Leading operator William Hill reported that its revenue for the past 23 weeks through June 9 fell 32% year-on-year. However, it said that lately the business has shown a strong recovery after the closure caused by the coronavirus pandemic (Covid-19).
Until mid-March when the coronavirus outbreak caused retail stores to close and major sporting events around the world were suspended, the company’s revenue fell 5% compared to 2019.
The decrease was directly attributed to the closure of retail betting shops, in addition to a 3% drop in retail store revenues. But instead the income in the other verticals of the business saw growth.
The operator announced in July last year that it planned to close 700 betting shops in Britain following the authorities’ decision to reduce the participation limit for fixed-rate betting terminals to £ 2.
Declines in land-based gaming rooms were mitigated by a 16% increase in revenue from online gaming. UK online games contributed 7%, while international markets contributed a 35% increase, helped in part by the acquisition of MRG Group.
The performance of the United States gaming market was also very important as revenues increased 30% year-over-year.
Signs of recovery
As the pandemic spread throughout Western Europe causing the blockade in all countries, William Hill’s income fell by 57%. Even online gaming revenue that also fell 21%. This was largely due to the 33% drop in UK income.
The closure in the following six weeks of the operator’s retail stores caused an 85% drop. The situation worsened in the US with the suspension of the country’s main leagues, which caused a decrease in income of 90%.
Until June 9, however, there have been some signs of recovery as revenue fell 50%, with no revenue recorded in the retail business. The United States’ contribution fell 62%.
Betting in the US improved due to the Ultimate Fighting Championship and Nascar’s return. It was also influenced by the gamblers participating in sports events different from those of the main leagues in the country. The operator announced that it will try to improve its position in US, through the launch of the online casino in New Jersey.
The annual decline in online gaming slowed to 3%, thanks to a 7% rise in international revenue. Although the 8% decline in the UK, performance declined. The increase in sports betting was the result of the resumption of Bundesliga games and the reopening of horse racing, after ordered closings to prevent the spread of the pandemic.
“Performance above our initial expectations”
Other sports such as table tennis that have become very popular during closings have made their contributions to the business.
“We are delighted to see a strong recovery in recent weeks with the relief of Covid-19 restrictions and the progressive return of sporting events,” the company said.
Although William Hill hopes that “the business context remains uncertain”, it is encouraged to “see both online and in the United States performing above our initial expectations.”
“The return of sporting events has fueled a strong recovery in our online volumes,” said William Hill Chief Executive Ulrik Bengtsson.
He stressed that:
“Our UK online business is in a better place than ever and our international business is showing strong growth.”
“In the United States, we have wisely used this lockdown period to move our product forward and we are now in a strong position to capitalize on the upcoming growth opportunity for the United States,” Bengtsson said.
Since its last market update in mid-May, William Hill’s spending has been reduced. Furthermore, the outstanding £ 203 million of his 2020 bonus has already been repaid.
The company added that this situation allowed it to have uncompromised liquidity of over £ 500 million to generate positive cash flow in the second half of the year.
VAT refund and bond placement
Operators will receive a refund of value added tax that was incorrectly paid on gaming machines. William Hill noted that up to £ 150 million will likely be reimbursed. This reimbursement is scheduled for the second half of the year, following discussions with Her Majesty’s Revenue and Customs.
According to the operator this is “roughly equivalent to the value of the bond redemption.” So the figure could be more than the £ 150 million it initially expected.
Following the new bond issue for retail and institutional investors worth 19.99% of its share capital, Hill seeks to further strengthen its financial position.
“This will allow the Group to pursue its long-term growth ambitions, strengthen its balance sheet and increase its strategic and financial flexibility,” said the operator.
The bonds will be placed through Barclays Bank and Citigroup Global Markets who will act as joint global coordinators and joint book brokers. Part of the new shares worth £ 200k will be absorbed by the directors and senior management of William Hill.
With the extra financing, the operator will be able to mitigate the additional risks that continue to be present during the pandemic recovery process, Hill said.
On the other hand, the additional funds raised will allow the operator to strengthen its position in the United States. The company expects regulations to increase and its participation to extend to other states. William Hill seeks to increase its market share to 24%.