UK bookies William Hill saw revenues rise 20% to £751.6m in the first half of 2013, thanks to continued strength in both online and mobile wagering. Hills’ pre-tax profit was up a mere £300k to £143.6m as the company dealt with the combined £900m hangover from this spring’s Sportingbet acquisition and the buyout of Playtech’s share of William Hill Online (WHO). Nonetheless, Hills’ board has approved an interim dividend of 3.7p per share (+16% from last year) payable Dec. 6, 2013. Investors were unimpressed, sending Hills’ shares down over 7% to close out the week at 458.5p after starting the year at 352.5p.
Revenue from WHO rose 18% to £233.9m while operating profit rose 16% to £80.2m. Online sports wagering handle was up 26% and hold improved to 9% from 7.9% last year, thanks to some favorable footie results and Auroras Encore’s surprise Grand National win, which all by its lonesome added £15m to Hills’ coffers. Online sportsbook revenue rose 44% to £116m, while online gaming revenue was flat at £117.9m. The casino vertical was up 2%, while bingo was down 2% and poker was off 14%.
Hills’ retail operations saw revenue rise 11% to £464m. Over the counter wagering handle dipped 5% due to the lack of a lucrative Euro 2012 competition this year, yet OTC revenue rose 5% while shop gaming revenue rose 18%. Hills opened 16 shops in H1 while closing another 10, leaving them with a net of 2,398 shops across the UK. Hills’ always outspoken CEO Ralph Topping took a shot at the growing ranks of high street bookie critics who didn’t understand that “people from Strathclyde, Strathyre and Strathaven do not read poetry books or go to the opera. They like a bet, a pint and a fag.” (Not necessarily in that order.)
On the mobile front, sports wagering handle rose 112% with a healthy 11.6% margin. Mobile gaming revenue rose a whopping 198% and Topping said the company’s mobile app had been downloaded over a million times since its Feb. 2012 launch. Topping said the “significant resources” Hills has invested in making itself mobile-ready were “clearly justified” by the H1 figures.
According to Topping, Hills’ mobile success had “come from nowhere in the past few years and now makes up 40% of our turnover,” up from 38% in the same period last year. Topping said Hills had set a goal to bring mobile gaming’s share of total revenue up to 40% from its current 14% level. Topping suggested this might be “a real stretch” but his team not only thought it achievable, “they’re betting their bonus on it.”
AUSTRALIA BRAND CONSOLIDATION IN THE WORKS
Hills’ recently acquired Sportingbet operation in Australia was only contributing to Hills’ bottom line as of March 19. This period reflected what Sportingbet Australia boss Michael Sullivan called the “quietest time” on the Aussie sports calendar, an opinion borne out by the 6% fall in sportsbook handle. Nonetheless, revenue rose 34% to £30.8m and profit rose 48% to £3.7m, but the cost of acquiring each new Aussie customer hit a hefty £724 – over seven times Hills’ European average of £99.70. Topping acknowledged that the Australian business contained a lot of “imperfections” and that there were “some missing skills around marketing.” Topping believes the CPA imbalance is “correctable” via moves like a shift from TV to digital marketing.
In March, Topping had vowed there’d be no rebranding of the Aussie operations, which operate under both the Sportingbet and Centrebet brands. On Friday, Topping said those two brands were “complementary, they hit different customer bases, different product mixes. But we’re not maximizing that difference with our marketing or our CRM.” As such, Topping suggested the company was looking at “a single market brand that we know will appeal to all segments.” Topping said the company was taking “a good hard stare” before picking a unified brand and had solicited some “expert advice” to arrive at a consensus opinion, with which the board would “soon” be presented.
SPAIN AND SPORTSBOOK SOFTWARE
As for the option Hills holds on Sportingbet’s Spanish-facing Miapuesta operation, which holds the third-largest chunk of Spanish market share, Topping said there was “value to be had in that business,” so investors “should assume we will exercise” the option before the six-month deadline expires in September.
Topping also revealed Hills was looking at a larger role for the proprietary online sportsbook technology it acquired via the Sportingbet deal. Topping said some tinkering would be required, but the in-house product would likely be rolled out in Hills’ US-facing division first before eventually taking center stage in Hills’ mainstay UK operation. Topping said he didn’t want Hills’ current UK sportsbook supplier OpenBet “to start panicking at the moment,” cautioning that Hills was still “looking at a feasibility study” at present.