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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:08.065)
Oops.
Fernando Noodt (00:14.082)
This morning, Evoque PLC presented what is likely to be its final set of interim accounts as LSE listed business as leadership presses ahead with its merger with Balise IntroLod. H1 accounts reveal increased tax exposure hitting Ebok's bottom line, while top line metrics remain broadly flat. Yet Evo continues to attract significant interest from media and analysts who tuned into this morning's investor call looking for further clues on how its heritage brands could be reshaped under the ownership.
of ballast introlout. Welcome to iGaming Daily will where we will look into all that happened with evoke PLC's investor call, its results, and we'll analyze all that's happening ahead of its merger with ballast introlout. I'm Fernando Nott, media manager for SBC, and your host for today, where I'm joined again for another Ted and Ted Talking Time. Ted Memur, editor large for SBC. How are you today?
ted (01:11.209)
Very well Fernando, climatizing to the UK summer with a new haircut and to our audio audiences, yeah it's a great one, it's all blue and gone peroxide and yeah.
Fernando Noodt (01:28.322)
Yeah, I'll I wish I wish you hadn't you didn't bring haircuts into the the conversation because it's I clearly haven't got one in a while. But also with us, editor for SBC News, Ted Romclay. Ted, how are you today?
Ted Orme-Claye (01:30.809)
Ha ha ha!
Ted Orme-Claye (01:43.715)
Very well, you, I'm loving the vibrant colours in Ted's hair. He looks like he should be playing guitar in a 2000s pop punk band. He's looking good, man, he's looking good.
ted (01:48.498)
Yeah.
ted (01:54.597)
It's called a midlife crisis guys.
Fernando Noodt (02:00.503)
Alright, but you know.
Ted Orme-Claye (02:00.512)
Yeah, but like Ted, I'm also adjusting to what is set to be our fifth heatwave in the UK. So things are nice and apocalyptic over here. I'm very much looking forward to battling it out for bottles of water on the streets of Manchester very soon.
ted (02:16.221)
Ready for the eclipse tonight.
Ted Orme-Claye (02:18.658)
Yes, of course. Yeah, we're going to get a brief respite when the sun is blocked out like some sort of Aztec ritual later this evening.
Fernando Noodt (02:19.106)
Yeah.
Fernando Noodt (02:29.986)
Yeah, absolutely. And I'm happy to to welcome you guys in Buenos Aires where the temperature is under ten degrees Celsius. So and ahead of entire week of rain, so you guys will feel just like in Manchester, so or London. So yeah. but anyway, let's begin with today's episode of iGaming Daily, which is brought to you by Optimus, the creator of positionless marketing and number one player engagement solution for iGaming and Sports Betting operators, guys.
Ted Orme-Claye (02:38.444)
beautiful.
Ted Orme-Claye (02:44.996)
Ha ha.
Fernando Noodt (02:58.06)
Like we said about well evoke's final call, another PLC publishes its interim statement. So what are the headline narratives from these H one results?
ted (03:11.945)
Leadership cites that corporate performance is stable and in line with expectations as Avog now progresses with its merger with Ballis Interactive. Yet on paper the discrepancy is really sharp, the top line income is flat at £888 million whilst the beta and adjusted profits stumble from comparatives of £12 million to £700,000.
And if you look at the bottom line numbers, the exposures are very clear. The UK tax bill since April has hit 30 million. And shout out to Connor Porter for getting that number from the investor call. All previous growth markets in Italy, Spain and Romania are hitting the walls. So metrics are down across Europe. And finally, from kind of a long-term perspective, is that evoke.
its final kind of interim has made no improvement on its debt base which remains at £1.9bn. In all, this is not a nightmare interim but it doesn't inspire confidence in my opinion. There's still so many questions about the merger with Bally's Interactive.
Fernando Noodt (04:24.854)
And of course with this interim we'd see we're seeing revenue flat and profitability has deteriorated sharply in the meantime. So do you think Ebok is generally improving its operations or are the underlying numbers telling a different story?
Ted Orme-Claye (04:43.931)
It's difficult to say. mean, like we've established, things have definitely not got any worse, but they've also not got considerably better. So it does make you think, I wonder if anyone at Bally's is looking at this and thinking, right, what are we inheriting here? I mean, they'll be well aware of what challenges they're taking on.
but a lot of them are quite considerable. We've talked a lot about the debt on previous podcasts. As Ted said, that's still quite large. I think it's actually gone up slightly to just under 1.9 billion.
the international performance was a bit mixed. I think one of the things that was noticeable though, which was a good sign for them was some of the turnaround in retail. They've been doing what a lot of other...
Big retail players have been doing and cutting back at their estate. They closed their 200 William Hill shops this year in the UK. That's obviously led to retail revenue going down as you'd expect, but only by about 2.6%. Whilst adjusted EBITDA for that division has gone up, which I guess shows you that what they've done is they've taken a look at that estate and gone, right, we need to close the least performing shops, the least cost-effective ones. The fact that the closure of 200 shops only represented about 2.6%.
6 % of revenue I think really goes to show that these ones were unfortunately the ones that weren't performing well and obviously those will come with job losses which is obviously not very sad for the people involved there.
Ted Orme-Claye (06:19.993)
But for the overall performance of that division for the corporate level for evoke that's turned out all right so maybe we'll see a bit of a Some some sort of resale aging for the william hill brand here of some of very legacy uk brand This is also coming at the time when? We're starting to see some more restrictions getting put in on uk retail as was discussed on the podcast yesterday prime minister andy burnham Is is moving to get rid of the aim to permit rule but again, I don't think that's going to be particularly
of massive significance to evoke in William Hill because they're not looking at opening new sharps and aim to permit is the reversal of the aim to permit rule is about preventing the opening of new sharps so I think they'll be they're probably not looking at that one with too much worry
Yeah, and overall I Ballis and Trilat is acquiring two very big brands here in William Hill and the 888 Group. and Mr. Green, of course. It's really just a big question now is what are they going to do with it? How are they going to leverage it? And how are they going to leverage those brands in a way that Evoke has been struggling to do with revenue? Yeah, this half being flat and in previous years having been on the decline.
Fernando Noodt (07:36.748)
And of course we're recording this a few hours after the investor call. So one thing we found out there is how exposed evoke is to higher gambling taxes in the UK, of course, mainly but about everywhere in Europe as well. So can you break down its current tax burden the for evoke and explain how this is impacting strategy for the company?
ted (07:58.28)
Okay, so if you drill down on the accounts, 46 million was booked as direct impact on the beta performance, and of which SPC found out that 30 million accounted for UK exposure and 10 million in Italian costs. I think that will be kind of primarily attributed to the relaunch of the Italian gambling market. The remainder, which is about six million pounds, was spread across the markets of Romania, Spain and Denmark. So.
Okay, let's kind of separate this kind of cash, this tax burden. One thing that it kind of pointed out to is that Envoke now has a much, much more weakened cashflow from operations. That is, you know, from this interim is look, it's falling to kind of the 100 million pound mark.
We were talking about narratives and improvements. One thing that Evoque has immensely improved on is cost controls and its period capex stood at 50 million, which has been its best for quite a while. But is that metric good enough to subdue concerns ahead of key integrations? I think if we return back to your last question, what we're seeing is that leadership is fulfilling the pre-merger duties on cost controls and reining in spend.
Evoque is a leaner business, but does that inspire confidence? I'm not sure.
Fernando Noodt (09:19.968)
And speaking of narratives, we're always focusing on on covering the news around the gambling industry, of course. And usually except for when market decides to to enforce a regulation framework for for the industry, usually we're talking about restrictions, we're talking about higher taxes, we're talking about bad news. So going into narratives, are there any positive narratives actually that leadership can present to the market in in a book? So
this remains a big a business that is attracting a a lot of investor interest is in interest, sorry, despite the the challenges we've been covering.
Ted Orme-Claye (09:59.938)
Yeah, think in my opinion one positive is that they've remained resilient. Like I said, it's not been a complete storming first half of the year for them with revenue remaining pretty much exactly the same it was last year and with profitability down a little bit. it's still, according to the results I'm looking at right now, it still remains profitable.
Define the figures fallen but given the the heavy tax burdens they've got and how overexposed they'll be to those burdens with with a group of brands they have William Hill and its online division, know, obviously we're discounting retail because that's not impacted by these taxes. But yeah, the William William Hill online 888 casino and poker Mr. Green obviously and being quite big online casino with all that considered they've absorbed I think they've absorbed that tax impact
fairly well according to these results. Like Ted mentioned they've clearly taken cost cutting and efficiency quite seriously. That's included some of the shop closures that I mentioned earlier where they've seen that as alright if we've got this new cost on the online business we're just going to have to look at how we can cut a cost in the retail one, close some of the least efficient shops, make the money back by doing that. They've cut back on marketing as well which is something they said they were going
ted (11:19.113)
Yeah.
Ted Orme-Claye (11:23.901)
to do very soon after the budget was announced last year. Obviously a lot of other companies said the same. So I think that's probably a positive there. I think they've responded to these tax increases with obviously some difficult decisions to make and some that obviously have a negative element to them like job losses.
and reducing marketing, which in doing so kind of cuts some of your links to sports, which is quite valuable. But from a purely just more ruthless business standpoint, they've done what they had to do, I think, to absorb that impact.
Fernando Noodt (12:03.724)
And what do you make of the leadership's tight lip s approach to this whole situation? They have been quite silent o about future strategy, about financial guidance. do you see this as a confidence in the direction of the business or could we read that as uncertainty ahead of a very important
ted (12:26.313)
I don't know what to think of this and I think it kind of divides opinion. I don't think that Per Vettelstrom wants to kind of give anything away in terms of the overall or the enlargement strategy. And we will see a much clearer picture on Evoke's future under Bally's once investors actually approve the deal and a prospectus is published.
What I find kind of more interesting is kind of the wider speculation because this is a transformative deal for the sector. Both parties are targeting 180 million pounds of combined synergies. And personally, I'm kind of looking at the overall kind technical architecture of the group in which they have to kind of evaluate key platform deals with Canby, Playtech, GameSys and OpenBed. So I can see why there's so much interest in.
how Evoque is performing at the moment and what Evoque will become six months down the line. There's a lot of winding narratives coming from this deal.
Fernando Noodt (13:35.426)
And what will become after the merger is something we will discuss after this very quick ad break, but we will be right back with more iGaming Daily.
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Fernando Noodt (15:19.274)
And we're back with more iGaming Daily after evoke PLC presented its interim before the or ahead the merger with ballast introload, which is what we will discuss right now. we of course expected a BC investor call ahead of what happened a few hours ago from this recording, of course. so guys, where are analysts probing evokes as it stands ahead of of this huge merger?
ted (15:51.082)
I really want to find out what Tito sees soar in this, but in terms of financials, it's just clearly down to kind of what is evoked current profitability status and what are the raw numbers as stands ahead of the merger. Of course, debt too is a concern and as evoked cannot minimize as a standalone its debt capacity or its debt of 1.9 million, billion.
And then finally for me, it's just on a European basis. There was kind of lots of concerns of in this kind of interrupted growth in Italy, Spain and Denmark. These have been kind of previous markets where Evoque has put out a positive light and what are kind of now the expectations of market share there. But Ted, did you read anything else or?
Ted Orme-Claye (16:41.019)
No, I mean, think like you say, there was a lot of focus from what I saw on profitability. That's understandably quite a big focus as a company heads into an acquisition. Some of the more specifics, obviously the tax situation in the UK was mentioned and some of the mitigation measures there. I did see some of the regulatory factors in the UK mentioned, the financial, I've written about these a million times and I've forgotten what they're called.
The FRAs. Risk, there we go. should have, yeah, risk, of course it's risk. Financial risk assessments. Obviously the most stringent level of what's colloquially referred to as an affordability check, but obviously the commission and government don't refer to them as that. There was some mention of those and the impact it could have on the business there. Obviously William Hill being...
ted (17:14.269)
Bish checks. Yeah.
Ted Orme-Claye (17:38.074)
being very big brand here and one that could stand to lose out from that. obviously overall, like we mentioned earlier, the company is being kind of tight lipped about its future expectations. They've not issued any guidance due to this taking place while the Bally's acquisition takes place. So yeah.
I guess we didn't really get as much out of a H1 earnings call, conference call, analyst call, as we might usually get, I think, given the circumstances.
Fernando Noodt (18:18.552)
But talking about risk, there's significant liability for for Bali's Introt ahead of the merger. Evoke is carrying around one point nine billion pound debt net debt. So how significant do you think this is and what options does the enlarged business have to bring leverage down debt?
ted (18:40.553)
So returning to the call and I think this has been kind of analyzed extensively and it's always kind of the first point concerned with the deal and even when it was announced.
So yes, following from kind of engine results, evoke has zero impact on debt burden despite significantly implementing the significant cost control and savings. That will be a somewhat of a concern to kind of analysts. But I think that we have to return to what's been said about this deal and what leadership believes and especially kind of Bally's Interactive thinks that it can see kind of debt on scale of it's a large business. And it pointed that
carries kind of market confidence having secured a 900 million euro credit facility for mercury capital. I think that where the debt becomes an issue and concerns may kind of
linger on is because it's now kind of combining with this kind of tax exposure and it will become a problem if scale does not improve kind of cash flow and operations. I think that's the kind of key metric in KPI. This, I expect this to be kind of heavily probed when the investors publish their prospectus. What do they expect on cash flow?
Fernando Noodt (20:00.043)
And of course Taylor Ste mentioned eight eighty eight William Hill, Mr. Green several times during this episode. Ted you just talked about cost savings. So Ballis will take over these brands, this portfolio of brands. So what where do we expect it to prioritize both integration and cost savings across those brands?
Ted Orme-Claye (20:24.955)
So on the cost savings front, if I just refer to 888, this was something I did actually find interesting in the, both in the call and in the statement published earlier. And that's that 888 revenue, the 888 revenue was down in the UK.
as part of the UK and Ireland online reporting segment. But this seems to be part of Evoke's plan. They're focusing very much on profitability for that brand. they said that the reduction in revenue for 888 was basically expected and almost planned for.
I wouldn't be surprised if a continuation of that carries on under Bally's Intralot. To be honest, find, you know, a lot of the conversations we've had about this acquisition of, understandably, from where me and Ted are in the UK, focus very much on William Hill, due to that being a legacy brand, a really big name on the British High Street, probably, you know, one of the biggest, most historic names in the betting industry in this country. But I think what Bally's Intralot decides to do with 888 will be very interesting as it goes down, because, it's a more of a modern brand.
well established in the online sector in the 21st century.
has become a bit of a difficult one for Evoque in recent years. I'm very interested in following that story as it develops as to what they do with that. We've talked a lot about how the international segment was down for Evoque as well. Obviously a lot of that is around the 888 group of brands. how they can, how they, the direction they take that group in I think is going to be quite interesting. And I don't really know how I can predict what they're going
Ted Orme-Claye (22:12.571)
be doing of that either.
Fernando Noodt (22:15.436)
But I still want you to predict things because that's why we're why we're here. so what is are your expectations or what we do we think the new ballast in will look the new ballast interactive will look and how does the the the what we heard from this recent call change those expectations about about them and what they can bring to the market?
ted (22:44.283)
I'm kind of just reflecting what Ted said. I actually thought about that because think Ted's actually turned into real one-spanner in the work in terms of strategy and I think one of the questions...
It's actually very prominent. mean, what do you do with the 888 and its kind of relationship with William Hill? And I mean, I myself, think I'm in that kind of, you know, that bracket of people who's just been completely focused on how do they turn around William Hill and stop the bleeding. And the concern here is that, okay, how do you kind of rebalance? And we just, as well, which is, you know, a heritage and very prominent brand online.
That stopping William Hills bleeding is a key priority. Regaining kind of confidence in AAA is another one, right? And here is where I kind of return to what is this group architecture gonna be like and how it's gonna proceed with like key integrations from very, very kind of different platform providers. What are they gonna keep? What are they gonna cut out?
and can they meet these kind of synergy targets? And how much of that credit facility are they just going to use alone on integrations? It's funny, I've never seen a deal where, you you pull one thread, you pull another one, right? And you just dig deeper and deeper into these kinds of like liabilities that come into your face. I think Ted, you'd probably agree with that. Now that every time you look at a section of Bally's Interactiveness Enlargement,
More questions are raised.
Ted Orme-Claye (24:20.109)
Yeah, it's a bit of a hydra, isn't it? mean, if you look at Bally's interactive and its current portfolio of brands, know, it owns a lot of B2C brands in its own right. In the UK, they've been pushing the Bally Bet brand quite heavily, haven't they? They sponsored my very own Nottingham Forest, obviously, in recent times with a front of shirt sponsorship going for visibility in the Premier League.
ted (24:21.884)
Yeah.
Ted Orme-Claye (24:45.979)
So yeah, there's a question there about how do they, like you said Ted, how do they integrate the Triple 8 brands and William Hill alongside its current portfolio? How do they consolidate all of that? If I was to throw a bit of a hypothetical out there, maybe there could be some sort of mergers between brands further down the line or.
some migrations of customers from one to the other. We've just seen Flutter this week announce that Pokestars is going to be integrated into the Betfair casino as the main poker product there and it will be branded as Pokestars on Betfair I think it was and they're planning to do the same for Skybet and Paddy Power. I wonder if Balli's intro after acquiring a vote could look at doing something similar with
ted (25:14.024)
Mm-hmm.
Ted Orme-Claye (25:34.576)
just playing about with some of the brands it's got, seeing what fits where, looking at what mergers or integrations or customer migrations could be played out because they will have a pretty extensive brand portfolio after this and in this environment we're currently in, especially in the UK with the high taxes, changing regulations, you might not want to be too overly exposed by having such a huge amount of brands under one umbrella.
Fernando Noodt (26:03.178)
And unfortunately unfortunately, that's how he said, is we ran out of time, but before listeners turn off their cars and miss this last question, very briefly looking ahead of this MA, how confident are you that Ballist Interactive is the right owner for for for this merger to to to change the fortunes of a book and and its portfolio?
Ted Orme-Claye (26:29.871)
I'll let Ted go first, on. Yeah, go for it.
ted (26:31.305)
I've always said that this is a survival first &A and I think that the deal makers here responded to the wider dynamics of a new gambling era of squeeze margins and cost controls. Bally's Interactive in many ways is the first kind of pill seed to kind of make this bold play for survival.
But I agree with Ted, I don't necessarily think that this means that it will maintain its current shape. There are so many kind of questions to ask. And I'll just finish by telling readers that I expect like a lot of drama from Bally's Interactive pre and post merger in how it navigates its enlargement and secures its synergies. It's definitely one to watch.
Ted Orme-Claye (27:19.981)
Yeah, mean, you know, Bally's intro is certainly a very ambitious company. Obviously, it's also company that does have experience of corporate transformations in recent history, given its own creation last year via that merger between the effective merger between Bally's Corporation and Intralot. So it does have experience of navigating quite big transformations like this. It's also got experience of kind of coming in and giving a lifeline to struggle
struggling brands and we've seen it do that in other markets.
So yeah, in terms of its experience and its ambitions, I think I understand why it lines up well with evoke. The trouble we've got is, and Ted's kind of, well, you know, we've alluded to this the whole podcast actually, evoke is going to be a much bigger challenge than that due to, you know, factors like the amount of debt it carries, the markets it's overexposed in, and how much it will enlarge that portfolio of brands like we mentioned during the last question. So yeah, I'm confident that
Out of all the companies out there, this is one that has the right ambition and the right experience to pull it off, but the task in front of them is huge, to say the least.
Fernando Noodt (28:37.176)
There's only one thing left to do right now. Hashtag wait and see. but for now we'll have to stick to subscribing to SVC News newsletter as well as all the SVC Media Network newsletters. So to keep up to date not only with this story, but all developing stories in the iGaming and sports betting world. And of course, follow iGaming Daily on all social media as well. And subscribe to the podcast on your preferred podcasting platform. This has been all for today's TED and TED.
Ted Orme-Claye (28:41.701)
Yeah.
Fernando Noodt (29:06.755)
Talking time or iGaming Daily, also known. thank you very much guys. Thank you very much, Enia McDonald, for producing this episode. I'm Fernando Nott and to our listeners out there we'll see you in the next one. Goodbye.
Ted Orme-Claye (29:11.099)
You