Tough Year For William Hill Plc

Revenues mark time as profits decline

2016 has not been online and land gambling group William Hill's best year, judging by FY-2016 results released Friday; revenues marked time whilst profit declined, and even its once-powerful online division struggled.
The trading environment was challenging, and there were unfavourable football results which conspired to whittle away at the group's overall profits, the company pointed out, but that doesn't gel with some of the more positive industry reports posted recently by other major betting companies.
Vicissitudes experienced by the group included ongoing problems implementing a new IT system to underpin its online betting offering, a key component of its future strategy.
Management reported that the online business of the group took up much of its attention in 2016 as growth in the unit "stalled", with net revenue falling 3 percent and adjusted operating profit dropping by 20 percent.
The problems had been addressed, and numerous improvements made, which management is confident will benefit the division going forward; this includes a better product range, user experience and stronger marketing.
Here are a few performance results from William Hill's report:
" Operating profit down 10 percent year-on-year at GBP 261.5 million; that is in line with the lower end of the company's earlier guidance and profit warnings which were already pessimistic;
* EPS down 13 percent y-o-y;
* Pre-tax profit up just 1 percent to GBP 225.6 million;
* Revenue largely steady at GBP 1.6 billion, although online revenues were down 3 percent;
* Annual dividend maintained at 12.50 pence;
* Strong cash generation with operating cash flow of GBP 265.9 million;
* Balance sheet remains healthy with net debt for covenant purposes at 1.8x EBITDA (2015: 1.3x);
* Company has embarked on an efficiency programme that will deliver a further GBP 40 million for reinvestment in marketing and in a project with OpenBet to build a global technology platform for the group over three years;
Interim CEO Philip Bowcock said the company has seen positive trends across the business in the seven weeks to February 14, with UK sportsbook wagering up 10 percent, UK gaming net revenue up 8 percent and continued improvements in the performance of its online division.
Sporting results have also been favourable in the UK so far, though this has not so far been the case in Australia and the US.
"2016 was a challenging year for William Hill, but one in which we made considerable operational progress, leaving us well-placed to drive the business forward in 2017," said Bowcock.
"We have delivered extensive product, user experience and marketing improvements in Online, modernised our Retail management structure to focus more on the customer and continued to grow in our key international markets. There are now encouraging signs in all our divisions, in particular Online's UK business, which is now delivering sustained growth."
Observers noted that the report did not — as had been predicted earlier in the week by the Financial Times — confirm Bowcock's appointment as permanent CEO of the group.
Subsequently the chairman, Gareth Davis said: 'I am pleased to say that we are entering the final stages [of the CEO project] and expect to complete an announcement in a few weeks' time.'

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