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William Hill plc Q1-2014 Earnings results

Online channel continues to work well for William Hill plc, but tax increases to result in betting shop closures.
Britain's largest online and land bookmaker William Hill plc has posted another impressive set of first quarter results, highlighting:
* Strong underlying growth but football results that adversely impacted margins.
* Continued outstanding growth in Online Sportsbook turnover, up 39 percent with mobile up 78 percent.
* Strong Online gaming net revenue growth, up 16 percent, benefiting from 142 percent growth in mobile.
* Largely completed roll-out of Eclipse gaming machines into half the Retail estate
* Improving Australia KPIs with unique actives up 22 percent; new accounts up 8 percent and cost per acquisition  down 11 percent.
* Strong US performance with wagering up 23 percent and operating profit up 188 percent.
* Mobile Sportsbook and Casino launched in Italy
* On the Retail side, Management says that new UK government taxes on FOBT income will cost it around GBP 22 million and result in the closure of 109 betting shops this year, with the possible loss of some 420 jobs.
Ralph Topping, Chief Executive, reported:
"Our focus on combining a broad and deep product range with outstanding user experiences and scale investment in marketing continues to deliver tangible benefits across the Group: Sportsbook betting continues to grow rapidly, mobile gaming is much improved and we're seeing positive trends in the key performance indicators for Australia and the US.
"Whilst the outstanding gross win margin in Q1 2013 sets a very high bar, meaning we are facing tough comparative figures, two substantial loss making weeks in this quarter (weeks 2 and 12) - with major wins for the football punters - impacted profit progression despite good growth in wagering in both Online and Retail and significantly improved gaming performance in both channels.
"As ever, it is important to look through short-term sporting results to the underlying strength of the business.  Mobile, for instance, continues to go from strength to strength, increasing to 45 percent of Online Sportsbook amounts wagered and 27 percent of Online gaming net revenue in the period.
"We are also progressing successful diversification of the business both online and internationally, including delivering further good growth in Italy, Spain and the US. With most of the major components of the digital Australian platform now in place, we will be driving further improvements in that business's performance as well.
 "As regards UK Retail, we have now successfully implemented the ABB's voluntary Code for Responsible Gambling and are pleased with the progress to date. However, as a direct result of the UK government's unexpected announcement on an increase in Machine Games Duty to 25 percent, we have reviewed shop profitability and will be closing a portfolio of 109 shops this year, putting c420 shop employees at risk of redundancy.  This is particularly disappointing as, through the economic downturn, we have worked hard to grow our Retail base but this further planned increase in indirect taxation makes this action necessary.
"Looking ahead to the rest of 2014, it is positive to note Online had recouped much of its shortfall against internal expectations following week 2 before we were hit again in week 12. While there is no guarantee we can make up the difference, we continue to believe the increased customer confidence from such wins should be good for business, especially in this World Cup year. We are very well placed to take advantage of the World Cup opportunity, coming in the second quarter, with an unrivalled football product range, the most downloaded Sportsbook app in the UK and a leading mobile gaming offer for cross-sell."

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