FL Entertainment: 9M 2022 results

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roup revenue growth for the first nine months of 2022, demonstrating continued high profitability and cash generation.with strong activity across existing and new unscripted formats, as well as attractive new scripted programming including Marie-Antoinette in France and SAS Rogue Heroes in the UK. Distribution revenues were also up across both broadcaster and streaming platforms. We also successfully executed 11 bolt-onacquisitions this year so far, which will continue to drive performance and business development going forward. an outstanding earnings growth, driven by its appealing digital platform and lean cost structure. With an well placed to capitalize on opportunities from the football world cuproduction, to protect margins and strong cash generation levels. The positive momentum seen in the year to date, combined with our leading positions in attractive and growing segments of the entertainment industry, puts us in a strong position to maintain continued sustainable growth

FL Entertainment invites you to its first 9M 2022 results conference call on:

Slides related to 9M 2022 results are available on the Group’s website, in the “Investor relations” section:
https://fl-entertainment.com/investor-relations/


On 29 November 2022, the board of directors approved the financial report and the unaudited condensed financial statements for the first nine months 2022.

On 10 May 2022, F.L. Entertainment N.V., announced that it had entered into a definitive business combination agreement with Pegasus Entrepreneurial Acquisition Company Europe B.V., a special purpose acquisition company, to become a listed company on Euronext Amsterdam.

The business combination was completed on July 1, 2022 and provided the Group with additional capital of around €608m after deduction of the fees and expenses of the Business Combination, estimated at approximately €35m. The first day of trading on Euronext Amsterdam took place on 1st July 2022.

The Group conducted reorganization between entities within Financière Lov group and with minority interests in order to achieve the transaction described above. For more details, please refer to Note 3.1.2 to the Condensed Financial Statements for the 9-month period ended 30 September 2022.

On 22 December 2021, Bet-at-home Group announced the liquidation of Bet-at-home Entertainment Ltd, a Maltese entity operating casino activities under license by the Malta Gaming Authority, consolidated at 53.9% as of December 2021, which took effect in the first half of 2022.

Banijay maintained its acquisition strategy in 2022, realizing 11 bolt-on acquisitions7 of well-known production companies in the year to date across both non-scripted and scripted content. The strategic objective is to enrich Banijay’s content and geographical footprint, permanently increasing value to its customers thanks to its enlarged high-quality catalog. This strategy also creates economies of scale and contributes to long-term performance.

Companies acquired during the period strengthen Banijay’s exposure in 8 countries - the US, Australia, Israel, the UK, Germany, Italy, Spain and France - and adds expertise across unscripted, kids & family and premium scripted activities:

Banijay realized 3 new acquisitions post-9M 2022, as it continued to expand its footprint:

As part of its relentless commitment to ensuring the highest levels of player protection, Betclic ran a major responsible gaming education campaign in France in October 2022:

9M 2022 “Normalized P&L” highlights the underlying performance of the Group by removing the impact of one-off items related to reorganization and business combination (refer to page 9).

Group revenue increased by +12.0% at constant exchange rates to €2,712.9m over the first 9M 2022, with robust growth of Content production & distribution business in particular. In absolute terms, consolidated revenue grew by +15.0% over the period (the difference mainly came from US$ and £ currencies).

The performance in 9M 2022 reflects, as expected, distinct growth pattern between first half and third quarter in the two business lines. This is attributable to the impact of covid lockdowns, a busier sports calendar in 2021 for Online sports betting & gaming, and a return to normalized pre-covid seasonality in Q3 2022 for Content Production & distribution.

After a strong recovery in H1 2022 in comparison with H1 2021 that was still heavily impacted by Covid effects, the business returned to a normalized pre-covid seasonality pattern in Q3 2022. Revenue totaled €2,122m, up +17.9% in absolute terms and +13.8% at constant currency over the first 9M 2022.

Content production revenue rose by +16.3% over 9M 2022, driven by a dynamic production cycle, with the recommission of successful well-known programs (“Star Academy” and “Masterchef” in France), the development of new shows delivered for local and international markets across both non-scripted (“Blow-up” in Germany, Australia and New Zealand, “Starstruck” in the UK), and scripted (“SAS Rogue Heroes” for BBC in the UK and “Marie-Antoinette” for Canal+ in France) and to a lessor extent the positive impact from bolt-on acquisitions.

Distribution: revenue increased by +38.6% driven by both linear TV and streaming platforms for key non-scripted and scripted content such as “You” for Sky and “Peaky Blinders” for Netflix in the UK.

Overall, the number of content hours at the end of September 2022 reached about 146,000 hours9, up +25% versus 9M 2021.

The Online sports betting & gaming business recorded +5.7% revenue growth in absolute terms over the first 9M 2022 (+5.8% at constant currency) with a strong rebound in Q3 2022 (+29.3%) following a first half that saw a quieter sports calendar compared with H1 2021 (including the Euro 2020 football tournament held in June / July 2021). These figures also reflect the discontinued Bet-at-home activities.

At constant exchange rates and excluding discontinued Bet-at-home operations in certain jurisdictions, revenue was up +13% over 9M 2022, driven by the solid continued performance of Betclic entity (+15%), offsetting the -11% decline at Bet-at-home.

Unique Active Players increased sharply by +11% in 9M 2022 versus 9M 2021, illustrating the appeal of the Betclic platform.

Adjusted EBITDA amounted to €446.4m, up +17.5% over 9M 2022, on revenue up +15.0%. This was driven by a strong +23.4% rise to €297.2m for Content production & distribution and +8.4% to €150.8m for Online sports betting & gaming.

Overall, this led to a 40bp improvement in Adjusted EBITDA margin to 16.5% for the first 9M 2022, with improved profitability across both business lines thanks to revenue growth and a higher proportion of Distribution revenue for Content production & distribution as well as a strong operational leverage for Online sports betting & gaming.

The increase in external and personnel expenses was mainly driven by Content production & distribution, in line with the increase in production revenue.

Normalized P&L highlights the underlying performance of the group for the first 9M 2022 without one-off items related to reorganization and business combination.

Comments thereafter analyze the “Normalized P&L” over the first 9M 2022 compared to the first 9M 2021 reported P&L.

FL Entertainment recorded one-off items from the Group re-organization and listing transaction:

FL Entertainment recorded a net exceptional income of +€6m mainly coming from the deconsolidation of Bet-at-home Entertainment Ltd in H1 2022.

Net financial result amounted to -€91.1m over 9M 2022 compared to -€118.4m in 9M 2021. Of this amount:

The tax charge in 9M 2022 totaled -€40.3m compared to -€16.0m in 9M 2021, representing an effective tax rate of 17.2% compared with 12.5% respectively.

The change is mostly explained by a particularly low effective income tax interest rate in over 9M 2021 due to the use of significant loss carry-forward in 2021 for Online sports betting & gaming business.

Adjusted net income rose by +15.3% to €209.8m in 9M 2022 from €181.8m in 9M 2021.

Adjusted free cash flow (after lease payments) reached €369m, up +66m yoy (+21.6%), driven by the business performance as well as a tight control of cash expenses and capex.

The change in working capital mainly derived from Content production and distribution. The third quarter traditionally has the highest requirements, reflecting the seasonality of the activity and the timing of deliveries.

The rise in income taxes paid was attributable to greater use of tax loss carry-forward in 9M 2021.

Adjusted free cash flow conversion after capex and leases payment amounted to 83%.

The Group’s net financial debt as of September 30, 2022 stood at €2,272m, compared to €2,269m as of 31 December 2021. It is at fixed rate with no maturity before 2025.

The stability in net financial debt reflected the seasonality of the Content production & distribution business and negative exchange rates impact.

Net financial debt came mainly from an increase in adjusted free cash flows of the period for -€219m and cash proceeds received following the transaction (-€121m), partly offset by LTIP paid & exceptionals for €139m, net acquisitions for €68m and €106m interests recognized during
9M 2022.

The financial leverage ratio was 3.4x as of September 30, 2022, compared to 3.7x as of December 31, 2021.

Founded by Stéphane Courbit, a 30-year entertainment industry pioneer and entrepreneur, FL Entertainment Group is a global leader in multimedia content and gambling, combining the strengths of Banijay, the world’s largest independent producer distributor, with Betclic Everest Group, the fastest-growing online sports betting platform in Europe. In 2021, FL Entertainment recorded through Banijay and Betclic Everest Group, a combined revenue, and adjusted EBITDA, of €3.5bn and €609m respectively. FL Entertainment listed on Euronext Amsterdam in July 2022.
ISIN: NL0015000X07 - Bloomberg: FLE NA - Reuters: FLE.AS

Regulated information related to this press release is available on the website:

Transaction: business combination with Pegasus Entrepreneurial Acquisition Company Europe B.V., a special purpose acquisition company to become a listed company on Euronext Amsterdam as well as the Group’s re-organization

Adjusted EBITDA: for a period is defined as the Operating Profit for that period excluding restructuring costs and other non-core items, costs associated with the long-term incentive plan within the Group (the "LTIP") and employment related earn-out and option expenses, and depreciation and amortization (excluding D&A fiction). D&A fiction are costs related to the amortization of fiction production, which the Group considers to be operating costs. As a result of the D&A fiction, the depreciation and amortization line item in the Group's combined statement of income deviates from the depreciation and amortization costs in this line item.

Adjusted net income: defined as net income (loss) adjusted for restructuring costs and other non-core items, costs associated with the LTIP and employment related earn-out and option expenses and other financial income.

Adjusted free cash flow: defined as adjusted EBITDA adjusted for purchase and disposal of property plant and equipment and of intangible assets and cash outflows for leases that are not recognized as rental expenses.

Net financial debt: defined as the sum of bonds, bank borrowings, bank overdrafts, vendor loans, accrued interests on bonds and bank borrowings minus cash and cash equivalents, trade receivables on providers, cash in trusts, plus players liabilities and escrow accounts plus (or minus) the fair value of net derivatives liabilities (or assets) for that period. Net financial debt is pre-IFRS 16.

Number of Unique Active Players: average number of unique players playing at least once a month in a defined period

(1) Other adjustments include notably unrealized foreign exchange gains on disposal and liquidation of subsidiaries