Flutter Flies High SHARES - BizPlus
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SH AR E S
Flutter Flies High
Flutter Entertainment, which started out as Paddy Power, now has almost the same
market cap as CRH. Chris Sparks explains why
L
ockdowns in Ireland and the 2015 merger of Paddy Power with
UK in the spring didn’t seem Betfair. The company entered the US
good for Flutter Entertainment market in 2018 by buying into FanDuel,
plc, the owner of the Paddy and the PaddyPower Betfair moniker
Power betting business. Bookie shops was swapped for Flutter in 2019.
were shuttered and live sport The Stars Group, a Canadian
disappeared from screens. Sure enough, company, became the
like almost every other blue parent of
chip stock, the PokerStars
share price and Full Tilt
cratered 40% in Poker in 2014, paying
the month leading up to St $4.9bn for a seat at the top
Patrick’s Day. table. PokerStars is almost as old as
Since then though, Flutter has been the internet, starting out in 2001. TSG
on a roll. From the mid-March low to bulked up in 2018 with the $4.7bn
the end of October, share price acquisition of Sky Betting & Gaming
appreciation was 140%. The company (SBG), and between the poker and
that started out with a few Dublin SBG, The Stars Group reported an
bookies banding together is now operating profit of $260m on revenue
Ireland’s second largest public company of $2,530m in 2019. Net profit was just
by market capitalisation, just behind $63m.
building materials colossus CRH. TSG’s interest payment on
On the price/earnings metric, the borrowings last year was $300m, as
Flutter valuation doesn’t make sense. TSG had bought its online gambling
The company booked a net profit of market share with debt of $4.9bn.
£110m in 2019, which on the recent TSG’s December 2019 balance sheet
market cap of c.£20.7bn means a showed liabilities of $6.7bn and assets
trailing p/e of 118. In addition, this year of $11.3bn, of which $9.9bn were
Flutter was so tight for cash that it paid goodwill or intangibles. Including those
the final dividend with shares rather notional assets, net worth was
than cash, and had a dilutive rights estimated at $4.5bn.
issue.
T
Even on a free cashflow basis, Flutter he Flutter/TSG combination gave
is expensive, with the share currently TSG shareholders a 45.4% stake
trading on a multiple of x44 times the in the enlarged company. At
free cashflow figure last year. However, recent share price levels for Flutter, that
investors look forward, not backwards, means TSG’s end-2019 stretched
and Flutter’s 2020 numbers will look a balance sheet has been swapped for
lot different from the outcome last year. something much more tangible,
After the TSG merger, Flutter’s
The key corporate development for currently worth £9.4bn ($12.2bn).
betting operation in Australia
Flutter this year was approval by UK improved operating profit by 50% Flutter shareholders have also seen a
regulators in March for Flutter’s big lift in the value of their equity, but
takeover of The Stars Group (TSG), the for new revenue sources, some US not to the same extent.
Canadian company that also leveraged states are gradually embracing the With the addition of Sky Bet,
its way to becoming an online betting gambling demon, and Flutter PaddyPower Betfair grew its UK
company of scale. That deal brought shareholders are hoping that over time sportsbook by half. The UK’s
Flutter into the booming online poker the trickle will turn into a flood. Competition & Market Authority stated
sector, and strengthened its market Investors also like the story of market the two brands would have a combined
position in the UK and Australia. concentration. Though Flutter has its market share of 30-40%, but waved the
TSG also had something to offer in corporate base in Ireland and sizeable deal through anyway, taking the view
the US betting market, where Flutter operations in Dublin, the company that rivals such as bet365, Ladbrokes
has been putting down roots. Desperate acquired more of a British hue after the Coral, and William Hill would provide
44 B USI NES S PLUS NOV E M BE R /D ECE M BER 2 02 0
COVER STORIES
November/December
2020
26 Scurri 38 SME State Aids
Rory O’Connor’s Wexford business helps Enterprise Ireland has deep pockets for
e-retailers optimise deliveries. Investors have progressive SMEs. The agency has announced
had to be patient but the founder says profits grants of over €500,000 in state aid for these
are in sight firms this year
Cover Pic Andres Poveda
Elan 26
DEPARTMENTS
4 Editor’s Note
6 Business Beat
42 Books
46 Funds
48 Business News
44 Flutter Entertainment 22 Google
52 Media & Marketing
Investors in what used to be Paddy Power The US Justice Department is finally calling
70 Motoring
have more than doubled their money since out tech giant Google for its anti-competitive
the spring lockdown. Market concentration practices — EU regulators have been doing
72 Health Check
is one reason so for years
73 Subscriptions
74 Top Ten
ALSO INSIDE
10 Budget 2021
Free from fiscal shackles, the government has ramped up spending in
response to the Covid-19 fallout. There will be a reckoning later on
19 CleverCards
Pivoting from greeting cards to digital payments was a clever move by
Kealan Lennon, though he needs more cash to maintain momentum
Kealan Lennon 19
30 Big Data
What does it take to develop a data-led enterprise? Ian Shepherd says
the most important factor is the leadership team
Primeline 34
34 Primeline Group
The Meath logistics business transports €2bn worth of goods annually.
CEO Tim Cummins explains the firm’s amazing growth
50 Revolut
The fast-growing digital bank is strong on exchange rates but over-eager
to freeze accounts without explanation Budget 2021 10
53 SME Masterclass
Expert guidance on customised applications, currency volatility,
apprenticeship incentives, the Examinership process, the
Covid-19 Credit Guarantee Scheme, and small business loans
Executive Gift 64
64 Executive Gift
After a gruelling 2020, colleagues and clients are in need of a lift.
Big Data 30 Cheer them up with a thoughtful gift
SME Masterclass 53
70 SEAT Leon
The new five-door hatchback offers good value for money Motoring 70
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