BUSINESS

William Hill’s Australian write-downs spoil online resurgence

TAGs: Australia, William Hill

william-hill-australia-writedownsUK bookmakers William Hill reported an eight-figure loss in 2017 as writedowns at its Australian division offset online revenue growth.

On Friday, Hills released its official 2017 results, which showed overall revenue in the 52 weeks to December 26 – because just reporting calendar 2017 results would be too difficult, obviously – rising 7% to £1.71b.

If one ignores exceptional items, Hills’ adjusted operating profit improved 11% to £291.3m. However, the actual results showed a pre-tax loss of £74.6m versus a £181.3m profit in 2016.

The statutory results were undone by a £238m impairment of Hills’ struggling Australian operation, which the company put under review in January following the recent bans on online in-play and credit betting, as well as the threat of new point-of-consumption taxes. Hills expects to complete its Aussie review by mid-year.

The impairment spoiled a solid performance by Hills’ oft-maligned non-Australian digital operations, which reported overall revenue up 13% to £617m and adjusted operating profit up nearly one-third to £132.5m, despite the UK’s implementation of the online horse betting levy and the extension of the Remote Gaming Duty to free bet offers.

Online sports turnover was up 10% while sports revenue improved 14% to £308.3m thanks to a modest rise in margins and improvements to Hills’ mobile and desktop products. Mobile’s share of sports revenue was up 12 points to 82%.

Digital gaming revenue improved 12% to £308.6m thanks to the company’s Q1 2017 launch of a single wallet and “significant work” on cross-sell product features. Overall digital accounts were up 3% last year while active users improved 6%.

Retail operations remain Hills’ core vertical, representing 54% of group revenue. Retail revenue was up a modest 2% to £913.m but operating profit slipped 1% to £161m. Retail sports revenue gained 1% to £415.4m despite the absence of a major football tournament, while gaming was up 3% to £497.7m.

The retail sports results got a boost from improved margins as well as from the rollout of Hills’ proprietary self-service betting terminals (SSBTs), which accounted for 12% of all retail wagering by the end of 2017. On the gaming front, Hills is currently trialing a new Inspired Gaming Group gaming machine in 50 of its betting shops.

US GOOD, AUSTRALIA BAD
The William Hill US division continues to go from strength to strength, with turnover up 22% (in local currency terms) to $1.15b, while revenue was up 24% to just under $73m and adjusted operating profit rose 18% to $22.8m. Mobile’s share of overall wagering improved six points to 58%.

William Hill US finished the year with the same number of Nevada sportsbooks (108) but the US operation grew beyond its Nevada roots last year, establishing a race book for Caesars Entertainment in Iowa and a sportsbook at the Baha Mar casino resort in the Bahamas.

As for William Hill Australia, overall revenue (in local currency) fell 2% to A$201m but adjusted operating profit rose 11% to A$30m, primarily as a result of a 37% decline in marketing expenditure as Hills prepared its operational review. Australian betting turnover was up 28% in the first half of 2017 but declined 15% in H2 as Hills braced for the new credit betting ban.

WE’RE BEHAVING NOW, HONEST
Hills CEO Philip Bowcock claimed the company was starting 2018 “in a stronger position after a year of significant change.” Bowcock’s optimism belied the fact that the company is now under the regulatory microscope following the £6.2m penalty levied by UK regulators this week to address Hills’ anti-money laundering shortcomings.

Hills’ annual report claimed the company was still as money-hungry as any other corporation “but commercial gain should not come at the expense of being a responsible company.” Hills said it is introducing “new and improved policies and increased levels of resourcing to improve our ability to ensure full regulatory compliance.”

WELCOME BETSSON’S BENGTSSON, HELLO AMERICA
Hills announced a major addition to its management team in the form of former Betsson CEO Ulrik Bengtsson, who will become Hills’ new Chief Digital Officer in April. Assisting Bengtsson will be Grant Williams, who has been named MD of Online with responsibility for day-to-day digital management.

Former digital boss Crispin Neiboer will become Group Corporate Development Director, overseeing strategic growth opportunities around the globe, with a focus on the US market and its expected legalization of sports betting.

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