Evoke’s £2bn gamble on William Hill drives decline in earnings

The gambling group behind William Hill reported a first-half loss of £143 million as it paid the price for the debt-fuelled £2 billion takeover of the British bookmaker.

The reported post-tax loss from Evoke reflects a slump in its underlying earnings plus the impact of accounting charges and finance costs relating to the largely debt-funded acquisition of William Hill.

Evoke, formerly 888 Holdings, also incurred £72 million of exceptional items and adjustments, mainly linked to the company’s exit from its American business and continuing integration and transformation costs.

Evoke changed its name in May and since October has changed nine out of eleven members of its executive leadership team as it seeks to shake things up. It estimates that the measures will save £30 million in cost efficiencies this year.

In the first half of the year, Evoke reported a 2 per cent decline in revenue to £862 million, while reported underlying earnings fell by 67 per cent to £43.8 million. On an adjusted basis, earnings were down by 26 per cent at £115.5 million.

The company said its revenues for the third quarter so far were consistent with the 5 per cent to 9 per cent target range given for the second half. It made no changes to recently issued forecasts, including an adjusted earnings margin of at least 20 per cent.

Per Widerstrom, who became chief executive in October, said there were four main areas where the company was behind its plans in the first half. He highlighted the return on marketing, particularly in UK online, as being lower than expected. “We have taken rapid and decisive actions to address these areas, both to improve our trading in the second half and to continue to strengthen the base for significantly higher profits in the future,” he said.

“We are performing a total reset and transformation of the business that will enable it to achieve its full potential. During the first half we took bold and decisive actions to both execute a turnaround in short-term trading while simultaneously building out our enhanced capabilities to drive mid and long-term competitive advantage.”

The Swedish-born boss said growth was improving, but conceded that the growth generated by its UK and Ireland division was “behind our expectation”. William Hill has 1,331 betting shops in the UK.

Shares of Evoke rose ½p, or 0.7 per cent, to 55¼p.