William Hill Shares Fall on Underwhelming Results

By Martin Green01 March 2020
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William Hill Shares Fall on Underwhelming Results

William Hill has reported that adjusted operating profit fell 37% year-on-year to £147 million in 2019. That decline can largely be attributed to the UK government’s decision to reduce the maximum stake from £100 to £2 on virtual roulette machines. That has decimated retail bookmaking in the UK. However, William Hill did beat management guidance by £4 million. Net revenue decreased 2% to £1.58 billion and operating cash flow fell 7% to £183m. Net debt rose to £535.7 million after William Hill bought Swedish gaming site Mr Green for £242 million in 2019. The plan is now to ramp up its digital focus and build on its strong market share in the US. “Our industry is evolving and this brings great opportunities, underlining the importance of our efforts to reposition the business,” said chief executive Ulrik Bengtsson. “We look forward to building on these foundations with a renewed focus on customer, team and execution.”

Mr Green has been fined £3 million over “systemic failures” to stop money laundering and tackle problem gambling. The UK Gambling Commission ruled it had failed to perform any checks on a punter that lost thousands, and it also accepted 10-year-old evidence of another customer’s source of funds. Richard Watson, the Gambling Commission executive director, said: “Our investigation uncovered systemic failings in respect of both Mr Green’s social responsibility and anti-money laundering controls which affected a significant number of customers across its online casinos. Consumers in Britain have the right to know that there are checks and balances in place which will help keep them safe and ensure gambling is crime-free – and we will continue to crack down on operators who fail in this area.” Mr Green said the failings took place before William Hill purchased the company and that these areas have “since been addressed by the introduction of new processes”.

Paddy Power Betfair owner Flutter Entertainment also revealed its 2019 results this week. Profit before tax decreased 38% year-on-year to £136 million. That came despite a 14% increase in revenue to £2.14 billion. The firm bought popular DFS brand to front its US operations and it has invested in an aggressive new customer acquisition strategy in order to capture a market leading position in several states. That hit its overall profits. The Paddy Power retail estate has also been hit by the maximum stake reduction, but Paddy Power Betfair online revenue rose 6%, passing the £1 billion mark. Its Australian operations also grew 11%. “I am immensely proud of the group’s performance given the complex regulatory environment,” said chief executive Peter Jackson. “The entrepreneurial culture of our business and the quality of our people are continuing to drive our global expansion while providing our teams with the opportunities they seek to develop their careers and gain new experiences.” Flutter is poised to purchase Sky Bet owner The Stars Group, creating the world’s largest online betting company.

Prominent hedge fund owner Ken Griffin has taken an £80 million short bet against Ladbrokes Coral owner GVC. The Citadel founder is banking on the reduction in stakes on the fixed-odds betting terminals hitting Ladbrokes Coral’s performance, which would allow him to benefit from a fall in its valuation. A spokesperson for GVC said: “The company’s in a closed period but before that we’ve had a strong performance. Others in our sector have larger short positions. Numerous other listed companies have larger short positions. The short position in us hasn’t changed substantially in at least a month. The level of short positions in our stock is unremarkable, especially compared to some industry peers. It’s not for us to comment on the possible motivations of short sellers, but we welcomed recent news that the German states have reached a compromise on future online gambling regulation, and we are engaged in regulator constructive dialogue with regulators in Germany and the UK.”