TIDMWMH
RNS Number : 4150G
William Hill PLC
06 November 2018
WILLIAM HILL PLC TRADING STATEMENT
6 November 2018
Rapid progress in the US
William Hill PLC (LSE: WMH) (William Hill or the Group)
announces a trading update for the unaudited 17 weeks and 43 weeks
to 23 October 2018 (H2 to date and year-to-date (YTD)).
Comparatives relate to the equivalent weeks in 2017.
Highlights
-- Online net revenue +4% YTD, with Sportsbook +8% and gaming +1%
-- Retail net revenue -4% YTD, with Sportsbook -6% and gaming -2%
-- US Existing continues to deliver strong growth in Nevada,
with net revenue YTD up 36% in local currency
-- US Expansion
o Good volumes in early months with approximately $200m wagered,
in line with our expectations
o Now taking sports bets in Delaware, New Jersey, Mississippi
and West Virginia
o iOS and Android apps launched successfully in New Jersey
o Market access secured in 17 states with partnership deals
signed with Eldorado Resorts, Golden Entertainment and IGT
o Building new proprietary technology platform to go live in
2019, supported by NeoGames' Player Account Management system
-- Recommended cash offer for Mr Green & Co AB (MRG) for a
total consideration of cGBP242m(1) , delivering digital and
international diversification
-- Full-year operating profit expected to be in the range of
GBP225m to GBP245m, assuming normalised gross win margins in the
remaining weeks of the year
In GBP terms H2 to date (27 Jun to 23 Year to date (to 23 Oct
Oct 2018) 2018)
--------------------------------------------
Total Sportsbook Sportsbook Change Total Sportsbook Sportsbook Change
net amounts gross net amounts gross
revenue wagered win revenue wagered win
margin margin
--------- -----------
-0.2 +0.7
Online -5% +2% 7.4% ppts +4% -3% 7.9% ppts
-0.3 +0.4
Retail -4% -4% 17.3% ppts -4% -8% 17.9% ppts
-0.7 +0.8
US - Existing +6% +17% 7.3% ppts +29% +15% 7.5% ppts
US - Expansion - - - - - 11.6% -
--------- ----------- ----------- ------- --------- ----------- ----------- -------
Group - excl.
discontinued
operations -4% +2% +0%
------------------------ --------- ----------- ----------- ------- --------- ----------- ----------- -------
Philip Bowcock, CEO, commented:
"It has been another busy period for William Hill, with
significant progress made on our plan to capitalise on the emerging
US sports betting opportunity following the Supreme Court's
decision to overturn PASPA in May. I'm pleased to report that we've
built on our market leading position in Nevada to make rapid
progress in other states as they legalise sports betting, and are
the only company to be taking sports bets in the first five states
to have regulated.
"Our goal is to be in every state. Supported by the extensive
experience of our US Existing business in Nevada, we're building a
network of market access agreements, including our strategic
partnership with Eldorado, expanding our relationship with Golden
Entertainment and exclusively partnering with IGT for sports
lottery opportunities. We've opened 18 new sports books and
launched our initial mobile offering in New Jersey. We're also
progressing a new technology solution to go live in 2019,
incorporating the newest elements of the Group's existing platform
and a bespoke Player Account Management system from NeoGames, whose
solution is more feature-rich than any sports betting platform
currently live in the US.
"In our existing markets, Online continues to deliver good
underlying KPIs. Our greater mass market focus is successfully
driving new accounts growth, up 11% YTD. As expected average
revenue per user is 19% lower, reflecting the more sustainable
customer base we are building, with mass market actives up 28%
YTD.
"Adverse regulatory and tax changes will impact Online profit
growth in 2018 and 2019, including enhanced customer due diligence
processes and an increase in Remote Gaming Duty to 21%. The gross
effect of these is to reduce profit by GBP20m in 2018 and a further
GBP25m in 2019. The net effect in 2018 is expected to be lower
given the offsetting positive impact of Online's otherwise strong
underlying performance, and from 2020 onwards the Online business
is expected to return to strong operating profit growth.
"We have recently announced the proposed acquisition of MRG for
GBP242m(1) . Our strategy is to build a digitally led,
geographically diverse gambling business, and this acquisition will
bring us an enlarged pan-European footprint in faster growing
digital markets, an established Malta hub from which to expand
Online internationally and a team with a proven track record of
consistently strong revenue growth.
"Looking at the second half performance so far, we have
benefited from the later stages of the World Cup but otherwise
football and racing margins have been weaker than expected,
including three loss-making weeks on horseracing during the summer
and customer-friendly football results during the international
break in October. Retail continues to be challenged by the wider
high street conditions and we have seen gaming as well as
sportsbook revenues decline in the period.
"Taking all these factors into account, full-year operating
profit is expected to be in the range of GBP225m to GBP245m,
assuming normalised gross win margins in the remaining weeks of the
year.
"The UK Government has stated that the Triennial Review changes
will be implemented in October 2019 and we will be ready to meet
that deadline, though mitigation benefits are not expected to flow
through until 2020.
"We are continuing to experience a period of significant change
for our industry and have already made important changes over the
last two years to transform our digital business, broaden the
management team and enhance our financial flexibility ahead of key
regulatory changes. The proposed acquisition of Mr Green will
accelerate the diversification of William Hill into a more digital
and international business. At today's Capital Markets Day, we will
lay out our medium- and long-term strategy to respond to the latest
challenges and opportunities and to successfully build William Hill
into a digitally-led, diversified and sustainable gambling
business."
MRG acquisition
On 30 October, we announced a recommended cash offer to acquire
Mr Green & Co AB (MRG) for a total consideration of SEK 2,819m
(cGBP242m)(1) . MRG is a fast-growing, innovative iGaming group
with operations in 13 markets and brands including MRG and Redbet.
MRG holds remote gambling licences in Denmark, Italy, Latvia,
Malta, Great Britain and Ireland, and expects to obtain licences in
Sweden by the year end. This acquisition supports the Group's
strategy of becoming a digitally led and geographically diverse
gambling company by adding an expanded pan-European footprint in
faster growing online betting and gaming markets. The consideration
payable to MRG shareholders will be funded by cash on William
Hill's balance sheet or through existing credit facilities.
Financial position
On 2 October, the Group signed a new bank loan agreement,
entering into a five-year GBP390m committed multi-currency
revolving credit facility (RCF) with a syndicate of banks. The new
facility expires in October 2023 and replaces the Group's existing
RCF, which was due to expire in May 2019. It continues the Group's
current financial covenant obligations, which are for net
debt/EBITDA to be not more than 3.5 times and for EBITDA/net cash
interest to be not less than 3.0 times.
OAM: Inside Information
William Hill LEI: 213800 MDW41W5UZQ1X82
Enquiries
William Lyndsay Wright, Director of Strategy Tel: +44 (0) 20 7612
Hill and Sustainability 3000
Tom Randell, Head of IR
Ciaran O'Brien, Group Communications
Director
Brunswick Andrew Porter / Chris Buscombe Tel: +44 (0) 20 7404
5959
Footnotes:
1. Based on 40,849,413 outstanding shares in MRG. GBP / SEK FX rate of 11.6567.
Analyst conference call
Philip Bowcock, CEO, and Ruth Prior, CFO, will host a conference
call for analysts at 8.30 a.m. GMT today. Dial-in details for the
call are:
Telephone: +44 20 3936 2999
Participant Access Code: 510681
An archive of the call will be available until 13 November 2018.
Dial-in details for the archive call are:
Telephone: +44 3936 3001
Replay Code: 685680
An audio webcast of the call will be available at
www.williamhillplc.com
About William Hill PLC
William Hill PLC is one of the world's leading betting and
gaming companies, employing around 16,000 people. Founded in 1934
and listed on the London Stock Exchange, it aims to provide
gamblers with a fun and safe gambling experience, and has set the
ambition that nobody is harmed by gambling. The majority of its
GBP1.7bn annual revenues are still derived from the UK, where it
has a national presence of licensed betting offices and one of the
leading online betting and gaming services. William Hill Online has
operations in Italy and Spain and serves online customers
throughout the world from its headquarters in Gibraltar. In 2012,
it established William Hill US with a focus on retail and mobile
operations in Nevada, which is now the largest sports betting
business in the US. It currently operates 126 race and sports books
in Nevada, New Jersey, Mississippi, West Virginia and Iowa, is the
exclusive risk manager for the sports lotteries in Delaware and is
the exclusive partner to IGT to provide sports betting services to
the lottery in Rhode Island. It also has licensed operations in The
Bahamas and St. Kitts. William Hill PLC is listed on the London
Stock Exchange and is a member of both the FTSE 250 and FTSE4Good
Indices.
Cautionary note regarding forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "plans", "goal", "target",
"aim", "may", "will", "would", "could" or "should" or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not
historical facts. They may appear in a number of places throughout
this announcement and the information incorporated by reference
into this announcement and include statements regarding the
intentions, beliefs or current expectations of the directors,
William Hill or the Group concerning, amongst other things, the
results of operations, financial condition, liquidity, prospects,
growth, strategies and dividend policy of William Hill and the
industry in which it operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and may be beyond William Hill's ability to control or
predict. Forward-looking statements are not guarantees of future
performance. The Group's actual results of operations, financial
condition, liquidity, dividend policy and the development of the
industry in which it operates may differ materially from the
impression created by the forward-looking statements contained in
this announcement and/or the information incorporated by reference
into this announcement. In addition, even if the results of
operations, financial condition, liquidity and dividend policy of
the Group and the development of the industry in which it operates,
are consistent with the forward-looking statements contained in
this announcement and/or the information incorporated by reference
into this announcement, those results or developments may not be
indicative of results or developments in subsequent periods. Other
than in accordance with its legal or regulatory obligations
(including under the Market Abuse Regulation (596/2014), the
Listing Rules, the Disclosure Guidance and Transparency Rules and
the Prospectus Rules), William Hill does not undertake any
obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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