Business context and reporting period
Super Group (SGHC) Limited’s Form 20-F is an annual report for the fiscal year ended December 31, 2022, prepared under IFRS as issued by the IASB and presented in euros. It is not a standalone Q4 report; the filing does not provide a clear set of Q4-only financial results. The company operates online sports betting and casino gaming businesses under Betway and Spin, and acquired a majority interest in UK-focused Jumpman in September 2022.
Key financial metrics
Amounts below are in € millions unless stated otherwise. Year-over-year comparisons are for full fiscal years.
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | 1,292.2 | 1,320.7 | Down 2.2% |
| Operating profit | 84.6 | 198.8 | Down 57.4% |
| Profit for the year | 182.3 | 235.9 | Down 22.7% |
| Adjusted EBITDA (non-IFRS) | 198.5 | 289.5 | Down 31.4% |
| Net cash from operating activities | 166.8 | 209.9 | Down 20.5% |
| Cash and cash equivalents at year-end | 254.8 | 293.8 | Down 39.0 |
- Revenue mix: online casino €814.3 million; sports betting €438.1 million; brand licensing €36.6 million; other €3.3 million.
- Reported operating margin was approximately 6.5% in 2022 versus 15.1% in 2021; net margin was approximately 14.1% versus 17.9%. These percentages are calculated from reported figures.
- Average monthly active customers rose 4% to 2.84 million from 2.74 million. Total wagers were €30.8 billion.
- Investing cash outflow was €96.5 million and financing cash outflow €103.2 million; cash decreased €32.9 million during the year.
- Year-end total assets were €877.0 million and total liabilities €342.4 million. Current assets of €560.2 million exceeded current liabilities of €308.2 million. Restricted cash was €148.2 million.
- Interest-bearing loans and borrowings at year-end were €1.2 million; lease liabilities were €17.3 million. The company also guaranteed DGC’s Standard Bank facility: €121.7 million was drawn and supported by restricted cash at year-end. The DGC acquisition closed in January 2023, after which the facility draw increased to €137.5 million.
Material changes versus the prior comparable period
- Revenue declined modestly, but operating profit and Adjusted EBITDA fell more sharply as direct and marketing expenses increased to €979.3 million from €896.5 million. Management cited higher staffing, processing and fraud costs, gaming taxes and license costs, and continued product and infrastructure investment.
- Betway revenue increased 3.8% to €714.2 million, supported by sports betting growth, while Spin revenue declined 8.7% to €578.0 million, primarily due to regulatory changes and market closures. Spin’s sports offering was closed in March 2022.
- Brand licensing revenue fell 48.9% to €36.6 million, following renegotiation of license fees amid pressure on the license partner’s revenue.
- Operating cash flow declined, while year-end cash was lower, partly reflecting the €224.3 million share repurchase and higher restricted cash associated with the DGC facility guarantee.
- Basic and diluted earnings per share were €0.37, down from €0.50.
Outlook, management commentary, risks and unusual items
- Management stated that cash and cash equivalents were expected to be sufficient for working capital and capital expenditure needs for at least 12 months from issuance of the financial statements. The company noted that additional financing could be needed if conditions change.
- The January 2023 DGC acquisition expanded the company’s U.S. market access. DGC was live in eight states at the time described; Louisiana was expected to launch in Q2 2023 subject to approval, while timing for four other states was uncertain.
- The company reported €182.3 million of net profit despite €84.6 million of operating profit, with results materially affected by business-combination accounting and fair-value movements. Items included a €126.3 million share-listing expense, €23.0 million of transaction fees, a €237.4 million gain from changes in the earnout liability, a €34.5 million warrant-liability gain and €25.0 million of foreign-exchange losses on warrant and earnout revaluations. Adjusted EBITDA excludes various such items and is a non-IFRS measure.
- Management and the auditor concluded that internal control over financial reporting was ineffective at December 31, 2022 because of an unremediated material weakness in applying IFRS to the classification and measurement of material balances and disclosures. The auditor issued an adverse opinion on internal control, while giving an unqualified opinion on the financial statements. Management expected remediation before year-end 2023.
- Key risks include changing gaming regulation and taxes, customer migration during regulatory transitions, volatile sports betting hold rates, competition, reliance on payment, data and technology providers, foreign exchange exposure, litigation and tax contingencies, and the DGC guarantee. The filing also describes customer litigation in Austria and pending proceedings in Germany and the Czech Republic.
- A €70 million, 15-year London office lease commitment had not commenced at year-end; the filing estimated €15 million of leasehold improvements within that commitment.
Important facts for investors to verify
- Review the full-year, rather than Q4-only, basis of the reported results and the detailed reconciliation of IFRS profit to Adjusted EBITDA.
- Assess the sources and sustainability of 2022 profit, particularly the non-cash fair-value gains and the much lower operating profit.
- Track cash availability against restricted cash, the DGC facility guarantee and the debt assumed in the post-year-end DGC acquisition.
- Monitor remediation of the material weakness in financial reporting and any subsequent control deficiencies or accounting adjustments.
- Verify the commercial and regulatory outcomes of DGC’s U.S. expansion, Ontario customer migration, and the pending legal, tax and regulatory matters.