The Times - UK (2022-04-08)

36 V2 Friday April 8 2022 | the times

Business

1

Families will not see lower

energy bills for three years

from a plan launched to end

dependence on foreign oil and gas,

ministers acknowledge. Boris

Johnson said the government’s

energy security strategy would

end “blackmail” by autocrats such

as President Putin. Experts

criticised the absence of energy

efficiency measures that would cut

bills faster. Pages 6-7, 31, 35

2

A branch of HS2 that would

connect the high-speed line to

the west coast main line at

Wigan is to be scrapped, Sir

Graham Brady, chairman of the

1922 Committee, told his voters in

Altrincham and Sale West

constituency. Page 16

3

Airlines must stop cancelling

flights at the last minute and

promptly pay compensation to

disrupted passengers, the Civil

Aviation Authority said. Page 16

4

Britain’s biggest companies

have been put on notice of

the threat of industrial action

over below-inflation pay rises for

employees. The Communication

Workers Union has rejected BT’s

biggest pay rise in more than 20

years, calling an average 5 per cent

pay increase from the telecoms

group “nothing short of an insult”.

Page 35

5

Tens of thousands of the

smallest finance firms in

Britain will have their

authorisation fees raised up to

sevenfold under a plan from the

Financial Conduct Authority to

speed up policing of the industry.

Page 35

6

Global economic turmoil and

regulatory issues have cut the

price of 888 Holdings’

acquisition of William Hill from

Caesars Entertainment. The

gambling operator, which agreed a

£2.2 billion deal with the American

casino group in September, said

that the enterprise value of the

deal was being reduced to between

£1.95 billion and £2.05 billion.

7

Productivity rose by 1.3 per

cent in the final three months

of last year and is above pre-

pandemic levels. Output per hour

worked, the headline measure, was

2.6 per cent higher than the 2019

average, the Office for National

Statistic said, adding that this had

remained higher than pre-Covid

levels throughout the pandemic.

Page 38

8

Cazoo, the British online car

retailer, has fallen deeper into

the red after investing heavily

in expansion and counting the

cost of its stock market listing in

New York last summer. Page 39

9

The boss of Boohoo has

insisted that its new “model

factory” will be a profitable

production site as clothes for

Debenhams, Dorothy Perkins and

Wallis are made in Britain again

after moving offshore almost three

decades ago. Page 40

10

Shirine Khoury-Haq, who

is set to succeed Steve

Murrells as head of the

Co-operative Group, is braced for

further “shocks” after a difficult

year when profits were hit by

disruption to its supply chain that

coincided with a systems upgrade

in its grocery business. Page 41

Need to know

Shell puts cost of Russia exit at $5bn

Shell will take up to $5 billion in

impairment charges from exiting its

interests in Russia after the invasion of

Ukraine — more than the oil major had

thought.

In a first-quarter trading update

yesterday, it also flagged a bumper

performance by its oil and gas traders

after the conflict sent prices soaring,

but warned that high and volatile prices

would have a negative effect on its

cashflow.

Days after the invasion, Shell said

that it would exit its joint ventures with

Gazprom, Russia’s state gas company,

including its stake in the huge Sak-

halin-2 liquefied natural gas plant in

Russia’s far east, and its funding for the

Nord Stream 2 pipeline from Russia to

Germany. It said that this would lead to

impairments of those assets, valued at

$3 billion.

Shell provoked a backlash by buying

a cargo of discounted Russian oil,

prompting it to apologise and

announce that it intended to withdraw

from all involvement in Russian hydro-

carbons, including its network of about

500 petrol stations in the country. It

had flagged that this could lead to fur-

ther impairments of those businesses,

which were valued at $400 million.

In a trading update, Shell said that

“the post-tax impact from impairment

of non-current assets and additional

charges (eg writedowns of receivable,

expected credit losses, and onerous

contracts) relating to Russia activities

are expected to be $4 to $5 billion”. It did

not give further details.

The company said last month that it

would immediately stop buying

Russian oil on spot markets and was

working to remove Russian oil from its

supply chain “as fast as possible”, which

would lead to reduced throughput from

some of its refineries while it sought

alternatives. It said that extricating

itself from other parts of its Russian

business, including pipeline gas and

LNG, was a “complex challenge” and

would take much longer.

Shell is Europe’s biggest oil group and

reported a quadrupling of adjusted

earnings to $19.3 billion in 2021 after oil

and gas prices soared. Those results

triggered calls for a windfall tax on oil

majors as many consumers struggle

with the cost of living.

Shell said that the charges related to

exiting Russia would be counted as

one-off items and would not affect its

adjusted earnings, which stand to

benefit from soaring prices.

It said that trading and optimisation

results for its integrated gas business —

the world’s biggest independent LNG

trader — were “expected to be higher

compared to the fourth quarter 2021”.

Its oil products trading and optimisa-

tion profits were expected to be “signifi-

cantly higher”. Shell’s shares fell 45½p,

or 2.1 per cent, to £20.86.

Emily Gosden Energy Editor

Entain puts

punters in

the saddle

Dominic Walsh

Customers of one of Britain’s biggest

bookmakers will soon be able not only

to place a bet on their favourite horse,

but also to take the reins and ride it —

in virtual reality.

Entain, which owns the Ladbrokes

and Coral betting shop chains, as well as

Sportingbet, said that it was “re-defin-

ing horse racing for racegoers” with the

launch of an immersive, 360-degree

virtual reality experience under its

Coral brand. It said that the experience,

created in partnership with Jockey-

Cam, was the first of its kind, enabling

punters to saddle up and go head-to-

head with other virtual jump jockeys.

The immersive experience will tour

Hurdle cleared

Source: Refinitiv

£500

400

300

200

100

0

888 Holdings share price

April 20, 2021

Judge approves £2.9bn

takeover of William Hill by

Caesars Entertainment, firing

starting gun on sale of

non-US assets coveted by 888

April 7, 2022

Secures new

cut-price terms

on William Hill

deal

March 29, 2022

Investment to

launch 888 brand

in Africa

December 15, 2021

Strategic $50m sale

of online bingo business

September 9, 2021

Agrees £2.2bn takeover

of William Hill from

Caesars Entertainment

June 25, 2021

Signs tie-up with

Sports Illustrated

magazine

2021 2022

Q1 Q2 Q3 Q4 Q1

HOLDINGS

William Hill price cut gives

Global economic turmoil and regu-

latory issues have cut the price of 888

Holdings’ acquisition of William Hill

from Caesars Entertainment.

The gambling operator, which

agreed a £2.2 billion deal with the

American casino group in September,

said that the enterprise value of the deal

was being reduced to between £1.95 bil-

lion and £2.05 billion.

The amount it has to pay on com-

pletion of the deal has been reduced by

£250 million to £584.9 million, with the

payment of up to £100 million being

deferred until 2024, dependent on the

level of adjusted earnings achieved by

the enlarged group.

888 has also discarded its previous

plan to raise about £500 million of new

equity via a capital raise and will in-

stead issue up to 70.8 million new shares

— equating to about 19 per cent of its

share capital — through a placing at

230p to raise £163 million.

Investors in 888 breathed a sigh of

relief at the news as there had been

fears that the halving of the share price

since the deal was announced could

scupper the capital-raising and possibly

even the acquisition itself. The shares

leapt by nearly a third in morning

trading yesterday and closed up 16.8 per

cent, or 32¼p, at 224¼p.

The company said that the revision

to the terms of the deal “reflects the

change in the macroeconomic and

regulatory environment since the

announcement of the acquisition, as

well as compliance factors impacting

the William Hill business”.

The revised offer has revealed that

William Hill is subject to a continuing

licence review by the Gambling Com-

mission relating to social responsibility

and anti-money-laundering obliga-

tions. William Hill has booked a

provision of £15 million to cover poss-

ible fines, although Caesars has agreed

to indemnify any losses and costs from

the licence review up to £150 million.

It also has emerged that William Hill

provided inaccurate data when the

Gambling Commission decided to

conduct an analysis of the impact of the

pandemic on gambling behaviour. 888,

which was fined £9.4 million in 2020 for

its failings over social responsibility and

money laundering, said that the com-

mission was reviewing the regulatory

consequences of William Hill’s failure

to submit accurate data.

William Hill was taken over a year

ago by Caesars Entertainment in a

£2.9 billion deal, but the Las Vegas

casino operator had made clear that it

wanted only the British group’s

American operations and would sell

the rest. In the final round of bidding for

the unwanted assets, 888 saw off Apollo

Global Management.

The FTSE 250 gambling operator is

acquiring a brand that was founded in

1934 and today operates more than

1,400 British betting shops and has

about two million active online cus-

tomers in the UK. 888’s main territories

in Europe are Italy, Spain and the

Nordic countries, while it recently was

launched in Latin America.

The company said that, despite the

economic impact on William Hill of

Analysis

R

evising an agreed

acquisition price

downwards rather than

upwards doesn’t

happen very often, but

Itai Pazner knew that he had a

strong hand and could afford to

cut the terms of the William Hill

deal signed more than six

months ago (Dominic Walsh

writes).

“Circumstances have changed

since September,” the chief

executive of 888 said. “The market

Dominic Walsh

Covid-19, the deal remained “highly

compelling” from a strategic and finan-

cial perspective. The enlarged com-

pany would generate £5 million of cost

synergies this year, gradually building

up to savings of £100 million in 2025, it

said. It will have more than 12,000

employees.

The 888 business, which was floated

in London in 2005, was founded in 1997

by two Israeli families, the Shakeds and

the Ben-Yitzhaks. The Shakeds remain

the biggest shareholders, with a 23.2 per

cent stake. The group offers online

casino games, poker, bingo and sports

betting. In June, it signed a deal with the

media group behind Sports Illustrated

magazine.