UK bookmaker reports strong growth in trading update

The UK online and land bookmaker William Hill plc has posted a performance report for the 13 weeks from 2 October to 31 December 2013, showcasing strong growth in sports betting and sportsbook, and online net revenue up 14 percent, thanks to mobile gambling improvements.

Responding to recent criticism on Fixed Odds Betting Terminsals, the company said that it would work with the British government to tackle concerns about the use of the gambling machines in its betting shops.

A spokesman said the company planned to adhere to a new industry code scheduled for implementation by March 2014 to warn gamblers how much they have spent and how long they have been on a machine.

“In addition, we and the industry will continue to work with both government and the regulator to look at additional harm reduction measures, such as increasing the level of responsible gambling messaging in advertising, to supplement the code,” the company said in its trading update.

The report included the following key items:

* The company’s forecast for 2013 FY operating profit is GBP 334 million, which should meet analyst predictions.

* William Hill’s sportsbook app has been downloaded by more than 1.3 million iOS users and generates GBP 23 million in turnover every week.

* With 8.6 million customers William Hill is now the UK’s largest bookmaker.

* Strong underlying net revenue growth in sports betting, with above average gross win margins in Retail and strong wagering growth from the company’s online sports book.

* Good progress on enhancing the company’s digital (online and mobile) offering in Australia.

* Online gaming net revenue growth rates improved by 14 percent year-on-year.

* Sportsbook amounts wagered continued to grow strongly, up 38 percent.

* Gross win margin of 8.1 percent was well up on the 6.3 percent achieved in Q3-2013 but not as good as Q4-2012, which recorded a margin of 8.4 percent.

* Overall net revenue up 30 percent.

* Mobile performance well up, with sports betting stakes up 92 percent year-on-year and a gross win margin of 9.7 percent. Mobile gaming net revenue was 199 percent higher than in 2012 and increased to 23 percent of Online’s total gaming net revenue.

* In Retail, net revenue grew 13 percent, with gaming machine net revenue up 24 percent and gross win per machine per week at GBP 920 – slightly up on 2012’s GBP 918.

* The United States operations of the William Hill group enjoyed a strong quarter fourth quarter, ending Hill’s first full year of ownership with amounts wagered up 34 percent for the year and a 47 percent rise in quarter 4 and net revenue increasing by over 150 percent year-on-year with an 8.3 gross win margin.

* Group net debt stood at around GBP 800 million at 31 December 2013.

Ralph Topping, CEO, commented:

“Q4 proved a strong end to the year as we enjoyed continued momentum in Sportsbook with 38 percent more wagered in Q4 on a 13 week basis than last year.

“This demonstrates our competitive strength in Online ahead of the expected introduction of the [United Kingdom] Point of Consumption tax in December 2014.

“We made good progress on key initiatives in the quarter: improving our mobile gaming offer, rolling out the Eclipse gaming machine to over a third of our estate and continuing to enhance Australia’s digital capabilities. It is also pleasing to see a turnaround in the profitability of our US business in our first full year of ownership.”

Topping drew attention to the FOBT debate, which has become something of a political football in Britain recently, pointing out that the health surveys for England and Scotland, published in December 2013 and September 2013 respectively, provided an independent, up-to-date view on problem gambling.

The Scottish survey showed no change to the prevalence levels while the English survey indicated an average of 0.5 percent of people could be classified as problem gamblers, which is a lower number than that indicated by previous prevalence surveys in England and Wales (0.8% in 2010, 0.6% in 2007 and 0.6% in 1999).

Turning to current trading, Topping said that his company’s online sportsbook has continued to show strong wagering growth, up 48 percent in the first two weeks of 2014.

However, football results in week 2 were highly unfavourable with an unusually high number of odds-on favourites winning. Driven by the impact of this, William Hill recorded a loss of approximately GBP 13 million in the week.

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