +Corporate 1,350 1,012 +30,335 27,454 +The number of people employed by the Group at 31 December 2023 was 31,180 (2022: 28,940). +2023 +£m +2022 +£m +Wages and salaries 623.9 560.6 +Redundancy costs 1 28.8 6.2 +Social security costs 58.0 49.9 +Other pension costs 21.4 18.6 +Share-based payments (Note 31) 21.7 19.2 +753.8 654.5 +1. Included within redundancy costs are £28.8m (2022: £2.5m) which are included within separately disclosed items. +In addition to salary, employees may qualify for various benefit schemes operated by the Group. Eligibility for benefits is normally +determined according to an employee’s length of service and level of responsibility. +Benefits may include insured benefits that can cover private healthcare for the employee and their immediate family, long-term disability, +personal accident and death in service cover. Company cars, including fuel benefits, are provided predominantly to meet job requirements +but also to certain executives. +10 Income tax +Analysis of expense for the year: +2023 +£m +2022 +£m +Current income tax: +– current tax charge 114.3 91.4 +– adjustments in respect of previous years (19.6) (7.9) +Deferred tax: +– relating to origination and reversal of temporary differences (58.8) (17.5) +– adjustments in respect of previous years 0.2 4.0 +Income tax expense reported in the income statement 36.1 70.0 +Income tax expense is attributable to: +Profit from continuing operations 36.1 70.0 +Loss from discontinued operations – – +36.1 70.0 +Deferred tax credited directly to other comprehensive income (1.3) (8.6) +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 177 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_18.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdd6e47a6c38924a2aca75b08ab5687234db54 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,113 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_180.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_180.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1bb4c4b92c2297508d6e13ec941487e4c3fc347 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_180.txt @@ -0,0 +1,73 @@ +10 Income tax (continued) +A reconciliation of income tax expense applicable to loss (2022: profit) before tax at the UK statutory income tax rate to the income tax +expense for the years ended 31 December 2023 and 31 December 2022 is as follows: +2023 2022 +Underlying +£m +Separately +disclosed +(Note 6) +£m +Total +£m +Underlying +£m +Separately +disclosed +(Note 6) +£m +Total +£m +Profit/(loss) from continuing operations before income tax 444.9 (1,287.5) (842.6) 321.8 (218.9) 102.9 +Loss from discontinued operations before tax – (57.8) (57.8) – (13.4) (13.4) +Profit/(loss) before tax 444.9 (1,345.3) (900.4) 321.8 (232.3) 89.5 +Corporation tax expense thereon at 23.52% (2022: 19.00%) 104.6 (316.4) (211.8) 61.1 (44.1) 17.0 +Adjusted for the effects of: +– Higher/(lower) effective tax rates on overseas earnings (7.4) 19.9 12.5 4.6 6.8 11.4 +– Non-deductible expenses 12.7 8.5 21.2 25.9 9.3 35.2 +– Non-deductible legal settlement – 137.6 137.6 – – – +– Fair value adjustment to contingent consideration – 10.5 10.5 – (0.6) (0.6) +– Goodwill impairment – 68.6 68.6 – – – +– Impact of additional 50% deduction for marketing +expenditure in Gibraltar – – – (20.3) – (20.3) +– Increase in unrecognised tax losses relating to US joint +venture 8.9 – 8.9 40.7 – 40.7 +– Increase/(decrease) in other unrecognised tax losses 4.2 0.9 5.1 (12.1) 1.0 (11.1) +– Increase/(decrease) in unrecognised deferred interest 5.8 – 5.8 0.4 – 0.4 +– Difference in current and deferred tax rates (3.0) 0.1 (2.9) 0.7 0.5 1.2 +Adjustments in respect of prior years: +– Deferred tax (0.4) 0.6 0.2 4.8 (0.8) 4.0 +– Current tax (19.6) – (19.6) (7.9) – (7.9) +Income tax expense 105.8 (69.7) 36.1 97.9 (27.9) 70.0 +Deferred tax +Deferred tax at 31 December relates to the following: +Deferred tax +liabilities +Deferred tax +assets +2023 +£m +2022 +£m +2023 +£m +2022 +£m +Property, plant and equipment – – (31.0) (45.1) +Intangible assets 731.8 410.6 (22.3) (25.1) +Retirement benefit assets 21.6 22.3 – – +Losses – – (59.7) (56.9) +Contingent and deferred revenue share payments 1 – – (321.5) – +Other temporary difference 2 71.7 62.5 (58.7) (30.2) +Deferred tax liabilities/(assets) 3 825.1 495.4 (493.2) (157.3) +1. This deferred tax asset reflects tax deductions that will arise on future payment of the deferred and contingent consideration amounts by Tab NZ (see Note 32). +2. The deferred tax liability includes a provision for tax on unremitted earnings from overseas subsidiaries of £71.4m (2022: £61.8m) and other temporary differences of £0.3m +(2022: £0.7m). The deferred tax asset comprises deferred interest relief of £52.2m (2022: £22.9m) and other temporary differences of £6.5m (2022: 7.3m). +3. Deferred tax assets and liabilities have been offset only where there is a legally enforceable right to do so, and the assets and liabilities relate to the same taxable entity or tax +grouping. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023178 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_181.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_181.txt new file mode 100644 index 0000000000000000000000000000000000000000..53ffb9204b8a221073a23f9d302dd7aa808af9bb --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_181.txt @@ -0,0 +1,81 @@ +10 Income tax (continued) +Movements in deferred tax during the year ended 31 December 2023 were recognised as follows: +Net deferred tax liabilities/(assets): + +Property, +plant and +equipment +£m +Intangible +assets +£m +Retirement +benefit assets +£m +Losses +£m +Contingent +and deferred +revenue share +payments 1 +£m +Other +temporary +differences +£m +Total +£m +At 31 December 2021 (62.3) 305.7 33.3 (27.0) – 16.9 266.6 +Income statement 17.7 (14.5) 0.1 (28.7) – 11.9 (13.5) +Other comprehensive income – – (8.6) – – – (8.6) +Arising on business combinations – 85.4 – – – 0.5 85.9 +Settlement of tax on pension asset – – (2.5) – – – (2.5) +Exchange adjustment (0.5) 8.9 – (1.2) – 3.0 10.2 +At 31 December 2022 (45.1) 385.5 22.3 (56.9) – 32.3 338.1 +Income statement 13.9 (46.7) 0.6 (3.3) (5.1) (18.0) (58.6) +Other comprehensive income – – (1.3) – – – (1.3) +Arising on business combinations +(Note 32) – 368.9 – – (309.8) – 59.1 +Exchange adjustment 0.2 1.8 – 0.5 (6.6) (1.3) (5.4) +At 31 December 2023 (31.0) 709.5 21.6 (59.7) (321.5) 13.0 331.9 +Amounts presented on the consolidated balance sheet: +2023 +£m +2022 +£m +Deferred tax liabilities 825.1 495.4 +Deferred tax assets (493.2) (157.3) +Net deferred tax liability 331.9 338.1 +The average standard rate of UK corporation tax during the period was 23.52% (2022: 19.0%). +The deferred tax assets and liabilities are measured at the tax rates of the respective territories which are expected to apply in the year +in which the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted +at the balance sheet date. Deferred tax assets have been recognised based on the ability of future offset against deferred tax liabilities +or against future taxable profits, to the extent they relate to the same taxable entity. The assessment of future taxable profits is based on +forecasts and assumptions consistent with those used for impairment testing as set out in Note 14. +As at 31 December 2023, the Group had £1,760.9m (2022: £1,764.6m) of gross unrecognised deferred tax assets. This unrecognised +deferred tax asset consists of £213.3m of capital losses (2022: £213.3m), £1,479.5m of income losses (2022: £1,538.3m), £66.2m of +deferred interest relief (2022: £13.0m) and £1.9m of other deferred tax assets (2022: £nil). These assets arise in entities that do not have +deferred tax liabilities they can be set against, and where there are either no forecast future taxable profits, or the potential future profits +are not sufficiently certain to support the deferred tax asset recognition. +There are no significant unrecognised taxable temporary differences associated with investments in subsidiaries. +With effect from 1 April 2023 the standard rate of UK Corporation Tax was increased from 19% to 25%. The 25% rate has therefore been +used in measuring the UK deferred tax items at the date of this Report. Deferred tax on retirement benefit assets is provided at 35.0%, +which is the rate applicable to refunds at the date of this Report. +In Gibraltar, a temporary enhanced tax deduction for qualifying business marketing and promotion costs was introduced in July 2021, +which applied for the years ended 31 December 2021 and 31 December 2022. The total impact of this measure for the Group has been +a cumulative tax credit of £48.4m. In a subsequent Gibraltar Budget on 28 June 2022 the Chief Minister unexpectedly announced the +retrospective removal of this enhanced deduction, except in very limited circumstances. This change had not been substantively enacted +by the balance sheet date and so is not reflected in the tax charge for the year. The impact of this change, once enacted, will depend on +how it is implemented and to which periods the change applies, but could result in a tax charge of up to £48.4m. +The Group’s future tax charge, and effective tax rate, will be affected by a number of factors including the geographic mix of profits, +changes to statutory corporate tax rates and the impact of continuing global tax reforms. +During 2023 the UK enacted legislation to implement the OECD’s global minimum tax model rules for multinational groups (“Pillar Two”). +This will apply from 1 January 2024 and is not expected not significantly increase the Group’s future Effective Tax Rate. The Group has +applied the temporary exception required under IAS 12 Income Taxes in relation to the accounting for deferred taxes arising from the +implementation of the Pillar Two rules. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 179 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_182.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_182.txt new file mode 100644 index 0000000000000000000000000000000000000000..672a5016b5b6bdd6ade74ee88bf28b1c707e919b --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_182.txt @@ -0,0 +1,72 @@ +11 Dividends +Pence per share +2023 +pence +2022 +pence +2023 +Shares in +issue +number +2022 +Shares in +issue +number +2022 interim dividend paid – 8.5 – 588.8 +2022 second interim dividend paid 8.5 n/a 588.8 n/a +2023 interim dividend paid 8.9 n/a 638.8 n/a +A second interim dividend of 8.9p (2022: 8.5p) per share, amounting to £56.9m (2022: £50.0m) in respect of the year ended 31 December +2023, was proposed by the Directors on 7 March 2024. The estimated total amount payable in respect of the final dividend is based on +the expected number of shares in issue on 7 March 2024. There are no income tax implications for the Group and Company arising from +the proposed second interim dividend. The 2022 second interim dividend of 8.5p per share (£50.0m) was paid on 26 April 2023. The 2023 +interim dividend of 8.9p per share (£56.8m) was paid on 18 September 2023. +In the year, the Group paid a dividend totalling £7.4m to non-controlling interests (2022: £nil). +12 Earnings per share +Basic earnings per share has been calculated by dividing the loss for the year attributable to shareholders of the Company of £928.6m +(2022: £24.2m profit) by the weighted average number of shares in issue during the year of 617.5m (2022: 588.2m). +The dilutive effects of share options and contingently issuable shares are not considered when calculating the diluted loss per share. +At 31 December 2023, there were 638.8m €0.01 ordinary shares in issue. +The calculation of adjusted earnings per share which removes separately disclosed items and foreign exchange gains and losses arising +on financial instruments has also been disclosed as it provides a better understanding of the underlying performance of the Group. +Separately disclosed items are defined in Note 4 and disclosed in Note 6. +Total earnings per share +Weighted average number of shares (millions) 2023 2022 +Shares for basic earnings per share 616.0 588.2 +Potentially dilutive share options and contingently issuable shares 1.5 4.5 +Shares for diluted earnings per share 617.5 592.7 +Total profit +2023 +£m +2022 +£m +(Loss)/profit attributable to shareholders (928.6) 24.2 +– from continuing operations (870.8) 37.6 +– from discontinued operations (57.8) (13.4) +Losses arising from financial instruments 90.6 23.1 +(Gains)/losses arising from foreign exchange debt instruments (123.1) 112.2 +Associated tax charge on (losses)/gains arising from financial instruments and foreign exchange debt instruments 1.1 (2.4) +Separately disclosed items net of tax (Note 6) 1,232.7 201.4 +Adjusted profit attributable to shareholders 272.7 358.5 +– from continuing operations 272.7 358.5 +– from discontinued operations – – +Earnings per share (pence) +Standard earnings +per share +Adjusted earnings +per share +2023 2022 2023 2022 +Basic earnings per share +– from continuing operations (141.4) 6.4 44.3 60.9 +– from discontinued operations (9.3) (2.3) – – +From profit for the period (150.7) 4.1 44.3 60.9 +Diluted earnings per share +– from continuing operations (141.4) 6.3 44.2 60.5 +– from discontinued operations (9.3) (2.2) – – +From profit for the period (150.7) 4.1 44.2 60.5 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023180 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_183.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_183.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd67d9e268f9a15f6512ec18e57a59dcac900a43 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_183.txt @@ -0,0 +1,70 @@ +12 Earnings per share (continued) +The earnings per share presented above is inclusive of the performance from the US joint venture BetMGM. Adjusting for the removal of +the BetMGM performance would result in a basic adjusted earnings per share of 51.1p (2022: 93.9p) and a diluted adjusted earnings per +share of 51.0p (2022: 93.2p) from continuing operations. +13 Goodwill and intangible assets +Goodwill +£m +Licences +£m +Software +£m +Customer +relationships +£m +Trade-marks & +brand names +£m +Total +£m +Cost +At 1 January 2022 3,492.5 49.7 622.0 1,005.0 2,017.5 7,186.7 +Exchange adjustment 153.6 7.1 28.3 34.1 44.9 268.0 +Additions – – 129.9 – – 129.9 +Additions from business combinations (Note 32) 1 624.0 149.1 7.4 201.9 207.0 1,189.4 +Disposals – (0.5) (13.9) – – (14.4) +Reclassification – – (1.0) – – (1.0) +At 31 December 2022 (restated) 1 4,270.1 205.4 772.7 1,241.0 2,269.4 8,758.6 +Exchange adjustment (68.2) 11.8 (12.7) (12.3) (17.4) (98.8) +Additions – – 191.5 – – 191.5 +Additions from business combinations (Note 32) 1,067.5 747.8 49.8 275.5 439.5 2,580.1 +Disposals – – (2.9) – – (2.9) +At 31 December 2023 5,269.4 965.0 998.4 1,504.2 2,691.5 11,428.5 +Accumulated amortisation and impairment +At 1 January 2022 275.5 13.3 405.8 942.0 180.6 1,817.2 +Exchange adjustment 13.7 0.3 19.8 23.6 11.7 69.1 +Amortisation charge – 12.7 109.1 52.4 54.9 229.1 +Impairment charge – 0.5 – – – 0.5 +Disposals – (0.5) (13.9) – – (14.4) +At 31 December 2022 289.2 26.3 520.8 1,018.0 247.2 2,101.5 +Exchange adjustment (13.3) (0.1) (9.1) (13.8) (7.3) (43.6) +Amortisation charge – 45.3 138.0 141.4 90.4 415.1 +Impairment charge 277.5 – 2.2 0.5 2.1 282.3 +Disposals – – (2.9) – – (2.9) +At 31 December 2023 553.4 71.5 649.0 1,146.1 332.4 2,752.4 +Net book value +At 31 December 2022 3,980.9 179.1 251.9 223.0 2,022.2 6,657.1 +At 31 December 2023 4,716.0 893.5 349.4 358.1 2,359.1 8,676.1 +1. Restatement of prior year intangible valuations has been made in relation to the prior year SuperSport acquisition during the subsequent measurement period. See note 32 for +further details. +At 31 December 2023 the Group had not entered into contractual commitments for the acquisition of any intangible assets (2022: £nil). +Included within trade-marks and brand names are £1,398.4m (2022: £1,398.4m) of intangible assets considered to have indefinite lives. +These assets relate to the UK Ladbrokes and Coral brands which are considered to have indefinite durability that can be demonstrated, +and their value can be readily measured. The brands operate in longstanding and profitable market sectors. The Group has a strong +position in the market and there are barriers to entry due to the requirement to demonstrate that the applicant is a fit and proper person +with the ‘know-how’ required to run such operations. +Goodwill reflects the value by which consideration exceeds the fair value of net assets acquired as part of a business combination +including the deferred tax liability arising on acquisitions. +Licences comprise the cost of acquired betting shop and online licences, as well as licences acquired as part of the NZ Tab acquisition +(see Note 32). +Software relates to the cost of acquired software, through purchase or business combination, and the capitalisation of internally +developed software. Additions of £191.5m (2022: £128.8m) include £92.6m of internally capitalised costs (2022: £58.0m). +Customer relationships, trade-marks and brand names relate to the fair value of customer lists, trade-marks and brand names acquired +as part of business combinations, primarily relating to the bwin, Ladbrokes Coral Group, Enlabs, Sport Interaction, SuperSport, BetCity, +365Scores, and Tab NZ businesses. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 181 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_184.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_184.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8a96eaa7523b2362e06409d315575af169f755b --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_184.txt @@ -0,0 +1,75 @@ +14 Impairment testing of goodwill and indefinite life intangible assets +An impairment loss is recognised for any amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable +amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are +grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). +Within UK, European Retail, CEE, and Tab NZ Retail, the cash-generating units (“CGUs”) are generally an individual Licensed Betting +Office (“LBO”) and, therefore, impairment is first assessed at this level for licences (intangibles) and property, plant and equipment, with +any impairment arising booked to licences and property, plant and equipment on a pro-rata basis. Since goodwill and brand names have +not been historically allocated to individual LBOs, a secondary assessment is then made to compare the carrying value of the segment +against the recoverable amount with any additional impairment then taken against goodwill first. +For Online the CGU is the relevant geographical location or business unit, for example Australia, European digital (defined as websites +hosted by proprietary platforms based in European constituent countries), Digital (defined as websites hosted by Entain proprietary +platforms) etc. and any impairments are made firstly to goodwill, next to any capitalised intangible asset and then finally to property, +plant and equipment. The expected cash flows generated by the assets are discounted using appropriate discount rates that reflect the +time value of money and risks associated with the group of assets. +For both tangible and intangible assets, the future cash flows are based on the forecasts and budgets of the CGU or business discounted +to reflect time value of money. The key assumptions within the UK and European Retail budgets are OTC wagers (customer visits and +spend per visit), the average number of machines per shop, gross win per shop per week, salary increases, the potential impact of the +shop closures and the fixed costs of the LBOs. The key assumptions within the budgets for Online are the number of active customers, net +revenue per head, win percentage, marketing spend, revenue shares and operating costs. All forecasts take into account the impact of the +Group’s commitment to be Net Zero by 2035 as well as the impact of climate change. +The value in use calculations use cash flows based on detailed, Board approved, financial budgets prepared by management covering a +three-year period. These forecasts have been extrapolated over years 4 to 8 representing a declining growth curve from year 3 until the +long-term forecast growth rate is reached. The growth rates used from years 4 to 8 range from 0% to 10%. From year 9 onwards long-term +growth rates used are between 0% and 2% (2022: between 0% and 2%) and are based on the long-term GDP growth rate of the countries +in which the relevant CGUs operate or the relevant outlook for the business. An eight-year horizon is considered appropriate based on the +Group’s history of underlying profit as well as ensuring there is an appropriate decline to long-term growth rates from those growth rates +currently observed in our key markets. A 0% growth rate has been used for the UK Retail operating segment. All key assumptions used in +the value in use calculations reflect the Group’s past experience unless a relevant external source of information is available. Whilst the +same approach is adopted for Tab NZ impairment reviews, the value-in-use is assessed over the 25-year life of the licence rather than +into perpetuity. +The discount rate calculation is based on the specific circumstances with reference to the WACC and risk factors expected in the industry +in which the Group operates. +The pre-tax discount rates used, which have remained consistent year-on-year, and the associated carrying value of goodwill by CGU is +as follows: +Goodwill +2023 + +% +2022 + +% +2023 + +£m +2022 +restated 1 +£m +Digital 11.1 12.6–12.9 2,263.4 2,230.7 +UK Retail 12.6 12.6 76.4 76.4 +Australia 13.5 13.5 145.0 347.5 +European Retail 9.5–13.3 9.5–13.3 147.1 161.5 +European Digital 9.5–13.3 9.5–13.3 343.3 350.4 +Enlabs 11.8 11.8 205.3 209.6 +BetCity 12.7 n/a 200.1 n/a +SuperSport 11.5 11.8 527.8 538.4 +STS 11.7 n/a 389.1 n/a +365Scores 12.3 n/a 86.8 n/a +Tab NZ 11.1 n/a 255.5 n/a +All other segments 11.1–12.6 12.4 76.2 66.4 +4,716.0 3,980.9 +1. Restatement of prior year intangible valuations has been made in relation to the prior year SuperSport acquisition during the subsequent measurement period. See note 32 for +further details. +It is not practical or material to disclose the carrying value of individual licences by LBO. +Impairment recognised during the year +Impairments of intangible assets and property, plant and equipment are recognised as separately disclosed items within operating expenses. +Australia impairment +During the current year, the Group recorded a non-cash impairment charge of £190.0m against the Online division. The charge has arisen in the +Group’s Australian CGU and is a result of the impact of ongoing increases in the rate of Point of Consumption tax across certain states and a +forecast decline in Australian revenues in 2024 as a result of a reduced market outlook. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023182 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_185.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_185.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1679ff854f3d93759bdc6f794948a3a9aff49b2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_185.txt @@ -0,0 +1,70 @@ +14 Impairment testing of goodwill and indefinite life intangible assets (continued) +Whilst our Australian business continues to be profitable and strategically important, market conditions and tax headwinds have reduced +the value in use of the business resulting in the impairment charge. Post the annualisation of the tax increases and stabilisation of local +market conditions, we expect our Australian business to return to growth. +Impairment testing across the business +Licences/ +Franchisees PPE & Software +Customer +relationships Goodwill Brand name +UK Digital +UK Retail +ROI +Eurobet +Digital +Eurobet +Retail +Belgium +Digital +Belgium +Retail +Australia +Enlabs +BetCity +SuperSport +Digital +SuperSport +Retail +STS +365Scores +Tab NZ +Digital +Tab NZ +Retail +Digital Impairment review +UK Retail site by site Impairment review UK Retail Impairment review +ROI Impairment review +Australia Impairment review +Enlabs Impairment review +Belgium Retail Impairment review +Belgium Digital Impairment review +Eurobet Retail Impairment review +Eurobet Digital Impairment review +Combined +Digital/UK Retail +Impairment +review +Eurobet +Impairment +review +Belgium +Impairment +review +Tab NZ +Impairment +review +SuperSport +Impairment review +BetCity Impairment review +SuperSport Digital Impairment review +SuperSport Retail Impairment review +STS Impairment review +365Scores Impairment review +Tab NZ Digital Impairment review +Tab NZ Retail Impairment review +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 183 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_186.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_186.txt new file mode 100644 index 0000000000000000000000000000000000000000..df4f9d5e3e18ce80f170db53de4e447efd5c46c2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_186.txt @@ -0,0 +1,70 @@ +14 Impairment testing of goodwill and indefinite life intangible assets (continued) +Unikrn impairment +During the year, the Group took the decision to close its B2C eSports business operating under the Unikrn brand, in favour of developing a +leading eSports proposition on existing labels. As a result of the decision to turn off its B2C operations, the Group has recorded an £43.2m +impairment of goodwill and £1.1m impairment of trade-marks and brands associated with the Unikrn operation during the current year within +the New Opportunities segment. +Impala impairment +The Group has also taken the decision during 2023 to close its B2C operations in Zambia and Kenya, operations that were run out of the +previously acquired African subsidiary. As a result of the decision to close these operations and focus resources to drive growth in other +markets, the Group has recorded an impairment against the value of assets carried against this business. The resulting impairment has been +booked against goodwill of £29.9m, and against software of £4.0m within the Online segment. +In addition, an impairment charge of £11.0m has been recognised during the current year against our Retail estate in ROI as a result of a +reduced outlook for this market, and £5.0m against Totolotek following its closure post the STS acquisition. +Sensitivity analysis +With the exception of Australia, no reasonable change in assumptions would cause an additional impairment, including A 5% decrease in +all cash flows or a 0.5pp increase in discount rates. +For Australia, a 10% increase in revenue would reduce the impairment by £110.0m, whereas a 5% decrease in revenue would increase +the impairment by £48.0m. Each 0.5pp movement in the discount rate impacting the charge by £20.0m. +15 Property, plant and equipment +Land and +buildings +£m +Plant and +equipment +£m +Fixtures +and fittings +£m +Leased +assets +£m +Total +£m +Cost +At 1 January 2022 26.8 102.5 188.3 572.3 889.9 +Exchange adjustment 0.7 3.2 7.0 5.2 16.1 +Additions 24.9 50.6 11.1 61.8 148.4 +Additions from business combinations 0.2 3.2 4.4 9.5 17.3 +Disposals (10.4) (20.2) (16.1) (3.5) (50.2) +Reclassification (1.6) 1.9 42.9 (42.2) 1.0 +At 31 December 2022 40.6 141.2 237.6 603.1 1,022.5 +Exchange adjustment (0.3) (2.1) (3.5) (1.4) (7.3) +Additions 18.0 27.0 45.9 45.6 136.5 +Additions from business combinations (Note 32) 4.9 8.1 2.2 26.9 42.1 +Disposals (4.5) (6.7) (5.7) (49.8) (66.7) +Reclassification – 0.9 (0.9) – – +At 31 December 2023 58.7 168.4 275.6 624.4 1,127.1 +Accumulated depreciation +At 1 January 2022 11.3 38.3 52.2 320.9 422.7 +Exchange adjustment 0.5 2.7 2.0 4.2 9.4 +Depreciation charge 11.4 23.5 26.0 65.0 125.9 +Impairment – 0.1 1.9 4.5 6.5 +Disposals (10.3) (20.0) (16.1) (2.8) (49.2) +Reclassification – – 21.7 (21.7) – +At 31 December 2022 12.9 44.6 87.7 370.1 515.3 +Exchange adjustment (0.2) (1.5) (2.0) (0.6) (4.3) +Depreciation charge 13.7 29.4 36.6 61.3 141.0 +Impairment 0.9 0.7 0.4 4.7 6.7 +Disposals (4.5) (6.0) (5.1) (49.4) (65.0) +Reclassification – (0.2) 0.2 – – +At 31 December 2023 22.8 67.0 117.8 386.1 593.7 +Net book value +At 31 December 2022 27.7 96.6 149.9 233.0 507.2 +At 31 December 2023 35.9 101.4 157.8 238.3 533.4 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023184 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_187.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_187.txt new file mode 100644 index 0000000000000000000000000000000000000000..086f38daf54d6b749860a60e61c54c7857303a8e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_187.txt @@ -0,0 +1,51 @@ +15 Property, plant and equipment (continued) +At 31 December 2023, the Group had not entered into contractual commitments for the acquisition of any property, plant and equipment +(2022: £nil). +Included within fixtures, fittings and equipment are assets in the course of construction which are not being depreciated of £17.1m +(2022: £10.6m), relating predominantly to self-service betting terminals and the new point of sale system in UK Retail. +An impairment charge of £6.5m (2022: £6.5m) has been made against closed retail shops and office buildings included within leased +assets in the year. See Notes 6 and 14 for further details. +Analysis of leased assets: +Land and +buildings +£m +Plant and +equipment +£m +Total +£m +Cost +At 1 January 2022 520.7 51.6 572.3 +Exchange adjustment 5.0 0.2 5.2 +Additions 60.0 1.8 61.8 +Additions from business combinations 9.5 – 9.5 +Disposals (2.0) (1.5) (3.5) +Reclassification – (42.2) (42.2) +At 31 December 2022 593.2 9.9 603.1 +Exchange adjustment (1.3) (0.1) (1.4) +Additions 32.8 12.8 45.6 +Additions from business combinations 26.0 0.9 26.9 +Disposals (49.8) – (49.8) +At 31 December 2023 600.9 23.5 624.4 +Accumulated depreciation +At 1 January 2022 299.8 21.1 320.9 +Exchange adjustment 4.1 0.1 4.2 +Depreciation charge 55.1 9.9 65.0 +Impairment 4.5 – 4.5 +Disposals (2.0) (0.8) (2.8) +Reclassification – (21.7) (21.7) +At 31 December 2022 361.5 8.6 370.1 +Exchange adjustment (0.6) – (0.6) +Depreciation charge 59.0 2.3 61.3 +Impairment 4.7 – 4.7 +Disposals (49.4) – (49.4) +At 31 December 2023 375.2 10.9 386.1 +Net book value +At 31 December 2022 231.7 1.3 233.0 +At 31 December 2023 225.7 12.6 238.3 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 185 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_188.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..fcb41133eafda4a21e194740d580ef1bb6548cc2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,61 @@ +16 Interest in joint venture +Share of joint +venture’s net +assets +£m +Cost +At 1 January 2022 9.7 +Additions 175.1 +Exchange adjustment 3.7 +Share of loss after tax (193.9) +Share of other comprehensive loss (0.4) +Contributions to be made 5.8 +At 31 December 2022 – +Additions 40.7 +Exchange adjustment 0.5 +Share of loss after tax (42.0) +Share of other comprehensive loss (movement in translation reserve) (0.6) +Contributions to be made 1.4 +At 31 December 2023 – +The joint venture represents the Group’s investment in BetMGM set up in the US in which a 50% stake is held. +The Group has committed to provide its final committed equity injection to BetMGM over the course of 2024, with $25.0m additional +contributions expected ($50.0m split between both joint venture partners). This will take the Group’s total investment to $705.0m +($1.41bn across both joint venture partners). +Given the net liabilities position of the joint venture, the Group has recorded £7.2m of these future contributions as a liability at the year +end, an increase of £1.4m on the prior year. +Summarised financial information in respect of the Group’s joint venture’s net assets is set out below: +2023 +£m +2022 +£m +Non-current assets 118.1 148.6 +Cash and cash equivalents 138.7 308.7 +Other current assets 182.7 92.4 +Current assets 321.4 401.1 +Balances with customers (208.6) (234.4) +Other current liabilities (224.0) (310.0) +Current liabilities (432.6) (544.4) +Non-current liabilities (21.2) (17.0) +Net liabilities (14.3) (11.7) +Group’s share of net liabilities (7.2) (5.8) +Summarised statement of comprehensive income +2023 +£m +2022 +£m +Revenue 1,582.4 1,174.8 +Depreciation and amortisation (8.2) (28.5) +Other operating expenses (1,658.1) (1,534.1) +Loss for the year (83.9) (387.8) +Other comprehensive loss (1.2) (0.8) +Total comprehensive loss (85.1) (388.6) +Group’s share of loss (42.6) (194.3) +There are no contingent liabilities relating to the Group’s interest in the joint venture (2022: £nil). +The risks associated with the Group’s interest in joint ventures are aligned to the same risks the Group is exposed to on the basis that they +operate wholly within the betting and gaming market. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023186 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_189.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c75fc36392a585df21afe7ff8b477ed07946ad4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,67 @@ +17 Interest in associates and other investments +Share of +associates’ +net assets +£m +Other +investments +£m +Total +£m +Cost +At 1 January 2022 44.2 14.2 58.4 +Revaluation loss – (5.1) (5.1) +Arising on business combinations – 4.9 4.9 +Dividends received (3.6) – (3.6) +Share of loss after tax (0.2) – (0.2) +Foreign exchange (0.9) – (0.9) +At 31 December 2022 39.5 14.0 53.5 +Revaluation gain – 2.6 2.6 +Additions – 3.1 3.1 +Dividends received (9.8) – (9.8) +Share of loss after tax (0.9) – (0.9) +Share of other comprehensive expense (1.1) – (1.1) +Foreign exchange – (0.3) (0.3) +At 31 December 2023 27.7 19.4 47.1 +Revaluation loss includes £1.1m (2022: £2.6m) recognised through other comprehensive income with the remaining loss of £2.5m +(2022: £2.5m) recognised through profit or loss. +Associates +Summarised financial information in respect of the associates is set out below: +2023 +£m +2022 +£m +Non-current assets 42.5 52.0 +Current assets 78.0 132.4 +Non-current liabilities (5.7) (2.5) +Current liabilities (73.1) (90.1) +Net assets 41.7 91.8 +Group’s share of net assets 27.7 39.4 +Revenue for the year 370.1 337.1 +Profit for the year 10.4 0.1 +Other comprehensive expense (4.7) – +Total comprehensive income 5.7 0.1 +Group’s share of total comprehensive expense (2.0) (0.2) +Further details of the Group’s associates are listed in Note 34. +The financial year end of Sports Information Services (Holdings) Limited (SIS), an associate of the Group, is 31 March. The Group has +included the results for SIS for the 12 months ended 31 December 2023. +All associates are private companies and there are no quoted market prices available for their shares. +The risks associated with associate investments are considered to be aligned to the same risks the Group is exposed to on the basis that +they operate wholly within the betting and gaming market. +Other investments of £19.4m (2022: £14.0m) consist of investments which have no fixed maturity date or coupon rate. +18 Trade and other receivables +2023 +£m +2022 +£m +Trade receivables 40.6 34.1 +Other receivables 399.0 430.8 +Finance lease receivable 4.3 3.5 +Prepayments 91.1 70.5 +535.0 538.9 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 187 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_19.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..3973336da2d0e02b35f49ab9cf406adc18b2ad4f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,150 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_190.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_190.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f5efbf93bb89638bf7e587ab13dff78abd9ae51 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_190.txt @@ -0,0 +1,69 @@ +18 Trade and other receivables (continued) +Trade and other receivables are presented on the Balance Sheet as follows: +2023 +£m +2022 +£m +Current 503.2 500.3 +Non-current 31.8 38.6 +Total 535.0 538.9 +Trade and other receivables are non-interest bearing and are generally on 30–90 day terms. Trade and other receivables are reviewed +for impairment on an ongoing basis, taking account of the ageing of outstanding amounts and the credit profile of customers. +Impaired receivables, including all trade receivables that are a year old, are provided for in an allowance account. Impaired receivables +are derecognised when they are assessed as irrecoverable. The expected credit losses arising from receivables are not considered to +be significant. +The balance of other receivables consists of the receivable for Greek tax of €34.9m (2022: €34.9m), amounts receivable from payment +service providers of £176.0m (2022: £149.8m), and other smaller items such as regulatory deposits, security deposits, rent deposits and +balances due from affiliates and partners. The Group does not perceive there to be a material credit risk against these items. +19 Cash and cash equivalents +2023 +£m +2022 +£m +Cash and short-term deposits 400.6 658.5 +Cash and cash equivalents in the consolidated statement of cash flows comprises cash at bank, overdrafts net of short-term investments +and includes £154.6m (2022: £52.1m) restricted in respect of customers. +20 Trade and other payables +2023 + +£m +2022 +Restated 1 +£m +Trade payables 56.9 64.4 +Other payables 1 719.9 135.4 +Social security and other taxes 197.6 181.0 +Accruals 338.0 339.2 +1,312.4 720.0 +1. Restatement of prior year intangible valuations increasing prior year other payables by £0.2m has been made in relation to the prior year SuperSport acquisition during the +subsequent measurement period. See Note 32 for further details. +Trade and other payables are presented on the Balance Sheet as follows: +2023 + +£m +2022 +Restated 1 +£m +Current 878.6 720.0 +Non-current 433.8 – +Total 1,312.4 720.0 +HMRC settlement liability within other payables +On 5 December 2023, Entain plc entered into a Deferred Prosecution Agreement (“DPA”) with the Crown Prosecution Service (“CPS”) in +relation to historical conduct of the Group, thereby resolving the HM Revenue & Customs (“HMRC”) investigation into the Group. +The DPA relates to alleged offences under Section 7 of the Bribery Act 2010 and, in particular, a failure by the Company to have adequate +procedures in place to prevent bribery in relation to its legacy Turkish-facing business. The Turkish-facing business was sold by a former +management team in 2017. +Under the terms of the DPA, the Group has agreed to pay a financial penalty plus disgorgement of profits totalling £585 million, to +make a charitable donation of £20 million and to pay a contribution of £10 million to HMRC’s and the CPS’s costs. The financial penalty, +disgorgement of profits and the charitable donation will be paid in instalments over the term of the DPA, which will be four years from +the date of the DPA. During the current financial year, the Group has provided for £585m representing the discounted value of all future +payments over the four-year term. +Since the conduct giving rise to the DPA, the Group has undertaken a comprehensive review of its anti-bribery policies and procedures +and has taken decisive action to significantly strengthen its wider compliance programme and related controls. Recognition of the +significant improvements made by the Company is an integral feature of achieving a DPA. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023188 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_191.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_191.txt new file mode 100644 index 0000000000000000000000000000000000000000..c20daeeb2930fb789eefab318629106ae194b946 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_191.txt @@ -0,0 +1,73 @@ +21 Discontinued operations +During the current year, the Group recorded a £57.8m loss in discontinued operations relating to its former business Intertrader which +was disposed of in November 2021. The loss recorded primarily reflects legal costs associated with historic matters as well as a provision +liability for a potential settlement with the former owners of the business following a long-running legal dispute. The charge has been +recognised in within separately disclosed items in the year (Note 6). +In 2022, loss on disposal was £13.4m relating to ongoing costs of disposal of the Intertrader business and the settlement of various +associated legal matters. +22 Lease liabilities +2023 +£m +2022 +£m +Current +Lease liabilities 65.7 65.1 +Non-current +Lease liabilities 210.2 215.8 +Total lease liabilities 275.9 280.9 +The Group’s leasing activity consists of leases on property, cars, self-service betting terminals and office equipment. The majority of those +relate to the leasing of LBOs within the Retail estates and office buildings. +Each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on +an index or a rate (such as lease payments on gaming machines based on a percentage of revenue) are excluded from the measurement +of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner to its property, plant and equipment +(see Note 15). +Leases of vehicles and IT equipment are generally limited to a new lease term of 3 to 5 years. Leases of property generally have a +lease term ranging from 5 to 10 years, with some legacy leases extending out to 20 years and beyond. Most new leases of property +are now generally expected to be limited to no more than 10 years, with a break option after no more than 5 years, except in +special circumstances. +The maturity analysis of lease liabilities at 31 December 2023 is as follows: +Minimum lease payments due +Within +1 year +£m +1–2 years +£m +2–5 years +£m +> 5 years +£m +Total +£m +2023 +Net present value 65.7 57.8 106.7 45.7 275.9 +2022 +Net present value 65.1 56.2 106.5 53.1 280.9 +The Group secures the use of its retail premises primarily through taking out leases for these premises. Typically, the leases are for a +duration between 5 and 10 years. In respect of the UK property portfolio there is commonly a right to negotiate replacement leases on +expiry, by virtue of the Landlord and Tenant Act 1954. Details of undiscounted amounts payable under leases are set out in Note 25. +Certain lease payments are not recognised as a liability. This arises when the Group continues to pay rents and occupy properties +after the lease has expired. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease +payments and irrecoverable VAT are not permitted to be recognised as lease liabilities and are expensed as incurred. +The use of extension and termination options gives the Group added flexibility in the event it has identified more suitable premises in +terms of cost and/or location or determined that it is advantageous to remain in a location beyond the original lease term. An option is +only exercised when consistent with the Group’s regional markets strategy and the economic benefits of exercising the option exceeds +the expected overall cost. +Amounts paid for short-term and low-value leases not included within the lease liability are immaterial. +The Group incurred rent and associated costs of £20.8m (2022: £15.3m). These are predominantly driven by VAT on rental charges not +being recoverable and held over leases. +Details of total cash outflow relating to leases, are disclosed in the consolidated statement of cash flows. +Group as lessor: +Finance lease receivables are included in the statement of financial position within trade and other receivables and is as follows: +2023 +£m +2022 +£m +Current 1.1 1.0 +Non-current 3.2 2.5 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 189 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_192.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_192.txt new file mode 100644 index 0000000000000000000000000000000000000000..859d5dbfdea7412f50f58217f6749288f2fa3fd0 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_192.txt @@ -0,0 +1,69 @@ +22 Lease liabilities (continued) +The maturity analysis of lease receivables, including the undiscounted lease payments to be received, are as follows: +Minimum lease payments due +Within +1 year +£m +1–2 years +£m +2–5 years +£m +> 5 years +£m +Total +£m +2023 +Lease payments receivable 1.4 1.3 2.0 0.8 5.5 +Interest (0.3) (0.3) (0.5) (0.1) (1.2) +Present value of lease payments receivable 1.1 1.0 1.5 0.7 4.3 +2022 +Lease payments receivable 1.1 0.9 1.1 0.9 4.0 +Interest (0.1) (0.1) (0.2) (0.1) (0.5) +Present value of lease payments receivable 1.0 0.8 0.9 0.8 3.5 +Operating lease commitments – Group as lessor +A number of the sublease agreements for unutilised space in the UK shop estate are not classified as finance leases within IFRS 16. +These non-cancellable leases have remaining lease terms of between one and six years. The future minimum rentals receivable under +these non-cancellable operating leases at 31 December are as follows: +2023 +£m +2022 +£m +Within one year 0.4 0.6 +After one year but not more than five years 0.6 1.0 +After five years 0.1 0.1 +1.1 1.7 +23 Interest-bearing loans and borrowings +2023 +£m +2022 +£m +Current +Euro-denominated loans 0.4 0.9 +USD-denominated loans 23.4 17.7 +Sterling-denominated loans 295.4 406.3 +319.2 424.9 +Non-current +Euro-denominated loans 869.4 994.7 +USD-denominated loans 2,172.1 1,694.4 +Sterling-denominated loans (2.7) – +3,038.8 2,689.1 +As at 31 December 2023 there were £515.0m (2022: £515.0m) of committed bank facilities of which £295.0m (2022: £nil) were drawn +down and £5.2m (2022: £52.1m) of facilities which have been utilised for letters of credit. +On 6 December 2022, the Group agreed pricing and allocation of two new tranches of First Lien Term Loans, namely a EUR tranche of €800m +with a maturity in June 2028 and a USD tranche of $375m which was added to the $1,000m term loan which had an October 2029 maturity. +These new loans were issued on 11 January 2023 and used to repay the existing €1,125m loan in January 2023, ahead its March +2024 maturity. +On 26 June 2023, the Group agreed pricing and allocation of add ons to existing First Lien Term Loans. €230m was added onto the +€800m term loan, with maturity remaining in June 2028 and $385m was added onto the $1,375m term loan, with maturity remaining in +October 2029. A total of c£500m GBP equivalent was issued and these funds were part used to fund the repayment of the Ladbrokes +Group Finance plc £400m bond in July 2023, a bond which was due for repayment in September 2023. +The Group’s senior facilities agreement contains a single financial covenant: a springing leverage covenant (subject to customary cure +rights) and solely for the benefit of the lenders under the revolving credit facility (“RCF”). The financial covenant is tested only in respect +of a quarter-end date where the aggregate outstanding principal amount of all loans under the RCF (excluding utilisations of the RCF by +way of letters of credit or bank guarantees) exceeds 40% of the total RCF commitments as at that date. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023190 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_193.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_193.txt new file mode 100644 index 0000000000000000000000000000000000000000..970c917d3e97b1b982e26298c4b93d52da3f2f74 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_193.txt @@ -0,0 +1,70 @@ +24 Provisions +Property +provisions1 +£m +Restructuring +provisions 2 +£m +Litigation and +regulation +provisions 3 +£m +Total +£m +At 1 January 2022 9.1 0.8 40.0 49.9 +Provided 10.1 1.8 33.6 45.5 +Utilised (7.5) (2.0) (35.9) (45.4) +Released (4.5) (0.6) (1.9) (7.0) +Reclassification – – (17.0) (17.0) +At 31 December 2022 7.2 – 18.8 26.0 +Provided 4.4 28.8 28.2 61.4 +Utilised (5.3) (25.5) (30.4) (61.2) +Released (1.0) – (0.1) (1.1) +At 31 December 2023 5.3 3.3 16.5 25.1 +1. The Group is party to a number of leasehold property contracts. Provision has been made against the unavoidable non-rent costs on those leases where the property is now +vacant. Provisions have been based on management’s best estimate of the minimum future cash flows to settle the Group’s obligations, considering the risks associated with +each obligation, discounted at a risk-free interest rate of 3.5%. The periods of vacant property commitments range from 1 to 12 years (2022: 1 to 13 years). In accordance with +IFRS 16, the rental elements of certain property provisions are included within lease liabilities. +2. Restructuring provisions relate to redundancy costs. +3. Litigation and regulation provisions relate to estimates for potential liabilities which may arise in the Group as a result of customer claims and past practices. Whilst the nature of +legal claims means that the timing of settlement can be uncertain, we expect all claims to be settled in the next 1 to 2 years. Whilst the provisions are based on management’s +best estimate of the likely liability for obligations that exist at the year end date, the maximum potential exposure is not expected to be materially different to the provision made. +Of the total provisions at 31 December 2023, £20.9m (2022: £20.6m) is current and £4.2m (2022: £5.4m) is non-current. +Provisions expected to be settled in greater than one year are discounted at the risk-free rate. +25 Financial risk management objectives and policies +The Group’s treasury function provides a centralised service for the provision of finance and the management and control of liquidity, +foreign exchange rates and interest rates. The function operates as a cost centre and manages the Group’s treasury exposures to reduce +risk in accordance with policies approved by the Board. +The Group’s principal financial instruments comprise term loans, bank facilities, overdrafts, loan notes, bonds, financial guarantee +contracts, and cash and short-term deposits, together with certain derivative financial instruments. The main purpose of these financial +instruments is to raise finance for the Group’s operations. The Group has various other financial instruments such as trade receivables, +trade payables and accruals that arise directly from its operations. Details of derivatives are set out in Note 26. +It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken other +than betting. Activity of this nature is only undertaken by the customer and is not speculative activity of the Group. The Group’s exposure +to ante-post betting and gaming transactions is not significant. +The main financial risks for the Group are exchange rate risk, interest rate risk, credit risk and liquidity risk. The Board reviews and agrees +policies for managing each of these risks and they are summarised below. The Group also monitors the market price risk arising from all +financial instruments. +Interest rate risk +The Group is exposed to interest rate risk on certain of its interest-bearing loans and borrowings and on cash and cash equivalents. +The Group uses derivative financial instruments such as interest rate swaps to hedge its interest rate risk. At 31 December 2023, 65% +(2022: 50%) of the Group’s post-swap gross debt (excluding leases) was at fixed interest rates. +Interest on financial instruments at floating rates is repriced at intervals of less than six months. Interest on financial instruments at fixed +rates is fixed until the maturity of the instrument. +The table below demonstrates the sensitivity to reasonably possible changes in interest rates on income for the year when this movement +is applied to the carrying value of financial liabilities: +Effect on: +Profit before tax +2023 2022 +25 basis points decrease 1.1 4.1 +100 basis points increase (4.6) (16.3) +Foreign currency risk +Given the multi-national nature of the business, the Group is exposed to foreign exchange gains and losses on its trading activities, +the net assets of its overseas subsidiaries and its non-GBP-denominated financing facilities. The primary currencies that the Group is +exposed to fluctuations in are the Euro, Australian Dollar and US Dollar. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 191 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_194.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_194.txt new file mode 100644 index 0000000000000000000000000000000000000000..1907ec16cff65da24cb9deaaaab4b6c29769e76f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_194.txt @@ -0,0 +1,78 @@ +25 Financial risk management objectives and policies (continued) +Foreign currency risk (continued) +Whilst the Group does not actively hedge the foreign exposure on its trading cash flows, it continuously monitors exposures to +individual currencies, taking remediating actions as necessary to manage any significant risks as they arise. In the event that the Group +anticipates large transactions in currencies other than GBP, forward exchange contracts are taken out to manage the potential foreign +exchange exposure. +The Group’s exposure to the translation of net assets on foreign currency subsidiaries into its reporting currency is partially offset by the +opposite exposure on the Group’s financing facilities providing a natural economic hedge, even though the Group does not apply hedge +accounting. The Group’s policy on borrowings is broadly aligned to the underlying cash flows of the business. +The Group has financing facilities in GBP, Euros and US Dollars. As the Group’s overseas subsidiaries largely report in Euros, the Group +has taken out swap contracts to hedge the US Dollar debt into Euros in order to align the foreign currency exposure on the Group’s +financing facilities with that on the net assets of its subsidiaries. The Group has also taken out swap contracts to hedge US Dollar debt +into GBP and Australian Dollars. +A 5% weakening in the Euro would reduce Group operating profit by £21.6m (2022: £27.7m) and net assets by £22.0m (2022: £0.8m) +when applied to the results of the year in question. +A 5% weakening in the Australian Dollar would reduce Group operating profit by £3.4m (2022: £4.6m) and net assets by £7.1m +(2022: £19.0m) when applied to the results of the year in question. +A 5% weakening in the US Dollar would increase Group operating profit by £2.0m (2022: £9.2m) arising from the share of loss of joint +venture. There are no material net assets held in US Dollar as at 31 December 2023 and 31 December 2022. +Credit risk +The Group is not subject to significant concentration of credit risk, with exposure spread across a large number of counterparties +and customers. +Receivable balances are monitored on an ongoing basis. Any changes to credit terms are assessed and authorised by senior +management on an individual basis. +With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s +exposure to credit risk arises from default of the counterparty, with a primary exposure equal to the carrying amount of these instruments. +Credit risk in respect of cash and cash equivalents is managed by restricting those transactions to banks that have a defined minimum +credit rating and by setting an exposure ceiling per bank. +Liquidity risk +The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of +maturities. The Group’s policy on liquidity is to ensure that there are sufficient medium-term and long-term committed borrowing facilities +to meet the medium-term funding requirements. At 31 December 2023, there were undrawn committed borrowing facilities of £220.0m +(2022: £515.0m). Total committed facilities had an average maturity of 4.5 years (2022: 3.7 years). +The total gross contractual undiscounted cash flows of financial liabilities, including interest payments, fall due as follows. Cash flows in +respect of financial guarantee contracts reflect the probability weighted cash flows. +2023 +On demand +or within +1 year +£m +1–2 years +£m +2–5 years +£m +> 5 years +£m +Total +£m +Interest-bearing loans and borrowings 573.7 558.1 1,223.1 1,401.9 3,756.8 +Other financial liabilities 252.7 692.4 378.5 2,855.8 4,179.4 +Trade and other payables 681.0 151.3 302.5 – 1,134.8 +Lease liabilities 77.5 66.8 122.9 54.0 321.2 +Total 1,584.9 1,468.6 2,027.0 4,311.7 9,392.2 +2022 +On demand +or within +1 year +£m +1–2 years +£m +2–5 years +£m +> 5 years +£m +Total +£m +Interest bearing loans and borrowings 548.4 1,310.6 1,131.2 914.5 3,904.7 +Other financial liabilities 210.7 56.5 205.5 1.7 474.4 +Trade and other payables 538.8 – – – 538.8 +Lease liabilities 72.4 61.6 116.6 59.8 310.4 +Total 1,370.3 1,428.7 1,453.3 976.0 5,228.3 +Details of discounted contractual cash flows of leasing liabilities are set out in Note 22. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023192 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_195.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_195.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9b348a45381db30977ca33a50d53d517dae481c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_195.txt @@ -0,0 +1,64 @@ +25 Financial risk management objectives and policies (continued) +Capital risk management +The primary objective of the Group’s capital management is to ensure that it maintains a credit quality that enables the Group to raise +funds at an economic interest rate and to maintain healthy capital ratios in order to support its business and maximise shareholder value. +The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the +capital structure, the Group may adjust the dividend payment to shareholders, adjust borrowings, return capital to shareholders or issue +new shares. +The Group monitors capital using an adjusted net debt to underlying EBITDA ratio. The ratio at 31 December 2023 was 3.3 times +(2022: 2.8 times). See Note 27 for further details. +The Group’s funding policy is to raise funds centrally to meet the Group’s anticipated requirements. These are planned so as to mature at +different stages in order to reduce refinancing risk. The Board reviews the Group’s capital structure and liquidity periodically. +26 Financial instruments and fair value disclosures +The table below analyses the Group’s financial instruments into their relevant categories: +31 December 2023 +Amortised +cost +£m +Assets/ +(liabilities) +at fair value +through +profit and loss +£m +Assets at +fair value +through other +comprehensive +income +£m +Total +£m +Assets +Non-current: +Other investments (Note 17) 1.3 10.9 7.2 19.4 +Current: +Trade and other receivables 443.9 – – 443.9 +Derivative financial instruments – 31.9 – 31.9 +Cash and short-term investments (including customer funds) 400.6 – – 400.6 +Total 845.8 42.8 7.2 895.8 +Liabilities +Current: +Customer balances (196.8) – – (196.8) +Interest-bearing loans and borrowings 1 (319.2) – – (319.2) +Trade and other payables (681.0) – – (681.0) +Derivative financial instruments – (117.5) – (117.5) +Other financial liabilities 2 – (157.0) – (157.0) +Lease liabilities (Note 22) (65.7) – – (65.7) +Non-current: +Interest-bearing loans and borrowings (3,038.8) – – (3,038.8) +Trade and other payables (433.8) – – (433.8) +Other financial liabilities 2 (905.7) (835.8) – (1,741.5) +Lease liabilities (Note 22) (210.2) – – (210.2) +Total (5,851.2) (1,110.3) – (6,961.5) +Net financial (liabilities)/assets (5,005.4) (1,067.5) 7.2 (6,065.7) +1. The fair value of interest-bearing loans and borrowings at 31 December 2023 and 31 December 2022 is not materially different to their original cost. +2. Other financial liabilities include £1,335.5m deferred and contingent consideration (2022: £261.7m), a put liability of £536.3m (2022: £180.4m), £9.6m of financial guarantees +(2022: £2.9m) and £17.1m of ante-post liabilities (2022: £17.2m). +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 193 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_196.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_196.txt new file mode 100644 index 0000000000000000000000000000000000000000..98b1caafda376de105e4eaa2d2d7c1cb9e5c4e60 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_196.txt @@ -0,0 +1,74 @@ +26 Financial instruments and fair value disclosures (continued) +31 December 2022 +Amortised +cost +£m +Assets/ +(liabilities) +at fair value +through +profit and loss +£m +Assets at +fair value +through other +comprehensive +income +£m +Total +£m +Assets +Non-current: +Other investments (Note 17) 1.3 6.6 6.1 14.0 +Other financial assets 0.2 – – 0.2 +Current: +Trade and other receivables 464.9 – – 464.9 +Derivative financial instruments – 72.9 – 72.9 +Cash and short-term investments (including customer funds) 658.5 – – 658.5 +Total 1,124.9 79.5 6.1 1,210.5 +Liabilities +Current: +Customer balances (200.5) – – (200.5) +Interest-bearing loans and borrowings 1 (424.9) – – (424.9) +Trade and other payables (538.8) – – (538.8) +Derivative financial instruments – (79.2) – (79.2) +Other financial liabilities 2 – (208.8) – (208.8) +Lease liabilities (Note 22) (65.1) – – (65.1) +Non-current: +Interest-bearing loans and borrowings (2,689.1) – – (2,689.1) +Other financial liabilities 2 (183.3) (70.1) – (253.4) +Lease liabilities (Note 22) (215.8) – – (215.8) +Total (4,317.5) (358.1) – (4,675.6) +Net financial (liabilities)/assets (3,192.6) (278.6) 6.1 (3,465.1) +Fair value hierarchy +IFRS 13 requires financial assets and liabilities recorded at fair value to be categorised in three levels according to the inputs used in the +calculation of their fair value: +– Level 1 – uses quoted prices as the input to fair value calculations +– Level 2 – uses inputs other than quoted prices, that are observable either directly or indirectly +– Level 3 – uses inputs that are not observable +The following tables illustrate the Group’s financial assets and liabilities measured at fair value after initial recognition at 31 December 2023 +and 31 December 2022: +2023 +Level 1 +£m +Level 2 +£m +Level 3 +£m +Total +£m +Assets measured at fair value +Derivative financial instruments – 31.9 – 31.9 +Other investments 7.1 2.5 8.5 18.1 +7.1 34.4 8.5 50.0 +Liabilities measured at fair value +Derivative financial instruments – (117.5) – (117.5) +Other financial liabilities – – (992.8) (992.8) +– (117.5) (992.8) (1,110.3) +Net assets/(liabilities) measured at fair value 7.1 (83.1) (984.3) (1,060.3) +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023194 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_197.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_197.txt new file mode 100644 index 0000000000000000000000000000000000000000..7fa76199b8803a08c4205953f1cb1cbf307ec24a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_197.txt @@ -0,0 +1,57 @@ +26 Financial instruments and fair value disclosures (continued) +2022 +Level 1 +£m +Level 2 +£m +Level 3 +£m +Total +£m +Assets measured at fair value +Derivative financial instruments – 72.9 – 72.9 +Other investments 5.5 1.8 5.4 12.7 +5.5 74.7 5.4 85.6 +Liabilities measured at fair value +Derivative financial instruments – (79.2) – (79.2) +– – (278.9) (278.9) +Other financial liabilities – (79.2) (278.9) (358.1) +Net assets/(liabilities) measured at fair value 5.5 (4.5) (273.5) (272.5) +There have been no transfers of assets or liabilities recorded at fair value between the levels of the fair value hierarchy. +Included within other financial assets and derivative financial instruments measured at fair value are: the Group’s currency swaps +held against debt instruments as an asset of £31.9m (2022: asset of £72.9m) and a liability of £117.5m (2022: £79.2m), investment +in RAS Technology, designated as fair value through other comprehensive income, £2.1m (2022: £1.0m), an investment in Scout +Gaming of £0.3m (2022: £0.3m), a convertible equity instruments with Visa Inc. for £2.5m (2022: £1.8m) and Greenrun Inc. for £3.1m +(2022: £nil),and an investment fund of £5.0m (2022:£4.9m), all designated as fair value through profit and loss. During the year, the Group +disposed of its investment in Hui10 (2022: £5.1m) as a share-for-share exchange with Intuitive Investment Group plc (“IIG) at a £nil profit +or loss. The investment in IIG of £5.1m is designated as fair value through other comprehensive income. The fair value of the investments +at 31 December 2023 and 31 December 2022 is not materially different to their original cost. +Contingent and deferred consideration +Contingent and deferred consideration arises through business combinations, the fair value for which is reassessed at each reporting +date using updated inputs and assumptions based on the latest financial forecasts of each respective business. As at 31 December 2023 +contingent and deferred consideration included within other financial liabilities was £1,335.5m (2022: £261.7m), including £1,155.1m +on Tab NZ as well as from the Group’s acquisitions of SuperSport in the prior year, and in year acquisitions of ASF Limited, BetCity, +and 365Scores. +The valuation of the contingent element of consideration is subject to estimation uncertainty as the amount payable is based on +various factors, including future profitability. With the exception of Tab NZ, based on the current profit forecast and reasonable upside +and downside sensitivities, the range of potential valuations is not expected to be materially different from that provided for in the +financial statements. For Tab NZ where the range of potential outcomes could be materially different from the amounts provided as it +is subject to the future performance of the business over a 25-year time period. The fair value of contingent consideration for Tab NZ at +31 December 2023 was £788.3m. The valuation technique used for calculating the contingent consideration was a discounted cash flow +model. The key unobservable inputs for the calculation are revenue growth rates, adjusted gross profit margin and discount rate. A 5% +movement in forecast cash flows, both positive and negative, would impact the contingent consideration liability by approximately £50m, +whereas the 0.5pp movement in the discount rate would affect the liability by approximately £40m. +During the year, the Group paid £266.7m (2022: £32.9m) of deferred and contingent consideration in relation to the +aforementioned acquisitions. +Put option liability +The amortised costs of the put option liability recognised is not materially different to fair value. +Ante-post +Ante-post liabilities are valued using methods and inputs that are not based upon observable market data. The principal assumptions +relate to anticipated gross win margins on unsettled bets. There are no reasonably probable changes to assumptions or inputs that would +lead to material changes in the fair value determined, although the final value will be determined by future sporting results. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 195 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_198.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..3d976aca128672a88d9c7049a441a3e8e25056a3 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,49 @@ +27 Net debt +The components of the Group’s adjusted net debt are as follows: +2023 +£m +2022 +£m +Current assets +Cash and short-term deposits 400.6 658.5 +Current liabilities +Interest-bearing loans and borrowings (319.2) (424.9) +Non-current liabilities +Interest-bearing loans and borrowings (3,038.8) (2,689.1) +Net debt (2,957.4) (2,455.5) +Cash held on behalf of customers (196.8) (200.5) +Fair value swaps held against debt instruments (derivative financial (liability)/asset) (85.6) (6.5) +Deposits 48.8 43.8 +Balances held with payment service providers 176.0 149.8 +Sub-total (3,015.0) (2,468.9) +Lease liabilities (275.9) (280.9) +Adjusted net debt including lease liabilities (3,290.9) (2,749.8) +Cash held on behalf of customers represents the outstanding balance due to customers in respect of their online gaming wallets. +28 Share capital +Number of +€0.01 +ordinary +shares +Total +€m +Total +£m +Authorised: +At 31 December 2022 and 31 December 2023 773,000,000 7.7 6.4 +Issued and fully paid: +At 1 January 2022 586,550,219 5.9 4.8 +Exercise of share options 2,296,623 – – +At 31 December 2022 588,846,842 5.9 4.8 +Allotment of shares 48,827,271 0.5 0.4 +Exercise of share options 1 1,125,778 – – +At 31 December 2023 638,799,891 6.4 5.2 +1. Share options exercised in the year included 56,527 (2022: 239,116) deferred bonus shares not disclosed as part share options exercised in Note 31. +The Company’s share capital consists entirely of ordinary shares, accordingly all shares rank pari passu in all respects. +On 16 June 2023, the Company issued an additional 48,827,271 of ordinary shares for net proceeds of £589.8m. +See Note 31 for further information on terms and amounts of shares reserved for issue under options. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023196 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_199.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..3aafb9c9b5bf7789a983626bd02007ea45d20a96 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,39 @@ +29 Notes to the statement of cash flows +29.1 Reconciliation of (loss)/profit to net cash inflow from operating activities: +2023 +£m +2022 +£m +(Loss)/profit before tax from continuing operations (842.6) 102.9 +Net finance expense 197.9 225.7 +(Loss)/profit before tax and net finance expense from continuing operations (644.7) 328.6 +Loss before tax and net finance expense from discontinued operations (57.8) (13.4) +Loss/(profit) before tax and net finance expense including discontinued operations (702.5) 315.2 +Adjustments for: +Impairment 289.0 7.0 +Loss on disposal 1.0 1.0 +Depreciation of property, plant and equipment 141.0 125.9 +Amortisation of intangible assets 415.1 229.1 +Share-based payments charge 23.6 19.2 +Decrease/(increase) in trade and other receivables 42.2 44.7 +Increase in other financial liabilities 62.7 2.2 +(Decrease)/increase in trade and other payables 506.0 (85.9) +Decrease in provisions (1.9) (6.9) +Share of results from joint venture and associate 42.9 194.1 +Pension settlement – 7.0 +Other (9.1) (5.7) +Cash generated by operations 810.0 846.9 +29.2 Cash flows arising from discontinued operations: +2023 +£m +2022 +£m +Cash used in operating activities (57.8) (13.4) +Cash used in investing activities – – +Net cash outflow arising from discontinued operations (57.8) (13.4) +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023 197 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_2.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae3ada93eb9d8e8c95719ce335416f239a14e8a1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_2.txt @@ -0,0 +1,124 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_20.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..484ddb21de400d508d6549a73a5a4f3960ddb307 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,147 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_200.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..9544ebc1d04459123458acc3e9816ddb702e06d5 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,80 @@ +29 Notes to the statement of cash flows (continued) +29.3 Reconciliation of movements of liabilities to cash flows arising from financing activities: +2023 2022 +Other +loans and +borrowings +£m +Lease +liabilities +£m +Other +financial +liabilities +£m +Total +£m +Other +loans and +borrowings +£m +Lease +liabilities +£m +Other +financial +liabilities +£m +Total +£m +Balance at 1 January 3,114.0 280.9 462.2 3,857.1 2,282.4 293.7 88.7 2,664.8 +Changes from financing cash flows +Proceeds from borrowings, net of issue costs 1,780.3 – – 1,780.3 838.4 – – 838.4 +Repayments (1,419.2) – (266.7) (1,685.9) (109.0) – (32.9) (141.9) +Repayment of borrowings on acquisition (9.4) – – (9.4) (162.8) – – (162.8) +Repayment of lease liabilities 1 – (68.5) – (68.5) – (83.0) – (83.0) +Total changes from financing cash flows 351.7 (68.5) (266.7) 16.5 566.6 (83.0) (32.9) 450.7 +Other changes +Business combination consideration (Note 32) – – 1,254.4 1,254.4 – – 216.7 216.7 +Recognition of put option liability (Note 32) – – 350.5 350.5 – – 181.2 181.2 +Interest expense/discount unwind 229.2 12.8 70.4 312.4 76.2 13.0 2.9 92.1 +Interest paid 2 (224.2) (12.8) – (237.0) (91.9) (13.0) – (104.9) +New lease liabilities – 45.6 – 45.6 – 61.8 – 61.8 +Finance fees 1.0 – – 1.0 5.7 – – 5.7 +Re-measurement adjustments – (7.4) 1.4 (6.0) – (5.0) (6.1) (11.1) +Total other changes 6.0 38.2 1,676.7 1,720.9 (10.0) 56.8 394.7 441.5 +Arising through business combinations 9.4 26.9 7.0 43.3 162.8 9.5 – 172.3 +The effect of changes in foreign exchange (123.1) (1.6) 19.3 (105.4) 112.2 3.9 11.7 127.8 +Balance at 31 December 3,358.0 275.9 1,898.5 5,532.4 3,114.0 280.9 462.2 3,857.1 +1. In addition to the above, the Group received £0.2m (2022: £0.2m) in respect of lease receivables resulting in a net repayment of finance leases of £68.3m (2022: £82.8m). +2. In addition to the above, the Group received £12.4m (2022: £4.3m) of interest income resulting in a net finance expense paid of £224.6m (2022: £100.6m). +Non-cash movements include amounts acquired as a result of business combinations and the amortisation of issue costs incurred in +respect of debt instruments. +30 Retirement benefit schemes +Defined contribution schemes +During the year the Group charged £23.1m of contributions (2022: £18.9m) to the consolidated income statement in relation to the +defined contribution pension schemes. +Defined benefit plans +Judgement is applied, based on legal, actuarial, and accounting guidance in IFRIC 14, regarding the amounts of net pension asset that are +recognised in the consolidated balance sheet. +Following the buy-out of the Ladbrokes Pension Plan, the Group now only has one pension scheme, the Gala Coral Pension Plan, which is +a final salary pension plan for UK employees and closed to new employees and future accrual. +At retirement each member’s pension is related to their ‘career average earnings’ for the Gala Coral Pension Plan. The weighted average +duration of the expected benefit payments from the plan is around 15 years (2022: 15 years). +The plan’s assets are held separately from those of the Group. The plan is approved by HMRC for tax purposes, and is managed by +independent Trustees. The plan is subject to UK regulations, which require the Group and Trustees to agree a funding strategy and +contribution schedule at least every three years. Under the current contribution schedule in place, the Group does not pay contributions to +Gala Coral Pension Plan but is paying the administrative costs. +There is a risk to the Group that adverse circumstances, such as a disconnect between changes in asset investment values and required +funding obligations, could lead to a requirement for the Group to make additional contributions to fund any deficit that arises. As at the +date of signing the financial statements no such event has arisen. +The results of the latest formal actuarial valuation 30 June 2022 for the Gala Coral Pension Plan was updated to 31 December 2023 by +an independent qualified actuary in accordance with IAS 19 (Revised) Employee Benefits. The value of the defined benefit obligation and +current service cost have been measured using the projected unit credit method, as required by IAS 19 (Revised). Actuarial gains and +losses are recognised immediately through other comprehensive income. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 2023198 +Notes to the consolidated +financial statements +for the year ended +31 December 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_21.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..30fdd2721c616d031a8ce043d99eba0476810760 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,83 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_22.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fa7de2a0e70a5074085f40da95e8798dde032d4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,26 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_23.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..54d0019779000556fb44d39d9dbcbab705822e94 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,53 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_24.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5206445be607b97a7e5cc2e7fbe9fc142205b34a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,70 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_25.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..07b3c659368c199081ebe8a423398b433b471dd1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,96 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_26.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..f716ebfd45daca1b4ee94ff0e9c89425b0c0a5f9 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,90 @@ +Reflecting the Group’s strategic progress, in November 2023 we revised our +corporate strategy. These refocused objectives recognise the progress achieved +by the business, whilst acknowledging there is still further transformation needed +to maximise the opportunities ahead. We have set clear targets and initiatives to +deliver value for our stakeholders. Ensuring focused execution in driving Organic +Growth, Margin Expansion and US market share growth. + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supported by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +People and culture +Technology and product +Governance +Organic +growth +Grow presence in +existing markets, +synergistic +adjacencies +Margin +expansion +Drive margin +expansion +through scale +and operational +leverage +US market +growth +Empower profitable +growth and share +gains in the US +Purpose +Vision +24 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202324 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_27.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c04e08a318496ea491e27e16ae3c73e09b0c739 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,69 @@ + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supportive by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +Sports betting +and gaming +courses through +our DNA. It’s the +purple thread that +steers our evolution, +guides our people +and shapes our purpose. +25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements 25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_28.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3178643d29e130a7fbb8346211a0612ffcada27f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,17 @@ +our technology +and product +Entain today, is underpinned by incredible talent, in-house +technology and leading product capability. We have +hundreds of always-on sports data and game supplier +integrations, which we bring to life as easy to play games +and almost infinite bet opportunities in a safe, responsible +way. With the largest RMG platform in our industry and +a sportsbook powering approximately 1.8K matchers +per day, we’re evolving our strong in-house technology, +globally diversified portfolio and adaptability to create +entertaining experiences for our customers. + Shaping + the game: +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202326 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_29.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e66b60a44d0fe0d1c1a92254976f5b56bd229a4e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,79 @@ +Our award-winning in-house gaming +studios have continued to go from +strength to strength in powering our +brands globally and providing our +customers with exclusive gaming +experiences. From branded BetMGM +slots, to exclusive first-of-their-kind +non-traditional tap games, our in–house +team has now delivered over 300 titles +to our retail and digital brands. +Demonstrating that our customers love +our products, one of our original 2023 +games, Pig Banker, saw over double +the revenue of an average in-house +new game within 60 days of launch. +Pig Banker was so popular with our +customers, that it trotted to the top 3 +games worldwide, including number 1 in +the UK, Brazilian, and Canadian markets. +And to top things off, the follow up +release, “Pig Banker: Three Little Piggies” +proved to be an immediate player hit by +taking the top spot for spins per player to +date after its first day of release. +Our in-house gaming team also had +cause for celebration in 2023, launching +the first in-house non-traditional Tap +game “Pot O’ Fortune: Golden Tap”, which +reached the top spot for GGR for game +release of its type when compared to third +party releases. +In-house gaming at Entain ++26% +2023 In House Studios GGR +increased by 26% vs 2022 +(Non US markets based on +all live products across all +3 studios) ++28% +Active players on in-house +games across non US +markets increased by 28% +vs 2022 ++18% +Average spins per active +also increased by 18% vs +2022 showing players are +engaging more with our +in-house products +14 +In-house studios saw GGR +growth across 14 European +and Ontario Markets +vs 2022 +33 +new in-house games +launched in the US 2023 +The milestones +reached and quality +delivered this year +are a testament +to the unrivalled +creativity and hard- +work of our people +in our in-house +game studios. +We’re proud of the +way we develop, +construct, and bring +to life the exclusive +gaming experience +for our customers +across our brands.” +Ciara Nic Liam +Gaming Director +Continued on next page +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +27Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_3.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..78bdaac8c239ecc35542d3b09298fc35ae139346 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,10 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_30.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..da3cf5cfc1090c0b1fe5fb8de57fd8404ef332da --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,20 @@ +When it comes to in-house technology +at Entain, our trading team are right +at the heart of it. Our in-house trading +platform is powered by our own propriety +technology, which turns millions of +real-time data points into odds for our +customers. Every kick, goal, overtake and +point scored is integrated from multiple +data feeds and turned into a betting +opportunity for players worldwide. +What makes our in-house tech so +fundamental to our transformation is the +strength of its core. With it, we’re set up +to be able to tweak, adapt and localise +the peripherals of our platform to suit the +needs of our players, all over the world. +The technology that powers our in-house +trading platform +28 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_31.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..053a983672b047e320dd15dea02492494f2108af --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,33 @@ +Betstation brings a market +leading digital experience +to our players which is a cut +above the rest.” +Introducing Angstrom: +next generation sports +betting +Our Retail technology +-Major milestones hit +for our digital in-shop +experience +Last October, we completed the acquisition of the newest +member of the Entain Group, Angstrom. Angstrom Sports’ +unrivalled sports modelling, forecasting and data analytics +provision simulates predictive modelling, in order to create +highly sophisticated pricing and forecasting capabilities. +In short, it will be a game changer for our in-house trading +technology. Angstrom will enable BetMGM to provide endless +moments of excitement for fans in the US, with the most +accurate lines in the industry. The acquisition secures Entain as +the only global operator which will have a full in-house suite of +end-to-end analytics, risk and pricing capabilities for US Sports +betting products. +We hit a milestone moment last November, as Group BetStation +went live in our 1000th shop in the UK & Ireland Retail Estate. +Launching in over very first shop in November 2020, Group +BetStation brings a market leading digital experience to our +players that’s a cut above the rest. Our in-house developed +software gives customers the freedom to place their bets in +store, access to more racing markets than ever before and the +power to place in-play bets on sports around the world. +29Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_32.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb983832618760210211b23763a6f4a3824a5c8d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,40 @@ +With over 30 brands, across 40 markets, we’re able to provide +entertaining experiences to customers all over the world. But it’s +not just through our core product offering that our customers +engage with us. At Entain, we go beyond the game to enhance +the sports betting and gaming experience for our players – +beyond a bet, scroll or tap. +Over the last year, Coral has taken its +customers closer to the action than +ever before following the launch of the +free-to-join Coral Racing Club. The club +provides a unique opportunity for racing +fans to experience what it is like to be +a racehorse owner through unmissable +content, priceless opportunities, exclusive +offers and much more. +Now over 160,000 members strong, the +Club’s first year was a roaring success. +It has created thousands of unforgettable +memories with its stable of 10 racehorses, +including over 1,000 raceday tickets won +by members, 37 unique ‘owner for the +day’ experiences created and in excess of +£40,000 being shared in prize money. +For many years Coral has demonstrated a deep +passion for, and commitment to, British Racing, +but over the last year we have significantly +expanded our sponsorship portfolio to become +the leading bookmaker sponsor in the UK. +And now, with the Coral Racing Club, Coral +is doing more than any betting operator has +done before to grow the appeal of racing and +promote the sport.” +Simon Clare +Director of PR +Continued on next page +A year of Coral Racing Club +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202330 +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_33.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..50780abb4893f1dbe75990ac082fa49b5c602c69 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,7 @@ +Beyond + the game: +customer + experiences +1 Overview 8 Strategic report 88 Governance 140 Financial statements +31Entain plc Annual Report 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_34.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..8685bac73a949afcb15b7e6d02f02f355a2fa629 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,90 @@ +Elevating the social betting +experience with STS and Eurobet +STS’s new brand campaign, Kocham +Sport Gram Mądrze (Love Sports, Play +Smart), has been taking shape over +the last few months in the form of a +new ecosystem designed to inspire +customers. It incorporates a new smart +feature that redefines the social betting +experience and empowers customers. +BetMGM ‘pucker up’ and get +their skates on with NHL +partnership extension +Eurobet’s ReadyBet +Empowered by a seamless digital +experience across various devices, +Eurobet’s Readybet effortlessly +creates pre-filled betslips. Eurobet’s +Readybets, generated weekly through +inputs from retail shop managers, +the trading room, marketing teams, +and even digital and retail customers, +entices users to engage in a diversified +betting experience. Offering a curated +selection of “wise” picks from reputable +and successful sources, the Readybet +platform fosters a sense of community +by turning customers and betting shops +into interactive “tipsters.” Enhanced with +dedicated promotions and challenges, +this approach bridges the gap between +conventional sports betting and a social +experience, creating a vibrant marketplace +accumulator bets. +Last year, our joint venture BetMGM +continued to offer fans unforgettable +entertainment built around the game they +love, with a multi-year extension of their +partnership with the National Hockey +League (NHL ®). +‘Players Bet’ is built +around the trusted +community of STS +players who draw +inspiration from each +other’s bets, including +bets shared by the +best players with a +proven track record +of effectiveness. +Over 2 million bets +have been copied in +2023 indicating that +players actively seek +bets from trusted +sources. The fact that +51% of copied bets +are turning into real +bets, shows the +significant potential +of this feature and +the power dormant +in the community. +Through team-branded casino games, +including the word’s first NHL-endorsed +slot game, Gold Blitz, VIP fan experiences, +and sponsored branding in national +broadcasts, players will experience the +NHL beyond the rink. NHL Gold Blitz +features the NHL Gold Blitz Instant Cash +Collection, Wild Multiplier Free Spins, and +jackpot prizes, as well featuring all 32 NHL +teams and the league’s iconic shield. It’s +through these exciting activations that +BetMGM will continue to deliver new ways +for Ice Hockey fans to engage with the +sport they love. +Gracze Typują (Players Predict) is a unique +space on the STS site that allows players +to copy bets shared by other players, check +out success rates of other betters, duplicate +their bets and chat with each other on +a forum fostering a sense of community +amongst customers. +STS is the only operator in Poland offering +this free, community-driven feature, +reinforcing our commitment to a smart and +socially connected betting future. +32 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_35.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..8fed0928126673d1a665dad53ca3d94dd2f527a6 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,82 @@ +Bwin fulfilling football fans wildest +dreams on Europe´s big stage +The launch of +Ladbrokes Live +Last year we embarked on an exciting +new era for Ladbrokes, connecting +thousands of fans with free events +through the Ladbrokes LIVE platform. In +The O2, AEG Presents, and NME, we’re +working with three of the biggest and +most iconic brands in the entertainment +industry and this means we will be +able to reward our audiences with the +chance to attend some of the most +exciting live shows in Britain for free.” +Kelly Rose +Head of Brand for Ladbrokes +This year, our UK brand Ladbrokes +furthered its ambition to provide +customers with excitement beyond +its sportsbook, with the launch of +Ladbrokes LIVE. LIVE is a digital +entertainment platform that rewards +thousands of fans with free access to +the UK’s best live music, comedy and +sports events, powered by exciting +new strategic and ground-breaking +partnerships with The O2, AEG +Presents, NME and many more. +The unique collaboration between +Ladbrokes and NME has also seen the +return of the iconic Club NME nights with +a series of dates across the UK featuring +incredible headline talent and unmissable +DJ sets. Fans have been able to win free +access to Club NME nights through the +Ladbrokes LIVE platform. +With over 135,000 plays and hundreds of +tickets already won in 2023, we are giving +reasons for consumers to engage with us +again and again in, everyday play. +Besides bringing pure entertainment and joy to the football fans and +uniting players from across Europe, bwin and other Entain brands were +able to generate unrivalled brand presence across the continent during +the 22/23 season, with branding visible at 80% of all matches across +56 countries; 20% of this being Responsible Gambling messaging. +Being the official betting sponsor for both competitions this year again, +we’ll be there for every shot, pass and tackle to make the third season +an even better one for our customers.” Gemma Bell, Head of Sponsorship +For the past two seasons (21/22 & 22/23) +bwin has delivered the ultimate football +experience by giving fans the opportunity +to play in ‘the bwin Fans Final’ in the +UEFA Europa League Final Stadium. +2023 saw the fans play in the Puskás +Arena, the day after the UEFA Europa +League Final in Budapest. +Thanks to our official partnership with the +UEFA Europa League and UEFA Europa +Conference League, bwin laid out the red +carpet in Budapest for 40 customers who +witnessed the UEFA Europa League epic +between Roma and Sevilla unfold, before +taking to the turf of the Puskas Arena the +next day. Customers were treated to pre- +match training sessions, personalised kits +and the opportunity to lift a customised +trophy just like the Sevilla players did a +few hours prior. Joined by legends Esteban +Cambiasso and Luis García, the bwin +Fans Final saw dreams brought to life +for our players. An intimate lunch with +the ambassadors and the nomination +of the Player of the Match rounded the +experience into an unforgettable event +with one of the winners stating: “These +days I will never forget, the memories +will live with me forever. It was the best +football trip ever, a dream came true, what +a privilege to have been part of it.” +33Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_36.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7f92bd6b48b9fb255f13c07b4fe25e53097942e --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,7 @@ +Championing +the game: +Advertising +34 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202334 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_37.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ebab343084f728ceaaeb59617fd66b244bb41a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,29 @@ +All of our brands have their own unique identity – from the striking blue of Coral to +the playful orange of Foxy Bingo. It’s our heritage and brand recognition that has +built up such trust with our customers, and it’s through this trust that we’ve been +able to push boundaries with iconic advertising, activations and campaigns. +Last year saw Foxy Bingo’s ‘Get Your +Fox On’ ATL campaign level-up with +two world-first’s: Dirtie Gertie’s Mullet +Salon and The Celebrity Swap Shop. +Continued on next page +Opened by Geordie Queen, Vicky +Pattison, Dirtie Gertie’s Mullet-only Salon +in Newcastle offered consumers free +mullet haircuts, foxy nails and games of +musical bingo. The city lit up with fleets +of pedicabs and iconic parts of the centre +were turned purple and orange with +incredible out-of-house advertisement, +with over 2 million impacts. In total, the +campaign gained a 1.1 billion reach via +media coverage, gave 94 dodgy haircuts +and engaged whole new community of +Foxy fans. +Get Your Fox On with +Foxy’s Celebrity Swap +Shop & Mullet Salon +35Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +35Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_38.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8c971924a33934feceabdd7ba8bb51a63168532 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,61 @@ +Gala’s Jolly Good +Fish and Chip hotel +Eurobet.Live with +Luca Toni +Gala Bingo continued to build community spirit amongst +players this year, with the world’s first ‘Fish and Chip Hotel’ +in Blackpool. Inspired by consumer research, insights and the +iconic bingo call 33, Gala’s ‘The Jolly Good Fish & Chip Hotel’ +gave British seaside goers the chance to enter Gala Land and +receive a complimentary serving of fish, chips and peas, as well +as games of bingo. +The activation built on Gala’s ‘Where A Little Joy Goes A Long +Way’ campaign and encouraged players to find the little joys in life +last summer With over 800 consumers attending the prototype +hotel and 314 million people reached via earned social media +coverage, it’s safe to say customers experienced the brand in a +whole new way, combining the classic charm of the Great British +seaside with the wonder and joy of Gala Land. +Eurobet.live elevated the football experience for fans across +Italy through an exciting TV campaign featuring World Cup +winner, Luca Toni, as it’s presenter. The campaign seamlessly +integrated the excitement of live scoring with the thrill of +the matches themselves, providing viewers with real-time +updates, insights and analysis, detailed statistics and +engaging multimedia content. +Eurobet.live not only celebrated the passion and excitement +of football, but also underlined its commitment to providing +fans with a comprehensive and immersive platform to stay +connected to the game they love. Eurobet.Live has also +strengthened it’s connection with fans, through prestigious +partnerships with several Serie A teams, including the iconic +Juventus as well as a partnership with the entire Serie C league. +These strategic alliances +served as a powerful bond +between the Eurobet.live +brand and football fans +on the ground, solidifying +its position as the premier +platform for live scoring, +results, and multimedia +content in Italy.” +Alexis Grigoriadis +Marketing Director, Italy +Get Your Fox On with Foxy’s Celebrity +Swap Shop & Mullet Salon continued +In the wake of Foxy’s new laundrette +theme ads, the team brought the screen +to life up north with The Celebrity Swap +Shop: a two-day pop up affair in Hull, +where locals swapped drab for fab +and get their hands on a celebrity item. +17 celebrities donated items to the +laundrette, and in total, 23 bags of clothes +were donated to charity. Foxy consumers +took to the laundrette to experience +the brand’s new and engaging identity +and with free Bingo sessions on site. +The brand saw a 17% increase in betting +players from the activation. +36 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_39.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1e0db133568de8d018b5cae8e853af552b22360 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,108 @@ +Last December, the F1 circus rolled +into Las Vegas for the inaugural GP, +and our joint venture, BetMGM, left +no stone unturned in making their +presence known with customers over +the weekend. +From exclusive grandstand hospitality to +the excitement of experiencing incredible +entertainment within touching distance +of the track in their retail shops, BetMGM +bolstered the anticipation of placing bets +on the race with awesome experiences +throughout the GP weekend. The team +also pulled off some incredible activations +with McLaren Racing; from BetMGM’s +logo being centre stage on the car to +a series of marquee and On-property +digital placements, BetMGM certainly +gave F1 superfans an experience to +never forget. +The spectacle received 3X the number +of bets compared to any other F1 event +in the company’s history. The Las Vegas +GP certainly shattered records for the +King of Sportsbooks. +TAB activation on Auckland’s +Sky Tower for the TAB +Karaka Millions +The TAB Karaka Millions brings together the +best horses sold at the New Zealand Bloodstock +yearling for two separate races, as well as an +open-entry race called the Elsdon Park Aotearoa +Classic. This year, TAB became the naming rights +sponsor for the meeting, and with three $1m +races on the six-race card for the first time ever, +TAB wanted to do something different to attract +attention of customers. +A few days before the meeting, Entain Australia +and NZ took over the second tallest freestanding +structure in the southern hemisphere, Auckland’s Sky +Tower, and projected the barrier draw for the three +main races onto it. Watched on by trainers, owners +and horse racing fanatics, the incredible display +revealing which horse starts where, set the scene for +a weekend that ended up smashing records for TAB’s +horse racing history. +The six-race meeting saw a 26.6% increase in +turnover compared to the highest wagered meeting +on record (of which had over double the number of +races) and a 33% increase in the number of customers +betting compared to 2023. Better yet, the final race +of the day set a record for the most wagered race in +New Zealand, with Year-on year-turnover for the TAB +Karaka Millions up 66%. +BetMGM win Las Vegas for Super Bowl week +Known for its massive audiences, thrilling action, much-anticipated commercials, +and halftime extravaganza, the Super Bowl was a big day for BetMGM, where we +saw a 30% uplift in activity across the U.S. alone. Super Bowl in Las Vegas was a +huge opportunity for BetMGM to be at the centre of the action, having the world’s +biggest stage literally footsteps away from several BetMGM retail sportsbooks. +To maximize this opportunity, Entain +launched its new Nevada app with access +to BetMGM’s full sportsbook offering, +weeks before the Super Bowl, giving the +best BetMGM experience to the NFL fans in +Nevada for this landmark event. +Then, BetMGM set out to do what so +many other brands struggle to do in this +domain, carve out a memorable Big Game +commercial that perfectly complements and +establishes a connection with the brand. +In a company-first, the team launched +its three-part campaign which featured +the never-before-seen pairing of sports +legends, Tom Brady and Wayne Gretzky, +along with actor Vince Vaughn, marking an +iconic moment for BetMGM. +The BetMGM team didn’t stop there. +In addition to the advertisement, BetMGM +executed a multi-faceted approach to +“Win Las Vegas” for Super Bowl week. +Alongside extraordinary VIP experiences +with celebrity ambassadors, BetMGM +painted Las Vegas gold and black with +a variety of outdoor, indoor, digital and +special advertising campaigns that +greeted fans from the moment they get off +the plane. +Marking another first, BetMGM partnered +with X in a one-of-a-kind collaboration to +become the official betting sponsor of the +platform, starting with the Super Bowl and +continuing through 2025. +Regardless of who was the Super Bowl +champion, BetMGM came out a winner. +The new platform was able to handle +a 30% uplift in activity over the Super +Bowl weekend and a 72% increase in +customers from the 2023 Big Game, thanks +to the incredible efforts and collaboration +between the Entain, BetMGM and +MGM teams. +Smashing +records under +the neon lights of +Las Vegas strip +37Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_4.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..34a2edaf9cc87ff1f4f007a6062cf063921d085b --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_4.txt @@ -0,0 +1,105 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_40.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e9fbfdeb7e9639669ca9f237c90b3d1f5689a24 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,81 @@ +Regulatory +update +Unlike slots and poker, casino table games +are regulated on a state-by-state basis. +The states may either create a monopoly +or issue as many licences as the state has +land-based casinos. By the end of 2023, +only the states of Schleswig-Holstein and +North Rhine- Westphalia had opted for a +licensing system. To date, only Schleswig- +Holstein has released the tendering +process, but the group has opted not to +apply for a licence for commercial reasons. +In North Rhine-Westphalia, details on the +tendering process were expected to be +published in 2023 but due to various delays, +the details are now expected in Q1 2024. +Entain looks forward to participating in +this process. + Germany +The Joint Gambling Authority (“GGL”) has +now been operational in Germany for over +a year. Encouragingly, the GGL has been +more proactive in issuing sanctions against +unlicensed operators, but we still see room +for improvement and intensification. We are +continuously working with the regulator +and state governments to push for more +effective enforcement against illegal +operators and in 2023 worked jointly with +the University of Leipzig and the local online +casino association to produce a study +investigating the scale of the issue. +While the Group was granted three slots +and two poker licences in November 2022 +and the Group´s sports betting licences +were also extended for another 5 years in late +2022, the restrictive environment in Germany +continues to prove challenging. The process +for managing playing limits for slots, poker +and sports betting remains one of the most +pertinent regulatory challenges for licensed +operators. There is also mounting political +pressure for stricter sports betting advertising +restrictions, while the first evaluation of the +Interstate Treaty is set to be published soon. + The UK +The UK Government published its White +Paper of the 2005 Gambling Act Review +in April 2023. As expected, this document +included consultations on a number of +areas, including online slots staking limits; +financial vulnerability checks; a mandatory +levy for research, education and treatment; +additional requirements on game design +and direct marketing as well as the creation +of an Ombudsman. We continue to engage +government actively in this process, both +directly and via our trade body. We have +continued to develop and enhance our +Advanced Responsibility and Care™ +(“ARC™”) programme, which offers tailored +identification of customers who may be at +risk, as well as targeted interventions and +interactions. Whilst many of the changes +within the White Paper can be achieved via +secondary legislation, we are collaborating +with the other major operators to voluntarily +progress initiatives such as a single +view of the customer and the creation of +an Ombudsman. +Gaming is a truly global market and in 2023 the Group held licences in over +30 jurisdictions across the world. The Group is committed to only operating in +regulated or regulating markets and as from February 2023, 100% of the Group’s +revenue is from such markets. The Group firmly believes that strong, commercially +viable regulation of the betting and gaming sector is in everyone’s interests. It +provides stability for operators, important taxation streams for governments +and – most importantly – provides the consumer with proper protections and +safeguards by ensuring that only responsible providers operate in the market. +38 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_41.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..ffe4c0fec1b990c43f93881d1b65c5c82574fa8c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,159 @@ + Africa +In late 2023, Entain decided to withdraw +from the regulated markets of Zambia and +Kenya but the Group remains committed to +expanding its significant regulated offering +in South Africa, where it has been present +for a number of years. + US +The sports betting regulatory activity +continues at pace in the United States. +Kentucky, North Carolina and Vermont are +amongst the US states that have regulated +in 2023. Rhode Island has been added +to the list of US iGaming states. Finally, +additional states have adopted, or are in +the process of adopting, modernised forms +of responsible gambling regulation; a trend +Entain welcomes with an eye on the long- +term sustainability of the US market. +Bearing in mind that over 35 US states +have already allowed for sports betting in +one form or another, the Group remains of +the view that in the coming years some 40 +or even 45 US states will have regulated +sports-betting, which will provide BetMGM +with even broader market access across +the country. The number of states that +permit online casino is also expected to +grow in the years to come – for example the +state of New York as already announced +its intention to attempt iGaming regulation +in 2024. + LATAM +In Latin America, Brazil adopted a law +that allows for domestic licensing of sports +betting and online casino in late 2023. +The law will be implanted throughout +the first half of 2024, with the regulated +market expected to launch at some point +in Q3 2024.The regulation will extend to +all online gambling verticals, including +sports betting and gaming, and will allow +for an open licensing system subject to +payment of betting and other taxes and +fees. Furthermore, the Group has launched +licensed operations in Mexico under its +bwin brand. +There was better news in France where +we have seen nascent discussions +about the possible legalisation of online +casino, while in Croatia the Government +completed a regulatory review and is now +looking to bolster its efforts to tackle the +illegal market. +At the end of 2023, Entain only operated in +two markets in Europe where it is not yet +locally regulated. Despite our best efforts +in Austria , there have been no changes to +the status quo and the Government has +no imminent plans to initiate the reforms it +announced in March 2021. Nevertheless, +we will continue to push for regulatory +reforms. Encouragingly, in Finland the +Government has officially begun the +process of dismantling the monopoly in +favour of a licensing system that we expect +to come into force sometime in 2026. + Australia +A parliamentary inquiry issued a report +in 2023 calling for a ban on gambling +advertising as part of a 31-point plan to +reform the Australian gambling market. +It also proposed various other measures +including the establishment of a single +national regulator and a formal duty of +care. We expect the Government to come +forward with its response to the report and +proposed next steps in the first half of 2024. +Elsewhere, the National Self-Exclusion +Register BetStop launched in August, while +a ban on credit card betting was adopted in +December 2023 and will come into effect in +mid-2024. + Canada +The Ontario online betting and gaming +market became regulated on 4 April 2022, +thereby becoming the first Canadian +Province to issue domestic licenses for +private operators. Entain operates in +Ontario through its bwin and Party brands +as well as Sports Interaction, a Canadian +brand the Group acquired in February 2022. +Going forward, other Canadian Provinces +such as Alberta and British Colombia are +expected to introduce regulation. + Other Europe +In 2023, wide-reaching advertising +restrictions were introduced in Belgium , +while a pending parliamentary bill and a +draft Royal Decree could impose further +restrictions on local operators in 2024. +Fortunately, the sector was successful +in blocking a proposal to introduce an +additional 5% tax which would have had a +detrimental impact on licenced operators +and encouraged customers to move to +black market operators and therefore +reduce player protections. +In the Netherlands , Entain completed +the acquisition of BetCity in January +2023. National elections took place in +November and we await the formation of +a new coalition government which could +lead to change in direction for gambling +policy. We are also expecting the Dutch +authorities to come forward with new +proposals on playing limits, AML and +duty of care requirements which are likely +to come into effect in 2024 and impose +stricter compliance requirements on +operators . The headline gambling tax rate +also increased by 1% to 30.5% from 1st +January 2024. +In Italy, the Government published a +new framework law in 2023 laying the +foundations for potentially wide-reaching +sectoral reforms to be enacted in 2024 +and beyond, including an overhaul of the +current gambling licence tender procedure +which will increase licensing costs and +impose stricter regulatory requirements on +operators. In Spain , the government has +moved oversight of gambling to a newly- +formed Ministry, while plans to introduce a +system of cross-operator limits remain on +the medium-term agenda. In Ireland we are +still awaiting the enactment of the pending +Gambling Regulation Bill that will introduce +a formal regulatory and licensing regime for +online gambling. In Denmark a draft law +has been published to amend the Gaming +Act, including the introduction of a B2B +licence regime to take effect from 2025. +In 2023, we have seen tax increases +announced in several of the markets where +we operate. The Prime Minister of Georgia +announced plans to increase taxes for +online gaming from 10% to 15% GGR, and +player winnings withholding taxes from +2% to 5%, effective from 1 January 2024. +The Swedish government has announced +its intention to increase the rate of gaming +tax from 18% to 22% with effect from 1 July +2024, while the Latvian Government plans +to increase online gambling tax from 10% to +12% GGR from January 2024. +39Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Regulatory update \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_42.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..017ad9fa81c6bf4651766cc6afeef7c85d4214a0 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_42.txt @@ -0,0 +1,68 @@ +At Entain, sustainability is a key enabler of our corporate strategy. +We firmly believe that the most sustainable operators will be the +most successful in our industry. +2023 was a pivotal year for sustainability +at Entain as we unveiled our new +Sustainability Strategy, building on our +longstanding commitment to sustainability +and taking it to the next level. +With this new Strategy, we wanted to +strengthen our sustainability leadership +position as well as listen to our stakeholders +and respond to the changing Environmental, +Social, and Governance (“ESG”) landscape. +We conducted a double materiality +assessment to help us understand our +unique sustainability-related risks and +opportunities, as well as our impacts on +society and the environment. We conducted +surveys and interviews, analysed industry +reports, and held leadership workshops, +gathering input from over 250 internal +and external stakeholders from around +our business, to understand how we can +ensure we are supporting value creation to +all stakeholders. +These insights helped us develop a +strategic framework that will focus our +sustainability actions in the coming years. +Our new approach, which is presented on +the next page, is structured across four +pillars that encapsulate those ESG issues +that are most important to Entain, our +customers, investors, and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create the environment for everyone to +do their best work + Positively impact our communities +As we reflect on 2023, we are proud to +report extensive progress across each of +these strategic pillars. We invite you to +discover our achievements on the following +pages, which include: + Rolling out our player protection +programme ARC TM in our digital offer +to cover 27 jurisdictions and launching +ARCTM for retail in the UK and the +Republic of Ireland. + 100% of our revenues coming from +regulated or regulating markets since +February 2023. + Winning Innovator of the Year at the +Women in Gaming Diversity Awards +for our Returnship programme with +McLaren Racing. + Partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings, and onboarding 35% of in-scope +vendors and supporting them to improve +their sustainability performance. +Looking at 2024, we will remain sharply +focused on delivering our new strategy and +reaffirming the sustainability leadership +role that underpins our long-term growth. +Sustainability at Entain +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202340 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_43.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..5578fe4868be8f1c0f1f593c49b9d13329b3d226 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_43.txt @@ -0,0 +1,130 @@ +Entain’s Sustainability Strategy +At Entain, we see sustainability as a key enabler of our corporate strategy and growth. We embrace our role within society with the +strongly held belief that the most sustainable business in our industry will be the most successful. +This is reflected in our new Sustainability Strategy. We have structured it across four pillars that carefully encapsulate those sustainability +issues that are most important to Entain, our customers, investors, and partners. For each pillar, we have identified key focus areas and +assigned Board-level oversight, summarised below. +You can read more details about how we developed the strategy using the results of our 2023 double materiality exercise here . +What it means Aligned material clusters Focus areas Oversight +Be a leader in player +protection +We provide industry- +leading customer +protection through +innovative features, +customer support, +communications and +our culture. +S afer betting and gaming +E thical & +compliant behaviour + Innovation + Industry-leading +ta +ilored customer +protection tools +and processes +E mpower our people +to support and protect +our customers +H arm prevention +through education +and responsible +communications +Pr omote research +and share evidence- +based learnings with +the industry +Sustainability +& Compliance +Committee +Provide a secure and +trusted platform +We lead on integrity in +everything that we do. +From having the highest +ethical standards, +to only operating in +regulated markets, with +an aim of gold standard +data protection, +and cybersecurity. +E thical & compliant +behaviour +D ata privacy +and cybersecurity + Corporate +G +overnance +O nly operate in +regulated markets +E thics and integrity +at the core of +our organisation +and culture + Provide in dustry- +leading cybersecurity, +data privacy and +AI governance +C lear and robust +governance processes +for each of our key +ESG areas +Sustainability +& Compliance +Committee +Create the environment +for everyone to do +their best work +We are an employer of +choice, and we build an +inclusive and supportive +culture where talents +from all backgrounds +can thrive. +D iversity, equity +and inclusion +H aving the +right people +A ttract, engage and +retain the best, most +diverse talent +Pr ovide the right +growth opportunities +for all +B uild a sense of +belonging for +all Entainers +People +& Governance +Committee +Positively impact +our communities +We play our role in +limiting global warming +to no more than +1.5°C and we create +a positive impact on +our communities. + Environmental +S +ustainability + Corporate +G +overnance +R educe our +environmental impact +C reating a sustainable +value chain + Promote g rassroots, +women’s and +disability sports +S upport communities +where we operate +Sustainability +& Compliance +Committee +Entain plc A +nnual Report 2023 41 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_44.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..b598fd0b116ebee3d83e5afa8e2c28b18d6f05f8 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,90 @@ +ESG Governance +Climate governance +Given the urgent need for action to address +the climate emergency, we have stepped +up our governance in this area. Our CEO +is now responsible for our approach to +climate change, and climate-related risks +and opportunities. In addition, we have +developed our Net Zero Action Group. +The Net Zero Action Group reports to +the ESG Steering Committee, which +is a selection of leaders from around +the business who are responsible for +delivering and developing an organisation- +wide approach to achieve our Net Zero +ambitions. You can read more about how +we manage our climate-related risks and +opportunities in our TCFD Statement on +pages 56 to 63. +Issue-specific Committees +In addition to the ESG Steering Group +and the Net Zero Action Group, we have +formed groups that report to the ESG +Steering Group that focus on delivering our +approach to specific ESG issues that require +additional expertise and insights from the +business. Steering groups include groups +focused on Anti-modern Slavery and +Human Rights, Safer Betting and Gaming, +Anti-Money Laundering, and Diversity & +Inclusion. +Board Committee Oversight +In May 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. +The newly created Sustainability and +Compliance Committee was created to take +on the bulk of the responsibilities of the +former ESG Committee. The Sustainability +and Compliance Committee has oversight +for safer betting and gaming, regulatory +compliance, anti-money laundering and +counter-terrorism financing, anti-bribery +& corruption, human rights (including our +approach to addressing modern slavery +risks), health and safety, environmental +impact (including the evolution of our +strategy and processes in response to the +Taskforce for Climate-related Financial +Disclosures), data protection and charitable +donations, including the work of the Group’s +Entain Foundation. Chaired by Virginia +McDowell, one of our Non-Executive +Directors, the Committee has three +members and guides the business on all +aspects of ESG strategy, sets targets and +monitors our performance. +The second newly created Committee, +the People and Governance Committee, +took on the responsibilities of the previous +Nomination Committee and added +responsibility for oversight of the Group’s +approach to Diversity, Equity and Inclusion +and other people-related functions +such as engagement and culture and +employee wellbeing. +The ESG Steering Group +The ESG Steering Group, which meets +monthly, consists of functional leaders +from across the business, including +Sustainability, Investor Relations, Human +Resources, Corporate Affairs, Legal, Health, +Safety & Security, Operations, People and +Communications. Convened by our Group +Head of Sustainability and chaired by our +Chief IR & Communications Officer, the +Group oversees the implementation of our +sustainability strategy. +Delivering our +Sustainability Strategy +starts with robust +governance. As our +ambitions grow, and +best practice evolves, +we continue to expand +our processes. ” +Entain plc Annual Report 202342 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_45.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..df0951d328403898c8edff9fccfc7400bb736050 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,64 @@ +Strategy Board +Delivery +Coordination +Oversight +ESG Steering Group +Operating Units and +Central Functions +Operational teams +People and Governance +Committee +People and Governance +Committee +Sustainability and Compliance +Committee +People and Governance +Committee +Anti-Money Laundering and +Counter-terrorism Financing +Anti-Bribery and Corruption +Health and Safety +Environmental Impact +Modern Slavery and +Human Rights +Privacy and Data Protection +Net Zero Action Group +Regulatory Compliance +Safer Betting and Gaming +Talent and capability +Diversity, Equality and Inclusion +Employee engagement +Employee well-being +Our performance across ESG Rating Agencies +We are proud to be a sector leader amongst many of the leading independent ESG rating providers. The below table summarises our +performance and improvement over time. We will continue to work tirelessly to further improve our ESG practices and performance, with +the aim of further improving the standards for our industry and in these external assessments. +Rating Evaluation +Score +(31 December 2023) +Score +(31 December 2022) +Industry +Rank +MSCI ESG Score AA 7.2 6.7 N/A +Sustainalytics ESG Risk Rating Low 19.6 +(a lower score +shows a +lower risk) +22.3 13/87 in the Casinos +& Gaming industry +ISS ESG ESG Score C 49 47 1st decile +S&P Global ESG Score S&P +Yearbook +and DJSI Europe +constituent +60 67 95th percentile +FTSE4Good ESG Score Inclusion +in +FTSE4Good Index +3.8<> 3.8 93rd percentile +CDP Climate Management B B N/A +ESG Governance Structure +Entain plc Annual Report 2023 43 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_46.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..242e3529cecb8e06933fc7fce5dfeb94098c9861 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,105 @@ +We provide best in class customer protection through innovative +features, customer support, communications and our culture +Material issues + Safer betting and gaming + Ethical and compliant behaviour + Innovation +Oversight +Sustainability & Compliance Committee +Advanced Responsibility and Care™ +(“ARCTM”): Our leading tailored customer +protection tool +Our recent materiality assessment found +that safer betting and gaming is our most +material ESG issue, and ARC™ is our +flagship initiative to protect our customers +– providing a technology-led approach to +player protection through real-time and +individually tailored detection, interaction +and interventions with players that are +potentially at risk. +Given its importance to Entain and our +customers, the roll-out and effectiveness of +ARC™ is linked to through our Group Bonus +Scheme, which includes our executive +team. The details of how we incentivise +the delivery of player protection is outlined +further in the Remuneration Report +on p131. +This year, ARC™ continued to mature in +the UK and expand globally. By the end of +2023, ARC™ is now live across our core +international markets (except Brazil). +Our safer betting and gaming programmes +in our retail estate in the Republic of Ireland +and the UK are also supported by ARC™. +This provides our customer facing retail +colleagues with data-driven insights to +help them spot and address risky play in +our shops. +We continue to monitor the effectiveness of +ARC™, the results of which are reviewed by +the Executive Committee and Sustainability +and Compliance Committee quarterly. +Empowering our people +We continue to deeply embed safer gaming +into the culture of our company. At the end +of 2023, 98% of our colleagues were up +to date with their mandatory annual safer +betting and gaming training. This training +provides all colleagues with the essential +understanding of our approach to, and +compliance requirements on, safer betting +and gaming. However, we also understand +that specific roles within our business have +key responsibilities for player protection. +Focus area 2023 Highlights +Best-in-class tailored customer +protection tools and processes + Rolled our ARC™ to cover 27 jurisdictions (2022: 22), including real-time models in +23 jurisdictions + ARC™ for retail now live across UK and ROI + 7.5 million ARC™ interactions (+98% YoY) to 742,112 unique customers +Empower our people to support +and protect our customers + 98% completion rate of annual compliance, safer gambling, and AML training + Enhanced safer gaming training, delivered by EPIC Risk Management, delivered +to all senior leaders +Harm prevention through education +and responsible communications + Expanded our stakeholder education and training in the US, through our partnership +with EPIC Risk Management and major leagues as well as players associations such +as the Major League Baseball, National Football League, League Soccer Players +Associations and the NHL Alumni Association + 20% of TV advertising space and football sponsorship dedicated to safer betting and +gaming communications or Foundation promotion +Promote research and share +evidence-based learnings + Final year of partnership with Harvard Medical School’s Cambridge Health Alliance +Division on Addiction (CHADA), contributing £5.5m over five years to cutting-edge +research into Safer Betting and Gaming + Contributed 1% of our GGY in the UK to Research, Education and Treatment (RET), +totalling £18.7m +Awards and accreditations: UK North America International +GamCare Advanced Safer +Gambling Standard + Online: Advanced +Level 2 (highest level) + Retail: Advanced Level 2 +EGR North America +Awards 2023: +Socially +Responsible Operator +SBC Global and +SBC LATAM Socially +Responsible Operator of +the Year +Vixio Global Regulatory +Awards: Award for +Outstanding Contribution +to Safer Gambling +Entain plc Annual Report 202344 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Be a leader +in Player +Protection \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_47.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5718fd8f711d206bcf409e8e422ff99a3bc4d3bd --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,138 @@ +For these roles, we continue to roll out more +in-depth and specific training. For example, +our senior leadership periodically +undertakes in-depth training from EPIC +Risk Management. Customer-facing roles +who are responsible for engaging directly +with our customers also receive in-depth +training on identifying and interacting with +customers who may be at higher risk of +harmful play. +We are also leveraging our partnership +with Harvard Medical School’s Cambridge +Health Alliance Division on Addition +(“CHADA”) to support our training +programmes. Since 2019, 16 of our safer +betting and gaming training programmes +have been reviewed by the team at CHADA +– ensuring our training and culture reflect +the latest research. +Responsible marketing +Responsible marketing is a core part of +our commitment to promote responsible +attitudes, and protect children, young +persons and vulnerable individuals. +We have a long history of leading the +industry in this area, spearheading the +UK whistle-to-whistle advertising ban, +and being the first operator to ban shirt +sponsorship in UK football. +Our commitment to responsible advertising +and marketing is underpinned by our +recently refreshed External Marketing +Policy. This Policy outlines our responsible +marketing principles. All relevant staff +receive training on the policy. +We also work closely with trade +associations to strengthen best practice for +our industry’s marketing and advertising. +For example, we are a signatory of – and +contributor to – the European Betting +and Gaming Association’s (“EGBA”) Code +of Conduct. +Promoting research through +our partnership with Harvard +Medical School +2023 marked the final year of our five-year +research partnership with the Cambridge +Division on Addiction, which has now +produced 14 research papers since 2019. +The outcomes of this research have +been highly practical, underpinning our +26 markers of protection – the behavioural +patterns found to indicate signs of risk +that are used by ARC™. As this research +is published, or is in the process of +publication, this allows not just Entain but +the whole industry to access the latest +research. You can read more about this +research programme in our 2023 Social +Impact Report. +At Entain, we know that safer betting and gaming starts +with our culture. It’s important that all colleagues have the +knowledge and tools to fulfil our responsibility to protect +our customers. + Interactions excellence: Interaction +Excellence aims to promote insightful +and valuable discussions with teams +that deal with customers that are +potentially the most at risk. The training +focuses on strengthening soft skills +that colleagues will draw upon during +customer interactions. In 2023, this +training was reviewed by the Harvard +Medical School’s Division on Addiction, +Cambridge Health Alliance. +Moving forward we will also conduct +in-depth training with leaders from +around the business (aimed at our +senior leadership team and Board +Directors), to further integrate a culture +of player protection right at the top of +the organisation. This training will be run +by EPIC Global Solutions and refresh the +leadership training delivered in late 2022. +Embedding safer betting and +gaming into our culture +As part of the 2023 Group Annual Bonus +Plan, a mandatory training module +was implemented on compliance, safer +gambling and anti-money laundering, +achieving a 98% completion rate. Our goal +is to train all colleagues on the importance +of player protection, preventing money +laundering, and responsible marketing +– with retail colleagues receiving a more +tailored version of the content relevant to +their role. +We also know that some colleagues +have unique responsibilities for their +role – whether it be engaging directly +with customers, designing new products, +or leading teams or divisions. In 2023 +we worked with EPIC Global Solutions +to deliver in-depth masterclasses and +face-to-face-training on safer betting and +gaming tailored for specific, high-impact +roles. For example, our customer service +and retail colleagues took part in sessions +that equipped them with the skills to +1. Core countries are those that are using our core technology platform. ARC™ is embedded within this core technology, so in these countries we can use the full power of our +markers of protection and interactions. +2. Risk is determined based on our Long-term Excessive Play (LTEP) model, which is one of our three primary ARC™ Markers of Protection models, which scores every user of the +Entain Platform from 1 (low risk) to 100 (high risk) daily. LTEP is used for assessing risk due to identify underlying problem gambling behaviour over time. +identify signs of harm and effectively +interact with customers to advise on +our suite of tools that may be used to +help them. +Key modules focused on: + Introducing our retail teams to problem +gambling to help them understand how +gambling related harm can present +itself and ensure that they are aware +of how to protect our customers to +limit the negative impacts of gambling. +Between May and August 2023, 294 +colleagues attended the EPIC Safer +Gambling Awareness training. + Affordability Interactions: This training +provided our colleagues with guidance +on the key steps they should take to +ensure that customers are keeping +their betting affordable, and the +communication tools they can use to +encourage safer gambling and manage +hostile behaviour on the shop floor. +Entain plc Annual Report 2023 45 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Lead on player protection \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_48.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..8cf5b50e6e70557a6fd033899f4365662624b660 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_48.txt @@ -0,0 +1,104 @@ +Ethics and integrity at the core +of our organisation and culture +We are committed to conducting +our business in line with the highest +ethical standards. We heavily invest in +governance, resources, and training to +combat corruption and keep financial +crimes out of gambling. +For Entain, this starts with playing an active +role in safeguarding the values and integrity +of sport. We want all sports events to be +fair and played to the best of participants’ +abilities. This is why we work closely with +regulators and sports governing bodies to +fight match-fixing, spot-fixing, and other +corrupt betting activity. We are a member +of the International Betting Integrity +Association (IBIA) and the Sports Betting +Integrity Forum (SBIF). +In 2023, we continued to reinforce our +Ethics & Compliance (“E&C”) function +with new team members and stronger +governance. We launched a new Ethics +& Compliance Charter which defines +clear accountability across the group and +ensures that our E&C team has the required +independence and authority to act as an +effective second line of defence. We also +launched a three-year E&C Strategy, which +sets our action plan for achieving a best-in- +class E&C programme. +Only operate in regulated markets +Entain firmly believes that strong, +commercially viable regulation of +the betting and gaming sector is in +everyone’s interests. It offers stability for +operators, important taxation streams +for governments and – most importantly +– provides the consumer with proper +protections and safeguards by ensuring +that only responsible providers operate in +the market. +Since February 2023, 100% of our group’s +revenue come from regulated or regulating +markets. As of 31 December 2023, we held +licences in 34 jurisdictions across the world. +We were also present in five regulating +markets where we can see a clear pathway +to regulation that will enable us to obtain +domestic licences in the next two years. +These regulating markets are Brazil, +Mexico, Peru, Austria and Finland. For more +about this, please refer to our regulatory +update on pages 38 to 39. +We appointed a Group Money Laundering +Reporting Officer and Global Head of Anti- +Financial Crime (“AFC”), and we expanded +our AFC team. After a period of growth +and multiple acquisitions, we revised our +organisational structure with all colleagues +with AFC responsibility reporting to the +central AFC Leadership Team. This new +governance framework gives us better +control and oversight across all our +entities, subsidiaries, and joint ventures. +We have also initiated an evaluation of +our international subsidiaries to assess the +maturity of local AFC programmes. This will +conclude in 2024 with on-site visits and +upskilling programmes tailored to the needs +of our colleagues. +We lead on integrity in everything that we do. From having the +highest ethical standards, to only operating in regulated markets, +with an aim of gold standard data protection, and cybersecurity +Material issues + Ethical & compliant behaviour + Data privacy and cybersecurity + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Only operate in regulated markets 100% of revenues from regulated or regulating markets since February 2023 +Ethics and integrity at the core +of our organisation and culture + New Ethics & Compliance Charter and Strategy + Average completion rate of 95% across Entain’s Big Four Compliance +Training Modules + Refreshed set of Entain Values, with “Do what’s right” at its core +Provide industry-leading +cybersecurity and data privacy + Growing headcount in Data Privacy and Cybersecurity teams, by 25% and 35% +respectively compared to 2022. + Average time to fix cybersecurity vulnerabilities decreased by 65% compared to 2022 + Over 80% of our operations audited and certified to ISO 27001 (by headcount) +Clear and robust governance processes +for each of our key ESG areas + New ESG governance structure with two board-level committees (Sustainability & +Compliance and People & Governance) +Awards and accreditations: ISO 27001 2022 Information Security Management System +Entain plc Annual Report 202346 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Provide a secure +and trusted +platform \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_49.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..714427fcecf3a3a68d400042945b454c1c855d92 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_49.txt @@ -0,0 +1,111 @@ +Doing what’s right +Every colleague, including contractors +and agency staff, must complete four +compliance modules covering Entain’s +Code of Conduct as well as ethical topics +such as safer gambling, data privacy, or +bribery and corruption prevention. As part +of this, colleagues sign a declaration that +they have understood the training and will +comply with Entain’s Code of Conduct. +Our 2023 Group Bonus was linked to +achieving 85% completion for each +module – an ambitious but achievable +target given the turnover in certain parts +of our business. This year, we achieved an +average completion rate of 98% – up from +93% in 2022 and 82% in 2021. +Big Four Learning Modules +Completion +Rate +Code of Conduct 94% +Compliance, Safer Gambling, +and Anti-Money Laundering 98% +Data Privacy 98% +Cybersecurity 98% +Provide industry-leading cybersecurity +and data privacy +Safeguarding our corporate and customer +information remains a top priority for +Entain. Our commitment is reflected in the +growing headcount of our Data Privacy and +Cybersecurity teams, which respectively +increased by 25% and 35% in 2023. +In 2023, we continued building our data +privacy assurance function with dedicated +resources to monitor the effectiveness +of our privacy activities, keep risks under +review, and update policies and procedures. +We boosted privacy controls by introducing +Effectiveness and Maturity Reviews of +our most critical data processes. We also +reinforced our risk management process +with a new privacy risk register which feeds +into Entain’s Enterprise Risk Management +(“ERM”) risk maps and identified an +additional 20 privacy risks in 2023. +Throughout the year, we further embedded +Entain’s Artificial Intelligence (“AI”) and +Data Ethics Charter, which we launched +in 2021 to define our principles for the +responsible use of AI and data-driven +technologies. We collaborate across the +business to embed Privacy by Design, +building data privacy considerations +directly into the development of our +products and processes. We have also +been preparing for emerging legislation +around AI, such as the EU Artificial +Intelligence Act. Working closely with our +Data Sciences & AI (“DSAI”) colleagues, +the Privacy team created a blueprint for +Entain’s AI Governance Framework and +developed a new AI policy which will be +released in 2024. +As cybercrimes continue rising globally, +we are continuously improving our +cybersecurity programme to protect our +players from digital threats. In 2023, we +introduce new security features in our +products such as customer multi-factor +authentication. We also reinforced our +cyberattack detection processes by +deploying machine-learning and AI- +based systems which uncover patterns +of malicious activity and block attacks +before they can reach our customers. +We managed to decrease the average +time to fix cybersecurity vulnerabilities by +65% compared to 2022. +As part of our commitment to best +practice, we have re-certified for the +ISO 27001 certification, an international +standard for information security. As of +31 December 2023, 80% of our operations +have been audited and certified to +ISO 27001. In 2024, we will continue +expanding the scope of the certification to +our 2023 acquisitions. +Clear and robust governance +processes for each of our key +ESG areas +In April 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. This new +structure reflects the ever-growing +importance of ESG topics for the group. +You can read about our ESG governance +structure on page 43. +As a FTSE100 company, +we have a duty to do the +right thing. This also means +training our people to always +make the right decision +for our customers and +our communities. +Entain plc Annual Report 2023 47 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Provide a secure and +trusted platform \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_5.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..9800d0d1fb13d42baafaeacb3075e7744440b355 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_50.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c14569294c1cb4570811a1185d4d90e4093d5a70 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,139 @@ +Focus area 2023 Highlights +Attract, engage and retain the best, +most diverse talent + Launch of Black Professionals@Entain employee network + Publication of Entain’s first-ever Global Menopause Policy + Entain ranking 5 in the 2023 All-In-Diversity Project Index + Entain’s Returnship programme with McLaren Racing receiving accolades at the +Women in Gaming Diversity Awards and the Personnel Today Awards +Provide the right growth opportunities +for all + Launch of Your Goals, Entain’s new objective-setting programme +Build a sense of belonging for +all Entainers + Launch of refreshed values and behaviours + 94% of Entain Managers received mental health training through the Workplace of +Tomorrow programme + 400,000 employee interactions with Entain’s Well-Me events, activities, and content + 9.1% utilisation rate for our Employee Assistance programme +Awards and accreditations: + + +We attract a broad and diverse audience from the inside out. +We are an employer of choice, and we build an inclusive and +supportive culture where talents from all backgrounds can thrive +Material issues + Diversity, equity and inclusion + Having the right people +Oversight +People & Governance Committee +On International Women’s Day 2023, we +published our first-ever global menopause +policy. Our ambition was to help colleagues +understand menopause-related issues and +normalise talking about the symptoms. +The policy came with a global awareness +campaign and support for managers in +having conversations around menopause. +We built a virtual Menopause Hub with +resources and bite-size training for those +going through the menopause journey and +for managers and teammates wanting +information on how to best support women +in the workplace. +We are committed to positively impacting +diversity not just within Entain, but across our +industry. We partner with universities and +charities to improve female representation +within STEM careers. One example of this +is our partnership with Girls Who Code, +through which we have reached 10,680 +young women since 2021. You can read more +about our work to drive diversity in the tech +sector in our 2023 Social Impact Report. +In 2024, we will focus our efforts on further +embedding DE&I within our Resourcing +Strategy to increase representation in +our hiring process. Our new recruitment +and candidate management platform will +provide us with better DE&I data on our +Attract, engage and retain the best, +most diverse talent +Diversity, Equity and Inclusion (DE&I) are key +to Entain’s future sustainability and success. +Attracting and retaining key talent remains +one of our Principal Risks as a tech business +(see page 85), and workforce diversity +plays an essential role in innovating, driving +change, and delivering outstanding products +and services for our customers. +As part of our commitment to DE&I, we +understand the importance of global +employee networks in providing a safe space +for colleagues with a shared identity or +experience. Launched in 2022, the Women@ +Entain and Pride@Entain groups continue +to grow, with over 1200 and 250 members +respectively. In 2023, Women@Entain +piloted a new mentoring programme for +women in our Product & Technology team, +matching participants with senior mentors. +We also launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. Led by our +network, we signed a UK partnership +10,000 Black Interns Foundation, and have +pledged to offer career opportunities to +Black students and graduates in the summer +of 2024. +Gender diversity at Entain +Group Board 33% +2023 3 out of 9 +(33%) +2022 +2021 +3 out of 9 +(33%) +4 out of 10 +(40%) +Senior managers 28% +221 out +of 794 +(28%) +194 out +of 752 +(27%) +128 out +of 364 +(26%) +2023 +2022 +2021 +All Employees 46% +13,645 out +of 29,576 +(46%) +13,479 out +of 28,940 +(47%) +11,583 out +of 25,554 +(45%) +2023 +2022 +2021 + Male Female +Personnel Today +Equity, Diversity & +Inclusion award +Women in Gaming +Diversity Awards Innovator +of the Year award +Entain plc Annual Report 202348 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Create the +environment for +everyone to do +their best +work \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_51.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..c80ae463127b563c317fc3f799afe58eca33e894 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,159 @@ +candidates and recruits, allowing us to +tailor interventions and set group-wide +targets. We will also continue to remove +any barriers in the hiring process for +candidates and colleagues through the +design and launch of our new recruitment +platform in 2024. +Provide the right growth +opportunities for all +Our colleagues’ continuous personal and +professional growth is essential, and we +invest in targeted learning & development +(“L&D”) within our business units. +Programmes, courses, and self-led learning +are tailored to the needs of our teams +and individuals. +Entainers globally have access to best- +in-class learning resources, such as +LinkedIn Learning, Get Abstract, and +Pluralsight. These platforms enable our +colleagues to continuously develop their +skills – from marketing to Python coding or +public speaking. +In 2023, we focused our L&D efforts on +customer-facing roles, both in our global +Customer Services team and across our +Retail Estate. We know that customer +satisfaction starts with great leadership and +employees who feel supported and valued. +In our Customer Services team, we kicked +off Let’s Lead, a new leadership programme. +The seven-week curriculum includes a mix +of self-paced learning, in-person training, +and professional certifications delivered by +external providers. With over 20 modules, +the programme equips our managers +with all the technical knowledge and soft +skills they need to successfully lead their +teams. This includes completing a Mental +Health First Aider course, as part of Entain’s +commitment to wellbeing. 979 colleagues +have already completed the course, with 113 +learning sessions delivered and we will roll +it out to Hyderabad, India and Montevideo, +Uruguay in 2024. +In our retail business, we have built a +consistent foundation of competency +and knowledge among managers and +team leaders. The Enhance, Establish and +Elevate Your Game programmes support +colleagues at different points in their careers, +from preparing for a first management +role to sharpening their leadership skills. +In 2023, the programme trained over 2000 +colleagues. We are proud that many of +our retail management team started as +Customer Service Managers before growing +into senior roles. +Last year, we also worked to harmonise +the way our colleagues think about their +professional objectives. We launched Your +Goals, an objective-setting programme, to +ensure all our colleagues have meaningful +conversations with their managers about +their goals and understand how these align +with Entain’s strategy. In 2024, we will +develop Entain Leadership Expectations +which will be supported by a structured, +consistent, and global leadership pathway. +Build a sense of belonging for +all Entainers +Following an intensive period of business +growth, we wanted to bring our colleagues +together and consolidate our shared culture. +2023 saw us launching a refreshed set +of values and behaviours which build on +our core beliefs whilst helping us prepare +for the next phase of our evolution: Do +what’s right, Keep it simple, Go beyond, +and Win together. More than words on a +wall, these values act as guiding principles +for our colleagues across all locations and +at all levels. They have been embedded +in everything we do, from the way we +recognise our colleagues to how we set +individual objectives. +In line with these values, we remain +passionately committed to creating a +supportive and encouraging environment +where all our colleagues can thrive. +The Entain Well-Me strategy is designed +to help employees make positive changes +to improve their physical, mental, and +emotional health. Our 2022 global well- +being survey, which was completed by +9,600 colleagues, helped us identify +strategic priorities for the coming years. + In 2023, we rolled out Workplace of +Tomorrow, a mental health programme +designed to give people managers the +tools to support their teams and create a +culture of trust and psychological safety. +Developed by experts at Unmind, the +training equipped our managers to have +supportive conversations, giving them +practical knowledge on topics such as self- +care, stress and anxiety, or active listening. +94% of the Entain managers completed the +course last year. 74% of them taking action +with their team as a result. +Our 2023 global wellbeing campaigns were +tailored to boost the mental and physical +health of our colleagues. Our flagship +Live-Well Festival consisted of a week- +long event with expert-led workshops on +nutrition, sleep, and fitness, generating +65,000 engagements on our intranet. +In November, nearly 600 colleagues joined +Breaking Stereotypes Together, a live event +to champion men’s mental health and share +techniques for combatting stress. +Looking at 2024, we are using data from +our global wellbeing survey to pilot Entain’s +new resilience training, The Energy Edge. +The programme aims to help colleagues +grow their energy and performance through +a mix of text learning, bite-sized videos, +and interactive activities. We will open +the programme to our retail colleagues +in early 2024 before opening to our +global workforce. +In 2023, we partnered with the McLaren +F1 team on a Returnship programme, +providing unique opportunities for skilled +women to resume their STEM careers. +Over six months, 10 career returners +worked at both Entain and McLaren in +roles ranging from Data Analysts to +Software Developers. The placements +were tailored to their experience and +ambitions, and they received extensive +support to ensure a successful transition +back into work. We are delighted that, at +the end of the returnship, most returners +secured a role at Entain or McLaren. +The programme received two accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Driving Diversity Forward with +McLaren Racing +Companies like Entain can +reshape the world of work for +women, and we want to play +an active role in doing so. +Entain plc Annual Report 2023 49 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Create the environment +for everyone to do their +best work \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_52.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8c5e7af17dd9be90d6dabdd21e3b7484731185d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,36 @@ +We will be Net Zero by 2035, and support and positively impact +our communities around the globe +Material issues + Environmental sustainability + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Reduce our +environmental impact + 70% global electricity from renewable sources, including over 99% in the UK through +green tariffs and a 5-year Power Purchase Agreement + 9% decrease in market-based Scope 1 & 2 emissions globally from the prior year + Near-term and Net Zero submitted to the Science Based Targets Initiative (SBTi), +pending verification +Create a sustainable +value chain + 35% of our in-scope third-party spend enrolled on the EcoVadis platform with +a detailed assessment of their sustainability performance +Promote grassroots, women’s and +disability sports + 250+ aspiring champions have received a financial award via SportsAid since 2019, +helping to cover the costs of training, equipment, and travel + 100 non-league football clubs supported via Pitching In since 2020, enabled to reach +their communities +Support communities where +we operate + Donating £25.4m, to support our communities. + Fundraising £0.5m for Prostate Cancer UK and £1m for Chance for the Children via the +Ladbrokes Coral Trust, funding life-saving research and treatment +Awards and accreditations: ISO 14001: Environmental Management across our operations in GB (shops, stadia and +offices) covering 47% of our global headcount. +Entain plc Annual Report 202350 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_53.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce4a5d93ddbf55c4485b3f04f48b39858e9b10f2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,152 @@ +Environmental Impact +Doing what’s right is one of Entain’s long- +standing values. Whilst our greenhouse +gas (GHG) emissions are relatively low +compared to companies in other industries, +we have an important role to play due +to our size and global scale – especially +given the critical and urgent importance of +climate change. +We were the first betting and gaming +company to formally commit to a Net Zero +target with the Science-based Targets +Initiative (SBTi), with the formal verification +process commencing in 2023 and due to be +concluded in 2024. +Our targets reflect our ambition to lead +the industry on decarbonisation. We have +committed to reduce our absolute scope 1 +and 2 (market-based) and material Scope +3 emissions by 42% by 2027 from a 2020 +base year, and 60% by 2030. We have +also committed to be net zero by 2015 – +reducing our Scope 1, 2 and 3 emissions +by 90% by 2035, and investing in credible +carbon removal projects to neutralise the +remaining 10%. These targets, which follow +the SBTi criteria, will see us reduce our +emissions in line with a 1.5 decarbonisation +pathway ahead of the UK Government’s +2050 timeline. +In 2023, our Net Zero Action Group +developed our first net-zero strategy, which +focuses on energy (efficiency and sources), +electrification, and engagement (see +next section). +We continue to procure over 99% of +our electricity in the UK from renewable +sources, which equates to 70% renewable +electricity globally. We are currently looking +at the viability of sourcing renewable +electricity in our key markets globally. +We recognise that as a digital business, we +need to understand our digital emissions. +We have been collecting and analysing +data from our data centre suppliers to +understand the energy consumption and +renewable energy purchasing of our major +providers. Our most recent analysis in 2022 +indicated that over 50% of our data centres +are on renewable electricity contracts, +and we are engaging with our providers to +increase this further. +We know that ambitious decarbonisation +requires credible and up-to-date data +to monitor and address our emissions +hotspots. In 2023 we signed up to carbon +accounting software that we will launch +and operationalise in 2024. To increase +the quality of our emissions reporting, we +have also commissioned the Carbon Trust +to verify our Scope 3 emissions footprint +in addition to our annual scope 1 and 2 +footprint verification. +Creating a sustainable supply chain +Our commitment to ethics and sustainability +extends to our business partners. We want +to work closely with our suppliers to +support them on their decarbonisation +journey and to protect human rights beyond +our operations. +In early 2023, we took an important step +by partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings. EcoVadis allows us to evaluate our +key suppliers and set corrective action plans +across four topics – environment, labour +and human rights, ethics, and sustainable +procurement. The platform also provides +our suppliers with e-learning training on a +self-service model. Working with EcoVadis +will help us refine our Net Zero roadmap by +giving us access to primary emission data +from our suppliers and helping us identify +those who are committed to the Science +Based Targets Initiative (“SBTi”). +Throughout the first year of our partnership, +we focused on onboarding our existing +suppliers to the platform, enrolling and +assessing over 35% of in-scope vendors. +This represents £523m of third-party +spend. So far, we found that our suppliers +scored on average 59.6 out of 100 +on EcoVadis, 13.6% higher than the +benchmark. We also embedded EcoVadis in +our tender process, making its sustainability +assessment a mandatory requirement for +all winning suppliers. +We are now working with our suppliers to +create corrective action plans, supporting +them in improving their sustainability +performance. We encourage them to set +Science-based Targets, increase their use +of renewable energy sources, and publish +policies around Anti-Bribery and Corruption +(“ABC), Modern Slavery, and Diversity, +Equity and Inclusion (“DEI”). Our ambition is +for 75% of our in-scope third-party spend +to be assessed on EcoVadis by the end +of 2025. +Next year, we will start implementing our +2024-2026 Modern Slavery Strategy by +conducting an extensive risk assessment +of all our in-scope suppliers, mapping +areas where modern slavery could be +more prevalent based on factors such as +purchasing category or political instability. +The findings will help us identify higher-risk +suppliers and, when necessary, request +the completion of supplier self-assessment +questionnaires and plan for external on-site +audits to be completed in 2025. +Promoting Grassroots, Disability and +Women’s Sports +Entain is passionate about sports and +understands the role it plays in society. +We are proud to invest at the grassroots +level, supporting amateur and professional +athletes of all ages, backgrounds, and +abilities to chase their dreams. The Entain +Foundation supports projects across the +globe that you can discover in our 2022/23 +Social Impact Report. +In the UK, we are proud of our long-term +commitment to SportsAid, helping young +British athletes aspiring to become the +country’s next Olympic, Paralympic, +Commonwealth, and world champions. +Since 2019, Entain has helped 251 athletes +by providing them with a financial award to +help with training, equipment, competition +costs, and personal development training. +We empower a diverse cohort of sports +people nationwide, with a close to even +gender split, 48% of our athletes with a +disability and 16% coming from ethnic +minority backgrounds. By 2024, we will +have donated £500,000 to SportsAid. +Entain plc Annual Report 2023 51 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Positively impact +our communities +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_54.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..b2e6a1f05347d865387bb5ed816889ee8f468fde --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,76 @@ +In the U.S., we have partnered with Oak +Out Hunger Entain since 2022. The project, +launched by the Charles Oakley Foundation, +provides education in responsible +gambling with other forms of support to +underprivileged communities. The Entain +Foundation U.S. sponsorship provides +funding and expertise in preventing and +mitigating problem gambling to the Oak +Out Hunger community project. In 2023, +the Entain Foundation U.S. helped fund +10,000 meals to those communities in need. +If you would like to learn more about the +difference we make with our partners +across the globe, we invite you to review +our 2022/23 Social Impact Report. +We also launched Pitching In in 2020 to +support and develop grassroots sports in +the UK, helping non-league clubs improve +their facilities. This multi-million-pound, +multi-year investment programme works +with the Trident Leagues to champion +their achievements and tell their stories. +Pitching In has been designed from the +ground up to deepen links between clubs +and their local communities. We are +also the founding partner of the Trident +Community Fund since 2020, investing +£150,000 every year to enable clubs to +engage in vital community-based projects +and invest in their local areas. In 2022, we +unveiled the Pitching In Volunteer Hub, a +unique online portal and one-stop shop +for every Trident League club to connect +football fans with potential volunteers. +The Volunteer Hub provides a simple +web-based interface where clubs can +post volunteering vacancies, while fans +can search for available opportunities in +their preferred clubs or locations. To date, +nearly 300 positions have been processed +through the hub, helping to bring a vitally +needed new generation of volunteers to the +Pitching In clubs. +Support communities where +we operate +As a global business, we want to positively +impact local communities across the +markets where we operate. Entain partners +with small to large-sized charities across +the globe to support the causes that are +the most important to our colleagues, our +customers, and our communities. +In Kenya, we partner with ComputerAid, +an international charity aiming to address +unequal access to technology in African +countries. Our support is helping to create +a Solar Learning Lab (“SLL”) in Al Huda +Primary School, providing technology +access to traditionally marginalised +communities in South Kenya. The SLLs +are shipping containers converted into +computer rooms and fitted with solar +panels to generate electricity, enabling +them to be deployed in remote locations. +In 2023, we enabled ComputerAid to install +two containers in Al Huda Primary School +with 20 computer stations, 20 laptops, as +well as drinking water and toilet facilities. +We expect over 750 students to access this +communal space in the coming months. +1. The Scope 3 categories included in our target are: Category 1: Purchase Goods & Services, Category 3: Fuel and Energy-related Activities, Category 4: Upstream Transportation +and Distribution, Category 5: Waste Generated in Operations, Category 6: Business Travel, and Category 7: Employee Commuting. We completed a similar risk assessment +exercise in 2022 and we intend to repeat it every other year. +Entain plc Annual Report 202352 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_55.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..ceecd901b0dad2708ddc7b76eb2a75463691cc39 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,29 @@ +Our ESG Key Performance Indicators +Pillar Data point 2023 2022 2021 +Lead on player +protection +Number of jurisdictions outside the UK covered by the ARC TM player +protection programme 27 22 - +% contributions of GGY to RET 1% 0.75% 0.5% +Cash and in-kind contributions towards responsible betting and +gaming initiatives £20.8m £18.3M £12.9m +Customer interactions regarding problem gambling 8.7m 1.8m 2.3m +ARCTM Interactions 2,3 7.5m 3.7m n/a +Customer complaints 1 3,927 4,215 4,045 +Customer complaints specifically related to a betting and +gaming transaction 715 629 655 +Self-exclusions made 1,4 53,745 60,261 61,644 +Secure +& trusted +platform +% of revenues from domestically regulated or regulating markets 100% 100% Nearly 100% +Number of markets exited with no clear path to a sustainable and +safe regulated betting and gaming industry +5 9 3 +% of operations certified under ISO27001 5 80% n/a n/a +% of Technology budget dedicated to Cybersecurity 3.2 n/a n.a +Impact of security incidents £0.7m £3.6m n/a +Entain plc Annual Report 2023 53 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_56.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..84371767540ccb2e66007b0364decbfd8c864ea4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_56.txt @@ -0,0 +1,99 @@ +Pillar Data point 2023 2022 2021 +Foster an +inclusive culture +Employees worldwide (headcount) 6 29,582 28,940 25,554 +Employees worldwide (FTE) 6 ,7 23,650 24,195 19,314 +Female employees 6 13,645 13,479 11,583 +% female employees 6 46% 47% 45% +Part-time employees 6 9,968 9,754 4,328 +% part-time employees 6 34% 34% 17% +Median hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 4% 3% 5% +Mean hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 16% 17% 16% +Median bonus pay difference between male and female colleagues 8 44% 39% 60% +Mean bonus pay difference between male and female colleagues 8 65% 66% 63% +Females in all management positions (as % of total +management workforce) +37% 37% 38% +Females in junior management positions (as a % of total +junior management workforce) 39% 40% 40% +Females in technical roles 9 28% 31% 30% +Female managers in revenue generating functions 10 40% 42% 38% +UK-based employees who have confirmed being part of an ethnic +minority background, as a percentage of UK employees that have +reported their ethnicity 11 15% 14% 18% +UK-based employees who have confirmed as being part from an +ethnic minority background +7% 7% 10% +Employee age groups: 7 +<30 +30-50 +50+ +Unknown +35% +47% +15% +3% +37% +46% +14% +3% +38% +48% +14% +0% +Employee contract types: 7 +Permanent 12 +Fixed-termed 12 +Contractors 13 +99% +0.1% +1% +99% +0.1% +1.5% +98% +1.21% +1.78% +Customer Satisfaction 14 78% 60% 60% +Average hours per employee of training and development 13 8.1 10.5 +Employee turnover – all 28% 36% 32% +Employee turnover – voluntary 20% 27% 25% +Whistleblowing incidents reported and investigated 65 51 29 +Whistleblowing incidents reported and investigated, broken down +by topics +Fraud and theft +Code of conduct +Procedural non-compliance +HSSE +HR Grievance +Not provided +12 +32 +15 +1 +4 +1 +5 +23 +12 +3 +7 +1 +N/A +Accidents 603 624 456 +Employee work-related injuries 72 112 117 +Employee reportable incidents 5 5 5 +Public work-related incidents 5 11 9 +Public reportable incidents 0 2 2 +Robberies 50 73 36 +Incidents of anti-social behaviour 6,137 5,979 4,216 +Incidents of assault 452 240 132 +Absenteeism rate 15 4% 5% N/A +% of internal hires 23.8 19% N/A +Employee engagement score 16 77% 74% 78% +Entain plc Annual Report 202354 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_57.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f475360d79982889969f60aeeddb185a7ec57753 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_57.txt @@ -0,0 +1,119 @@ +Pillar Data point 2023 2022 2021 +Positive impact +on communities +(including +Streamlined +Energy & +Carbon +Reporting Data) +Total energy consumption (kWh) 17,18 +UK +Rest of the world (RoW) + 124,771,815 +77,957,313 +46,814,502 +125,026,096 +82,641,345 +42,384,750 +110,509,736 +85,336,239 +25,173,497 +Absolute direct emissions (scope 1) – (tCO 2e) 5,899 4,414 3,663 +Absolute indirect emissions (scope 2, location-based) – (tCO 2e) 27,202 26,846 24,767 +% of purchased electricity from renewable sources 19 70.3% 66.4% 67.4% +Total GHG emissions – direct & indirect: location based (tCO 2e)20 +UK +RoW +33,101 +14,885 +18,216 +31,259 +15,569 +15,690 +28,430 +18,286 +10,144 +Absolute GHG emissions intensity per employee (tCO 2e/headcount) 1.12 1.08 1.13 +Absolute indirect emissions (scope 2, market-based) – (tCO 2e) 9,171 12,151 12,677 +Total GHG emissions – direct and indirect: market based (tCO 2e) +UK +RoW +15,071 +625 +14,445 +16,565 +1,980 +14,585 +16,340 +4,932 +11,408 +Waste generated 21 (tonnes) 3,738 4,384 3,858 +Total Scope 3 GHG emissions (tCO 2e)22 +Category 1: Purchased Goods & Services (EEIO methodology) +Category 1: Purchased Goods & Services (Supplier specific) +Category 4: Upstream Transportation & Distribution +Category 5: Waste +Category 6: Business Travel +Category 7: Employee Commuting +346,051 +312,603 +15,726 +7,873 +101 +5,292 +4,456 +315,550 +288,524 +12,100 +6,399 +83 +4,398 +4,046 +Supplier spend £2.8bn £2.7bn £2.1bn +Number of suppliers 12,613 12,006 10,380 +1. Data covers all Great Britain licenses. +2. Data covers all UK licenses. +3. This figure includes all ARC TM real-time packages and risk-based interceptors, as well as ARC TM emails. It is a count of the number of customer interactions, not at a distinct +customer level. This figure includes the 1,807,892 interactions reported under ‘Customer interactions regarding problem gambling’. +4. Data only includes self-exclusions made via Entain’s own processes (e.g., via customer services) and does not include third-party self-exclusion schemes such as, for example, +GAMSTOP (National Online Self-Exclusion Scheme) and the Multi-operator Self Exclusion Scheme. This information has been obtained from Entain’s Regulatory Returns. +5. We use employee headcount to evaluate the scope of our ISO27001 certification. +6. The 2023 figures under the ‘Foster an inclusive culture’ pillar do not include our latest acquisitions 365 Scores and STS as data isn’t yet available for these new subsidiaries at +the time of publication. Unless stated otherwise, the 2022 figures do not include employees from our November 2022 acquisitions, SuperSport, Puni Broj, and Minus. All figures +are global unless stated otherwise. The snapshot date for all figures is 31 December 2023 unless otherwise stated. +7. The 2022 figures have been revised from the 2022 annual report to include employees from SuperSport, Puni Broj, and Minus 5. The 2022 figures do not include employees from +SuperSport, Puni Broj, and Minus 5 who have left the business between 1/01/2023 and 31/04/2023. +8. Data covers UK colleagues only. Data is based on a snapshot date of 5 April for the year stated, as per the requirements of the UK’s Gender Pay Gap Reporting. +9. For the 2021 and 2022 figures, technical colleagues were those employees that rolled up to our Chief Technology Officer based on our Business Process Flow Manager. +Following changes to the Group’s functions in 2023, technical roles are defined for 2023 as all roles in our Product & Technology function excluding customer operations. +10. For the 2021 and 2022 figures, revenue-generating functions included our digital and retail/stadia functions. Following changes in the business, revenue-generating functions +are defined for 2023 as the following functions: Ladbrokes.au/Neds, Core, BetCity, Crystalbet, Enlabs, Eurobet, Labrokes.be, Latam, Retail & Stadia, and BetMGM. +11. This 2023 data is based on a sample of 47% of UK-based Entain employees who have provided us with their ethnicity information. To prevent us from over or understating the +ethnic diversity of our employees, we report this data in two ways. We report on both the percentage of the sample that identifies as being from ethnic minority backgrounds, as +well as the number of those confirmed to be identifying as from an ethnic minority background as a proportion of all UK employees. +12. As a percentage of the total number of employees excluding contractors. +13. As a percentage of the total number of employees. +14. Our methodology to measure customer satisfaction changed in 2023, as we stopped using email surveys and replaced them with digital pop-up surveys shared with customers +whilst online. +15. Data covers UK retail colleagues only. +16. We measure employee engagement based on the results of the annual Your Voice survey. The 2023 survey was postponed to January 2024, which is the basis for the 2023 data. +17. Coverage of energy consumption and emissions data is 100% for the UK, and 87% globally, by employee headcount. Global and ROW energy and emissions data are scaled up +based on this coverage to estimate totals across global operations. This data includes energy consumption related to both scope 1 (company vehicles, gas, and fuel) and scope +2 emissions (purchased electricity). Global coverage is below 100% due to limited availability at the time of reporting. Any updates to figures will be provided in our forthcoming +ESG Report and CDP submission. +18. Recent acquisitions of 365Scores and STS are not included in the figures due to no data availability at the time of reporting – we will include these entities in our 2024 reporting +and restate previous years according to our rebaselining policy. +19. Energy from renewable sources only includes electricity purchased that was actively sourced from renewables. All remaining electricity used by Entain is sourced from the local +grids where we operate. +20. Emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard. Consumption data has been converted to GHG emissions using 2023 BEIS +emissions factors and 2023 IEA emissions factors for non-UK grid electricity. Emissions reported above are calculated using both the location-based and market-based +methods, using an operational control boundary. 2021 and 2022 GHG emissions (Scope 1 & 2) data has been assured to limited assurance by the Carbon Trust based on ISO +14064-3: 2019. Verification statements are available on our website. 2021 Scope 1 emissions data has been restated due to a methodology change that arose in the 2022 +assurance process. +21. Waste data is sourced from our operations in the UK. This makes up 49% of our overall headcount. These figures are not prorated to 100% coverage. +22. Scope 3 emissions data disclosed has been verified by the Carbon Trust to ISO 14064-3 for 2022 and 2021. 2023 data was not available at the time of reporting but will be +disclosed later in 2024. +Entain plc Annual Report 2023 55 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_58.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb449c20b1d94c1fb8fa582fd794345f76a9c1db --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_58.txt @@ -0,0 +1,99 @@ +and opportunities (Metrics and targets – +disclosure C), in particular the physical risks +outlined in Table 2. These updates will be +included in the 2024 Annual Report. +This statement was developed by following +the guidance in Section C of the TCFD +Guidance Document: Implementing the +Recommendations of the Task Force on +Climate-related Financial Disclosures. +Table 1 is structured against the four pillars +of the TCFD framework: Governance, +Strategy, Risk Management and Metrics +and Targets. Table 2 summarises our +most material climate-related risks and +opportunities and their estimated impact +on the Group. Table 3 outlines the climate +change scenarios used in our 2022 analysis +and subsequent 2023 review. +2022 scenario analysis, we reviewed our +climate-related threats and opportunities to +identify those that are the most significant +to the group. This process helped us +refine our analysis, and we have revised +our list of climate-related threats and +opportunities accordingly. +Over the next year, we will continue refining +the quantification of the impact of climate- +related risks on the Group and across our +different markets. We want to further +embed climate-related considerations +into the Group’s financial planning and +relevant business strategies, such as our +Key Locations Strategy which determines +where we will operate in the future. We will +consider additional metrics and targets +to monitor our climate-related threats +Over the past year, we have made progress +in integrating climate-related risks into our +group enterprise risk management (“ERM”) +framework. In line with the ‘comply or +explain’ obligation under the UK’s Financial +Conduct Authority Listing Rules, the Group +can confirm it is fully compliant with ten of +the eleven TCFD recommendations and +partially compliant with disclosure C of +the Metrics and Targets pillar. Where we +are partially compliant, we continue to +develop and mature our processes as +outlined below. +Our priority for 2023 was to start +evaluating the impact of our relevant +climate-related risks on the group in line +with our ERM methodology as described on +pages 79 to 82. Using the outcomes of our +TCFD Entain is a staunch supporter of the recommendations of the +Task Force for Climate-related Financial Disclosures (“TCFD”), +having made voluntary disclosures ahead of the FCA’s mandatory +requirements for UK Premium Listed Companies. In this section, we +disclose the threats and opportunities of different climate scenarios +on our Group – whether these are the impacts of transitioning to a +lower-carbon economy, or the adaptational impacts arising from a +rapidly warming planet +Governance +(a) Describe the board’s +oversight of climate- +related risks and +opportunities. +FC The Entain Board is ultimately responsible for climate-related threats and opportunities, with overall +ownership of this agenda sitting with our CEO. +Responsibility for identifying and managing threats is delegated to the Sustainability and +Compliance Committee, which is accountable for monitoring our progress against targets, and +ensuring climate-related risks are adequately addressed, respectively. +The Sustainability and Compliance Committee is also responsible for approving, and overseeing +the implementation of, our environmental strategy. The Committee receives quarterly updates on +our progress against our climate-related performance – including progress against our goals and +targets – from the ESG Steering Committee (see below). In 2023, the Sustainability and Compliance +Committee was briefed on climate-related issues and opportunities at four of their meetings. +The Group Risk Committee, which reports to the Board, has operational responsibility for managing +risks within the Group, including climate-related risks deemed to have a material financial impact. +The Board ultimately approves the Principal Risks and significant risks as well as how they are +allocated for monitoring. +(b) Describe +management’s role +in assessing and +managing climate- +related risks and +opportunities. +FC Our ESG Steering Group is responsible for assessing and managing climate-related threats +and opportunities, as well as overseeing our approach to climate change as part of our wider +sustainability strategy. The ESG Steering Group is chaired by our Chief IR & Communications Officer +and reports to the Board Sustainability and Compliance Committee every quarter (see pages 42 to +43). +In addition to our ESG Steering Group, we set up a Net Zero Action Group to deliver Entain’s Net Zero +strategy. The Action Group convenes senior colleagues across departments to identify practical +measures which can be implemented throughout our global operations to reduce greenhouse gas +emissions. It reports to the ESG Steering Group every quarter. +Table 1 – Climate-related financial disclosures aligned with the TCFD recommendations +56 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_59.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1829672dfb67727c0daa84fc98fcc985280026a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_59.txt @@ -0,0 +1,74 @@ +Strategy +(a) Describe the +climate-related risks +and opportunities +the organisation has +identified over the +short, medium, and +long term. +FC Please see Table 2 on pages 60 to 61 for a full description of climate-related threats (both physical +and transition) and opportunities potentially arising over the short, medium, and long term that +could have a material financial impact on Entain. +As described below, our climate-related threats and opportunities have been assessed against +Entain’s ‘Impact versus Action’ matrix (see page 82). In line with our matrix, the materiality of +climate-related risks on Entain was assessed by evaluating their potential impact on the Group’s +finances, operations, reputation, and commitment to health & safety. This was done across three +climate scenarios (see Table 3) and time horizons (see below). All climate-related threats and +opportunities were mapped against five categories, from very low impact to very high impact. The +Group defined as material any climate-related risks potentially having a medium or above impact on +the Group. +We understand that climate-related threats and opportunities can have longer-term time horizons +that span beyond typical enterprise risk management and business planning processes. We +considered climate-related risks based on the following time horizons: + Short (0-3 years) + Medium (3-5 years) + Long (5+ years) +(b) Describe the +impact of climate- +related risks and +opportunities on +the organisation’s +businesses, +strategy, and +financial planning. +FC In Table 2, we describe the potential impact of climate-related threats and opportunities on the +Group’s businesses, strategy, and financial planning in the short-, medium- and long-term (see +section above for definitions). +Addressing climate change is a key part of our strategy, and our Net Zero by 2035 commitment is an +important aspect of the Sustainability enabler in our strategic framework. Delivering on this requires +alignment with financial planning. In the short-to-medium-term, financial planning decisions have +already been made with the climate in mind. +For example: + Continuing to invest in our green electricity tariff for the UK Retail estate, despite increasing +energy costs. + Investing in a renewable Power Purchasing Agreement (PPA) to secure renewable energy at a +fixed price to gain energy price certainty. + Increasing our price banding for our company car selection, giving a wider choice for relevant +colleagues opting for hybrid and electric vehicles. +Over the next years, we will look to further embed climate considerations into our financial and +strategic planning processes as we further enhance our assessment and response to climate- +related issues and further integrate climate-related risks into our day-to-day processes. Currently, +the impact of climate-related issues has not significantly impacted Entain’s financial performance or +financial position, and we don’t anticipate it will in the short to medium term. +(c) Describe the +resilience of the +organisation’s +strategy, taking +into consideration +different climate- +related scenarios, +including a 2°C or +lower scenario. +FC In Table 2, we describe the Group’s strategic response and resilience regarding our climate- +related risks and opportunities. The risks outlined in Table 2 were developed through a series of +workshops held throughout 2022 and reviewed again in 2023 against our ERM methodology. Our +analysis raised risks that have not yet been deemed to be Principal Risks in and of themselves, +but climate change may become a factor in affecting the impact of our current Principal Risks, +and the subsequent actions required to manage those risks, both threats and opportunities. +Therefore, the climate-related threats and opportunities identified are emerging and/or operational +risks that will continue to be monitored and evaluated. The most significant risks have been +integrated into functional and divisional risk registers and they are continuously reviewed by their +functional owners. +57Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_6.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..9bc9c402f145bd10c09e3f3bbd01d056650ef9b4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,53 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_60.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..99cc9e40caa36abbb78ec3bb6b3b4a69208abe1a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_60.txt @@ -0,0 +1,59 @@ +Risk Management +(a) Describe the +organisation’s +processes for +identifying and +assessing climate- +related risks. +FC In 2022, we conducted a series of workshops focused specifically on climate-related threats +and opportunities. This was led by Entain’s Chief Risk Officer and facilitated by our external ESG +Advisors. The purpose of these workshops was to gather insights from leaders around the business +on the climate-related threats and opportunities that were relevant to Entain, identifying those that +required further in-depth analysis to determine their impact on our business. In these workshops, +we explored three climate change scenarios outlined in Table 3, enabling the workshop participants +to draw out how each would affect Entain’s ability to deliver on our strategy. The climate-related +threats and opportunities identified through these workshops were disclosed in our 2022 +TCFD statement. +In 2023, we wanted to further integrate these threats and opportunities into our group enterprise +risk management framework and start evaluating their impact on the Group in absolute terms +as well as in relation to other business risks. We convened leaders and experts from across +the business to review the risks and assess them against our ‘Impact versus Action’ matrix, as +described on page 82. All risks were assessed for their impact on the business and the actions +required to bring those risks within Entain’s risk appetite. The impact of each risk was measured by +evaluating its financial implications, its potential operational impact (including impact on products +and services), the effect on the reputation of our brands and whether it affects our commitment to +health, safety, security, and well-being. This allowed us to allocate risks across five categories, from +very low impact to very high impact. Any climate-related risks potentially having a medium or above +impact on the Group is deemed as material and disclosed in Table 2. These material risks have been +integrated into our functional and divisional risk registers (see disclosure C below). +(b) Describe the +organisation’s +processes for +managing +climate-related +risks. +FC Our principal risks are recommended by the Group Risk Committee and ratified by our board, +as described on pages 83 to 86. The feedback from our 2022 and 2023 TCFD workshops found +that our climate-related threats and opportunities do not qualify as Principal Risks but rather +as emerging and/or operational risks. The outcomes of our work described above allowed us +to prioritise our significant climate-related threats and opportunities have been integrated into +functional and divisional risk registers and they are continuously reviewed by their divisional heads. +(c) Describe how +processes for +identifying, +assessing, and +managing climate- +related risks are +integrated into +the organisation’s +overall risk +management. +FC In 2023, we further embedded the process for identifying, assessing, and managing climate-related +risks into our overall risk management and governance framework, which is outlined on pages +79 to 82. As described above, all climate-related threats and opportunities have been assessed +against Entain’s ‘Impact versus Action’ matrix. The most significant climate-related threats and +opportunities have been integrated into functional and divisional risk registers and they are +continuously reviewed by their divisional heads along with other business risks on an annual basis. +58 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_61.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f82084b905976e7e51ea25f66986fccc4b610cb --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_61.txt @@ -0,0 +1,71 @@ +Metrics and Targets +(a) Disclose the +metrics used by +the organisation +to assess climate- +related risks and +opportunities +in line with its +strategy and risk +management +process. +FC In 2023, the Group started evaluating our climate-related threats and opportunities against Entain’s +‘Impact versus Action’ matrix, described on pages 60 to 61. The impact of each risk was measured +different scenarios and timeframes by evaluating its potential: + financial implications + operational impact + effect on the reputation of our brands + affect to health, safety, security, and well-being of our employees +This allowed us to evaluate the business impact of climate-related risks – from very low to very high +– across three different climate scenarios. +Entain also uses the following metrics to monitor its performance in managing transition risks and +progress against its Net Zero target: + Scope 1 and 2 greenhouse gas emissions + Scope 3 greenhouse gas emissions + Global energy consumption + Percentage of electricity purchased on renewable energy contracts + Water consumption (where data is available) + Waste (where data is available) +We report our performance against these metrics on page 55. We disclose figures for the past three +financial years (FY23, FY22, and FY21) and we describe the methodologies used to calculate them. +In line with prior years, the Group will report 2023 scope 3 data within its forthcoming 2023-24 ESG +Report, expected to be published in Q2 2024. +At the time of reporting, climate-related metrics are not linked to remuneration. Entain does not +currently have an internal carbon price. +(b) Disclose Scope 1, +Scope 2, and, if +appropriate, Scope +3 greenhouse gas +(GHG) emissions, +and the related +risks. +FC On page 55, we disclose our Scope 1 and 2 greenhouse gas emissions for the financial years 2023, +2023, and 2021, showing historical trends. We use the GHG Protocol Corporate Standard and GHG +Protocol Corporate Value Chain (Scope 3) Standard as our methodology, using the ‘operational +control’ boundary to disclose this information. +Given the reputational risk of inaccurate reporting and the need for high-quality ESG data, we +commissioned the Carbon Trust to assure our Scope 1, 2, and 3 data. Assurance of our Scope 1 and +2 information has taken place since 2019, and our Scope 3 data for 2021 and 2022 has now been +completed. These assurance statements available on the Entain website. +(c) Describe the +targets used by +the organisation to +manage climate- +related risks and +opportunities +and performance +against targets. +C Entain currently has two non-financial targets linked with remuneration (see the Remuneration +Committee Report on page 131, linked with customer satisfaction and safer betting and gaming. +Currently, Entain does not have a climate-related target that is linked with remuneration. +As described on pages 50 to 51, we have set a Net Zero by 2035 target, which is underpinned by a +near-term reduction target of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline +year. In 2023, we started quantifying the impact of climate-related threats and opportunities. As +we continue refining our understanding of the financial impact of climate change on our business, +we intend to identify further metrics and targets that can be used to assess our most significant +climate threats and opportunities. We will continue this in 2024 with further disclosures against +recommendation A to be provided in the 2024 Annual Report as climate risk owners further define +KPIs to manage specific climate-related against. +59Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_62.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..108b2e37de2a7c38c2f0b195b7b68816d02fd6d2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_62.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact +60 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_63.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..45b310de5df85da7ed6605bfb3ec54ccb370eb9d --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_63.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Key: + Low Medium High Very High +61Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_64.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..236f9289d9bccab93500fc6c97a20c8a8a74d3e6 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_64.txt @@ -0,0 +1,102 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact continued +62 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_65.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..00aa19adbecf448a2709b588f38c7cb394d345f6 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_65.txt @@ -0,0 +1,101 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Key: + Low Medium High Very High +63Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_66.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..31d1b348aaf496b6db5bd44757c38ccdff97ae5f --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,106 @@ +Engaging with +stakeholders +In addition, the Remuneration Committee +assesses the overall performance of +the Group, including progress against +its responsible betting and gaming +ambitions as well as delivery against its +Environmental, Social and Governance +(“ESG”) strategy to support decision making +on remuneration outcomes. +To ensure that the Group continues to +operate in line with good corporate practice, +Directors as part of their induction receive +training on the scope and application of +Section 172 to ensure that they are aware +of how a Board, in its decision making, must +consider its stakeholders. +Our approach +The Board believes in the importance +of engaging in effective communication +with all of its stakeholders. Depending on +the nature of the issue in question, the +relevance of each stakeholder group may +vary and not every decision the Board +makes will necessarily result in a positive +outcome for every stakeholder. +At each meeting the Board ensures that the +process of considering its stakeholders is +embedded in papers it receives to enable it +to discharge its duties. The Board monitors +the progress and delivery of strategic +initiatives through metrics reported +in meetings. +Section 172 of the Companies Act 2006 +imposes a general duty on Directors to act +in a way that they consider, in good faith, +to most likely promote the success of the +Company for the benefit of shareholders +as a whole. The Directors in setting +policies and strategies continue to have +regard to the interests of the Group’s +employees, shareholders, investors, +suppliers, customers and regulators, +including the impact of its activities on the +community and on the Group’s reputation. +These factors underpin the way in which +the Directors discharge their duties and +the Board is cognisant of the need to +engender strong relationships with all +stakeholders to help the Group deliver its +strategy and support its long-term values +including sustainability. +The Board recognises the importance of effective +governance and operates in line with the UK reporting +regulations. The information below should be read in +conjunction with the rest of the Strategic Report. +Colleagues +In order to gather feedback from colleagues around the Group, Board members +participated in a number of virtual and face-to-face employee events in 2023. +To facilitate such engagement we have instituted formal Employee Forums in our +major employment locations. +These Forums are a vital component of +our employee listening and engagement +strategy, enabling our people to discuss +how their teams connect with the +company purpose, strategy and values, as +well as discussing topics that impact them +and their colleagues. +Virginia McDowell, Chair of both the +Sustainability & Compliance and the +Remuneration Committees, is our +appointed Designated Workforce +Director, a position she has held since +2019. Virginia is a regular attendee at +Employee Forums, enabling her to provide +the Board and its Committees with +informed feedback and insight into the +realities of everyday working life at Entain. +Virgina McDowell and Rahul Welde +(Independent Non-Executive Director) +attended both the National Forum AGM +and the Global Engagement Conference +in 2023. +In addition, we regularly hold hybrid +virtual and physical ‘townhall’ meetings +through which our CEO, Board Directors +and senior management provide updates +and dialogue with our colleagues. +Twelve such hybrid townhall meetings +were hosted from nine different office +locations In 2023. +We believe that by encouraging and +supporting a diverse workforce where +individuals can thrive and success no +matter their background, is the best +way maximise our talent pool and better +represent our global customer-base. +We do not discriminate on the basis +of age, disability, gender or gender +reassignment, pregnancy or maternity, +race, religion or belief, sexual orientation +or marriage/civil partnership. +Read more : pages 53 to 57 +1 +64 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_67.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b71c24fd5afb1cedb95292e05d8ad665cfe54de --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_67.txt @@ -0,0 +1,74 @@ +Shareholders +We strive to provide the Group’s investors and shareholders with an accurate and +comprehensive view of the financial and sustainable performance of the business +as well as a clear presentation of our performance against our ESG objectives +and sustainability objectives. The Group undertakes regular conference calls and +meetings with investors through roadshows, investor conferences, one to one and +group calls, publication of the Annual Report, dedicated ESG Report, press releases +and Stock Exchange announcements. In 2023, the Group conducted a total of 553 +investor interactions, as well as presenting at 12 conferences and ‘fireside chats’, +engaging with 353 unique institutions. These interactions involved a combination +of the CEO, CFO, the Chairman, the Chief IR & Communications Officer, Director of +IR and other management as appropriate. +In addition to these meetings and +conferences, as well as the usual trading +updates based around our financial +calendar, the Group also held four +shareholder events throughout the year. +These included a detailed business and +strategy update held In November 2023; +two updates on the performance of +the Group’s BetMGM joint venture and; +Entain Sustain, a virtual showcase and +presentation of the Group’s refreshed +sustainability strategy in December. +The Board receives feedback on +shareholder views through a variety of +channels, including regular meetings +throughout the year between +shareholders, our Chairman and executive +management. In addition to providing +the Board with updates on shareholder +discussion topics as part of its regular +Board reports, over the past year the +investor relations team conducted three +feedback and audit exercises to enable +us to better address investors views +based on a number of satisfaction and +confidence measures. These cover topics +including perception of the Group’s +strategy, management and opportunities +as well as delivery versus expectations +and transparency. +The quantitative analysis and qualitative +feedback were presented to the Board +during the year. The audits showed +positive progress in investor engagement +through the year with Entain performing +more positively than the benchmark +in all measures. In addition, Board +members listen in to results and trading +updates held by the Group for analysts +and institutional investors and can hear +directly the questions and comments +on Company performance and are +kept abreast of relevant newsflow and +commentary on the Company throughout +the year. +Customers +Our customers’ interests range from product availability, ethical behaviour, service, +pricing and promoting responsible attitudes to betting and gaming. The Group, as +part of its commitment to safer betting and gaming, engages through initiatives +such as Responsible Gambling Week, where responsible betting and gaming +messages dominated our websites and social media channels. +Our industry-leading ARC TM safer betting and gaming programme was developed in +recognition of the importance of tailoring our approach to the individual customer and +providing them with the protection and assurance which they should expect from us. +Read more: pages 43 to 52 +Read more: pages 8 to 11 +2 +3 +65Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_68.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..968d612b6259cf3f45c65ded086d36bc961bb498 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,64 @@ +Suppliers +The Group strives to work responsibly with its suppliers and regularly reviews its +customer and creditor payment policies. As part of the three-year modern slavery +strategy developed In 2023, we are now conducting an extensive risk assessment +of all our in-scope suppliers, to help us identify higher-risk suppliers and, where +necessary, request the completion of supplier self-assessment questionnaires. +As part of approach to ensuring a responsible supply chain, last year engaged +EcoVadis, the world’s largest platform for supplier sustainability ratings. +The EcoVadis platform enables us to evaluate our key suppliers and set corrective +action plans across four topics – environment, labour and human rights, ethics, and +sustainable procurement. +Our supplier interests range from fair trading, payment terms, success of the business +and long-term partnerships. The Group engages with suppliers by direct engagement, +supplier conferences and corporate responsibility and ethics reporting. The Board in its +duties receives regular reporting on retail performance and modern slave. +Read more: page 55 +Our Communities +Group has committed to investing £100m over five years on a range of projects +and good causes including safer betting and gaming measures, investment in +grassroots sport, reducing environmental impact, diversity in technology and +projects with a clear link to our local communities. +Entain has committed to investing £100m +over five years (2021-2025) to support a +range of initiatives and good causes In +areas including safer betting and gaming +measures, investment in grassroots sport, +reducing environmental impact, diversity +in technology and projects with a clear link +to our local communities. +A flagship project of Entain Foundation is +the Group’s Pitching In grassroots sport +investment programme, through which +the Entain Foundation supports The +Trident Leagues in the UK, made up of +248 clubs at the heart of England’s non- +league football pyramid. The Foundation +also supports a range projects to promote +diversity in and through technology and +partnered with ComputerAid and the +Turing Trust in 2023 to deliver community +hubs in sub-Saharan Africa. The Company +provides a comprehensive update to +stakeholders through the publication of +both annual ESG report and annual Social +Impact Report. +The Board has overall oversight of +corporate responsibility planning and +reporting as well as involvement in +corporate affairs strategy which is +delegated to the Sustainability and +Compliance Committee. The Sustainability +and Compliance Committee is advised +by the executive ESG Steering Group and +also works with external consultants +which assist the operational units and +review the environmental and social +performance data. +4 +5 +Read more: pages 57 to 60 +66 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_69.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c0fe3872ed9e7abce4eb9a30113790a0996db39 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,84 @@ +Read more: pages 36 to 37 +Regulators +As a global operator and one of the world’s largest online betting, gaming +and sports entertainment companies, Entain engages with a wide variety of +stakeholders. These include regulators, investors, trade associations, safer betting +and gaming charities and customers. This engagement is core to our ability to +offer first class player protection through our cutting edge technology and product +platform, while upholding all licensing objectives, across multiple jurisdictions. +One of the key relationships we maintain is with our regulators. Liaising with our +regulators on an open and regular basis helps us to ensure that each of them +are fully apprised of our operating practices. Through this process we can help +policymakers shape our industry environment to best serve our stakeholder group +whilst operating in a legal and fair way. +Governments and regulators + UK Government departments. + UK Gambling Commission. + Governments and regulators +in territories where we hold +gaming licences. + US state licensing bodies. + National information commissioners. + Domestic and International +trade Associations. + What are their expectations? + Providing an enjoyable and safe +leisure experience. + Making sure we operate legally and in a +fair manner. + Minimising harm and maximising +player protection. + Ensuring that we protect the young and +the vulnerable. + Reducing crime and unlawful behaviour. +How we engage + Ongoing dialogue with regulators, +domestic and international trade +associations and local authorities. + Responding to the UK Government’s +Review of the 2005 Gambling Act. + Numerous face-to-face +meetings bilaterally or as part of +industry meetings. + Quarterly meetings, at a minimum, +between the UK Gambling Commission +and senior members of Entain’s +leadership team. + Detailing governance, risk management +and safer betting and gaming +strategies through submission to the +UK Gambling Commission Annual +Assurance Statement process. + Partnerships with the GB Health & +Safety Executive. + Engagement with the Nevada Gaming +Commission’s Compliance Committee + Formal meetings with our regulators in +Gibraltar, Malta, the US and our other +global regulated jurisdictions. + Engage with the Department of +Justice in Ireland as it implements +new Anti-Money Laundering +(“AML”) requirements. + Respond to formal regulatory +consultations including most recently +the call for evidence on affordability +by the + UK Gambling Commission and RG +consultations in Spain and Sweden. + e-betting and gaming international +workshops in Spain, annual industry +meeting in Denmark and the ‘Licensing +information session’ in Germany. + Suspicious activity disclosed to relevant +national bodies and membership of +national match-fixing platforms (eg Spain). + Engagement with regulatory authorities +in regulating markets via local +associations and advisors in the run up +to licensing (eg Finland, Brazil). +6 +67Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_7.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..71a2fc533c37f192039c73a298825b15b2ae6a62 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,56 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_70.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..7be8d493ef864bd10b030da7410f26e6ff9ce7e0 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_70.txt @@ -0,0 +1,5 @@ +Rob Wood +Chief Financial Officer +Chief Financial Officer’s Review +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202368 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_71.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..9ba29126475a11e9be25eb728d3c70f9ccdae503 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_71.txt @@ -0,0 +1,45 @@ +Financial Highlights: + Group NGR (excluding US) up +11% (+11%cc2), -2% on a proforma basis +– Online NGR up +12% (+12%cc2) in 2023, -3% on a proforma basis + • Excluding regulatory impacts, underlying proforma Online NGR growth of + + 3 % c c2 + • Record level of Online active customers, + 23% YoY, +10% proforma5 +– Retail NGR up +9% (+8%cc 2), proforma +2%cc2, reflecting the acquired +shops in New Zealand and Poland, and the continued strength of the +retail estate + BetMGM delivered a strong performance through the year +– 2023 NGR of $1.96bn, +36% year on year at the top end of expectations +– 14% market share in sports betting and iGaming in the markets where +BetMGM operates +– Positive EBITDA for H2 2023 + Group profit after tax before separately disclosed items was £339.1m +(2022: £223.9m) + Group loss after tax was £878.7m (profit of £32.9m), reflecting the DPA +settlement and impairment charges related to Australia point of consumption +tax increases and portfolio optimisation + Net debt of £3,290.9m (2022: £2,749.8m) and leverage of 3.3x +(3.1x proforma 5) + Adjusted diluted EPS of 44.2p (2022: 60.5p) + Second Interim Dividend of 8.9p per share announced, bringing the total +dividend for the year to 17.8p per share +Financial Results and the use of non-GAAP measures +The Group’s statutory financial information is prepared in accordance with International +Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (IFRS IC) +pronouncements as adopted for use in the European Union. In addition to the statutory +information provided, management have also provided additional information in the +form of constant currency 2, proforma 3, Contribution 4 and EBITDA 5 as these metrics are +industry standard KPIs which help facilitate the understanding of the Group’s performance +in comparison to its peers. A full reconciliation of these non-GAAP measures is provided +within the Income Statement and supporting memo. +Dear Shareholder +We have faced a number of challenges throughout +2023, both industry-wide and Entain-specific. +Despite the challenges, the Group delivered Revenue ++11% ahead of 2022 and underlying EBITDA3 of +£1,007.9m (2022: £993.2m) with our acquisitions +contributing strongly to the Group’s performance. +Entain plc Annual Report 2023 69 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_72.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a536991a9025b6f86026d78088abb39b83d6f5c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,71 @@ +Financial Performance Review +Group +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +VAT/GST (63.5) (52.0) (22%) (29%) +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Operating costs excluding marketing costs (1,271.5) (1,135.7) (12%) +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV (loss)/income (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Results1: +NGR and Revenue increased by +11% versus 2022 (+11%cc 2), with proforma 3 growth in Retail and the benefit of acquisitions more than +offsetting a -3%cc 2 proforma 3 decline in Online NGR, as we continue to face regulatory headwinds in both the UK and Germany and +experienced soft trading in Australia and Brazil. Total Online NGR was +12% ahead of 2022 whilst Retail NGR was +9% ahead. +Contribution 4 in the year of £2,279.4m was +7% higher than 2022 reflecting the increase in NGR, offset by a reduction in contribution +margin of -1.8pp, due to territory mix, increased taxation in Australia and the reclassification of certain content costs in Retail to cost of +sales rather than operating costs, following the move to a revenue share arrangement. +Operating costs were 12% higher due to the impact of acquisitions (8pp), FX (1pp) and underlying inflation, including wage rate and +energy price inflation, partially offset by the reclassification of costs to cost of sales. Resulting in underlying EBITDA 5 of £1,007.9m, +1% +higher than 2022. +Share based payment charges were £2.5m higher than last year, while underlying depreciation and amortisation was 27% higher, +reflecting the impact of businesses acquired in the year (14pp), the annualisation of prior year acquisitions and continued investment in +the business. Share of JV losses of £42.9m includes an operating loss of £42.0m relating to BetMGM (2022: £193.9m), which was in line +with expectations. +Group underlying operating profit 6 was +18% ahead of 2022. After charging separately disclosed items of £1,286.5m (2022: £213.2m), +Group operating loss was £644.7m (2022: profit of 328.6m). + Online +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 13,724.5 14,090.5 (3%) (2%) +Sports margin 13.7% 12.9% 0.8pp +Sports NGR 1,531.0 1,443.7 6% 7% +Gaming NGR 1,837.6 1,576.9 17% 15% +B2B NGR 57.9 29.9 94% 90% +Total NGR 3,426.5 3,050.5 12% 12% +VAT/GST (59.9) (52.0) (15%) (21%) +Revenue 3,366.6 2,998.5 12% 12% +Gross profit 1,980.1 1,829.6 8% +Contribution 4 1,369.8 1,254.2 9% +Contribution 4 margin 40.0% 41.1% (1.1pp) +Operating costs excluding marketing costs (512.4) (426.0) (20%) +Underlying EBITDA 5 857.4 828.2 4% +Share based payments (7.3) (7.8) 6% +Underlying depreciation and amortisation (160.2) (118.3) (35%) +Share of JV (loss)/income (1.4) (0.2) (600%) +Underlying operating profit 6 688.5 701.9 (2%) +Entain plc Annual Report 202370 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_73.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4d52397764006e444ba783d2d20c8c2fd31f038 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_73.txt @@ -0,0 +1,48 @@ +Results1: +Whilst there is underlying momentum in a number of our key markets, regulatory headwinds in the UK and Germany, as well as weaker +trading in Australia and Brazil, impacted NGR performance in 2023. Resulting proforma 3 Online NGR was down -3%cc 2 in the year but, +with the benefit of acquisitions total Online NGR was +12%cc 2 ahead of 2022. Whilst proforma 3 NGR was down year on year, actives +grew +10% year on year on a proforma 3 basis, emphasising the ongoing attraction of our brands to our customers. +In the UK, we continue to absorb the impact of regulatory changes and as a result NGR was down -6%. Excluding the impact of these +regulatory headwinds, we estimate that underlying NGR was +4% ahead of 2022, while actives were +18% higher than the same period +last year. +In Italy, constant currency 2 NGR was +3% ahead of 2022. Whilst our brands, along with the rest of the market, lost online market share +to one of the leading operators during 2023, our omni-channel offering continues to resonate with customers with combined Online and +Retail NGR +63%cc 2 ahead of pre-Covid levels. +Local market conditions in Australia have been challenging during 2023 leaving year on year NGR -6% down on a constant currency 2 +basis. Whilst we expect trading to remain challenging in 2024, we remain confident in our strategy focusing on brand differentiation, +new and innovative products and the customer experience. +In Germany, whilst we have seen some non-compliant operators exit the market, the continued lack of robust regulatory enforcement +as well as new regulation last Summer continues to impact the business. Resulting NGR in 2023 was -26% behind 2022 on a constant +currency 2 basis, primarily driven by lower spend per head. Whilst we received our gaming licences in November 2022, it is disappointing +that we are still yet to see the level of enforcement action that is needed in this market to combat unlicensed operators and ensure +customers are protected. +In Brazil, we continue to see a fiercely competitive market ahead of regulation with a significant increase in the amount spent on +marketing by various operators. Whilst we were initially slow to react to changes in the market, we are confident that following a change +in our regional leadership we now have the team and localised expertise needed to regain share in this exciting growth market, an +opportunity that our 365Scores acquisition will help us further leverage. NGR in Brazil was -14%cc 2 behind the prior year. +Georgia NGR was +7%cc 2 ahead of 2022 on a constant currency 2 basis, with our Crystalbet brand performing strongly following the +implementation of new regulation in the prior year. Following a strong 2023, our Crystalbet brand continues to be the market leader +in Georgia. +In the Baltics , proforma 3 NGR was +3%cc2 ahead of 2022 despite high inflation rates in the region. Our brands remain resilient despite +the economic pressures in the Baltic states and we continue to attract more customers each year with proforma 3 actives +13% ahead +of 2022. +Our Entain CEE business continues to perform well with proforma 3 NGR +13%cc2 ahead year on year. NGR in our SuperSport business in +Croatia was +29%cc 2 ahead of 2022 (proforma 3) maintaining its position as the market leader. NGR in our recent acquisition in Poland, +STS, was flat year on year with c4%cc 2 growth to the end of Q3 offset by poor margins in October. +NGR in our newly acquired New Zealand business was £84.7m in 2023, slightly ahead year on year on a proforma 3 basis. +Contribution 4 margin of 40.0% was in line with guidance but 1.1pp behind 2022 due to territory mix and the impact of additional taxation +in Australia which was implemented in H2 of 2022. +Operating costs were 20% higher than 2022 with recent acquisitions driving 16pp of the increase and FX 1pp with the remaining 3pp due +to underlying inflation offset by the initial benefits from Project Romer. +Underlying EBITDA 5 of £857.4m was +4% ahead of 2022, albeit flat year on year excluding the benefit of TAB NZ accounting +treatment to 2023, reflecting the contribution 4 from acquired businesses offset by the decline in proforma 3 NGR and 1.1pp reduction in +contribution margin. +Resulting underlying operating profit 6 of £688.5m was £13.4m behind 2022 with depreciation and amortisation of £160.2m, £41.9m +higher than 2022, half of which is a result of the impact of new acquisitions, including annualisation of those in the prior year, with the +remainder of the increase due to recent investment in our technology and product. After charging separately disclosed items of £481.1m +(2022: £114.0m), operating profit was £207.4m (2022: £701.9m). +Entain plc Annual Report 2023 71 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_74.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..beef6fc2e83931aed9d899358da0a9fb0fd55650 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_74.txt @@ -0,0 +1,68 @@ +Retail +The Retail business is made up of our Retail estates in the UK, Italy, Belgium, Croatia, New Zealand, Republic of Ireland and Poland. +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 4,341.7 3,827. 3 12% 11% +Sports margin 18.9% 18.3% 0.6pp +Sports NGR/Revenue 813.0 705.2 15% 14% +Machines NGR/Revenue 573.7 572.6 0% 0% +NGR 1,386.7 1 ,277.8 9% 8% +VAT/GST (3.6) – – – +Revenue 1,383.1 1 ,277.8 8% 8% +Gross profit 900.2 860.0 5% +Contribution 4 890.3 852.1 4% +Contribution 4 margin 64.2% 66.7% (2.5pp) +Operating costs excluding marketing costs (606.1) (571.9) (6%) +Underlying EBITDA 5 284.2 280.2 1% +Share based payments (2.4) (2.3) (4%) +Underlying depreciation and amortisation (132.1) (112.4) (18%) +Share of JV income – – – +Underlying operating profit 6 149.7 165.5 (10%) +Results1: +Our Retail businesses continue to show the strength of their offer and customer appeal with 2023 Revenue and NGR both +8%cc 2 ahead +of 2022 and proforma 3 NGR +2%cc2 ahead. +In the UK, NGR was +2% ahead of 2022 on a LFL 7 basis, with strong performance across both sports and gaming. Our strong underlying +performance continues to be driven by an ongoing focus on market leading content for our gaming machines and betting terminals with +both providing a proposition akin to the digital offering but combined with the in-shop experience that cannot be replicated online. +NGR in Italy was up +16% on a constant currency 2 basis with a number of enhancements to our offering and the customer +experience including cash-out, reduced minimum bet sizes and continuous development of our SSBT proposition driving greater +customer engagement. +Proforma 3 NGR in Croatia grew at +14%cc 2 year on year further enhancing our market leading position and reflecting our program of +improvements to the customer offer, including the introduction of a loyalty scheme and enhanced sports content. +In Belgium, NGR was up +10%cc 2 with Ireland NGR +1%cc 2 ahead year on year. Our newly acquired Retail businesses in Poland and New +Zealand contributed £40.4m of NGR during 2023. +Contribution 4 of £890.3m was +4% ahead of 2022 with contribution 4 margin falling by 2.5pp due to territory mix and the impact +of certain content costs (1pp) which are now classified as cost of sales rather than operating costs as they move to revenue share +arrangements from fixed fees. +Operating costs were 6% higher than in 2022 with the impact of acquisitions (5pp) and inflation, including wage rate and energy price +inflation, more than offsetting the benefit of costs which are now classified within cost of sales. +Resulting underlying EBITDA 5 of £284.2m was £4.0m ahead of 2022. Depreciation of £132.1m was £19.7m higher than 2022, largely +due to the impact of acquisitions and the continued investment in our retail estates. Underlying operating profit 6 of £149.7m was £15.8m +behind 2022 and, after charging £22.8m of separately disclosed items (2022: £57.4m), operating profit was £126.9m, £18.8m ahead of +last year. + New Opportunities +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (29.3) (29.1) (1%) +Share based payments (0.7) (0.3) (133%) +Underlying depreciation and amortisation (5.7) (4.5) (27%) +Share of JV (loss)/income (1.5) (0.4) (275%) +Underlying operating loss 6 (37.2) (34.3) (8%) +Entain plc Annual Report 202372 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_75.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..c729fb1d034d0d1e80911044ca9efcd84eb473d9 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_75.txt @@ -0,0 +1,65 @@ +Results1: +New Opportunities underlying costs 5 of £29.3m were 1% higher than 2022 with increased start-up marketing costs in our Unikrn brand +offset by reduced costs associated with our innovation programme. Unikrn has now been closed as a B2C operation and development +of our e-Sports wagering offering is now focused on our existing labels. After depreciation and amortisation and share of JV loss, New +Opportunities underlying operating loss 6 was £37.2m, an increase in losses of £2.9m on 2022 and, after charging separately disclosed +items of £44.3m (2022: £nil), was a loss of £81.5m, £47.2m more than in the prior year. +Other +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR/Revenue 26.7 25.1 6% 6% +Gross profit 26.7 25.1 6% +Contribution 4 26.3 25.0 5% +Operating costs excluding marketing costs (21.0) (20.1) (4%) +Underlying EBITDA 5 5.3 4.9 8% +Share based payments – – – +Underlying depreciation and amortisation (2.7) (2.7) – +Share of JV income 2.0 0.4 400% +Underlying operating profit 6 4.6 2.6 77% +Results1: +NGR of £26.7m was 6% higher than 2022 driven by additional income in our greyhound stadia with 2022 impacted by adverse weather. +Underlying EBITDA 5 of £5.3m was an increase of £0.4m on 2022, with the additional NGR offset by increased overheads associated with +the aforementioned increase in number of meets. Underlying operating profit 6 of £4.6m was £2.0m ahead of last year and after charging +separately disclosed items of £nil (2022: £0.7m) was £2.7m ahead of 2022. +Corporate +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (109.7) (91.0) (21%) +Share based payments (11.3) (8.8) (28%) +Underlying depreciation and amortisation (0.8) (0.2) (300%) +Share of JV loss (42.0) (193.9) 78% +Underlying operating loss 6 (163.8) (293.9) 44% +Results1: +Corporate underlying costs 5 of £109.7m were £18.7m higher than last year driven by increases in our contributions to Research, +Education and Treatment, including GambleAware, increased legal costs and ongoing investment in our governance policies +and procedures. +After share based payments, depreciation and amortisation and share of JV losses, Corporate underlying operating loss 6 was £163.8m, +a decrease of £130.1m. The share of JV loss of £42.0m relates to BetMGM. After charging separately disclosed items of £737.2m +(2022: £41.1m), the operating loss was £902.0m versus £335.0m in 2022. + +Notes +1. 2023 and 2022 statutory results are audited with the tables presented relating to continuing operations and include both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as if they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. UK Retail LFL YoY NGR is calculated based on shops that traded for the full year in both 2023 and 2022. +Entain plc Annual Report 2023 73 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_76.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..39d1922fc0223c254e7b824ead514b8f1d84c4d4 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_76.txt @@ -0,0 +1,66 @@ +Statutory Performance Review +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV loss (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Net underlying finance costs 6 (229.4) (84.7) +Net foreign exchange/financial instruments 32.5 (135.3) +Profit before tax pre separately disclosed items 444.9 321.8 +Separately disclosed items: +Amortisation of acquired intangibles (254.6) (116.9) +Recognition of HMRC settlement liability (585.0) – +Other (447.9) (102.0) +(Loss)/profit before tax (842.6) 102.9 +Tax (36.1) (70.0) +(Loss)/profit after tax from continuing activities (878.7) 32.9 +Discontinued operations (57.8) (13.4) +(Loss)/profit after tax (936.5) 19.5 +NGR and Revenue +Group NGR and revenue were +11% ahead of last year and the same on a constant currency basis 2, with Online NGR +12% and Retail +NGR +9% year on year. Further details are provided in the Financial Performance Review section. +Underlying operating profit 6 +The Group reported underlying operating profit 5 of £641.8m, +18% ahead of 2022 (2022: £541.8m). Underlying EBITDA 5 was +1% +ahead, with the increase in revenue offset by additional taxes, particularly in Australia, and increased operating costs largely associated +with acquired businesses and inflation. Depreciation and amortisation was -27% higher than 2022 driven by depreciation on acquired +businesses as well as on our recent investment in product and technology. The Group’s share of BetMGM losses in the period were +£42.0m, £152.1m lower than 2022 as the business continues on its path to profitability. Analysis of the Group’s performance for the +period is detailed in the Financial Performance Review section. +Financing costs +Underlying finance costs of £229.4m excluding separately disclosed items of £1.0m (2022: £5.7m) were £144.7m higher than 2022 driven +by interest on the Group’s new $1bn USD term loan, which was raised in Q4 of 2022, increased drawdowns on the Group’s RCF and the +impact of the increase in global interest rates. +Net gains on financial instruments, driven primarily by a foreign exchange gain on re-translation of debt related items, were £32.5m in the +period (2022: £135.3m loss). This gain is offset by a foreign exchange loss on the translation of assets in overseas subsidiaries which is +recognised in reserves and forms part of the Group’s commercial hedging strategy. +Separately disclosed items +Items separately disclosed before tax for the year amount to £1,287.5m (2022: £218.9m) and relate to the Deferred Prosecution +Agreement (“DPA”) with the Crown Prosecution Service of £585.0m (2022: £nil), £254.6m of amortisation on acquired intangibles +(2022: £116.9m), corporate transaction costs of £17.8m (2022: £23.9m), restructuring costs, including the initial costs of Project Romer, of +£49.7m (2022: £11.8m) and legal and onerous contract costs of £17.6m (2022: £8.1m) primarily relating to the legal costs associated with +the HMRC investigation. The Group also recorded a £1.0m loss on disposal of assets (£2022: £1.0m), £71.8m on movements in fair value +of contingent consideration (2022: £1.0m income), primarily relating to discount unwind on Tab NZ consideration, and £1.0m in financing +costs (2022: £5.7m). +In addition, the Group has also recognised an impairment charge of £289.0m during the current year (2022: £7.0m) with impairments +recognised against our Australian business of £190.0m, our closed B2C operations in Unikrn and Africa of £78.1m, and smaller +impairments against our ROI Retail business, closed shops and offices in the UK and our Totolotek business in Poland of £20.9m. +The charge which has arisen in the Group’s Australian CGU is a result of the impact of ongoing increases in the rate of Point of +Consumption tax across certain states and a forecast decline in Australian revenues in 2024 as a result of a reduced market outlook. +Entain plc Annual Report 202374 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_77.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..aceaf497c366a80e9ed644f0272d23d884a4180c --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_77.txt @@ -0,0 +1,38 @@ +Our Australian business continues to be profitable and strategically important. Post the annualisation of the tax increases and +stabilisation of local market conditions, we expect our Australian business to return to growth. +During the prior year, the Group also recognised a £45.5m charge in respect of the repayment of amounts received under the +Governments Covid Furlough scheme. +Separately disclosed items +2023 +£m +2022 +£m +Legal settlement (585.0) – +Amortisation of acquired intangibles (254.6) (116.9) +Impairment (289.0) (7.0) +Corporate transaction costs (17.8) (23.9) +Restructuring costs (49.7) (11.8) +Legal and onerous contract costs (17.6) (8.1) +Loss on sale of assets (1.0) (1.0) +Movement in fair value of contingent consideration (71.8) 1.0 +Other including financing (1.0) (5.7) +Furlough repayments – (45.5) +Total (1,287.5) (218.9) +Profit/(loss) before tax +The Group’s profit before tax 5 and separately disclosed items was £444.9m (2022: £321.8m), a year-on-year increase of £123.1m +with the growth in underlying EBITDA 5, a decrease in BetMGM losses and a gain on foreign exchange partially offset by the increase in +depreciation and amortisation and interest. After charging separately disclosed items, the Group recorded a pre-tax loss from continuing +operations of £842.6m (2022: £102.9m profit), with the separately disclosed costs discussed above having a significant impact on the +reported results. +Taxation +The tax charge on continuing operations for the period was £36.1m (2022: £70.0m), reflecting an underlying effective tax rate pre- +BetMGM losses and foreign exchange gains on external debt of 23.0% (2022: 15.4%) and a tax credit on separately disclosed items of +£69.7m (2022: charge of £27.9m). +Discontinued operations +During the current year, the Group recorded a £57.8m (2022: £13.4m) loss in discontinued operations relating to its former Intertrader +business which was disposed of in November 2021. The loss recorded primarily reflects legal costs associated with historic matters as +well as a provision for a potential settlement with former owners of part of the business following a long running legal dispute. +Entain plc Annual Report 2023 75 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_78.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..9baacb1b8ff2e9d68a7b9c33d06b63cb96afa610 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,57 @@ +Cash flow +Year Ended 31 December +2023 +£m +2022 +£m +Cash generated by operations 810.0 846.9 +Corporation tax (137.3) (106.1) +Interest (224.6) (100.6) +Net cash generated from operating activities 448.1 640.2 +Cash flows from investing activities: +Acquisitions & disposals (1,315.4) (738.6) +Cash acquired/(disposed) 87.9 29.9 +Dividends received from associates 9.6 3.6 +Capital expenditure (259.9) (212.0) +Investment in Joint ventures (40.7) (175.1) +Purchase of investments (3.1) – +Net cash used in investing activities (1,521.6) (1,092.2) +Cash flows from financing activities: +Equity issue 589.8 – +Net proceeds from borrowings 1,780.3 838.4 +Repayment of borrowings (1,428.6) (271.8) +Subscription of funds from non-controlling interest 350.5 174.3 +Settlement of financial instruments and other financial liabilities (279.9) 8.7 +Repayment of finance leases (68.5) (83.0) +Equity dividends paid (106.9) (50.0 +Minority dividends paid (7.4) – +Net cash used in financing activities 829.3 616.6 +Foreign exchange (13.7) 6.8 +Net (decrease)/increase in cash (257.9) 171.4 +During the period, the Group had a net cash outflow of £257.9m (2022: inflow of £171.4m). +Net cash generated by operations was £810.0m (2022: £846.9m) including £1,007.9m of underlying EBITDA 5 (2022: £993.2m) and a +working capital inflow of £601.8m largely due to payments not having started on the DPA (2022: £45.9m) offset by separately disclosed +items that are reported in operating activities of £741.9m (2022: £96.0m) including the DPA but excluding items charged to depreciation, +amortisation and impairment as well as a £57.8m loss on discontinued operations (2022: £13.4m). Included within working capital is a +£29.7m outflow for balances held with payment service providers as well as customer funds, which are net debt neutral (2022: £47.9m). +During the period £137.3m was paid out in relation to corporate taxes (2022: £106.1m) with a further £224.6m paid out in interest +(2022: £100.6m). +Net cash used in investing activities for the period was £1,521.6m (2022: £1,092.2m) and includes cash outflows for acquisitions of +£1,315.4m (2022: £738.6m), net investment in capital expenditure of £259.9m (2022: £212.0m), an additional £40.7m invested in +BetMGM (2022: £175.1m) and £3.1m of other investments (2022: £nil). These outflows were partially offset by cash acquired with +acquisitions of £87.9m (2022: £29.9m) and dividends received from associates of £9.6m (2022: £3.6m). +During the period the Group received a net £829.3m (2022: £616.6m) from financing activities. £589.8m was raised through the equity +issuance (2022: £nil) with a further £1,780.3m through new financing facilities (2022: £838.4) which were used, in part, to repay +£1,428.6m of debt (2022: £271.8m) including £400m against the Group’s retail bond. During the period, the Group also received £350.5m +from minority holdings to meet their obligations under the Supersport earn-out and STS acquisition. These amounts are recorded in non- +controlling interests (2022: £174.3m for the acquisition of SuperSport). £279.9m was paid on settlement of other financial instruments +and liabilities, primarily relating to contingent consideration on previous acquisitions. In the prior year, the Group received £8.7m on the +settlement of other financial instruments and liabilities as a result of the receipt of £41.6m on the partial settlement on a number of swap +arrangements, partially offset by contingent consideration payments. Lease payments of £68.5m (2022: £83.0m) including those on non- +operational shops, were made in the period. +During the period, the Group also paid £106.9m in equity dividends (2022: £50.0) and £7.4m in dividends to the minority interest in Entain +CEE (2022: £nil). +Entain plc Annual Report 202376 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_79.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..23fc8976e8c58188acd8b3e3e3ea57e7cecf9876 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,52 @@ +Net debt and liquidity +As at 31 December 2023, adjusted net debt 7 was £3,290.9m and represented an adjusted net debt 7 to underlying EBITDA 5 ratio of 3.3x +(3.1x proforma 3). The Group has drawn down £295m on the revolving credit facility at 31 December 2023 (2022:£nil). +Par value +£m +Issue costs/ +Premium +£m +Total +£m +Term loans (3,420.5) 64.8 (3,356.4) +Interest accrual (1.6) – (1.6) +(3,422.1) 64.8 (3,358.0) +Cash 400.6 +Net debt (2,957 .4) +Cash held on behalf of customers (196.8) +Fair value of swaps held against debt instruments (85.6) +Other debt related items* 224.8 +Lease liabilities (275.9) +Adjusted net debt (3,290.9) +* Other debt related items include balances held with payment service providers, deposits and other similar items +Refinancing +On 1 March 2024, the Group raised an additional £300m of borrowings under a bank loan facility and used the proceeds to repay all +amounts drawn under the Group’s revolving credit facility. Concurrently, the commitments available under the Group’s revolving credit +facility (disclosed in Note 36) were increased by £45m further increasing the Group’s available liquidity. As such, the Group’s revolving +credit facility now has total commitments of £635m which, as at 1 March 2024, was completely undrawn save £5m carved out for letters +of credit and guarantees. +Going Concern +In adopting the going concern basis of preparation in the financial statements, the Directors have considered the current trading +performance of the Group, the financial forecasts and the principal risks and uncertainties. In addition, the Directors have considered +all matters discussed in connection with the long-term viability statement including the modelling of ‘severe but plausible’ downside +scenarios such as legislation changes impacting the Group’s Online business and severe data privacy and cybersecurity breaches. +Given the level of the Group’s available cash post the recent extension of certain financing facilities (see Note 36) and the forecast +covenant headroom even under the sensitised downside scenarios, the Directors believe that the Group and the Company are well +placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation that the Group and the +Company will have adequate financial resources to continue in operational existence, for at least 12 months (being the going concern +assessment period) from date of approval of the financial statements, and have, therefore, considered it appropriate to adopt the going +concern basis of preparation in the financial statements. +Notes +1. 2023 and 2022 statutory results are audited, with the tables presented relating to continuing operations and including both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as is they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. Adjusted net debt excludes the DPA settlement of £585.0m. Leverage also excludes any benefit from future BetMGM EBITDA or the payments due to acquire the minority +interests in Entain CEE. +Entain plc Annual Report 2023 77 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_8.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9e1775924ce17b04890a2eaae5971b1e140d70 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_8.txt @@ -0,0 +1,31 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_80.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..a986558e59ef20fc281858d83a5fd742b0e299eb --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_80.txt @@ -0,0 +1,112 @@ +Statement of Directors’ responsibilities in respect of the +Annual Report and the Financial statements +Responsibility statement of the +Directors in respect of the annual +financial report +We confirm that to the best of +our knowledge: + the financial statements, prepared in +accordance with the applicable set of +accounting standards, give a true and +fair view of the assets, liabilities, financial +position and profit or loss of the Company +and the undertakings included in the +consolidation taken as a whole; and + the Strategic Report includes a fair review +of the development and performance of +the business and the position of the issuer +and the undertakings included in the +consolidation taken as a whole, together +with a description of the principal risks +and uncertainties that they face. +We consider the Annual Report and +Accounts, 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. +Rob Wood +Chief Financial Officer & Deputy Chief +Executive Officer +07 March 2024 +The Directors are responsible for keeping +adequate accounting records that are +sufficient to show and explain the parent +Company’s transactions and disclose +with reasonable accuracy at any time the +financial position of the parent Company +and enable them to ensure that its financial +statements comply with the Isle of Man +Companies Act 2006. They are responsible +for 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, and have general +responsibility for taking such steps as are +reasonably open to them to safeguard the +assets of the Group and to prevent and +detect fraud and other irregularities. +The Directors are responsible for the +maintenance and integrity of the corporate +and financial information included on the +Company’s website. Legislation in the Isle +of Man governing the preparation and +dissemination of financial statements may +differ from legislation in other jurisdictions. +In accordance with Disclosure Guidance +and Transparency Rule (“DTR”) 4.1.16R, +the financial statements will form part of +the annual financial report prepared under +DTR 4.1.17R and 4.1.18R. The auditor’s +report on these financial statements +provides no assurance over whether the +annual financial report has been prepared +in accordance with those requirements. +The Directors are responsible for preparing +the Annual Report and the Group and +parent Company financial statements +in accordance with applicable law +and regulations. +The Directors have elected to prepare +the consolidated financial statements in +accordance with International Financial +Reporting Standards and applicable +law and have elected to prepare the +parent Company financial statements +in accordance with FRS 101 Reduced +Disclosure Framework. +In preparing each of the Group and +parent Company financial statements, the +Directors are required to: + select suitable accounting policies and +then apply them consistently; + make judgements and estimates that are +reasonable and prudent; + for the Group financial statements, +state whether applicable accounting +standards have been followed, subject +to any material departures disclosed and +explained in the financial statements; + for the parent Company financial +statements, state whether applicable +UK accounting standards have been +followed, subject to any material +departures disclosed and explained in the +parent Company financial statements; + assess the Group and parent Company’s +ability to continue as a going concern, +disclosing, as applicable, matters related +to going concern; + use the going concern basis of accounting +unless they either intend to liquidate +the Group or the parent Company or to +cease operations, or have no realistic +alternative but to do so; and + prepare financial statements which give +a true and fair view of the state of affairs +of the Group and the parent Company +and of the profit or loss of the Group and +the parent Company for that period. +Entain plc Annual Report 202378 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_81.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..92843bbf10e494ed2821b8d4dc051f69da39a5e6 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_81.txt @@ -0,0 +1,137 @@ +Enterprise Risk Management +Managing Risks +Risk Management Governance +The Board has established and reviewed +procedures to manage risk, oversee internal +control systems and determine the nature +and extent of the most significant risks +the Company is willing to take in order to +achieve its long-term strategic objectives. +Our Enterprise Risk Management (ERM) +process supports the Board to establish a +“bottom up” view of its most significant and +emerging Group risks, which are presented +to the Committees of the Board and where +required, directly to the Board in thematic +risk reviews throughout the year by the +Risk Owners, using a consistent format +Risk Dashboard. +The Risk Dashboard highlights whether +strategic objectives can be met in the +current context and indicates how much +action is needed to further manage the +risks to an acceptable level. If objectives +cannot be met, oversight Committees are +asked for additional resources to manage +the risks, or, if no additional resources +are made available, whether they wish +to formally accept the risk exposure or +change objectives. This process embeds +risk appetite decision-making at the +appropriate levels of the Company, with +outcomes noted and communicated back to +the Risk Owners who can then take action +to manage risks accordingly. +The Board retains ultimate responsibility +for the management and oversight of +risk and considers a “top-down” view +of the significant and emerging Group +risks obtained through the “bottom-up” +ERM process, from this, it establishes the +Principal Risks to the Group and considers +the likelihood of the Principal Risks +occurring and whether risks emerging over +three-, five- and ten-year horizons require +deep dives. +During 2023, we re-structured the Group +Risk Committee, which now meets six +times a year in cadence with our other +Board Committees and Board meetings. +The Group Risk Committee is scheduled +to precede and feed into Committee and +Board meetings where possible, so that risk +information is current and overseen on a +timely basis. +People and Governance +Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting and +retaining key talent, as part of +their responsibilities the People +and Governance Committee +continually reviews succession +planning and the susceptibility +of the Group to the risk. +Legal & +Regulatory +Data +PrivacyRetail UK&I Cyber +& ISCore Digital TradingLATAM HSSE +Australia +& New +Zealand +Safer +Betting & +Gaming +ProcurementInternational +Tax, +Treasury & +Insurance +Technology Customer +Service +Product & +Tech +Property & +WorkplaceCorporate +Ethics & +Compliance +People +Services Integration +PLC Board +Specific risk oversight: + Execution of the group strategy + Laws, regulations and compliance + Attracting and retaining key talent + Whilst not a principal risk, the +Board also reviews the Group’s +litigation risk on an ongoing basis +Group Risk Committee Meets six times annually, prior to each Board and Board committee meeting +Sustainability and +Compliance Committee +Delegated risk oversight*: + Health, safety and well-being + Safer betting and gaming + Risk also reviewed +continually under +Committee ToR: Regulatory +compliance and licensing, +anti-money laundering +(“AML”), Responsible +gambling, protection and +the environment. +Audit Committee +Delegated risk oversight*: + Data privacy and cyber +resilience + Maintain technology platform +resilience + Taxes + Trading, liability and +pricing management + Price and service of delivery +from 3rd party suppliers +Remuneration Committee +Whilst the Board is responsible +for the annual review of the +principal risk of attracting +and retaining key talent, as +part of their responsibilities, +the Remuneration Committee +continually reviews this risk and +the mitigating actions in place +to prevent the risk crystalling. +*Delegated oversight and responsible for deep +dive reviews of Group’s principal risks. +Entain plc Annual Report 2023 79 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_82.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..d948796fc1e2eb41822f5996efd3d78c7c1a692a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,130 @@ +Effective risk management supports us to +meet our corporate objectives, it helps us +to make risk-based decisions so that we +operate with fewer shocks and allocate +resources in line with our risk appetite. +Our Risk Management Principles: +1 +Tailor an enterprise risk +management system that +improves performance, +encourages innovation, and +supports the achievement of +our objectives. +2 +Integrate and align risk +management across different +strategic, functional, and +operational disciplines, such +as budgeting, compliance, +finance, health and safety, IT, +security, and so on. +3 +Embed risk management as +an integral part of the way +we manage our business, +people, and teams across all +our operations. +4 +Proactively manage our risks +in our fast-changing business +environment, updating and +continuously improving our +risk information to support +decision making at all levels. +Management Process +We work together to use modern risk +management methods (and Entain’s four- +step model in figure 1 below) as an integral +part of our day-to-day decision making +across our entire organisation, minimising +threats to the delivery of our strategy, and +maximising opportunities. +Risk Strategy +At Entain, we are committed to active and +effective risk management, creating, and +protecting value to the organisation and +helping us deliver on our strategic priorities, +managing threats, exploiting opportunities, +and building resilience. We support risk +taking where it is forecast to generate +returns for the business and manage this in +line with our values and ethics. +Definition: +Risk +We define risk as “the effect of +uncertainty on the ability of Entain +to achieve its objectives”. Risks can +be either opportunities (upside) or +threats (downsides), and we assess +and manage both. +Definition: +Risk Management +Risk management is doing +something to take charge of and +change those uncertainties that +matter most across the company. +Enterprise Risk Management (ERM) +are the co-ordinated activities to +direct and control the organisation +with regard to risk. +Our risk landscapes +Current risks +Risks we are managing now that could stop +us achieving our strategic objectives. +Emerging risks +Risks with a future impact from external or +internal opportunities or threats. These can +be slow moving, as well as rapid velocity. +What we assess + Risk ownership: each risk has a +named owner + Impact versus Action: globally applied +scale measuring the amount of action +required to manage the risk to an +acceptable level + Critical controls: subject to internal audit +review and monitoring + Current risk: after existing controls + Risk acceptance: if the risk is acceptable +with the current controls or if additional +actions are needed to manage the risk to +an acceptable level. + Risk appetite: defined at risk level + Actions: identify further actions if +required, with action owners and +due dates +Our bottom-up registers +The bedrock of our risk assessment. +Owned by functions and super-regions, +they identify, analyse, and evaluate risks +and mitigating controls arising from day-to- +day operations globally. +Our significant risk dashboards +The main output of our risk assessment. +Owned by functions and super-regions, +they highlight the significant threats +and opportunities via our ‘impact versus +actions’ scales and subsequent controls +needed to mitigate the threats and exploit +the opportunities arising from day-to- +day operations globally. They include a +description of the risk, reference which +corporate objectives are exposed to the +risk, and what additional support and +decisions are needed to manage the risk to +an acceptable level. The Dashboards are +used to make effective, risk-based decisions +on allocation of resources. +Risk categories we assess +As part of the ERM process, we assess +against the following impacts criteria: + Financial + Operational + Reputation / Brand + Legal / Regulation + Health & Safety +Entain plc Annual Report 202380 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_83.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..be19eccd52a783b806ed69dbbfd0d7d30ae2d116 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,69 @@ +Figure 1: Entain’s Risk Management Process – four-steps +Our primary objective is to ‘operationalise’ risk and move toward a risk aware +culture that includes effective reporting collaboration and action taking +This four step process allows us to ask, ‘Given the context in which we are operating, the risk we face and our ability to +manage them – can we achieve our objectives?’ If we can, then we continue the good work. if we can’t, then we need to +manage the risks further, or change the objectives. +Risk-based +decision +making +Define context +and objectives +Understanding both the external +and internal context in which we are +operating – what is happening and +what might happen to make things +easier or more difficult for our business? +We clarify what we are trying to +achieve – our objectives – whether it is +for the entirety of a strategy, division +or function. +We think through how the context and +objectives may impact each other, both +positively and negatively. +Monitor, Review +and Report +Ongoing checking of the status of risks +and their controls. +This step involves reviews, +inspections, and audits of the status +of risks, providing risk management +information that is communicated to all +necessary stakeholders. +Assess risks +Risk identification: Recognise, +acknowledge, and describe risks (both +potential opportunities and threats). +Risk analysis: Understand the risks +both individually and as a collective +risk profile. This includes prioritising +risks as well as better understanding +any triggers which may make the +risk happen. +Risk evaluation: Determine if action +needs to be taken regarding a risk +or risk profile to bring the risks to an +acceptable level. +Manage risks +Active management of risk with +decisions on the types of controls +needed and the implementation +of controls. +Proactive risk management takes +charge of and changes the nature +of the risk and risk profile so that it +comes in line with the amount of risk +we are willing to take in delivering +our objectives. +Where risks are out of line with the +amount of risk we want to take, we +can enhance or add new controls +where necessary. +1 +4 +2 +3 +Entain plc Annual Report 2023 81 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_84.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..1defbcef9ed33338785570260b92f0cba845794a --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,185 @@ +Risk Management +Whilst our Board owns and oversees +our ERM programme, risk management +accountability and responsibility are +embedded throughout our organisation: + Our first line of sight to our risks is +through our Colleagues, who have +responsibility to manage day-to-day risks +in their own areas, they have the insight +to risk that comes from experience and +knowledge. The ERM process engages +with the first line in all four steps of +the ERM process defined in Figure 1. +The first line is guided by Group policies, +procedures, control frameworks and +risk appetite. Local management, and +ultimately the Executive, ensure that risks +are managed and carried out according +to these frameworks. + The second line of sight is provided by our +advisory support teams who specialise +in areas such as ERM, Compliance, +Cyber Security, Legal and HSSE. +These advisory support teams review +the controls implemented by the first +line and advise whether the controls are +adequate, they form a holistic view of +risk across the Group and capture and +escalate risks that could fall through silos, +supporting and encouraging foresight +of risk. This risk foresight is captured by +the ERM and management teams, who +review each risk register and dashboard +on a regular basis, culminating in review +by the Group Risk Committee, which +then escalates significant risks to other +Committees and the Board to fulfill +risk oversight. + The third line of sight is through +independent Internal and external +audit, who provide assurance over the +effectiveness of critical controls, which +is provided through internal audits, +supplemented by reports from external +assurance providers. We use this +hindsight to adjust our controls in the light +of audit recommendations. + Entain’s Group Code of Conduct and +Whistleblowing Policies, in addition to +our controls framework, are in place to +promote and aid us to ‘Do what’s right’. +Annually the Audit Committee reviews +the adequacy and effectiveness of the +Company’s policies, which sets our tone +for desired risk culture. +2023 Key Achievements +Robust Governance +A key cornerstone towards robust +governance was accomplished, including +the deployment of a new risk policy, +framework, governance forums, and +assurance checks. We: + Completed the ERM management system +design and approval + Began implementation of our ERM +system through over 50 sessions of risk +management training and workshops, +with work ongoing into 2024 to +implement in our Super Regions, giving a +much clearer view of the company’s most +significant risks. + Reviewed and updated Entain’s risk +scoring criteria, establishing new risk +matrix covering ‘Impact vs Actions’ as +a modern approach to ERM, ensuring +focus on what can be done about the +risk is embedded in our day-to-day risk +management “bottom-up” process. + Delivered new format risk registers, +allowing the identification of key controls +and monitoring of actions needed to put +further controls in place. + Delivered new Significant Risk +Dashboards and presented to the +risk oversight Committees and Board +during the year, facilitating decisions +on risk appetite, required actions and +resource allocation. +Horizon scanning (emerging risks) +We enhanced our process for identification, +analysis, and evaluation of emerging +risks, informed by functions, divisions, +super-regions, subject matter experts +and leadership, to provide a Group-wide +view. In 2023, we undertook a series of +workshops across our risk landscape +to provide a deeper exploration of our +emerging threats and opportunities and +come to a consensus on our response. +As such, the exercise to understand +potential emerging risks has been carried +out during each initial risk workshop, +looking at risks that may occur over 3-, 5-, +and 10-year time horizons. In analysing +the data, common themes have become +apparent, which have been developed +to display and better understand the +information regarding emerging risks. +Risk aware culture +Our ERM team led the establishment and +implementation of our refreshed approach +to Enterprise Risk Management, which +is aligned with the international risk +standard ISO 31000. During 2023, we have +progressed a consistent approach across +our business through training, engagement, +and application of our new ERM toolkit. +Our colleagues are fundamental to the +success of risk management at Entain. +A positive risk aware culture enables +colleagues at all levels of our organisation +to deliver risk management as an integral +part of their day -to-day activities. We do +this by: + Developing a compelling narrative on the +benefits of effective risk management +across the Group. + Delivering targeted foundation of risk +management training. + Undertaking specific risk workshops for +each function and region, the culmination +being a robust risk register and +dashboard highlighting those risks which +we deem significant. + Collaborative working across the Groups +functions and super-regions utilising the +expertise of external insight. + Articulating risks so they can be clearly +understood so decisions are made on a +more informed basis. + Embedding the consideration of risk +appetite through our risk prioritisation +tool which indicates whether risks are +deemed to be at acceptable levels. +These tools are used in our first lines and +reviewed at oversight Committees and +Board. Embedding risk appetite in our +ERM process has improved our ability +to talk about risk appetite as part of our +risk culture. +How risks are measured +As part of the ERM process, the risks +identified are assessed against a defined +set of criteria using an ‘Impact versus +Action’ matrix which assesses both the +impact to the business and the actions +required to bring those risks within Entain’s +risk appetite. In assessing ‘impact versus +action’ we assess the risk against financial +performance, operational processes, legal +and PR and health, safety, and security. +In particular: + The impact of each risk is measured with +reference to the financial implications +(underlying EBITDA and cash), its +potential operational impact (including +the security of our data), the effect on the +reputation of our brands and whether it +affects our commitment to health, safety, +security, and well-being. + The impact is measured on a scale, from +‘very low’, with limited damage to a +minor stakeholder, and ‘very high’ being +severe, which may have a substantial +impact on the Group affecting many +key stakeholders, including customers. +The action is measured from a range +of no action required to many actions +needed and additional resource required, +also on a scale from ‘very low’ to +‘very high’). +Entain plc Annual Report 202382 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Risk management process +and methodology \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_85.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e2233c2d0cc1972f0654522e0a3abd4d876a7c0 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,152 @@ +Principal Risks +02. Data Privacy and +Cyber Resilience +Chief Product and Technology Officer; +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +Our customers expect a great experience, +including protecting their personal details, +their privacy, their winnings and ensuring +the integrity of our offering. Customers +place a trust on our organisation and +our operations, so it is of paramount +importance that we protect our customers’ +data by keeping it secure, in addition, +personal data is subject to stringent data +protection laws around the world, and +we have compliance obligations in the +jurisdictions in which we operate. +A data or security breach could impede +our operations and impact our ability to +serve customers and would undermine +trust in our business and brands, +and could lead to loss of customers, +prosecution, litigation (including class +actions), significant financial penalties and +impact our share price. +How we respond +The Group has dedicated Cyber Security +and Data Privacy functions entrusted with +protecting the security and confidentiality +of our customers and the company, whilst +ensuring the availability of services and +regulatory compliance. +The experts in our Cyber Security team +constantly scan and adapt our defences to +emerging cyber threats. +We operate to an ISO 27001 Information +Security Management System +certification, the Cyber Security controls +and associated policies are constantly +being evaluated, aligned, and applied, +where deemed relevant across the +enlarged Group. +The Data Privacy team, led by the Group’s +Chief Data Privacy Officer matures our +privacy programme through designing +policies and training, including on the +use of AI, giving up to date advice to +the business, ensuring standards of +compliance, partnering with the Chief +Data Officer and other key stakeholders +to improve our data management +practices and providing regular updates +to the Group’s Audit and Sustainability & +Compliance Committees. +01. Laws, Regulations, +Licensing and Regulatory +Compliance +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +We operate in complex regulatory, +legislative, and fiscal environments, +and have multiple licensing obligations, +gambling and non-gambling laws and +regulations, and tax regimes with which +to comply. In addition, on a global basis, +laws and regulations change continuously, +and it can be operationally challenging to +keep pace with legislative or regulatory +change, particularly if we need to adjust +our operations or product offering at short +notice. +As we expand into new markets or laws/ +regulations change, our compliance +requirements expand, we need to build +constructive relationships with regulators, +and we are likely to need additional +effort, resource and/or investment into +our internal compliance and governance +efforts. +In 2023, Entain entered into a deferred +prosecution agreement (DPA) relating to +historic bribery allegations in Turkey. All +the above means that compliance efforts +and having a strong, well-resourced +compliance programme in place needs to +remain a top priority. +How we respond +Our strategy is to operate only in +regulated or regulating markets, which +reduces our exposure to unregulated +markets that may undermine player +safety and pose other legal risks. +Our internal experts monitor for changes +in legislation and regulation and develop +policies, procedures, assurance programs, +and training to enable us to adapt. They +are engaged in due diligence when we +engage new suppliers, onboard new +customers, enter new markets or acquire +new companies. All these efforts reflect +the commitments to compliance in our +Code of Conduct. +External legal expertise is sought when +additional specialist support is necessary. +We will ensure that we comply with all +the terms of the DPA and continue to co- +operate with regulators as required. +We consider principal risks to be those +risks, or combination of risks, that, were +they to materialise and not be effectively +controlled, would cause material disruption +to our business model, threatening future +performance, solvency, liquidity, or our +ability to deliver our strategy. Risks at this +level are recorded on our Significant Group +Risk dashboard. Group risks are considered, +along with material emerging risks to define +our Principal Risks. +During our periodic risk reviews, we +confirmed that all principal risks reported +in 2022 remain relevant except for ‘Loss +of Key Locations ’, which now forms part +of ‘Ensure Health, Safety, Security and +Well-being of Employees, Customers, and +Communities’ and ‘Maintain Technology +Platform Resilience’ . This is because +a deep dive helped us understand that +the most significant impacts of loss of +key locations would be to our people or +technology, and the controls for these risks +will largely be managed in these areas. +One new principal risk has been identified, +namely Price and Service of Delivery from +3rd Party Suppliers and added to the +Group risk register in 2023. +The Groups Principal Risk for 2023 are: +Entain plc Annual Report 2023 83 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_86.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..930f6e9922b731d5c96adc4a5d308bcd8257cf36 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,142 @@ +05. Trading Liability and +Pricing Management +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group may experience signi ficant +losses because of a failure to determine +accurately the odds in relation to any +particular event and/or any failure of +its price risk management processes. +Some bets are complex and have +an accumulator effect which could +significantly impact the Group’s +profitability. +How we respond +We have some of the leading expertise +in trading liability management in the +Gaming sector. +The Group’s trading team has developed +the skills and systems to be able to offer a +wide range of betting opportunities. +Events are priced to achieve an average +return to the bookmaker over many events +over the long-term. +The Group’s gross win percentage has +remained constant in recent years. +Executive management monitor the gross +win margin daily in order to ensure the +long-term targets are achieved. +04. Price and Service +of Delivery from +3rd Party Suppliers +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +We are dependent on certain Third Parties +to deliver key products and services. Some +of our core capabilities are supplied by +small, specialist providers, which include +content providers who stream live events +to our shops, results and other key data +providers, League proprietors, industry +bodies, and suppliers that ensure security +and resilience of our locations and +systems. Other key Third Parties include +large technology and software suppliers +which hold dominant market positions. +Key suppliers could raise prices, become +financially unstable or deny services +which would limit the variety of gaming +we can offer, leading to loss of revenue. +To ensure robust management of service +delivery and value creation through +the life of the contract will allow better +management of growing risk/opportunity +amplified by our expansion. +If suppliers are purchased by our +competitors, access to services may be +restricted or denied, or we may decide +to withdraw from certain markets if they +become uneconomical. +Conversely, Third Party providers may present +acquisition opportunities for the Group. +How we respond +Strategic and critical suppliers are subject +to regular business and quality reviews +to ensure ongoing relationship and +performance management. +As part of our procurement processes, we +employ dedicated resources supplemented +by subject matter expertise within risk, +compliance, legal and technology assurance +to protect and enhance value, demonstrate +our high standards of corporate integrity, +and reinforce organisational resilience. +Where possible, we limit reliance on a +single supplier to reduce the potential +single point of failure. We proactively +manage our relationships with our +specialists and key providers. +Prices are subject to negotiation at the +contracting stage, and we have deep +industry expertise in our Procurement and +Legal teams. +We maintain good relationships with +Industry bodies and suppliers that keep our +key locations and services running. +03. Taxes +Chief Financial Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group is subject to a wide range of +taxes, duties, and levies in the countries +where we operate. There may be +adverse changes in tax rates, laws, or +administrative practice. +The Group is geographically diverse and +there are complex tax regimes for the +betting and gaming sector. Tax authorities +may have a different interpretation to the +Group regarding the scope and scale of +taxation. These factors mean the levels +of taxation to which the Group is exposed +to may change in the future, and we may +become liable for tax payments greater +than the amounts in our filed tax returns. +How we respond +The Group’s tax strategy is approved +annually by the Board of Directors. +Responsibility for the execution of the +Group’s tax strategy is delegated to +the Chief Financial Officer who reports +the Group’s tax position to the Audit +Committee and Board on a regular basis. +To mitigate tax risks that arise, the Group +actively identi fies, evaluates, manages, +and monitors its tax risks. +The Group has an appropriately quali fied +and resourced tax team to manage its tax +affairs. +In addition, where there is signi ficant +uncertainty or complexity in relation to a +tax risk, the Group may use the services of +external, expert tax advisors. +Entain plc Annual Report 202384 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_87.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad851a70c133cea17eec67371b123d5b18c1bab9 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,132 @@ +08. Execution of the +Group Strategy +Chief Executive Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Board +Why this matters to us +Our Group strategy establishes our +direction and culture and sets us on a +course of future growth through delivery +of overarching corporate objectives. +The corporate objectives guide our +business and team objectives and +facilitates our colleagues to be aligned in +delivering desired outcomes. +If we cannot understand or deliver +our Group strategy, we risk wasted or +fragmented effort, inefficient allocation of +resources, strategic stagnation, and loss +of competitive advantage. +How we respond +Our refreshed Enterprise Risk +Management process sets understanding +and clarifying objectives as part of its +first step, and all risks (both threats and +opportunities) are identified in relation to +their effect on objectives. +07. Maintain Technology +Platform Resilience +Chief Product and Technology Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Audit Committee +Why this matters to us +The Group’s operations are highly +dependent on information systems and +technology. Should we fail to maintain the +stability and availability of our technology +platforms, this could have a material +impact on customer-facing products +and customer experience, with adverse +impacts to our brands, revenue, and +market share. +Some of our technology is situated in +locations which could be subject to +physical threats. +How we respond +Proactively, our strategy is to move to +modern systems with higher levels of +resilience where possible. +We are enhancing our reactive responses +and provision of fall-back solutions should +our technology platforms fail. +We monitor key global metrics on critical +systems and platforms which identify any +potential emerging issues on our brands +or customer-facing technologies. When +indications of vulnerability are detected, +we escalate to resolve issues and create +solutions. +Our in-house experts are adept in +knowledge of our platforms, systems +and coding and can create solutions +adaptively. +06. Attracting and +Retaining Key Talent +Chief People Officer +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: High +Risk Oversight: Board +Why this matters to us +Our colleagues, their talents and skills are +vital to helping our business succeed. +Attracting, retaining, and developing +the best and diverse talent is key to +the success of delivering our strategic +priorities – our people really do make the +difference. +Having clear leadership standards +enabling a vibrant and inclusive +organisational culture allows colleagues +to do their best work and excel. Providing +an open and inclusive environment +allows us to attract new and different +talent to join Entain but also creates a +culture people want to be a part of. By +creating the right standards of leadership +and setting clear expectations around +performance we are able to respond to +challenges and opportunities faster and +more effectively and therefore deliver on +our critical strategic objectives. +How we respond +Everything we do is anchored to our +clearly stated purpose, supported by our +shared values and behaviours. +Our value of “do what’s right” underpins +our commitment to setting the very +highest standards for our people to +adhere to. +Our leadership framework drives higher +levels of leadership capability allowing +us to attract and retain great talent. Our +commitments and actions are monitored +by the Executive Committee and the Board. +We are committed to ensuring all of our +people have a safe place to work with the +ability to raise any concern they may have. +We regularly seek employee feedback +through our Your Voice survey and translate +that into actionable plans to ensure high +levels of engagement and retention. +We encourage and support diversity +through Employee Resource Groups who +help drive, support, and promote a focus +on why diversity matters. +We actively promote the opportunity to +grow a career at Entain through promotion +but also lateral movement across the +business, providing meaningful career +progression. +Entain plc Annual Report 2023 85 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_88.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..7367fa96a1f37f022005bb600e97c7c61f17a355 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_88.txt @@ -0,0 +1,113 @@ +10. Safer Betting and +Gaming +Group General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion + US Market Growth +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Our Safer Gaming and Betting +approach is central to our business. It +is the cornerstone of our Sustainability +Charter, and our most material ESG issue +is to ensure market leading levels of +player safety and protection. Failure to +adequately protect our customers could +result in customer harm, fines, and loss of +license to operate in some jurisdictions. +How we respond +We have developed our in-house tool, +ARC™, and other forms of support and +customer interventions to facilitate us to +manage our safer gaming commitments. +Where risky behaviour is detected, we +may offer a personalised gambling control +tool, refer them for a chat with our player +protection team, or suspend their account +in real time. +ARC™ is an intelligent and innovative +platform that uses behavioural insight +and research, data science and analytics +to assess risk in play, enabling us to +identify, interact and intervene early with +customers who show signs of gambling- +related harm. +We have a range of initiatives in the area +of player protection, including a $5m +academic research partnership with the +Harvard Medical School, to understand +the causes and consequences of problem +gambling, and donating up to 1% of our +GGY to the treatment of gambling related +issues. +Our bonuses are calculated with reference +to our Safer Gaming metric – to reach the +threshold level for payout, minimum levels +of completion of safer betting and gaming +compulsory training modules must be +achieved by our colleagues globally. +09. Ensure Health, Safety, +Security and Well-being +of Employees, Customers, +and Communities +Chief Executive Officer and Group +General Counsel +Link to Strategic Objective: + Organic Growth + Margin Expansion +Impact: Very High +Risk Oversight: Sustainability and +Compliance Committee +Why this matters +Failure to meet the requirements of the +various domestic and international rules +and regulations relating to the health +and safety of our employees and our +responsibilities and commitments towards +customers and communities could +expose the Company to material civil, +criminal and/ or regulatory action with +the associated financial and reputational +consequences. +While Entain is committed to high +standards and strives to achieve zero +harm in all that it does, it recognises that +there is always the potential for safety or +well-being related issues to arise in an +operational business. +How we respond +At Entain, we are committed to providing +a safe work environment which promotes +people’s health, safety, security, and well- +being. We want everyone to feel healthy +and supported at work, and at home. We +have plans for each discipline to ensure +that we maximise the opportunities and +manage threats specific to our business. +Our health, safety and security strategy +is focused on continual improvement of +safety performance to reduce the number +and severity of work-related injuries whilst +keeping our colleagues and places of work +secure. This is underpinned by our HSSE +assurance programme to ensure our risk +management system is effective and that +we keep our colleagues safe and secure. +Our well-being strategy is designed to +help leaders and colleagues make positive +changes to improve their physical, mental, +and emotional health, in turn creating +a better performing, energised and +productive workforce. To achieve this, +we provide tools, training, and targeted +support to our colleagues. +The Group’s Sustainability and +Compliance Committee also oversees all +aspects of Health, Safety, Security and +Well-being practices. +Entain plc Annual Report 202386 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Principal Risks \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_89.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..ad832a487c0999954a01c83a43689a8741beac13 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_89.txt @@ -0,0 +1,70 @@ +Long-term viability statement +The financial impact of the identified risk +events has been assessed both individually +and in combination and include: + The impact of a change in the Group’s +duty profile, including further changes in +gaming taxes in key geographies. + Significant changes in the regulatory +environment/further focus on AML +legislation and breaches in data +privacy regulations + Cyber and data privacy failings. + Downturns in trading as a result of a +failure to protect customers and/or retain +key staff. +The Directors have also performed reverse +stress tests to assess the level of liquidity +and covenant headroom in the underlying +forecasts as well as considering the broader +economic landscape in forming their view +on viability. +Based on the results of this analysis and the +mitigating actions available to the business, +the Directors confirm that they have a +reasonable expectation that the Company +will be able to meet its liabilities as they fall +due over the three-year assessment period +to December 2026. +In accordance with provision 31 of the 2018 +Corporate Governance Code, the Board and +Directors have completed an assessment +of the prospects and viability of the Entain +Plc Group over a longer period than the +12 months required by the “Going Concern” +provision. +The Directors have concluded that three +years was an appropriate period for +assessment, as this is aligned to the +Group’s strategic planning process and +is considered to be the period for which +reliable estimates can be made for +variations in both industry and customer +dynamics, regulatory change, technological +advancements and the economic backdrop +in the betting and gaming industry taking +into account the ever changing landscape. +The objectives of the strategic planning +process are to further develop the +businesses understanding of the markets +in which it operates, assess the risks +and opportunities facing the business +and develop a Group-wide strategy and +associated financial forecasts. +The Directors have utilised these strategic +forecasts, the 2024 Board approved budget +and the current financial position of the +Group to assess the potential impact on +viability of certain severe, but plausible, +“risk events” arising which represent the +crystallisation of the Group’s principal risks +and uncertainties as identified on pages +83 to 86 of this Annual Report. The robust +assessment conducted considered the +Group’s revenue, EBITDA, operating +profits, cash fl ows, risk management +and controls, its current debt maturity +and mitigating actions should baseline +assumptions change. +Entain plc Annual Report 2023 87 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_9.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..35def1b5c7ca95f3e34e916776c6083c96827c52 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_90.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6a49aaf5bb4827f817bb63f70b6fde274695756 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,58 @@ +Chairman’s Governance Overview +Entain continues to enhance its corporate governance practices +and procedures to ensure the Board operates effectively and +sets the right tone from the top. In 2023 a key focus for the Board +has been managing its own succession and I was delighted to +announce the appointment of Amanda Brown and Ricky Sandler, +who joined the Board in November 2023 and January 2024 +respectively. Amanda brings extensive commercial and human +resource experience to us. Ricky knows our business extremely well +and his focus will be on generating value for all shareholders. +We have also overseen the departure of two executive directors +during the year, Jette Nygaard-Andersen and Robert Hoskin. +Under Jette’s leadership, Entain executed a strategic shift towards +regulated or regulating markets and continued to improve its +customer and product offering. +Robert stepped down as Chief Governance Officer in August +having been with the Group since 2005. I would like to express +my thanks to both Jette and Rob for their roles as directors and +everything they have done for me personally and the Group +more widely. +We have been hugely fortunate that Stella David agreed to take on +the Interim Chief Executive role while we continue our search for a +permanent replacement to Jette. Stella is an intensely commercial +leader with a long track record of success across multiple +industries. She has already made a significant impact refreshing +the corporate strategy and sharpening management’s focus on +operational execution. +The strength and expertise of the Board members has allowed us +to adjust quickly to these significant changes and I am thankful +to Pierre Bouchut, who took on the role of Senior Independent +Director, and Virginia McDowell, who replaced Stella as Chair of the +Remuneration Committee. Further details regarding our continued +search for Non-Executive Directors and our board succession +planning appears in the People and Governance Committee report +starting on page 101. +The Board established a new Capital Allocation Committee in +February 2024, which will provide additional oversight over the +Company’s portfolio of assets, capital allocation and capital +structure. I am the Chair of this Committee and I have been joined +by Pierre Bouchut and Ricky Sandler. +The Board remains confident about the Group’s future and is +committed to our strategy, our purpose and is highly focused on +developing sustained and sustainable shareholder value. +“The Board remains +confident about the +Group’s future and +is committed to our +strategy, our purpose +and is highly focused on +developing sustained +and sustainable +shareholder value”. +J M Barry Gibson +Chairman +J M Barry Gibson +Chairman +1 Overview 8 Strategic report 88 Governance 140 Financial statements +88 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_91.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..79e6ab5a22c5f3cb3b9290c1d1ccc16630e8c247 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,47 @@ +93 88 1235 4 +Board of Directors +(as at 7 March 2024) +Tenure +Years: +Barry Gibson +Stella David +Rob Wood +Pierre Bouchut +Amanda Brown +Virginia McDowell +Ricky Sandler +David Satz +Rahul Welde +0 1 2 3 4 5 6 7 +Age and +experience +No. of Directors +Experience/Skills: +No. of Directors +40-44 60-6450-5445-49 65-6955-59 70+ +1221201 +Gaming +Sector +Finance Technology/ +Digital +Global +Business +Legal/ +Regulatory +MarketingCustomer Media/ +Entertainment +Leadership +Diversity Gender + 3:6 +No. of Directors 4 +British +3 +American +1 +French +1 +Indian +Entain plc Annual Report 2023 89 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s Governance +Overview \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_92.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..bea3bd237f701d6be81d7f907f0e2e27e21d1088 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,73 @@ +J M Barry Gibson +Chairman +Tenure: Appointed to the Board November 2019 and became Chairman February 2020. +Age: 72 Nationality: British +Committees: C P S +Biography: Barry was previously a non-executive director of William Hill plc and bwin. +party digital entertainment plc, where he was the senior independent director. Other listed +company experience includes roles as the chairman of HomeServe plc, non-executive +directorships of Somerfield plc and National Express plc and group chief executive +of Littlewoods plc. He was formerly the group retailing director at BAA plc and non- +executive chairman of Harding Brothers Holdings Ltd. +Key strengths and experience: +Barry has enjoyed a distinguished business career and has a deep understanding of +the gaming and retail sectors. He is an experienced leader and board member with +valuable insight on improving company performance and transformation programmes. +Barry continues to create a Board environment of constructive challenge and oversight. +Rob Wood +Chief Financial Officer and Deputy CEO +Tenure: Appointed to the Board as Chief Financial Officer March 2019; the role of Deputy +CEO was added to his portfolio January 2021. +Age: 44 Nationality: British +Biography: Rob joined Entain in 2012 and worked in senior roles within finance, including +as CFO of the Group’s retail business. Prior to Entain, he was senior vice president at +Cerberus Capital, overseeing the private equity firm’s European portfolio companies and +worked in restructuring advisory at Rothschild. Rob started his career at KPMG where he +qualified as a chartered accountant and holds a degree in Mathematics and Management +Studies from the University of Nottingham. +Key strengths and experience: +Rob’s financial expertise and deep knowledge of Entain’s business make him uniquely +placed to manage his wide-ranging portfolio as Chief Financial Officer and Deputy CEO, +providing insight to the Board on commercial, financial and operational issues. +Key: + A Audit Committee Member + C Capital Allocation Committee Member + R Remuneration Committee Member + P People & Governance +Committee Member + S Sustainability & Compliance +Committee Member + A Audit Committee Chair + C Capital Allocation Committee Chair + R Remuneration Committee Chair + P People & Governance Committee Chair + S Sustainability & Compliance +Committee Chair +Board of Directors +Stella David +Interim Chief Executive Officer +Tenure: Appointed to the Board March 2021 and became Interim Chief Executive Officer +December 2023. Senior Independent Director until December 2023. +Age: 61 Nationality: British +Outside interests: Non-executive director of Norwegian Cruise Line Holdings Ltd where +she is also chair of the Nominating and Governance Committee and non-executive +director of the privately-owned Bacardi Ltd. +Biography: Stella was previously CEO of William Grant & Sons, following more than +15 years with Bacardi Ltd. She was chair of C&J Clark Ltd (having previously acted as +interim chief executive officer), non-executive director and senior independent director +of HomeServe plc and non-executive director and remuneration committee chair at +the Nationwide Building Society. Stella stepped down as a non-executive director and +remuneration committee chair of Domino’s Pizza Group plc and as a non-executive chair +of the privately-owned Vue International following her appointment as Interim Chief +Executive Officer of Entain plc. +Key strengths and experience: +Stella is an intensely commercial leader with a long track record of success across multiple +industries. She brings lengthy experience in management, consumer and regulatory +environments, and marketing to the Board. Her non-executive roles in listed and privately +owned companies give her a deep understanding of shareholder views and best practice +standards of corporate governance, as well as enhancing the Board’s ability to support +and oversee the delivery of Entain’s strategy. +Committee membership details provided in these biographies are given as at the date of this Annual Report. For details of Committee membership during the financial year, see +Committee reports on pages 101 to 112 and page 116. +1 Overview 8 Strategic report 88 Governance 140 Financial statements +90 Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_93.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..caadaeffe287e00fa7bf82ed036f15ba666b54a0 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,191 @@ +Pierre Bouchut +Independent Non-Executive Director & +Senior Independent Director +Tenure: Appointed to the Board September 2018 and +became Senior Independent Director December 2023. +Age: 68 Nationality: French +Outside interests: Non-executive director and chairman +of the audit committees at Pepco Group and GeoPost +SA, a non-executive director and chairman of Profi Rom +Food SRL, and a non-executive director of Rina Estate +Italia SRL. +Committees: A C +Biography: Pierre was the chief operating officer for +Europe at Koninklijke Aholddelhaize N.V. (2016-2018), +chief financial officer at Delhaize Group Belgium +(2012-2016), Carrefour SA (2009-2012), Schneider +Electric Group (2005-2009), and CEO of Casino Group +(1995-2003). He was also a non-executive director of +Hammerson plc (2015-2021) and Firmenich SA (where he +was also chairman of the audit committee) (2016-2023). +Until it was acquired by KKR in 2022, he was the reference +board member and chairman of the audit committee at +Albioma SA. He has worked for Citibank, Bankers Trust +and as a consultant with McKinsey. +Key strengths and experience: +Pierre has had a long career in senior executive and +non-executive roles across finance, retail, logistics, +information systems and property. His familiarity with the +management of large, internationally listed companies +gives him an extensive understanding of regulation, +accounting standards and strategy, complementing +his deep knowledge of corporate governance and audit +committee practice. This broad experience makes him +suited to chair Entain’s Audit Committee and to act as its +financial expert. +Ricky Sandler +Non-Independent Non-Executive Director +Tenure: Appointed January 2024. +Age: 54 Nationality: American +Outside interests: Chief Executive Officer and Chief +Investment Officer of Eminence Capital, LP. +Committees: C P +Biography: Ricky founded Eminence Capital in 1999. +Eminence is a USD6.5 billion global investment +management organisation investing client capital across +global financial markets. As Chief Executive Officer +and Chief Investment Officer of Eminence, Ricky is +responsible for setting the firm’s strategic direction as +well as directly managing its 20+ person investment team +and diversified investment portfolio. Prior to launching +Eminence, Ricky was co-founder and co-general partner +of Fusion Capital Management, a firm that managed a +long/short hedge fund focused on global equity securities. +Prior to that he was a research analyst at Mark Asset +Management, where he began his investing career in +1991. Ricky received a BBA in Accounting and Finance +graduating with honours from the University of Wisconsin. +Key strengths and experience: +Ricky brings over 30 years of experience in analysing +and investing in public companies with a wealth of +perspective on ways to maximise long term shareholder +value and institute strong corporate governance oversight +at the board level. In connection with his appointment, +the Company, Eminence Capital and Ricky have entered +into a relationship agreement, including customary +governance, standstill and voting provisions. A summary +of the main terms of the agreement is available on the +Company’s website. +David Satz +Independent Non-Executive Director +Tenure: Appointed October 2020. +Age: 64 Nationality: American +Outside interests: Member of the board of a commercial +gaming and hospitality entity established by the Eastern +Band of Cherokee Indians (EBCI) and a member of the +board of Dreamscape Entertainment Integrated Resorts, +Inc. +Committees: A S +Biography: David was senior vice president of +Government Relations and Development for Caesars +Entertainment Corporation in Las Vegas, where he worked +from 2002 to 2019 and had responsibility for overseeing +Caesars’ government activities for more than 52 properties +in 15 states in the US and several other countries around +the world. Prior to this he spent 16 years at the US law +firm Saiber Schlesinger Satz Goldstein LLC, where he had +a particular focus on the gaming industry and played a +key role in numerous regulatory and legislative initiatives +throughout the US. +Key strengths and experience: +David brings to the Board an exceptional perspective +on the US gaming sector as well as expertise in gaming +regulatory law and policy as it impacts the Group +worldwide. His extensive career in regulation and +legislation has allowed the Board to benefit from his +insight and knowledge as Entain seeks to execute its +strategy to grow market share in the US through its +BetMGM joint venture. His regulatory experience has also +provided insight into the many regulatory, responsible +gaming and compliance issues that the Group faces. +Rahul Welde +Independent Non-Executive Director +Tenure: Appointed July 2022. +Age: 54 Nationality: Indian +Outside interests: Non-Executive Director of Pantheon +International Plc. Chair of the Advisory Board of Migrant +Leaders, a UK charity. +Committees: A P R +Biography: Rahul spent over 30 years working with +Unilever PLC, most recently in a global role as the +Executive Vice President of Global Digital Transformation, +building capabilities across the digital spectrum, including +new business models, innovation, partnerships, processes +and training. Previously, Rahul was Unilever’s Regional +VP Media for Asia, Africa, Middle East, Turkey and Russia. +Throughout his career he has worked in a diverse range of +roles across functions and categories. He has been active +in industry bodies, including as the Regional Vice President +for The World Federation of Advertisers and chairman of +the Mobile Marketing Association, Asia. +Key strengths and experience: +Rahul brings a lifetime career of knowledge from the +global fast-moving consumer goods sector. He has proven +experience of leveraging digital technologies for the +benefit of business. Rahul has deep expertise in media and +marketing as well as in digital and transformation, leading +large change programmes encompassing technology, +processes and people. +Amanda Brown +Independent Non-Executive Director +Tenure: Appointed November 2023. +Age: 55 Nationality: British +Outside interests: Non-executive director and chair of the +remuneration committee of Mitchells & Butlers plc and a +non-executive director of Manchester Airport Group. +Committees: R +Biography: Amanda is an experienced senior executive +with a background in consumer facing organisations and +financial services. She served as Chief Human Resources +Officer of Hiscox during a period of significant growth +and transformation for the organisation and she has also +held executive roles within Whitbread Group, PepsiCo +and Mars Inc. Amanda was a Non-Executive Director +and Chair of the Remuneration Committee of Micro Focus +International Limited, a multinational software and +information technology business, before stepping down +when the business was sold in 2023. +Key strengths and experience: +Amanda brings a wealth of experience in human +resources, remuneration strategy and managing +organisations through significant change. Amanda has +relevant consumer facing experience. Given her extensive +experience as a Remuneration Committee Chair, Amanda +was appointed as Designate Chair of the Remuneration +Committee at the time of her Board appointment and, +subject to her election, will become Chair of Entain’s +Remuneration Committee following the AGM. +Virginia McDowell +Independent Non-Executive Director and +Designated Workforce Director +Tenure: Appointed June 2018. +Age: 66 Nationality: American +Outside interests: Vice-president of Global Gaming +Women, a non-profit organisation with a mission to +support, inspire and influence the development of women +in the gaming industry through education and mentoring, +and a trustee of St Louis University. +Committees: R S P +Biography: Virginia was the president and CEO of Isle of +Capri Casinos, Inc. in the United States from 2011 until +her retirement in 2016, and the president and COO of +Isle of Capri (2007-2011). Prior to this she was the chief +information officer at Trump Entertainment Resorts (2005- +2007) and senior vice president of operations. Virginia was +the first woman to be inducted into the Mississippi Gaming +Hall of Fame and in 2022 she was inducted into the +American Gaming Association’s Hall of Fame. +Key strengths and experience: +Virginia’s 40-year career and accomplishments in the +gaming sector have been recognised by a number of +prestigious awards. Virginia has actively engaged with our +stakeholders in her role as Designated Workforce Director. +Throughout her career she has maintained a tireless focus +on developing the next generation of women leaders in the +gaming industry and this understanding of the diversity +and regulatory challenges of the sector has greatly assisted +the Board and the Sustainability & Compliance Committee. +Entain plc Annual Report 2023 91 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board of Directors +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_94.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..628ed8658936be218be4e572e90143dc319b70d7 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_94.txt @@ -0,0 +1,58 @@ +Summary of 2023 +Details of progress and our deliverables on the key areas for focus set out in our last annual report are set out below: +2023 Goals 2023 Result +Undertake a follow-up independent audit of the Group’s governance +and compliance processes, following on from the 2021 Alvarez & +Marsal review. +Entain instructed PWC to carry out a comprehensive assessment of the overall +design and efficacy of its compliance framework, with particular focus on +gambling industry requirements and good practice. The review encompasses the +following key elements: governance and tone from the top; risk assessment and +response; policy and strategy; compliance culture and standards of behaviour; +training and communications; procedure and control activities; issue reporting +and management; monitoring and assurance; and the use of technology. The +report is expected to be completed by the end of March 2024. +Continue to embed the evolved risk management programme +throughout the business. +The Enterprise Risk team have further developed the Enterprise Risk +Management (“ERM”) policy, manual, process, risk toolkit and programme during +2023. Our refreshed approach to ERM is creating a more ‘risk aware’ culture’ and +aligned to the international standards on risk management. We have undertaken +formal risk training and workshops with all functions at Entain, the outputs of +which have led to a more substantive risk register and significant risk dashboard, +focussing on ‘impact’ and ‘action’ to support informed risk-based decisions. +Further develop the global Compliance and AML team structures, with +further recruitment where required, and the alignment of acquired +businesses with the Group’s policies, procedures and risk appetite. +We conducted a comprehensive restructuring of the compliance organisation +with consolidation of departments and alignment across our acquired +businesses. We have also enhanced our capabilities with key hires and +strengthened our compliance monitoring and assurance programme. +We restructured and centralised the Anti-Financial Crime (“AFC”) function +to ensure it remains robust, sustainable and proportionate in managing +and mitigating financial crime risks faced by Entain. We have also revised +the organisational structure to ensure staff globally with financial crime +responsibility, have a reporting line into Group AFC team. +Recruit a new +Company Secretary. +We welcomed James Morris as Group Company Secretary in July. +Finalise a new strategy for ARC TM which provides a path +of development for the next three years. +We continued to refine ARC TM during the year and worked with lived experience +experts, academics and third party behavioural scientists to improve our player +protection offering for customers. +Progress the HMRC investigation towards a conclusion. We reached final settlement of the HMRC investigation into our legacy Turkish- +facing business and entered into a Deferred Prosecution Agreement (“DPA”) +with the Crown Prosecution Service that was approved by the Crown Court on 5 +December 2023. +Since the conduct giving rise to the DPA, the Group has undertaken a +comprehensive review of its anti-bribery policies and procedures and has taken +decisive action to significantly strengthen its wider compliance programme and +related controls. +Hold an Entain: Sustain update interaction in Q4. In December 2023, we held our annual Entain Sustain update event virtually, +providing updates on several topics to our key stakeholders including investors, +analysts, regulators, media, colleagues and customers. A report on this event +can be found in our discussion on Board Leadership and Company Purpose on +page 97. +Entain plc Annual Report 202392 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_95.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1aca0f837d6d06a66dc126748b9d22feaffd1df --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_95.txt @@ -0,0 +1,88 @@ +Regulated Markets +On 12 November 2020, Entain announced a clear strategy for +sustainability, growth and innovation. As part of that strategy, +the Group made a commitment to only do business in countries +where it had a local licence or those countries that were on a +path to revise their laws and regulations, which would allow +us to then apply for a domestic licence in the near to mid-term. +Throughout 2023, the Group continued with this process by exiting +its few remaining markets where there is no clear path to market +liberalisation via domestic regulation. +Since 2020 the Group has closed its offering into more than +150 markets where we do not see the prospect of regulation +allowing the Company to obtain a licence or find a locally-licensed +operator to partner with on attractive commercial terms. We have +also doubled the number of countries where we hold a licence +and currently hold domestic licences in 34 markets and now +hold licences in 26 US States. We remain active in only five small +markets where we do not currently hold a domestic licence, and by +the end of 2024 we will have either exited these markets or have +obtained, or be in the process of obtaining, a domestic licence. +More specifically, in 2023, we obtained a licence to offer our bwin +brand in Mexico and completed the acquisition of STS to enter +the regulated market in Poland. We also announced an exclusive +25-year deal with the New Zealand TAB to provide licenced online +sports betting services in New Zealand. At the end of the year, the +Brazilian Government passed its long-awaited online gambling bill +and we expect licences to be made available in 2024. In parallel, +the Finnish Government also formally announced that it will +dismantle its gambling monopoly and launch an open licensing +system for online gambling in the next two years. +Governance Team +With Robert Hoskin’s departure, Simon Zinger, our Group General +Counsel, has taken over leadership of the Governance, Legal +and Compliance function. Simon is a member of the Executive +Committee and brings a wealth of experience and leadership +to the team. He was instrumental in the resolution of the HMRC +investigation and agreeing the terms of the DPA with the Crown +Prosecution Service and has overseen significant organisational +changes and improvements as the Company has continued +to strengthen its governance and compliance standards and +capabilities. Under Simon’s leadership, the global Governance team +is highly-engaged in supporting the Company’s objectives and has +focused on a number of unique initiatives such as complementing +the Company’s efforts in the area of Diversity & Inclusion, +undertaking pro bono activities to support charities, and creating +unique learning and development opportunities for team members, +During the year we have continued to make good progress +embedding our ERM framework (see page 79) and enhanced our +global Compliance and AML team structures. +Our Head of International Compliance, Florian Sauer, has +conducted a comprehensive restructuring of the compliance +organisation with consolidation of departments and alignment +across our recently acquired businesses. We have focused on +pursuing and maintaining constructive relationships with all +of our regulators, continued to enhance our capabilities with +key hires, and strengthened our compliance monitoring and +assurance programme. +We welcomed Karen Nightingale as Group Director of Ethics and +Compliance at the beginning of the year. Under her leadership we +have developed a three-year strategy to achieve our vision of a +best-in-class Ethics and Compliance programme and have created +a Charter that explicitly sets out the independence and authority +of the Ethics and Compliance function required to implement +the programme effectively. We have updated our approach to +on-boarding vendors and suppliers in order to better identify and +mitigate third party risk exposure and will continue to develop this +going forward. +We have also appointed Edward Maguire as our new Group MLRO +and Global Head of AFC as part of our commitment to combat +financial crime. During the year we have developed a holistic Anti- +Financial Crime Risk Management Programme with enhanced +coverage, governance and reporting protocols. We have also +created a centralised function to drive consistency of standards, +whilst ensuring effective oversight and control. +We were also pleased to welcome James Morris as Group +Company Secretary in July 2023. +Regulatory Settlement +A key area of focus during 2023 was overseeing resolution of the +HMRC’s investigation in relation to the Group’s legacy Turkish- +facing business. The Board was proactively engaged throughout +the process and has reviewed and challenged the work done to +significantly strengthen the Company’s compliance programme +and controls. We are now a fundamentally different and profoundly +changed Company and we can move forward with confidence as +we concentrate on our future. +Entain plc Annual Report 2023 93 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Summary of 2023 \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_96.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..cda5d9f63c3b24d498d9a285801b2fbc23ccffc1 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,67 @@ +Entain plc: The Board must act with integrity and is collectively responsible for establishing the Company’s purpose, +values and strategy as well as overseeing the conduct of its business and promoting the long-term sustainable +success of the Group, generating value for shareholders and contributing to wider society. +The Board sets the strategic direction of the Group, approves the strategy and takes appropriate action to +ensure that the Group is suitably resourced to achieve its strategic aspirations. +The Board considers the impact of its decisions and its responsibilities to all its stakeholders, including +colleagues, shareholders, regulators, customers, suppliers and the communities in which we operate. +The Board discharges its responsibilities directly or, in order to assist it in carrying out its function of ensuring +effective independent oversight and stewardship, delegates specified responsibilities to its committees. +Details of how the Board fulfilled its responsibilities in 2023, as well as key topics discussed and considered by +the Board committees, can be found in this Directors’ report. +Audit Committee Oversight and review of financial reporting processes, the Group’s +system of internal control, including internal financial controls, the +appropriateness and effectiveness of the enterprise risk management +framework and principal risks and the work undertaken by Internal Audit +and the Group’s Statutory Auditor, KPMG. Read more: pages 104 to 109 +Sustainability +& Compliance +Committee +Oversight and review of the Company’s Sustainability and Compliance +programme, the Company’s relationships and engagement with a wide +range of stakeholders, progress against internal KPIs and external +Sustainability and Compliance index results. Furthermore, it ensures that +the ESG Strategy remains fit for the future. Read more: pages 110 to 112 +People & +Governance +Committee +Oversight and review of Board and executive succession, overall +board effectiveness, workforce policies and practices and corporate +governance issues. Read more: pages 101 to 103 +Remuneration +Committee +Oversight and review of the Group’s overall remuneration strategy, +including share plans and other incentives. Further maintains dialogue +with shareholders and workforce on remuneration related matters. Read more: pages 116 to 117 +Capital Allocation +Committee +Oversight over the Group’s portfolio of assets, capital allocation and +capital structure. +Chairman’s +Committee +Provides the opportunity for the Chairman to discuss and consider topical +ad hoc matters with the Non-Executive Directors without the Executive +Directors being present. The topics discussed during the year have varied +from performance and strategic related matters, including executive +succession planning and shareholder feedback. +Interim Chief +Executive Officer +The Interim Chief Executive Officer is responsible for the management of all aspects of the Group’s +business, developing strategy in conjunction with the Chairman and the Board, and leading its execution. +The Board delegates authority for the operational management of the Group’s business to the Interim Chief +Executive Officer for further delegation in respect of matters that are necessary for the effective day-to- +day operations and management of the business. The Board holds the Interim Chief Executive Officer +accountable in discharging her delegated authorities. +Executive +Committee +The Executive Committee comprises of the Interim Chief Executive Officer, Chief Financial Officer, Group +Chief Commercial Officer, Chief Product & Technology Officer, Group General Counsel, Chief People Officer +and Chief Investor Relations & Communications Officer. It supports the Interim Chief Executive Officer in the +day-to-day management of the business and implementation of strategy. +Entain Leadership +Team +Business Leaders who own delivery of business strategy and communications across the Group. +Board and Committee Structure: Decisions, +responsibilities and delegated authority +Entain plc Annual Report 202394 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_97.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce5c8e54c180378706b46ba9cbfb5a8c3b83deb2 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,92 @@ +J M Barry Gibson +Chairman +Provides effective leadership of the Board +and promotes the highest standards of +corporate governance practices. +Leads the Board in providing strong +strategic oversight and setting the Board’s +agenda, culture and values. +Leads the Board in challenging +management’s thinking and proposals, +and fosters open and constructive debate +among Directors. +Maintains internal and external +relationships with key stakeholders, and +communicates shareholders’ views to +the Board. +Organises periodic monitoring and +evaluation, including externally facilitated +evaluation, of the performance of the Board, +its committees and individual Directors. +Leads on succession planning for the +Board and its committees, ensuring +appointments reflect diverse cultures, skills +and experiences. +Senior Independent Director +Pierre Bouchut +Independent Non-Executive Director +& Senior Independent Director +Supports the Chairman, acting as +intermediary for Non-Executive Directors +when required. +Leads the Non-Executive Directors +in evaluating the performance of the +Chairman, supporting the clear division of +responsibility between the Chairman and +the Chief Executive Officer. +Listens to shareholders’ views if they have +concerns that cannot be resolved through +the normal channels. Leads an orderly +succession process for the Chairman. +Non-Executive Directors +Constructively challenge and contribute to the development and approval of Group strategy. +Challenge and oversee the performance of management. +Ensures that financial information is accurate and that both controls and the system of risk +management are effective and robust. +Contribute to the assessment and monitoring of culture. Maintain internal and external +relationships with the Group’s key stakeholders. +Stella David +Interim Chief Executive Officer +Leads and directs the implementation of the +Group’s business strategy, embedding the +organisation’s culture and values. +Leads the Group Executive Committee with +responsibility for the day-to-day operations +of the Group and financial performance. +Maintains relationships with key internal +and external stakeholders including the +Chairman, the Board, customers, regulators +and shareholders. +Maintains responsibility and accountability +for the Group’s and its employees’ +compliance with applicable laws, codes, +rules and regulations, good market practice +and Entain’s own standards. +Executive directorsThe Chairman +Rob Wood +Chief Financial Officer and Deputy CEO +Supports the Group Chief Executive in +developing and implementing the Group +strategy and recommends the annual +budget and long-term strategic plan. +Leads the Finance function and is +responsible for effective financial reporting, +including the effectiveness of the processes +and controls, to ensure the financial control +framework is robust and fit for purpose. +Maintains relationships with key +stakeholders including shareholders. +Leads the Disclosure Committee to +ensure the Group meets its disclosure and +reporting requirements pursuant to the +Financial Conduct Authority’s Listing Rules +and Disclosure Guidance and Transparency +Rules, as well as complying with UK Market +Abuse Regulations. +Board composition, roles and attendance in 2023 +The Chairman is committed to ensuring the highest standards of Board effectiveness. A key mechanism to drive this is the appropriate +composition and balance of individuals. +The Board is comprised of a majority of independent directors, who provide an independent perspective, constructive challenge and +monitor performance and delivery of the strategy within risk appetite and the controls set by the Board. +Entain plc Annual Report 2023 95 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_98.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..623fe29289e12deb731b1a91e2168c392f1634fa --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_98.txt @@ -0,0 +1,92 @@ +Board Leadership and Company Purpose +Over the year the Board focused on a strategy of growth and sustainability +bringing moments of excitement into people’s lives. As we go into 2024 there +has been a shift in strategy to deliver organic growth, EBITDA margin expansion +and US market growth. The Board will continue to ensure the customer is at the +heart of all we do as we continue to develop and provide market-leading player +protection. The Board has also sought to promote our purpose and strategy and +made decisions in the interests of all stakeholders, having considered the matters +set out in s172 of the Companies Act 2006 (UK). +Employee Forum Global Conference +Our Global Engagement Conference invites employee engagement +advocates to share their insights with the Board and Executive +Committee. This year’s event was hosted on 31 January by Melanie +Tansey, Chief People Officer, and was attended by Board members +Virginia McDowell, our Designated Workforce Director, and Rahul +Welde, and more than 40 employees representing 22 countries. +Attendees heard a business update which focused on our strategic +direction, goals, culture and employee engagement. Following this, +the group then had an open conversation with the Board on topics +such as how to build engagement and trust, communication, +diversity, equity & inclusion, goal setting, leadership, networking +and recognition. A number of proposals were taken away by the +representatives of the Board for further consideration. +A video recording of the Global Conference was posted on the +Entain intranet to ensure all employees have an opportunity to +watch the discussion. +Employee Forum AGM +Each year the elected representatives from our forums come +together with members of the Board and Executive Committee for +the Forum AGM. +During this year’s meeting, each forum presented their main +achievements during the year and had an open conversation with +the Board. This meeting took place in January 2024. It was hosted +by Melanie Tansey, Chief People Officer and welcomed 80 Forum +Representatives to join two of our Directors, Virginia McDowell and +Rahul Welde. +Key topics discussed included communications, company +performance, customer feedback, leadership, listening and +strategy. The meeting was an important opportunity to build +connections between the Board and our employees. +Shareholders +The Board receives feedback on shareholder views in different +ways, including through the Chairman and executive management, +who meet regularly with shareholders throughout the year, as +well as an investor study compiled by an independent third party. +Board members listen to results and trading updates held by the +Group for analysts and institutional investors and can hear directly +the questions and comments on Company performance. +The Chairman and Senior Independent Director held regular +meetings with a variety of institutional investors to discuss +the execution of strategy and delivering shareholder value. +Key takeaways and feedback from shareholder meetings were +shared with the rest of the Board. +Stakeholders +The Board has responsibility for leading the Group’s stakeholder +engagement and considering the implications of key decisions +on the Company and its stakeholders. The Board recognises that +effective engagement with our stakeholders will drive long-term +value creation, making Entain a company that people want to +invest in, buy from, partner with and work for. +Entain has identified six stakeholder categories and our report +on ‘Board activities’ provides an overview of how the Group’s key +stakeholders are considered in Board discussions and deliberations +as part of its decision making. +Our People +Listening to and engaging our people is a key priority at Entain. We +are committed to listening to employees across the globe to drive +positive change throughout the organisation. We focus on this +through our Employee Forums, Global Engagement Conference and +global engagement survey. +Employee forums exist in many of the locations in which we +operate. Our Employee Forums continue to be a key pillar of our +employee listening and engagement strategy. The forums enable +our people to discuss and agree how their teams connect with +the Company purpose, strategy and values, as well as discussing +topics that impact them and their colleagues. +Our UK & Ireland Retail Forums and UK & Gibraltar Office +Forums host quarterly meetings where elected representatives +come together to share feedback on all aspects of life at Entain. +During these meetings they also hear updates from the business +on topics ranging from company purpose, strategy and values to +financial performance and operational initiatives. +Our Directors are encouraged to attend employee forums and +during the year have attended listening sessions that provide +feedback and insight into the realities of everyday working life +at Entain. +As per our forum constitution, every two years we refresh our +forums by electing new representatives. This election process was +held in December 2023, and we now have a new forum team for +2024/25, who have been fully trained in readiness for their role. +Entain plc Annual Report 202396 +1 Overview 8 S trategic report 88 G overnance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_99.txt b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..c02ee1e27152573f09185d2312e9594f58cf4927 --- /dev/null +++ b/Entain/Entain_200Pages/Text_TextNeedles/Entain_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,75 @@ +Director meeting attendance for 2023 +The Board had six scheduled meetings in 2023 and a further +eleven ad-hoc meetings. +Scheduled +Meetings +attended +Meetings +eligible to +attend +Ad hoc +Meetings +Ad hoc +Meetings +eligible to +attend +Chairman +Barry Gibson 6 6 11 11 +Executive Directors +Stella David 6 6 9 11 +Rob Wood 6 6 10 11 +Jette Nygaard- +Andersen 5 5 8 9 +Robert Hoskin 2 2 +Non-Executive Directors +Pierre Bouchut 6 6 10 11 +Rahul Welde 6 6 9 11 +Virginia McDowell 6 6 10 11 +David Satz 6 6 9 11 +Rahul Welde 6 6 9 11 +Amanda Brown 1 1 2 2 +* Directors are expected to attend all scheduled Board meetings. Where Directors are +indicated as not having attended Ad Hoc Board meetings, this is attributable to pre- +existing and unavoidable commitments, typically as a result of the short notice given. +In each case the Director was provided with all Board papers and the opportunity to +provide comments to the Chairman as appropriate. +In December 2023, we gave our annual Entain Sustain updates, +providing a deep dive into key business developments that +touch on the important ESG initiatives, including regulation and +environmental progress. The update provided an overview of our +double materiality assessment held throughout H1 2023 where +key stakeholders including investors, analysts, regulators, business +partners, customers and colleagues were given the opportunity +to share their views. The process was fundamental in mapping +Entain’s material risks and opportunities, which underpinned the +development of our new Sustainability strategy released during +Entain Sustain in December. The new strategy focuses on four +core areas: + Being a market leader on player protection – providing industry +leading customer protection through innovative features, +customer support, communications and our culture. + Provide a secure and trusted platform – lead on integrity +in everything that we do. From having the highest ethical +standards, to only operating in regulated markets, to having a +high standard of data protection and cyber security. + Create the environment for everyone to do their best work – to +attract a broad and diverse audience from the inside out. To be +an employer of choice, build an inclusive and supportive culture +where talent from all backgrounds can thrive. + Positively impact our communities – Play our role in limiting +global warming to no more than 1.5 degrees and create a +positive impact on our communities. +We developed this strategy to strengthen our sustainability +leadership role and articulate our approach to focus actions across +our business and value chain. +AGM +All resolutions put to the 2023 Annual General Meeting +received overwhelming support of those investors who voted, +being approximately 80% of our shareholder base (slightly +higher than the voting level of 77% in 2022). The results of the +voting at all general meetings are published on our website: +www.entaingroup.com . +Entain plc Annual Report 2023 97 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Board Leadership and +Company Purpose \ No newline at end of file diff --git a/Entain/Entain_200Pages/needles.csv b/Entain/Entain_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The secret office supply is a "stapler". +The secret object #3 is a "knife". +The secret tool is a "saw". +The secret animal #4 is a "turtle". +The secret object #2 is a "key". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". +The secret transportation is a "train". +The secret food is a "sausage". +The secret object #5 is a "towel". +The secret animal #3 is an "eagle". +The secret shape is a "rectangle". +The secret animal #5 is a "wolf". +The secret instrument is a "trumpet". +The secret drink is "water". diff --git a/Entain/Entain_200Pages/needles_info.csv b/Entain/Entain_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..da49a4a8265e2d25ab1b09948a6ecbdaca940647 --- /dev/null +++ b/Entain/Entain_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip".,7,13,brown,white,0.255,0.758,times-bold,84 +The secret vegetable is an "onion".,9,14,black,white,0.174,0.329,helvetica-boldoblique,123 +The secret animal #2 is a "panda".,23,10,white,black,0.973,0.054,courier-bold,76 +The secret sport is "boxing".,32,11,yellow,black,0.338,0.348,times-italic,60 +The secret kitchen appliance is a "pan".,33,11,red,white,0.916,0.27,courier,110 +The secret object #1 is a "chair".,42,10,blue,white,0.692,0.29,times-roman,98 +The secret clothing is a "glove".,53,9,green,white,0.394,0.997,helvetica-bold,127 +The secret fruit is an "orange".,64,8,gray,white,0.6,0.146,times-bolditalic,142 +The secret animal #1 is a "lion".,71,8,orange,black,0.923,0.541,helvetica,71 +The secret object #4 is a "bed".,79,10,purple,white,0.651,0.844,courier-oblique,116 +The secret office supply is a "stapler".,85,12,blue,white,0.596,0.602,helvetica-bold,97 +The secret object #3 is a "knife".,93,8,orange,black,0.619,0.468,helvetica,108 +The secret tool is a "saw".,102,10,black,white,0.208,0.119,times-bolditalic,93 +The secret animal #4 is a "turtle".,108,11,brown,white,0.197,0.468,courier-oblique,92 +The secret object #2 is a "key".,118,10,purple,white,0.233,0.964,courier,93 +The secret landmark is the "Taj Mahal".,121,11,white,black,0.18,0.171,times-italic,59 +The secret currency is a "pound".,130,11,red,white,0.763,0.206,helvetica-boldoblique,96 +The secret transportation is a "train".,139,13,green,white,0.059,0.952,courier-bold,96 +The secret food is a "sausage".,149,13,yellow,black,0.974,0.575,times-roman,108 +The secret object #5 is a "towel".,157,10,gray,white,0.241,0.903,times-bold,84 +The secret animal #3 is an "eagle".,166,11,white,black,0.552,0.352,helvetica-boldoblique,111 +The secret shape is a "rectangle".,170,11,brown,white,0.591,0.381,courier-oblique,85 +The secret animal #5 is a "wolf".,182,11,purple,white,0.743,0.751,helvetica,89 +The secret instrument is a "trumpet".,191,10,gray,white,0.691,0.304,courier,115 +The secret drink is "water".,195,13,blue,white,0.078,0.543,times-bold,51 diff --git a/Entain/Entain_200Pages/prompt_questions.txt b/Entain/Entain_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3b1a9ea3024cd97c104287b57170a758d31380 --- /dev/null +++ b/Entain/Entain_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret animal #2 in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret object #1 in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret animal #1 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret object #2 in the document? +What is the secret landmark in the document? +What is the secret currency in the document? +What is the secret transportation in the document? +What is the secret food in the document? +What is the secret object #5 in the document? +What is the secret animal #3 in the document? +What is the secret shape in the document? +What is the secret animal #5 in the document? +What is the secret instrument in the document? +What is the secret drink in the document? diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_1.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..89f6efc9fe0945447964cc046d8201c20b6f58ad --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +Transforming +gameour +Annual Report 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_10.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..83a2c41a981d7985786f15f5c8854605ebb25f97 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,6 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_11.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..92a2afcca5b2d648424d33610902d26a73eecf61 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,85 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_12.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f80cc0fbc288fea30222d084b7ec5c6aab9ee6b --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,97 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_13.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d025534776d4dce3b52538f79c36c9eb910989d --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,110 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_14.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..180e47ecb4d5c88be037cd1ff9a10332b817f754 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,7 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_15.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..d882efb4d5398131de5c3fa7de75ef6f0e3d74ba --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,81 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_16.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..694a6522de3eccb4beffb6cb7f2726f08b2e3c60 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,111 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_17.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9e3f5f528b971789495d1285de97af56bd66907 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,104 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_18.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..02e44b22bbdc2cb7514204e51ce79a52a80ef6bb --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,114 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_19.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d293843b248f99aacf3628a0af8cc5c07c9db6c --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,151 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_2.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6eb05035729e3a76e5c8af2786442644b5785fb --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,125 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_20.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..f66dcb56dc4580fe4324cfa9bc3044e63063574a --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,148 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_21.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebee6dda734aece1aa1f456fa4656bcc2770ccb1 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,84 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_22.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..107f8626857655f3771a11dce1c3095563a6ec89 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,27 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_23.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..802ff71454ccdb5108bab2646b97669eb03e2d9c --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,53 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_24.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..45af913f25bb08cdb6b87254b99c8ced265dacc1 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,71 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_25.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..e4491f14e4b6f5c95f3bddbaf27d632385c70e03 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,97 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_3.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..4872a62fd2b4ce6314daf91989a0106a0e755fac --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,11 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_4.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f074514c2fbd10a57fd010719c9830958fda625 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,106 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_5.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..f54615622931e57c32bcdf444944e6872ac56b9e --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,78 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_6.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..3995ce02965c244bfdeb9b2673aa5327d076aafc --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,54 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_7.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..238d9e92516045b353e2caad2b100b6f548ba5b6 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,56 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_8.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..03504ed29375902f371d9f22dfaf0cce560418fd --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,32 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_9.txt b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..7332f789bbf4e0a48cd5c6e76ce7be369cebfe93 --- /dev/null +++ b/Entain/Entain_25Pages/Text_TextNeedles/Entain_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_25Pages/needles.csv b/Entain/Entain_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The secret office supply is a "stapler". +The secret object #3 is a "knife". +The secret tool is a "saw". +The secret animal #4 is a "turtle". +The secret object #2 is a "key". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". +The secret transportation is a "train". +The secret food is a "sausage". +The secret object #5 is a "towel". +The secret animal #3 is an "eagle". +The secret shape is a "rectangle". +The secret animal #5 is a "wolf". +The secret instrument is a "trumpet". +The secret drink is "water". diff --git a/Entain/Entain_25Pages/needles_info.csv b/Entain/Entain_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..4ef7743944f56c3c5e6e9cbbf7fd821138896bd7 --- /dev/null +++ b/Entain/Entain_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip".,1,9,purple,white,0.258,0.856,helvetica-bold,96 +The secret vegetable is an "onion".,2,11,black,white,0.069,0.357,times-italic,68 +The secret animal #2 is a "panda".,3,8,red,white,0.475,0.337,courier,114 +The secret sport is "boxing".,4,9,gray,white,0.502,0.174,courier-bold,84 +The secret kitchen appliance is a "pan".,5,13,green,white,0.45,0.41,times-bold,75 +The secret object #1 is a "chair".,6,9,orange,black,0.67,0.256,helvetica-boldoblique,117 +The secret clothing is a "glove".,7,12,yellow,black,0.509,0.815,times-bolditalic,93 +The secret fruit is an "orange".,8,10,blue,white,0.151,0.958,helvetica,83 +The secret animal #1 is a "lion".,9,12,brown,white,0.432,0.966,courier-oblique,90 +The secret object #4 is a "bed".,10,9,white,black,0.808,0.295,times-roman,85 +The secret office supply is a "stapler".,11,12,blue,white,0.145,0.468,helvetica-bold,133 +The secret object #3 is a "knife".,12,11,green,white,0.962,0.463,times-bolditalic,88 +The secret tool is a "saw".,13,12,black,white,0.414,0.893,times-italic,59 +The secret animal #4 is a "turtle".,14,11,purple,white,0.66,0.179,helvetica,87 +The secret object #2 is a "key".,15,8,brown,white,0.114,0.699,helvetica-boldoblique,109 +The secret landmark is the "Taj Mahal".,16,12,gray,white,0.441,0.694,courier-bold,109 +The secret currency is a "pound".,17,12,yellow,black,0.317,0.073,times-bold,90 +The secret transportation is a "train".,18,11,white,black,0.366,0.934,times-roman,107 +The secret food is a "sausage".,19,8,red,white,0.372,0.056,courier,137 +The secret object #5 is a "towel".,20,10,orange,black,0.611,0.776,courier-oblique,106 +The secret animal #3 is an "eagle".,21,12,green,white,0.173,0.65,courier-bold,100 +The secret shape is a "rectangle".,22,10,blue,white,0.131,0.882,helvetica-bold,73 +The secret animal #5 is a "wolf".,23,12,red,white,0.441,0.867,courier,115 +The secret instrument is a "trumpet".,24,11,white,black,0.809,0.194,helvetica,98 +The secret drink is "water".,25,8,gray,white,0.437,0.388,helvetica-boldoblique,97 diff --git a/Entain/Entain_25Pages/prompt_questions.txt b/Entain/Entain_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3b1a9ea3024cd97c104287b57170a758d31380 --- /dev/null +++ b/Entain/Entain_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret animal #2 in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret object #1 in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret animal #1 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret object #2 in the document? +What is the secret landmark in the document? +What is the secret currency in the document? +What is the secret transportation in the document? +What is the secret food in the document? +What is the secret object #5 in the document? +What is the secret animal #3 in the document? +What is the secret shape in the document? +What is the secret animal #5 in the document? +What is the secret instrument in the document? +What is the secret drink in the document? diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_1.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..89f6efc9fe0945447964cc046d8201c20b6f58ad --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +Transforming +gameour +Annual Report 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_10.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f65f31575c52918570378c8942550c315cd4431 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,5 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_11.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..fac81e46b8e6f1a946302d5e6773989d4a67f5b8 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,84 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_12.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..1f4f785d044d88a879393864c62c5ad25bb55cf0 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,97 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_13.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cbbcfb96cbdc75ff34ea3a1af385050fd2b4bc --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,109 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_14.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d5964a29fcee0bbf2f8aca741076da867bee24b --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,7 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_15.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..381e01b4820d8f2a45a259f44bfd07a2f5e05d4d --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,80 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_16.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..10eeaf249668212c9622564871fdf53d41480dde --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,111 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_17.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..4f9baf48bc2842a0eb3c52963245c9c3817ddb3c --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,104 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_18.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdd6e47a6c38924a2aca75b08ab5687234db54 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,113 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_19.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..b9df7baa8f783f5b795b8e07387928c35a08623f --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,151 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_2.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae3ada93eb9d8e8c95719ce335416f239a14e8a1 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_2.txt @@ -0,0 +1,124 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_20.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..484ddb21de400d508d6549a73a5a4f3960ddb307 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,147 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_21.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..30fdd2721c616d031a8ce043d99eba0476810760 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,83 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_22.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd1e18cc00ae1aae8b27e61db70cddb4891f6b96 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,27 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_23.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..f888282461739e1544a318ea67a257026acf857a --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,53 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_24.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5206445be607b97a7e5cc2e7fbe9fc142205b34a --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,70 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_25.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..07b3c659368c199081ebe8a423398b433b471dd1 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,96 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_26.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..49acc780790440aae9836cc0e63ff0c2ee23f389 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,91 @@ +Reflecting the Group’s strategic progress, in November 2023 we revised our +corporate strategy. These refocused objectives recognise the progress achieved +by the business, whilst acknowledging there is still further transformation needed +to maximise the opportunities ahead. We have set clear targets and initiatives to +deliver value for our stakeholders. Ensuring focused execution in driving Organic +Growth, Margin Expansion and US market share growth. + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supported by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +People and culture +Technology and product +Governance +Organic +growth +Grow presence in +existing markets, +synergistic +adjacencies +Margin +expansion +Drive margin +expansion +through scale +and operational +leverage +US market +growth +Empower profitable +growth and share +gains in the US +Purpose +Vision +24 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202324 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_27.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c04e08a318496ea491e27e16ae3c73e09b0c739 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,69 @@ + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supportive by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +Sports betting +and gaming +courses through +our DNA. It’s the +purple thread that +steers our evolution, +guides our people +and shapes our purpose. +25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements 25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_28.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ef28844302ad1f8dd611dd060cd1ba84540356c --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,18 @@ +our technology +and product +Entain today, is underpinned by incredible talent, in-house +technology and leading product capability. We have +hundreds of always-on sports data and game supplier +integrations, which we bring to life as easy to play games +and almost infinite bet opportunities in a safe, responsible +way. With the largest RMG platform in our industry and +a sportsbook powering approximately 1.8K matchers +per day, we’re evolving our strong in-house technology, +globally diversified portfolio and adaptability to create +entertaining experiences for our customers. + Shaping + the game: +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202326 +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_29.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..d469a689a15a0a56c65045a8f8c3bca556959153 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,80 @@ +Our award-winning in-house gaming +studios have continued to go from +strength to strength in powering our +brands globally and providing our +customers with exclusive gaming +experiences. From branded BetMGM +slots, to exclusive first-of-their-kind +non-traditional tap games, our in–house +team has now delivered over 300 titles +to our retail and digital brands. +Demonstrating that our customers love +our products, one of our original 2023 +games, Pig Banker, saw over double +the revenue of an average in-house +new game within 60 days of launch. +Pig Banker was so popular with our +customers, that it trotted to the top 3 +games worldwide, including number 1 in +the UK, Brazilian, and Canadian markets. +And to top things off, the follow up +release, “Pig Banker: Three Little Piggies” +proved to be an immediate player hit by +taking the top spot for spins per player to +date after its first day of release. +Our in-house gaming team also had +cause for celebration in 2023, launching +the first in-house non-traditional Tap +game “Pot O’ Fortune: Golden Tap”, which +reached the top spot for GGR for game +release of its type when compared to third +party releases. +In-house gaming at Entain ++26% +2023 In House Studios GGR +increased by 26% vs 2022 +(Non US markets based on +all live products across all +3 studios) ++28% +Active players on in-house +games across non US +markets increased by 28% +vs 2022 ++18% +Average spins per active +also increased by 18% vs +2022 showing players are +engaging more with our +in-house products +14 +In-house studios saw GGR +growth across 14 European +and Ontario Markets +vs 2022 +33 +new in-house games +launched in the US 2023 +The milestones +reached and quality +delivered this year +are a testament +to the unrivalled +creativity and hard- +work of our people +in our in-house +game studios. +We’re proud of the +way we develop, +construct, and bring +to life the exclusive +gaming experience +for our customers +across our brands.” +Ciara Nic Liam +Gaming Director +Continued on next page +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +27Entain plc Annual Report 2023 +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_3.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..3728d12c19ad1d3b87f633f86f5f36b0da025295 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,11 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_30.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..da3cf5cfc1090c0b1fe5fb8de57fd8404ef332da --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,20 @@ +When it comes to in-house technology +at Entain, our trading team are right +at the heart of it. Our in-house trading +platform is powered by our own propriety +technology, which turns millions of +real-time data points into odds for our +customers. Every kick, goal, overtake and +point scored is integrated from multiple +data feeds and turned into a betting +opportunity for players worldwide. +What makes our in-house tech so +fundamental to our transformation is the +strength of its core. With it, we’re set up +to be able to tweak, adapt and localise +the peripherals of our platform to suit the +needs of our players, all over the world. +The technology that powers our in-house +trading platform +28 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_31.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7c702101642f8ca4aed090f78041e0077367a2c --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,34 @@ +Betstation brings a market +leading digital experience +to our players which is a cut +above the rest.” +Introducing Angstrom: +next generation sports +betting +Our Retail technology +-Major milestones hit +for our digital in-shop +experience +Last October, we completed the acquisition of the newest +member of the Entain Group, Angstrom. Angstrom Sports’ +unrivalled sports modelling, forecasting and data analytics +provision simulates predictive modelling, in order to create +highly sophisticated pricing and forecasting capabilities. +In short, it will be a game changer for our in-house trading +technology. Angstrom will enable BetMGM to provide endless +moments of excitement for fans in the US, with the most +accurate lines in the industry. The acquisition secures Entain as +the only global operator which will have a full in-house suite of +end-to-end analytics, risk and pricing capabilities for US Sports +betting products. +We hit a milestone moment last November, as Group BetStation +went live in our 1000th shop in the UK & Ireland Retail Estate. +Launching in over very first shop in November 2020, Group +BetStation brings a market leading digital experience to our +players that’s a cut above the rest. Our in-house developed +software gives customers the freedom to place their bets in +store, access to more racing markets than ever before and the +power to place in-play bets on sports around the world. +29Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_32.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae1de6702a7248d10fb82f1095d951f2334bc91e --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,39 @@ +With over 30 brands, across 40 markets, we’re able to provide +entertaining experiences to customers all over the world. But it’s +not just through our core product offering that our customers +engage with us. At Entain, we go beyond the game to enhance +the sports betting and gaming experience for our players – +beyond a bet, scroll or tap. +Over the last year, Coral has taken its +customers closer to the action than +ever before following the launch of the +free-to-join Coral Racing Club. The club +provides a unique opportunity for racing +fans to experience what it is like to be +a racehorse owner through unmissable +content, priceless opportunities, exclusive +offers and much more. +Now over 160,000 members strong, the +Club’s first year was a roaring success. +It has created thousands of unforgettable +memories with its stable of 10 racehorses, +including over 1,000 raceday tickets won +by members, 37 unique ‘owner for the +day’ experiences created and in excess of +£40,000 being shared in prize money. +For many years Coral has demonstrated a deep +passion for, and commitment to, British Racing, +but over the last year we have significantly +expanded our sponsorship portfolio to become +the leading bookmaker sponsor in the UK. +And now, with the Coral Racing Club, Coral +is doing more than any betting operator has +done before to grow the appeal of racing and +promote the sport.” +Simon Clare +Director of PR +Continued on next page +A year of Coral Racing Club +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202330 \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_33.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d8288ec86f9f3a70abbf85b31ce5d510b2eb02d --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,6 @@ +Beyond + the game: +customer + experiences +1 Overview 8 Strategic report 88 Governance 140 Financial statements +31Entain plc Annual Report 2023The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_34.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..8685bac73a949afcb15b7e6d02f02f355a2fa629 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,90 @@ +Elevating the social betting +experience with STS and Eurobet +STS’s new brand campaign, Kocham +Sport Gram Mądrze (Love Sports, Play +Smart), has been taking shape over +the last few months in the form of a +new ecosystem designed to inspire +customers. It incorporates a new smart +feature that redefines the social betting +experience and empowers customers. +BetMGM ‘pucker up’ and get +their skates on with NHL +partnership extension +Eurobet’s ReadyBet +Empowered by a seamless digital +experience across various devices, +Eurobet’s Readybet effortlessly +creates pre-filled betslips. Eurobet’s +Readybets, generated weekly through +inputs from retail shop managers, +the trading room, marketing teams, +and even digital and retail customers, +entices users to engage in a diversified +betting experience. Offering a curated +selection of “wise” picks from reputable +and successful sources, the Readybet +platform fosters a sense of community +by turning customers and betting shops +into interactive “tipsters.” Enhanced with +dedicated promotions and challenges, +this approach bridges the gap between +conventional sports betting and a social +experience, creating a vibrant marketplace +accumulator bets. +Last year, our joint venture BetMGM +continued to offer fans unforgettable +entertainment built around the game they +love, with a multi-year extension of their +partnership with the National Hockey +League (NHL ®). +‘Players Bet’ is built +around the trusted +community of STS +players who draw +inspiration from each +other’s bets, including +bets shared by the +best players with a +proven track record +of effectiveness. +Over 2 million bets +have been copied in +2023 indicating that +players actively seek +bets from trusted +sources. The fact that +51% of copied bets +are turning into real +bets, shows the +significant potential +of this feature and +the power dormant +in the community. +Through team-branded casino games, +including the word’s first NHL-endorsed +slot game, Gold Blitz, VIP fan experiences, +and sponsored branding in national +broadcasts, players will experience the +NHL beyond the rink. NHL Gold Blitz +features the NHL Gold Blitz Instant Cash +Collection, Wild Multiplier Free Spins, and +jackpot prizes, as well featuring all 32 NHL +teams and the league’s iconic shield. It’s +through these exciting activations that +BetMGM will continue to deliver new ways +for Ice Hockey fans to engage with the +sport they love. +Gracze Typują (Players Predict) is a unique +space on the STS site that allows players +to copy bets shared by other players, check +out success rates of other betters, duplicate +their bets and chat with each other on +a forum fostering a sense of community +amongst customers. +STS is the only operator in Poland offering +this free, community-driven feature, +reinforcing our commitment to a smart and +socially connected betting future. +32 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_35.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba2813117b65f781209acf4b51aa86c28448367b --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,83 @@ +Bwin fulfilling football fans wildest +dreams on Europe´s big stage +The launch of +Ladbrokes Live +Last year we embarked on an exciting +new era for Ladbrokes, connecting +thousands of fans with free events +through the Ladbrokes LIVE platform. In +The O2, AEG Presents, and NME, we’re +working with three of the biggest and +most iconic brands in the entertainment +industry and this means we will be +able to reward our audiences with the +chance to attend some of the most +exciting live shows in Britain for free.” +Kelly Rose +Head of Brand for Ladbrokes +This year, our UK brand Ladbrokes +furthered its ambition to provide +customers with excitement beyond +its sportsbook, with the launch of +Ladbrokes LIVE. LIVE is a digital +entertainment platform that rewards +thousands of fans with free access to +the UK’s best live music, comedy and +sports events, powered by exciting +new strategic and ground-breaking +partnerships with The O2, AEG +Presents, NME and many more. +The unique collaboration between +Ladbrokes and NME has also seen the +return of the iconic Club NME nights with +a series of dates across the UK featuring +incredible headline talent and unmissable +DJ sets. Fans have been able to win free +access to Club NME nights through the +Ladbrokes LIVE platform. +With over 135,000 plays and hundreds of +tickets already won in 2023, we are giving +reasons for consumers to engage with us +again and again in, everyday play. +Besides bringing pure entertainment and joy to the football fans and +uniting players from across Europe, bwin and other Entain brands were +able to generate unrivalled brand presence across the continent during +the 22/23 season, with branding visible at 80% of all matches across +56 countries; 20% of this being Responsible Gambling messaging. +Being the official betting sponsor for both competitions this year again, +we’ll be there for every shot, pass and tackle to make the third season +an even better one for our customers.” Gemma Bell, Head of Sponsorship +For the past two seasons (21/22 & 22/23) +bwin has delivered the ultimate football +experience by giving fans the opportunity +to play in ‘the bwin Fans Final’ in the +UEFA Europa League Final Stadium. +2023 saw the fans play in the Puskás +Arena, the day after the UEFA Europa +League Final in Budapest. +Thanks to our official partnership with the +UEFA Europa League and UEFA Europa +Conference League, bwin laid out the red +carpet in Budapest for 40 customers who +witnessed the UEFA Europa League epic +between Roma and Sevilla unfold, before +taking to the turf of the Puskas Arena the +next day. Customers were treated to pre- +match training sessions, personalised kits +and the opportunity to lift a customised +trophy just like the Sevilla players did a +few hours prior. Joined by legends Esteban +Cambiasso and Luis García, the bwin +Fans Final saw dreams brought to life +for our players. An intimate lunch with +the ambassadors and the nomination +of the Player of the Match rounded the +experience into an unforgettable event +with one of the winners stating: “These +days I will never forget, the memories +will live with me forever. It was the best +football trip ever, a dream came true, what +a privilege to have been part of it.” +33Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_36.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7f92bd6b48b9fb255f13c07b4fe25e53097942e --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,7 @@ +Championing +the game: +Advertising +34 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202334 \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_37.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ebab343084f728ceaaeb59617fd66b244bb41a --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,29 @@ +All of our brands have their own unique identity – from the striking blue of Coral to +the playful orange of Foxy Bingo. It’s our heritage and brand recognition that has +built up such trust with our customers, and it’s through this trust that we’ve been +able to push boundaries with iconic advertising, activations and campaigns. +Last year saw Foxy Bingo’s ‘Get Your +Fox On’ ATL campaign level-up with +two world-first’s: Dirtie Gertie’s Mullet +Salon and The Celebrity Swap Shop. +Continued on next page +Opened by Geordie Queen, Vicky +Pattison, Dirtie Gertie’s Mullet-only Salon +in Newcastle offered consumers free +mullet haircuts, foxy nails and games of +musical bingo. The city lit up with fleets +of pedicabs and iconic parts of the centre +were turned purple and orange with +incredible out-of-house advertisement, +with over 2 million impacts. In total, the +campaign gained a 1.1 billion reach via +media coverage, gave 94 dodgy haircuts +and engaged whole new community of +Foxy fans. +Get Your Fox On with +Foxy’s Celebrity Swap +Shop & Mullet Salon +35Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +35Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_38.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6dd7f6530b4c270f269baab16acc27d304b13ba --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,62 @@ +Gala’s Jolly Good +Fish and Chip hotel +Eurobet.Live with +Luca Toni +Gala Bingo continued to build community spirit amongst +players this year, with the world’s first ‘Fish and Chip Hotel’ +in Blackpool. Inspired by consumer research, insights and the +iconic bingo call 33, Gala’s ‘The Jolly Good Fish & Chip Hotel’ +gave British seaside goers the chance to enter Gala Land and +receive a complimentary serving of fish, chips and peas, as well +as games of bingo. +The activation built on Gala’s ‘Where A Little Joy Goes A Long +Way’ campaign and encouraged players to find the little joys in life +last summer With over 800 consumers attending the prototype +hotel and 314 million people reached via earned social media +coverage, it’s safe to say customers experienced the brand in a +whole new way, combining the classic charm of the Great British +seaside with the wonder and joy of Gala Land. +Eurobet.live elevated the football experience for fans across +Italy through an exciting TV campaign featuring World Cup +winner, Luca Toni, as it’s presenter. The campaign seamlessly +integrated the excitement of live scoring with the thrill of +the matches themselves, providing viewers with real-time +updates, insights and analysis, detailed statistics and +engaging multimedia content. +Eurobet.live not only celebrated the passion and excitement +of football, but also underlined its commitment to providing +fans with a comprehensive and immersive platform to stay +connected to the game they love. Eurobet.Live has also +strengthened it’s connection with fans, through prestigious +partnerships with several Serie A teams, including the iconic +Juventus as well as a partnership with the entire Serie C league. +These strategic alliances +served as a powerful bond +between the Eurobet.live +brand and football fans +on the ground, solidifying +its position as the premier +platform for live scoring, +results, and multimedia +content in Italy.” +Alexis Grigoriadis +Marketing Director, Italy +Get Your Fox On with Foxy’s Celebrity +Swap Shop & Mullet Salon continued +In the wake of Foxy’s new laundrette +theme ads, the team brought the screen +to life up north with The Celebrity Swap +Shop: a two-day pop up affair in Hull, +where locals swapped drab for fab +and get their hands on a celebrity item. +17 celebrities donated items to the +laundrette, and in total, 23 bags of clothes +were donated to charity. Foxy consumers +took to the laundrette to experience +the brand’s new and engaging identity +and with free Bingo sessions on site. +The brand saw a 17% increase in betting +players from the activation. +36 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_39.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5cbbbba2e3225975ec2361ea73692e0e989d35c --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,109 @@ +Last December, the F1 circus rolled +into Las Vegas for the inaugural GP, +and our joint venture, BetMGM, left +no stone unturned in making their +presence known with customers over +the weekend. +From exclusive grandstand hospitality to +the excitement of experiencing incredible +entertainment within touching distance +of the track in their retail shops, BetMGM +bolstered the anticipation of placing bets +on the race with awesome experiences +throughout the GP weekend. The team +also pulled off some incredible activations +with McLaren Racing; from BetMGM’s +logo being centre stage on the car to +a series of marquee and On-property +digital placements, BetMGM certainly +gave F1 superfans an experience to +never forget. +The spectacle received 3X the number +of bets compared to any other F1 event +in the company’s history. The Las Vegas +GP certainly shattered records for the +King of Sportsbooks. +TAB activation on Auckland’s +Sky Tower for the TAB +Karaka Millions +The TAB Karaka Millions brings together the +best horses sold at the New Zealand Bloodstock +yearling for two separate races, as well as an +open-entry race called the Elsdon Park Aotearoa +Classic. This year, TAB became the naming rights +sponsor for the meeting, and with three $1m +races on the six-race card for the first time ever, +TAB wanted to do something different to attract +attention of customers. +A few days before the meeting, Entain Australia +and NZ took over the second tallest freestanding +structure in the southern hemisphere, Auckland’s Sky +Tower, and projected the barrier draw for the three +main races onto it. Watched on by trainers, owners +and horse racing fanatics, the incredible display +revealing which horse starts where, set the scene for +a weekend that ended up smashing records for TAB’s +horse racing history. +The six-race meeting saw a 26.6% increase in +turnover compared to the highest wagered meeting +on record (of which had over double the number of +races) and a 33% increase in the number of customers +betting compared to 2023. Better yet, the final race +of the day set a record for the most wagered race in +New Zealand, with Year-on year-turnover for the TAB +Karaka Millions up 66%. +BetMGM win Las Vegas for Super Bowl week +Known for its massive audiences, thrilling action, much-anticipated commercials, +and halftime extravaganza, the Super Bowl was a big day for BetMGM, where we +saw a 30% uplift in activity across the U.S. alone. Super Bowl in Las Vegas was a +huge opportunity for BetMGM to be at the centre of the action, having the world’s +biggest stage literally footsteps away from several BetMGM retail sportsbooks. +To maximize this opportunity, Entain +launched its new Nevada app with access +to BetMGM’s full sportsbook offering, +weeks before the Super Bowl, giving the +best BetMGM experience to the NFL fans in +Nevada for this landmark event. +Then, BetMGM set out to do what so +many other brands struggle to do in this +domain, carve out a memorable Big Game +commercial that perfectly complements and +establishes a connection with the brand. +In a company-first, the team launched +its three-part campaign which featured +the never-before-seen pairing of sports +legends, Tom Brady and Wayne Gretzky, +along with actor Vince Vaughn, marking an +iconic moment for BetMGM. +The BetMGM team didn’t stop there. +In addition to the advertisement, BetMGM +executed a multi-faceted approach to +“Win Las Vegas” for Super Bowl week. +Alongside extraordinary VIP experiences +with celebrity ambassadors, BetMGM +painted Las Vegas gold and black with +a variety of outdoor, indoor, digital and +special advertising campaigns that +greeted fans from the moment they get off +the plane. +Marking another first, BetMGM partnered +with X in a one-of-a-kind collaboration to +become the official betting sponsor of the +platform, starting with the Super Bowl and +continuing through 2025. +Regardless of who was the Super Bowl +champion, BetMGM came out a winner. +The new platform was able to handle +a 30% uplift in activity over the Super +Bowl weekend and a 72% increase in +customers from the 2023 Big Game, thanks +to the incredible efforts and collaboration +between the Entain, BetMGM and +MGM teams. +Smashing +records under +the neon lights of +Las Vegas strip +37Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_4.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..34a2edaf9cc87ff1f4f007a6062cf063921d085b --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,105 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_40.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e9fbfdeb7e9639669ca9f237c90b3d1f5689a24 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,81 @@ +Regulatory +update +Unlike slots and poker, casino table games +are regulated on a state-by-state basis. +The states may either create a monopoly +or issue as many licences as the state has +land-based casinos. By the end of 2023, +only the states of Schleswig-Holstein and +North Rhine- Westphalia had opted for a +licensing system. To date, only Schleswig- +Holstein has released the tendering +process, but the group has opted not to +apply for a licence for commercial reasons. +In North Rhine-Westphalia, details on the +tendering process were expected to be +published in 2023 but due to various delays, +the details are now expected in Q1 2024. +Entain looks forward to participating in +this process. + Germany +The Joint Gambling Authority (“GGL”) has +now been operational in Germany for over +a year. Encouragingly, the GGL has been +more proactive in issuing sanctions against +unlicensed operators, but we still see room +for improvement and intensification. We are +continuously working with the regulator +and state governments to push for more +effective enforcement against illegal +operators and in 2023 worked jointly with +the University of Leipzig and the local online +casino association to produce a study +investigating the scale of the issue. +While the Group was granted three slots +and two poker licences in November 2022 +and the Group´s sports betting licences +were also extended for another 5 years in late +2022, the restrictive environment in Germany +continues to prove challenging. The process +for managing playing limits for slots, poker +and sports betting remains one of the most +pertinent regulatory challenges for licensed +operators. There is also mounting political +pressure for stricter sports betting advertising +restrictions, while the first evaluation of the +Interstate Treaty is set to be published soon. + The UK +The UK Government published its White +Paper of the 2005 Gambling Act Review +in April 2023. As expected, this document +included consultations on a number of +areas, including online slots staking limits; +financial vulnerability checks; a mandatory +levy for research, education and treatment; +additional requirements on game design +and direct marketing as well as the creation +of an Ombudsman. We continue to engage +government actively in this process, both +directly and via our trade body. We have +continued to develop and enhance our +Advanced Responsibility and Care™ +(“ARC™”) programme, which offers tailored +identification of customers who may be at +risk, as well as targeted interventions and +interactions. Whilst many of the changes +within the White Paper can be achieved via +secondary legislation, we are collaborating +with the other major operators to voluntarily +progress initiatives such as a single +view of the customer and the creation of +an Ombudsman. +Gaming is a truly global market and in 2023 the Group held licences in over +30 jurisdictions across the world. The Group is committed to only operating in +regulated or regulating markets and as from February 2023, 100% of the Group’s +revenue is from such markets. The Group firmly believes that strong, commercially +viable regulation of the betting and gaming sector is in everyone’s interests. It +provides stability for operators, important taxation streams for governments +and – most importantly – provides the consumer with proper protections and +safeguards by ensuring that only responsible providers operate in the market. +38 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_41.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..ffe4c0fec1b990c43f93881d1b65c5c82574fa8c --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,159 @@ + Africa +In late 2023, Entain decided to withdraw +from the regulated markets of Zambia and +Kenya but the Group remains committed to +expanding its significant regulated offering +in South Africa, where it has been present +for a number of years. + US +The sports betting regulatory activity +continues at pace in the United States. +Kentucky, North Carolina and Vermont are +amongst the US states that have regulated +in 2023. Rhode Island has been added +to the list of US iGaming states. Finally, +additional states have adopted, or are in +the process of adopting, modernised forms +of responsible gambling regulation; a trend +Entain welcomes with an eye on the long- +term sustainability of the US market. +Bearing in mind that over 35 US states +have already allowed for sports betting in +one form or another, the Group remains of +the view that in the coming years some 40 +or even 45 US states will have regulated +sports-betting, which will provide BetMGM +with even broader market access across +the country. The number of states that +permit online casino is also expected to +grow in the years to come – for example the +state of New York as already announced +its intention to attempt iGaming regulation +in 2024. + LATAM +In Latin America, Brazil adopted a law +that allows for domestic licensing of sports +betting and online casino in late 2023. +The law will be implanted throughout +the first half of 2024, with the regulated +market expected to launch at some point +in Q3 2024.The regulation will extend to +all online gambling verticals, including +sports betting and gaming, and will allow +for an open licensing system subject to +payment of betting and other taxes and +fees. Furthermore, the Group has launched +licensed operations in Mexico under its +bwin brand. +There was better news in France where +we have seen nascent discussions +about the possible legalisation of online +casino, while in Croatia the Government +completed a regulatory review and is now +looking to bolster its efforts to tackle the +illegal market. +At the end of 2023, Entain only operated in +two markets in Europe where it is not yet +locally regulated. Despite our best efforts +in Austria , there have been no changes to +the status quo and the Government has +no imminent plans to initiate the reforms it +announced in March 2021. Nevertheless, +we will continue to push for regulatory +reforms. Encouragingly, in Finland the +Government has officially begun the +process of dismantling the monopoly in +favour of a licensing system that we expect +to come into force sometime in 2026. + Australia +A parliamentary inquiry issued a report +in 2023 calling for a ban on gambling +advertising as part of a 31-point plan to +reform the Australian gambling market. +It also proposed various other measures +including the establishment of a single +national regulator and a formal duty of +care. We expect the Government to come +forward with its response to the report and +proposed next steps in the first half of 2024. +Elsewhere, the National Self-Exclusion +Register BetStop launched in August, while +a ban on credit card betting was adopted in +December 2023 and will come into effect in +mid-2024. + Canada +The Ontario online betting and gaming +market became regulated on 4 April 2022, +thereby becoming the first Canadian +Province to issue domestic licenses for +private operators. Entain operates in +Ontario through its bwin and Party brands +as well as Sports Interaction, a Canadian +brand the Group acquired in February 2022. +Going forward, other Canadian Provinces +such as Alberta and British Colombia are +expected to introduce regulation. + Other Europe +In 2023, wide-reaching advertising +restrictions were introduced in Belgium , +while a pending parliamentary bill and a +draft Royal Decree could impose further +restrictions on local operators in 2024. +Fortunately, the sector was successful +in blocking a proposal to introduce an +additional 5% tax which would have had a +detrimental impact on licenced operators +and encouraged customers to move to +black market operators and therefore +reduce player protections. +In the Netherlands , Entain completed +the acquisition of BetCity in January +2023. National elections took place in +November and we await the formation of +a new coalition government which could +lead to change in direction for gambling +policy. We are also expecting the Dutch +authorities to come forward with new +proposals on playing limits, AML and +duty of care requirements which are likely +to come into effect in 2024 and impose +stricter compliance requirements on +operators . The headline gambling tax rate +also increased by 1% to 30.5% from 1st +January 2024. +In Italy, the Government published a +new framework law in 2023 laying the +foundations for potentially wide-reaching +sectoral reforms to be enacted in 2024 +and beyond, including an overhaul of the +current gambling licence tender procedure +which will increase licensing costs and +impose stricter regulatory requirements on +operators. In Spain , the government has +moved oversight of gambling to a newly- +formed Ministry, while plans to introduce a +system of cross-operator limits remain on +the medium-term agenda. In Ireland we are +still awaiting the enactment of the pending +Gambling Regulation Bill that will introduce +a formal regulatory and licensing regime for +online gambling. In Denmark a draft law +has been published to amend the Gaming +Act, including the introduction of a B2B +licence regime to take effect from 2025. +In 2023, we have seen tax increases +announced in several of the markets where +we operate. The Prime Minister of Georgia +announced plans to increase taxes for +online gaming from 10% to 15% GGR, and +player winnings withholding taxes from +2% to 5%, effective from 1 January 2024. +The Swedish government has announced +its intention to increase the rate of gaming +tax from 18% to 22% with effect from 1 July +2024, while the Latvian Government plans +to increase online gambling tax from 10% to +12% GGR from January 2024. +39Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Regulatory update \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_42.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a417b51b55b50a556d762f5d3daa1f9a6f6a1ef --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,68 @@ +At Entain, sustainability is a key enabler of our corporate strategy. +We firmly believe that the most sustainable operators will be the +most successful in our industry. +2023 was a pivotal year for sustainability +at Entain as we unveiled our new +Sustainability Strategy, building on our +longstanding commitment to sustainability +and taking it to the next level. +With this new Strategy, we wanted to +strengthen our sustainability leadership +position as well as listen to our stakeholders +and respond to the changing Environmental, +Social, and Governance (“ESG”) landscape. +We conducted a double materiality +assessment to help us understand our +unique sustainability-related risks and +opportunities, as well as our impacts on +society and the environment. We conducted +surveys and interviews, analysed industry +reports, and held leadership workshops, +gathering input from over 250 internal +and external stakeholders from around +our business, to understand how we can +ensure we are supporting value creation to +all stakeholders. +These insights helped us develop a +strategic framework that will focus our +sustainability actions in the coming years. +Our new approach, which is presented on +the next page, is structured across four +pillars that encapsulate those ESG issues +that are most important to Entain, our +customers, investors, and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create the environment for everyone to +do their best work + Positively impact our communities +As we reflect on 2023, we are proud to +report extensive progress across each of +these strategic pillars. We invite you to +discover our achievements on the following +pages, which include: + Rolling out our player protection +programme ARC TM in our digital offer +to cover 27 jurisdictions and launching +ARCTM for retail in the UK and the +Republic of Ireland. + 100% of our revenues coming from +regulated or regulating markets since +February 2023. + Winning Innovator of the Year at the +Women in Gaming Diversity Awards +for our Returnship programme with +McLaren Racing. + Partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings, and onboarding 35% of in-scope +vendors and supporting them to improve +their sustainability performance. +Looking at 2024, we will remain sharply +focused on delivering our new strategy and +reaffirming the sustainability leadership +role that underpins our long-term growth. +Sustainability at Entain +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202340 +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_43.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..0578d124b6cfd8c454017e6e203bad0c9bf4f3f5 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,131 @@ +Entain’s Sustainability Strategy +At Entain, we see sustainability as a key enabler of our corporate strategy and growth. We embrace our role within society with the +strongly held belief that the most sustainable business in our industry will be the most successful. +This is reflected in our new Sustainability Strategy. We have structured it across four pillars that carefully encapsulate those sustainability +issues that are most important to Entain, our customers, investors, and partners. For each pillar, we have identified key focus areas and +assigned Board-level oversight, summarised below. +You can read more details about how we developed the strategy using the results of our 2023 double materiality exercise here . +What it means Aligned material clusters Focus areas Oversight +Be a leader in player +protection +We provide industry- +leading customer +protection through +innovative features, +customer support, +communications and +our culture. +S afer betting and gaming +E thical & +compliant behaviour + Innovation + Industry-leading +ta +ilored customer +protection tools +and processes +E mpower our people +to support and protect +our customers +H arm prevention +through education +and responsible +communications +Pr omote research +and share evidence- +based learnings with +the industry +Sustainability +& Compliance +Committee +Provide a secure and +trusted platform +We lead on integrity in +everything that we do. +From having the highest +ethical standards, +to only operating in +regulated markets, with +an aim of gold standard +data protection, +and cybersecurity. +E thical & compliant +behaviour +D ata privacy +and cybersecurity + Corporate +G +overnance +O nly operate in +regulated markets +E thics and integrity +at the core of +our organisation +and culture + Provide in dustry- +leading cybersecurity, +data privacy and +AI governance +C lear and robust +governance processes +for each of our key +ESG areas +Sustainability +& Compliance +Committee +Create the environment +for everyone to do +their best work +We are an employer of +choice, and we build an +inclusive and supportive +culture where talents +from all backgrounds +can thrive. +D iversity, equity +and inclusion +H aving the +right people +A ttract, engage and +retain the best, most +diverse talent +Pr ovide the right +growth opportunities +for all +B uild a sense of +belonging for +all Entainers +People +& Governance +Committee +Positively impact +our communities +We play our role in +limiting global warming +to no more than +1.5°C and we create +a positive impact on +our communities. + Environmental +S +ustainability + Corporate +G +overnance +R educe our +environmental impact +C reating a sustainable +value chain + Promote g rassroots, +women’s and +disability sports +S upport communities +where we operate +Sustainability +& Compliance +Committee +Entain plc A +nnual Report 2023 41 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_44.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..b598fd0b116ebee3d83e5afa8e2c28b18d6f05f8 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,90 @@ +ESG Governance +Climate governance +Given the urgent need for action to address +the climate emergency, we have stepped +up our governance in this area. Our CEO +is now responsible for our approach to +climate change, and climate-related risks +and opportunities. In addition, we have +developed our Net Zero Action Group. +The Net Zero Action Group reports to +the ESG Steering Committee, which +is a selection of leaders from around +the business who are responsible for +delivering and developing an organisation- +wide approach to achieve our Net Zero +ambitions. You can read more about how +we manage our climate-related risks and +opportunities in our TCFD Statement on +pages 56 to 63. +Issue-specific Committees +In addition to the ESG Steering Group +and the Net Zero Action Group, we have +formed groups that report to the ESG +Steering Group that focus on delivering our +approach to specific ESG issues that require +additional expertise and insights from the +business. Steering groups include groups +focused on Anti-modern Slavery and +Human Rights, Safer Betting and Gaming, +Anti-Money Laundering, and Diversity & +Inclusion. +Board Committee Oversight +In May 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. +The newly created Sustainability and +Compliance Committee was created to take +on the bulk of the responsibilities of the +former ESG Committee. The Sustainability +and Compliance Committee has oversight +for safer betting and gaming, regulatory +compliance, anti-money laundering and +counter-terrorism financing, anti-bribery +& corruption, human rights (including our +approach to addressing modern slavery +risks), health and safety, environmental +impact (including the evolution of our +strategy and processes in response to the +Taskforce for Climate-related Financial +Disclosures), data protection and charitable +donations, including the work of the Group’s +Entain Foundation. Chaired by Virginia +McDowell, one of our Non-Executive +Directors, the Committee has three +members and guides the business on all +aspects of ESG strategy, sets targets and +monitors our performance. +The second newly created Committee, +the People and Governance Committee, +took on the responsibilities of the previous +Nomination Committee and added +responsibility for oversight of the Group’s +approach to Diversity, Equity and Inclusion +and other people-related functions +such as engagement and culture and +employee wellbeing. +The ESG Steering Group +The ESG Steering Group, which meets +monthly, consists of functional leaders +from across the business, including +Sustainability, Investor Relations, Human +Resources, Corporate Affairs, Legal, Health, +Safety & Security, Operations, People and +Communications. Convened by our Group +Head of Sustainability and chaired by our +Chief IR & Communications Officer, the +Group oversees the implementation of our +sustainability strategy. +Delivering our +Sustainability Strategy +starts with robust +governance. As our +ambitions grow, and +best practice evolves, +we continue to expand +our processes. ” +Entain plc Annual Report 202342 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_45.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..df0951d328403898c8edff9fccfc7400bb736050 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,64 @@ +Strategy Board +Delivery +Coordination +Oversight +ESG Steering Group +Operating Units and +Central Functions +Operational teams +People and Governance +Committee +People and Governance +Committee +Sustainability and Compliance +Committee +People and Governance +Committee +Anti-Money Laundering and +Counter-terrorism Financing +Anti-Bribery and Corruption +Health and Safety +Environmental Impact +Modern Slavery and +Human Rights +Privacy and Data Protection +Net Zero Action Group +Regulatory Compliance +Safer Betting and Gaming +Talent and capability +Diversity, Equality and Inclusion +Employee engagement +Employee well-being +Our performance across ESG Rating Agencies +We are proud to be a sector leader amongst many of the leading independent ESG rating providers. The below table summarises our +performance and improvement over time. We will continue to work tirelessly to further improve our ESG practices and performance, with +the aim of further improving the standards for our industry and in these external assessments. +Rating Evaluation +Score +(31 December 2023) +Score +(31 December 2022) +Industry +Rank +MSCI ESG Score AA 7.2 6.7 N/A +Sustainalytics ESG Risk Rating Low 19.6 +(a lower score +shows a +lower risk) +22.3 13/87 in the Casinos +& Gaming industry +ISS ESG ESG Score C 49 47 1st decile +S&P Global ESG Score S&P +Yearbook +and DJSI Europe +constituent +60 67 95th percentile +FTSE4Good ESG Score Inclusion +in +FTSE4Good Index +3.8<> 3.8 93rd percentile +CDP Climate Management B B N/A +ESG Governance Structure +Entain plc Annual Report 2023 43 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_46.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..2275be1588cb1504b6a8ea93f4c723fb04682124 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,106 @@ +We provide best in class customer protection through innovative +features, customer support, communications and our culture +Material issues + Safer betting and gaming + Ethical and compliant behaviour + Innovation +Oversight +Sustainability & Compliance Committee +Advanced Responsibility and Care™ +(“ARCTM”): Our leading tailored customer +protection tool +Our recent materiality assessment found +that safer betting and gaming is our most +material ESG issue, and ARC™ is our +flagship initiative to protect our customers +– providing a technology-led approach to +player protection through real-time and +individually tailored detection, interaction +and interventions with players that are +potentially at risk. +Given its importance to Entain and our +customers, the roll-out and effectiveness of +ARC™ is linked to through our Group Bonus +Scheme, which includes our executive +team. The details of how we incentivise +the delivery of player protection is outlined +further in the Remuneration Report +on p131. +This year, ARC™ continued to mature in +the UK and expand globally. By the end of +2023, ARC™ is now live across our core +international markets (except Brazil). +Our safer betting and gaming programmes +in our retail estate in the Republic of Ireland +and the UK are also supported by ARC™. +This provides our customer facing retail +colleagues with data-driven insights to +help them spot and address risky play in +our shops. +We continue to monitor the effectiveness of +ARC™, the results of which are reviewed by +the Executive Committee and Sustainability +and Compliance Committee quarterly. +Empowering our people +We continue to deeply embed safer gaming +into the culture of our company. At the end +of 2023, 98% of our colleagues were up +to date with their mandatory annual safer +betting and gaming training. This training +provides all colleagues with the essential +understanding of our approach to, and +compliance requirements on, safer betting +and gaming. However, we also understand +that specific roles within our business have +key responsibilities for player protection. +Focus area 2023 Highlights +Best-in-class tailored customer +protection tools and processes + Rolled our ARC™ to cover 27 jurisdictions (2022: 22), including real-time models in +23 jurisdictions + ARC™ for retail now live across UK and ROI + 7.5 million ARC™ interactions (+98% YoY) to 742,112 unique customers +Empower our people to support +and protect our customers + 98% completion rate of annual compliance, safer gambling, and AML training + Enhanced safer gaming training, delivered by EPIC Risk Management, delivered +to all senior leaders +Harm prevention through education +and responsible communications + Expanded our stakeholder education and training in the US, through our partnership +with EPIC Risk Management and major leagues as well as players associations such +as the Major League Baseball, National Football League, League Soccer Players +Associations and the NHL Alumni Association + 20% of TV advertising space and football sponsorship dedicated to safer betting and +gaming communications or Foundation promotion +Promote research and share +evidence-based learnings + Final year of partnership with Harvard Medical School’s Cambridge Health Alliance +Division on Addiction (CHADA), contributing £5.5m over five years to cutting-edge +research into Safer Betting and Gaming + Contributed 1% of our GGY in the UK to Research, Education and Treatment (RET), +totalling £18.7m +Awards and accreditations: UK North America International +GamCare Advanced Safer +Gambling Standard + Online: Advanced +Level 2 (highest level) + Retail: Advanced Level 2 +EGR North America +Awards 2023: +Socially +Responsible Operator +SBC Global and +SBC LATAM Socially +Responsible Operator of +the Year +Vixio Global Regulatory +Awards: Award for +Outstanding Contribution +to Safer Gambling +Entain plc Annual Report 202344 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Be a leader +in Player +Protection +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_47.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7c06dcdc8a4bf55128056b64f1f9048e4d9f3a6 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,139 @@ +For these roles, we continue to roll out more +in-depth and specific training. For example, +our senior leadership periodically +undertakes in-depth training from EPIC +Risk Management. Customer-facing roles +who are responsible for engaging directly +with our customers also receive in-depth +training on identifying and interacting with +customers who may be at higher risk of +harmful play. +We are also leveraging our partnership +with Harvard Medical School’s Cambridge +Health Alliance Division on Addition +(“CHADA”) to support our training +programmes. Since 2019, 16 of our safer +betting and gaming training programmes +have been reviewed by the team at CHADA +– ensuring our training and culture reflect +the latest research. +Responsible marketing +Responsible marketing is a core part of +our commitment to promote responsible +attitudes, and protect children, young +persons and vulnerable individuals. +We have a long history of leading the +industry in this area, spearheading the +UK whistle-to-whistle advertising ban, +and being the first operator to ban shirt +sponsorship in UK football. +Our commitment to responsible advertising +and marketing is underpinned by our +recently refreshed External Marketing +Policy. This Policy outlines our responsible +marketing principles. All relevant staff +receive training on the policy. +We also work closely with trade +associations to strengthen best practice for +our industry’s marketing and advertising. +For example, we are a signatory of – and +contributor to – the European Betting +and Gaming Association’s (“EGBA”) Code +of Conduct. +Promoting research through +our partnership with Harvard +Medical School +2023 marked the final year of our five-year +research partnership with the Cambridge +Division on Addiction, which has now +produced 14 research papers since 2019. +The outcomes of this research have +been highly practical, underpinning our +26 markers of protection – the behavioural +patterns found to indicate signs of risk +that are used by ARC™. As this research +is published, or is in the process of +publication, this allows not just Entain but +the whole industry to access the latest +research. You can read more about this +research programme in our 2023 Social +Impact Report. +At Entain, we know that safer betting and gaming starts +with our culture. It’s important that all colleagues have the +knowledge and tools to fulfil our responsibility to protect +our customers. + Interactions excellence: Interaction +Excellence aims to promote insightful +and valuable discussions with teams +that deal with customers that are +potentially the most at risk. The training +focuses on strengthening soft skills +that colleagues will draw upon during +customer interactions. In 2023, this +training was reviewed by the Harvard +Medical School’s Division on Addiction, +Cambridge Health Alliance. +Moving forward we will also conduct +in-depth training with leaders from +around the business (aimed at our +senior leadership team and Board +Directors), to further integrate a culture +of player protection right at the top of +the organisation. This training will be run +by EPIC Global Solutions and refresh the +leadership training delivered in late 2022. +Embedding safer betting and +gaming into our culture +As part of the 2023 Group Annual Bonus +Plan, a mandatory training module +was implemented on compliance, safer +gambling and anti-money laundering, +achieving a 98% completion rate. Our goal +is to train all colleagues on the importance +of player protection, preventing money +laundering, and responsible marketing +– with retail colleagues receiving a more +tailored version of the content relevant to +their role. +We also know that some colleagues +have unique responsibilities for their +role – whether it be engaging directly +with customers, designing new products, +or leading teams or divisions. In 2023 +we worked with EPIC Global Solutions +to deliver in-depth masterclasses and +face-to-face-training on safer betting and +gaming tailored for specific, high-impact +roles. For example, our customer service +and retail colleagues took part in sessions +that equipped them with the skills to +1. Core countries are those that are using our core technology platform. ARC™ is embedded within this core technology, so in these countries we can use the full power of our +markers of protection and interactions. +2. Risk is determined based on our Long-term Excessive Play (LTEP) model, which is one of our three primary ARC™ Markers of Protection models, which scores every user of the +Entain Platform from 1 (low risk) to 100 (high risk) daily. LTEP is used for assessing risk due to identify underlying problem gambling behaviour over time. +identify signs of harm and effectively +interact with customers to advise on +our suite of tools that may be used to +help them. +Key modules focused on: + Introducing our retail teams to problem +gambling to help them understand how +gambling related harm can present +itself and ensure that they are aware +of how to protect our customers to +limit the negative impacts of gambling. +Between May and August 2023, 294 +colleagues attended the EPIC Safer +Gambling Awareness training. + Affordability Interactions: This training +provided our colleagues with guidance +on the key steps they should take to +ensure that customers are keeping +their betting affordable, and the +communication tools they can use to +encourage safer gambling and manage +hostile behaviour on the shop floor. +Entain plc Annual Report 2023 45 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Lead on player protection +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_48.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..8cf5b50e6e70557a6fd033899f4365662624b660 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,104 @@ +Ethics and integrity at the core +of our organisation and culture +We are committed to conducting +our business in line with the highest +ethical standards. We heavily invest in +governance, resources, and training to +combat corruption and keep financial +crimes out of gambling. +For Entain, this starts with playing an active +role in safeguarding the values and integrity +of sport. We want all sports events to be +fair and played to the best of participants’ +abilities. This is why we work closely with +regulators and sports governing bodies to +fight match-fixing, spot-fixing, and other +corrupt betting activity. We are a member +of the International Betting Integrity +Association (IBIA) and the Sports Betting +Integrity Forum (SBIF). +In 2023, we continued to reinforce our +Ethics & Compliance (“E&C”) function +with new team members and stronger +governance. We launched a new Ethics +& Compliance Charter which defines +clear accountability across the group and +ensures that our E&C team has the required +independence and authority to act as an +effective second line of defence. We also +launched a three-year E&C Strategy, which +sets our action plan for achieving a best-in- +class E&C programme. +Only operate in regulated markets +Entain firmly believes that strong, +commercially viable regulation of +the betting and gaming sector is in +everyone’s interests. It offers stability for +operators, important taxation streams +for governments and – most importantly +– provides the consumer with proper +protections and safeguards by ensuring +that only responsible providers operate in +the market. +Since February 2023, 100% of our group’s +revenue come from regulated or regulating +markets. As of 31 December 2023, we held +licences in 34 jurisdictions across the world. +We were also present in five regulating +markets where we can see a clear pathway +to regulation that will enable us to obtain +domestic licences in the next two years. +These regulating markets are Brazil, +Mexico, Peru, Austria and Finland. For more +about this, please refer to our regulatory +update on pages 38 to 39. +We appointed a Group Money Laundering +Reporting Officer and Global Head of Anti- +Financial Crime (“AFC”), and we expanded +our AFC team. After a period of growth +and multiple acquisitions, we revised our +organisational structure with all colleagues +with AFC responsibility reporting to the +central AFC Leadership Team. This new +governance framework gives us better +control and oversight across all our +entities, subsidiaries, and joint ventures. +We have also initiated an evaluation of +our international subsidiaries to assess the +maturity of local AFC programmes. This will +conclude in 2024 with on-site visits and +upskilling programmes tailored to the needs +of our colleagues. +We lead on integrity in everything that we do. From having the +highest ethical standards, to only operating in regulated markets, +with an aim of gold standard data protection, and cybersecurity +Material issues + Ethical & compliant behaviour + Data privacy and cybersecurity + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Only operate in regulated markets 100% of revenues from regulated or regulating markets since February 2023 +Ethics and integrity at the core +of our organisation and culture + New Ethics & Compliance Charter and Strategy + Average completion rate of 95% across Entain’s Big Four Compliance +Training Modules + Refreshed set of Entain Values, with “Do what’s right” at its core +Provide industry-leading +cybersecurity and data privacy + Growing headcount in Data Privacy and Cybersecurity teams, by 25% and 35% +respectively compared to 2022. + Average time to fix cybersecurity vulnerabilities decreased by 65% compared to 2022 + Over 80% of our operations audited and certified to ISO 27001 (by headcount) +Clear and robust governance processes +for each of our key ESG areas + New ESG governance structure with two board-level committees (Sustainability & +Compliance and People & Governance) +Awards and accreditations: ISO 27001 2022 Information Security Management System +Entain plc Annual Report 202346 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Provide a secure +and trusted +platform \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_49.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..01515b484c9ea5b068492cb839428e97e55e6d52 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,112 @@ +Doing what’s right +Every colleague, including contractors +and agency staff, must complete four +compliance modules covering Entain’s +Code of Conduct as well as ethical topics +such as safer gambling, data privacy, or +bribery and corruption prevention. As part +of this, colleagues sign a declaration that +they have understood the training and will +comply with Entain’s Code of Conduct. +Our 2023 Group Bonus was linked to +achieving 85% completion for each +module – an ambitious but achievable +target given the turnover in certain parts +of our business. This year, we achieved an +average completion rate of 98% – up from +93% in 2022 and 82% in 2021. +Big Four Learning Modules +Completion +Rate +Code of Conduct 94% +Compliance, Safer Gambling, +and Anti-Money Laundering 98% +Data Privacy 98% +Cybersecurity 98% +Provide industry-leading cybersecurity +and data privacy +Safeguarding our corporate and customer +information remains a top priority for +Entain. Our commitment is reflected in the +growing headcount of our Data Privacy and +Cybersecurity teams, which respectively +increased by 25% and 35% in 2023. +In 2023, we continued building our data +privacy assurance function with dedicated +resources to monitor the effectiveness +of our privacy activities, keep risks under +review, and update policies and procedures. +We boosted privacy controls by introducing +Effectiveness and Maturity Reviews of +our most critical data processes. We also +reinforced our risk management process +with a new privacy risk register which feeds +into Entain’s Enterprise Risk Management +(“ERM”) risk maps and identified an +additional 20 privacy risks in 2023. +Throughout the year, we further embedded +Entain’s Artificial Intelligence (“AI”) and +Data Ethics Charter, which we launched +in 2021 to define our principles for the +responsible use of AI and data-driven +technologies. We collaborate across the +business to embed Privacy by Design, +building data privacy considerations +directly into the development of our +products and processes. We have also +been preparing for emerging legislation +around AI, such as the EU Artificial +Intelligence Act. Working closely with our +Data Sciences & AI (“DSAI”) colleagues, +the Privacy team created a blueprint for +Entain’s AI Governance Framework and +developed a new AI policy which will be +released in 2024. +As cybercrimes continue rising globally, +we are continuously improving our +cybersecurity programme to protect our +players from digital threats. In 2023, we +introduce new security features in our +products such as customer multi-factor +authentication. We also reinforced our +cyberattack detection processes by +deploying machine-learning and AI- +based systems which uncover patterns +of malicious activity and block attacks +before they can reach our customers. +We managed to decrease the average +time to fix cybersecurity vulnerabilities by +65% compared to 2022. +As part of our commitment to best +practice, we have re-certified for the +ISO 27001 certification, an international +standard for information security. As of +31 December 2023, 80% of our operations +have been audited and certified to +ISO 27001. In 2024, we will continue +expanding the scope of the certification to +our 2023 acquisitions. +Clear and robust governance +processes for each of our key +ESG areas +In April 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. This new +structure reflects the ever-growing +importance of ESG topics for the group. +You can read about our ESG governance +structure on page 43. +As a FTSE100 company, +we have a duty to do the +right thing. This also means +training our people to always +make the right decision +for our customers and +our communities. +Entain plc Annual Report 2023 47 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Provide a secure and +trusted platform +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_5.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..9800d0d1fb13d42baafaeacb3075e7744440b355 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,77 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_50.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c14569294c1cb4570811a1185d4d90e4093d5a70 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,139 @@ +Focus area 2023 Highlights +Attract, engage and retain the best, +most diverse talent + Launch of Black Professionals@Entain employee network + Publication of Entain’s first-ever Global Menopause Policy + Entain ranking 5 in the 2023 All-In-Diversity Project Index + Entain’s Returnship programme with McLaren Racing receiving accolades at the +Women in Gaming Diversity Awards and the Personnel Today Awards +Provide the right growth opportunities +for all + Launch of Your Goals, Entain’s new objective-setting programme +Build a sense of belonging for +all Entainers + Launch of refreshed values and behaviours + 94% of Entain Managers received mental health training through the Workplace of +Tomorrow programme + 400,000 employee interactions with Entain’s Well-Me events, activities, and content + 9.1% utilisation rate for our Employee Assistance programme +Awards and accreditations: + + +We attract a broad and diverse audience from the inside out. +We are an employer of choice, and we build an inclusive and +supportive culture where talents from all backgrounds can thrive +Material issues + Diversity, equity and inclusion + Having the right people +Oversight +People & Governance Committee +On International Women’s Day 2023, we +published our first-ever global menopause +policy. Our ambition was to help colleagues +understand menopause-related issues and +normalise talking about the symptoms. +The policy came with a global awareness +campaign and support for managers in +having conversations around menopause. +We built a virtual Menopause Hub with +resources and bite-size training for those +going through the menopause journey and +for managers and teammates wanting +information on how to best support women +in the workplace. +We are committed to positively impacting +diversity not just within Entain, but across our +industry. We partner with universities and +charities to improve female representation +within STEM careers. One example of this +is our partnership with Girls Who Code, +through which we have reached 10,680 +young women since 2021. You can read more +about our work to drive diversity in the tech +sector in our 2023 Social Impact Report. +In 2024, we will focus our efforts on further +embedding DE&I within our Resourcing +Strategy to increase representation in +our hiring process. Our new recruitment +and candidate management platform will +provide us with better DE&I data on our +Attract, engage and retain the best, +most diverse talent +Diversity, Equity and Inclusion (DE&I) are key +to Entain’s future sustainability and success. +Attracting and retaining key talent remains +one of our Principal Risks as a tech business +(see page 85), and workforce diversity +plays an essential role in innovating, driving +change, and delivering outstanding products +and services for our customers. +As part of our commitment to DE&I, we +understand the importance of global +employee networks in providing a safe space +for colleagues with a shared identity or +experience. Launched in 2022, the Women@ +Entain and Pride@Entain groups continue +to grow, with over 1200 and 250 members +respectively. In 2023, Women@Entain +piloted a new mentoring programme for +women in our Product & Technology team, +matching participants with senior mentors. +We also launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. Led by our +network, we signed a UK partnership +10,000 Black Interns Foundation, and have +pledged to offer career opportunities to +Black students and graduates in the summer +of 2024. +Gender diversity at Entain +Group Board 33% +2023 3 out of 9 +(33%) +2022 +2021 +3 out of 9 +(33%) +4 out of 10 +(40%) +Senior managers 28% +221 out +of 794 +(28%) +194 out +of 752 +(27%) +128 out +of 364 +(26%) +2023 +2022 +2021 +All Employees 46% +13,645 out +of 29,576 +(46%) +13,479 out +of 28,940 +(47%) +11,583 out +of 25,554 +(45%) +2023 +2022 +2021 + Male Female +Personnel Today +Equity, Diversity & +Inclusion award +Women in Gaming +Diversity Awards Innovator +of the Year award +Entain plc Annual Report 202348 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Create the +environment for +everyone to do +their best +work \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_6.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5d4be091a5fc1970d18380c8917eb1e717ada9d --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,54 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_7.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..315e5e6fe9decac25446038afe5e71a7859f0b78 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,56 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_8.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9e1775924ce17b04890a2eaae5971b1e140d70 --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_8.txt @@ -0,0 +1,31 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_9.txt b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..f98e2a847e7853fd71d36be19d7063638e1850ff --- /dev/null +++ b/Entain/Entain_50Pages/Text_TextNeedles/Entain_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_50Pages/needles.csv b/Entain/Entain_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The secret office supply is a "stapler". +The secret object #3 is a "knife". +The secret tool is a "saw". +The secret animal #4 is a "turtle". +The secret object #2 is a "key". +The secret landmark is the "Taj Mahal". +The secret currency is a "pound". +The secret transportation is a "train". +The secret food is a "sausage". +The secret object #5 is a "towel". +The secret animal #3 is an "eagle". +The secret shape is a "rectangle". +The secret animal #5 is a "wolf". +The secret instrument is a "trumpet". +The secret drink is "water". diff --git a/Entain/Entain_50Pages/needles_info.csv b/Entain/Entain_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..caaaa26f6d3305a4ea8df10425ab276da3c835a7 --- /dev/null +++ b/Entain/Entain_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip".,1,9,orange,black,0.198,0.69,courier,140 +The secret vegetable is an "onion".,3,13,brown,white,0.526,0.044,times-italic,123 +The secret animal #2 is a "panda".,6,11,purple,white,0.063,0.11,courier-bold,78 +The secret sport is "boxing".,7,12,yellow,black,0.573,0.513,helvetica,69 +The secret kitchen appliance is a "pan".,9,11,gray,white,0.991,0.338,courier-oblique,92 +The secret object #1 is a "chair".,12,14,black,white,0.268,0.126,times-bold,139 +The secret clothing is a "glove".,14,12,red,white,0.009,0.504,helvetica-bold,89 +The secret fruit is an "orange".,16,11,blue,white,0.233,0.114,times-roman,127 +The secret animal #1 is a "lion".,17,13,green,white,0.617,0.355,helvetica-boldoblique,112 +The secret object #4 is a "bed".,19,13,white,black,0.893,0.626,times-bolditalic,93 +The secret office supply is a "stapler".,22,9,gray,white,0.877,0.737,times-italic,123 +The secret object #3 is a "knife".,23,13,green,white,0.262,0.486,times-bold,109 +The secret tool is a "saw".,26,11,red,white,0.635,0.056,times-roman,119 +The secret animal #4 is a "turtle".,28,13,blue,white,0.018,0.483,helvetica-bold,83 +The secret object #2 is a "key".,29,11,white,black,0.694,0.488,helvetica-boldoblique,87 +The secret landmark is the "Taj Mahal".,31,12,black,white,0.516,0.341,courier,65 +The secret currency is a "pound".,33,13,brown,white,0.647,0.979,courier-bold,118 +The secret transportation is a "train".,35,11,yellow,black,0.446,0.687,times-bolditalic,84 +The secret food is a "sausage".,38,13,purple,white,0.627,0.719,courier-oblique,72 +The secret object #5 is a "towel".,39,9,orange,black,0.249,0.564,helvetica,66 +The secret animal #3 is an "eagle".,42,7,yellow,black,0.015,0.059,times-bold,103 +The secret shape is a "rectangle".,43,11,orange,black,0.464,0.553,helvetica-bold,119 +The secret animal #5 is a "wolf".,46,13,white,black,0.977,0.173,helvetica-boldoblique,137 +The secret instrument is a "trumpet".,47,12,black,white,0.356,0.2,times-italic,96 +The secret drink is "water".,49,9,gray,white,0.927,0.33,courier-oblique,90 diff --git a/Entain/Entain_50Pages/prompt_questions.txt b/Entain/Entain_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3b1a9ea3024cd97c104287b57170a758d31380 --- /dev/null +++ b/Entain/Entain_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret animal #2 in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret object #1 in the document? +What is the secret clothing in the document? +What is the secret fruit in the document? +What is the secret animal #1 in the document? +What is the secret object #4 in the document? +What is the secret office supply in the document? +What is the secret object #3 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret object #2 in the document? +What is the secret landmark in the document? +What is the secret currency in the document? +What is the secret transportation in the document? +What is the secret food in the document? +What is the secret object #5 in the document? +What is the secret animal #3 in the document? +What is the secret shape in the document? +What is the secret animal #5 in the document? +What is the secret instrument in the document? +What is the secret drink in the document? diff --git a/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_1.txt b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..89f6efc9fe0945447964cc046d8201c20b6f58ad --- /dev/null +++ b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +Transforming +gameour +Annual Report 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_2.txt b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..c6eb05035729e3a76e5c8af2786442644b5785fb --- /dev/null +++ b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_2.txt @@ -0,0 +1,125 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_3.txt b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..a20a390900a798d7b3372107e607048f9bf98452 --- /dev/null +++ b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,11 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_4.txt b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..fccb22ecf1e2742493d4ba66099fad2daaafdd26 --- /dev/null +++ b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,106 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_5.txt b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..0488dec4d49589781cf6397242d0b744466bbc4d --- /dev/null +++ b/Entain/Entain_5Pages/Text_TextNeedles/Entain_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,78 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_5Pages/needles.csv b/Entain/Entain_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..0cda233b986cd22c691426e5efeeb8d0a4096c5f --- /dev/null +++ b/Entain/Entain_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret clothing is a "glove". diff --git a/Entain/Entain_5Pages/needles_info.csv b/Entain/Entain_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..e3570d3fb27531bd2d13bca5d989bf161cdbb389 --- /dev/null +++ b/Entain/Entain_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret flower is a "tulip".,1,13,green,white,0.97,0.314,times-bolditalic,84 +The secret vegetable is an "onion".,2,10,purple,white,0.783,0.045,helvetica,68 +The secret sport is "boxing".,3,8,yellow,black,0.937,0.536,helvetica-bold,81 +The secret kitchen appliance is a "pan".,4,13,black,white,0.485,0.744,times-italic,103 +The secret clothing is a "glove".,5,12,orange,black,0.461,0.454,courier,142 diff --git a/Entain/Entain_5Pages/prompt_questions.txt b/Entain/Entain_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b0e6e92be447568bc4b7ec6d942c3fe26c84bc3 --- /dev/null +++ b/Entain/Entain_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret flower in the document? +What is the secret vegetable in the document? +What is the secret sport in the document? +What is the secret kitchen appliance in the document? +What is the secret clothing in the document? diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_1.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..eecbefdc4b16b7815a0a1e1bef6dbba0a8f5406d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Transforming +gameour +Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_10.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f65f31575c52918570378c8942550c315cd4431 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,5 @@ +Chairman’s introduction +J M Barry Gibson +Chairman +Entain plc Annual Report 202308 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_11.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..38b903e94caafee9da01412ae6e2eee03caca183 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,85 @@ +Financial performance +During 2023, we delivered Total Group +revenue growth of 14%, with Group Net +Gaming Revenue (NGR), excluding our 50% +share in BetMGM, growing 11%. However, +this was down 2% on a proforma basis +reflecting the operational and regulatory +challenges the organic business faced. +We delivered EBITDA of just over £1bn, +despite sacrificing profits as we re-shaped +the business to focus on regulated markets. +Our balance sheet is robust and while +leverage is above levels we would ideally +like over the longer term, our balance sheet +and available cash is healthy. As a result, +we are continuing with our progressive +dividend with a payment of approximately +£113m for the year. +Deferred Prosecution agreement +December’s Deferred Prosecution +Agreement with the Crown Prosecution +Service was important in drawing a much- +needed line under legacy GVC issues. +Confronting these challenges was never +going to be easy, but we can be proud of +the positives – particularly the recognition +of Entain’s extensive co-operation, the +“wholesale changes” within our business +and above all, the acknowledgement +that “the company in its current form is +effectively a different entity”. +Those welcome comments on Entain +and our transformation reflect our +commitment to operate only in markets +that are regulated or have a clear +pathway to regulation. We are proud +of that commitment to deliver higher +quality and more sustainable revenues +in the future despite forgoing around +We’ve made significant strategic progress; +lessons have been learned on operational +implementation and we draw to a close a +period overshadowed by the behaviours of +a different era. Entain can now look forward +confidently as a global operator with a +clear and sustainable strategy, supported +by the hard work and commitment of our +31,000 colleagues. +This year the business has: + Delivered Total Group revenue growth of +14%, including our 50% share of BetMGM + Finalised a £585m Deferred Prosecution +Agreement (DPA) to conclude the +HMRC investigation into activities by +the company’s legacy Turkish-facing +business, which was sold in 2017. + Accelerated our exit from unregulated +markets, delivering our commitment to +only operate in regulated markets. + Expanded into new regulated +markets, in particular Poland and New +Zealand, whilst withdrawing from less +attractive opportunities. + Refined our operational strategy to +streamline the business, grow revenues +and improve margins, as well as invest +behind our US business to drive market +share gains. + Refocused our leadership under our +Interim Chief Executive, Stella David, and +added new expertise to our Board. + Led by example in our commitment +to safer gambling and player +protection and won recognition for +our positive contribution to corporate +social responsibility. +Reflecting on the last year, I would best describe 2023 +as a period of necessary, but ultimately positive, +transition for Entain. We strengthened our revenue +base, enhanced our Board, and delivered a satisfactory +resolution to our previous regulatory issues. +09Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction +The secret sport is "boxing". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_12.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..4cd01940d3872fc804d7bd55f074e4dd4c0eed9d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,96 @@ +Geographically, we embedded our footprint +in Central and Eastern Europe in 2023 +with Entain CEE’s acquisition of STS, the +leading sports-betting operator in Poland. +Following our acquisition of SuperSport in +Croatia during 2022, STS further consolidates +our position across the region, with a +regulated betting market which is expected to +continue to grow rapidly in the years ahead. +Similarly, our 25-year partnership with TAB +NZ, secured Entain’s position as the sole +licensed operator with access to the very +attractive New Zealand market. +We also enhanced our technology and +product capabilities in the US market with +the acquisition of Angstrom Sports, which +will provide an unrivalled experience for our +customers in the U.S., the most important +and fast-growing new regulated market in +the world. Additionally, bringing 365scores, +one of the world’s leading scores and sports +media companies into our group, supports +our ambitions of improving the customer +experience and broadening our pathways to +growing our customer audiences. +Driving operational focus +In our rapidly consolidating global industry, +acquisitions have been important in +cementing the strategy of our business +and securing leading positions in attractive +regulated markets. As we look forward, in +November we revised our strategic targets, +outlining our plans to drive organic growth +expand our EBITDA margins to 28% by 2028 +and deliver on our market share ambitions in +the US. We cannot be complacent and must +recognise that we have to deliver operational +excellence on time, every time and our +management are focused on delivering a +stronger performance in the coming year. +Looking forward we have many opportunities +to improve our performance. Most importantly +we must better leverage the benefits of +our scale whilst being agile to fine tune our +offering to customers and to respond to +changing markets. In the US we’re more +excited than ever about the prospects for +BetMGM and are working with our partners +in MGM to drive our market share to at least +20%. The recent introduction of a new single +wallet capability, new apps and games are +just the beginning of improvements we have +been working hard to deliver and they are +already demonstrating great improvements +for our customers. +£100 million of EBITDA from those 140 + +unregulated markets that we have now +exited. In our industry we must embrace +regulation, it’s the right thing for our +customers and it’s the right thing for our +stakeholders. Good regulation, properly +implemented and well enforced, is good +for our business. It improves visibility and +stability of earnings, and means that the +most credible, respected and responsible +operators can engage with customers. +We work constructively with industry +bodies and regulators around the globe to +ensure that wherever we can we influence +the development and implementation +of better regulation and its application. +We are continuing to cooperate fully with +AUSTRAC in relation to their investigation +into our Australian business, which +commenced in September 2022 and +remains ongoing. +Over time the wider benefits of regulation +will far outweigh the short-term financial +cost of market exits. I’m confident that +because of our strategic decisions, we are +now firmly on the right road to deliver the +enhanced value our shareholders and other +stakeholders deserve and expect. +Strategic focus on regulated +growth markets +Having gone through a period of re-focusing +our portfolio, we are now the most diversified +operator of scale in our sector working +exclusively in regulated or regulating markets. +While M&A activity will be much slower going +forward as our focus shifts to organic growth, +we made some key strategic transactions for +the business in 2023. +10 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_13.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3cbbcfb96cbdc75ff34ea3a1af385050fd2b4bc --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,109 @@ +Our newly formed capital allocation +committee has begun reviewing Entain’s +markets with the goal of maximizing +shareholder value of the portfolio. This will +help the company to effectively manage +its balance sheet as well as be in a +position to make further investments in +growth opportunities. +Fresh perspectives and leadership +I’d like to thank Jette Nygaard-Andersen +for her hard work leading the business for +nearly three years. Having taken the reins +amid the Covid pandemic, she set in place +the foundations of our regulated markets +strategy, executing our portfolio re-shaping +and leading significant acquisitions as +well as enhancing our management team. +Jette offered leadership at a time of great +change and challenge for our business. +The conclusion of the HMRC investigation +through the DPA and our revised strategy +provided a natural transition point. +The Board was pleased to be able to call on +Stella David to take on the Chief Executive +Officer role on an interim basis. Stella knows +the business extremely well and as an +experienced leader with a strong track +record across many fields, she is well placed +to drive operational delivery while we seek +a permanent Chief Executive Officer – a +process that is well advanced. +Alongside refreshed leadership, we have also +brought fresh experience to the wider board. +We welcomed Amanda Brown as a new +Non-Executive Director and Remuneration +Committee member in November. +Amanda brings extensive commercial and +Human resource experience to us. In January +2024 Ricky Sandler, the Chief Executive +of our shareholder Eminence Capital, was +also appointed to our Board and to our new +Capital Allocation Committee. Ricky knows +our business extremely well and his focus will +be on generating value for all shareholders. +Nobody has a monopoly on wisdom and as +Chairman I believe Entain will benefit from +the fresh perspectives and constructive +challenge that both Ricky and Amanda +bring. We anticipate further Non-Executive +Director appointments over the coming +weeks and recognise that we need to re- +balance the board’s gender balance following +recent changes. +Pierre Bouchut has also become our +Senior Independent Director and Virginia +McDowell has been appointed as Chair of the +Remuneration Committee. I am chairing the +People and Governance Committee together +with our new Capital Allocation Committee, +which has a clear mandate to ensure a +disciplined return on investment from the +markets and products we choose to prioritise. +Importantly it underlines our firm commitment +to deliver shareholder value. +Safer gambling and +community engagement +Even though Entain has seen much +transition as a business this year, player +protection remains vital. We continue to +ensure we provide an environment that +is as safe as possible for our customers. +We care about our customers, and we want +them to enjoy their experience, which is why +we developed our Advanced Responsibility +and Care programme to provide an invisible +safety net. ARC has already delivered 1m +proactive interactions, and protected 400k +unique customers from harmful play. +Amidst all the change, another thing that will +never falter is our commitment to investment +in people and making a positive contribution +to the communities in which we operate, +such as through our Entain Foundation. +The Entain Team +Suffice to say any business as complex and +geographically spread as ours has to rely +on a committed team of highly talented +individuals. During this last year we have +benefited from over 30,000 people working +every day to deliver better service and +results. On behalf of the Board, I would +like to thank each and every one of our +colleagues for the hard work, loyalty and +enthusiasm they have shown. +Note +1. Underlying EBITDA is earnings before interest, tax, +depreciation and amortisation, share based payments +and share of JV income. EBITDA is stated pre- +separately disclosed items. +We must better +leverage the benefits of +our scale whilst being +agile to fine tune our +offering to customers +and to respond to +changing markets.” +11Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chairman’s introduction \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_14.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..31d63be5e47d573f1171d4cc1ad7d9fe9fd18a91 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,7 @@ +Chief Executive’s Review +Stella David +Interim Chief Executive Officer +12 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +12 Entain plc Annual Report 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_15.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..381e01b4820d8f2a45a259f44bfd07a2f5e05d4d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,80 @@ +Dear Shareholder +Entain is a leading sports betting and gaming +business, operating in a global industry with +attractive dynamics and structural growth. We are +the most diversified leader of scale in our sector, +only operating in regulated or regulating markets. +Our strong brands, leading market positions and +increasingly localised offering are supported by in- +house technology and product capabilities. +The Group’s strategy is focused on +delivering the most entertaining customer +experience supported by market leading- +player protection to deliver quality +growth and sustainable returns for +our shareholders. +While 2023 presented many challenges +and our performance in some of our +markets was behind our expectations, +overall we made good strategic progress. +We re-shaped our geographic footprint +enabling us to focus on leadership positions +in regulated or regulating markets, +broadened our customer engagement +and continued to implement leading +player safety measures. We also secured +a conclusion to a material overhanging +legacy issue. +Reflecting the significant progress made +in re-focusing our business, in November +2023 we revised our strategic ambitions, +focusing on key objectives and priorities +for the next three years that will drive +shareholder value. +One of these changes has been leadership. +I have been on Entain’s board as Senior +Independent Director since March 2021 +and was honoured to accept the role of +Interim CEO. Although my appointment is +on an interim basis, the business will not be +treading water. We have clear targets to +deliver. I will focus on driving the execution +of our revised strategic priorities until the +appointment of a new, permanent, CEO. +Performance in 2023 +During 2023, we achieved total revenue +growth of 14%, including our 50% share +in BetMGM, in spite of operational and +regulatory challenges. We expanded into +the regulated markets of Croatia, Poland +and New Zealand as well as adding to +our capabilities with the acquisitions of +365Scores and Angstrom. +Entain’s operations now span over +30 regulated or regulating territories, +with established brands supporting +leading positions in many of our markets. +Regulation remains an over-arching +factor in our industry and for the +Group’s performance. Clear regulatory +frameworks that are appropriate and +well enforced, are positive for us and our +customers. However, in the short term, +they can create headwinds as significant +changes are put in place and uneven +implementation can occur ahead of +consistent enforcement. +During 2023, we managed regulatory +change in a number of our larger markets, +impacting headline organic performance. +The most notable being our implementation +of ever-tightening UK affordability +measures and the persistent lack of +impactful regulatory oversight in Germany. +We estimate the aggregate of regulatory +impacts was a negative 6ppt headwind +to Online NGR performance in 2023. +As a result, proforma 3 organic Online NGR +13Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_16.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab7401bd1a3967e3159407cdd3a95d7e4e7a179d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,110 @@ +was down 3%cc2 versus the prior year, +whilst proforma 3 Retail NGR grew 2%cc 2. +Total Group NGR, including our 50% share +of BetMGM was up 14% and up 2%cc 2 on a +proforma 3 basis. +We also continued to improve the +sustainability of our business, ensuring +more diversified, sustainable and +ultimately higher quality earnings. +We achieved another record level of +active customers, with proforma 3 actives ++10%, demonstrating the underlying +strength in our core business as well +as our broadening, more recreational +customer base. +In the UK, Online NGR was down 6%, +reflecting the ongoing digestion of +regulatory changes. We estimate that we +experienced a headwind of approximately +c10ppt to our Online NGR growth. +Unfortunately, this drag did not ease during +H2 as we expected due to the imposition of +further affordability measures. The iterative +imposition of cumulative safer gambling +measures throughout 2023 has resulted in +overly complex journeys for our customers. +We continue to believe that restrictions +should be personal and appropriate for +each customer, however, we must ensure +the experience for our customers is smooth. +In the short term we expect that the +measures currently in place will continue +to weigh on performance. However, we are +encouraged that our industry and regulator +are working together to agree a pragmatic +framework for customer safer gambling +checks. If implemented, as currently +anticipated, these will provide a clear and +consistent approach to player protection +for customers across all operators in the +UK. Our focus remains firmly on acquisition +and retention of customers to grow market +share. In 2023 we grew UK online actives +by +18% driven by continued customer +engagement with exciting marketing +campaigns, new product releases and +wider offering enhancements. +UK Retail NGR was up +2% on a LFL 4 +basis with a good performance in both +sports and gaming across both machines +and OTC. Our strong performance is +underpinned by our market leading retail +offering reaching a broader demographic +of customers supported by exclusive and +in-house content coupled with digital in- +shop experiences. +Our business in Italy continues to perform +well, with online NGR up +3%cc 2 versus +2022. The underlying market growth +remains strong and omni-channel +operators continue to outperform. +Despite increased competitive activity, +Eurobet, bwin and GiocoDigitale grew +actives +13% by leveraging our omni- +channel proposition, brand strength and +ongoing investment in our products. +Retail NGR was up +16%cc 2 and the retail +shop network remains invaluable to our +omni-channel offering, with combined +Online and Retail NGR +63%cc 2 versus +pre-Covid levels. +Combined Online NGR in Australia and +New Zealand was up 11%cc 2, although +down -5%cc2 on a proforma 3 basis. +In Australia, whilst we experienced a softer +market along with increased competition, +our Ladbrokes and Neds brands continue +to deliver unique content and engaging +products. Entain Australia’s partnership +with TAB NZ also provides a broader +differentiated experience for sports +betting customers in New Zealand as +well as Australia, and we look forward to +customers in New Zealand enjoying an +enhanced experience as our offer migrates +to Entain Australia’s technology platform +in 2024. +Our NGR in Brazil was down 14%cc 2 +year on year reflecting our disappointing +operational execution in early 2023. +We installed a new management team, +taking swift action to realign customer +acquisition channels, payment processing +and product engagement, and are pleased +to be seeing positive signs from the impact +of these actions taken. As the Brazilian +sports betting and gaming regulation +progresses towards licencing during +2024 the market will remain intensely +competitive. However, we remain excited +for our Brazilian business and believe we +are well positioned in this fast growing +regulated market. Sportingbet remains +a strong brand and we are focused +on rebuilding market share growth, +leveraging an improved app experience, +product innovation, as well as our +14 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_17.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..d32e7ebc773a95861afb3d06f0e1ffca2a2c3885 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,104 @@ +365Scores acquisition supporting growth +going forward. +Entain’s CEE business continues to +perform strongly, maintaining its market +leadership with the SuperSport brand +in Croatia and expanding our presence +across the CEE region with the acquisition +of STS Holdings in Poland. Proforma 3 NGR +was up 13%cc2 for Online and 4%cc 2 +for Retail on a constant currency basis. +SuperSport proforma 3 Online NGR grew +29%cc2 benefitting from its leading omni- +channel offering and its first to market +cashout offering, whilst STS Online NGR +was flat year on year, reflecting its sports +only offering impacted by customer friendly +sporting results in October offsetting +prior growth. +Our Crystalbet brand remains the market +leader in Georgia and continues to perform +well. Online NGR grew +7%cc 2, reflecting +the strength of our operations and brand, +and sees us well positioned as the market +digests increases in online gaming taxes +and licence costs in 2024. +Enlabs continues to perform well, with +profoma NGR +3%cc 2 despite some +markets in the Baltics and Nordics +experiencing more challenging economic +environments. Enlabs delivered +13% +growth in active customers supported +by localised offering of sports and +gaming products. +In Germany, we continue to see the +impact of new regulatory measures +alongside limited regulatory enforcement. +Despite some unregulated operator +exits during 2023, the uneven operating +landscape remains a significant challenge +to licenced operators adhering to +regulation. Our Online NGR for Germany +declined year on year. However, our bwin +brand continues to be strong and we +remain positive on the German market’s +long-term prospects, but regulatory +enforcement is critical. +During 2023, we added further capabilities +to evolve our offering and customer +engagement further. Our acquisitions of +365Scores and Angstrom Sports enable us +to expand our content, data and analytical +capabilities, and ultimately enhance our +customer’s experience. +365Scores is one of the world’s leading +sports apps providing highly engaged +sports fans real time action and results. +Its access, content and data insights are +a key part of how we are reinvigorating +our offering in Brazil and addressing this +exciting regulating growth opportunity. +Arguably the most significant for +our business, particularly for the US +opportunity and BetMGM’s performance, +was our acquisition of Angstrom Sports. +Angstrom will provide next generation +sports modelling, forecasting and data +analytics. BetMGM is already seeing +benefits from offering customers more +betting markets and more accurate pricing. +With this addition, Entain will become +the only global operator with a full in- +house suite of end-to-end analytics, risk +and pricing capabilities for US sports +betting products. +We are excited to build on BetMGM’s +momentum and successes during 2023. +Its performance inline with targets and +achievement of H2 EBITDA profitability +validates our business model and sees +BetMGM in position to be self funded +going forward. +BetMGM is established as one of the +leaders in the fast-growing, highly +competitive US sports betting and iGaming +market. In 2023, BetMGM continued +delivering good growth, with NGR up 36% +to $1.96 billion and achieved profitability +over the latter three quarters of the year. +Our products are available in 28 markets +with a combined market share of 14% 5 in +sports betting and iGaming across the US. +Aligned with our +strategy, 2023 +saw delivery of +growth coupled with +sustainability, ensuring +more diversified, +sustainable and +ultimately higher +quality earnings.” +15Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review +The secret object #1 is a "chair". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_18.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dfdd6e47a6c38924a2aca75b08ab5687234db54 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,113 @@ +operational leverage we can expand our +EBITDA margins over time, creating better +returns for our shareholders. +US Market Growth – Our focus to drive +our US performance remains a key +strategic priority. BetMGM is established +as one of the leaders in this fast growing +highly competitive industry. Much of +this success is underpinned by Entain +technology and product capabilities, which +have been significantly strengthened for +our US proposition. Entain’s acquisition +of Angstrom further accelerates this, +particularly for our parlay and in-play +products with Same Game Parlay (“SGP”), +SGP+ and new LIVE SGP pricing models. +Our strategic roadmap for 2024 sees +BetMGM invest behind this strengthening +and differentiated offering. BetMGM’s +Big Game commercial campaign, as well +as partnership with X, demonstrate the +drive behind the brand to accelerate player +acquisition and retention. BetMGM is the +only top three operator with a licenced +mobile app live in Nevada. This advantage +will be amplified when BetMGM’s single +account single wallet functionality receives +licence approval in Nevada. Working closely +with our co-parent, BetMGM will be able to +unlock the power of MGM Resorts unique +omni-channel advantages leveraging +the Las Vegas visitor footfall as well as +tentpole events for a deep and replenishing +pool of players. We remain committed to +empowering BetMGM as it continues to +progress towards delivering c$500m of +EBITDA in 2026. +Drive Organic Growth – We are +rebalancing our portfolio to prioritise +growth and returns, exiting smaller markets +where the timeframe for suitable returns +is too long, such as Chile, Peru, Zambia +and Kenya. In addition, we have closed our +B2C operations of Unikrn and are focusing +on delivering the Unikrn eSports offer +through our existing sports betting and +gaming brands. +We are refocusing our operational +execution on customer acquisition and +retention, by reinvigorating our acquisition +channels and accelerating technology and +product delivery. In two of our markets, UK +& Brazil we see significant opportunities +to drive value through our commercial +excellence programme, including, simplified +and streamlined customer journeys, +more effective marketing, improved app +experience and products, especially in +sports betting. +Player protection remains embedded in our +ambition to deliver the best experience for +customers, however, our approach must +evolve along with our offering, ensuring it is +localised and appropriate for each market. +Margin Expansion – Having grown rapidly +through M&A we now need to focus on +simplifying our operations, removing +duplication and enabling greater agility. +Our efficiency programme, Project Romer, +will not only improve ways of working for +our teams, but will also unlock efficiencies +through operational streamlining, +functional integration and restructuring, +as well as deliver net cost savings of £70m +by 2025. Coupled with maximising our +BetMGM also made fantastic progress +against key strategic initiatives, solidifying +the foundations for 2024 and beyond. +As well as delivering substantial +enhancements to our app features, design +and speed, the seamless execution of +SASW functionality across 21 states was +the most significant upgrade to BetMGM’s +customer experience. BetMGM players can +now travel across these states, betting +with the same account credentials and +wallet. We have already seen improved +retention KPIs, a 5x increase in new state +bettors who had previously played with +BetMGM in a different state, with multi- +state customers now representing over +20% NGR. Together with our partner, MGM +Resorts International, we look forward +to unlocking this powerful differentiator +for BetMGM customers in Nevada, with +state regulator’s approval of our SASW +functionality expected during 2024. +Revised strategic priorities +The Group has been transformed over +the last four years since becoming Entain, +delivering an improved sustainable +business only operating in regulated or +regulating markets. In November 2023 we +updated our corporate strategy, focusing on +three strategic objectives to deliver value +for our shareholders as the next phase of +our transformation: + Drive organic growth + Expand online margins + Empower growth in US +16 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_19.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..3973336da2d0e02b35f49ab9cf406adc18b2ad4f --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,150 @@ +Positively impact our communities – We +were proud to be the first betting and +gaming company to formally commit to +a Net Zero target for carbon emissions +with the Science-based Targets Initiative +(SBTi). This reflects our ambition to lead the +industry on decarbonisation, along with our +commitment to reduce our absolute scope +1 and 2 (market-based) and material Scope +3 emissions by 42% by 2027 and 60% +by 2030, from a 2020 base year. In 2023, +our Net Zero Action Group developed our +first net-zero strategy to help us achieve +these ambitions. +We also want to make a positive impact +on our communities through the charitable +work of the Entain Foundation. Our flagship +Pitching In programme in the UK pioneers +engagement between semi-professional +football and local communities. Our funding +of the Trident Community Foundation +has helped to deliver over 100 initiatives +to improve the lives of thousands of +people across the country. Last year we +also continued to partner with a range +of charities, such as bringing access +to technology with community-based +technology hubs in partnership with +ComputerAid as well as delivering support +to under privileged communities in the US +with the Charles Oakley Foundation. +Notes +1. Awarded; EGR North America Socially Responsible +Operator 2023, SBC Global and SBC LATAM Socially +Responsible Operator of the Year, and Vixio Global +Regulatory Award for Outstanding Contribution to +Safer Gambling. +2. Growth on a constant currency basis is calculated by +translating both current and prior year performance at +the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 +acquisitions as if they had been part of the Group +since 1 January 2022. +4. UK Retail LFL YoY NGR is calculated based on shops +that traded for the full year in both 2023 and 2022 +5. Market share for last three months ending November +2023 by GGR, including only US markets where +BetMGM was active; internal estimates used where +operator-specific results are unavailable. +At the start of 2024 we updated our +regulatory and safer gaming charter based +around four principles: + Only operate in regulated markets or in +markets with a clear path to regulating + Committed to a constructive and +progressive relationship with regulators + Always comply with in-market regulation + Take a market leading approach to player +protection in each market we operate, +developing and using tools to identify & +limit customer harm +Provide a secure and trusted +platform – We operate in a highly +regulated sector where the highest ethical +standards are critical in maintaining trust +with our customers and wider society +– from gold standard data protection, +keeping crime out of betting and gaming, +to eliminating poor working conditions in +our supplier base. Through this strategy, +our expectations of ourselves is to exceed +these standards. We have a comprehensive +training programme for all our colleagues +across the Group and I am delighted with +the completion rates. +Governance oversight from the Board +is key to ensuring robust execution and +accountability across the business. +Further details on these processes are set +out in our Governance report on page 96. +Create an environment for everyone to do +their best work – Ensuring we are able to +attract a broad and diverse pool of the best +talent is vital for our success. We aim to +be an employer of choice with an inclusive +and supportive culture, where talents from +all backgrounds can flourish. Our Diversity, +Equity and Inclusion (DE&I) strategy is +built on establishing strong networks and +having launched the Women@Entain +and Pride@Entain groups in 2022, in +2023 we launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. +As a technology based employer, we also +recognise the importance of encouraging +women to succeed in the sector. In 2023, +Entain partnered with the McLaren F1 +team on a returnship programme, providing +unique opportunities for skilled women +to resume their STEM careers. Over six +months, 10 career returners worked at both +Entain and McLaren in roles ranging from +Data Analysts to Software Developers. +The programme received accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Sustainability – A key enabler +supporting our growth +In November 2023, we unveiled a refreshed +sustainability charter. This updated charter +was informed by a double materiality +assessment we conducted throughout H1 +2023, which identified how sustainability- +related issues impact our business and how +we impact the environment in which we +operate. Our charter’s four pillar structure +encapsulates the sustainability issues +that are most important to Entain, our +customers and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create an environment for everyone to do +their best work + Positively impact our communities +A leader in player protection – Our +objective is to be a leader in player +protection. In 2023, our safer gaming +programme ARC™ (“Advanced +Responsibility and Care”) was rolled out +across 22 jurisdictions alongside the +continuing optimisation of ARC™ features. +This saw a significant increase in the +volume of interactions and interventions +with customers, with 6.1 million ARC™ +interactions in 2023, up 121% versus 2022. +In recognition of these efforts, during +2023 Entain won a number of responsible +operator awards 1 including EGR, SBC +and Vixio. +Our new sustainability +charter reiterates +the importance of +sustainability as an +enabler to our overall +corporate strategy.” +17Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Executive’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_2.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..a512aa0b5bc92cbbe3661afe5c46b3d5ca4b9ebf --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,125 @@ + Refreshed corporate strategy, focusing on +three strategic objectives (Drive Organic +Growth; Expand online margins; Empower +growth in US) to deliver value for our +shareholders as the next phase of our +transformation + Further expansion into regulated markets +with leading market positions; expansion +into Poland with acquisition of STS +Holdings and partnership with TAB NZ +providing unique access to New Zealand +sports betting market + Enhancement of in-house content and +capabilities with acquisition of 365Scores +and Angstrom Sports + Strong performance of BetMGM boosted +by product and tech enhancements +including Single Account Single Wallet in +27 markets + Only global operator with 100% revenue +from regulated or regulating markets + Launch of new sustainability strategy +including an updated regulatory and safer +gaming charter +Strategic and operational highlights Financial highlights +Group Revenue +£4.8bn ++11% 2022: £4.3bn +Online Net Gaming Revenue +£3.4bn ++12% 2022: £3.1bn +BetMGM Net Gaming Revenue1 +$2.0bn ++36% 2022: $1.4bn +Group Underlying EBITDA 2 +£1,008m ++1% 2022: £993.0m +Loss after Tax from Continuing +Operations +£879m +2022: profit of £33m +Adjusted Net Debt +£3.3bn +3.3x (3.1x proforma) +2022: £2.8bn (2.8x) +Profit after Tax from +Continuing Operations before +Separately Disclosed Items +£339m +2022: £224m +Adjusted Diluted EPS +44.2p +2022: 60.5p +01 Introduction +02 We are Entain +06 Investment proposition +08 Chairman’s introduction +12 Chief Executive’s Review +18 The industry in which +we operate +20 How we create value +23 Our strategic framework +38 Regulatory update +40 Sustainability +42 ESG Governance +44 Safer betting and gaming +46 Secure and trusted + platform +48 Working environment +50 Positively impact our +communities +53 ESG KPIs +56 TCFD Statement +64 Engaging with +stakeholders +68 Chief Financial Officer’s +Review +79 ERM and Principal Risks +87 Viability Statement +88 Chairman’s Governance + Overview +89 Board of Directors +92 Governance framework +98 Board Activities during + 2023 +101 People & Governance + Committee Report +104 Audit Committee Report +110 Sustainability & + Compliance Committee + Report +113 Directors’ Remuneration +Report +138 Directors’ Report +141 Independent Auditor’s +Report +160 Consolidated income +statement +161 Consolidated statement of +comprehensive income +162 Consolidated balance +sheet +163 Consolidated statement of +changes in equity +164 Consolidated statement of +cash flows +165 Notes to the consolidated +financial statements +215 Company income +statement +216 Company balance sheet +217 Company statement of +changes in equity +218 Notes to the Company +financial statements +223 Glossary +224 Shareholder information +225 Corporate information +1. Represents NGR from 100% of BetMGM. +2. Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, +share based payments and share of JV income. EBITDA is stated pre-separately +disclosed items. +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret flower is a "tulip". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_20.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..ed115af221e4dbcad1edee3ed847c6f17b924b8a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,148 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +The industry in which we operate +Source: H2GC +(25/01/2024) – +Global Online GGR +(including offshore). +Global Online Growth +Entain’s Retail operations are in the UK, +Italy, Belgium, Republic of Ireland (ROI), +New Zealand and Croatia. +The UK Retail market was estimated to be +worth £7.2bn in 2023, an increase of 6% +versus 2022, as operator investment in +gaming cabinets and self-service betting +terminals has broadened engagement +with products such as in-play now being +available through SBBI. The UK Retail +market is highly consolidated, with four +operators accounting for over 85% of +all betting shops. Entain is the leading +operator in UK Retail, with over 2000 stores +across the Ladbrokes and Coral brand +covering 96% of all postcodes in the UK. +The Italian Retail sports betting market +is estimated to be worth £1.2bn in 2023, +up from £1.1bn in 2022. Entain operates +via the Eurobet brand as the 3rd largest +operator in the market for over the counter +sports betting in Italy. +The Republic of Ireland and Belgium Retail +markets are smaller, estimated to have +been worth £1.0bn and £0.9bn respectively +in 2023. Entain operates in Belgium and +ROI via the Ladbrokes brand and is the +largest operator in Belgium and third +largest in ROI. +A new market for Entain, Croatia, is +relatively small, valued at £0.4bn in 2023, +however the shops serve an important +bridge for customers between the offline +(retail) and online experience. +In 2023 Entain gained a Retail presence in +New Zealand, as part of the exclusive 25YR +partnership signed with the New Zealand +government, through which Entain is +responsible for operating TAB NZ, the only +operator with an Online and Offline licence +in the country. +2023e +Landbased +Gambling +Total Market +Size – £bn +Betting +Casino +Machines +Bingo +Lottery +UK 7.2 18% 12% 38% 3% 29% +Italy 15.1 8% 1% 53% 2% 36% +ROI 1.0 38% 5% 27% 4% 27% +Belgium 0.9 14% 12% 20% 15% 38% +New Zealand 1.2 7% 28% 47% 0% 18% +Croatia 0.4 21% 13% 53% 0% 12% +H2GC (25/01/2024) – Landbased GGR +Entain’s Online Markets +Geographically, in 2023 Core markets +represented 67% of the total Online betting +and gaming Market that Entain operated +in. The largest individual countries being +the UK (c15%), Italy (c8%) and Australia +(c6%). In 2023, the UK market grew +10%, with growth unevenly distributed +amongst operators, reflecting the timing of +implementation of affordability changes by +operators. The Italian online market grew +13%, as it continued to benefit from the +Offline to Online transition. The Australian +market shrank 3%, due to tightening market +conditions combined with the lapping of +a very strong 2022, which had benefited +from a lagged Covid effect. +Growth markets accounted for 33% of the +Total Online Market for Entain in 2023, +the majority of which was USA (21%) and +Brazil (5%). The USA grew 43% versus +2022, driven largely by growth of existing +states, as well as the annualization of +2022 state launches. Brazil grew 31%, +driven in part by an increasing awareness +of Online gambling ahead of legislation +aimed at creating a licenced regime which +is expected to take effect in 2024 following +Government approval at the end of 2023. +Global Online Growth +Entain only operates in regulated or +regulating markets. The total global online +gaming market, which also includes +unregulated markets, was estimated to +be worth c£107bn in 2023. Over the past +twelve years the market grew at 13% +CAGR and growth from 2022 to 2023 was +15%, in part driven by same state betting +and gaming growth in US States. +Entain’s markets +Entain’s Online portfolio is categorised into +Growth & Core markets, Core markets are +forecast to grow at 6% CAGR 2023-2026 +and Growth markets at 17% on an Entain- +weighted basis. +The next largest market is the unregulated +Asia market which represents 26% of +the global total, followed by regions that +are part regulated, part unregulated +including North America (18%), Oceania +(7%), Latin America (3%), and Africa +(2%). Excluding Asia, Entain has online +operations in countries in these regions. +Retail Online +Entain plc Annual Report 2023Entain plc Annual Report 202318 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret clothing is a "glove". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_21.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..30fdd2721c616d031a8ce043d99eba0476810760 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,83 @@ +2012 +£23.0bn +2011 +£20.0bn +2013 +£25.0bn +2014 +£28.0bn +2015 +£31.0bn +2016 +£35.0bn +2017 +£40.0bn +2018 +£46.0bn +2019 +£53.0bn +2021 +£84.0bn +2023 +£107.0bn +2022 +£95.0bn +2020 +£67.0bn + +Share of Global online market by region + +Oceania +6% +Latam +8% +Core +67% +Growth +33% +N America +21% +N America +7% +UK +15% +Europe +38% +Oceania +1% +Europe +2% +Africa +1% +Entain’s markets +Core markets (£bn) Growth markets (£bn) +2021 2022 2023 2024 2025 2026 2028 2027 +26 26 +29 +31 +33 +36 +41 +38 +8 +10 +14 +16 +19 +22 +31 +26 +2021 2022 2023 2024 2025 2026 2028 2027 +Source: Regulus Partners, +Online NGR +11% +Online gaming is forecast to +grow 11% CAGR between +2021 and 2027, with the US +growing at 23%. +2027 +Forecast +Entain plc Annual Report 2023 19Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The industry in which +we operate \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_22.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..77d7bbfe94d722d30d740c0db77977c5be1f65ec --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,27 @@ +Player protection Industry +leading +products +Market +leading +protection +Online +SPORTS +BETTING +GAMING +We provide sports betting +and gaming offerings to +customers through both +Online and Retail channels +We offer our customers +engaging and entertaining +experiences supported by +market-leading player protection +Engaging +customer +experience +How we +create value +Retail +20 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret fruit is an "orange". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_23.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..ee1ae517227c367a44f7d78c4b1267c16fc8856b --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,52 @@ +Customers +Customer satisfaction +78% +Positive experience +Safer betting & Gaming +8.7m +Customer interactions in 2023 +Our people +Employee Engagement +77% +Actively engaged + Wellbeing +83% +Manager’s care about +employee wellbeing +Communities +Entain Foundation +£100m +Committed over 5 years +Net Zero by +2035 +Throughout all operations +Investors +2023 EBITDA +£1bn + +Revenue from regulated +100% +and regulating markets +Marketing +Excellence +Product +& Content +CRM and Data Proprietary +Technology +Leading Player +Protection +We create value for +all our stakeholders: +We deliver on our +strategy and create +value by leveraging a +unique set of capabilities… +People and +Talent +Regulatory +Expertise +Global Scale +and Brands +21Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +How we create value \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_24.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..5206445be607b97a7e5cc2e7fbe9fc142205b34a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,70 @@ +How we +create value +We deliver on our strategy and create value by +leveraging a unique set of capabilities. +Marketing +Excellence +We have unparalleled customer +insight that we use to engage our +audiences with new experiences, +media content and marketing to +attract a broader demographic of +recreational players. +Read more: pages 34 to 37 +Product & Content +Our award-winning in-house +development studios enable +us to create exclusive content +and innovate to provide our +customers with a richer, more +engaging experience. +Read more: pages 26 to 33 +Proprietary +Technology +By owning and operating our own +technology we can be more flexible +and adaptable, keeping us ahead +of the competition and enabling +us to expand into new markets, +provide great products and lead +on responsibility. +Read more: pages 27 to 29 +CRM and Data +Our customer CRM capabilities and +player analytics enable a powerful +data-led approach to marketing +Read more: pages 14 to 16 +People and Talent +Our people are our number one +asset and our ability to attract and +retain the best minds both within +and beyond the industry is key to +our success. +Read more: pages 46 to 47 +Regulatory +Expertise +As the world’s only global operator +operating exclusively in regulated +and regulating markets we have +unparalleled experience of working +with regulators coupled with an +uncompromising approach to +player safety. +Read more: pages 38 to 39 +Leading Player +Protection +We provide best-in-class customer +protection through innovative +features, customer support, +communications and our culture. +Read more: pages 44 to 45 +Global Scale +and Brands +We offer over 30 leading brands, +some dating back more than 135 +years, offering customers a great +trusted offer +Read more: pages 2 to 3 +22 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202322 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_25.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..07b3c659368c199081ebe8a423398b433b471dd1 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,96 @@ +Our strategic +framework +Before a refresh in November 2023, Entain’s +strategy was based on the two pillars of +growth and sustainability. +Achieved On target Not achievedKey: +2023 priorities KPIs +Growth +1 Leadership in +North America + Established Top 3 operator with 14% share of Sports Betting +& iGaming market in US and Ontario + NGR $1.95bn, +36% YoY growth + 28 live markets with 49% adult population; 4 new launches; +Ohio, Massachusetts, Puerto Rico, Kentucky + Successful delivery of Single Account Single Wallet +functionality across 27 states + Significant digital sports offering improvements; app speed, +user experience, broader bet offering + iGaming strength supported by new games & product +enhancements – 33 exclusive new game launches by our in- +house studios (Read more on page 27) + Acquisition of Angstrom Sports (Read more on page 29) +Global Online market +107bn +Group NGR +£4.8bn +Online NGR +£3.4bn +Underlying EBITDA +£1.0bn +2 Grow presence +in core markets + Online Actives +10%, FTDs +7% + Online NGR growth on a compound annual basis over the last +four years of 12% +3 Expanding into +new markets + Entered Netherlands (BetCity completion Jan-23), Poland +through acquisition of STS, and New Zealand through 25yr +partnership with TAB NZ +4 Extend into +interactive +entertainment + Pivoted eSports strategy, Unikrn no longer B2C brand, now +supporting eSports offering for our other brands. +Sustainability +5 Lead on +Responsibility + Rolled our ARC™ across 27 jurisdictions, including real-time +models in 23 jurisdictions. + ARC™ for retail now live across UK and ROI + 98% completion rate of annual compliance, safer gambling, +and AML training + Contributed 1% of our GGY in the UK to Research, Education +and Treatment (RET), totalling £18.7m +£20.8m +Contribution to +safer betting and +gaming initiatives +83% +Employee satisfaction with +approach to wellbeing +2035 +Target set for +carbon Net Zero +throughout operations +£100m +Commitment to Entain +Foundation over five years +6 Diversify our +regulated +activities + 100% of revenues from regulated or regulating markets since +February 2023 +7 Broaden our +customer appeal + F2P + Coral Racing Club – (Read more on page 30) + Ladbrokes Live – (Read more on page 33) + F1 – (Read more on page 37) +8 Invest in our +people & +communities + Entain’s Returnship programme with McLaren Racing +receiving accolades at the Women in Gaming Diversity +Awards and the Personal Today Awards + 250+ aspiring champions received SportsAid financial +award since 2019, to cover the costs of training, equipment, +and travel. + 250 non-league football clubs supported via Pitching In since +2020, reaching their communities + Launch of Black Professionals@Entain network +2023 progress +23Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_26.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..f716ebfd45daca1b4ee94ff0e9c89425b0c0a5f9 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,90 @@ +Reflecting the Group’s strategic progress, in November 2023 we revised our +corporate strategy. These refocused objectives recognise the progress achieved +by the business, whilst acknowledging there is still further transformation needed +to maximise the opportunities ahead. We have set clear targets and initiatives to +deliver value for our stakeholders. Ensuring focused execution in driving Organic +Growth, Margin Expansion and US market share growth. + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supported by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +People and culture +Technology and product +Governance +Organic +growth +Grow presence in +existing markets, +synergistic +adjacencies +Margin +expansion +Drive margin +expansion +through scale +and operational +leverage +US market +growth +Empower profitable +growth and share +gains in the US +Purpose +Vision +24 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statementsEntain plc Annual Report 202324 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_27.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..1fa4d28939755d0cd3edfc0f1a9529ba0bef7a25 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,70 @@ + The world leader in betting, gaming and interactive entertainment +To deliver the most entertaining customer experience +supportive by market leading player protection +Priorities Enablers KPIs 2023 progress Risks Links to Remuneration ++7% +Online organic NGR +growth in-line with market +(from 2025, Ex-US) + Ongoing optimisation of market portfolio to +maximise growth and ROI + Implemented Comprehensive commercial +and operational excellence program in +key markets + Build on capabilities and innovate our +sports product +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 + Executive annual bonuses +are linked to Operating +Profit, Online NGR growth +and safer betting and +gaming targets and +customer metrics. + Safer betting and gaming +metric and customer +satisfaction metrics +implemented for 2023 +bonus schemes. +>28-30% +>28% for 2026 +30% BY 2028 +Online EBITDA margin +(Ex-US) + Launched Project Romer to create a more +agile organisation and drive gross cost +efficiencies of c£100M +Principal risks +1 2 3 4 5 +6 7 8 9 10 +Read more: +pages 83 to 86 +20-25% +20-25% market share + Capitalise on new product and pricing +capabilities, and omnichannel + Delivery of Single Account, Single Wallet +functionality in 27 markets + Enhancement of in-house content and +capabilities through acquisition of Angstrom +Principal risks +1 2 3 4 5 +7 8 10 +Read more: +pages 83 to 86 +Sports betting +and gaming +courses through +our DNA. It’s the +purple thread that +steers our evolution, +guides our people +and shapes our purpose. +25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements 25Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Strategic framework +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_28.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..3178643d29e130a7fbb8346211a0612ffcada27f --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,17 @@ +our technology +and product +Entain today, is underpinned by incredible talent, in-house +technology and leading product capability. We have +hundreds of always-on sports data and game supplier +integrations, which we bring to life as easy to play games +and almost infinite bet opportunities in a safe, responsible +way. With the largest RMG platform in our industry and +a sportsbook powering approximately 1.8K matchers +per day, we’re evolving our strong in-house technology, +globally diversified portfolio and adaptability to create +entertaining experiences for our customers. + Shaping + the game: +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202326 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_29.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..e66b60a44d0fe0d1c1a92254976f5b56bd229a4e --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,79 @@ +Our award-winning in-house gaming +studios have continued to go from +strength to strength in powering our +brands globally and providing our +customers with exclusive gaming +experiences. From branded BetMGM +slots, to exclusive first-of-their-kind +non-traditional tap games, our in–house +team has now delivered over 300 titles +to our retail and digital brands. +Demonstrating that our customers love +our products, one of our original 2023 +games, Pig Banker, saw over double +the revenue of an average in-house +new game within 60 days of launch. +Pig Banker was so popular with our +customers, that it trotted to the top 3 +games worldwide, including number 1 in +the UK, Brazilian, and Canadian markets. +And to top things off, the follow up +release, “Pig Banker: Three Little Piggies” +proved to be an immediate player hit by +taking the top spot for spins per player to +date after its first day of release. +Our in-house gaming team also had +cause for celebration in 2023, launching +the first in-house non-traditional Tap +game “Pot O’ Fortune: Golden Tap”, which +reached the top spot for GGR for game +release of its type when compared to third +party releases. +In-house gaming at Entain ++26% +2023 In House Studios GGR +increased by 26% vs 2022 +(Non US markets based on +all live products across all +3 studios) ++28% +Active players on in-house +games across non US +markets increased by 28% +vs 2022 ++18% +Average spins per active +also increased by 18% vs +2022 showing players are +engaging more with our +in-house products +14 +In-house studios saw GGR +growth across 14 European +and Ontario Markets +vs 2022 +33 +new in-house games +launched in the US 2023 +The milestones +reached and quality +delivered this year +are a testament +to the unrivalled +creativity and hard- +work of our people +in our in-house +game studios. +We’re proud of the +way we develop, +construct, and bring +to life the exclusive +gaming experience +for our customers +across our brands.” +Ciara Nic Liam +Gaming Director +Continued on next page +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +27Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_3.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..78bdaac8c239ecc35542d3b09298fc35ae139346 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,10 @@ +At Entain, we’re on a +mission to provide our +customers around the +world with the most +entertaining experiences, +supported by market +leading player protection +across betting & gaming. +Entain plc Annual Report 2023 01Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_30.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..dcb21e4c106bc1681b57463f927ada42b21929ce --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,21 @@ +When it comes to in-house technology +at Entain, our trading team are right +at the heart of it. Our in-house trading +platform is powered by our own propriety +technology, which turns millions of +real-time data points into odds for our +customers. Every kick, goal, overtake and +point scored is integrated from multiple +data feeds and turned into a betting +opportunity for players worldwide. +What makes our in-house tech so +fundamental to our transformation is the +strength of its core. With it, we’re set up +to be able to tweak, adapt and localise +the peripherals of our platform to suit the +needs of our players, all over the world. +The technology that powers our in-house +trading platform +28 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #4 is a "bed". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_31.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..053a983672b047e320dd15dea02492494f2108af --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,33 @@ +Betstation brings a market +leading digital experience +to our players which is a cut +above the rest.” +Introducing Angstrom: +next generation sports +betting +Our Retail technology +-Major milestones hit +for our digital in-shop +experience +Last October, we completed the acquisition of the newest +member of the Entain Group, Angstrom. Angstrom Sports’ +unrivalled sports modelling, forecasting and data analytics +provision simulates predictive modelling, in order to create +highly sophisticated pricing and forecasting capabilities. +In short, it will be a game changer for our in-house trading +technology. Angstrom will enable BetMGM to provide endless +moments of excitement for fans in the US, with the most +accurate lines in the industry. The acquisition secures Entain as +the only global operator which will have a full in-house suite of +end-to-end analytics, risk and pricing capabilities for US Sports +betting products. +We hit a milestone moment last November, as Group BetStation +went live in our 1000th shop in the UK & Ireland Retail Estate. +Launching in over very first shop in November 2020, Group +BetStation brings a market leading digital experience to our +players that’s a cut above the rest. Our in-house developed +software gives customers the freedom to place their bets in +store, access to more racing markets than ever before and the +power to place in-play bets on sports around the world. +29Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_32.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae1de6702a7248d10fb82f1095d951f2334bc91e --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,39 @@ +With over 30 brands, across 40 markets, we’re able to provide +entertaining experiences to customers all over the world. But it’s +not just through our core product offering that our customers +engage with us. At Entain, we go beyond the game to enhance +the sports betting and gaming experience for our players – +beyond a bet, scroll or tap. +Over the last year, Coral has taken its +customers closer to the action than +ever before following the launch of the +free-to-join Coral Racing Club. The club +provides a unique opportunity for racing +fans to experience what it is like to be +a racehorse owner through unmissable +content, priceless opportunities, exclusive +offers and much more. +Now over 160,000 members strong, the +Club’s first year was a roaring success. +It has created thousands of unforgettable +memories with its stable of 10 racehorses, +including over 1,000 raceday tickets won +by members, 37 unique ‘owner for the +day’ experiences created and in excess of +£40,000 being shared in prize money. +For many years Coral has demonstrated a deep +passion for, and commitment to, British Racing, +but over the last year we have significantly +expanded our sponsorship portfolio to become +the leading bookmaker sponsor in the UK. +And now, with the Coral Racing Club, Coral +is doing more than any betting operator has +done before to grow the appeal of racing and +promote the sport.” +Simon Clare +Director of PR +Continued on next page +A year of Coral Racing Club +Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202330 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_33.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..5b6e8139eb607c1ccaea6882de17d79831f6af47 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,7 @@ +Beyond + the game: +customer + experiences +1 Overview 8 Strategic report 88 Governance 140 Financial statements +31Entain plc Annual Report 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_34.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..8685bac73a949afcb15b7e6d02f02f355a2fa629 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,90 @@ +Elevating the social betting +experience with STS and Eurobet +STS’s new brand campaign, Kocham +Sport Gram Mądrze (Love Sports, Play +Smart), has been taking shape over +the last few months in the form of a +new ecosystem designed to inspire +customers. It incorporates a new smart +feature that redefines the social betting +experience and empowers customers. +BetMGM ‘pucker up’ and get +their skates on with NHL +partnership extension +Eurobet’s ReadyBet +Empowered by a seamless digital +experience across various devices, +Eurobet’s Readybet effortlessly +creates pre-filled betslips. Eurobet’s +Readybets, generated weekly through +inputs from retail shop managers, +the trading room, marketing teams, +and even digital and retail customers, +entices users to engage in a diversified +betting experience. Offering a curated +selection of “wise” picks from reputable +and successful sources, the Readybet +platform fosters a sense of community +by turning customers and betting shops +into interactive “tipsters.” Enhanced with +dedicated promotions and challenges, +this approach bridges the gap between +conventional sports betting and a social +experience, creating a vibrant marketplace +accumulator bets. +Last year, our joint venture BetMGM +continued to offer fans unforgettable +entertainment built around the game they +love, with a multi-year extension of their +partnership with the National Hockey +League (NHL ®). +‘Players Bet’ is built +around the trusted +community of STS +players who draw +inspiration from each +other’s bets, including +bets shared by the +best players with a +proven track record +of effectiveness. +Over 2 million bets +have been copied in +2023 indicating that +players actively seek +bets from trusted +sources. The fact that +51% of copied bets +are turning into real +bets, shows the +significant potential +of this feature and +the power dormant +in the community. +Through team-branded casino games, +including the word’s first NHL-endorsed +slot game, Gold Blitz, VIP fan experiences, +and sponsored branding in national +broadcasts, players will experience the +NHL beyond the rink. NHL Gold Blitz +features the NHL Gold Blitz Instant Cash +Collection, Wild Multiplier Free Spins, and +jackpot prizes, as well featuring all 32 NHL +teams and the league’s iconic shield. It’s +through these exciting activations that +BetMGM will continue to deliver new ways +for Ice Hockey fans to engage with the +sport they love. +Gracze Typują (Players Predict) is a unique +space on the STS site that allows players +to copy bets shared by other players, check +out success rates of other betters, duplicate +their bets and chat with each other on +a forum fostering a sense of community +amongst customers. +STS is the only operator in Poland offering +this free, community-driven feature, +reinforcing our commitment to a smart and +socially connected betting future. +32 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_35.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..8fed0928126673d1a665dad53ca3d94dd2f527a6 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,82 @@ +Bwin fulfilling football fans wildest +dreams on Europe´s big stage +The launch of +Ladbrokes Live +Last year we embarked on an exciting +new era for Ladbrokes, connecting +thousands of fans with free events +through the Ladbrokes LIVE platform. In +The O2, AEG Presents, and NME, we’re +working with three of the biggest and +most iconic brands in the entertainment +industry and this means we will be +able to reward our audiences with the +chance to attend some of the most +exciting live shows in Britain for free.” +Kelly Rose +Head of Brand for Ladbrokes +This year, our UK brand Ladbrokes +furthered its ambition to provide +customers with excitement beyond +its sportsbook, with the launch of +Ladbrokes LIVE. LIVE is a digital +entertainment platform that rewards +thousands of fans with free access to +the UK’s best live music, comedy and +sports events, powered by exciting +new strategic and ground-breaking +partnerships with The O2, AEG +Presents, NME and many more. +The unique collaboration between +Ladbrokes and NME has also seen the +return of the iconic Club NME nights with +a series of dates across the UK featuring +incredible headline talent and unmissable +DJ sets. Fans have been able to win free +access to Club NME nights through the +Ladbrokes LIVE platform. +With over 135,000 plays and hundreds of +tickets already won in 2023, we are giving +reasons for consumers to engage with us +again and again in, everyday play. +Besides bringing pure entertainment and joy to the football fans and +uniting players from across Europe, bwin and other Entain brands were +able to generate unrivalled brand presence across the continent during +the 22/23 season, with branding visible at 80% of all matches across +56 countries; 20% of this being Responsible Gambling messaging. +Being the official betting sponsor for both competitions this year again, +we’ll be there for every shot, pass and tackle to make the third season +an even better one for our customers.” Gemma Bell, Head of Sponsorship +For the past two seasons (21/22 & 22/23) +bwin has delivered the ultimate football +experience by giving fans the opportunity +to play in ‘the bwin Fans Final’ in the +UEFA Europa League Final Stadium. +2023 saw the fans play in the Puskás +Arena, the day after the UEFA Europa +League Final in Budapest. +Thanks to our official partnership with the +UEFA Europa League and UEFA Europa +Conference League, bwin laid out the red +carpet in Budapest for 40 customers who +witnessed the UEFA Europa League epic +between Roma and Sevilla unfold, before +taking to the turf of the Puskas Arena the +next day. Customers were treated to pre- +match training sessions, personalised kits +and the opportunity to lift a customised +trophy just like the Sevilla players did a +few hours prior. Joined by legends Esteban +Cambiasso and Luis García, the bwin +Fans Final saw dreams brought to life +for our players. An intimate lunch with +the ambassadors and the nomination +of the Player of the Match rounded the +experience into an unforgettable event +with one of the winners stating: “These +days I will never forget, the memories +will live with me forever. It was the best +football trip ever, a dream came true, what +a privilege to have been part of it.” +33Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_36.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..104941043d67846fe643da6aa15460603717fc48 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,8 @@ +Championing +the game: +Advertising +34 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202334 +The secret object #3 is a "knife". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_37.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..38ebab343084f728ceaaeb59617fd66b244bb41a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,29 @@ +All of our brands have their own unique identity – from the striking blue of Coral to +the playful orange of Foxy Bingo. It’s our heritage and brand recognition that has +built up such trust with our customers, and it’s through this trust that we’ve been +able to push boundaries with iconic advertising, activations and campaigns. +Last year saw Foxy Bingo’s ‘Get Your +Fox On’ ATL campaign level-up with +two world-first’s: Dirtie Gertie’s Mullet +Salon and The Celebrity Swap Shop. +Continued on next page +Opened by Geordie Queen, Vicky +Pattison, Dirtie Gertie’s Mullet-only Salon +in Newcastle offered consumers free +mullet haircuts, foxy nails and games of +musical bingo. The city lit up with fleets +of pedicabs and iconic parts of the centre +were turned purple and orange with +incredible out-of-house advertisement, +with over 2 million impacts. In total, the +campaign gained a 1.1 billion reach via +media coverage, gave 94 dodgy haircuts +and engaged whole new community of +Foxy fans. +Get Your Fox On with +Foxy’s Celebrity Swap +Shop & Mullet Salon +35Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +1 Overview 8 Strategic report 88 Governance 140 Financial statements +35Entain plc Annual Report 2023 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_38.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..ceea5f42107e01b9441a1a254a98a6fc30cb4cd6 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,62 @@ +Gala’s Jolly Good +Fish and Chip hotel +Eurobet.Live with +Luca Toni +Gala Bingo continued to build community spirit amongst +players this year, with the world’s first ‘Fish and Chip Hotel’ +in Blackpool. Inspired by consumer research, insights and the +iconic bingo call 33, Gala’s ‘The Jolly Good Fish & Chip Hotel’ +gave British seaside goers the chance to enter Gala Land and +receive a complimentary serving of fish, chips and peas, as well +as games of bingo. +The activation built on Gala’s ‘Where A Little Joy Goes A Long +Way’ campaign and encouraged players to find the little joys in life +last summer With over 800 consumers attending the prototype +hotel and 314 million people reached via earned social media +coverage, it’s safe to say customers experienced the brand in a +whole new way, combining the classic charm of the Great British +seaside with the wonder and joy of Gala Land. +Eurobet.live elevated the football experience for fans across +Italy through an exciting TV campaign featuring World Cup +winner, Luca Toni, as it’s presenter. The campaign seamlessly +integrated the excitement of live scoring with the thrill of +the matches themselves, providing viewers with real-time +updates, insights and analysis, detailed statistics and +engaging multimedia content. +Eurobet.live not only celebrated the passion and excitement +of football, but also underlined its commitment to providing +fans with a comprehensive and immersive platform to stay +connected to the game they love. Eurobet.Live has also +strengthened it’s connection with fans, through prestigious +partnerships with several Serie A teams, including the iconic +Juventus as well as a partnership with the entire Serie C league. +These strategic alliances +served as a powerful bond +between the Eurobet.live +brand and football fans +on the ground, solidifying +its position as the premier +platform for live scoring, +results, and multimedia +content in Italy.” +Alexis Grigoriadis +Marketing Director, Italy +Get Your Fox On with Foxy’s Celebrity +Swap Shop & Mullet Salon continued +In the wake of Foxy’s new laundrette +theme ads, the team brought the screen +to life up north with The Celebrity Swap +Shop: a two-day pop up affair in Hull, +where locals swapped drab for fab +and get their hands on a celebrity item. +17 celebrities donated items to the +laundrette, and in total, 23 bags of clothes +were donated to charity. Foxy consumers +took to the laundrette to experience +the brand’s new and engaging identity +and with free Bingo sessions on site. +The brand saw a 17% increase in betting +players from the activation. +36 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret tool is a "saw". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_39.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1e0db133568de8d018b5cae8e853af552b22360 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,108 @@ +Last December, the F1 circus rolled +into Las Vegas for the inaugural GP, +and our joint venture, BetMGM, left +no stone unturned in making their +presence known with customers over +the weekend. +From exclusive grandstand hospitality to +the excitement of experiencing incredible +entertainment within touching distance +of the track in their retail shops, BetMGM +bolstered the anticipation of placing bets +on the race with awesome experiences +throughout the GP weekend. The team +also pulled off some incredible activations +with McLaren Racing; from BetMGM’s +logo being centre stage on the car to +a series of marquee and On-property +digital placements, BetMGM certainly +gave F1 superfans an experience to +never forget. +The spectacle received 3X the number +of bets compared to any other F1 event +in the company’s history. The Las Vegas +GP certainly shattered records for the +King of Sportsbooks. +TAB activation on Auckland’s +Sky Tower for the TAB +Karaka Millions +The TAB Karaka Millions brings together the +best horses sold at the New Zealand Bloodstock +yearling for two separate races, as well as an +open-entry race called the Elsdon Park Aotearoa +Classic. This year, TAB became the naming rights +sponsor for the meeting, and with three $1m +races on the six-race card for the first time ever, +TAB wanted to do something different to attract +attention of customers. +A few days before the meeting, Entain Australia +and NZ took over the second tallest freestanding +structure in the southern hemisphere, Auckland’s Sky +Tower, and projected the barrier draw for the three +main races onto it. Watched on by trainers, owners +and horse racing fanatics, the incredible display +revealing which horse starts where, set the scene for +a weekend that ended up smashing records for TAB’s +horse racing history. +The six-race meeting saw a 26.6% increase in +turnover compared to the highest wagered meeting +on record (of which had over double the number of +races) and a 33% increase in the number of customers +betting compared to 2023. Better yet, the final race +of the day set a record for the most wagered race in +New Zealand, with Year-on year-turnover for the TAB +Karaka Millions up 66%. +BetMGM win Las Vegas for Super Bowl week +Known for its massive audiences, thrilling action, much-anticipated commercials, +and halftime extravaganza, the Super Bowl was a big day for BetMGM, where we +saw a 30% uplift in activity across the U.S. alone. Super Bowl in Las Vegas was a +huge opportunity for BetMGM to be at the centre of the action, having the world’s +biggest stage literally footsteps away from several BetMGM retail sportsbooks. +To maximize this opportunity, Entain +launched its new Nevada app with access +to BetMGM’s full sportsbook offering, +weeks before the Super Bowl, giving the +best BetMGM experience to the NFL fans in +Nevada for this landmark event. +Then, BetMGM set out to do what so +many other brands struggle to do in this +domain, carve out a memorable Big Game +commercial that perfectly complements and +establishes a connection with the brand. +In a company-first, the team launched +its three-part campaign which featured +the never-before-seen pairing of sports +legends, Tom Brady and Wayne Gretzky, +along with actor Vince Vaughn, marking an +iconic moment for BetMGM. +The BetMGM team didn’t stop there. +In addition to the advertisement, BetMGM +executed a multi-faceted approach to +“Win Las Vegas” for Super Bowl week. +Alongside extraordinary VIP experiences +with celebrity ambassadors, BetMGM +painted Las Vegas gold and black with +a variety of outdoor, indoor, digital and +special advertising campaigns that +greeted fans from the moment they get off +the plane. +Marking another first, BetMGM partnered +with X in a one-of-a-kind collaboration to +become the official betting sponsor of the +platform, starting with the Super Bowl and +continuing through 2025. +Regardless of who was the Super Bowl +champion, BetMGM came out a winner. +The new platform was able to handle +a 30% uplift in activity over the Super +Bowl weekend and a 72% increase in +customers from the 2023 Big Game, thanks +to the incredible efforts and collaboration +between the Entain, BetMGM and +MGM teams. +Smashing +records under +the neon lights of +Las Vegas strip +37Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_4.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..34a2edaf9cc87ff1f4f007a6062cf063921d085b --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,105 @@ +We are Entain +Betting and gaming is in our DNA. It’s the purple +thread that drives our evolution, our people, and our +purpose. We’re the brands our players hold in their +hands – and heart. +Our values +This year, we powered up our people +with a new set of values and behaviours. +These new values form the cornerstones +of our culture, unlock the highest +performance of our teams and lay the +foundations for creating incredible +experiences for our customers. +Our new values mean we’re all looking +towards the same future. At Entain, we: + + Do What’s Right +We put our customers first and +play a leading part in protecting +our players. We are creating a +work environment where everyone +can be themselves, and act with +integrity all the time. To do what’s +right we must keep ourselves +honest so our people should never +be afraid to speak out if something +feels wrong. + + Keep it Simple +We make things easy for our +customers by focusing on them +and their needs. We’re clear on our +goals and who’s accountable for +what, so we all know what success +looks like. We remove complexity +wherever we find it, because we all +perform better that way. + + Go Beyond +We stay curious. We need to +learn from our successes AND +from setbacks to push forward. +We surround ourselves with the +best people and we put in the +effort needed to turn ambitions +into reality. We embrace +change because that’s when +progress happens. + + Win Together +We have a shared vision for Entain. +We collaborate, break down +barriers and share ideas for the +greater good. We never forget +that we’re on the same side, so we +treat everyone the way we want +to be treated. We’re inspired by +our teammates. We celebrate their +success, because when they win, +we all win together. +We only operate in regulated or regulating +betting and gaming markets, which means +we’re focused on delivering a secure and +trusted betting and gaming business for +our stakeholders. Now, we operate in over +30 markets, with leadership positions in +the five largest regulated markets and +two fastest growing – US and Brazil. And, +through our global scale and household +names, we’re focused on leveraging our +skills, talent and capabilities to elevate +our technology and data insights to create +products and experiences like no other. +Entain, today. +Global & +Diversified +portfolio +Leadership +positions +Customer +Focused +High Quality +Revenue & +Growth +Largest +sports betting +& gaming +platform +Leading +Responsible +Operator +130+ +130 licences across +>40 territories +40 +Territories +worldwide +42 +Currencies +accepted +33 +Languages +offered +02 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_40.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1d4601a1c89c89509b53ddece5fc3d2511a1870 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,82 @@ +Regulatory +update +Unlike slots and poker, casino table games +are regulated on a state-by-state basis. +The states may either create a monopoly +or issue as many licences as the state has +land-based casinos. By the end of 2023, +only the states of Schleswig-Holstein and +North Rhine- Westphalia had opted for a +licensing system. To date, only Schleswig- +Holstein has released the tendering +process, but the group has opted not to +apply for a licence for commercial reasons. +In North Rhine-Westphalia, details on the +tendering process were expected to be +published in 2023 but due to various delays, +the details are now expected in Q1 2024. +Entain looks forward to participating in +this process. + Germany +The Joint Gambling Authority (“GGL”) has +now been operational in Germany for over +a year. Encouragingly, the GGL has been +more proactive in issuing sanctions against +unlicensed operators, but we still see room +for improvement and intensification. We are +continuously working with the regulator +and state governments to push for more +effective enforcement against illegal +operators and in 2023 worked jointly with +the University of Leipzig and the local online +casino association to produce a study +investigating the scale of the issue. +While the Group was granted three slots +and two poker licences in November 2022 +and the Group´s sports betting licences +were also extended for another 5 years in late +2022, the restrictive environment in Germany +continues to prove challenging. The process +for managing playing limits for slots, poker +and sports betting remains one of the most +pertinent regulatory challenges for licensed +operators. There is also mounting political +pressure for stricter sports betting advertising +restrictions, while the first evaluation of the +Interstate Treaty is set to be published soon. + The UK +The UK Government published its White +Paper of the 2005 Gambling Act Review +in April 2023. As expected, this document +included consultations on a number of +areas, including online slots staking limits; +financial vulnerability checks; a mandatory +levy for research, education and treatment; +additional requirements on game design +and direct marketing as well as the creation +of an Ombudsman. We continue to engage +government actively in this process, both +directly and via our trade body. We have +continued to develop and enhance our +Advanced Responsibility and Care™ +(“ARC™”) programme, which offers tailored +identification of customers who may be at +risk, as well as targeted interventions and +interactions. Whilst many of the changes +within the White Paper can be achieved via +secondary legislation, we are collaborating +with the other major operators to voluntarily +progress initiatives such as a single +view of the customer and the creation of +an Ombudsman. +Gaming is a truly global market and in 2023 the Group held licences in over +30 jurisdictions across the world. The Group is committed to only operating in +regulated or regulating markets and as from February 2023, 100% of the Group’s +revenue is from such markets. The Group firmly believes that strong, commercially +viable regulation of the betting and gaming sector is in everyone’s interests. It +provides stability for operators, important taxation streams for governments +and – most importantly – provides the consumer with proper protections and +safeguards by ensuring that only responsible providers operate in the market. +38 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_41.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..ffe4c0fec1b990c43f93881d1b65c5c82574fa8c --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,159 @@ + Africa +In late 2023, Entain decided to withdraw +from the regulated markets of Zambia and +Kenya but the Group remains committed to +expanding its significant regulated offering +in South Africa, where it has been present +for a number of years. + US +The sports betting regulatory activity +continues at pace in the United States. +Kentucky, North Carolina and Vermont are +amongst the US states that have regulated +in 2023. Rhode Island has been added +to the list of US iGaming states. Finally, +additional states have adopted, or are in +the process of adopting, modernised forms +of responsible gambling regulation; a trend +Entain welcomes with an eye on the long- +term sustainability of the US market. +Bearing in mind that over 35 US states +have already allowed for sports betting in +one form or another, the Group remains of +the view that in the coming years some 40 +or even 45 US states will have regulated +sports-betting, which will provide BetMGM +with even broader market access across +the country. The number of states that +permit online casino is also expected to +grow in the years to come – for example the +state of New York as already announced +its intention to attempt iGaming regulation +in 2024. + LATAM +In Latin America, Brazil adopted a law +that allows for domestic licensing of sports +betting and online casino in late 2023. +The law will be implanted throughout +the first half of 2024, with the regulated +market expected to launch at some point +in Q3 2024.The regulation will extend to +all online gambling verticals, including +sports betting and gaming, and will allow +for an open licensing system subject to +payment of betting and other taxes and +fees. Furthermore, the Group has launched +licensed operations in Mexico under its +bwin brand. +There was better news in France where +we have seen nascent discussions +about the possible legalisation of online +casino, while in Croatia the Government +completed a regulatory review and is now +looking to bolster its efforts to tackle the +illegal market. +At the end of 2023, Entain only operated in +two markets in Europe where it is not yet +locally regulated. Despite our best efforts +in Austria , there have been no changes to +the status quo and the Government has +no imminent plans to initiate the reforms it +announced in March 2021. Nevertheless, +we will continue to push for regulatory +reforms. Encouragingly, in Finland the +Government has officially begun the +process of dismantling the monopoly in +favour of a licensing system that we expect +to come into force sometime in 2026. + Australia +A parliamentary inquiry issued a report +in 2023 calling for a ban on gambling +advertising as part of a 31-point plan to +reform the Australian gambling market. +It also proposed various other measures +including the establishment of a single +national regulator and a formal duty of +care. We expect the Government to come +forward with its response to the report and +proposed next steps in the first half of 2024. +Elsewhere, the National Self-Exclusion +Register BetStop launched in August, while +a ban on credit card betting was adopted in +December 2023 and will come into effect in +mid-2024. + Canada +The Ontario online betting and gaming +market became regulated on 4 April 2022, +thereby becoming the first Canadian +Province to issue domestic licenses for +private operators. Entain operates in +Ontario through its bwin and Party brands +as well as Sports Interaction, a Canadian +brand the Group acquired in February 2022. +Going forward, other Canadian Provinces +such as Alberta and British Colombia are +expected to introduce regulation. + Other Europe +In 2023, wide-reaching advertising +restrictions were introduced in Belgium , +while a pending parliamentary bill and a +draft Royal Decree could impose further +restrictions on local operators in 2024. +Fortunately, the sector was successful +in blocking a proposal to introduce an +additional 5% tax which would have had a +detrimental impact on licenced operators +and encouraged customers to move to +black market operators and therefore +reduce player protections. +In the Netherlands , Entain completed +the acquisition of BetCity in January +2023. National elections took place in +November and we await the formation of +a new coalition government which could +lead to change in direction for gambling +policy. We are also expecting the Dutch +authorities to come forward with new +proposals on playing limits, AML and +duty of care requirements which are likely +to come into effect in 2024 and impose +stricter compliance requirements on +operators . The headline gambling tax rate +also increased by 1% to 30.5% from 1st +January 2024. +In Italy, the Government published a +new framework law in 2023 laying the +foundations for potentially wide-reaching +sectoral reforms to be enacted in 2024 +and beyond, including an overhaul of the +current gambling licence tender procedure +which will increase licensing costs and +impose stricter regulatory requirements on +operators. In Spain , the government has +moved oversight of gambling to a newly- +formed Ministry, while plans to introduce a +system of cross-operator limits remain on +the medium-term agenda. In Ireland we are +still awaiting the enactment of the pending +Gambling Regulation Bill that will introduce +a formal regulatory and licensing regime for +online gambling. In Denmark a draft law +has been published to amend the Gaming +Act, including the introduction of a B2B +licence regime to take effect from 2025. +In 2023, we have seen tax increases +announced in several of the markets where +we operate. The Prime Minister of Georgia +announced plans to increase taxes for +online gaming from 10% to 15% GGR, and +player winnings withholding taxes from +2% to 5%, effective from 1 January 2024. +The Swedish government has announced +its intention to increase the rate of gaming +tax from 18% to 22% with effect from 1 July +2024, while the Latvian Government plans +to increase online gambling tax from 10% to +12% GGR from January 2024. +39Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Regulatory update \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_42.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..b63ee97441c0323ccf3cbd2d808caefe47202c9a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,67 @@ +At Entain, sustainability is a key enabler of our corporate strategy. +We firmly believe that the most sustainable operators will be the +most successful in our industry. +2023 was a pivotal year for sustainability +at Entain as we unveiled our new +Sustainability Strategy, building on our +longstanding commitment to sustainability +and taking it to the next level. +With this new Strategy, we wanted to +strengthen our sustainability leadership +position as well as listen to our stakeholders +and respond to the changing Environmental, +Social, and Governance (“ESG”) landscape. +We conducted a double materiality +assessment to help us understand our +unique sustainability-related risks and +opportunities, as well as our impacts on +society and the environment. We conducted +surveys and interviews, analysed industry +reports, and held leadership workshops, +gathering input from over 250 internal +and external stakeholders from around +our business, to understand how we can +ensure we are supporting value creation to +all stakeholders. +These insights helped us develop a +strategic framework that will focus our +sustainability actions in the coming years. +Our new approach, which is presented on +the next page, is structured across four +pillars that encapsulate those ESG issues +that are most important to Entain, our +customers, investors, and partners: + Be a leader in player protection + Provide a secure and trusted platform + Create the environment for everyone to +do their best work + Positively impact our communities +As we reflect on 2023, we are proud to +report extensive progress across each of +these strategic pillars. We invite you to +discover our achievements on the following +pages, which include: + Rolling out our player protection +programme ARC TM in our digital offer +to cover 27 jurisdictions and launching +ARCTM for retail in the UK and the +Republic of Ireland. + 100% of our revenues coming from +regulated or regulating markets since +February 2023. + Winning Innovator of the Year at the +Women in Gaming Diversity Awards +for our Returnship programme with +McLaren Racing. + Partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings, and onboarding 35% of in-scope +vendors and supporting them to improve +their sustainability performance. +Looking at 2024, we will remain sharply +focused on delivering our new strategy and +reaffirming the sustainability leadership +role that underpins our long-term growth. +Sustainability at Entain +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202340 \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_43.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..5578fe4868be8f1c0f1f593c49b9d13329b3d226 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,130 @@ +Entain’s Sustainability Strategy +At Entain, we see sustainability as a key enabler of our corporate strategy and growth. We embrace our role within society with the +strongly held belief that the most sustainable business in our industry will be the most successful. +This is reflected in our new Sustainability Strategy. We have structured it across four pillars that carefully encapsulate those sustainability +issues that are most important to Entain, our customers, investors, and partners. For each pillar, we have identified key focus areas and +assigned Board-level oversight, summarised below. +You can read more details about how we developed the strategy using the results of our 2023 double materiality exercise here . +What it means Aligned material clusters Focus areas Oversight +Be a leader in player +protection +We provide industry- +leading customer +protection through +innovative features, +customer support, +communications and +our culture. +S afer betting and gaming +E thical & +compliant behaviour + Innovation + Industry-leading +ta +ilored customer +protection tools +and processes +E mpower our people +to support and protect +our customers +H arm prevention +through education +and responsible +communications +Pr omote research +and share evidence- +based learnings with +the industry +Sustainability +& Compliance +Committee +Provide a secure and +trusted platform +We lead on integrity in +everything that we do. +From having the highest +ethical standards, +to only operating in +regulated markets, with +an aim of gold standard +data protection, +and cybersecurity. +E thical & compliant +behaviour +D ata privacy +and cybersecurity + Corporate +G +overnance +O nly operate in +regulated markets +E thics and integrity +at the core of +our organisation +and culture + Provide in dustry- +leading cybersecurity, +data privacy and +AI governance +C lear and robust +governance processes +for each of our key +ESG areas +Sustainability +& Compliance +Committee +Create the environment +for everyone to do +their best work +We are an employer of +choice, and we build an +inclusive and supportive +culture where talents +from all backgrounds +can thrive. +D iversity, equity +and inclusion +H aving the +right people +A ttract, engage and +retain the best, most +diverse talent +Pr ovide the right +growth opportunities +for all +B uild a sense of +belonging for +all Entainers +People +& Governance +Committee +Positively impact +our communities +We play our role in +limiting global warming +to no more than +1.5°C and we create +a positive impact on +our communities. + Environmental +S +ustainability + Corporate +G +overnance +R educe our +environmental impact +C reating a sustainable +value chain + Promote g rassroots, +women’s and +disability sports +S upport communities +where we operate +Sustainability +& Compliance +Committee +Entain plc A +nnual Report 2023 41 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_44.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..b598fd0b116ebee3d83e5afa8e2c28b18d6f05f8 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,90 @@ +ESG Governance +Climate governance +Given the urgent need for action to address +the climate emergency, we have stepped +up our governance in this area. Our CEO +is now responsible for our approach to +climate change, and climate-related risks +and opportunities. In addition, we have +developed our Net Zero Action Group. +The Net Zero Action Group reports to +the ESG Steering Committee, which +is a selection of leaders from around +the business who are responsible for +delivering and developing an organisation- +wide approach to achieve our Net Zero +ambitions. You can read more about how +we manage our climate-related risks and +opportunities in our TCFD Statement on +pages 56 to 63. +Issue-specific Committees +In addition to the ESG Steering Group +and the Net Zero Action Group, we have +formed groups that report to the ESG +Steering Group that focus on delivering our +approach to specific ESG issues that require +additional expertise and insights from the +business. Steering groups include groups +focused on Anti-modern Slavery and +Human Rights, Safer Betting and Gaming, +Anti-Money Laundering, and Diversity & +Inclusion. +Board Committee Oversight +In May 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. +The newly created Sustainability and +Compliance Committee was created to take +on the bulk of the responsibilities of the +former ESG Committee. The Sustainability +and Compliance Committee has oversight +for safer betting and gaming, regulatory +compliance, anti-money laundering and +counter-terrorism financing, anti-bribery +& corruption, human rights (including our +approach to addressing modern slavery +risks), health and safety, environmental +impact (including the evolution of our +strategy and processes in response to the +Taskforce for Climate-related Financial +Disclosures), data protection and charitable +donations, including the work of the Group’s +Entain Foundation. Chaired by Virginia +McDowell, one of our Non-Executive +Directors, the Committee has three +members and guides the business on all +aspects of ESG strategy, sets targets and +monitors our performance. +The second newly created Committee, +the People and Governance Committee, +took on the responsibilities of the previous +Nomination Committee and added +responsibility for oversight of the Group’s +approach to Diversity, Equity and Inclusion +and other people-related functions +such as engagement and culture and +employee wellbeing. +The ESG Steering Group +The ESG Steering Group, which meets +monthly, consists of functional leaders +from across the business, including +Sustainability, Investor Relations, Human +Resources, Corporate Affairs, Legal, Health, +Safety & Security, Operations, People and +Communications. Convened by our Group +Head of Sustainability and chaired by our +Chief IR & Communications Officer, the +Group oversees the implementation of our +sustainability strategy. +Delivering our +Sustainability Strategy +starts with robust +governance. As our +ambitions grow, and +best practice evolves, +we continue to expand +our processes. ” +Entain plc Annual Report 202342 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_45.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..f46a3e50c4170b4b73557629f571c6db6e4034ab --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,65 @@ +Strategy Board +Delivery +Coordination +Oversight +ESG Steering Group +Operating Units and +Central Functions +Operational teams +People and Governance +Committee +People and Governance +Committee +Sustainability and Compliance +Committee +People and Governance +Committee +Anti-Money Laundering and +Counter-terrorism Financing +Anti-Bribery and Corruption +Health and Safety +Environmental Impact +Modern Slavery and +Human Rights +Privacy and Data Protection +Net Zero Action Group +Regulatory Compliance +Safer Betting and Gaming +Talent and capability +Diversity, Equality and Inclusion +Employee engagement +Employee well-being +Our performance across ESG Rating Agencies +We are proud to be a sector leader amongst many of the leading independent ESG rating providers. The below table summarises our +performance and improvement over time. We will continue to work tirelessly to further improve our ESG practices and performance, with +the aim of further improving the standards for our industry and in these external assessments. +Rating Evaluation +Score +(31 December 2023) +Score +(31 December 2022) +Industry +Rank +MSCI ESG Score AA 7.2 6.7 N/A +Sustainalytics ESG Risk Rating Low 19.6 +(a lower score +shows a +lower risk) +22.3 13/87 in the Casinos +& Gaming industry +ISS ESG ESG Score C 49 47 1st decile +S&P Global ESG Score S&P +Yearbook +and DJSI Europe +constituent +60 67 95th percentile +FTSE4Good ESG Score Inclusion +in +FTSE4Good Index +3.8<> 3.8 93rd percentile +CDP Climate Management B B N/A +ESG Governance Structure +Entain plc Annual Report 2023 43 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Sustainability +The secret object #2 is a "key". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_46.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..f66633e73ebdacf486635b731a267f58a73f7d8e --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,106 @@ +We provide best in class customer protection through innovative +features, customer support, communications and our culture +Material issues + Safer betting and gaming + Ethical and compliant behaviour + Innovation +Oversight +Sustainability & Compliance Committee +Advanced Responsibility and Care™ +(“ARCTM”): Our leading tailored customer +protection tool +Our recent materiality assessment found +that safer betting and gaming is our most +material ESG issue, and ARC™ is our +flagship initiative to protect our customers +– providing a technology-led approach to +player protection through real-time and +individually tailored detection, interaction +and interventions with players that are +potentially at risk. +Given its importance to Entain and our +customers, the roll-out and effectiveness of +ARC™ is linked to through our Group Bonus +Scheme, which includes our executive +team. The details of how we incentivise +the delivery of player protection is outlined +further in the Remuneration Report +on p131. +This year, ARC™ continued to mature in +the UK and expand globally. By the end of +2023, ARC™ is now live across our core +international markets (except Brazil). +Our safer betting and gaming programmes +in our retail estate in the Republic of Ireland +and the UK are also supported by ARC™. +This provides our customer facing retail +colleagues with data-driven insights to +help them spot and address risky play in +our shops. +We continue to monitor the effectiveness of +ARC™, the results of which are reviewed by +the Executive Committee and Sustainability +and Compliance Committee quarterly. +Empowering our people +We continue to deeply embed safer gaming +into the culture of our company. At the end +of 2023, 98% of our colleagues were up +to date with their mandatory annual safer +betting and gaming training. This training +provides all colleagues with the essential +understanding of our approach to, and +compliance requirements on, safer betting +and gaming. However, we also understand +that specific roles within our business have +key responsibilities for player protection. +Focus area 2023 Highlights +Best-in-class tailored customer +protection tools and processes + Rolled our ARC™ to cover 27 jurisdictions (2022: 22), including real-time models in +23 jurisdictions + ARC™ for retail now live across UK and ROI + 7.5 million ARC™ interactions (+98% YoY) to 742,112 unique customers +Empower our people to support +and protect our customers + 98% completion rate of annual compliance, safer gambling, and AML training + Enhanced safer gaming training, delivered by EPIC Risk Management, delivered +to all senior leaders +Harm prevention through education +and responsible communications + Expanded our stakeholder education and training in the US, through our partnership +with EPIC Risk Management and major leagues as well as players associations such +as the Major League Baseball, National Football League, League Soccer Players +Associations and the NHL Alumni Association + 20% of TV advertising space and football sponsorship dedicated to safer betting and +gaming communications or Foundation promotion +Promote research and share +evidence-based learnings + Final year of partnership with Harvard Medical School’s Cambridge Health Alliance +Division on Addiction (CHADA), contributing £5.5m over five years to cutting-edge +research into Safer Betting and Gaming + Contributed 1% of our GGY in the UK to Research, Education and Treatment (RET), +totalling £18.7m +Awards and accreditations: UK North America International +GamCare Advanced Safer +Gambling Standard + Online: Advanced +Level 2 (highest level) + Retail: Advanced Level 2 +EGR North America +Awards 2023: +Socially +Responsible Operator +SBC Global and +SBC LATAM Socially +Responsible Operator of +the Year +Vixio Global Regulatory +Awards: Award for +Outstanding Contribution +to Safer Gambling +Entain plc Annual Report 202344 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Be a leader +in Player +Protection +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_47.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..5718fd8f711d206bcf409e8e422ff99a3bc4d3bd --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,138 @@ +For these roles, we continue to roll out more +in-depth and specific training. For example, +our senior leadership periodically +undertakes in-depth training from EPIC +Risk Management. Customer-facing roles +who are responsible for engaging directly +with our customers also receive in-depth +training on identifying and interacting with +customers who may be at higher risk of +harmful play. +We are also leveraging our partnership +with Harvard Medical School’s Cambridge +Health Alliance Division on Addition +(“CHADA”) to support our training +programmes. Since 2019, 16 of our safer +betting and gaming training programmes +have been reviewed by the team at CHADA +– ensuring our training and culture reflect +the latest research. +Responsible marketing +Responsible marketing is a core part of +our commitment to promote responsible +attitudes, and protect children, young +persons and vulnerable individuals. +We have a long history of leading the +industry in this area, spearheading the +UK whistle-to-whistle advertising ban, +and being the first operator to ban shirt +sponsorship in UK football. +Our commitment to responsible advertising +and marketing is underpinned by our +recently refreshed External Marketing +Policy. This Policy outlines our responsible +marketing principles. All relevant staff +receive training on the policy. +We also work closely with trade +associations to strengthen best practice for +our industry’s marketing and advertising. +For example, we are a signatory of – and +contributor to – the European Betting +and Gaming Association’s (“EGBA”) Code +of Conduct. +Promoting research through +our partnership with Harvard +Medical School +2023 marked the final year of our five-year +research partnership with the Cambridge +Division on Addiction, which has now +produced 14 research papers since 2019. +The outcomes of this research have +been highly practical, underpinning our +26 markers of protection – the behavioural +patterns found to indicate signs of risk +that are used by ARC™. As this research +is published, or is in the process of +publication, this allows not just Entain but +the whole industry to access the latest +research. You can read more about this +research programme in our 2023 Social +Impact Report. +At Entain, we know that safer betting and gaming starts +with our culture. It’s important that all colleagues have the +knowledge and tools to fulfil our responsibility to protect +our customers. + Interactions excellence: Interaction +Excellence aims to promote insightful +and valuable discussions with teams +that deal with customers that are +potentially the most at risk. The training +focuses on strengthening soft skills +that colleagues will draw upon during +customer interactions. In 2023, this +training was reviewed by the Harvard +Medical School’s Division on Addiction, +Cambridge Health Alliance. +Moving forward we will also conduct +in-depth training with leaders from +around the business (aimed at our +senior leadership team and Board +Directors), to further integrate a culture +of player protection right at the top of +the organisation. This training will be run +by EPIC Global Solutions and refresh the +leadership training delivered in late 2022. +Embedding safer betting and +gaming into our culture +As part of the 2023 Group Annual Bonus +Plan, a mandatory training module +was implemented on compliance, safer +gambling and anti-money laundering, +achieving a 98% completion rate. Our goal +is to train all colleagues on the importance +of player protection, preventing money +laundering, and responsible marketing +– with retail colleagues receiving a more +tailored version of the content relevant to +their role. +We also know that some colleagues +have unique responsibilities for their +role – whether it be engaging directly +with customers, designing new products, +or leading teams or divisions. In 2023 +we worked with EPIC Global Solutions +to deliver in-depth masterclasses and +face-to-face-training on safer betting and +gaming tailored for specific, high-impact +roles. For example, our customer service +and retail colleagues took part in sessions +that equipped them with the skills to +1. Core countries are those that are using our core technology platform. ARC™ is embedded within this core technology, so in these countries we can use the full power of our +markers of protection and interactions. +2. Risk is determined based on our Long-term Excessive Play (LTEP) model, which is one of our three primary ARC™ Markers of Protection models, which scores every user of the +Entain Platform from 1 (low risk) to 100 (high risk) daily. LTEP is used for assessing risk due to identify underlying problem gambling behaviour over time. +identify signs of harm and effectively +interact with customers to advise on +our suite of tools that may be used to +help them. +Key modules focused on: + Introducing our retail teams to problem +gambling to help them understand how +gambling related harm can present +itself and ensure that they are aware +of how to protect our customers to +limit the negative impacts of gambling. +Between May and August 2023, 294 +colleagues attended the EPIC Safer +Gambling Awareness training. + Affordability Interactions: This training +provided our colleagues with guidance +on the key steps they should take to +ensure that customers are keeping +their betting affordable, and the +communication tools they can use to +encourage safer gambling and manage +hostile behaviour on the shop floor. +Entain plc Annual Report 2023 45 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Lead on player protection \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_48.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..8cf5b50e6e70557a6fd033899f4365662624b660 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,104 @@ +Ethics and integrity at the core +of our organisation and culture +We are committed to conducting +our business in line with the highest +ethical standards. We heavily invest in +governance, resources, and training to +combat corruption and keep financial +crimes out of gambling. +For Entain, this starts with playing an active +role in safeguarding the values and integrity +of sport. We want all sports events to be +fair and played to the best of participants’ +abilities. This is why we work closely with +regulators and sports governing bodies to +fight match-fixing, spot-fixing, and other +corrupt betting activity. We are a member +of the International Betting Integrity +Association (IBIA) and the Sports Betting +Integrity Forum (SBIF). +In 2023, we continued to reinforce our +Ethics & Compliance (“E&C”) function +with new team members and stronger +governance. We launched a new Ethics +& Compliance Charter which defines +clear accountability across the group and +ensures that our E&C team has the required +independence and authority to act as an +effective second line of defence. We also +launched a three-year E&C Strategy, which +sets our action plan for achieving a best-in- +class E&C programme. +Only operate in regulated markets +Entain firmly believes that strong, +commercially viable regulation of +the betting and gaming sector is in +everyone’s interests. It offers stability for +operators, important taxation streams +for governments and – most importantly +– provides the consumer with proper +protections and safeguards by ensuring +that only responsible providers operate in +the market. +Since February 2023, 100% of our group’s +revenue come from regulated or regulating +markets. As of 31 December 2023, we held +licences in 34 jurisdictions across the world. +We were also present in five regulating +markets where we can see a clear pathway +to regulation that will enable us to obtain +domestic licences in the next two years. +These regulating markets are Brazil, +Mexico, Peru, Austria and Finland. For more +about this, please refer to our regulatory +update on pages 38 to 39. +We appointed a Group Money Laundering +Reporting Officer and Global Head of Anti- +Financial Crime (“AFC”), and we expanded +our AFC team. After a period of growth +and multiple acquisitions, we revised our +organisational structure with all colleagues +with AFC responsibility reporting to the +central AFC Leadership Team. This new +governance framework gives us better +control and oversight across all our +entities, subsidiaries, and joint ventures. +We have also initiated an evaluation of +our international subsidiaries to assess the +maturity of local AFC programmes. This will +conclude in 2024 with on-site visits and +upskilling programmes tailored to the needs +of our colleagues. +We lead on integrity in everything that we do. From having the +highest ethical standards, to only operating in regulated markets, +with an aim of gold standard data protection, and cybersecurity +Material issues + Ethical & compliant behaviour + Data privacy and cybersecurity + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Only operate in regulated markets 100% of revenues from regulated or regulating markets since February 2023 +Ethics and integrity at the core +of our organisation and culture + New Ethics & Compliance Charter and Strategy + Average completion rate of 95% across Entain’s Big Four Compliance +Training Modules + Refreshed set of Entain Values, with “Do what’s right” at its core +Provide industry-leading +cybersecurity and data privacy + Growing headcount in Data Privacy and Cybersecurity teams, by 25% and 35% +respectively compared to 2022. + Average time to fix cybersecurity vulnerabilities decreased by 65% compared to 2022 + Over 80% of our operations audited and certified to ISO 27001 (by headcount) +Clear and robust governance processes +for each of our key ESG areas + New ESG governance structure with two board-level committees (Sustainability & +Compliance and People & Governance) +Awards and accreditations: ISO 27001 2022 Information Security Management System +Entain plc Annual Report 202346 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Provide a secure +and trusted +platform \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_49.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..714427fcecf3a3a68d400042945b454c1c855d92 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,111 @@ +Doing what’s right +Every colleague, including contractors +and agency staff, must complete four +compliance modules covering Entain’s +Code of Conduct as well as ethical topics +such as safer gambling, data privacy, or +bribery and corruption prevention. As part +of this, colleagues sign a declaration that +they have understood the training and will +comply with Entain’s Code of Conduct. +Our 2023 Group Bonus was linked to +achieving 85% completion for each +module – an ambitious but achievable +target given the turnover in certain parts +of our business. This year, we achieved an +average completion rate of 98% – up from +93% in 2022 and 82% in 2021. +Big Four Learning Modules +Completion +Rate +Code of Conduct 94% +Compliance, Safer Gambling, +and Anti-Money Laundering 98% +Data Privacy 98% +Cybersecurity 98% +Provide industry-leading cybersecurity +and data privacy +Safeguarding our corporate and customer +information remains a top priority for +Entain. Our commitment is reflected in the +growing headcount of our Data Privacy and +Cybersecurity teams, which respectively +increased by 25% and 35% in 2023. +In 2023, we continued building our data +privacy assurance function with dedicated +resources to monitor the effectiveness +of our privacy activities, keep risks under +review, and update policies and procedures. +We boosted privacy controls by introducing +Effectiveness and Maturity Reviews of +our most critical data processes. We also +reinforced our risk management process +with a new privacy risk register which feeds +into Entain’s Enterprise Risk Management +(“ERM”) risk maps and identified an +additional 20 privacy risks in 2023. +Throughout the year, we further embedded +Entain’s Artificial Intelligence (“AI”) and +Data Ethics Charter, which we launched +in 2021 to define our principles for the +responsible use of AI and data-driven +technologies. We collaborate across the +business to embed Privacy by Design, +building data privacy considerations +directly into the development of our +products and processes. We have also +been preparing for emerging legislation +around AI, such as the EU Artificial +Intelligence Act. Working closely with our +Data Sciences & AI (“DSAI”) colleagues, +the Privacy team created a blueprint for +Entain’s AI Governance Framework and +developed a new AI policy which will be +released in 2024. +As cybercrimes continue rising globally, +we are continuously improving our +cybersecurity programme to protect our +players from digital threats. In 2023, we +introduce new security features in our +products such as customer multi-factor +authentication. We also reinforced our +cyberattack detection processes by +deploying machine-learning and AI- +based systems which uncover patterns +of malicious activity and block attacks +before they can reach our customers. +We managed to decrease the average +time to fix cybersecurity vulnerabilities by +65% compared to 2022. +As part of our commitment to best +practice, we have re-certified for the +ISO 27001 certification, an international +standard for information security. As of +31 December 2023, 80% of our operations +have been audited and certified to +ISO 27001. In 2024, we will continue +expanding the scope of the certification to +our 2023 acquisitions. +Clear and robust governance +processes for each of our key +ESG areas +In April 2023, Entain restructured its +Board oversight of ESG issues to better +manage the increasing workload of the +prior ESG Committee and further embed +sustainability across the Group. This new +structure reflects the ever-growing +importance of ESG topics for the group. +You can read about our ESG governance +structure on page 43. +As a FTSE100 company, +we have a duty to do the +right thing. This also means +training our people to always +make the right decision +for our customers and +our communities. +Entain plc Annual Report 2023 47 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Provide a secure and +trusted platform \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_5.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c77d7a48e52ffbe26cffd50d8a746bcf3d95b4d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,78 @@ +30+ +Leading brands +Our commitment to sustainability +This year, we introduced our new +Sustainability strategy. A strategy that +makes a real positive impact in the +communities in which we work and +play, one that builds trust with wider +society, and ensures we are a leader in +player protection. +We’re continuously building on insights +and have refreshed our strategy +across four pillars that encapsulat the +sustainability issues that are most +important to Entain, our customers, +investors and partners: + Be a leader in player protection: Player +safety is a fundamental building block +of our business and we are proud to +play a leading role across our markets. + Provide a secure and trusted platform: +We lead on integrity in everything +that we do. From having the highest +ethical standards, to only operating +in regulated or regulating markets, to +having an aim of gold standard data +protection, and cybersecurity. + Create the environment for everyone +to do their best work: We attract a +broad and diverse audience from the +inside out. + Positively impact our communities: We +play our role in limiting global warming +to no more than 1.5°C and we create a +positive impact on our communities. +Read more about our sustainability +strategy and commitments in 2023 here. +Our commitment to the customer +1. Customers are the focus of everything +we do. +2. Our purpose is to provide them with +the most entertaining customer +experience supported by market- +leading player protection. +3. We will offer them exciting and +trusted sports betting and gaming +products and services. +4. Listen to and respond to +customer needs. +5. Using our technology platform, +we will continuously innovate to +introduce new products and create a +personalised and localised experience +for each of our customers. + Online 71% + Retail 29% + Other – +2023 NGR Split + Online 75% + Retail 25% + Other – +2023 Underlying EBITDA Split 1 +Online sports wagers +£13.7bn +-3% 2022: £14.1bn +Retail sports wagers +£4.3bn ++12% 2022: £3.9bn +Our commitment +to the game +Our divisions +1. New opportunities and Corporate +are excluded as they are negative. +Our leading brands +03Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +We are Entain +The secret vegetable is an "onion". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_50.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..c14569294c1cb4570811a1185d4d90e4093d5a70 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,139 @@ +Focus area 2023 Highlights +Attract, engage and retain the best, +most diverse talent + Launch of Black Professionals@Entain employee network + Publication of Entain’s first-ever Global Menopause Policy + Entain ranking 5 in the 2023 All-In-Diversity Project Index + Entain’s Returnship programme with McLaren Racing receiving accolades at the +Women in Gaming Diversity Awards and the Personnel Today Awards +Provide the right growth opportunities +for all + Launch of Your Goals, Entain’s new objective-setting programme +Build a sense of belonging for +all Entainers + Launch of refreshed values and behaviours + 94% of Entain Managers received mental health training through the Workplace of +Tomorrow programme + 400,000 employee interactions with Entain’s Well-Me events, activities, and content + 9.1% utilisation rate for our Employee Assistance programme +Awards and accreditations: + + +We attract a broad and diverse audience from the inside out. +We are an employer of choice, and we build an inclusive and +supportive culture where talents from all backgrounds can thrive +Material issues + Diversity, equity and inclusion + Having the right people +Oversight +People & Governance Committee +On International Women’s Day 2023, we +published our first-ever global menopause +policy. Our ambition was to help colleagues +understand menopause-related issues and +normalise talking about the symptoms. +The policy came with a global awareness +campaign and support for managers in +having conversations around menopause. +We built a virtual Menopause Hub with +resources and bite-size training for those +going through the menopause journey and +for managers and teammates wanting +information on how to best support women +in the workplace. +We are committed to positively impacting +diversity not just within Entain, but across our +industry. We partner with universities and +charities to improve female representation +within STEM careers. One example of this +is our partnership with Girls Who Code, +through which we have reached 10,680 +young women since 2021. You can read more +about our work to drive diversity in the tech +sector in our 2023 Social Impact Report. +In 2024, we will focus our efforts on further +embedding DE&I within our Resourcing +Strategy to increase representation in +our hiring process. Our new recruitment +and candidate management platform will +provide us with better DE&I data on our +Attract, engage and retain the best, +most diverse talent +Diversity, Equity and Inclusion (DE&I) are key +to Entain’s future sustainability and success. +Attracting and retaining key talent remains +one of our Principal Risks as a tech business +(see page 85), and workforce diversity +plays an essential role in innovating, driving +change, and delivering outstanding products +and services for our customers. +As part of our commitment to DE&I, we +understand the importance of global +employee networks in providing a safe space +for colleagues with a shared identity or +experience. Launched in 2022, the Women@ +Entain and Pride@Entain groups continue +to grow, with over 1200 and 250 members +respectively. In 2023, Women@Entain +piloted a new mentoring programme for +women in our Product & Technology team, +matching participants with senior mentors. +We also launched Black Professionals@ +Entain, a new network designed to create +a culture where black colleagues can thrive +professionally and personally. Led by our +network, we signed a UK partnership +10,000 Black Interns Foundation, and have +pledged to offer career opportunities to +Black students and graduates in the summer +of 2024. +Gender diversity at Entain +Group Board 33% +2023 3 out of 9 +(33%) +2022 +2021 +3 out of 9 +(33%) +4 out of 10 +(40%) +Senior managers 28% +221 out +of 794 +(28%) +194 out +of 752 +(27%) +128 out +of 364 +(26%) +2023 +2022 +2021 +All Employees 46% +13,645 out +of 29,576 +(46%) +13,479 out +of 28,940 +(47%) +11,583 out +of 25,554 +(45%) +2023 +2022 +2021 + Male Female +Personnel Today +Equity, Diversity & +Inclusion award +Women in Gaming +Diversity Awards Innovator +of the Year award +Entain plc Annual Report 202348 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Create the +environment for +everyone to do +their best +work \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_51.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..89f46a3e31e5bd823bad0949f97c29fba34bc6fb --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,160 @@ +candidates and recruits, allowing us to +tailor interventions and set group-wide +targets. We will also continue to remove +any barriers in the hiring process for +candidates and colleagues through the +design and launch of our new recruitment +platform in 2024. +Provide the right growth +opportunities for all +Our colleagues’ continuous personal and +professional growth is essential, and we +invest in targeted learning & development +(“L&D”) within our business units. +Programmes, courses, and self-led learning +are tailored to the needs of our teams +and individuals. +Entainers globally have access to best- +in-class learning resources, such as +LinkedIn Learning, Get Abstract, and +Pluralsight. These platforms enable our +colleagues to continuously develop their +skills – from marketing to Python coding or +public speaking. +In 2023, we focused our L&D efforts on +customer-facing roles, both in our global +Customer Services team and across our +Retail Estate. We know that customer +satisfaction starts with great leadership and +employees who feel supported and valued. +In our Customer Services team, we kicked +off Let’s Lead, a new leadership programme. +The seven-week curriculum includes a mix +of self-paced learning, in-person training, +and professional certifications delivered by +external providers. With over 20 modules, +the programme equips our managers +with all the technical knowledge and soft +skills they need to successfully lead their +teams. This includes completing a Mental +Health First Aider course, as part of Entain’s +commitment to wellbeing. 979 colleagues +have already completed the course, with 113 +learning sessions delivered and we will roll +it out to Hyderabad, India and Montevideo, +Uruguay in 2024. +In our retail business, we have built a +consistent foundation of competency +and knowledge among managers and +team leaders. The Enhance, Establish and +Elevate Your Game programmes support +colleagues at different points in their careers, +from preparing for a first management +role to sharpening their leadership skills. +In 2023, the programme trained over 2000 +colleagues. We are proud that many of +our retail management team started as +Customer Service Managers before growing +into senior roles. +Last year, we also worked to harmonise +the way our colleagues think about their +professional objectives. We launched Your +Goals, an objective-setting programme, to +ensure all our colleagues have meaningful +conversations with their managers about +their goals and understand how these align +with Entain’s strategy. In 2024, we will +develop Entain Leadership Expectations +which will be supported by a structured, +consistent, and global leadership pathway. +Build a sense of belonging for +all Entainers +Following an intensive period of business +growth, we wanted to bring our colleagues +together and consolidate our shared culture. +2023 saw us launching a refreshed set +of values and behaviours which build on +our core beliefs whilst helping us prepare +for the next phase of our evolution: Do +what’s right, Keep it simple, Go beyond, +and Win together. More than words on a +wall, these values act as guiding principles +for our colleagues across all locations and +at all levels. They have been embedded +in everything we do, from the way we +recognise our colleagues to how we set +individual objectives. +In line with these values, we remain +passionately committed to creating a +supportive and encouraging environment +where all our colleagues can thrive. +The Entain Well-Me strategy is designed +to help employees make positive changes +to improve their physical, mental, and +emotional health. Our 2022 global well- +being survey, which was completed by +9,600 colleagues, helped us identify +strategic priorities for the coming years. + In 2023, we rolled out Workplace of +Tomorrow, a mental health programme +designed to give people managers the +tools to support their teams and create a +culture of trust and psychological safety. +Developed by experts at Unmind, the +training equipped our managers to have +supportive conversations, giving them +practical knowledge on topics such as self- +care, stress and anxiety, or active listening. +94% of the Entain managers completed the +course last year. 74% of them taking action +with their team as a result. +Our 2023 global wellbeing campaigns were +tailored to boost the mental and physical +health of our colleagues. Our flagship +Live-Well Festival consisted of a week- +long event with expert-led workshops on +nutrition, sleep, and fitness, generating +65,000 engagements on our intranet. +In November, nearly 600 colleagues joined +Breaking Stereotypes Together, a live event +to champion men’s mental health and share +techniques for combatting stress. +Looking at 2024, we are using data from +our global wellbeing survey to pilot Entain’s +new resilience training, The Energy Edge. +The programme aims to help colleagues +grow their energy and performance through +a mix of text learning, bite-sized videos, +and interactive activities. We will open +the programme to our retail colleagues +in early 2024 before opening to our +global workforce. +In 2023, we partnered with the McLaren +F1 team on a Returnship programme, +providing unique opportunities for skilled +women to resume their STEM careers. +Over six months, 10 career returners +worked at both Entain and McLaren in +roles ranging from Data Analysts to +Software Developers. The placements +were tailored to their experience and +ambitions, and they received extensive +support to ensure a successful transition +back into work. We are delighted that, at +the end of the returnship, most returners +secured a role at Entain or McLaren. +The programme received two accolades, +including the Innovator of the Year at the +Women in Gaming Diversity Awards. +Driving Diversity Forward with +McLaren Racing +Companies like Entain can +reshape the world of work for +women, and we want to play +an active role in doing so. +Entain plc Annual Report 2023 49 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Create the environment +for everyone to do their +best work +The secret currency is a "pound". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_52.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..a8c5e7af17dd9be90d6dabdd21e3b7484731185d --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,36 @@ +We will be Net Zero by 2035, and support and positively impact +our communities around the globe +Material issues + Environmental sustainability + Corporate Governance +Oversight +Sustainability & Compliance Committee +Focus area 2023 Highlights +Reduce our +environmental impact + 70% global electricity from renewable sources, including over 99% in the UK through +green tariffs and a 5-year Power Purchase Agreement + 9% decrease in market-based Scope 1 & 2 emissions globally from the prior year + Near-term and Net Zero submitted to the Science Based Targets Initiative (SBTi), +pending verification +Create a sustainable +value chain + 35% of our in-scope third-party spend enrolled on the EcoVadis platform with +a detailed assessment of their sustainability performance +Promote grassroots, women’s and +disability sports + 250+ aspiring champions have received a financial award via SportsAid since 2019, +helping to cover the costs of training, equipment, and travel + 100 non-league football clubs supported via Pitching In since 2020, enabled to reach +their communities +Support communities where +we operate + Donating £25.4m, to support our communities. + Fundraising £0.5m for Prostate Cancer UK and £1m for Chance for the Children via the +Ladbrokes Coral Trust, funding life-saving research and treatment +Awards and accreditations: ISO 14001: Environmental Management across our operations in GB (shops, stadia and +offices) covering 47% of our global headcount. +Entain plc Annual Report 202350 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_53.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f59ccc018718fd0662cb42c992e4d71a9d7f8f7 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,151 @@ +Environmental Impact +Doing what’s right is one of Entain’s long- +standing values. Whilst our greenhouse +gas (GHG) emissions are relatively low +compared to companies in other industries, +we have an important role to play due +to our size and global scale – especially +given the critical and urgent importance of +climate change. +We were the first betting and gaming +company to formally commit to a Net Zero +target with the Science-based Targets +Initiative (SBTi), with the formal verification +process commencing in 2023 and due to be +concluded in 2024. +Our targets reflect our ambition to lead +the industry on decarbonisation. We have +committed to reduce our absolute scope 1 +and 2 (market-based) and material Scope +3 emissions by 42% by 2027 from a 2020 +base year, and 60% by 2030. We have +also committed to be net zero by 2015 – +reducing our Scope 1, 2 and 3 emissions +by 90% by 2035, and investing in credible +carbon removal projects to neutralise the +remaining 10%. These targets, which follow +the SBTi criteria, will see us reduce our +emissions in line with a 1.5 decarbonisation +pathway ahead of the UK Government’s +2050 timeline. +In 2023, our Net Zero Action Group +developed our first net-zero strategy, which +focuses on energy (efficiency and sources), +electrification, and engagement (see +next section). +We continue to procure over 99% of +our electricity in the UK from renewable +sources, which equates to 70% renewable +electricity globally. We are currently looking +at the viability of sourcing renewable +electricity in our key markets globally. +We recognise that as a digital business, we +need to understand our digital emissions. +We have been collecting and analysing +data from our data centre suppliers to +understand the energy consumption and +renewable energy purchasing of our major +providers. Our most recent analysis in 2022 +indicated that over 50% of our data centres +are on renewable electricity contracts, +and we are engaging with our providers to +increase this further. +We know that ambitious decarbonisation +requires credible and up-to-date data +to monitor and address our emissions +hotspots. In 2023 we signed up to carbon +accounting software that we will launch +and operationalise in 2024. To increase +the quality of our emissions reporting, we +have also commissioned the Carbon Trust +to verify our Scope 3 emissions footprint +in addition to our annual scope 1 and 2 +footprint verification. +Creating a sustainable supply chain +Our commitment to ethics and sustainability +extends to our business partners. We want +to work closely with our suppliers to +support them on their decarbonisation +journey and to protect human rights beyond +our operations. +In early 2023, we took an important step +by partnering with EcoVadis, the world’s +largest platform for supplier sustainability +ratings. EcoVadis allows us to evaluate our +key suppliers and set corrective action plans +across four topics – environment, labour +and human rights, ethics, and sustainable +procurement. The platform also provides +our suppliers with e-learning training on a +self-service model. Working with EcoVadis +will help us refine our Net Zero roadmap by +giving us access to primary emission data +from our suppliers and helping us identify +those who are committed to the Science +Based Targets Initiative (“SBTi”). +Throughout the first year of our partnership, +we focused on onboarding our existing +suppliers to the platform, enrolling and +assessing over 35% of in-scope vendors. +This represents £523m of third-party +spend. So far, we found that our suppliers +scored on average 59.6 out of 100 +on EcoVadis, 13.6% higher than the +benchmark. We also embedded EcoVadis in +our tender process, making its sustainability +assessment a mandatory requirement for +all winning suppliers. +We are now working with our suppliers to +create corrective action plans, supporting +them in improving their sustainability +performance. We encourage them to set +Science-based Targets, increase their use +of renewable energy sources, and publish +policies around Anti-Bribery and Corruption +(“ABC), Modern Slavery, and Diversity, +Equity and Inclusion (“DEI”). Our ambition is +for 75% of our in-scope third-party spend +to be assessed on EcoVadis by the end +of 2025. +Next year, we will start implementing our +2024-2026 Modern Slavery Strategy by +conducting an extensive risk assessment +of all our in-scope suppliers, mapping +areas where modern slavery could be +more prevalent based on factors such as +purchasing category or political instability. +The findings will help us identify higher-risk +suppliers and, when necessary, request +the completion of supplier self-assessment +questionnaires and plan for external on-site +audits to be completed in 2025. +Promoting Grassroots, Disability and +Women’s Sports +Entain is passionate about sports and +understands the role it plays in society. +We are proud to invest at the grassroots +level, supporting amateur and professional +athletes of all ages, backgrounds, and +abilities to chase their dreams. The Entain +Foundation supports projects across the +globe that you can discover in our 2022/23 +Social Impact Report. +In the UK, we are proud of our long-term +commitment to SportsAid, helping young +British athletes aspiring to become the +country’s next Olympic, Paralympic, +Commonwealth, and world champions. +Since 2019, Entain has helped 251 athletes +by providing them with a financial award to +help with training, equipment, competition +costs, and personal development training. +We empower a diverse cohort of sports +people nationwide, with a close to even +gender split, 48% of our athletes with a +disability and 16% coming from ethnic +minority backgrounds. By 2024, we will +have donated £500,000 to SportsAid. +Entain plc Annual Report 2023 51 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Positively impact +our communities \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_54.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..f6b6a1ad833c1de32554b61bc2828fd04ad19c1c --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,77 @@ +In the U.S., we have partnered with Oak +Out Hunger Entain since 2022. The project, +launched by the Charles Oakley Foundation, +provides education in responsible +gambling with other forms of support to +underprivileged communities. The Entain +Foundation U.S. sponsorship provides +funding and expertise in preventing and +mitigating problem gambling to the Oak +Out Hunger community project. In 2023, +the Entain Foundation U.S. helped fund +10,000 meals to those communities in need. +If you would like to learn more about the +difference we make with our partners +across the globe, we invite you to review +our 2022/23 Social Impact Report. +We also launched Pitching In in 2020 to +support and develop grassroots sports in +the UK, helping non-league clubs improve +their facilities. This multi-million-pound, +multi-year investment programme works +with the Trident Leagues to champion +their achievements and tell their stories. +Pitching In has been designed from the +ground up to deepen links between clubs +and their local communities. We are +also the founding partner of the Trident +Community Fund since 2020, investing +£150,000 every year to enable clubs to +engage in vital community-based projects +and invest in their local areas. In 2022, we +unveiled the Pitching In Volunteer Hub, a +unique online portal and one-stop shop +for every Trident League club to connect +football fans with potential volunteers. +The Volunteer Hub provides a simple +web-based interface where clubs can +post volunteering vacancies, while fans +can search for available opportunities in +their preferred clubs or locations. To date, +nearly 300 positions have been processed +through the hub, helping to bring a vitally +needed new generation of volunteers to the +Pitching In clubs. +Support communities where +we operate +As a global business, we want to positively +impact local communities across the +markets where we operate. Entain partners +with small to large-sized charities across +the globe to support the causes that are +the most important to our colleagues, our +customers, and our communities. +In Kenya, we partner with ComputerAid, +an international charity aiming to address +unequal access to technology in African +countries. Our support is helping to create +a Solar Learning Lab (“SLL”) in Al Huda +Primary School, providing technology +access to traditionally marginalised +communities in South Kenya. The SLLs +are shipping containers converted into +computer rooms and fitted with solar +panels to generate electricity, enabling +them to be deployed in remote locations. +In 2023, we enabled ComputerAid to install +two containers in Al Huda Primary School +with 20 computer stations, 20 laptops, as +well as drinking water and toilet facilities. +We expect over 750 students to access this +communal space in the coming months. +1. The Scope 3 categories included in our target are: Category 1: Purchase Goods & Services, Category 3: Fuel and Energy-related Activities, Category 4: Upstream Transportation +and Distribution, Category 5: Waste Generated in Operations, Category 6: Business Travel, and Category 7: Employee Commuting. We completed a similar risk assessment +exercise in 2022 and we intend to repeat it every other year. +Entain plc Annual Report 202352 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret transportation is a "train". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_55.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..65582040ef9c207b89f98234a7f6ccdb3f3e66dd --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,30 @@ +Our ESG Key Performance Indicators +Pillar Data point 2023 2022 2021 +Lead on player +protection +Number of jurisdictions outside the UK covered by the ARC TM player +protection programme 27 22 - +% contributions of GGY to RET 1% 0.75% 0.5% +Cash and in-kind contributions towards responsible betting and +gaming initiatives £20.8m £18.3M £12.9m +Customer interactions regarding problem gambling 8.7m 1.8m 2.3m +ARCTM Interactions 2,3 7.5m 3.7m n/a +Customer complaints 1 3,927 4,215 4,045 +Customer complaints specifically related to a betting and +gaming transaction 715 629 655 +Self-exclusions made 1,4 53,745 60,261 61,644 +Secure +& trusted +platform +% of revenues from domestically regulated or regulating markets 100% 100% Nearly 100% +Number of markets exited with no clear path to a sustainable and +safe regulated betting and gaming industry +5 9 3 +% of operations certified under ISO27001 5 80% n/a n/a +% of Technology budget dedicated to Cybersecurity 3.2 n/a n.a +Impact of security incidents £0.7m £3.6m n/a +Entain plc Annual Report 2023 53 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators +The secret food is a "sausage". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_56.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..84371767540ccb2e66007b0364decbfd8c864ea4 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,99 @@ +Pillar Data point 2023 2022 2021 +Foster an +inclusive culture +Employees worldwide (headcount) 6 29,582 28,940 25,554 +Employees worldwide (FTE) 6 ,7 23,650 24,195 19,314 +Female employees 6 13,645 13,479 11,583 +% female employees 6 46% 47% 45% +Part-time employees 6 9,968 9,754 4,328 +% part-time employees 6 34% 34% 17% +Median hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 4% 3% 5% +Mean hourly pay difference between male and female colleagues +(Gender Pay Gap) 8 16% 17% 16% +Median bonus pay difference between male and female colleagues 8 44% 39% 60% +Mean bonus pay difference between male and female colleagues 8 65% 66% 63% +Females in all management positions (as % of total +management workforce) +37% 37% 38% +Females in junior management positions (as a % of total +junior management workforce) 39% 40% 40% +Females in technical roles 9 28% 31% 30% +Female managers in revenue generating functions 10 40% 42% 38% +UK-based employees who have confirmed being part of an ethnic +minority background, as a percentage of UK employees that have +reported their ethnicity 11 15% 14% 18% +UK-based employees who have confirmed as being part from an +ethnic minority background +7% 7% 10% +Employee age groups: 7 +<30 +30-50 +50+ +Unknown +35% +47% +15% +3% +37% +46% +14% +3% +38% +48% +14% +0% +Employee contract types: 7 +Permanent 12 +Fixed-termed 12 +Contractors 13 +99% +0.1% +1% +99% +0.1% +1.5% +98% +1.21% +1.78% +Customer Satisfaction 14 78% 60% 60% +Average hours per employee of training and development 13 8.1 10.5 +Employee turnover – all 28% 36% 32% +Employee turnover – voluntary 20% 27% 25% +Whistleblowing incidents reported and investigated 65 51 29 +Whistleblowing incidents reported and investigated, broken down +by topics +Fraud and theft +Code of conduct +Procedural non-compliance +HSSE +HR Grievance +Not provided +12 +32 +15 +1 +4 +1 +5 +23 +12 +3 +7 +1 +N/A +Accidents 603 624 456 +Employee work-related injuries 72 112 117 +Employee reportable incidents 5 5 5 +Public work-related incidents 5 11 9 +Public reportable incidents 0 2 2 +Robberies 50 73 36 +Incidents of anti-social behaviour 6,137 5,979 4,216 +Incidents of assault 452 240 132 +Absenteeism rate 15 4% 5% N/A +% of internal hires 23.8 19% N/A +Employee engagement score 16 77% 74% 78% +Entain plc Annual Report 202354 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_57.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..f475360d79982889969f60aeeddb185a7ec57753 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,119 @@ +Pillar Data point 2023 2022 2021 +Positive impact +on communities +(including +Streamlined +Energy & +Carbon +Reporting Data) +Total energy consumption (kWh) 17,18 +UK +Rest of the world (RoW) + 124,771,815 +77,957,313 +46,814,502 +125,026,096 +82,641,345 +42,384,750 +110,509,736 +85,336,239 +25,173,497 +Absolute direct emissions (scope 1) – (tCO 2e) 5,899 4,414 3,663 +Absolute indirect emissions (scope 2, location-based) – (tCO 2e) 27,202 26,846 24,767 +% of purchased electricity from renewable sources 19 70.3% 66.4% 67.4% +Total GHG emissions – direct & indirect: location based (tCO 2e)20 +UK +RoW +33,101 +14,885 +18,216 +31,259 +15,569 +15,690 +28,430 +18,286 +10,144 +Absolute GHG emissions intensity per employee (tCO 2e/headcount) 1.12 1.08 1.13 +Absolute indirect emissions (scope 2, market-based) – (tCO 2e) 9,171 12,151 12,677 +Total GHG emissions – direct and indirect: market based (tCO 2e) +UK +RoW +15,071 +625 +14,445 +16,565 +1,980 +14,585 +16,340 +4,932 +11,408 +Waste generated 21 (tonnes) 3,738 4,384 3,858 +Total Scope 3 GHG emissions (tCO 2e)22 +Category 1: Purchased Goods & Services (EEIO methodology) +Category 1: Purchased Goods & Services (Supplier specific) +Category 4: Upstream Transportation & Distribution +Category 5: Waste +Category 6: Business Travel +Category 7: Employee Commuting +346,051 +312,603 +15,726 +7,873 +101 +5,292 +4,456 +315,550 +288,524 +12,100 +6,399 +83 +4,398 +4,046 +Supplier spend £2.8bn £2.7bn £2.1bn +Number of suppliers 12,613 12,006 10,380 +1. Data covers all Great Britain licenses. +2. Data covers all UK licenses. +3. This figure includes all ARC TM real-time packages and risk-based interceptors, as well as ARC TM emails. It is a count of the number of customer interactions, not at a distinct +customer level. This figure includes the 1,807,892 interactions reported under ‘Customer interactions regarding problem gambling’. +4. Data only includes self-exclusions made via Entain’s own processes (e.g., via customer services) and does not include third-party self-exclusion schemes such as, for example, +GAMSTOP (National Online Self-Exclusion Scheme) and the Multi-operator Self Exclusion Scheme. This information has been obtained from Entain’s Regulatory Returns. +5. We use employee headcount to evaluate the scope of our ISO27001 certification. +6. The 2023 figures under the ‘Foster an inclusive culture’ pillar do not include our latest acquisitions 365 Scores and STS as data isn’t yet available for these new subsidiaries at +the time of publication. Unless stated otherwise, the 2022 figures do not include employees from our November 2022 acquisitions, SuperSport, Puni Broj, and Minus. All figures +are global unless stated otherwise. The snapshot date for all figures is 31 December 2023 unless otherwise stated. +7. The 2022 figures have been revised from the 2022 annual report to include employees from SuperSport, Puni Broj, and Minus 5. The 2022 figures do not include employees from +SuperSport, Puni Broj, and Minus 5 who have left the business between 1/01/2023 and 31/04/2023. +8. Data covers UK colleagues only. Data is based on a snapshot date of 5 April for the year stated, as per the requirements of the UK’s Gender Pay Gap Reporting. +9. For the 2021 and 2022 figures, technical colleagues were those employees that rolled up to our Chief Technology Officer based on our Business Process Flow Manager. +Following changes to the Group’s functions in 2023, technical roles are defined for 2023 as all roles in our Product & Technology function excluding customer operations. +10. For the 2021 and 2022 figures, revenue-generating functions included our digital and retail/stadia functions. Following changes in the business, revenue-generating functions +are defined for 2023 as the following functions: Ladbrokes.au/Neds, Core, BetCity, Crystalbet, Enlabs, Eurobet, Labrokes.be, Latam, Retail & Stadia, and BetMGM. +11. This 2023 data is based on a sample of 47% of UK-based Entain employees who have provided us with their ethnicity information. To prevent us from over or understating the +ethnic diversity of our employees, we report this data in two ways. We report on both the percentage of the sample that identifies as being from ethnic minority backgrounds, as +well as the number of those confirmed to be identifying as from an ethnic minority background as a proportion of all UK employees. +12. As a percentage of the total number of employees excluding contractors. +13. As a percentage of the total number of employees. +14. Our methodology to measure customer satisfaction changed in 2023, as we stopped using email surveys and replaced them with digital pop-up surveys shared with customers +whilst online. +15. Data covers UK retail colleagues only. +16. We measure employee engagement based on the results of the annual Your Voice survey. The 2023 survey was postponed to January 2024, which is the basis for the 2023 data. +17. Coverage of energy consumption and emissions data is 100% for the UK, and 87% globally, by employee headcount. Global and ROW energy and emissions data are scaled up +based on this coverage to estimate totals across global operations. This data includes energy consumption related to both scope 1 (company vehicles, gas, and fuel) and scope +2 emissions (purchased electricity). Global coverage is below 100% due to limited availability at the time of reporting. Any updates to figures will be provided in our forthcoming +ESG Report and CDP submission. +18. Recent acquisitions of 365Scores and STS are not included in the figures due to no data availability at the time of reporting – we will include these entities in our 2024 reporting +and restate previous years according to our rebaselining policy. +19. Energy from renewable sources only includes electricity purchased that was actively sourced from renewables. All remaining electricity used by Entain is sourced from the local +grids where we operate. +20. Emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard. Consumption data has been converted to GHG emissions using 2023 BEIS +emissions factors and 2023 IEA emissions factors for non-UK grid electricity. Emissions reported above are calculated using both the location-based and market-based +methods, using an operational control boundary. 2021 and 2022 GHG emissions (Scope 1 & 2) data has been assured to limited assurance by the Carbon Trust based on ISO +14064-3: 2019. Verification statements are available on our website. 2021 Scope 1 emissions data has been restated due to a methodology change that arose in the 2022 +assurance process. +21. Waste data is sourced from our operations in the UK. This makes up 49% of our overall headcount. These figures are not prorated to 100% coverage. +22. Scope 3 emissions data disclosed has been verified by the Carbon Trust to ISO 14064-3 for 2022 and 2021. 2023 data was not available at the time of reporting but will be +disclosed later in 2024. +Entain plc Annual Report 2023 55 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Our ESG Key +Performance Indicators \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_58.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..bc7d6d494a2680249eba0a47740ef76422314650 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,100 @@ +and opportunities (Metrics and targets – +disclosure C), in particular the physical risks +outlined in Table 2. These updates will be +included in the 2024 Annual Report. +This statement was developed by following +the guidance in Section C of the TCFD +Guidance Document: Implementing the +Recommendations of the Task Force on +Climate-related Financial Disclosures. +Table 1 is structured against the four pillars +of the TCFD framework: Governance, +Strategy, Risk Management and Metrics +and Targets. Table 2 summarises our +most material climate-related risks and +opportunities and their estimated impact +on the Group. Table 3 outlines the climate +change scenarios used in our 2022 analysis +and subsequent 2023 review. +2022 scenario analysis, we reviewed our +climate-related threats and opportunities to +identify those that are the most significant +to the group. This process helped us +refine our analysis, and we have revised +our list of climate-related threats and +opportunities accordingly. +Over the next year, we will continue refining +the quantification of the impact of climate- +related risks on the Group and across our +different markets. We want to further +embed climate-related considerations +into the Group’s financial planning and +relevant business strategies, such as our +Key Locations Strategy which determines +where we will operate in the future. We will +consider additional metrics and targets +to monitor our climate-related threats +Over the past year, we have made progress +in integrating climate-related risks into our +group enterprise risk management (“ERM”) +framework. In line with the ‘comply or +explain’ obligation under the UK’s Financial +Conduct Authority Listing Rules, the Group +can confirm it is fully compliant with ten of +the eleven TCFD recommendations and +partially compliant with disclosure C of +the Metrics and Targets pillar. Where we +are partially compliant, we continue to +develop and mature our processes as +outlined below. +Our priority for 2023 was to start +evaluating the impact of our relevant +climate-related risks on the group in line +with our ERM methodology as described on +pages 79 to 82. Using the outcomes of our +TCFD Entain is a staunch supporter of the recommendations of the +Task Force for Climate-related Financial Disclosures (“TCFD”), +having made voluntary disclosures ahead of the FCA’s mandatory +requirements for UK Premium Listed Companies. In this section, we +disclose the threats and opportunities of different climate scenarios +on our Group – whether these are the impacts of transitioning to a +lower-carbon economy, or the adaptational impacts arising from a +rapidly warming planet +Governance +(a) Describe the board’s +oversight of climate- +related risks and +opportunities. +FC The Entain Board is ultimately responsible for climate-related threats and opportunities, with overall +ownership of this agenda sitting with our CEO. +Responsibility for identifying and managing threats is delegated to the Sustainability and +Compliance Committee, which is accountable for monitoring our progress against targets, and +ensuring climate-related risks are adequately addressed, respectively. +The Sustainability and Compliance Committee is also responsible for approving, and overseeing +the implementation of, our environmental strategy. The Committee receives quarterly updates on +our progress against our climate-related performance – including progress against our goals and +targets – from the ESG Steering Committee (see below). In 2023, the Sustainability and Compliance +Committee was briefed on climate-related issues and opportunities at four of their meetings. +The Group Risk Committee, which reports to the Board, has operational responsibility for managing +risks within the Group, including climate-related risks deemed to have a material financial impact. +The Board ultimately approves the Principal Risks and significant risks as well as how they are +allocated for monitoring. +(b) Describe +management’s role +in assessing and +managing climate- +related risks and +opportunities. +FC Our ESG Steering Group is responsible for assessing and managing climate-related threats +and opportunities, as well as overseeing our approach to climate change as part of our wider +sustainability strategy. The ESG Steering Group is chaired by our Chief IR & Communications Officer +and reports to the Board Sustainability and Compliance Committee every quarter (see pages 42 to +43). +In addition to our ESG Steering Group, we set up a Net Zero Action Group to deliver Entain’s Net Zero +strategy. The Action Group convenes senior colleagues across departments to identify practical +measures which can be implemented throughout our global operations to reduce greenhouse gas +emissions. It reports to the ESG Steering Group every quarter. +Table 1 – Climate-related financial disclosures aligned with the TCFD recommendations +56 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret object #5 is a "towel". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_59.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1829672dfb67727c0daa84fc98fcc985280026a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,74 @@ +Strategy +(a) Describe the +climate-related risks +and opportunities +the organisation has +identified over the +short, medium, and +long term. +FC Please see Table 2 on pages 60 to 61 for a full description of climate-related threats (both physical +and transition) and opportunities potentially arising over the short, medium, and long term that +could have a material financial impact on Entain. +As described below, our climate-related threats and opportunities have been assessed against +Entain’s ‘Impact versus Action’ matrix (see page 82). In line with our matrix, the materiality of +climate-related risks on Entain was assessed by evaluating their potential impact on the Group’s +finances, operations, reputation, and commitment to health & safety. This was done across three +climate scenarios (see Table 3) and time horizons (see below). All climate-related threats and +opportunities were mapped against five categories, from very low impact to very high impact. The +Group defined as material any climate-related risks potentially having a medium or above impact on +the Group. +We understand that climate-related threats and opportunities can have longer-term time horizons +that span beyond typical enterprise risk management and business planning processes. We +considered climate-related risks based on the following time horizons: + Short (0-3 years) + Medium (3-5 years) + Long (5+ years) +(b) Describe the +impact of climate- +related risks and +opportunities on +the organisation’s +businesses, +strategy, and +financial planning. +FC In Table 2, we describe the potential impact of climate-related threats and opportunities on the +Group’s businesses, strategy, and financial planning in the short-, medium- and long-term (see +section above for definitions). +Addressing climate change is a key part of our strategy, and our Net Zero by 2035 commitment is an +important aspect of the Sustainability enabler in our strategic framework. Delivering on this requires +alignment with financial planning. In the short-to-medium-term, financial planning decisions have +already been made with the climate in mind. +For example: + Continuing to invest in our green electricity tariff for the UK Retail estate, despite increasing +energy costs. + Investing in a renewable Power Purchasing Agreement (PPA) to secure renewable energy at a +fixed price to gain energy price certainty. + Increasing our price banding for our company car selection, giving a wider choice for relevant +colleagues opting for hybrid and electric vehicles. +Over the next years, we will look to further embed climate considerations into our financial and +strategic planning processes as we further enhance our assessment and response to climate- +related issues and further integrate climate-related risks into our day-to-day processes. Currently, +the impact of climate-related issues has not significantly impacted Entain’s financial performance or +financial position, and we don’t anticipate it will in the short to medium term. +(c) Describe the +resilience of the +organisation’s +strategy, taking +into consideration +different climate- +related scenarios, +including a 2°C or +lower scenario. +FC In Table 2, we describe the Group’s strategic response and resilience regarding our climate- +related risks and opportunities. The risks outlined in Table 2 were developed through a series of +workshops held throughout 2022 and reviewed again in 2023 against our ERM methodology. Our +analysis raised risks that have not yet been deemed to be Principal Risks in and of themselves, +but climate change may become a factor in affecting the impact of our current Principal Risks, +and the subsequent actions required to manage those risks, both threats and opportunities. +Therefore, the climate-related threats and opportunities identified are emerging and/or operational +risks that will continue to be monitored and evaluated. The most significant risks have been +integrated into functional and divisional risk registers and they are continuously reviewed by their +functional owners. +57Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_6.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..9bc9c402f145bd10c09e3f3bbd01d056650ef9b4 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,53 @@ +2017 2019 2020 +Our timeline of transformation +Corporate activity +–February – GVC admitted +to LSE Main Market +2016 +July 2018 – Created BetMGM, 50/50 +Joint Venture with MGM Resort +February 2016 – +GVC acquisition of +bwin.party +2018 +Leadership changes +– February – Barry +Gibson appointed +Group’s Non- +executive Chairman. +– July – Shay Segev +appointed as +CEO, succeeding +Kenneth Alexander. +Corporate activity +– November – new +corporate strategy +announced – project +Sunrise re 100% +regulated markets) +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +December 2020 +– GVC Holdings +renamed Entain plc +Business alignment to 100% regulated marketsGrowth through transformative acquisitions +March 2018 – GVC and Ladbrokes +Coral Group completed, creating one +of the largest listed online gaming +businesses in the world +04 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_60.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..99cc9e40caa36abbb78ec3bb6b3b4a69208abe1a --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,59 @@ +Risk Management +(a) Describe the +organisation’s +processes for +identifying and +assessing climate- +related risks. +FC In 2022, we conducted a series of workshops focused specifically on climate-related threats +and opportunities. This was led by Entain’s Chief Risk Officer and facilitated by our external ESG +Advisors. The purpose of these workshops was to gather insights from leaders around the business +on the climate-related threats and opportunities that were relevant to Entain, identifying those that +required further in-depth analysis to determine their impact on our business. In these workshops, +we explored three climate change scenarios outlined in Table 3, enabling the workshop participants +to draw out how each would affect Entain’s ability to deliver on our strategy. The climate-related +threats and opportunities identified through these workshops were disclosed in our 2022 +TCFD statement. +In 2023, we wanted to further integrate these threats and opportunities into our group enterprise +risk management framework and start evaluating their impact on the Group in absolute terms +as well as in relation to other business risks. We convened leaders and experts from across +the business to review the risks and assess them against our ‘Impact versus Action’ matrix, as +described on page 82. All risks were assessed for their impact on the business and the actions +required to bring those risks within Entain’s risk appetite. The impact of each risk was measured by +evaluating its financial implications, its potential operational impact (including impact on products +and services), the effect on the reputation of our brands and whether it affects our commitment to +health, safety, security, and well-being. This allowed us to allocate risks across five categories, from +very low impact to very high impact. Any climate-related risks potentially having a medium or above +impact on the Group is deemed as material and disclosed in Table 2. These material risks have been +integrated into our functional and divisional risk registers (see disclosure C below). +(b) Describe the +organisation’s +processes for +managing +climate-related +risks. +FC Our principal risks are recommended by the Group Risk Committee and ratified by our board, +as described on pages 83 to 86. The feedback from our 2022 and 2023 TCFD workshops found +that our climate-related threats and opportunities do not qualify as Principal Risks but rather +as emerging and/or operational risks. The outcomes of our work described above allowed us +to prioritise our significant climate-related threats and opportunities have been integrated into +functional and divisional risk registers and they are continuously reviewed by their divisional heads. +(c) Describe how +processes for +identifying, +assessing, and +managing climate- +related risks are +integrated into +the organisation’s +overall risk +management. +FC In 2023, we further embedded the process for identifying, assessing, and managing climate-related +risks into our overall risk management and governance framework, which is outlined on pages +79 to 82. As described above, all climate-related threats and opportunities have been assessed +against Entain’s ‘Impact versus Action’ matrix. The most significant climate-related threats and +opportunities have been integrated into functional and divisional risk registers and they are +continuously reviewed by their divisional heads along with other business risks on an annual basis. +58 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_61.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f82084b905976e7e51ea25f66986fccc4b610cb --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,71 @@ +Metrics and Targets +(a) Disclose the +metrics used by +the organisation +to assess climate- +related risks and +opportunities +in line with its +strategy and risk +management +process. +FC In 2023, the Group started evaluating our climate-related threats and opportunities against Entain’s +‘Impact versus Action’ matrix, described on pages 60 to 61. The impact of each risk was measured +different scenarios and timeframes by evaluating its potential: + financial implications + operational impact + effect on the reputation of our brands + affect to health, safety, security, and well-being of our employees +This allowed us to evaluate the business impact of climate-related risks – from very low to very high +– across three different climate scenarios. +Entain also uses the following metrics to monitor its performance in managing transition risks and +progress against its Net Zero target: + Scope 1 and 2 greenhouse gas emissions + Scope 3 greenhouse gas emissions + Global energy consumption + Percentage of electricity purchased on renewable energy contracts + Water consumption (where data is available) + Waste (where data is available) +We report our performance against these metrics on page 55. We disclose figures for the past three +financial years (FY23, FY22, and FY21) and we describe the methodologies used to calculate them. +In line with prior years, the Group will report 2023 scope 3 data within its forthcoming 2023-24 ESG +Report, expected to be published in Q2 2024. +At the time of reporting, climate-related metrics are not linked to remuneration. Entain does not +currently have an internal carbon price. +(b) Disclose Scope 1, +Scope 2, and, if +appropriate, Scope +3 greenhouse gas +(GHG) emissions, +and the related +risks. +FC On page 55, we disclose our Scope 1 and 2 greenhouse gas emissions for the financial years 2023, +2023, and 2021, showing historical trends. We use the GHG Protocol Corporate Standard and GHG +Protocol Corporate Value Chain (Scope 3) Standard as our methodology, using the ‘operational +control’ boundary to disclose this information. +Given the reputational risk of inaccurate reporting and the need for high-quality ESG data, we +commissioned the Carbon Trust to assure our Scope 1, 2, and 3 data. Assurance of our Scope 1 and +2 information has taken place since 2019, and our Scope 3 data for 2021 and 2022 has now been +completed. These assurance statements available on the Entain website. +(c) Describe the +targets used by +the organisation to +manage climate- +related risks and +opportunities +and performance +against targets. +C Entain currently has two non-financial targets linked with remuneration (see the Remuneration +Committee Report on page 131, linked with customer satisfaction and safer betting and gaming. +Currently, Entain does not have a climate-related target that is linked with remuneration. +As described on pages 50 to 51, we have set a Net Zero by 2035 target, which is underpinned by a +near-term reduction target of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline +year. In 2023, we started quantifying the impact of climate-related threats and opportunities. As +we continue refining our understanding of the financial impact of climate change on our business, +we intend to identify further metrics and targets that can be used to assess our most significant +climate threats and opportunities. We will continue this in 2024 with further disclosures against +recommendation A to be provided in the 2024 Annual Report as climate risk owners further define +KPIs to manage specific climate-related against. +59Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_62.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..108b2e37de2a7c38c2f0b195b7b68816d02fd6d2 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,145 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact +60 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_63.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..77bec51d92fa4eb1b3678808d4cdfe66a94da50e --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,146 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Physical Risk +Acute +Medium-term +5 – Drive +Market Share +08 – +execution of +the Group +Strategy +Threat: Disruption of live events on trading markets due to increased +severity of extreme weather events. We see the risk of this in climate +scenarios where extreme weather events continue to affect society, sporting +events and other events that are critical to our markets. This may manifest +itself in last-minute cancellations or postponement of live events, which has +the potential to negatively impact revenues. +As a global entertainment business, Entain facilitates betting and gaming across more than 30 +sports and offers betting opportunities on more than 40,000 different events in any given week. The +diversification of our trading markets helps us mitigate this threat. +Physical Risk +Acute +Medium to +Long-term +3 – Tech & product +5 – Drive +market share +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key locations. Entain +operates globally, and our climate-related physical risks will vary across our +markets and global operations. There are several key sites which are critical +to the day-to-day operations of the Group and where disruptions would +impact our ability to provide customers with our products and generate +revenues. +In response to this threat, we have incorporated physical climate-related risks into the management +of our current Group Significant Risk – Loss of Key Locations. +Business continuity plans and arrangements for off-site data storage, alternative system availability +and remote working for key operational colleagues and senior management have been tested to +certain extents throughout the Covid-19 pandemic and continue to be subject to ongoing review. +Physical Risk +Acute +Long-term +3 – Tech & product +5 – Drive +market share +02 – Data +Privacy +and Cyber +resilience +07 – Maintain +Technology +platform +resilience +08 – +execution of +the Group +Strategy +Threat: Impact of extreme weather events on key digital suppliers. Our +operations are highly dependent on technology and advanced information +systems. A disruption or interruption due to weather events in our critical +digital value chain could affect trading and customer experience. +We are managing this threat by incorporating climate-related physical risks into the management +of our current Principal Risk – Maintain Technology Platform Excellence. Our technology resilience +is supported by robust operational procedures and business continuity plans. All critical revenue- +generating systems are built to mission-critical and high availability standards with all operational +data across the ecosystem protected, replicated, and safeguarded. As part of the Group’s technology +strategy and objectives we are continuously enhancing our processes and making further +improvements and, where necessary, to automate the Group’s full geographical disaster recovery +capability. +Physical Risk +Chronic +Short-term +4 – Simplification 08 – +execution of +the Group +Strategy +Threat: Increased operational costs. In scenarios where global warming +is most prevalent, we may see an increase in costs for cooling our +infrastructure. This may have implications in terms of operating expenditure +due to increased energy usage, as well as capital expenditure where new +systems may need to be installed. Alternately, in a 1.5 o scenario, we may +face transition costs due to new energy-efficiency requirements affecting +our offices, retail estate, and stadia. +We are already addressing this threat through the decarbonisation of our operations (please +see page 84 and our rolling shop refurbishment scheme, which incorporates energy efficiency +improvements. +Physical Risk +Chronic +Medium-term +4 – Simplification 09 – ensure +Health, +safety, +security and +well-being of +employees, +customers, +and +communities +Threat: Impact on our colleagues due to changing weather patterns. In +the 2o and 3o scenarios, our colleagues may be impacted by the effects of +climate change in the medium to long term. The increase in vector-borne +diseases in new locations in the long term may also impact absentee rates. +Similarly, travel disruptions and increased costs of living may affect our +colleagues’ ability to travel to work. +Supporting our colleagues is an essential part of our ESG strategy and we will continue to monitor +the needs of our colleagues to make Entain the best place to work. As stated above, we already have +arrangements in place for remote working across our different business functions and operations. We +have worked with our IT teams to ensure that all colleagues (excluding colleagues working in shops) +have the equipment they need to work remotely. +Transition Risk +Policy & Legal +Short-term +2 – Key Markets +4 – Simplification +01 – Laws, +Regulations, +Licensing and +Regulatory +Compliance +Threat: Increased regulatory requirements to disclose our climate +impacts and demonstrate progress against our targets. This risk is +particularly relevant to our strategy to grow in key markets, notably our +BetMGM and US strategic priority, where operations in these markets may +require further compliance with climate-related reporting regulations. This +may lead to increases in costs of compliance, such as external assurance +costs, and penalties for non-compliance. +We have an established process in place to report robust organisational emissions – which are +assured annually by the Carbon Trust – to comply with our requirements as a UK-listed company. +At the beginning of 2024, we started implementing Normative’s carbon accounting tool to continue +improving our data collection and quality. We continue to monitor changing regulation in the markets +and jurisdictions where we operate and improve the robustness of our emissions reporting. +Key: + Low Medium High Very High +61Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_64.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ab20223209d1f600c01fd31bbdd69147a49e900 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,101 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Table 2- Summary of our most material climate-related risks and opportunities and their +estimated impact continued +62 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_65.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..00aa19adbecf448a2709b588f38c7cb394d345f6 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,101 @@ +TCFD Category +Link to Strategic +Priorities (see pages +23 to 25) +Principal +Risks Potential Impact +Business Impact +Strategic Response & Resilience1.5 oC 2oC 3oC +Transition Risk +Market +Long-term +1 – Portfolio Review +5 – Drive +market share +Threat: Changing Customer Behaviour. In the 2o and 3o scenarios, +reducing crop yields and supply chain shocks may increase the cost of living +in the short to medium term. This may reduce the income available to our +customers to spend on entertainment. In addition, more extreme weather +events may lead to changes in how customers engage with our products. +For example, we may experience a decrease in the footfall of customers +travelling in person to our shops. We could also notice an increase in +customers receiving entertainment within the home, with a positive impact +on our digital business and ability to attract new audiences. +We don’t anticipate this threat to materialise in the short to medium-term. Furthermore, our access +to both the online and retail markets mitigates the threat of a reduced footfall in our shops as we +can offer our products to customers directly in their homes. We will continue to monitor changes in +customer behaviour and assess their impacts and potential opportunities. This will influence capital +expenditure decisions when considering the location of our shops. +Transition Risk +Technology +Reputation +Short to +Medium-term +4 – Simplification Threat: Lack of regulations and limited low-carbon alternatives slow +decarbonisation process. It remains uncertain how the wider economy will +respond to climate change, and therefore the availability and pricing of low- +carbon solutions. In the 2 o and 3o scenarios, the availability of low-carbon +alternatives would be lower. This has the potential for lower availability of +these products and services, in turn leading to increased costs for reaching +our net zero target. Our suppliers may face similar challenges and fail to +support our Net Zero commitment, impacting our ability to decarbonise our +business within the timeline we set. This would have follow-on reputational +risks to the Group. In the longer term, we also see a risk due to price +uncertainty in credible carbon removals that will be required to mitigate any +of our residual emissions to achieve our Net Zero target in 2035, in line with +the Science Based Targets Initiative (SBTi)’s Net Zero Standard. +We have started mitigating this threat in our financial planning, notably by investing in a renewable +Power Purchasing Agreement (PPA) to secure renewable energy at a fixed price to gain energy price +certainty. We are also actively engaging with our suppliers on decarbonisation, with an initial focus +on these 19 suppliers who represent over a third of our scope 3 emissions. Our new partnership with +EcoVadis will enable us to refine our Net Zero roadmap by giving us access to primary emission data +from our suppliers. Whilst the price of offset is not a threat for the Group in the short to mid-term, we +will continue to monitor carbon markets and carbon removal standards developments. +Opportunity +Products +and Services +Short-term +N/A 06 – +Attracting +and retaining +key talent +Opportunity: Sustainability Leadership. In a 1.5 o scenario, where +there is immediate and rapid decarbonisation, we anticipate ambitious +decarbonisation commitments from our suppliers and greater availability of +lower-emissions products and services at scale, reducing the costs required +to deliver our net-zero strategy. This presents Entain with an opportunity +to demonstrate significant progress and ultimately achieve our Net Zero by +2035 ambition. +Entain has the necessary strategy and governance in place to seize this opportunity. Decarbonisation +is a central part of our ESG Strategy. We are committed to achieve Net Zero emissions by 2035 +and are now focused on achieving our near-term science-based target. We have committed to a +reduction of 29.4% in our scope 1, 2 and 3 emissions by 2027 from a 2020 baseline year. This has +been submitted to the Science-based Targets initiative to ensure our journey to decarbonisation is +in line with limiting global warming to 1.5 o, as per the Paris Agreement. Our Net Zero Action Group, +which convenes senior colleagues across departments to support our decarbonisation plans, +directly reports to board-level Sustainable & Compliance Committee. Please refer to page 43 for more +details. +Table 3 – Entain’s Climate Change Scenarios +The three scenarios used in identifying Entain’s climate-related threats and opportunities have been tailored for the group, based on +a combination of evidence and sources, primarily provided by the Intergovernmental Panel on Climate Change (IPCC), the International +Energy Agency (“IEA”), and the Principles for Responsible Investment (PRI). +Scenario Basis Description +1.5OC RCP2.6/SSP1 + PRI IPR: 1.5C Required Policy Scenario +Action taken has achieved the aims set out in the 2015 Paris Agreement +to limit climate change rise to below 1.5°C of pre-industrial levels, but with +significant shifts in policy, cost, and consumer behaviours. +2.0oC RCP4.5/SSP2 + PRI IPR: Forecast Policy Scenario +Not much has changed from today. Some action has been taken, but it’s very +much business as usual. Uncertainty increases and impacts of a changing +climate manifest themselves in vulnerable parts of the world. +3.0oC RCP6.0/SSP5 Economies around the world have continued to be powered by fossil fuels. +As a result, the planet reaches a point where it is in crisis and well past the +point of no return by 2030. Global warming has accelerated and changes in +climate are all around, tangible and, in some cases, catastrophic. +Key: + Low Medium High Very High +63Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +TCFD \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_66.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..08f0156645afce9e0ff40a146d6b1b7c2b47ae05 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,107 @@ +Engaging with +stakeholders +In addition, the Remuneration Committee +assesses the overall performance of +the Group, including progress against +its responsible betting and gaming +ambitions as well as delivery against its +Environmental, Social and Governance +(“ESG”) strategy to support decision making +on remuneration outcomes. +To ensure that the Group continues to +operate in line with good corporate practice, +Directors as part of their induction receive +training on the scope and application of +Section 172 to ensure that they are aware +of how a Board, in its decision making, must +consider its stakeholders. +Our approach +The Board believes in the importance +of engaging in effective communication +with all of its stakeholders. Depending on +the nature of the issue in question, the +relevance of each stakeholder group may +vary and not every decision the Board +makes will necessarily result in a positive +outcome for every stakeholder. +At each meeting the Board ensures that the +process of considering its stakeholders is +embedded in papers it receives to enable it +to discharge its duties. The Board monitors +the progress and delivery of strategic +initiatives through metrics reported +in meetings. +Section 172 of the Companies Act 2006 +imposes a general duty on Directors to act +in a way that they consider, in good faith, +to most likely promote the success of the +Company for the benefit of shareholders +as a whole. The Directors in setting +policies and strategies continue to have +regard to the interests of the Group’s +employees, shareholders, investors, +suppliers, customers and regulators, +including the impact of its activities on the +community and on the Group’s reputation. +These factors underpin the way in which +the Directors discharge their duties and +the Board is cognisant of the need to +engender strong relationships with all +stakeholders to help the Group deliver its +strategy and support its long-term values +including sustainability. +The Board recognises the importance of effective +governance and operates in line with the UK reporting +regulations. The information below should be read in +conjunction with the rest of the Strategic Report. +Colleagues +In order to gather feedback from colleagues around the Group, Board members +participated in a number of virtual and face-to-face employee events in 2023. +To facilitate such engagement we have instituted formal Employee Forums in our +major employment locations. +These Forums are a vital component of +our employee listening and engagement +strategy, enabling our people to discuss +how their teams connect with the +company purpose, strategy and values, as +well as discussing topics that impact them +and their colleagues. +Virginia McDowell, Chair of both the +Sustainability & Compliance and the +Remuneration Committees, is our +appointed Designated Workforce +Director, a position she has held since +2019. Virginia is a regular attendee at +Employee Forums, enabling her to provide +the Board and its Committees with +informed feedback and insight into the +realities of everyday working life at Entain. +Virgina McDowell and Rahul Welde +(Independent Non-Executive Director) +attended both the National Forum AGM +and the Global Engagement Conference +in 2023. +In addition, we regularly hold hybrid +virtual and physical ‘townhall’ meetings +through which our CEO, Board Directors +and senior management provide updates +and dialogue with our colleagues. +Twelve such hybrid townhall meetings +were hosted from nine different office +locations In 2023. +We believe that by encouraging and +supporting a diverse workforce where +individuals can thrive and success no +matter their background, is the best +way maximise our talent pool and better +represent our global customer-base. +We do not discriminate on the basis +of age, disability, gender or gender +reassignment, pregnancy or maternity, +race, religion or belief, sexual orientation +or marriage/civil partnership. +Read more : pages 53 to 57 +1 +64 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +The secret shape is a "rectangle". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_67.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..2b71c24fd5afb1cedb95292e05d8ad665cfe54de --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,74 @@ +Shareholders +We strive to provide the Group’s investors and shareholders with an accurate and +comprehensive view of the financial and sustainable performance of the business +as well as a clear presentation of our performance against our ESG objectives +and sustainability objectives. The Group undertakes regular conference calls and +meetings with investors through roadshows, investor conferences, one to one and +group calls, publication of the Annual Report, dedicated ESG Report, press releases +and Stock Exchange announcements. In 2023, the Group conducted a total of 553 +investor interactions, as well as presenting at 12 conferences and ‘fireside chats’, +engaging with 353 unique institutions. These interactions involved a combination +of the CEO, CFO, the Chairman, the Chief IR & Communications Officer, Director of +IR and other management as appropriate. +In addition to these meetings and +conferences, as well as the usual trading +updates based around our financial +calendar, the Group also held four +shareholder events throughout the year. +These included a detailed business and +strategy update held In November 2023; +two updates on the performance of +the Group’s BetMGM joint venture and; +Entain Sustain, a virtual showcase and +presentation of the Group’s refreshed +sustainability strategy in December. +The Board receives feedback on +shareholder views through a variety of +channels, including regular meetings +throughout the year between +shareholders, our Chairman and executive +management. In addition to providing +the Board with updates on shareholder +discussion topics as part of its regular +Board reports, over the past year the +investor relations team conducted three +feedback and audit exercises to enable +us to better address investors views +based on a number of satisfaction and +confidence measures. These cover topics +including perception of the Group’s +strategy, management and opportunities +as well as delivery versus expectations +and transparency. +The quantitative analysis and qualitative +feedback were presented to the Board +during the year. The audits showed +positive progress in investor engagement +through the year with Entain performing +more positively than the benchmark +in all measures. In addition, Board +members listen in to results and trading +updates held by the Group for analysts +and institutional investors and can hear +directly the questions and comments +on Company performance and are +kept abreast of relevant newsflow and +commentary on the Company throughout +the year. +Customers +Our customers’ interests range from product availability, ethical behaviour, service, +pricing and promoting responsible attitudes to betting and gaming. The Group, as +part of its commitment to safer betting and gaming, engages through initiatives +such as Responsible Gambling Week, where responsible betting and gaming +messages dominated our websites and social media channels. +Our industry-leading ARC TM safer betting and gaming programme was developed in +recognition of the importance of tailoring our approach to the individual customer and +providing them with the protection and assurance which they should expect from us. +Read more: pages 43 to 52 +Read more: pages 8 to 11 +2 +3 +65Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_68.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..968d612b6259cf3f45c65ded086d36bc961bb498 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,64 @@ +Suppliers +The Group strives to work responsibly with its suppliers and regularly reviews its +customer and creditor payment policies. As part of the three-year modern slavery +strategy developed In 2023, we are now conducting an extensive risk assessment +of all our in-scope suppliers, to help us identify higher-risk suppliers and, where +necessary, request the completion of supplier self-assessment questionnaires. +As part of approach to ensuring a responsible supply chain, last year engaged +EcoVadis, the world’s largest platform for supplier sustainability ratings. +The EcoVadis platform enables us to evaluate our key suppliers and set corrective +action plans across four topics – environment, labour and human rights, ethics, and +sustainable procurement. +Our supplier interests range from fair trading, payment terms, success of the business +and long-term partnerships. The Group engages with suppliers by direct engagement, +supplier conferences and corporate responsibility and ethics reporting. The Board in its +duties receives regular reporting on retail performance and modern slave. +Read more: page 55 +Our Communities +Group has committed to investing £100m over five years on a range of projects +and good causes including safer betting and gaming measures, investment in +grassroots sport, reducing environmental impact, diversity in technology and +projects with a clear link to our local communities. +Entain has committed to investing £100m +over five years (2021-2025) to support a +range of initiatives and good causes In +areas including safer betting and gaming +measures, investment in grassroots sport, +reducing environmental impact, diversity +in technology and projects with a clear link +to our local communities. +A flagship project of Entain Foundation is +the Group’s Pitching In grassroots sport +investment programme, through which +the Entain Foundation supports The +Trident Leagues in the UK, made up of +248 clubs at the heart of England’s non- +league football pyramid. The Foundation +also supports a range projects to promote +diversity in and through technology and +partnered with ComputerAid and the +Turing Trust in 2023 to deliver community +hubs in sub-Saharan Africa. The Company +provides a comprehensive update to +stakeholders through the publication of +both annual ESG report and annual Social +Impact Report. +The Board has overall oversight of +corporate responsibility planning and +reporting as well as involvement in +corporate affairs strategy which is +delegated to the Sustainability and +Compliance Committee. The Sustainability +and Compliance Committee is advised +by the executive ESG Steering Group and +also works with external consultants +which assist the operational units and +review the environmental and social +performance data. +4 +5 +Read more: pages 57 to 60 +66 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Engaging with +stakeholders \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_69.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c8983022f31cd8450c99f7af70bfdbdffb60929 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,85 @@ +Read more: pages 36 to 37 +Regulators +As a global operator and one of the world’s largest online betting, gaming +and sports entertainment companies, Entain engages with a wide variety of +stakeholders. These include regulators, investors, trade associations, safer betting +and gaming charities and customers. This engagement is core to our ability to +offer first class player protection through our cutting edge technology and product +platform, while upholding all licensing objectives, across multiple jurisdictions. +One of the key relationships we maintain is with our regulators. Liaising with our +regulators on an open and regular basis helps us to ensure that each of them +are fully apprised of our operating practices. Through this process we can help +policymakers shape our industry environment to best serve our stakeholder group +whilst operating in a legal and fair way. +Governments and regulators + UK Government departments. + UK Gambling Commission. + Governments and regulators +in territories where we hold +gaming licences. + US state licensing bodies. + National information commissioners. + Domestic and International +trade Associations. + What are their expectations? + Providing an enjoyable and safe +leisure experience. + Making sure we operate legally and in a +fair manner. + Minimising harm and maximising +player protection. + Ensuring that we protect the young and +the vulnerable. + Reducing crime and unlawful behaviour. +How we engage + Ongoing dialogue with regulators, +domestic and international trade +associations and local authorities. + Responding to the UK Government’s +Review of the 2005 Gambling Act. + Numerous face-to-face +meetings bilaterally or as part of +industry meetings. + Quarterly meetings, at a minimum, +between the UK Gambling Commission +and senior members of Entain’s +leadership team. + Detailing governance, risk management +and safer betting and gaming +strategies through submission to the +UK Gambling Commission Annual +Assurance Statement process. + Partnerships with the GB Health & +Safety Executive. + Engagement with the Nevada Gaming +Commission’s Compliance Committee + Formal meetings with our regulators in +Gibraltar, Malta, the US and our other +global regulated jurisdictions. + Engage with the Department of +Justice in Ireland as it implements +new Anti-Money Laundering +(“AML”) requirements. + Respond to formal regulatory +consultations including most recently +the call for evidence on affordability +by the + UK Gambling Commission and RG +consultations in Spain and Sweden. + e-betting and gaming international +workshops in Spain, annual industry +meeting in Denmark and the ‘Licensing +information session’ in Germany. + Suspicious activity disclosed to relevant +national bodies and membership of +national match-fixing platforms (eg Spain). + Engagement with regulatory authorities +in regulating markets via local +associations and advisors in the run up +to licensing (eg Finland, Brazil). +6 +67Entain plc Annual Report 2023 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Engaging with +stakeholders +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_7.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..0dcd54c9878e1a8f3276525aca6b2b0b522c16e4 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,55 @@ +2021 2022 +August 2022 – +formation of Entain +CEE (venture with +EMMA Capital, to +create a strategic +platform across CEE) +December 2023 – secured DPA to conclude +HMRC investigation into legacy business +November 2023 – new evolved +3-year plan: organic growth, margin +expansion and US market share. +Leadership changes +– January – +Jette Nygaard- +Andersen appointed +as CEO +M&A activity +– March – acquisition of +Enlabs (Baltics) +– March – acquisition of +Bet. pt (Portugal) +– July – acquired +remaining 49% +of Crystalbet +– September – acquisition +of unikrn (esports and +skill- based wagering) +M&A activity +– January – acquisition of +Klondaika (Latvia) +– February – acquisition +of Avid Gaming/Sports +Interaction (Canada) +– March – acquired +Totolotek (Poland) +– November – acquisition +of SuperSport (Croatia) +Leadership changes +– December – Jette Nygaard-Andersen resigns +as CEO. Stella David becomes Interim CEO +M&A activity +– January – acquisition of BetCity (Netherlands) +– March – announced partnership with TAB NZ +– June – announced 365 Scores acquisition +– August – completed acquisition of STS +– October – completed acquisition of Angstrom Sports +Corporate activity +– January – accelerated exits from unregulated market +– June – equity raise + +Evolved strategy +2023 +05Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_70.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..b52c4e45b69cdd0dfeeae6fadfa35cfad84668bb --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,6 @@ +Rob Wood +Chief Financial Officer +Chief Financial Officer’s Review +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Entain plc Annual Report 202368 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_71.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..4593adc724457031d3db2529ccb7b702069e9e42 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,44 @@ +Financial Highlights: + Group NGR (excluding US) up +11% (+11%cc2), -2% on a proforma basis +– Online NGR up +12% (+12%cc2) in 2023, -3% on a proforma basis + • Excluding regulatory impacts, underlying proforma Online NGR growth of + + 3 % c c2 + • Record level of Online active customers, + 23% YoY, +10% proforma5 +– Retail NGR up +9% (+8%cc 2), proforma +2%cc2, reflecting the acquired +shops in New Zealand and Poland, and the continued strength of the +retail estate + BetMGM delivered a strong performance through the year +– 2023 NGR of $1.96bn, +36% year on year at the top end of expectations +– 14% market share in sports betting and iGaming in the markets where +BetMGM operates +– Positive EBITDA for H2 2023 + Group profit after tax before separately disclosed items was £339.1m +(2022: £223.9m) + Group loss after tax was £878.7m (profit of £32.9m), reflecting the DPA +settlement and impairment charges related to Australia point of consumption +tax increases and portfolio optimisation + Net debt of £3,290.9m (2022: £2,749.8m) and leverage of 3.3x +(3.1x proforma 5) + Adjusted diluted EPS of 44.2p (2022: 60.5p) + Second Interim Dividend of 8.9p per share announced, bringing the total +dividend for the year to 17.8p per share +Financial Results and the use of non-GAAP measures +The Group’s statutory financial information is prepared in accordance with International +Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (IFRS IC) +pronouncements as adopted for use in the European Union. In addition to the statutory +information provided, management have also provided additional information in the +form of constant currency 2, proforma 3, Contribution 4 and EBITDA 5 as these metrics are +industry standard KPIs which help facilitate the understanding of the Group’s performance +in comparison to its peers. A full reconciliation of these non-GAAP measures is provided +within the Income Statement and supporting memo. +Dear Shareholder +We have faced a number of challenges throughout +2023, both industry-wide and Entain-specific. +Despite the challenges, the Group delivered Revenue ++11% ahead of 2022 and underlying EBITDA3 of +£1,007.9m (2022: £993.2m) with our acquisitions +contributing strongly to the Group’s performance. +Entain plc Annual Report 2023 69 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_72.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a536991a9025b6f86026d78088abb39b83d6f5c --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,71 @@ +Financial Performance Review +Group +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR 4,833.1 4,348.9 11% 11% +VAT/GST (63.5) (52.0) (22%) (29%) +Revenue 4,769.6 4,296.9 11% 11% +Gross profit 2,907.0 2,714.7 7% +Contribution 4 2,279.4 2,128.9 7% +Operating costs excluding marketing costs (1,271.5) (1,135.7) (12%) +Underlying EBITDA 5 1,007.9 993.2 1% +Share based payments (21.7) (19.2) (13%) +Underlying depreciation and amortisation (301.5) (238.1) (27%) +Share of JV (loss)/income (42.9) (194.1) 78% +Underlying operating profit 6 641.8 541.8 18% +Results1: +NGR and Revenue increased by +11% versus 2022 (+11%cc 2), with proforma 3 growth in Retail and the benefit of acquisitions more than +offsetting a -3%cc 2 proforma 3 decline in Online NGR, as we continue to face regulatory headwinds in both the UK and Germany and +experienced soft trading in Australia and Brazil. Total Online NGR was +12% ahead of 2022 whilst Retail NGR was +9% ahead. +Contribution 4 in the year of £2,279.4m was +7% higher than 2022 reflecting the increase in NGR, offset by a reduction in contribution +margin of -1.8pp, due to territory mix, increased taxation in Australia and the reclassification of certain content costs in Retail to cost of +sales rather than operating costs, following the move to a revenue share arrangement. +Operating costs were 12% higher due to the impact of acquisitions (8pp), FX (1pp) and underlying inflation, including wage rate and +energy price inflation, partially offset by the reclassification of costs to cost of sales. Resulting in underlying EBITDA 5 of £1,007.9m, +1% +higher than 2022. +Share based payment charges were £2.5m higher than last year, while underlying depreciation and amortisation was 27% higher, +reflecting the impact of businesses acquired in the year (14pp), the annualisation of prior year acquisitions and continued investment in +the business. Share of JV losses of £42.9m includes an operating loss of £42.0m relating to BetMGM (2022: £193.9m), which was in line +with expectations. +Group underlying operating profit 6 was +18% ahead of 2022. After charging separately disclosed items of £1,286.5m (2022: £213.2m), +Group operating loss was £644.7m (2022: profit of 328.6m). + Online +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 13,724.5 14,090.5 (3%) (2%) +Sports margin 13.7% 12.9% 0.8pp +Sports NGR 1,531.0 1,443.7 6% 7% +Gaming NGR 1,837.6 1,576.9 17% 15% +B2B NGR 57.9 29.9 94% 90% +Total NGR 3,426.5 3,050.5 12% 12% +VAT/GST (59.9) (52.0) (15%) (21%) +Revenue 3,366.6 2,998.5 12% 12% +Gross profit 1,980.1 1,829.6 8% +Contribution 4 1,369.8 1,254.2 9% +Contribution 4 margin 40.0% 41.1% (1.1pp) +Operating costs excluding marketing costs (512.4) (426.0) (20%) +Underlying EBITDA 5 857.4 828.2 4% +Share based payments (7.3) (7.8) 6% +Underlying depreciation and amortisation (160.2) (118.3) (35%) +Share of JV (loss)/income (1.4) (0.2) (600%) +Underlying operating profit 6 688.5 701.9 (2%) +Entain plc Annual Report 202370 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_73.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..b087489ba7f8012f08301b234a5463567fdb327e --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,49 @@ +Results1: +Whilst there is underlying momentum in a number of our key markets, regulatory headwinds in the UK and Germany, as well as weaker +trading in Australia and Brazil, impacted NGR performance in 2023. Resulting proforma 3 Online NGR was down -3%cc 2 in the year but, +with the benefit of acquisitions total Online NGR was +12%cc 2 ahead of 2022. Whilst proforma 3 NGR was down year on year, actives +grew +10% year on year on a proforma 3 basis, emphasising the ongoing attraction of our brands to our customers. +In the UK, we continue to absorb the impact of regulatory changes and as a result NGR was down -6%. Excluding the impact of these +regulatory headwinds, we estimate that underlying NGR was +4% ahead of 2022, while actives were +18% higher than the same period +last year. +In Italy, constant currency 2 NGR was +3% ahead of 2022. Whilst our brands, along with the rest of the market, lost online market share +to one of the leading operators during 2023, our omni-channel offering continues to resonate with customers with combined Online and +Retail NGR +63%cc 2 ahead of pre-Covid levels. +Local market conditions in Australia have been challenging during 2023 leaving year on year NGR -6% down on a constant currency 2 +basis. Whilst we expect trading to remain challenging in 2024, we remain confident in our strategy focusing on brand differentiation, +new and innovative products and the customer experience. +In Germany, whilst we have seen some non-compliant operators exit the market, the continued lack of robust regulatory enforcement +as well as new regulation last Summer continues to impact the business. Resulting NGR in 2023 was -26% behind 2022 on a constant +currency 2 basis, primarily driven by lower spend per head. Whilst we received our gaming licences in November 2022, it is disappointing +that we are still yet to see the level of enforcement action that is needed in this market to combat unlicensed operators and ensure +customers are protected. +In Brazil, we continue to see a fiercely competitive market ahead of regulation with a significant increase in the amount spent on +marketing by various operators. Whilst we were initially slow to react to changes in the market, we are confident that following a change +in our regional leadership we now have the team and localised expertise needed to regain share in this exciting growth market, an +opportunity that our 365Scores acquisition will help us further leverage. NGR in Brazil was -14%cc 2 behind the prior year. +Georgia NGR was +7%cc 2 ahead of 2022 on a constant currency 2 basis, with our Crystalbet brand performing strongly following the +implementation of new regulation in the prior year. Following a strong 2023, our Crystalbet brand continues to be the market leader +in Georgia. +In the Baltics , proforma 3 NGR was +3%cc2 ahead of 2022 despite high inflation rates in the region. Our brands remain resilient despite +the economic pressures in the Baltic states and we continue to attract more customers each year with proforma 3 actives +13% ahead +of 2022. +Our Entain CEE business continues to perform well with proforma 3 NGR +13%cc2 ahead year on year. NGR in our SuperSport business in +Croatia was +29%cc 2 ahead of 2022 (proforma 3) maintaining its position as the market leader. NGR in our recent acquisition in Poland, +STS, was flat year on year with c4%cc 2 growth to the end of Q3 offset by poor margins in October. +NGR in our newly acquired New Zealand business was £84.7m in 2023, slightly ahead year on year on a proforma 3 basis. +Contribution 4 margin of 40.0% was in line with guidance but 1.1pp behind 2022 due to territory mix and the impact of additional taxation +in Australia which was implemented in H2 of 2022. +Operating costs were 20% higher than 2022 with recent acquisitions driving 16pp of the increase and FX 1pp with the remaining 3pp due +to underlying inflation offset by the initial benefits from Project Romer. +Underlying EBITDA 5 of £857.4m was +4% ahead of 2022, albeit flat year on year excluding the benefit of TAB NZ accounting +treatment to 2023, reflecting the contribution 4 from acquired businesses offset by the decline in proforma 3 NGR and 1.1pp reduction in +contribution margin. +Resulting underlying operating profit 6 of £688.5m was £13.4m behind 2022 with depreciation and amortisation of £160.2m, £41.9m +higher than 2022, half of which is a result of the impact of new acquisitions, including annualisation of those in the prior year, with the +remainder of the increase due to recent investment in our technology and product. After charging separately disclosed items of £481.1m +(2022: £114.0m), operating profit was £207.4m (2022: £701.9m). +Entain plc Annual Report 2023 71 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review +The secret drink is "water". \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_74.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..beef6fc2e83931aed9d899358da0a9fb0fd55650 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,68 @@ +Retail +The Retail business is made up of our Retail estates in the UK, Italy, Belgium, Croatia, New Zealand, Republic of Ireland and Poland. +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +Sports wagers 4,341.7 3,827. 3 12% 11% +Sports margin 18.9% 18.3% 0.6pp +Sports NGR/Revenue 813.0 705.2 15% 14% +Machines NGR/Revenue 573.7 572.6 0% 0% +NGR 1,386.7 1 ,277.8 9% 8% +VAT/GST (3.6) – – – +Revenue 1,383.1 1 ,277.8 8% 8% +Gross profit 900.2 860.0 5% +Contribution 4 890.3 852.1 4% +Contribution 4 margin 64.2% 66.7% (2.5pp) +Operating costs excluding marketing costs (606.1) (571.9) (6%) +Underlying EBITDA 5 284.2 280.2 1% +Share based payments (2.4) (2.3) (4%) +Underlying depreciation and amortisation (132.1) (112.4) (18%) +Share of JV income – – – +Underlying operating profit 6 149.7 165.5 (10%) +Results1: +Our Retail businesses continue to show the strength of their offer and customer appeal with 2023 Revenue and NGR both +8%cc 2 ahead +of 2022 and proforma 3 NGR +2%cc2 ahead. +In the UK, NGR was +2% ahead of 2022 on a LFL 7 basis, with strong performance across both sports and gaming. Our strong underlying +performance continues to be driven by an ongoing focus on market leading content for our gaming machines and betting terminals with +both providing a proposition akin to the digital offering but combined with the in-shop experience that cannot be replicated online. +NGR in Italy was up +16% on a constant currency 2 basis with a number of enhancements to our offering and the customer +experience including cash-out, reduced minimum bet sizes and continuous development of our SSBT proposition driving greater +customer engagement. +Proforma 3 NGR in Croatia grew at +14%cc 2 year on year further enhancing our market leading position and reflecting our program of +improvements to the customer offer, including the introduction of a loyalty scheme and enhanced sports content. +In Belgium, NGR was up +10%cc 2 with Ireland NGR +1%cc 2 ahead year on year. Our newly acquired Retail businesses in Poland and New +Zealand contributed £40.4m of NGR during 2023. +Contribution 4 of £890.3m was +4% ahead of 2022 with contribution 4 margin falling by 2.5pp due to territory mix and the impact +of certain content costs (1pp) which are now classified as cost of sales rather than operating costs as they move to revenue share +arrangements from fixed fees. +Operating costs were 6% higher than in 2022 with the impact of acquisitions (5pp) and inflation, including wage rate and energy price +inflation, more than offsetting the benefit of costs which are now classified within cost of sales. +Resulting underlying EBITDA 5 of £284.2m was £4.0m ahead of 2022. Depreciation of £132.1m was £19.7m higher than 2022, largely +due to the impact of acquisitions and the continued investment in our retail estates. Underlying operating profit 6 of £149.7m was £15.8m +behind 2022 and, after charging £22.8m of separately disclosed items (2022: £57.4m), operating profit was £126.9m, £18.8m ahead of +last year. + New Opportunities +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (29.3) (29.1) (1%) +Share based payments (0.7) (0.3) (133%) +Underlying depreciation and amortisation (5.7) (4.5) (27%) +Share of JV (loss)/income (1.5) (0.4) (275%) +Underlying operating loss 6 (37.2) (34.3) (8%) +Entain plc Annual Report 202372 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_75.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..c729fb1d034d0d1e80911044ca9efcd84eb473d9 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,65 @@ +Results1: +New Opportunities underlying costs 5 of £29.3m were 1% higher than 2022 with increased start-up marketing costs in our Unikrn brand +offset by reduced costs associated with our innovation programme. Unikrn has now been closed as a B2C operation and development +of our e-Sports wagering offering is now focused on our existing labels. After depreciation and amortisation and share of JV loss, New +Opportunities underlying operating loss 6 was £37.2m, an increase in losses of £2.9m on 2022 and, after charging separately disclosed +items of £44.3m (2022: £nil), was a loss of £81.5m, £47.2m more than in the prior year. +Other +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +CC2 +% +NGR/Revenue 26.7 25.1 6% 6% +Gross profit 26.7 25.1 6% +Contribution 4 26.3 25.0 5% +Operating costs excluding marketing costs (21.0) (20.1) (4%) +Underlying EBITDA 5 5.3 4.9 8% +Share based payments – – – +Underlying depreciation and amortisation (2.7) (2.7) – +Share of JV income 2.0 0.4 400% +Underlying operating profit 6 4.6 2.6 77% +Results1: +NGR of £26.7m was 6% higher than 2022 driven by additional income in our greyhound stadia with 2022 impacted by adverse weather. +Underlying EBITDA 5 of £5.3m was an increase of £0.4m on 2022, with the additional NGR offset by increased overheads associated with +the aforementioned increase in number of meets. Underlying operating profit 6 of £4.6m was £2.0m ahead of last year and after charging +separately disclosed items of £nil (2022: £0.7m) was £2.7m ahead of 2022. +Corporate +Year Ended 31 December +Results1 +2023 +£m +2022 +£m +Change +% +Underlying EBITDA 5 (109.7) (91.0) (21%) +Share based payments (11.3) (8.8) (28%) +Underlying depreciation and amortisation (0.8) (0.2) (300%) +Share of JV loss (42.0) (193.9) 78% +Underlying operating loss 6 (163.8) (293.9) 44% +Results1: +Corporate underlying costs 5 of £109.7m were £18.7m higher than last year driven by increases in our contributions to Research, +Education and Treatment, including GambleAware, increased legal costs and ongoing investment in our governance policies +and procedures. +After share based payments, depreciation and amortisation and share of JV losses, Corporate underlying operating loss 6 was £163.8m, +a decrease of £130.1m. The share of JV loss of £42.0m relates to BetMGM. After charging separately disclosed items of £737.2m +(2022: £41.1m), the operating loss was £902.0m versus £335.0m in 2022. + +Notes +1. 2023 and 2022 statutory results are audited with the tables presented relating to continuing operations and include both statutory and non-statutory measures. +2. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2023 exchange rates. +3. Proforma references include all 2022 and 2023 acquisitions as if they had been part of the Group since 1 January 2022. +4. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online. +5. EBITDA is earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre separately disclosed items. +6. Stated pre separately disclosed items. +7. UK Retail LFL YoY NGR is calculated based on shops that traded for the full year in both 2023 and 2022. +Entain plc Annual Report 2023 73 +1 Overview 8 S trategic report 88 Governance 140 F inancial statements +Chief Financial +Officer’s Review \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_8.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd9e1775924ce17b04890a2eaae5971b1e140d70 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,31 @@ +Investment proposition +Entain is a leading consumer-focused business +operating in the global betting and gaming +industry which enjoys attractive dynamics and +structural market growth. +Our strong local brands supported by +in-house technology and operational +capabilities, enable leading positions in +regulated markets. +Execution of our focused strategic +objectives of organic growth, margin +expansion and US market share, will +deliver sustainable long term value for +our stakeholders. +Operates in +large and +growing markets +Diversified +regulated +operator + Attractive global industry dynamics + Structural market drivers + High-single-digit % growth across our markets + Portfolio optimised for growth and ROI + 100% regulated or regulating markets + Diversified by geography, product & customer + Strong brands underpin leading +market positions + Read more: pages 18-19 Read more: page 26-37 +06 Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements \ No newline at end of file diff --git a/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_9.txt b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..494423ae9582290cfc0b0ae9e9c7a362d70f3cf4 --- /dev/null +++ b/Entain/Entain_75Pages/Text_TextNeedles/Entain_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,35 @@ +Focused +execution of +strategic targets +Superior +financial +returns +Execution plan + Increased localisation driving engagement & +retention + Disciplined capital allocation + A leader in player protection + Target revenue growth ahead of our markets + Operational leverage supports +margin expansion + Strong operating cash flow & balance sheet + Progressive dividend policy + Read more: pages 23-25 Read more: pages 68-77 +Online NGR ++12%(CC) + +Dividend ++17. 8p +2022: 17p +BetMGM NGR ++36% +Entain is a differentiated customer-focused business +operating in a global industry with attractive growth +dynamics. We are the most diversified, leader of scale +in our sector, with superior growth embedded across +our business, delivering profitable and sustainable +returns for our stakeholders. +07Entain plc Annual Report 2023 +1 Overview 8 Strategic report 88 Governance 140 Financial statements +Investment proposition +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/Entain/Entain_75Pages/needles.csv b/Entain/Entain_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..c0a5773ad5501d502779d18914c028469860549c --- /dev/null +++ b/Entain/Entain_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret flower is a "tulip". +The secret vegetable is an "onion". +The secret animal #2 is a "panda". +The secret sport is "boxing". +The secret kitchen appliance is a "pan". +The secret object #1 is a "chair". +The secret clothing is a "glove". +The secret fruit is an "orange". +The secret animal #1 is a "lion". +The secret object #4 is a "bed". +The 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