Strong Q1-2011 performance from Will Hill

The UK-listed online and land gambling group William Hill plc has posted a strong set of Q1-2011 results , showing  good year-on-year growth in both retail and online net revenue and operating profit
In addition to the continued strong performance of William Hill online sportsbook, all online gaming verticals delivered good growth in the period.
Highlights of the quarter included:
*    Group net revenue grew by 11 percent;
*    Retail net revenue increased by 8 percent;
*    Online net revenue grew by 26 percent;
*    Group operating profit advanced by 21 percent;
*    Group’s net debt for covenant purposes stood at GBP 458 million at the end of the period, down from GBP499 million in late December 2010.
The group chief executive, Ralph Topping, reported: “We have seen excellent growth across our business in the first quarter, enabling us to remain confident in our expectations for the full year.
“It is particularly pleasing that, alongside a continuing strong performance from William Hill Online, we have seen growth in both net revenue and operating profit in Retail. We have much to look forward to in the existing business and are also excited by the land-based opportunity in the US, where we recently made our first significant investment.”
William Hill Online reported that sportsbook operations generated net revenues up by 54 percent, driven by a 62 percent increase in amounts wagered, including growth of 138 percent in in-play amounts wagered and 786 percent in mobile betting amounts wagered.
The sportsbook gross win margin for the period was 7.3 percent (Q1 2010: 8.1 percent).
Online gaming net revenue grew 15 percent, with strong growth in all three verticals despite Q1 2010 including income from the Group’s French business prior to its closure in June 2010.  At +30 percent, Bingo continued to deliver the fastest growth in gaming but Poker and Casino are also growing well, up 16 percent and 13 percent, respectively. Underlying gaming net revenue, excluding French revenue in 2010, grew by 30 percent.
The Online business delivered GBP29.8 million of operating profit in Q1-2011, up 28 percent on the prior year. Playtech‘s non-controlling interest in William Hill Online was GBP8.7 million.
In Retail operations, growth was underpinned by increased amounts wagered in over-the-counter (OTC) business, the performance of gaming machines and an OTC gross win margin above the top end of the expected trading range of 17-18 percent. Whilst the quarter’s year-on-year comparison was helped by two weather-affected weeks in 2010, the underlying performance remained good even after allowing for this, the report notes.
Over-the-counter (OTC) amounts wagered grew 4 percent in the period.
The combination of amounts wagered growth and a strong margin led to an 8 percent increase in Retail net revenue, with OTC up 8 percent and gaming machines up 9 percent. On a gross win basis, which gives an underlying performance before accounting for the increased VAT costs, gaming machines were up 11 percent. Gross win per machine per week increased to GBP 885 (Q1 2010 – GBP814).
Operating profit for the channel grew by 24 percent.
The report covers two US land-based sports betting acquisitions – American Wagering, Inc. and the Club Cal Neva Satellite Race and Sportsbook Division, purchased for $39 million and subject to Will Hill execs being licensed by the Nevada Gaming Commission, for which application has been made .
It also addresses the Playtech dispute, explaining that during the quarter William Hill secured an interim injunction against Playtech Limited to ensure that its legal rights under the William Hill Online joint venture agreements are maintained.
Following a return court hearing on 17 March 2011, an injunction is in place preventing Playtech from selling its stake in William Hill Online. This injunction will remain in place at least until a further court hearing, which is expected to occur in mid-May 2011.
The report includes the joint venture in its “Risks” section.
The group is also opposed to a Liberal Democrat proposal to use the proceeds of uncollected winnings for the benefit of grass roots sport or a community fund, which has been made to the UK government Secretary of State.
“No formal consultation has been held,” the report observes. “In the Group’s view, there is no link between betting and grass-roots sport, such an approach would be discriminatory and it would present very difficult structural and legal definitional challenges as well as requiring primary legislation.”
Looking ahead, Management is confident in the company’s continued good performance for the full year.
“It is particularly pleasing that, alongside a continuing strong performance from William Hill Online, the Group has seen growth in both net revenue and operating profit in Retail,” the statement concludes.
“There is much to look forward to in the existing business and the Board is also excited by the land-based opportunity in the US, where the Group recently made its first significant investment.”

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