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Profits down at online and land betting group

2/26/10 - William Hill Online, the Internet gambling wing of major British betting group William Hill plc, was a bright spot in an otherwise lacklustre set of results released this week that showed a 9 percent decline in the group's full year 2009 pre-tax profit to GBP 197.5 million (2008 FY GBP 216.1 million).
 
Chief executive officer Ralph Topping said that 2009 had been a tough trading environment, and the numbers reflected this.
 
Full year revenues increased 4 percent to GBP 997.9 million from GBP 963.7 million in the comparable period prior year, benefited primarily by a surge in online revenues.
 
“2009 has been a year of transformation, and we are particularly pleased with the progress made by William Hill Online,” Topping added.
 
William Hill Online’s net revenue was GBP 203.5 million, up from GBP 125.1 million in 2008. The Internet division reported 665 000 new accounts, an impressive 28 percent increase.
 
Online operations were integrated in 2009 following the group’s acquisition of assets from Playtech, the online gambling software provider, in December 2008.
 
“We have made great strides,” Topping said in releasing the results. “William Hill Online is nearly unrecognisable from one year ago.”
 
Breaking the numbers down, online revenues grew 63 prcent to GBP 203.5 million from GBP 125.1 million in 2008, vindicating Topping's faith in the Internet medium.
 
The company noted that its gaming products performed strongly in 2009, achieving a net revenue growth of 95 percent. Casino and bingo/skill continued to perform well, increasing net revenues by 120 percent and 41 percent respectively, reflecting strong growth in new accounts, up 39 percent in casino and 63 percent in bingo. Poker revenues for the year were up by 36 percent compared with William Hill's previously standalone online business.
 
On the land gambling front, William Hill added 55 new licences for betting shops during the year, but closed 14 outlets in Ireland and is reviewing the remaining 35 shops.
 
A reduction in over-the-counter betting was partially offset by the performance of gaming machines and more favourable football results late in the season. Telephone betting operations were disappointing, recording a loss of GBP 1.8 million.
 
Topping said that current trading is generally flat, but the group anticipated good business later this year when the World Cup football kicked off in South Africa, an event that he expected to generate around GBP 10 million in additional revenues.
 
Group net debt for covenant purposes decreased to GBP 602.6 million, following a GBP 350 million rights issue last February (see previous InfoPowa reports) and a strong operating cash flow.
 
Adjusted earnings per share were 20.6p, down from 31.9p, reflecting the increased number of shares resulting from the rights issue and exceptional charges, including GBP 10.2 million integration costs for online operations and a GBP 20.5 million fair-value loss on legacy hedging arrangements.



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