William Hill interim boss hails turnaround

William Hill interim boss hails turnaround

Friday, February 24, 2017 Posted by Scott Longley
Firm ‘not harmed’ by failure to hire CEO

The interim chief executive at William Hill said the uncertainty over who would fill the vacancy at the top of the company had not diverted the attention of the management team running the business.

Philip Bowcock has been at the reins on an interim basis ever since previous chief executive James Henderson was sacked in July last year.

There has been much recent discussion in the newspapers and among the analysts about the long drawn-out process for replacing Henderson who took the fall in July after the company issued a profit warning in March that was blamed on stalled online growth.

Though Bowcock was not announced as the man for the job as some had predicted he did finish off his call with the analysts with the comment “see you in six months.”

Talking to TotallyGaming.com, Bowcock said he “didn’t think not having a CEO” made a difference to the company’s performance in the past seven months. He said the management team below him had been entirely “focused on the turnaround,” particularly in the online division.

He added that the company was in a “far stronger position as we enter this year than we were at the start of 2016.”

William Hill admits to having fallen behind the curve in digital. Total online revenue was down 3 percent to £544.8m while the unit’s adjusted operating profit took a 20 percent tumble to £100.5m. Sportsbook net revenue fell 2 percent to £270.1m and gaming net revenue was off by 4 percent at £274.7m.

Total revenues for the business as a whole came in 1 percent up at £1.6bn but adjusted operating profit fell 10 percent to £261.5m.

The company was keen to point to the evidence of growth in online in the first seven weeks of this year with UK sportsbook wagering up 10 percent and UK gaming net revenue rising 8 percent.

The team at Numis pointed out that though no comparatives were given for these metrics for last year, they do represent a “clear improvement” from the figures for the second half of 2016 where wagering was up 5 percent but gaming net revenue fell by 8 percent.

Analysts at Goodbody said the results would be well-received given the early evidence of a turnaround in the first few weeks of 2017. “While only a short period, and it could have been somewhat helped by recycling from the fourth quarter, the year-to-date performance in online gives hope the group may have turned the corner.”

The “challenging year” for William Hill included a rebuffed three-way merger plan from 888 and Rank and a failed £4.6bn nil-premium discussion with Amaya that was effectively sunk after an intervention from major William Hill shareholder Parvus.

The company did manage some M&A over the 12 months; it contributed £80m to NYX’s takeout of the OpenBet business in April and stumped up a further £13.6m to buy digital development company Grand Parade in August. Bowcock refused to be drawn on whether William Hill would be involved in any further M&A discussions, saying the company was focused at the moment on “self-help.”

In retail William Hill - like the rest of the UK high-street bookmaking industry – is awaiting the outcome of the government’s ongoing triennial review, looking at stakes and prizes for gaming machines. The company re-stated the case for the government to follow its own principles of making evidence-based decisions, adding there was no evidence that reducing staking levels to £2 would reduce gaming-related harm.

Bowcock cited a report that has been submitted to the government from analysts at KPMG which suggests that a stake cut to £2 would likely mean the closure of 3,000 betting shops across the UK. Asked by analysts whether such a drop was likely, Bowcock said it was “unclear.” “You just don’t know what the substitution effect would be into other machine play or into over-the-counter,” he said.

The company’s own initiatives in retail include the introduction of its own proprietary SSBT system where 2,000 have been rolled out to date and the company said it would be introducing a smaller version in the coming months.

The results showed retail revenue stable at £893.9m helped by a 6 percent rise in gaming machine net revenue to £484.6m. OTC revenues, including SSBTs, was down 5 percent at £409.3m. Adjusted operating profit for the retail business was down 5 percent at £162m.

Elsewhere in the business, the Australian operation saw revenues rise only 3 percent on a constant currency basis which Bowcock admitted was behind the rest of the market. The US fared better where in constant currency terms amounts wagered rose 37 percent. Net revenue rose 16 percent.

Totally Gaming says: Internally the lack of a permanent CEO might not, as Bowcock claims, be an issue but it certainly has an impact on outside perceptions of the company. The issue is likely to be resolved within weeks. But whether it is Bowcock himself or someone else who takes the post, it is true that the new boss will find the company in a better shape than it was this time last year, albeit with significant further hurdles ahead.

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