Hills online revenues up on sportsbook growth
Revenues from vertical up by 50% year-on-year " mobile turnover reaches record levels in final week of 2012.
A strong online sportsbook and casino performance helped William Hill Online record a 27% year-on-year increase in like-for-like full-year net revenues, the operator has revealed in a trading statement for the year ended 31 December.
Sportsbook revenues rose by 48% year-for-year on a like-for-like basis, or 50% with the 53rd week of the year (due to a leap year) taken into account, with amounts wagered on the vertical climbing by 33% compared to the corresponding period in 2011.
The fourth quarter saw online net revenues rise by 29% (or 20% on a 13-week basis) while mobile sportsbook turnover also showed substantial growth, rising by 260% year-on-year and reaching an all-time weekly high of £20m in the final week of 2012. Mobile contributed 30% of sportsbook turnover for the full year, however the contribution in December rose as high as 32%.
Elsewhere online gaming revenues were boosted by a strong performance from Hills’ Playtech casino and Vegas casino offerings, rising 11% year-on-year on a like-for-like basis.
Chief executive Ralph Topping described the fourth quarter as “A strong end to an already good year in 2012,” and while he declined to go into detail on November’s valuation process on Playtech’s 29% stake in the online business and December’s agreement to jointly acquire Sportingbet with GVC, he said the two developments see “The Group [continue] to enhance its already strong platform for the continued development of the business.”
Today has also seen Hills secure a significant retail betting software deal with OpenBet, extending its existing deal with the provider by signing a multi-year agreement for the OpenBet Promote content display software. OpenBet also provides William Hill with its back end solution through which it runs its sportsbook and mobile operations.
OpenBet CEO David Loveday said: “We have been cognisant for some time that the retail punter’s demands and habits have been changing. We have designed Promote to give our customers a platform from which they can greatly improve the range of products and the level of service they provide.
“The high-street bookmaker is no longer seen as just a betting shop but a destination that offers a wider range of entertainment. Operators need the tools available to them to deliver that experience and that is what Promote does,” he added.
The agreement comes as William Hill recorded a 7% year-on-year increase in OTC net revenues, though amounts wagered dropped slightly compared to 2011.
The last 12 months has also seen Hills pull back from a number of markets that continue to show regulatory uncertainty, withdrawing from Belgium where it saw two domains blacklisted, and Greece, where it has demonstrated its opposition to “economically unattractive” regulations.
The operator also chose to make its sports betting offering unavailable to German customers, however it continues to offer poker and casino in the market despite both verticals being off limits within the country’s revised Interstate Gaming Treaty to which all of its 16 Lander have ratified. The withdrawals from Germany, Greece and Belgium are expected to have an annualised impact on profit of between £7m and £9m according to the company.
Chief financial officer Neil Cooper explained in an analyst call this morning that the operator’s presence in Germany was dependent on a number of factors, including future regulation and the input of the Court of Justice of the European Union. Last week saw Germany’s highest federal court refer questions on the country’s controversial State Treaty to the CJEU.
The country’s Gaming Treaty proposes a ban on casino and poker and a limit of 20 sports betting licences to be issued. Schleswig-Holstein, that issued 43 sports betting and casino licences in line with its own regime brought in by its previous CPD-backed Parliament last week voted to return to the auspices of the Treaty following a change in political power to a SPD-Green-SSW coalition government.
Hills’ share price is up more that 4% today at the time of writing, and analyst Simon French of Panmure Gordon retained his firm’s ‘Buy’ recommendation, saying in a note this morning: “The key challenge for the market is how to value a company whose earnings profile and quality is improving rapidly.”
However analyst Nick Batram of Peel Hunt issued a ‘Hold’ recommendation, noting: “The acquisition of Sportingbet and potential buy-out of the Playtech minority are transformational deals, but William Hill is likely to pay a full price for both.”
Ivor Jones, analyst with Numis, issued a ‘Reduce’ recommendation, explaining: “There are some headwinds in 2013 which are going to make it difficult for profits to equal 2012 levels, let alone make progress.”