The UK\’s second-largest bookmaker said operating profit was up 5% to £246.0m on revenues of £10.7 billion, up 29%, after the company acquired Stanley Leisure\’s betting shops estate.
William Hill said the gross win (turnover less winnings paid out) at its retail division, which includes 2,184 betting shops, fell by 6.9 per cent following a run of sports results favourable to punters and a continued decline in theoretical horseracing betting margins. This adverse trend was largely offset by a 33.5 per cent increase in winnings from electronic gaming machines in the shops.
The firm expects savings from the integration of Stanley Retail, which will be completed by the end of the first quarter of 2006, to exceed its initial estimate of £13 million. Savings could top £20 million in the medium term.
The telephone betting channel, which is the most vulnerable to adverse sporting results, experienced a fall in gross win against the comparative period in both the first and second half of 2005, although the fall in the second half was less pronounced. For the FY gross win fell by 11.4% to £53.4m and profit fell by 41.2% to £13.0m. The company ended the year with 174,000 active telephone customers (2004: 184,000).
On the positive side, William Hill said its online gaming operations grew strongly with gross win up 16.2% to £123.3m, while profit surged 18.4% to £61.2m.
Growth in gross win was seen across all products with the strongest growth in poker, which increased 90%. Sportsbook gross win grew despite adverse sporting results, on the back of an increase in turnover and active accounts. Betting grew at 4.6% in the first half and 15.6% in the second half and gaming (casino and poker) grew at 30.9% in the first half and 15.3% in the second half.
Over the year, the firm enhanced its single account proposition with internet and telephone customers able to bet on sports, poker, casino and arcade from a single wallet. The online sportsbook launched a live betting console, which enables the rapid update of prices during play, while the mobile sportsbook service is now supported on the majority of WAP enabled handsets.
William Hill upgraded its poker product through partner company CryptoLogic and now has the fifth-largest poker room on the internet. As a result, players can compete for over $3.5m in guaranteed tournament prize pools each month as well to qualify for the World Series of Poker and European Poker Tour events. The company also added 31 new games to its Boss and Cryptologic download casinos, bringing the total of games on offer to over 140 .
Total active online accounts increased over the period to 341,000 from 292,000. Costs in the online channel increased 20.7% due to increased marketing activities to support the growth of the poker business and fund the costs of Channel 425 production and content.
In October 2004 the firm launched William Hill TV on Sky Channel 425. Although gross win generated through the interactive games arcade remains low, there has been an increase in stakes placed through the interactive and telephone sportsbooks on greyhound racing shown live on Channel 425. The firm will further evaluate the benefits of Channel 425 in mid 2006.
Chief Executive David Harding declined to comment on reports that the board had blocked a planned £4 billion all-share merger with Rank Group.
He added that William Hill had not allocated a budget or targeted a specific geographic region for bolt-on acquisitions, but would look at any small opportunities if they fitted well into the business.
William Hill said that trading in the first eight weeks of 2006 has been mixed “with some strong weeks, aided by more favourable football results and some poor weeks, particularly for horseracing which has been impacted by both unfavourable results and fixture cancellations.”
Harding also said that the growth in online gaming combined with the World Cup and the full-year benefits of the Stanley acquisition still to come, he was confident about William Hill\’s prospects.
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