Strong Hills online revenues offset slow retail growth

Online revenues have continued to grow impressively, while retail growth has slowed, resulting in flat operating profit, William Hill revealed in the company’s full year results for 2011.

Net revenue for online grew 28% year-on-year, up from £251.5m to £321.3m, and operating profit grew 17% to £106.8m, resulting in a £31.3m non-controlling interest for JV partner Playtech. This was driven by strong sportsbook performance, with a 51% increase in amounts wagered and increased advertising helped in-play betting grow 75% resulting in revenues of £111.1m ““ up 36% on 2010. Football betting performed especially well with amounts wagered up 54% in a year with no major European football tournament.

Gaming net revenue increased 28%, with growth in all verticals driving revenues to £321.3m. Vegas Casino net revenue climbed 54% up from £53.4m to £82.2m, while Playtech casino performance ““ broken out for the first time ““ was less impressive, with revenues up only 8% to £81.4m, meaning the company’s home-grown casino products draw more revenues than supplied software. Poker was up 7% and bingo grew 19% year-on-year.

Speaking at the group’s results presentation this morning CEO Ralph Topping said mobile continued to perform impressively, with the original target of a weekly turnover of £5m for mobile sportsbook by mid-2013 already surpassed. As a result, Topping has set a new target of 40% of overall sportsbook revenues from mobile by 2014. Mobile sportsbook gross win for the three months ending 27 December 2011 was £6.8m, despite the product not being available in Apple’s App Store until its approval two weeks ago.

Hills’ mobile casino app is also performing well and will “soon” overtake the Playtech-supplied download casino in revenue terms, Topping said without breaking out numbers.

The mobile team will expand this year with a replacement for former head of mobile Michael Byrne, who left in January, due to be announced in the coming weeks. The team will work on a number of apps including a sportsbook application allowing accumulator bets, mobile Vegas games as well as new apps related to sponsorship partners including the company’s recent agreement with the Football Association.

Retail was unable to match strong online growth with net revenues up just 1% from £783.1m to £789.7m for the year. Operating profit dropped by 4%, down to £196.8m, despite a 6% increase in amounts wagered. This contrasts Hills’ rival Ladbrokes, which saw a 2.1% increase in net retail revenues.

As a result total operating profit declined slightly, down 0.4% year-on-year, from £276.8m to £275.7m. This came despite a rise in net revenue, which increased 6% to £1.14bn, due in part to an increase in net operating expenses which rose from £647.6m to £703.4m, and an increase in VAT. However, the group chief executive added that William Hill is the “home of betting” and made £85m more operating profit than its nearest UK rival [Ladbrokes].

Current trading for the seven weeks to 14 February was strong, with online net revenue up 30%, aided by an impressive 64% rise in revenues for online sportsbook, helping net revenues for the group rise 13% for the period.

Topping revealed that William Hill derives 92% of its revenues from the UK, and admitted that the business needs to become less dependent on “these Isles”. The company is preparing to launch a sportsbook offering in Italy following the launch of a casino product in June last year, and will go live in Spain as soon as the market opens, currently scheduled at the end of March this year.

Hills has also positioned itself for launch in the US, acquiring Delaware-based Brandywine Bookmaking in May, and Nevada-based American Wagering Inc. and Club Cal Neva Satellite Race and Sportsbook Division in April 2011. It is still awaiting news of whether or not its full gaming licence application has been successful.