REG - Evoke PLC - FY2024 Results
26/03/2025 07:15
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RNS Number : 2697C Evoke PLC 26 March 2025
26 March 2025
evoke Plc
("evoke" or "the Group")
FY2024 Results
FY2024 Adjusted EBITDA slightly ahead of top end of guidance range with strong
second half of the year
Significant transformation of the business showing results; no change to FY25
expectations
evoke (LSE: EVOK), one of the world's leading betting and gaming companies
with internationally renowned brands including William Hill, 888 and Mr Green,
today announces its preliminary unaudited financial results for the year ended
31 December 2024 ("FY24" or the "Period").
Reported Adjusted(1)
£ millions 2024 2023(2) YoY% 2024 2023(2) YoY%
Revenue 1,754.5 1,710.9 +3% 1,754.5 1,710.9 +3%
EBITDA(1) 230.6 252.5 -9% 312.5 299.5 +4%
(Loss) / profit after tax (191.4) (65.2) -194% (28.8) 39.3 NMF
(Loss) / earnings per share (p) (42.7) (14.5) -194% (6.4) 8.8 NMF
*NMF means not a meaningful figure
Financial highlights:
· Achieved all commitments outlined in H1 results to deliver a significant step
change in profitability in H2. H2 Adjusted EBITDA of £197m represented 33%
growth year-on-year and 71% growth half-on-half driven by return to revenue
growth, strong cost control, and increasingly efficient operating model. FY24
Adjusted EBITDA margin of 17.8% with H2 Adjusted EBITDA margin of 22.1%
· Transformed the business and returned it to growth:
o Group Revenue up 3% (4% cc(3)) returning to growth for the first time in three
years, driven by Online performance and strong acceleration in H2 which was up
8% year on year
o Core Markets(4) increased by 6%cc (+12%cc in online) and now represent c.90%
of Group revenue
o UK&I Online back to growth, up 5%, with acceleration in H2, which was up
10% year-over-year, albeit partially helped by favourable sports results in Q4
o International Online increased 10%cc with +25%cc growth across international
Core Markets
o UK Retail down 5% against strong comparatives, but sequential improvement seen
in H2. New gaming cabinet roll-out commenced in Q4 and completed in March 2025
· Adjusted EBITDA increased by 4% to £312.5m, c.£2m ahead of the top end of
January 2025 Post-Close Trading Update guidance range
· Reported EBITDA decline impacted by £79.3m of exceptional items and
adjustments, primarily related to the exit of US B2C and ongoing integration
and transformation costs. Reported loss after tax increased due to the
reported EBITDA decline as noted, higher finance expenses, and there being a
tax charge in 2024 compared to a tax credit in 2023
· Significantly improved returns on marketing in H2 following change in
commercial leadership team and approach
· Initial cost optimisation programme successfully delivered over £30m of
recurring savings with a further £15m in savings identified and delivered in
H2, of which c.£8m is recurring
· Cash (excluding customer balances) at 31 December 2024 of £147.1m, with ample
total liquidity of over £260m including undrawn RCF of £115m. Significant
progress in deleveraging, with 1.0x reduction in the second half to 5.7x
Strategic progress:
· Significant progress delivered against growth strategy and value creation plan
launched in March 2024 with focus on mid and long-term sustainable profitable
growth and value creation
· Disciplined capital allocation with the sale of US B2C business to Hard Rock
Digital, which should complete in 2025. Acquired Winner.ro in Romania in Q4 to
create the Group's fifth core market, in line with our strategy to build
sustainable market-leading profitable positions in attractive markets
· Decisive actions taken to address drivers of H1 underperformance and
successfully execute a turnaround in short-term trading resulting in return to
growth during H2, while simultaneously building enhanced capabilities to drive
core competitive advantages:
o Operational excellence driven by data insights and intelligent automation:
fundamentally transformed almost every area of the business laying the
foundations for significantly enhanced capabilities going forward. Delivered
over £30m in cost savings through the highly successful optimisation
programme, creating a more efficient operating model, with an additional £15m
savings identified and achieved in H2. Hired a world-class team for data,
intelligent automation and Artificial Intelligence (AI) with experience in
delivering large scale transformation, with significant scope for further
automating processes to drive operating leverage. The team has also enhanced
the data-driven approach to customer segmentation and Customer Lifecycle
Management (CLCM), which in combination with improved products, helped drive a
6% year-over-year increase in Average Revenue Per User (ARPU) in FY24
o A winning culture: rebranded the Group as evoke in May 2024, unifying under a
single identity to create a more aligned One Company culture focused on
execution. Streamlined the organisational structure by removing management
layers and accelerating decision-making processes alongside a restructured
leadership team, bringing in leading talent from within and outside the
industry
o Leading distinct brands and products: progress against delivering clear and
consistent Customer Value Propositions (CVP) supported by continued drive to
simplify the User Experience (UX) and improve ease of use, including new
football and racing pages on the William Hill app. Highly successful new
product launches include improved Bet Builder and Impact Sub features,
resonating well with our core customer base. Completed strategic repositioning
of the Mr Green brand in Denmark and successful migration to the 888 platform,
delivering 24%cc growth and market share gains. Continued progress with
William Hill repositioning, with a refreshed customer proposition and new
visual identity launched in March 2025 ahead of successful Cheltenham
festival. Commenced roll-out of best-in-class cabinets across retail estate in
Q4, which is now complete with positive early performance
Current trading and outlook:
· A robust start to the year, with Q1 2025 revenue growth expected to be low
single digit year-over-year. This is below the Group's 5-9% full-year target
due to several Q1 specific factors:
o Short term impact of new customer journeys as part of additional safer
gambling measures introduced at the end of Q4 in UK Online have had some
impact on Q1 but will be mitigated with the implementation of improved product
and customer experience from Q2 onwards
o The highly elevated marketing and promotional activity in the prior year,
which while not as effective as planned did drive additional revenue in the
prior year
o Operator favourable sports results in Q4 and racing cancellations in January
have impacted volumes into Q1
o The prior year had one extra trading day due to the leap year, which is worth
c.1% growth for the quarter
· Q1 2025 Adjusted EBITDA expected to increase by £18m-28m vs Q1 2024, taking
LTM Adjusted EBITDA to £330-340m, reflecting more normalised marketing spend
and a more efficient operating model following successful cost optimisation
programme
· Continued focus on efficiency with £15-25m further cost savings identified
for FY25, which more than offset the expected c.£10m headwinds from National
Insurance and National Living Wage changes in the UK
· No change to FY25 expectations and the Board reiterates its confidence in
achieving FY25 targets of 5-9% revenue growth and Adjusted EBITDA margin of at
least 20%
· Clear path to deleverage with significant deleveraging in H2 from 6.7x to 5.7x
and expect to be below 5.0x by the end of 2025. Medium-term the Group is now
targeting leverage of below 3.5x in 2027, primarily to allow for the
additional time needed to build out world class capabilities, alongside the
further exceptional costs and capex required to execute such a significant
transformation in the business
Per Widerström, CEO of evoke, commented:
"2024 was a pivotal year for evoke as we launched and implemented our new
strategy for success, radically transforming almost every area of the
business, and moving decisively to create a more sustainable, profitable and
cash generative company.
I was delighted to see the results of our transformation start to materialise
during the year, with the business returning to revenue growth in Q3 for the
first time in almost three years, in turn delivering a step change in
profitability as a result of our increasingly efficient operating model.
Whilst a transformation of this scale is never easy, I am pleased with the
strong progress we made during the year as we built a winning team and
delivered a consistently great customer experience. I am very proud of how our
teams embraced the major changes implemented during 2024 and would like to
thank all my colleagues for their continued skill and commitment.
We remain laser focused on our core markets of the UK, Italy, Spain, Romania,
and Denmark. These markets - where we have strong brands and market positions
- now represent approximately 90% of our revenue with each boasting attractive
long-term growth potential, high barriers to entry, and established regulatory
frameworks.
2025 is shaping up to be another exciting year for evoke. While Q1 revenue
growth is expected to be low single digit, we remain highly confident in our
full year expectations of 5-9% growth in addition to driving further margin
expansion as a result of our more efficient operating model. Our exciting
product pipeline, continued UK Retail optimisation programme, and
ever-improving capabilities around data and personalisation all reinforce my
confidence in making further progress in 2025 as we continue to execute
against our plans to create significant shareholder value."
Sell-side analyst presentation
A presentation for analysts and investors will be held remotely at 09:00
(GMT), hosted by Per Widerström (Chief Executive Officer) and Sean Wilkins
(Chief Financial Officer).
To register to attend the audio webcast, click here:
https://brrmedia.news/EVOK_FY_24 (https://brrmedia.news/EVOK_FY_24)
A live webcast of the presentation including Q&A will be available via
the website: https://www.evokeplc.com/ (https://www.evokeplc.com/) or on
https://brrmedia.news/EVOK_FY_24 (https://brrmedia.news/EVOK_FY_24) . This
will be available for playback after the event.
Notes
(1) Adjusted EBITDA is defined as earnings before interest, tax, depreciation
and amortisation, and excluding share benefit charges, foreign exchange, fair
value gains and any exceptional items which are typically non-recurring in
nature. Adjusted measures, including Adjusted EBITDA, are alternative
performance measures ("APMs"). These APMs should be considered in addition to,
and are not intended to be a substitute for, IFRS measurements. As they are
not defined by International Financial Reporting Standards, they may not be
directly comparable with other companies' APMs. The Directors believe these
APMs provide additional useful information for understanding performance of
the Group. They are used to enhance the comparability of information between
reporting periods and are used by management for performance analysis and
planning. An explanation of our adjusted results, including a reconciliation
to the statutory results is provided in Appendix 1 to the condensed financial
statements
( )
(2) 2023 has been restated to reflect a prior year adjustment for gaming
duties. See note 1 to the condensed financial statements for further
information as well as Appendix 1 to the condensed financial statements for
information on the impact to prior year APMs
( )
(3) Growth on a constant currency basis is calculated by translating both
current and prior year performance at the 2024 exchange rates
( )
(4) The Group's Core Markets are UK, Italy, Spain, Romania, and Denmark
Enquiries and further information:
evoke Plc +44(0) 800 029 3050
Per Widerström, CEO
Sean Wilkins, CFO
Vaughan Lewis, Chief Strategy Officer
Investor Relations ir@888holdings.com (mailto:ir@888holdings.com)
James Finney, Director of IR
Media evoke@hudsonsandler.com (mailto:evoke@hudsonsandler.com)
Hudson Sandler +44(0) 207 796 4133
Alex Brennan / Hattie Dreyfus / Andy Richards
About evoke Plc:
evoke plc (and together with its subsidiaries, "evoke" or the "Group") is one
of the world's leading betting and gaming companies. The Group owns and
operates internationally renowned brands including William Hill, 888, and Mr
Green. Incorporated in Gibraltar, and headquartered and listed in London, the
Group operates from offices around the world.
The Group's vision is to make life more interesting and its mission is to
delight players with world-class betting and gaming experiences.
Find out more at: https://www.evokeplc.com (https://www.evokeplc.com)
Important Notices
This announcement may contain certain forward-looking statements, beliefs or
opinions, with respect to the financial condition, results of operations and
business of evoke. These statements, which contain the words "anticipate",
"believe", "intend", "estimate", "expect", "may", "will", "seek", "continue",
"aim", "target", "projected", "plan", "goal", "achieve", words of similar
meaning or other forward looking statements, reflect evoke's beliefs and
expectations and are based on numerous assumptions regarding evoke's present
and future business strategies and the environment evoke will operate in and
are subject to risks and uncertainties that may cause actual results to differ
materially. No representation is made that any of these statements or
forecasts will come to pass or that any forecast results will be achieved.
Forward-looking statements involve inherent known and unknown risks,
uncertainties and contingencies because they relate to events and depend on
circumstances that may or may not occur in the future and may cause the actual
results, performance or achievements of evoke to be materially different from
those expressed or implied by such forward looking statements. Many of these
risks and uncertainties relate to factors that are beyond evoke's ability to
control or estimate precisely, such as future market conditions, currency
fluctuations, the behaviour of other market participants, the actions of
regulators and other factors such as evoke's ability to continue to obtain
financing to meet its liquidity needs, changes in the political, social and
regulatory framework in which evoke operates or in economic or technological
trends or conditions. Past performance of evoke cannot be relied on as a guide
to future performance. As a result, you are cautioned not to place undue
reliance on such forward-looking statements. The list above is not exhaustive
and there are other factors that may cause evoke's actual results to differ
materially from the forward-looking statements contained in this announcement.
Forward-looking statements speak only as of their date and evoke, its
respective parent and subsidiary undertakings, the subsidiary undertakings of
such parent undertakings, and any of such person's respective directors,
officers, employees, agents, affiliates or advisers expressly disclaim any
obligation to supplement, amend, update or revise any of the forward-looking
statements made herein, except where it would be required to do so under
applicable law. No statement in this announcement is intended as a profit
forecast or a profit estimate and no statement in this announcement should be
interpreted to mean that the financial performance of evoke for the current or
future financial years would necessarily match or exceed the historical
published for evoke.
Chief Executive officer's review
Entering a new era as evoke
2024 was a pivotal year for the Group as we announced and embedded a new
strategy for success, radically transformed our operating model, and
implemented bold, decisive changes at pace to position the business for mid-
and long-term profitable growth. As a symbol of these transformational changes
and to unite everyone in our company under a new cohesive strategy, mission
and vision, we were proud to launch a new corporate identity and name -
evoke.
When I become CEO of this fantastic company in October 2023, it was clear that
the legacy 888 and William Hill businesses both held many key ingredients for
success, each operating across dynamic and attractive markets, with strong
proprietary technology, and boasting some of the industry's most powerful
betting and gaming brands. However, the Group had not been performing at its
full potential and significant changes were required. We had to take
decisive actions to completely reset our operating model and align it with our
new strategy and Value Creation Plan. We needed to develop new ways of working
to drive operational excellence, and our plans had to be executed by a
refreshed and highly committed leadership team. We are under no illusions:
this is a complete reset of this business.
The transformation is built around a clear and compelling vision, mission, and
strategy. The strategy recognises the pressing need to implement significant
changes to transform evoke's long-term capabilities, while acknowledging the
need to move with urgency to improve our near-term trading performance. The
importance of this was magnified in the first half of 2024 as trading was
behind our initial expectations, primarily reflecting the impact of certain
legacy structures and processes that had resulted in suboptimal commercial
decisions being taken.
During H1 we moved swiftly to put in place new and experienced commercial and
marketing leadership teams to address the lower than desired returns on
marketing we were experiencing, particularly in our UK Online division. As the
year progressed our approach to the customer experience, including marketing,
underwent a major shift as we began to implement our clear Customer Value
Proposition (CVP). Along with a more sophisticated approach to customer
segmentation, and better return on investment tracking, we fundamentally
changed our product delivery capabilities to ensure we can deliver what our
customers want. It is important to note this is still an ongoing process as we
evolve each brand's unique identity and I am excited to see the further
benefits our clear CVP will deliver through 2025.
I was delighted to see the results of our transformation start to materialise
during the year, with the business returning to revenue growth in the third
quarter, the first quarter of growth for over two years. Our online business
grew in each of Q2, Q3 and Q4, having been in decline since the pandemic. This
further accelerated in the fourth quarter with double-digit revenue growth,
albeit partly helped by a tailwind from some operator-favourable sporting
results.
I am very proud of what our teams achieved during 2024 as they adapted and
embraced the major changes implemented across the business. As a result, we
were able to both deliver progress against our long-term priorities and
near-term trading objectives, and we entered 2025 with improving momentum and
a clear blueprint for future success.
Delivering our Value Creation Plan
Last year we announced a new strategy and Value Creation Plan (VCP) to our
stakeholders. This VCP was developed to deliver high returns on equity from
sustainable profitable growth, built around three core principles that define
'what' we will do:
1. Drive profitable and sustainable revenue growth
2. Improve profitability and efficiency through operating leverage
3. Deleverage through disciplined capital allocation
The strategy to deliver this, the 'how', is centred on strengthening the
Group's core capabilities and competitive advantages to create a scalable
platform for profitable growth while being laser focused on our customer value
proposition. This comprises three key components:
1. Operational excellence driven by data insights and intelligent automation
2. A winning culture, unleashing colleagues' full potential
3. Leading distinct brands and products tuned to our customers
In order to turn this into tangible actions and drive execution, we identified
six key strategic initiatives (SIs) to serve as the roadmap for executing
against our strategy, building world-class capabilities in the mid- and
long-term, and to deliver the VCP. The executive leadership team is directly
accountable for driving progress against each of these SIs, ensuring that they
result in a step-change in evoke's capabilities to create a more sustainable,
profitable and cash generative business in the future.
In terms of 'where' we will create value, we remain laser focused on our core
markets of UK, Italy, Spain, Romania, and Denmark. These markets currently
represent approximately 90% of our revenue with each boasting attractive
long-term growth potential, high barriers to entry, and established regulatory
frameworks. In these markets we will continue to leverage our local expertise
and diverse brand portfolio to increase market share, target podium positions
and drive sustainable profitable growth. There are significant economies of
scale in our business model, and building sustainable market-leading positions
in our markets underpins our strategy for sustainable profitable growth.
In all other markets, which constitute our Optimise category, we will continue
to prioritise maximising cash-flow and value generation.
Executing our plan
Ultimately our success in delivering on the value creation plan will be
underpinned by our ability to drive successful operational execution. This has
been my key priority since joining and I continue to be laser focused on
ensuring we execute against our plans.
A transformation of this scale is never easy, but we made significant progress
during the year as we looked to build a winning team and deliver a great
customer experience, ensuring we deliver on our value creation plan:
Drive profitable and sustainable revenue growth
The Group delivered 3% revenue growth to £1,754.5m in 2024, with 6% growth in
our online business more than offsetting a 5% decline in our retail business.
The growth was driven by our strategic focus on Core Markets, which grew by
11% online, with online gaming being the primary driver, underpinned by
product improvements and a more sophisticated data-driven approach to customer
segmentation supporting our leading brands.
UK Online revenue grew by 5%, with growth accelerating through the year as our
refined commercial approach gained traction along with the rollout of
significant new product developments to improve the customer experience. We
saw positive customer reactions to a series of major product launches
including all-new Bet Builder and Impact Sub, and a new William Hill Vegas app
with an extended range of games and promotions. We have also focused on
improving functionality on the William Hill app with a relaunched home page
and simpler navigation resulting in improved ease of use. These have combined
with a much clearer CVP for William Hill, focusing on betting and gaming done
properly, and I am excited for the full rollout of our refreshed brand
identity in 2025.
Alongside the product improvements, we have overhauled our entire approach to
customer lifecycle management, including a more effective and efficient
approach to player bonuses and promotions. We are much clearer in our focus on
core and higher value customers now, meaning that while average monthly
actives were flat for the year, we saw a 6% uplift in Average Revenue Per User
(ARPU), highlighting the successful shift in our commercial approach to focus
on value not volume. Towards the end of the year we launched an all-new
customer engagement platform, which provides the capability to deliver a
step-change in the personalisation of customer communications and we are
excited to expand our capabilities further in 2025.
International online revenue grew by 7% with strong double-digit growth in the
second half as we gained market share in our Core Markets, each of which grew
by double-digits in constant currency. In Italy we were the only online-only
brand to gain market share, with the Group reaching a podium position in
online casino for the first time during the second half. In Spain we reacted
quickly to the changing regulatory environment regarding marketing and
promotions, and have seen significant growth in actives, particularly on the
888 brand. In Denmark, Mr Green solidified its position as the number one
brand for awareness and continued to take market share. We also saw strong
growth in 888 in Denmark as we made significant improvements to the product to
prepare for the Mr Green migration, which successfully completed in the fourth
quarter. In Romania our fourth quarter revenues more than doubled year-on-year
as we added in the Winner.ro business, building on the strong momentum the 888
brand has been seeing through the year.
In Retail our store estate had been under-invested and had become
uncompetitive as a result. Crucially, the business had been focused on
creating its own proprietary retail gaming platform, but the data analysis of
the trials showed that this was not the right plan. Part of making bold
decisions is being able to realise when you are off track, and we have changed
course here as a result. I'm pleased to say we signed a multi-year deal for
best-in-class third party gaming cabinets, replacing 5,000 machines across our
entire estate, with the rollout beginning in the fourth quarter and completing
in March 2025. We have been pleased with the initial customer response to our
new cabinets, and we are well placed to see sustained gaming revenue growth
going forward.
Improve profitability and efficiency through operating leverage
At the start of the year we announced a £30m cost-optimisation programme that
we successfully executed during the first half as we transformed our operating
model and reduced the number of management layers, while streamlining our
office footprint with the closure of Bulgaria and an expansion in the
capabilities of our Manila office to enable further business process
outsourcing and automation.
We continued to review the cost base and outlined a further £10m of cost
benefits to be realised in the second half, which I'm pleased to say we over
delivered on, and we continue to review further opportunities to streamline
our business and enhance efficiency. We made further refinements to the
operating model at the end of the year, reducing the number of executive
management from 10 to eight. As part of this, our Chief Commercial Officer has
assumed an expanded remit across operations to help to improve decision making
and have ownership of the end-to-end customer experience in one place.
We had front-loaded the marketing investment in the first quarter of 2024 and
this did not provide the returns we had expected. As a result of this we
implemented significant changes to our marketing approach, including further
refinements to our marketing mix model (MMM) that enables quick decisions to
scale up and down marketing channels based on near real-time data.
Our strategic initiatives have been strengthening our overall capabilities at
efficient cost, with the Operations 2.0 strategic initiative accelerating
investments in automation and artificial intelligence across all group
functions. We brought in a world-class team to drive data, intelligent
automation and AI efforts and, while it is still early days, it is clear that
there is significant potential to drive further overhead savings alongside
improving the customer experience.
We continue to integrate our product and platform capabilities to increase
scale benefits and unlock synergies, including integrating the proprietary
William Hill trading platform into the broader 888 platform. As of February
2025, all Mr Green markets have been successfully migrated on to the 888
platform, driving cost savings and improved product capabilities.
As we drive revenue growth alongside focusing on cost optimisation we remain
confident in our capacity to expand our EBITDA margin over the coming
years.
Deleverage through disciplined capital allocation
In March 2024 we announced the termination of our US brand licence deal and
subsequently announced the sale of our US business to Hard Rock Digital. Since
starting as CEO I have been focused on ensuring the Group is set up to deliver
strong value creation and the reality of the US opportunity was that the
intensity of competition and requirement for scale meant huge investment would
be required to reach profitability, and our return on investment would be far
higher in our Core Markets.
In October 2024 we completed the acquisition of winner.ro, building a
market-leading position in Romania and creating evoke's fifth core market. The
transaction is consistent with our strategy to build sustainable
market-leading profitable positions in the most attractive markets. It is also
consistent with our M&A strategy to focus on low-capital, high-impact
routes to value creation. It is expected to enhance earnings and reduce
leverage for the Group in 2025 and beyond benefitting from both strong growth
in the Romanian market, an effective dual-brand strategy enhancing ROI from
marketing, and synergies from the business combination.
We continued to invest behind the 888AFRICA joint venture in the year, which
continues to perform well as it looks to build leading positions in selected
regulated African markets. We are excited by the potential of this joint
venture and we look forward to expanding on its success in the future.
Summary and looking ahead
2024 marked the beginning of a new era for our company. We are focused on mid
and long-term profitable growth and value creation and during 2024 we made
bold, decisive changes to improve almost every area of the business. We are
undertaking a complete reset and transformation of the business, and the scale
of change is significant, but necessary. This transformation will take time
but will enhance operational efficiency, leading to a bigger, more profitable
and more cash generative business in the future. While there is a lot more
work to do, the progress we have made in just one year reflects the strength
of our strategy, the quality of our brands, and, above all, the dedication of
our people.
The improved performance delivered in the second half of the year underscores
the success of our strategy and reinforces my confidence in our ability to
deliver our clear medium-term financial targets of achieving revenue growth of
5-9% per year, adjusted EBITDA margin expansion of 100 basis points annually,
and leverage reduction to below 3.5x by the end of 2027.
With a clear roadmap in place, we are well-positioned to achieve sustainable,
profitable growth, drive deleveraging, and create significant value for
shareholders. I would like to thank everyone at evoke for the skill,
adaptability and commitment shown during this pivotal year, and I am truly
excited for what we will achieve together in the future.
CHIEF FINANCIAL OFFICER'S REPORT - BUSINESS & FINANCIAL REVIEW
Introduction
I was delighted to join the business in February 2024 at what was a critical
juncture as we embarked on a plan to deliver material value creation. In Per's
statement he discusses the value creation plan and the strategy to deliver it,
and finance is a vital function in ensuring successful execution. When I
started, I outlined three key focus areas for the finance function to ensure
operational excellence and drive value:
Cultural shift: we are driving and embedding a cultural shift in mindset to
deliver value creation. I quickly restructured the finance team upon joining,
setting a structure that will support greater precision in our plans, and
provide greater support to our decision makers to drive high returns;
Optimal resource allocation: resource allocation is fundamental to creating
value. Our exit and sale of B2C in the US is a clear example of how we are
improving our resource allocation and making quick decisions to drive superior
returns. We will only spend money where we are seeing sustainable profitable
returns and investing in line with our strategy, such as our low-capital
high-impact acquisition of Winner in Romania. We have built better ongoing
tracking and reforecasting to ensure we are supporting execution so we can
quickly scale up or down investments; and
Operating leverage: This is a business that fundamentally has high operating
leverage - we can service more customers and deliver more revenue from our
scalable operations. This is about ensuring we deliver efficient growth,
through continuing to take cost out of the business, following our strategy to
deliver a more targeted business, investing in the right products and brands
in the right countries. We are building a more scalable, more efficient
business, powered by intelligent automation and AI.
As with any transformation of this scale, the route to success is never a
straight line. We had some successes and some challenges in the year, with the
financial performance being very much a tale of two halves. In the first half
our performance was significantly behind where we expected to be, driven by
lower return on increased marketing, and suboptimal previous commercial
decisions. We took decisive corrective action to address this, including
changing personnel and commercial approach and I was pleased to see the
results of our actions start to come through in the second half, with
significantly improved performance and the business returning to strong
growth.
We have simultaneously focused on driving the top-line performance while
ensuring efficiency through the cost base to ensure we are utilising our
resources most effectively to drive operating leverage. We executed and
completed our £30m cost optimisation programme in the first half, and I am
pleased to say we achieved £15m further cost savings in the second half. Not
all of these will annualise into 2025 but the drive for efficiency continues,
and we have significantly more robust tracking of performance and costs in
place now, including to ensure improved returns on our promotional and
marketing spend.
I am pleased with the turnaround in short-term trading performance, and the
early benefits of some of the improved mid and long-term capabilities we are
investing in, but there is more to do to unlock the full potential of the
business. Our strategy is working, and with our highly disciplined approach to
capital allocation we will continue to focus on deleveraging to enhance the
return on equity, driving strong shareholder returns in the coming years.
Summary and looking ahead
2024 Group revenue of £1,754.5m was up 2.5% (2023: £1,710.9m)
year-over-year, driven by strong performance in UK&I Online (+5.3%) and
International (+7.3%), which was partially offset by a decline in UK Retail
(-5.4%).
The decline in UK Retail primarily reflects a tougher competitive environment,
with our gaming offering in particular having fallen behind competition. As
outlined earlier in this report, we have already taken decisive corrective
actions to address this, including a new management team and beginning the
rollout of 5,000 new best-in-class third-party gaming cabinets.
UK&I Online growth was driven by gaming (+9.4%) on the back of strong
engagement, product improvements and more efficient bonusing. Betting revenue
was down 1.3% year-on-year, driven by an 11.5% decline in staking, offset by
an improved net win margin, both of which partially reflect the change in
commercial approach to focus on customer value not volume, including through
improved promotional efficiency.
Within International, Core Markets (Italy, Spain, Denmark, Romania) combined
were up 21.5% (+24.9% in constant currency), albeit this partly benefits from
the acquisition of Winner in October, with organic growth of 19.2% excluding
Winner. Revenue from our Optimise Markets was down 14.0% in the year,
reflecting the exit of Latvia in the prior year, lapping the dotcom compliance
changes in the first quarter, the exit of US B2C, and the strategic shift to
focus on profitability and cash generation from these markets.
Further segmental details and trends are discussed within the segmental
section later in this statement.
Adjusted EBITDA for the year was £312.5m, an increase of £13.0m (+4.3%)
year-over-year, driven by the increase in revenue together with a focus on
cost control and an increasingly efficient operating model. During the year we
executed a £30m cost optimisation programme, as well as delivering further
savings in the second half. The £30m overhead saving was reinvested into
marketing, albeit as discussed above this did not deliver the expected
returns. Adjusted EBITDA margin for the year was 17.8% (2023: 17.5%). This
slight increase primarily reflects operating leverage on the increase in
revenue.
Reported EBITDA declined by £21.9m to £230.6m, with an increase in
exceptional costs of £26.7m, principally related to the exit of US B2C and
ongoing integration and transformation.
The reported loss after tax of £191.4m reflects the reported EBITDA as
described above, together with the impact of non-cash accounting charges for
purchase price amortisation as well as the finance costs related to the
largely debt-funded acquisition of William Hill.
Reconciliation of EBITDA to Adjusted EBITDA, Adjusted profit before tax and
Adjusted profit after tax
Adjusted results Exceptional items and adjustments(5) Statutory results
2024 2023(1) 2024 2023 2024 2023(1)
£'m £'m £'m £'m £'m £'m
Revenue 1,754.5 1,710.9 - - 1,754.5 1,710.9
Cost of sales (610.5) (581.4) 6.6 2.6 (603.9) (578.8)
Gross profit 1,144.0 1,129.5 6.6 2.6 1,150.6 1,132.1
Marketing expenses (268.1) (237.6) - - (268.1) (237.6)
Operating expenses(3) (562.4) (593.8) (88.5) (49.6) (650.9) (643.4)
Share of post-tax profit of equity accounted associate (1.0) 1.4 - - (1.0) 1.4
EBITDA(2) 312.5 299.5 (81.9) (47.0) 230.6 252.5
Depreciation and amortisation(4) (122.2) (114.0) (108.6) (114.3) (230.8) (228.3)
(Loss)/profit before interest and tax 190.3 185.5 (190.5) (161.3) (0.2) 24.2
Finance income and expenses (178.5) (173.7) 9.9 19.4 (168.6) (154.3)
(Loss)/profit before tax 11.8 11.8 (180.6) (141.9) (168.8) (130.1)
Taxation (40.6) 27.5 18.0 37.4 (22.6) 64.9
(Loss)/profit after tax (28.8) 39.3 (162.6) (104.5) (191.4) (65.2)
Basic (Loss)/earnings per share (p) (6.4) 8.8 (42.7) (14.5)
(1) 2023 has been restated to reflect a prior year adjustment for gaming
duties. See note 1 to the condensed financial statements for further
information as well as Appendix 1 to the condensed financial statements for
information on the impact to prior year APMs
(2) EBITDA is defined as earnings before interest, tax, depreciation and
amortisation.
(3) Statutory Operating expenses of £650.9m includes Operating expenses of
£571.6m (being the Operating expenses of £802.4m less Depreciation and
amortisation of £230.8m) and Exceptional items - operating expenses of
£79.3m per the note 3 of the condensed consolidated financial statements.
(4) Statutory Depreciation and amortisation of £230.8m has been separated
from Operating expenses of £802.4m per the Condensed consolidated Income
Statement.
(5) Foreign exchange adjustments of £6.6m gain within Cost of sales, £6.5m
expense within Operating expenses and £27.0m gain within Finance income and
expenses.
Adjusted EBITDA is defined as operating profit or loss excluding share benefit
charges, foreign exchange, depreciation and amortisation, fair value gains and
any exceptional items which are typically non-recurring in nature. Further
detail on exceptional items and adjusted measures is provided in note 3 to
condensed consolidated financial statements.
In the reporting of financial information, the Directors use various APMs.
These APMs should be considered in addition to, and are not intended to be a
substitute for, IFRS measurements. As they are not defined by International
Financial Reporting Standards, they may not be directly comparable with other
companies' APMs. The Directors believe these APMs provide additional useful
information for understanding performance of the Group. They are used to
enhance the comparability of information between reporting periods and are
used by management for performance analysis and planning. Further detail on
APMs is included in Appendix 1 to the condensed consolidated financial
statements.
CONSOLIDATED INCOME STATEMENT
Revenue
Revenue for the Group was £1,754.5m for 2024, an increase of 2.5% primarily
reflecting positive momentum in UK&I Online, as well as core international
performance across Italy, Spain, Denmark and Romania. This was offset by a
decline in UK retail due to challenging conditions on the high street and the
estate falling behind competition, particularly on gaming.
Revenue from sports betting was £628.9m, representing a 3.1% decline. Stakes
were down 7.5%, offset by an increase in betting net win margin from 12.1% to
12.7%. Both primarily reflect the customer mix changes in the UK online
segment as well as improvements in higher margin products such as Bet Builder,
leading to structurally higher win margins. Gaming revenue of £1,125.6m was
up 6.0% year-over-year, predominantly driven by our improved product offering,
focus on user experience, as well as more targeted promotional spend.
Cost of sales
Cost of sales mainly comprise of gaming taxes and levies, royalties payable to
third parties, chargebacks, payment service provider ('PSP') commissions and
costs related to operational risk management and customer due diligence
services. Cost of sales increased to £603.9m from £578.8m. The increase in
cost of sales as a percentage of revenue from 33.8% to 34.4% primarily
reflects the change in country mix towards core markets which typically apply
higher gaming tax rates.
Gross profit
Gross profit increased by 1.6% from £1,132.1m to £1,150.6m and gross margin
decreased from 66.2% to 65.6%, reflecting a higher proportion of revenue
generated from core markets which typically apply higher gaming tax rates.
Marketing expenses
Marketing is a significant investment for our Group to drive growth through
investing in our leading brands, as well as customer acquisition and retention
activities. Marketing increased by 12.8% from £237.6m in 2023 to £268.1m.
The increase was driven by significant investment in UK&I Online,
particularly in the first quarter as we sought to reactivate and acquire
significant customer volume. While the spend was effective at driving customer
numbers, it did not generate the returns we expected. This represents a
marketing to revenue ratio (marketing ratio) of 15.3% (2023: 13.9%).
Operating expenses
Operating expenses mainly comprise of employment costs, property costs,
technology services and maintenance, and legal and professional fees.
Operating expenses increased to £650.9m from £643.4m in 2023. This increase
is predominantly due to corporate transaction related fees incurred in
exceptional items, in particular the costs of exiting US B2C.
EBITDA & Adjusted EBITDA
Reported EBITDA decreased by 8.7% from £252.5m to £230.6m and included
£79.3m of exceptional costs primarily relating to US B2C exit and integration
and transformation costs. On an adjusted basis, the increase was 4.3% to
£312.5m from £299.5m, with an Adjusted EBITDA margin of 17.8% compared to
17.5% in 2023. This was driven by strong second half revenue performance and
cost control as described above.
Finance Income and Expenses
Net finance expenses of £168.6m (2023: £154.3m) related predominantly to the
interest from the debt of £149.8m (2023: £134.3m), which is net of foreign
exchange. The finance expense resulting from leases was £6.4m (2023: £6.9m).
The finance expense from hedging activities was £16.5m (2023: £17.2m)
predominantly due to foreign exchange movements.
Loss before tax
The net loss before tax for 2024 was £168.8m (2023: £130.1m loss). On an
adjusted basis, profits remained in line at £11.8m (2023: £11.8m).
Taxation
The Group recognised a tax charge of £22.6m on a loss before tax of £168.8m,
giving an effective tax rate of -13.4% (2023: tax credit of £64.9m and an
effective tax rate of 49.9%). The primary reasons for a tax charge arising
notwithstanding the overall loss results mainly from unrecognised interest
deductions under the Corporate Interest Restriction ("CIR") rules in the UK,
non-deductible losses in the US on the sale of the B2C business, and profits
arising in other jurisdictions.
On an adjusted basis, the Group recognised a tax charge of £40.6m on a profit
before tax of £11.8m, giving an effective tax rate of 344.1%. (2023: tax
credit of £27.5m and an effective tax rate of -233.1%). This higher rate
reflects primarily the effect of the CIR rules and profits arising in other
jurisdictions.
Net loss and adjusted net profit
The net loss for 2024 was £191.4m (2023: net loss of £65.2m). On an adjusted
basis, profit decreased by £68.1m from £39.3m in 2023 to a loss of £28.8m
in 2024, reflecting the items discussed above.
Earnings per share
Basic loss per share increased to 42.7p (2023: loss of 14.5p) due to lower net
profit, with minimal change in the number of shares in issue.
On an adjusted basis, basic loss per share decreased by 172.7% to 6.4p (2023:
earnings per share 8.8p). Further information on the reconciliation of
earnings per share is given in note 5 to the condensed consolidated financial
statements.
Dividends
The Board of Directors is not recommending a dividend to be paid in respect of
the year ended 31 December 2024 (2023: nil per share). The Board's decision is
to suspend payments of dividends until leverage is at or below 3x, as
previously announced following the acquisition of William Hill.
Income statement by Segment
The below tables show the Group's performance by segment on a reported and pro
forma basis respectively:
Statutory
Revenue Adju
sted
EBIT
DA
2024 2023 Change from % of reported Revenue 2024 2023 Change from % of Adjusted EBITDA
(2024) (2024)
£'m £'m previous year £'m £'m previous year
UK Retail 506.1 535.0 (5.4%) 28.9% 66.4 98.9 (32.9%) 21.2%
UK&I Online 693.2 658.5 5.3% 39.5% 142.7 143.5 (0.6%) 45.7%
Total UK&I 1,199.3 1,193.5 0.5% 68.4% 209.1 242.4 (13.7%) 66.9%
International 555.2 517.4 7.3% 31.6% 130.0 99.4 30.8% 41.6%
Corporate - - - 0.0% (26.6) (42.3) (37.1%) (8.5%)
Total 1,754.5 1,710.9 2.5% 100.0% 312.5 299.5 4.3% 100.0%
UK & Ireland (UK&I)
UK&I Online
Revenue increased by 5.3% to £693.2m compared to £658.5m in 2023, reflecting
growth in gaming revenue of 9.4% driven by continued improvements in product
and promotions. Sports Revenue decreased by 1.3% with lower sports staking
(11.5% year-on-year) compensated by improved sports net win margin (+1.1ppts
year-on-year) with some structural increase in the margin driven by customer
and product mix changes, together with some operator friendly results,
particularly in the fourth quarter.
Adjusted EBITDA decreased by £0.8m to £142.7m, primarily driven by an
increased marketing investment that was not as effective as expected,
alongside a lower gross margin due to product mix shift to gaming and
increased spend on free bets at major events such as Cheltenham in H1 2024.
UK Retail
UK Retail revenue decreased by 5.4% to £506.1m and Adjusted EBITDA decreased
by 32.9% to £66.4m, with Retail continuing to face challenging conditions on
the high street, partly reflecting the estate having fallen behind the
competition. Actions have been taken to address this with the roll out of new
gaming cabinets, which began in Q4. The Retail business has a high proportion
of fixed costs, meaning the revenue reduction creates negative operating
leverage and drops to Adjusted EBITDA at a high rate.
There were 1,331 shops open at the end of 2024 compared to 1,343 at the end of
2023. The small reduction to the already well optimised estate largely
reflects the impact of inflationary cost increases making certain shops no
longer commercially viable.
International
International revenue increased by 7.3% to £555.2m and adjusted EBITDA
increased by £30.6m compared to the previous period to £130.0m. This is
driven by double-digit growth in the core markets of Italy, Spain, Denmark,
and Romania, which now represent over 68% of the division as of Q4 following
the acquisition of Winner in Romania. This growth in the Core Markets was
offset by reduced revenues from Optimise Markets as the focus switches to
profitability and cash generation, including exiting the US B2C business and
the sale of Latvia in June 2023.
Corporate costs
Corporate costs were £26.6m in 2024 compared to £42.3m in 2023. This is due
to a combination of the execution of the cost optimisation programme, as well
as changes to the operating model impacting the way costs are allocated to the
divisions.
EXCEPTIONAL ITEMS AND ADJUSTMENTS
Operating Exceptional items 2024 2023
£'m £'m
Regulatory provisions and associated costs - 3.4
Integration and transformation costs 47.2 49.3
Corporate transaction related costs 32.1 (0.1)
Total exceptional items before tax 79.3 52.6
Interest expense on US exit provision 0.5 -
Total exceptional items before tax 79.8 52.6
Tax on exceptional items (9.8) (9.0)
Total exceptional items 70.0 43.6
Adjustments:
Fair value gain on financial assets - (4.1)
Amortisation of Finance Fees 16.5 17.2
Amortisation of acquired intangibles 108.6 114.3
Foreign Exchange (27.0) (37.6)
Share Based Charge / (Credit) 2.7 (0.5)
Total Adjustments before tax 100.8 89.3
Tax on adjustments (8.2) (28.4)
Total Adjustments 92.6 60.9
Total exceptional items and Adjustments 162.6 104.5
Total exceptional items in the year amounted to £70.0m in 2024, up from to
£43.6m in 2023.
Exceptional items are those items the Directors consider to be one-off or
material in nature or size that should be brought to reader's attention in
understanding the Group's financial performance. Refer to note 3 to the
condensed financial statements for further detail.
The integration programme now includes additional transformation costs
incurred as a result of the actions taken by management to simplify the
operating model, and drive efficiency through the business and the supply
chain, including through the increased use of AI and automation. These
initiatives have and will generate significant recurring cash cost savings in
addition to the costs and savings related to the realisation of the
post-integration synergies between William Hill and 888. Costs related to
these additional efficiency initiatives were £15m in 2024 and are expected to
be a further £20m across 2025 and 2026. In 2026 we also expect to incur an
additional £30m of platform integration costs, with all other
post-integration synergies still expected to complete by the end of 2025.
The Group has incurred a total of £47.2m of costs relating to the integration
programme, including £17.6m of platform integration costs (2023: £23.3m),
£2.4m of legal and professional costs (2023: £2.4m), £15.7m of redundancy
costs (2023: £7.6m), £5.3m of relocation and HR related expenses (2023:
£5.3m), £4.0m of employee incentives as part of the integration of William
Hill and 888 (2023: £7.9m), £1.0m for corporate rebranding costs (2023: nil)
and £1.2m of technology integration costs (2023: £2.8m).
The Group has incurred £32.1m of corporate transaction costs in 2024. The
Group decided to conclude its partnership with Authentic Brands Group and has
incurred £43.1m of fees in relation to the closure of the US B2C business in
the year. These costs include £38.1m of termination fees, £4.6m of
employment costs, £1.6m of costs for onerous contracts, £2.2m write off a
capitalised license fee and £1.3m of other M&A fees including legal and
professional costs. These costs have been offset by the profit earned on the
sale of player databases of £4.7m. As a part of the Romania acquisition, the
Group recognised a gain on bargain purchase of £13.4m. This is offset by
exceptional costs relating to the acquisition of £1.0m. The remaining £1.4m
relates to various smaller M&A projects.
Adjustments reflect items that are recurring, but which are excluded from
internal measures of underlying performance to provide clear visibility of the
underlying performance across the Group, principally due to their non-cash
accounting nature. They are items that are therefore excluded from Adjusted
EBITDA, Adjusted PAT and Adjusted EPS.
The amortisation of the specific intangible assets recognised on acquisitions
has been presented as an adjusted item, totalling £108.6m relating to the
William Hill acquisition. This amortisation is a recurring item that will be
recognised over its useful life.
The other items that have been presented as adjusted items are, foreign
exchange gains of £27.0m (£37.6m in 2023), amortisation of finance fees of
£16.5m (£17.2m in 2023), and share based payment charge of £2.7m (credit of
£0.5m in 2023).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Non-current assets decreased by £60.5m to £2,238.0m compared to £2,298.5m
at 2023, predominantly due to Goodwill and other intangible assets, which have
decreased by £49.0m, with the amortisation charge outweighing additions in
the year. Property, plant and equipment reduced from £91.7m in 2023 to
£78.9m, largely due to depreciation in the year, and right-of-use assets
increased by £6.5m in the year to £84.5m, due to additions of £37.6m offset
by the depreciation charge of £30.7m for the year.
Current assets are £432.5m, a decrease of £16.6m compared to £449.1m at
2023. Within this, cash and cash equivalents increased by £9.2m to £265.4m
from £256.2m, which includes £118.3m of customer deposits compared to
£127.8m at 2023. Excluding client funds, cash and cash equivalents increased
from £128.4m in 2023 to £147.1m in 2024. Income tax receivable reduced by
£19.7m from £53.3m to £33.6m in 2024. There was a £nil balance for current
derivative financial assets in 2024, a decrease from the balance of £1.6m in
the prior year.
Current liabilities decreased by £2.1m from £666.9m at FY 2023 to £669.0m
at 2024. Trade and other payables have increased by £3.6m to £391.1m due to
accrual timing differences. Provisions decreased by £6.5m to £72.0m, which
includes provisions of £62.4m for gaming tax in Austria. Current derivative
financial liabilities also increased by £7.8m in the year to £31.3m at 2024.
Non-current liabilities were £2,097.3m, an increase of £83.7m from the
balance of £2,013.6m at 2023. This is primarily due to the increase in
borrowings of £75.9m following the drawdown of the Revolving Credit Facility
as well as an increase in provisions of £24.7m, largely due to the
recognition of £16.6m of provisions in the year relating to the exit of the
US B2C business. In addition, the non-current derivative financial instruments
decreased by £14.1m. Lease liabilities have increased by £4.2m due to
additions in the year. Additionally, provisions of £129.5m include £112.9m
for customer claims that are currently recognised as non-current liabilities.
Net liabilities of £95.8m for 2024 was a decrease of £162.9m compared to net
assets of £67.1m at 2023.
CASH FLOWS
2024 2023
£'m £'m
Cash generated from operating activities before working capital 206.7 224.5
Working capital movements 19.8 (73.1)
Net cash generated from operating activities 226.5 151.4
Acquisitions (4.1) -
Disposals 4.7 41.8
Capital expenditure (93.4) (68.4)
Net movement in borrowings incl loan transaction fees 60.1 (35.8)
Interest paid (160.9) (138.1)
Settlement of derivatives - (10.8)
Other movements in cash incl FX (23.7) (1.5)
Net cash inflow/(outflow) 9.2 (61.4)
Cash balance 265.4 256.2
Gross Debt (1,839.8) (1,798.0)
Net Debt (1,787.7) (1,757.2)
Overall, the Group had a cash inflow of £9.2m in the year, compared to an
outflow of £61.4m in 2023. This resulted in a cash balance of £265.4m as of
31 December 2024 (£256.2m at 31 December 2023), although this included
customer deposits and other restricted cash of £118.3m, such that
unrestricted cash available to the Group was £147.1m compared to £128.4m in
2023.
Cash flow from operations was an inflow of £226.5m compared to £151.4m in
2023. This increase was due to working capital movements from timing of
accruals.
Disposals of £4.7m in 2024 relate to proceeds on sale of part of US business
received in 2024. In prior year, £41.8m inflow related to proceeds on the
sale of non-core assets including the Latvia business and the sale and
leaseback of certain freeholds.
Capital expenditure was £93.4m in 2024, an increase from £68.4m reflecting
investment in product development to drive sustainable growth.
Included within net movement in borrowings is drawdown on the Revolving Credit
Facility ('RCF') of £85.0m (£115.0m remaining), movements relating to the
refinancing in May 2024 with £383.4m repaid on the Euro TLA debt and £400.0m
received as part of the new GBP fixed rate notes. Furthermore, there was
£36.2m of payments of lease liabilities.
Net interest paid of £160.9m predominantly related to the borrowings
undertaken.
Other movements included £4.2m outflow predominantly due to funding of
888AFRICA, as well as dividend income received from associates of £0.6m and
net foreign exchange losses of £20.1m.
NET DEBT
2024 2023
£'m £'m
Borrowings (1,737.7) (1,661.1)
Loan transaction fees (61.6) (96.6)
Derivatives (40.5) (40.3)
Gross Borrowings (1,839.8) (1,798.0)
Lease liability (95.0) (87.6)
Cash (excluding customer balances) 147.1 128.4
Net Debt (1,787.7) (1,757.2)
LTM pro forma Adjusted EBITDA 312.5 299.5
Leverage 5.7x 5.9x
The gross borrowings balance as at 31 December 2024 was £1,839.8m. This
balance is now presented including derivatives (£40.5m) so as to more
accurately reflect the underlying liability at maturity, taking account of the
hedges the Group has in place to fix the currency and interest rates.
In May 2024, the Group successfully refinanced the Euro TLA and replaced it
with GBP fixed notes, improving the debt profile by extending the maturity of
£400m by two years out to 2030; improving the fixed/floating mix; and more
closely aligning the debt currency mix to underlying cash generation. The
Group continues to assess all opportunities to optimise its debt capital
structure and manage its debt facilities.
The earliest maturity of this debt is in 2026, which is £11.0m, with most of
the debt maturing across 2027, 2028 and 2030. In addition to this, the Group
has access to a £200m Revolving Credit Facility, with £150m available until
2028 and the additional facility of £50m available through to December 2025,
which was drawn down by £85.0m at 31 December 2024 (undrawn at 31 December
2023).
The debt is across GBP sterling, Euro and US Dollar; with 25% (2023: 49%) of
the debt in Euro; 74% (2023: 44%) in GBP and 1% in USD (2023: 7%). The Group
has undertaken hedging activities such that 94% (2023: 70%) of the interest is
at fixed rates and 6% (2023: 30%) at floating rates.
The net debt balance at 31 December 2024 was £1,787.7m with a net debt to
EBITDA ratio of 5.7x. This compares to £1,757.2m and 5.9x respectively as at
31 December 2023. The increase in net debt is predominantly due to the RCF
draw down (£85.0m), which was required to fund operations given the increased
exceptional costs and interest in the year. This is partly offset by lower
transaction fees following the refinancing, and a higher cash balance.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties that are considered to have a
potentially material impact on the Group's future performance, sustainability
and strategic objectives are set out below. This list is not exhaustive but
encompasses management's assessment of those risks which require considered
response at this time.
Strategic Execution Risks
The Group's Value Creation Plan (VCP) is fundamental to driving shareholder
value and maintaining market confidence. Successful execution of strategic
initiatives and clear alignment of business decisions with the VCP are
critical to achieving our strategic objectives and ensuring long-term
sustainability.
The current business environment demands a delicate balance between addressing
immediate operational challenges and implementing long-term strategic
transformation. This complex landscape is further complicated by evolving
regulatory requirements and the need to maintain operational excellence while
undertaking significant organisational change.
Poor execution of the VCP could result in multiple adverse impacts, including
share price underperformance, loss of stakeholder confidence, and employee
disengagement. Resource constraints, coupled with competing priorities between
regulatory compliance projects and strategic initiatives, pose significant
challenges to successful implementation.
ESG Risks
The Group faces significant Environmental, Social, and Governance (ESG) risks,
which include challenges such as player safety and climate change.
Climate-related risks, in particular, present unique challenges due to their
non-linear nature, and the complexity of forecasting. A critical aspect of
this risk lies in the Group's supply chain, as 95% of its emissions are Scope
3 emissions. We continue to engage with our supply chain to better understand
their climate strategies, targets and transition plans in order to ensure
alignment with our own goals which we review annually based on supply chain
alignment and other external factors
We aim to ensure we are a sustainable business with improving ESG ratings to
enhance our ability to raise capital, secure investment, and enhance our
valuation multiple. Lower ratings from key agencies could increase the cost of
capital and limit the Group's valuation, while also damaging its reputation in
the market.
Market Risks
The Group is exposed to market risks, including fluctuations in foreign
exchange (FX) rates and interest rates, which can impact profitability, cash
flow, and financial stability. A substantial portion of the Group's deposits
and revenues are generated in GBP, EUR, and other currencies, while operating
expenses are primarily incurred in GBP, EUR, ILS, and RON, with additional
exposure to SEK and PLN. This mismatch between revenue and expense currencies,
combined with debt servicing costs denominated in USD and EUR, creates
vulnerabilities to adverse FX rate movements.
The Group is also exposed to interest rate risks and has implemented hedging
strategies that have secured the majority of its interest costs at fixed rates
for the next two years. While this provides some stability, movements in
market interest rates could still result in higher borrowing costs.
Conversely, the Group also faces the risk of missing opportunities to lock in
lower interest rates if too much of its debt remains fixed. These fluctuations
in interest rates could divert financial resources away from critical areas
such as growth initiatives, marketing, and the development of new products and
projects, ultimately impacting the Group's ability to execute its strategic
objectives.
These market risks, driven by FX and interest rate volatility, underscore the
challenges of managing a global financial profile and maintaining financial
resilience in a dynamic economic environment.
Liquidity & Debt/Leverage Risks
Liquidity risk arises from the possibility that the Group may have
insufficient funds to settle its liabilities as they fall due. While the Group
generates strong operating cash flows and maintains sufficient cash balances
to meet anticipated working capital requirements, there is a risk that
external shocks, underperformance, or the maturity of bank facilities could
result in insufficient liquidity to service debts, pay suppliers or cover
significant obligations, such as UK gaming tax payments. Such scenarios could
lead to default on debt payments, acceleration of group debt repayments, and
additional penalties or costs, further straining the Group's financial
position.
Debt and leverage risks also pose significant challenges. The Group's leverage
could fail to meet its stated strategic leverage targets due to earnings
underperformance or FX rate shocks. This could result in a default on bank
covenants, triggering the acceleration of debt repayments and damaging the
Group's market reputation. Furthermore, a significant decline in credit
ratings or a downgrade in the debt capital markets could restrict the Group's
ability to raise funds to support growth, execute strategic initiatives, or
capitalise on new opportunities. These risks highlight the importance of
maintaining financial flexibility and access to capital to sustain operations
and drive future growth.
People Risks
The Group's colleagues are essential to its operational success and strategic
objectives, but it faces risks related to retention of senior leadership roles
and engagement as a whole. Overall company attrition has been steadily
decreasing throughout 2024, which is partially attributed to the lack of
movement in the jobs market and static economic environment. At the same time,
the high number of redundancies in 2024 and the requirement to pivot to a new
strategy and way of working has impacted engagement scores. Less colleagues
are actively leaving the business but are not feeling fully engaged; the
result of which can lead to a decrease in productivity.
These risks threaten the Group's ability to maintain a skilled, motivated,
and engaged workforce, impacting operational efficiency, financial
performance, and long-term strategic goals.
Third-Party Risks
The Group relies heavily on third-party suppliers to deliver a number of
critical services, including technology, payment processing, marketing, gaming
products, sports content, and media. Effective management of these
relationships is essential to achieving strategic objectives and ensuring
operational continuity. Failures or disruptions in supplier services, such as
outages, insolvency, or non-compliance, could lead to significant operational,
financial, and reputational impacts. Additionally, supplier-side compliance
failures, such as breaches of GDPR or regulatory licenses, could result in
fines, legal claims, and reputational damage.
The Group also faces risks related to strategic partnerships, such as B2B
gambling services in the United States, where meeting contractual obligations
and maintaining compliance are critical to long-term growth. Specific risks
include service outages from key providers, which could disrupt betting
markets, customer experience, and revenue streams.
Information Security Risks
The Group faces significant information security risks, including
cyber-attacks such as Distributed Denial of Service (DDoS), phishing, malware,
and unauthorised access to sensitive systems or data. These risks extend to
the potential theft, misuse, or exposure of customer and business data by both
internal and external entities, as well as vulnerabilities introduced through
manual processes, misconfigurations, or inadequate security controls. Such
incidents could result in regulatory fines, reputational damage, loss of
customer trust, and operational disruptions. Additionally, the Group is
exposed to risks from third-party vendors with weak security postures, legacy
systems that lack proper patching, and inconsistent access management
practices, which could lead to data breaches, fraud, or system compromise.
The loss of availability of critical technology systems, whether due to
cyber-attacks, insider threats, or physical disasters, could disrupt
operations, cause revenue loss, and lead to breaches of regulatory
obligations. Vulnerabilities in the Group's internal network, cloud systems,
or CI/CD pipelines could expose sensitive information or allow attackers to
exploit production systems. These risks are compounded by the increasing
sophistication of external attacks, such as automated credential attacks,
which can overwhelm public-facing services and degrade customer experience.
Product & Technology Risks
As a company, we acknowledge the critical importance of innovation and digital
transformation in driving growth and maintaining competitiveness. However, we
recognise that these initiatives come with inherent risks, particularly as we
consolidate multiple systems and pursue the development of a unified, scalable
global technology platform. This transformation introduces short-term
complexities and challenges, including potential operational disruptions,
system failures, and resource constraints.
The causes of these risks include the complexity of integrating legacy
systems, dependencies on third-party suppliers, and the fast-paced nature of
technological advancements. Additionally, the reliance on outdated systems,
and the need to modernise our applications further amplify these challenges.
The rapid scaling of automation also contribute to the potential for errors,
inefficiencies, and operational disruptions.
Operational disruptions, such as unplanned outages or system downtimes, can
hinder critical business activities, disrupt customer experiences, and lead to
financial losses. Legacy system dependencies increase the likelihood of data
loss, inefficiencies, and challenges in maintaining business continuity. Poor
implementation of new features, outdated applications, or inadequate product
communication can negatively affect customer satisfaction, retention, and
acquisition. Failures in regulatory APIs, governance gaps, or delays in
adapting to regulatory changes can result in operational halts, legal
scrutiny, and reputational damage. Scalability and capacity constraints,
driven by high demand on systems and resource limitations, can result in
performance degradation, outages, and delays in delivering critical
projects.
Regulatory and Compliance Risks
Compliance with regulatory requirements is critical to maintaining the Group's
licenses, protecting customers, and ensuring business continuity. With the
majority of revenue generated from licensed jurisdictions and an increasing
number of countries introducing regulations, the importance of adhering to
these requirements continues to grow.
The complexity of the regulatory landscape, including jurisdictional nuances,
evolving requirements, and heightened scrutiny, pose significant risks. These
include the potential for financial penalties, reputational damage, and
operational disruptions.
The risk of non-compliance extends to areas such as inadequate data
governance, failure to meet reporting deadlines, and breaches of safer
gambling or marketing regulations. Additionally, changes in legislation, such
as amendments to the UK Gambling Act or new jurisdictional requirements, could
restrict product offerings, impose stricter customer checks, or limit
marketing activities, leading to reduced revenue, and customer attrition.
Reputational damage is a critical concern, as regulatory breaches can erode
customer trust and stakeholder confidence. High-profile fines or license
suspensions could also attract negative media attention, further impacting the
Group's standing in the market.
The growing complexity of the Group's regulatory footprint, legacy systems,
and operational challenges, increases the likelihood of non-compliance. This
risk is amplified by jurisdictional differences, frequent regulatory changes,
and the need for robust relationships with regulators to navigate these
challenges effectively.
Anti-Money Laundering Risks
Ensuring compliance with Anti-Money Laundering (AML) and Counter-Terrorist
Financing (CTF) regulations is critical to maintaining our licenses and
protecting the business from financial crime. The nature of online gambling,
as highlighted by the EU Supranational Risk Assessment 2022, presents a very
high risk for money laundering and terrorist financing in the absence of
effective controls. This risk is exacerbated by the complexity of
jurisdictional regulations, evolving criminal techniques, and inconsistencies
in processes and systems across brands.
Key risks include failures in customer due diligence (CDD), inadequate
monitoring of transactions, ineffective reporting mechanisms, and gaps in
staff training and competence. Jurisdictional nuances, such as differing
thresholds and regulatory requirements, create further challenges in aligning
policies and processes, potentially leading to operational inefficiencies and
regulatory breaches.
The potential impacts of these risks are severe, including regulatory
sanctions, significant financial penalties, license suspensions or
revocations, and legal action against the company or its executives.
Reputational damage is also a critical concern, as regulatory failings can
erode trust with customers, stakeholders, and regulators. These risks
underscore the importance of maintaining robust governance and oversight to
mitigate the threat of financial crime and ensure compliance with AML
regulations.
CONDENSED Consolidated Income Statement
For the year ended 31 December 2024
All figures in £ millions (unaudited) Note 2024 2023
(restated)
Revenue 2 1,754.5 1,710.9
Gaming duties (400.5) (380.8)
Other cost of sales (203.4) (198.0)
Cost of sales (603.9) (578.8)
Gross profit 1,150.6 1,132.1
Marketing expenses (268.1) (237.6)
Operating expenses (802.4) (819.1)
Share of post-tax (loss)/profit of equity accounted associate (1.0) 1.4
Exceptional items - operating expenses 3 (79.3) (52.6)
Operating (loss)/profit (0.2) 24.2
Adjusted EBITDA(1) 312.5 299.5
Exceptional items - operating expenses 3 (79.3) (52.6)
Fair value gain on financial assets - 4.1
Foreign exchange gains 0.1 1.0
Share benefit (charge)/gain (2.7) 0.5
Depreciation and amortisation (230.8) (228.3)
Operating (loss)/profit (0.2) 24.2
Finance income 34.1 41.0
Finance expenses (202.7) (195.3)
Loss before tax (168.8) (130.1)
Taxation (charge)/credit 4 (22.6) 64.9
Loss after tax (191.4) (65.2)
Attributable to: (192.0) (65.2)
Equity holders of the Parent
Non-controlling interests 0.6 -
Loss for the period (191.4) (65.2)
Loss per share
Basic (pence) 5 (42.7) (14.5)
Diluted (pence) 5 (42.7) (14.5)
The 2023 comparative totals have been restated to reflect a Remote Gaming Duty
prior period adjustment (see note 1).
1. Adjusted EBITDA is an Alternative Performance Measure ("APM") which
does not have an IFRS standardised meaning. Refer to Appendix 1 - Alternative
performance measures for further detail.
CONDENSED Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
All figures in £ millions (unaudited) 2024 2023
(restated)
Loss for the year (191.4) (65.2)
Items that may be reclassified subsequently to profit or loss (net of tax)
Exchange differences on translation of foreign operations (5.0) (22.8)
Movement in hedging reserves 10.3 (1.2)
Items that will not be reclassified to profit or loss (net of tax)
Remeasurement of severance pay liability (0.2) (0.2)
Actuarial remeasurement in defined benefit pension scheme 0.7 1.8
Total other comprehensive income/(loss) for the year 5.8 (22.4)
Total comprehensive loss for the year (185.6) (87.6)
Total comprehensive loss for the year attributable to equity holders of the (186.2) (87.6)
Parent
Total comprehensive profit for the year attributable to non-controlling 0.6 -
interests
The 2023 comparative totals have been restated to reflect a Remote Gaming Duty
prior period adjustment (see note 1).
CONDENSED Consolidated Statement of Financial Position
At 31 December 2024
All figures in £ millions (unaudited) Note 2024 2023
(restated)
Assets
Non-current assets
Goodwill and other intangible assets 6 1,989.3 2,038.3
Right-of-use assets 84.5 78.0
Property, plant and equipment 78.9 91.7
Investment in sublease 1.2 1.0
Investments in associates 32.3 33.9
Non-current prepayments 2.4 2.8
Derivative financial instruments 13.1 15.8
Deferred tax assets 36.3 37.0
2,238.0 2,298.5
Current assets
Cash and cash equivalents(1) 265.4 256.2
Trade and other receivables 132.6 138.0
Income tax receivable 33.6 53.3
Derivative financial instruments - 1.6
Assets held for sale 0.9 -
432.5 449.1
Total assets 2,670.5 2,747.6
Equity and liabilities
Share capital 2.2 2.2
Share premium 160.7 160.7
Treasury shares (0.6) (0.6)
Foreign currency translation reserve (3.2) 1.8
Hedging reserves (4.3) (14.6)
Retained earnings (271.2) (82.4)
Total equity attributable to equity holders of the parent (116.4) 67.1
Non-controlling interests 20.6 -
Total equity (95.8) 67.1
Liabilities
Non-current liabilities
Borrowings 9 1,733.1 1,657.2
Severance pay liability 0.4 0.6
Provisions 8 129.5 104.8
Deferred tax liability 150.1 156.9
Derivative financial instruments 15.8 29.9
Lease liabilities 68.4 64.2
2,097.3 2,013.6
Current liabilities
Borrowings 9 4.6 3.9
Trade and other payables 391.1 387.5
Provisions 8 72.0 78.5
Derivative financial instruments 31.3 23.5
Income tax payable 25.1 22.3
Lease liabilities 26.6 23.4
Customer deposits 118.3 127.8
669.0 666.9
Total equity and liabilities 2,670.5 2,747.6
The 2023 comparative totals have been restated to reflect a Remote Gaming Duty
prior period adjustment (see note 1).
1. Cash and cash equivalents includes customer deposits of £118.3m (2023:
£127.8m) which represent bank deposits matched by customer liabilities of an
equal value. Cash and cash equivalents excludes restricted short-term deposits
of £16.5m which are presented in Trade and other receivables (2023: £22.6m).
The condensed consolidated financial statements were approved by the Board of
Directors on 25 March 2025.
CONDENSED Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
All figures in £ millions (unaudited) Share capital Share premium Treasury shares Foreign currency translation reserve Hedging reserve Retained earnings Non-controlling interests Total
Balance at 1 January 2023 (restated) 2.2 160.7 (0.9) 24.6 (13.4) (18.0) - 155.2
Loss after tax for the year - - - - - (65.2) - (65.2)
Other comprehensive (expense)/income for the year - - - (22.8) (1.2) 1.6 - (22.4)
Total comprehensive expense - - - (22.8) (1.2) (63.6) - (87.6)
Equity settled share benefit charges - - - - - (0.5) - (0.5)
Exercise of Deferred Share Bonus Plan - - 0.3 - - (0.3) - -
Balance at 31 December 2023 (restated) 2.2 160.7 (0.6) 1.8 (14.6) (82.4) - 67.1
(Loss)/profit after tax for the year - - - - - (192.0) 0.6 (191.4)
Other comprehensive (expense)/income for the year - - - (5.0) 10.3 0.5 - 5.8
Total comprehensive income/(expense) - - - (5.0) 10.3 (191.5) 0.6 (185.6)
Romania acquisition (note 7) - - - - - - 20.0 20.0
Equity settled share benefit credit - - - - - 2.7 - 2.7
Balance at 31 December 2024 2.2 160.7 (0.6) (3.2) (4.3) (271.2) 20.6 (95.8)
Retained earnings at 1 January 2023 have been restated to include a prior
period adjustment of £4.0m in respect of Remote Gaming Duty (see note 1).
The 2023 comparative totals have been restated to reflect a Remote Gaming
Duty prior period adjustment (see note 1).
The following describes the nature and purpose of each reserve within equity.
Share capital - represents the nominal value of shares allotted, called-up and
fully paid.
Share premium - represents the amount subscribed for share capital in excess
of nominal value.
Treasury shares - represents reacquired own equity instruments. Treasury
shares are recognised at cost and deducted from equity.
Foreign currency translation reserve - represents exchange differences arising
from the translation of all Group entities that have functional currency
different from Pounds Sterling.
Hedging reserve - represents changes in the fair value of derivative financial
instruments designed in a hedging relationship.
Retained earnings - represents the cumulative net gains and losses recognised
in the Condensed Consolidated Statement of Comprehensive Income and other
transactions with equity holders.
Non-controlling interests - represents the minority interests of other
shareholders in the net assets of consolidated subsidiaries.
CONDENSED Consolidated Statement of Cash Flows
For the year ended 31 December 2024
All figures in £ millions (unaudited) Note 2024 2023
£m £m
(restated)
Cash flows from operating activities
Loss before income tax (168.8) (130.1)
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets 44.5 46.3
Amortisation 6 186.3 182.0
Interest income (34.1) (41.0)
Interest expenses 202.7 195.3
Income tax paid (14.6) (30.1)
Fair value gain on financial assets - (4.1)
Share of post-tax loss/(profit) of equity accounted associate 1.0 (1.4)
Non-cash exceptional items (7.4) 5.9
(Profit)/loss on sale of intangible assets (4.7) 0.3
Movement on ante post and other financial derivatives (2.2) 7.6
Profit on sale of freehold properties via sale and leaseback - (4.6)
Impairment of freehold properties held for sale 0.5 -
Impairment of intangible assets 6 0.6 -
Loss/(gain) on disposal of property, plant and equipment 0.2 (1.1)
Share benefit charge/(credit) 2.7 (0.5)
Cash generated from operating activities before working capital movement 206.7 224.5
Decrease/(increase) in receivables 5.4 (1.9)
Decrease in customer deposits (9.5) (13.4)
Increase/(decrease) in trade and other payables 0.6 (30.8)
Increase/(decrease) in provisions 23.3 (27.0)
Net cash generated from operating activities 226.5 151.4
Cash flows from investing activities
Acquisition of intangible assets (90.9) (62.9)
Acquisition of property, plant and equipment (4.5) (7.4)
Acquisition of business 7 (4.1) -
Proceeds from sale of businesses 4.7 19.2
Proceeds on sale and leaseback of freehold properties - 22.6
Proceeds from sale of property, plant and equipment 2.0 1.9
Loans to related parties (4.2) (4.3)
Interest received 2.7 3.9
Dividend received from associate 0.6 5.9
Net cash used in investing activities (93.7) (21.1)
Cash flows from financing activities
Payment of lease liabilities (36.2) (31.8)
Settlement of derivatives - (10.8)
Interest paid (163.6) (142.0)
Repayment of loans 9 (388.7) (4.0)
Proceeds from loans 9 485.0 -
Net cash used in financing activities (103.5) (188.6)
Net Increase/(decrease) in cash and cash equivalents 29.3 (58.3)
Net foreign exchange difference (20.1) (3.1)
Cash and cash equivalents at the beginning of the year 256.2 317.6
Cash and cash equivalents at the end of the year 265.4 256.2
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
Notes to the CONDENSED Consolidated Financial Statements
For the year ended 31 December 2024
General information
Company description
evoke plc (the 'Company') and its subsidiaries (together the 'Group') was
founded in 1997 in the British Virgin Islands and since 17 December 2003 has
been domiciled in Gibraltar (Company number 90099). On 4 October 2005, the
Company listed on the London Stock Exchange.
Definitions
In these financial statements:
Subsidiaries Companies over which the Company has control (as defined in IFRS 10
- Consolidated Financial Statements) and whose accounts are consolidated with
those of the Company.
Related parties As defined in IAS 24 'Related Party Disclosures'.
Associates As defined in IAS 28 'Investments in Associates and Joint Ventures'.
1 basis of preparation
The financial information does not constitute the Group's statutory accounts
for the year ended 31 December 2023 but is derived from those accounts.
Statutory accounts for the year ended 31 December 2023 have been delivered to
the Registrar of Companies in Gibraltar. The auditors have reported on the
2023 accounts and their report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain statements under sections
257(1), 258(2) and 258(2A) of the Gibraltar Companies Act 2014. This
preliminary announcement does not constitute the Group's statutory accounts
for the year ended 31 December 2024. The Group's full consolidated financial
statements for the year ended 31 December 2024 will be approved by the Board
of Directors and is expected to be reported on by the auditors in the coming
weeks. Accordingly, the financial information for 2024 is presented unaudited
in the preliminary announcement.
The condensed consolidated financial statements of the Group have been
prepared in accordance with UK adopted international accounting standards and
in accordance with the requirements of the Gibraltar Companies Act 2014. The
condensed consolidated financial statements have been prepared on a historical
cost basis, except where certain assets or liabilities are held at amortised
cost or at fair value as described in the Group's accounting policies.
All values are rounded to the closest hundred thousand, except when otherwise
indicated.
The significant accounting policies applied in the condensed consolidated
financial statements in the prior year have been applied consistently in these
condensed consolidated financial statements, except for the amendments to
accounting standards effective for the annual periods beginning on 1 January
2024. These are described in more detail below.
2023 Restatement
Remote Gaming Duty
During the course of 2024, the Group performed a review of its Remote Gaming
Duty obligation. It was found that the Group had understated its Remote Gaming
Duty costs by £4.0m in 2022 and £8.8m in 2023. As a result, the Group has
adjusted its previously reported financial statements to reflect the
additional costs that should have been recognised at the time. The impact on
the 2022 Condensed Consolidated Statement of Financial Position is deemed
immaterial for re-presentation purposes.
The tables below show the impact of the restatement change on the previously
reported financial results:
Impact on Condensed Consolidated Income Statement and Statement of
Comprehensive Income
As previously reported Impact of restatement Restated
31 December 2023 31 December 2023
£m
£m £m
Gaming duties (372.0) (8.8) (380.8)
Other operating items 405.0 - 405.0
Operating profit 33.0 (8.8) 24.2
Adjusted EBITDA 308.3 (8.8) 299.5
Taxation 64.9 - 64.9
Loss after tax (56.4) (8.8) (65.2)
Loss per share - Basic (pence) (12.6) (1.9) (14.5)
Loss per share - Diluted (pence) (12.6) (1.9) (14.5)
Impact on Condensed Consolidated Statement of Financial Position
As previously reported Impact of restatement Restated
31 December 2023 31 December 2023
£m
£m £m
Total assets 2,747.6 - 2,747.6
Trade and other payables (374.7) (12.8) (387.5)
Other liabilities (2,293.0) - (2,293.0)
Total liabilities (2,667.7) (12.8) (2,680.5)
Net assets 79.9 (12.8) 67.1
£4.0m relates to the year ended 31 December 2022 and has been included in the
retained earnings balance as at 1 January 2023.
Going concern
Background
The financial statements have been prepared using the going concern basis of
accounting. As the year end, the Group had net liabilities of £95.8m (2023:
net assets of £61.7m) and incurred a statutory loss before tax of £168.8m
for the year ended 31 December 2024 (2023: £130.1m loss). The Group also had
net current liabilities of £236.5m (2023: £217.8m).
Business planning and performance management
The Group has robust forecasting and monitoring processes which consist of
weekly monitoring and careful management of liquidity, an annual budget and a
long-term plan, which generates income statement and cash flow projections for
assessment by management and the Board. Forecasts are regularly compared with
prior forecasts and current trading to identify variances and understand their
future impact so management can act where appropriate. Analysis is undertaken
to review both the appropriateness and completeness of the key assumptions,
including the integration and transformation programmes, underpinning the
forecasts on a rolling monthly basis.
Whilst there are risks to the Group's trading performance, as summarised
earlier in this statement, the Group has established risk management processes
to identify and mitigate risks, and such risks have been considered when
undertaking the going concern evaluation for the period to 31 March 2026.
The Group's future prospects
The Group meets its day-to-day working capital requirements from the positive
cash flows generated by its trading activities and its available cash
resources. The Group holds cash and cash equivalents excluding customer
balances and restricted cash of £147.1m as at 31 December 2024 (2023:
£128.4m). In addition to this the Group has access, until January 2028, to a
£150.0m Revolving Credit Facility, of which £85.0m is currently drawn down
(2023: nil), and an additional £50.0m Revolving Credit Facility, added in May
2024, until December 2025 which is currently undrawn.
The Group has significant debt arrangements resulting from the funding of the
acquisition of the William Hill business in 2022. There is an annual $5.8m
repayment on the TLB facilities, as well as a final £10.5m repayment due on
£350.0m Senior Unsecured Fixed Rate Notes due in 2026, which is a small
portion of the Group's overall borrowings. The remaining borrowings, which
constitute the majority of the Group's debt, are not due within the period of
the going concern evaluation or in the period soon after it. The next due date
on the Group's remaining debt is in 2027 and the majority is repayable in
2027-30. The Group's Revolving Credit Facility contains a Net Leverage
covenant which is not restrictive in the base case, downside or reverse stress
test scenarios. The remainder of the Group's debt does not contain any
financial covenants.
The Group's forecasts, for the going concern evaluation period to 31 March
2026, based on reasonable assumptions including, in the base case, a 12%
increase in revenue throughout the going concern period indicate that the
Group will be able to operate within the level of its currently available and
expected future facilities for this period to 31 March 2026. Under the base
case forecast, the Group has sufficient cash reserves and available facilities
to enable it to meet its obligations as they fall due, for this going concern
evaluation period to 31 March 2026.
The Group has also assessed a range of downside scenarios to evaluate whether
any material uncertainty exists relating to the Group's ability to continue as
a going concern. The forecasts and scenarios consider severe but plausible
downsides that could impact the Group, which are linked to the business risks
identified by the Group. These scenarios, both individually and in
combination, have enabled the Directors to conclude that the Group has
adequate resources to continue to operate for the foreseeable future.
Specifically, the Directors have given careful consideration to the regulatory
and legal environment in which the Group operates. Downside sensitivities have
been run, individually and in aggregate, to assess the impact of the following
scenarios:
· Reductions in profitability for the whole Group of 10% and 20%
from the base case respectively to reflect potential regulatory, macroeconomic
or competitive pressures;
· An increase in interest expense upon the revolving credit
facility, which would be notably drawn down in the downside scenarios
mentioned above;
· Reduction of cash inflows from failure to execute M&A
projects;
Management has performed a separate reverse stress test to identify the
conditions that would be required to compromise the Group's liquidity. Having
done so, management has identified further actions to conserve or generate
cash to mitigate any impact of such a scenario occurring. Following these
actions, the Group could withstand a decrease in forecast adjusted EBITDA,
including forecasted contingency, of 25%. The Board considers the likelihood
of a decline of this magnitude to be remote. Other initiatives, not directly
in the Group's control at the date of approval of these financial statements,
could be considered including the disposal of non-core assets and investments.
Should an extreme downside scenario occur, or planned mitigations and
initiatives not be achieved, further mitigating actions that can be executed
in the necessary timeframe could be taken over and above the reverse stress
test, such as a reduction of marketing expenditures and working capital
management.
Conclusion
Based on the above considerations, the Directors continue to adopt the going
concern basis in preparing these financial statements.
2 Segment information
The Board has reviewed and confirmed the Group's reportable segments in
accordance with the requirements of IFRS 8 'Operating Segments'. The segments
disclosed below are aligned with the reports that the Group's Chief Executive
Officer and Chief Financial Officer as Chief Operating Decision Makers review
to make strategic decisions.
The Retail segment comprises all activity undertaken in LBOs, including gaming
machines. The UK&I Online segment comprises all online activity, including
sports betting, casino, poker and other gaming products along with telephone
betting services that are incurred within the UK and Ireland. The
International segment comprises all online activity, including sports betting,
casino, poker and other gaming products along with telephone betting services
that are incurred within all territories excluding the UK and Ireland.
Corporate relates to corporate costs, assets and liabilities that cannot
reasonably be allocated to an operating segment. There are no inter-segmental
sales within the Group.
Segment performance is shown on an adjusted EBITDA basis, with a
reconciliation from adjusted EBITDA to statutory results for clarity.
Information for the year ended 31 December 2024 is as follows:
2024 Retail UK&I Online International Corporate Total
£m £m £m £m £m
Revenue(1) 506.1 693.2 555.2 - 1,754.5
Gaming duties (98.6) (156.7) (131.1) - (386.4)
Other cost of sales (13.4) (105.7) (90.1) - (209.2)
Segmental gross profit 394.1 430.8 334.0 - 1,158.9
Marketing expenses (7.8) (167.0) (93.1) - (267.9)
Operating expenses (319.9) (121.1) (110.9) (25.6) (577.5)
Share of post-tax loss of equity accounted associate - - - (1.0) (1.0)
Adjusted EBITDA 66.4 142.7 130.0 (26.6) 312.5
Depreciation (44.5)
Amortisation (excluding acquired intangibles) (77.7)
Amortisation of acquired intangibles (108.6)
Exceptional items (79.3)
Share benefit credit (2.7)
Foreign exchange 0.1
Finance expenses (202.7)
Finance income 34.1
Loss before tax (168.8)
1. Revenue recognised under IFRS 9 is £506.1m in Retail, £693.2.m in
UK&I Online and £527.1m in International. Revenue recognised under IFRS
15 is £nil in Retail, £nil in UK&I Online and £28.1m in International.
Retail UK&I Online International Corporate Total
£m £m £m £m £m
Total segment assets 488.3 1,231.7 726.4 154.2 2,600.6
Total segment liabilities 148.0 192.5 284.9 1,965.7 2,591.1
Included within total segment assets:
Goodwill 99.4 357.9 306.0 - 763.3
Interests in associates - - - 32.4 32.4
Capital additions 7.5 53.1 27.1 3.8 91.5
2023 Retail UK&I Online International Corporate Total
£m £m £m £m £m
Revenue(1) 535.0 658.5 517.4 - 1,710.9
Gaming duties(2) (94.0) (151.0) (114.4) - (359.4)
Other cost of sales(2) (21.4) (104.4) (92.8) - (218.6)
Segmental gross profit 419.6 403.1 310.2 - 1,132.9
Marketing expenses (6.5) (134.5) (96.8) - (237.8)
Operating expenses (314.2) (125.1) (114.0) (43.7) (597.0)
Associate income - - - 1.4 1.4
Adjusted EBITDA 98.9 143.5 99.4 (42.3) 299.5
Depreciation (46.3)
Amortisation (excluding acquired intangibles) (67.7)
Amortisation of acquired intangibles (114.3)
Exceptional items (52.6)
Fair value gain on financial assets 4.1
Share benefit credit 0.5
Foreign exchange 1.0
Finance expenses (195.3)
Finance income 41.0
Loss before tax (130.1)
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
1. Revenue recognised under IFRS 9 is £535.0m in Retail, £658.5m in
UK&I Online and £486.9m in International. Revenue recognised under IFRS
15 is £nil in Retail, £nil in UK&I Online and £30.5m in International.
2. In the prior year, both gaming duties and other cost of sales were
shown as a single line item within this note. However, to comply with June
2024 IFRIC update relating to IFRS 8: Operating Segments we have split them
into the two categories to match the line items in the Condensed Consolidated
Income Statement.
Retail UK&I Online International Corporate Total
£m £m £m £m £m
Total segment assets 516.2 1,292.4 759.3 89.4 2,657.3
Total segment liabilities 173.3 278.5 219.6 1,829.9 2,501.3
Included within total segment assets:
Goodwill 99.4 357.9 306.0 - 763.3
Interests in associates - - - 33.9 33.9
Capital additions 4.6 11.2 66.3 2.2 84.3
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
Geographical information
The Group's performance can also be reviewed by considering the geographical
markets and geographical locations within which the Group operates. This
information is outlined below:
Revenue by geographical market (based on location of customer)
2024 2023
£m £m
United Kingdom 1,172.5 1,165.8
Italy 178.3 149.9
Spain 100.1 92.9
Romania 51.4 28.4
Denmark 48.3 40.0
Rest of World 203.9 233.9
1,754.5 1,710.9
Non-current assets by geographical location
2024 2023
£m £m
United Kingdom & Ireland 519.4 495.8
Gibraltar 1,054.8 1,130.5
Rest of World 627.5 635.2
2,201.7 2,261.5
3 Exceptional items and adjustments
In determining the classification and presentation of exceptional items we
have applied consistently the guidelines issued by the Financial Reporting
Council ("FRC") that primarily addressed the following:
· Consistency and even-handedness in classification and presentation;
· Guidance on whether and when recurring items should be considered as
part of underlying results; and
· Clarity in presentation, explanation and disclosure of exceptional
items and their relevance.
In preparing the Annual Report and Accounts, we also note the European
Securities and Markets Authority (ESMA) guidance on Alternative Performance
Measures ("APM"), including:
· Clarity of presentation and explanation of the APM;
· Reconciliation of each APM to the most directly reconcilable
financial statement caption;
· APMs should not be displayed with more prominence than statutory
financials;
· APMs should be accompanied by comparatives; and
· The definition and calculation of APMs should be consistent over
time.
We are satisfied that our policies and practice conform to the above
guidelines.
The Group has restated net debt for the prior year following a change in
definition to include the fair value of the derivative swaps held against the
debt. Including the derivative balance more accurately reflects the fair value
of the total amount repayable related to the borrowings. This is a change over
time of the definition of the APM, however gives a better understanding of the
true net debt position of the Group, and will be kept consistent going
forward.
Adjusted results
The Group reports adjusted results, both internally and externally, that
differ from statutory results prepared in accordance with IFRS. These adjusted
results, which include our key metrics of adjusted EBITDA and adjusted EPS,
are considered to be a useful reflection of the underlying performance of the
Group and its businesses, since they exclude items which impair visibility of
the underlying activity in each segment. More specifically, visibility can be
impaired in one or both of the following instances:
· a transaction is of such a material or infrequent nature that it
would obscure an understanding of underlying outcomes and trends in revenues,
costs or other components of performance (for example, a significant
impairment charge); or
· a transaction that results from a corporate activity that has neither
a close relationship to the Group's underlying operations nor any associated
operational cash flows (for example, the amortisation of intangibles
recognised on acquisitions).
Adjusted results are used as the primary measures of business performance
within the Group and align with the results shown in management accounts, with
the key uses being:
· management and Board reviews of performance against expectations and
over time, including assessments of segmental performance;
· in support of business decisions by the Board and by management,
encompassing both strategic and operational levels of decision-making.
The Group's policies on adjusted measures are consistently applied over time,
but they are not defined by IFRS and, therefore, may differ from adjusted
measures as used by other companies.
The Condensed Consolidated Income Statement presents adjusted results
alongside statutory measures, with the reconciling items being itemised in the
statement and described below. We allocate these between exceptional items and
adjusted items.
Exceptional items
Exceptional items are those items the Directors consider to be one-off or
material in nature that should be brought to the reader's attention in
understanding the Group's financial performance.
Exceptional items are as follows:
2024 2023
£m £m
Operating expenses
Corporate transaction related costs/(income) 32.1 (0.1)
Integration and transformation costs 47.2 49.3
Regulatory provisions and other associated costs - 3.4
Exceptional items - operating expenses 79.3 52.6
Finance expenses
Interest expense on US exit provision 0.5 -
Exceptional items - finance expenses 0.5 -
Total exceptional items before tax 79.8 52.6
Tax credit on exceptional items (9.8) (9.0)
Total exceptional items after tax 70.0 43.6
Total exceptional items in the year were £70.0m in 2024 compared to £43.6m
in 2023.
Exceptional items are defined as those items which are considered to be
one-off or material in nature or size that should be brought to attention of
the user to better understand the Group's financial performance. Comparatives
are included even when not individually material to aid comparability.
Corporate transaction related costs
The Group has incurred £32.1m of corporate transaction costs in 2024.
The Group decided to conclude its partnership with Authentic Brands Group and
has incurred £43.1m of fees in relation to the closure of the US B2C business
in the year. These costs include £38.1m of termination fees, £4.6m of
employment costs, £1.6m of costs for onerous contracts, £2.2m write off a
capitalised license fee and £1.3m of other M&A fees including legal and
professional costs. These costs have been offset by the profit earned on the
sale of player databases of £4.7m.
As a part of the Romania acquisition, the Group recognised a gain on bargain
purchase of £13.4m (see note 7). This is offset by exceptional costs relating
to the acquisition of £1.0m.
The remaining £1.4m relates to various smaller M&A projects.
Integration and transformation costs
The Group has incurred a total of £47.2m of costs relating to the integration
programme, including £17.6m of platform integration costs (2023: £23.3m),
£2.4m of legal and professional costs (2023: £2.4m), £15.7m of redundancy
costs (2023: £7.6m), £5.3m of relocation and HR related expenses (2023:
£5.3m), £4.0m of employee incentives as part of the integration of William
Hill and 888 (2023: £7.9m), £1.0m for corporate rebranding costs (2023: nil)
and £1.2m of technology integration costs (2023: £2.8m). For more
information on platform migration refer to the business and financial review
in the Chief Financial Officer's Report.
Regulatory provisions and other associated costs
The Group paid £2.9m during the prior period related to a regulatory
settlement with the Gibraltar regulator in relation to the previously
disclosed failings that we identified in our Middle East business. Further to
this there was £0.5m of legal and professional fees incurred relating to this
settlement. This has been presented as an exceptional item given it is one-off
in nature.
Interest expense on US exit provision
£0.5m has been recognised in finance expenses in relation to the unwinding of
the discount on the US exit provision which is due for settlement across the
period from 2027 to 2029. The US exit provision has been captured in corporate
transaction related costs.
Adjusted items
Adjusted items are recurring items that are excluded from internal measures of
underlying performance and which are not considered by the Directors to be
exceptional. This relates to the amortisation of specific intangible assets
recognised in acquisitions, amortisation of finance fees, fair value gain of
financial assets, foreign exchange and share benefit charges. These items are
defined as adjusted items as it is believed it would impair the visibility of
the underlying activities across each segment as it is not closely related to
the businesses' or any associated operational cash flows. Each of these items
are recurring and occur in each reporting period and will be consistently
adjusted in future periods. Adjusted items are all shown on the face of the
Condensed Consolidated Income Statement in the reconciliations of adjusted
EBITDA and note 5 in the reconciliation of adjusted profit after tax.
4 Taxation
Corporate taxes
2024 2023
£m £m
Current taxation
UK corporation tax charge at 25% (2023: 23.5%) 3.8 0.7
Adjustments in respect of prior years 1.2 22.0
Other jurisdictions taxation 32.2 (21.0)
37.2 1.7
Deferred taxation
Origination and reversal of temporary differences (28.8) (37.7)
Effect of tax rate change on opening balance 14.3 -
Recognition of previously unrecognised deductible temporary differences - (30.2)
Adjustments in respect of prior years (0.1) 1.3
(14.6) (66.6)
Taxation expense/(credit) 22.6 (64.9)
The UK tax rate increased from 19% to 25% on 1 April 2023. The tax rate for
2024 is 25%. An average rate for 2023 was used of 23.5%.
The effective tax rate in respect of ordinary activities before exceptional
items for the year ended 31 December 2024 is 282.2% (2023: 81.4%). The
effective tax rate in respect of ordinary activities after exceptional items
is -13.4% (2023: 53.5%).
The Group is subject to the OECD's Pillar Two model rules, which introduce a
global minimum effective tax rate of 15% per jurisdiction starting with the
year ended 31 December 2024. For this year, the Group has recognised Pillar
Two top-up tax of £5.0m as a current year expense in respect of subsidiary
jurisdictions whose tax rate falls below the 15% minimum.
The difference between the total tax charge shown above and the amount
calculated by applying the standard rate of UK corporation tax to the
(loss)/profit before tax is as follows:
2024 2023
£m £m
Loss before taxation (168.8) (121.3)
Standard tax rate in UK 25% (2023:23.5%) (42.2) (28.5)
Difference in effective tax rate in other jurisdictions (12.1) (15.4)
Effect of tax rate change on opening balance 14.3 -
Difference in current and deferred tax rate (0.1) 0.2
Expenses not allowed for taxation 7.0 13.6
Non-deductible interest expenses 1.4 -
Non-deductible expenses on transactional items 8.8 -
Deferred tax not recognised 39.8 26.5
Recognition of previously unrecognised deductible temporary differences - (30.3)
Adjustments to prior years' tax charges 1.1 (19.7)
Accrual of liabilities for uncertain tax positions 1.4 (1.8)
Tax on share of result of associate 0.3 (0.3)
Pillar 2 tax 5.0 -
Non-taxable income (2.1) (8.8)
Losses utilised previously not recognised for deferred tax - (0.4)
Total tax expense/(credit) for the year 22.6 (64.9)
The difference in effective tax rates in other jurisdictions primarily
reflects the lower effective tax rate in Gibraltar, Spain and Malta. The
corporation tax rate in Gibraltar has increased to 15%, with effect from 1
July 2024. This results in a difference in current (13.75%) and deferred tax
rate (15%); and also the opening balances of the deferred tax positions in
Gibraltar have been re-calculated at the new rate.
Expenses not allowed for tax purposes mainly relate to reduced availability of
tax relief arising on costs incurred in the period.
Tax differences on transactional items include the costs not deductible in
relation to the sale of the US B2B business and business closure costs in
Bulgaria and Israel.
Deferred tax not recognised mainly relates to restricted interest in the UK in
respect of which no deferred tax asset can be recognised.
The accrual of liabilities for uncertain tax positions relates predominantly
to provisions in respect of transfer pricing matters.
Non-taxable income relates to the accounting gain arising from the acquisition
of a business in Romania.
Uncertain tax matters
The Group operates across multiple tax jurisdictions. We evaluate the tax
treatment of our transactions in those jurisdictions in accordance with
applicable tax laws and regulations, identify risks and uncertainties, and,
where applicable, estimate outcomes. Given the complexity of tax law,
uncertainties may arise in a number of circumstances, for example due to
uncertainty of interpretation, changes in tax law, case law developments, and
evolving areas of challenge by tax authorities. Where there is uncertainty
regarding the tax treatment of certain items, we are required under IFRIC 23
to determine whether it is probable that future economic outflows will occur,
and make provision for potential future liabilities accordingly. Given the
group's profile, the majority of our risks and uncertainties relate to
transfer pricing and interpretation of tax authorities in relation to tax
laws, including gaming taxes.
5 Earnings per share
Basic earnings per share
Basic earnings per share ("EPS") has been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of shares
in issue and outstanding during the year.
Diluted earnings per share
The weighted average number of shares for diluted earnings per share takes
into account all potentially dilutive equity instruments granted, which are
not included in the number of shares for basic earnings per share. Potential
ordinary shares are excluded from the weighted average diluted number of
shares when calculating IFRS diluted loss per share because they are
anti-dilutive. The number of equity instruments included in the diluted EPS
calculation consist of 8,049,597 Ordinary Shares (2023: 2,789,783) and nil
market-value options (2023: nil).
The number of equity instruments excluded from the diluted EPS calculation is
4,575,605 (2023: 2,294,080).
2024 2023
(restated)
Loss for the period attributable to equity holders of the Parent (£m) (192.0) (65.2)
Weighted average number of Ordinary Shares in issue and outstanding 449,436,621 448,166,792
Effect of dilutive Ordinary Shares and share options 8,049,597 2,789,783
Weighted average number of dilutive Ordinary Shares 457,486,218 450,956,575
Basic loss per share (pence) (42.7) (14.5)
Diluted loss per share (pence) (42.7) (14.5)
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
The diluted loss per share in the current and prior year is the same as the
basic loss per share as the potentially dilutive share options are considered
anti-dilutive as they would reduce the loss per share and therefore, they are
disregarded in the calculation.
Adjusted earnings per share
The Directors believe that EPS excluding exceptional and adjusted items, tax
on exceptional and adjusted items ("Adjusted EPS") allows for a further
understanding of the underlying performance of the business and assists in
providing a clearer view of the performance of the Group.
2024 2023
(restated)
Adjusted profit after tax (£m) (28.8) 39.3
Weighted average number of Ordinary Shares in issue 449,436,621 448,166,792
Weighted average number of dilutive Ordinary Shares 457,486,218 450,956,575
Adjusted basic earnings per share (pence) (6.4) 8.8
Adjusted diluted earnings per share (pence) (6.4) 8.7
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
An explanation of adjusted profit after tax is provided in Appendix 1.
The table below highlights the measures used to achieve Adjusted profit after
tax:
Note 2024 2023
£m £m
(restated)
Adjusted (loss)/profit after tax (28.8) 39.3
Exceptional items - operating expenses 3 (79.3) (52.6)
Exceptional items - finance expenses 3 (0.5) -
Fair value gain on financial assets - 4.1
Amortisation of finance fees (16.5) (17.2)
Amortisation of acquired intangibles (108.6) (114.3)
Tax on exceptional and adjusted items 18.0 37.4
Foreign exchange gains 27.0 37.6
Share benefit (charge)/credit (2.7) 0.5
Profit attributable to non-controlling interests (0.6) -
Loss after tax (192.0) (65.2)
The 2023 comparative totals have been restated to reflect the Remote Gaming
Duty prior period adjustment (see note 1)
6 Goodwill and other intangibles
Goodwill Brands, Software Total
£m customer £m £m
relationships
and licences
£m
Cost or valuation
At 31 December 2023 789.0 1,219.1 451.8 2,459.9
Additions via business combinations - 52.2 - 52.2
Additions - 4.1 86.0 90.1
Impairment - - (1.8) (1.8)
Disposals - - (8.2) (8.2)
Effect of foreign exchange rates - 0.8 1.5 2.3
At 31 December 2024 789.0 1,276.2 529.3 2,594.5
Amortisation and impairments:
At 31 December 2023 25.7 161.4 234.5 421.6
Amortisation charge for the year - 87.0 99.3 186.3
Impairment charge for the year - - (1.2) (1.2)
Disposals - - (2.4) (2.4)
Effect of foreign exchange rates - 0.5 0.4 0.9
At 31 December 2024 25.7 248.9 330.6 605.2
Carrying amounts
At 31 December 2024 763.3 1,027.3 198.7 1,989.3
At 31 December 2023 763.3 1,057.7 217.3 2,038.3
7 AcquisitionS
Acquisitions
On 11 October 2024, the Group entered into a transaction to acquire 51% of the
share capital in both New Gambling Solutions SRL ("NGS"), an entity
incorporated in Romania, and Orion Sky Marketing Limited ("OSM"), an entity
incorporated in Gibraltar, including the Winner brand. The Group has
contributed the trade of its 100% owned subsidiary, 888 Romania Limited
(including the 888 brand and customer database as a part of the transaction.
This has been consolidated with NGS to form an enlarged Romania business of
which the Group holds a 51% stake.
The transaction has been assessed as a single acquisition under IFRS 10:
Consolidated Financial Statements, with the Group maintaining control over the
enlarged business. Accordingly, it is accounted for as a business combination
under IFRS 3: Business Combinations.
Total consideration for the transaction was £7.4m, £4.4m of which was
transferred to the sellers pre-year end and the remainder being paid in
January 2025. There is no further contingent or deferred consideration to be
paid. The non-controlling interest ("NCI") of 49% in NGS and OSM has been
measured based on the proportionate share of the acquiree's identifiable net
assets.
Although the contribution of the 888 Romania Limited to the new enlarged
Romania business was included in the transaction for commercial purposes, the
transfer of the 888 brand and customer database has been excluded from the
accounting for the business combination under IFRS 3. These assets were
transferred for the benefit of the combined business post-acquisition and are
not considered part of the acquisition consideration.
The transfer of the 888 Romania brand, the platform agreement between NGS and
OSM, and the joint venture agreement between NGS and OSM are treated as
intercompany transactions and do not impact the acquisition accounting.
Identifiable assets acquired and liabilities acquired
Preliminary
fair value
Intangible assets 52.2
Cash and cash equivalents 0.3
Trade and other receivables 3.2
Trade and other payables (6.0)
Deferred tax liabilities (8.3)
Long-term debt (0.6)
Total net identifiable assets 40.8
Gain on bargain purchase (13.4)
Non-controlling interest (20.0)
Consideration transferred 7.4
Intangible assets
Acquired identifiable intangible assets include £29.8m in respect of customer
relationships, £21.8m in respect of brands, and £0.6m in respect of
licences. As noted above, given the 888 Romania assets are commercially
included within the transaction but not included within the consideration
under IFRS 3: Business Combinations, this leads to a gain on bargain purchase
of £13.4m that has been recognised as an exceptional item in the Condensed
Consolidated Income Statement.
The fair value of the brand assets was assessed by considering the benefit to
the Group's future revenue of the acquired Winner brand and assessing the
royalty costs that would be incurred in deriving the same benefit. The key
assumptions in the assessments are the forecast revenue growth and royalty
cost applied. A royalty cost of 4% of revenue was applied. The fair value of
the customer relationships was assessed using the multi-period excess earnings
methodology. The key assumption in the assessments is customer retention
rates. A 2% increase/(decrease) in estimated customer churn rates would
increase/(decrease) the fair value of customer relationships by £5m/(£4m)
respectively. The fair value of the licences has been derived by calculating a
replacement cost for each individual licence.
8 Provisions
Indirect tax Legal and Shop closure Other Total
provision regulatory provision restructuring £m
£m £m £m costs
£m
At 31 December 2023 62.8 116.4 3.6 0.5 183.3
Charged/(credited) to income statement
Additional provisions recognised 3.8 9.3 0.6 19.3 33.0
Provisions released to income statement (1.3) (3.5) (0.1) (0.5) (5.4)
Utilised during the year - (1.3) (2.7) (0.3) (4.3)
Foreign exchange differences (2.9) (2.2) - - (5.1)
At 31 December 2024 62.4 118.7 1.4 19.0 201.5
Customer claims provisions of £112.9m (2023: £104.8m) within legal and
regulatory, and £16.6m of US termination costs (31 December 2023: £nil)
within other restructuring costs are classified as non-current. The remaining
provisions are all classified as current.
Indirect tax provision
The Group has accrued for gaming duty liabilities which it expects to pay as a
result of enquiries by the Austrian tax authorities in respect of amounts
stakes by Austrian players, generally with our Maltese companies, for periods
between January 2019 and December 2022. All amounts for periods up to an
including the year ended 31 December 2018 have been assessed and settled.
Legal and regulatory provisions
The Group has recorded a provision in respect of legal and regulatory matters,
including customer claims, and updated it to reflect the Group's revised
assessment of these risks in light of developments arising during 2024, such
that this represents management's best estimate of probable cash outflows
related to these matters.
The industry in which the Group operates is subject to continuing scrutiny by
regulators and other governmental authorities, which may, in certain
circumstances, lead to enforcement actions, sanctions, fines and penalties or
the assertion of private litigations, claims and damages.
In common with other businesses in the gambling sector, the Group receives
claims from consumers relating to the provision of gambling services. Claims
have been received from consumers in a number of (principally European)
jurisdictions and allege either failure to follow responsible gambling
procedures, breach of licence conditions or that underlying contracts in
question are null and void given local licencing regimes.
Consumers who have obtained judgement against the Group's entities in the
Austrian courts have sought to enforce those judgements in Malta and
Gibraltar. These are being defended on the basis of a public policy argument.
The provisions held for the Group relating to these claims is £84.5m (2023:
£86.2m), which includes a provision of £77.6m (2023: £80.6m) relating to
the William Hill and Mr Green brands and £6.9m (2023: £5.6m) relating to
888.
The calculation of the customer claims liability includes provision for both
legal fees and interest but does not include any gaming taxes that have
already been paid on these revenues. Management have assessed that it is
probable as opposed to virtually certain that the tax will be reclaimed and
therefore a contingent asset of up to £27.3m (2023: £28.0m) has been
disclosed but not recognised for the tax reclaims.
The timing and amount of the outflows is ultimately determined by the
settlement reached with the relevant authority.
Following receipt of updated advice, the development of case law in Germany
indicates that the courts may apply a more customer-friendly approach to the
application of the three-year limitation period and link the commencement of
the limitation period to the player's first positive knowledge of a claim to
recover their gambling losses. The law permits a maximum limitation period of
10 years in this scenario. As such, during 2023 and within the purchase price
accounting measurement period, we re-assessed the value of the provision for
customer claims in Germany as at the acquisition date. This led to an increase
in the provision of £15.7m to a total value on acquisition of £23.4m. This
was recognised through the opening balance sheet on acquisition, leading to an
equivalent increase in goodwill on acquisition.
During the year, the Group has utilised £1.3m (2023: £3.5m) of the overall
provision as claims have been settled. In addition, a further charge of £4.3m
(2023: £6.2m) has been recognised to reflect the receipt of new claims.
Shop closure provisions
As at 31 December 2024, the Group holds provisions relating to the associated
costs of closure of 20 shops which ceased trading in 2019, and certain shops
that ceased to trade as part of normal trading activities but where the
properties were still leased by the Group. As at 31 December 2023, the Group
held provisions for the costs related to the closure of 713 shops which closed
in 2019, 119 shops which closed in 2020 and certain other shops that ceased
trade as part of normal trading activities.
Other restructuring costs
The entirety of this provision relates to costs for the closure of the US B2C
business. The majority of this balance relates to termination payments due
across the period from 2027 to 2029. Refer to Note 3 for more information on
the US B2C business closure. During the year, the Group released certain staff
severance provisions to profit and loss resulting from restructuring
initiatives announced in 2023 and 2022.Additionally, the Group recognised and
settled another staff severance provision in full during the current year.
9 Borrowings
Interest rate Maturity 2024 2023
% £m £m
Borrowings at amortised cost
Bank facilities
€473.5m term loan facility EURIBOR + 5.25 2028 - 385.6
$575.0m term loan facility CME term SOFR + 5.35 2028 410.4 401.6
£150.0m Equivalent Multi-Currency RCF SONIA + 3.75 2028 85.0 -
£50.0m Equivalent Multi-Currency RCF SONIA + 3.75 2025 - -
Loan Notes
€582.0m Senior Secured Fixed Rate Notes 7.56 2027 471.9 489.6
€450.0m Senior Secured Floating Rate Notes EURIBOR + 5.5 2028 359.9 373.8
£400.0m Senior Unsecured Notes 10.75 2030 400.0 -
£350.0m Senior Unsecured Notes 4.75 2026 10.5 10.5
Total Borrowings 1,737.7 1,661.1
Less: Borrowings as due for settlement in 12 months 4.6 3.9
Total Borrowings as due for settlement after 12 months 1,733.1 1,657.2
Bank facilities
Senior Facilities Agreement
The Group has a Senior Facilities Agreement under which the following
facilities are made available:
· a £150.0m multicurrency revolving credit facility;
· a £50.0m multicurrency revolving credit facility; and
· a $575.0m 6-year US Dollar-denominated term loan due July 2028.
In May 2024, the group refinanced a euro denominated term loan of €473.5m
(which had been provided under the Senior Facilities Agreement) by issuing a
10.75% £400.0m sterling-denominated senior secured fixed rate note with
maturity in May 2030.
Loan Notes
Senior Secured Notes
(i) €582.0m 7.558% Senior Secured Fixed Rate Notes due July 2027
The Group has issued €582.0m of guaranteed senior secured fixed rate notes,
which are guaranteed by certain members of the Group and certain of the
Group's operating subsidiaries and mature in July 2027.
(ii) €450.0m Senior Secured Floating Rate Notes due July 2028
The Group has issued €450.0m of guaranteed senior secured floating rate
notes. The notes, which are guaranteed by certain members of the Group and
certain of the Group's operating subsidiaries, mature in July 2028.
(iii) £400.0m 10.75% Senior Secured Fixed Rate Notes due May 2030
In May 2024, the Group issued £400.0m of guaranteed senior secured fixed rate
notes and used the net proceeds to fully repay a term loan of €473.5m, of
which €467.1m remained outstanding at that date. The notes, which are
guaranteed by certain members of the Group and certain of the Group's
operating subsidiaries, mature in May 2030.
Senior Unsecured Notes
(iv) £350.0m 4.75% Senior Unsecured Fixed Rate Notes due 2026
The legacy William Hill notes have £10.5m outstanding at 31 December 2024
(2023: £10.5m).
(v) £200.0m Equivalent Multi-Currency Revolving Credit Facilities
In July 2022, as part of the William Hill Group acquisition, the Group
arranged a new five-and-a-half-year maturity £150.0m multi-currency revolving
credit facility (maturing in January 2028) to be included in its overall
Senior Facilities Agreement. The drawn balance on this facility at 31 December
2024 was £85.0m (2023: nil).
In May 2024, the Group added a further £50.0m one-an-a-half-year
multicurrency revolving credit facility to the Senior Facilities Agreement
(maturing in December 2025).
Financial covenant
The Revolving Credit Facilities are subject to a Senior Facilities Agreement
whereby any applicable revolving Incremental Senior Facilities (together the
'Financial Covenant Facilities') are tested at every reporting period to
ensure that they do not exceed a pre-agreed threshold to be agreed with the
Mandated Lead Arrangers prior to the entry into the Senior Facilities
Agreement. There are no other covenants on the Group debt, therefore the
Directors are satisfied that, at the year-end, the net leverage ratio has not
exceeded the pre-agreed threshold and, as a consequence, the financial
covenants have not been breached.
Borrowings reconciliation
2024:
Debt Opening Inflows Repayments Non-cash FX Total
£m £m £m £m £m £m
2026 Senior Unsecured Notes 10.5 - - - - 10.5
€473.5m term loan facility 385.7 - (383.4) 0.6 (2.9) -
$575.0m term loan facility 401.7 - (5.3) 8.1 5.9 410.4
€450.0m Senior Secured Floating Rate Notes 374.0 - - 3.1 (17.2) 359.9
£400.0m Senior Secured Fixed Rate Notes - 400.0 - - - 400.0
€582.0m Senior Secured Fixed Rate Notes 489.2 - - 3.7 (21.0) 471.9
£200.0m Revolving Credit Facility - 85.0 - - - 85.0
1,661.1 485.0 (388.7) 15.5 (35.2) 1,737.7
2023:
Debt Opening Repayments Non-cash FX Total
£m £m £m £m £m
2026 Senior Unsecured Notes 10.5 - - - 10.5
€473.5m term loan facility 392.6 - 2.9 (9.8) 385.7
$575.0m term loan facility 420.6 (4.0) 7.4 (22.3) 401.7
€582.0m Senior Secured Fixed Rate Notes 498.7 - 2.9 (12.4) 489.2
€450.0m Senior Secured Floating Rate Notes 379.9 - 3.6 (9.5) 374.0
1,702.3 (4.0) 16.8 (54.0) 1,661.1
10 Contingent assets and liabilities
Legal claims
As at 31 December 2024, potential legal claims of £4.9m (2023: £4.5m)
related to the Austria and Germany provisions (see note 8 for further details)
are deemed to give rise to a possible future cash outflow, as such no further
provision was required at the balance sheet date.
The calculation of the customer claims liability includes provision for both
legal fees and interest but does not include any gaming taxes that have
already been paid on these revenues. Management have assessed that it is
probable as opposed to virtually certain that the tax will be reclaimed and
therefore a contingent asset of up to £27.3m (2023: £28.0m) has been
disclosed for the tax reclaims.
Appendix 1 - Alternative performance measures
In reporting financial information, the Board uses various alternative
performance measures ("APMs") which it believes provide useful additional
information for understanding the financial performance and financial health
of the Group. These APMs should be considered in addition to IFRS measures and
are not intended to be a substitute for them. Since IFRS does not define APMs,
they may not be directly comparable to similar measures used by other
companies.
The Board uses APMs to improve the comparability of information between
reporting periods by adjusting for non-recurring or uncontrollable factors
which affect IFRS measures, to aid users in understanding the Group's
performance.
Consequently, the Board and management use APMs for performance analysis,
planning, reporting and incentive-setting.
APM Closest equivalent IFRS measure Definition/purpose Reconciliation/calculation
Adjusted EBITDA Operating profit/loss Adjusted EBITDA is defined as operating profit or loss excluding share benefit A reconciliation of this measure is provided on the face of the Condensed
charges, foreign exchange, depreciation and amortisation, fair value gains and Consolidated Income Statement.
any exceptional items which are typically non-recurring in nature.
Adjusted EBITDA margin No direct equivalent Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue. It is See note A.
a measure of the business's profitability, and also measures how much revenue
the business converts into underlying profitability. Improving adjusted EBITDA
margin is a key strategic priority for the Group.
Adjusted BASIC and DILUTED EPS Earnings per share Adjusted basic EPS is defined as adjusted profit after tax attributable to Reconciliations of these measures are provided in note 5 of the condensed
equity holders of parent divided by the weighted average number of ordinary financial statements.
shares in issue and outstanding during the year during the financial year.
Adjusted diluted EPS is defined as adjusted profit after tax attributable to
equity holders of parent divided by the Weighted average number of dilutive
ordinary shares.
Adjusted profit after tax Profit after tax Adjusted profit after tax is defined as profit after tax before amortisation A reconciliation of this measure is disclosed in note 5 of the condensed
of acquired intangibles and finance fees, foreign exchange, share benefit financial statements.
charges, exceptional items and tax on exceptional items.
Exceptional and adjusted items No direct equivalent Exceptional items are those items the Directors consider to be one-off or Exceptional items and adjusted items are included on the face of the
material in nature or size that should be brought to the reader's attention in Consolidated Income Statement with further detail provided in note 3 of the
understanding the Group's financial performance. condensed financial statements.
Adjusted items are recurring items that are excluded from internal measures of
underlying performance, and which are not considered by the Directors to be
exceptional. This relates to the amortisation of specific intangible assets
recognised in acquisitions and finance fees, foreign exchange, fair value
gains and share benefit charges.
Effective tax rate Income tax expense This measure is the tax charge for the year divided by profit before tax, Effective tax rate is disclosed in note 4 of the condensed financial
expressed as a percentage. statements.
effective tax rate on adjusted profit No direct equivalent This measure is the tax charge for the year, adjusted for the tax effect of Effective tax rate on Adjusted profit is disclosed in note 4 of the condensed
adjusted items, divided by adjusted profit before tax, expressed as a financial statements.
percentage.
Leverage ratio No direct equivalent Leverage ratio is calculated as net debt divided by the previous 12-months See note B.
adjusted EBITDA. Net debt comprises the principal outstanding balance of
borrowings, the fair value of the derivative swaps held against this debt,
accrued interest on those borrowings and lease liabilities less cash and cash
equivalents (excluding customer deposits).
CONSTANT CURRENCY REVENUE GROWTH No direct equivalent Constant currency growth is calculated by translating both current and prior See note C.
year performance at the 2024 exchange rates.
Note
A
Retail UK&I Online International Corporate Total
£m £m £m £m £m
2024
Revenue from continuing businesses 506.1 693.2 555.2 - 1,754.5
Adjusted EBITDA 66.4 142.7 130.0 (26.6) 312.5
Adjusted EBITDA margin % 13.1% 20.6% 23.4% N/A 17.8%
2023
Revenue from continuing businesses 535.0 658.5 517.4 - 1,710.9
Adjusted EBITDA 98.9 143.5 99.4 (42.3) 299.5
Adjusted EBITDA margin % 18.5% 21.8% 19.2% N/A 17.5%
NOTE
B
2024 2023
£m £m
Borrowings (1,737.7) (1,661.1)
Add back loan transaction fees (61.6) (96.6)
Add derivatives (40.5) (40.3)
Gross borrowings (1,839.8) (1,798.0)
Lease liability (95.0) (87.6)
Cash (excluding customer balances) 147.1 128.4
Net debt (1,787.7) (1,757.2)
Adjusted EBITDA 312.5 299.5
Financial leverage ratio 5.7 5.9
NOTE C
2024 2023
£m £m
Reported revenue 1,754.7 1,710.9
Impact of 2024 exchange rates - (15.5)
At constant currency 1,754.7 1,695.2
Constant currency revenue growth 3.5%
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