The London-based bookmaker produced a strong performance in the first half of 2006 and announced a 24.8% increase in gross win up to £478.3m and a profit on ordinary activities before finance charges and exceptional items up 29.8% to £160.0m. William Hill estimates that the World Cup generated a total gross win of £17.5m across all three channels – retail, telephone and interactive.
In particular, the retail channel grew gross win by 29.4% to £374.4m and pre-exceptional profit increased by 39.4% to £124.1m. The group has leveraged the benefits of the Stanley Retail acquisition, which was completed in June last year, while strong performance from FOBTs has boosted year-on-year gross win growth.
Telephone gross win grew by 4.5% to £29.9m, but operating profit fell 17.9% to £6.4m. The channel benefited from the World Cup and football betting in general as well as more normal horseracing results including a good result from the Grand National. William Hill ended the half-year with 167,000 active telephone customers (December 2005: 174,000).
Interactive gross win increased 14.2% to £70.7m and operating profit grew 13.2% to £35.9m. Growth in gross win was seen across all major products, but the strongest growth was in poker, which increased 44% during the period. Both the casino and arcade have continued to experience strong growth, boosted by the introduction of new games and advertising, while the William Hill sportsbook continued to expand its range of in-running betting opportunities. Total active accounts increased to 395,000 as at 27 June 2006 (December 2005: 341,000).
In the four weeks to 25 July 2006, the group\’s gross win has increased by 13.3% in line with management expectations as the period includes the completion of the World Cup and some weak comparators for 2005. For the year as a whole, the Board remains comfortable with consensus expectations.
Commenting on the results, Chairman Charles Scott said: “The Group has seen strong profit growth in the period, with profit before finance charges and exceptional items 29.8% higher than last year. The Group has successfully integrated the Stanley Retail business and is on course to deliver the £20m of synergy and other benefits forecast at the end of 2005 for this acquisition.”
“We remain confident of the Group\’s future prospects and are committed to delivering value to shareholders. The Board has resolved to increase the interim dividend by 18.9% to 7.25p per share and remains committed to its programme of share buy-backs. Having already completed £167.2m share repurchases out of the proposed buy-back programme of £200m-£300m announced in September 2005, we are now increasing our target to £320m to £400m.”
William Hill has also signed a memorandum of understanding with the Spanish gaming group Codere to develop a sports betting business in Spain if deregulation goes ahead as expected.
Spain is one of the largest gambling markets in Europe and growth of the number of internet operators targeting the country is evidence that there is strong demand for these services. This has led the regional governments within Spain to move towards regulating the market. Several of Spain\’s regions are now developing legislation to regulate sports betting and introduce a licensing regime, allowing the establishment of land-based businesses.
The proposed joint venture would bring together William Hill\’s bookmaking expertise and Codere\’s leadership position in gaming businesses within Spain, creating a powerful proposition for the Spanish market.
Commenting on the proposals, David Harding, Chief Executive of William Hill, said: “We are very excited about this opportunity. The combination of William Hill\’s bookmaking expertise and Codere\’s leadership position in gaming in the Spanish-speaking world creates a very strong team to take advantage of sports betting regulation in Spain. We hope that as our joint business in Spain grows, Codere\’s presence in other parts of the world will present the partnership with further opportunities.”
Jose Antonio Martinez Sampedro, Codere\’s Chief Executive, commented: “Sports betting has been in Spain since the arrival of the Internet. We welcome the Autonomous regions\’ moves to regulate it, allowing for the development of a market where customers can enjoy sports betting safely.”
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