Q3 Interim Management Statement
Good growth in key areas but sporting results less favourable
William Hill PLC (LSE: WMH) (William Hill or the Group) announces its unaudited Interim Management Statement for the 13 weeks ended 1 October 2013 (the period or Q3). References to the year-to-date relate to the 39 weeks to 1 October 2013. All comparisons are with the 13-week period ended 25 September 2012 (Q3 2012) or the equivalent 39-week period in 2012 unless otherwise stated.
Key operational highlights for the quarter
- Strong growth continues in Sportsbook amounts wagered, up 42%, with football Sportsbook wagering up 49% and mobile wagering on Sportsbook up 115%
- Mobile gaming net revenue increased 126%, with mobile accounting for 18% of gaming net revenue
- Retail football staking increased 27% in the quarter
- Commenced roll-out of Eclipse gaming machines into half the Retail estate
- Further developed William Hill Australia with the £20m acquisition of tomwaterhouse.com, extending our Australian presence into a wider recreational customer base
- Good progress on William Hill Australia growth strategies with improved first time deposit trends and actions taken to reduce average cost per acquisition by the year end
- 47% growth in wagering in William Hill US as product proliferation and mobile expansion drive strong growth
- Exercised call option over the Spanish Miapuesta brand and commenced integration into the William Hill brand in that market
Key financial outcomes for the quarter
- Overall quarterly performance impacted by quiet July trading in Retail together with lower results-linked gross win margin in the quarter
- Retail over-the-counter (OTC) gross win margin down 0.8 percentage points and Online Sportsbook gross win margin down 1.5 percentage points versus Q3 2012
- Group net revenue1 grew by 10% in Q3, up 4% on the comparable quarter after adjusting for Machine Games Duty (MGD), and is up 17% on a year-to-date basis, up 10% on an underlying basis after adjusting for MGD
- Group Operating profit2 was down c£24m or 31% in the period, down 4% year-to-date
Ralph Topping, Chief Executive, commented:
“I am pleased with the progress we have made in our strategic development during the third quarter. Online Sportsbook staking growth goes from strength to strength, with growth in football wagering accelerating at the start of the new season driven by increased products, successful marketing and a strong focus on our prices and offers ahead of a World Cup year in 2014.
“Our intensive attention to the development of Mobile Online continues to yield results, generating 41% of wagering in Sportsbook. Mobile gaming is developing well, too, with net revenue growing by 126% in the quarter.
“During this quarter, results were not as favourable as in the comparable period, with outcomes – particularly in football – going the punters’ way. Consequently, gross win margins are below the prior year in both major channels, and below normalised expectations in Sportsbook. It is of course important in our business to look through the impact of short-term results on trading.
“Additionally, we saw a disappointing Retail performance in July. However, football wagering in Retail has grown in Q3 and the rollout of our new Eclipse gaming machine has begun.
“In Australia, we are making good progress with our strategy to expand the business into a wider, more recreational customer base. We are establishing a very strong team with the right digital experience to take the business forward. The acquisition of tomwaterhouse.com is an important building block for us in this regard.
“Given trading in the quarter, operating profit was around £20m below our expectations for this period. While the fundamental performance of the Group remains good and there is time for the Group’s shortfall versus internal expectation to be recouped should results turn in our favour, there can be no certainty that we will make up this shortfall before the end of the year.
“Staking levels and machine performance in our shops picked up in August and September from their July lows and Sportsbook wagering levels generally across the quarter give us continued confidence in the underlying strength of the business, when allied to the improved trends in Australia and the strong wagering growth being generated in the US. Therefore, we remain confident in the business and are encouraged to see signs that we are benefitting from our investments.”
William Hill PLC
Ralph Topping, Chief Executive
Neil Cooper, Group Finance Director
Lyndsay Wright, Director of IR
Tel: +44 (0) 20 8918 3614
Simon Sporborg / Fiona Micallef-Eynaud / Oliver Hughes
Tel: +44 (0) 20 7404 5959
Analyst conference call
Ralph Topping, Chief Executive, and Neil Cooper, Group Finance Director, will be hosting a conference call for analysts at 8.30 a.m. BST. Dial-in details for the call are:
UK telephone: 0800 368 0649
International: +44 20 3059 8125
Password: William Hill
An archive of the call will be available after the call until Thursday, 17 October. Dial-in details for the archive call are:
Telephone: +44 (0) 121 260 4861
An audio webcast of the call will be available at www.williamhillplc.com.