William Hill managed to beat its own expectations on full year profit today after the government rolled out a £2m betting limit, but warned of a possible £10m hit from an impending credit card ban.
William Hill’s adjusted operating profit fell 37 per cent year on year to £147m, ahead of management guidance of £143m.
But the bookmaker made a loss before tax of £37.6m on a statutory basis on charges of £134.1m. That was mostly due to the closure of shops and mass redundancies after the government slashed the fixed odds betting limit from £100 to £2 last year.
Thewas much narrowed from 2018’s £722m loss after William Hill took a massive impairment charge to prepare for the regulatory change.
Net revenue slipped two per cent to £1.58bn while operating cash flow fell seven per cent year on year to £183m. Net debt rose to £535.7m after William Hill bought Swedish gaming site Mr Green for £242m in 2019.
Investors suffered a loss per share of 3.1p, though that was much better than 2018’s 83.6p loss per share.
Still, William Hill booked a 33 per cent plunge in its dividend from 12p to 8p per share.
Why it’s interesting
William Hill’s progress has been rocked by the government’s strict crackdown on gambling over the last year. And April’s incoming ban on using credit cards to put down stakes will cost William Hill between £5m and £10m, the firm said today. Credit card payments produce around five per cent of the company’s online revenue.
The acquisition of Mr Green pushed operating costs up 19 per cent. But William Hill said the newly acquired company has performed in line with expectations and has resulted in £4m of cost synergies so far. Meanwhile it helped gaming net revenue rise 36 per cent.
Amid the UK’s betting crackdown William Hill and rivals have been expanding into the US, where sports betting rules have been relaxed. The bookie struck a media partnership with CBS Sports early this month, and today it said it would kick off integrations in March for the American fantasy football season.
What William Hill said
Chief executive Ulrik Bengtsson said:
2019 was a year of transition during which we executed on our ambition to diversify internationally with the acquisition of Mr Green and the continued strong growth of our US business. The group delivered a strong operating performance, ahead of our expectations and against a challenging regulatory backdrop.
We move into 2020 in a stronger position. Almost a quarter of revenue is now generated outside the UK compared to 15 per cent in 2018. We made positive progress with our digital platform, launching our purpose-built platform in the US and product developments in the online business in 2019. We will invest in our proprietary technology as we continue to improve the competitiveness of our customer offering. We have also made great progress embedding a culture of safer gambling across the group.
This is an exciting time to be William Hill’s CEO. Our industry is evolving and this brings great opportunities, underlining the importance of our efforts to reposition the business. We look forward to building on these foundations with a renewed focus on customer, team and execution.
Main image credit: Getty