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Australian impairment drags William Hill results down under

William Hill’s decision to take a £238m impairment charge on the value of its Australian business saw the bookmaker report a pre-tax loss of £75m for 2017, but the firm is confident that the performance of the business as a whole is positive.

While Group net revenue grew 7% to £1,711.1m, a total of £335.0m of exceptional costs and adjustments ruined the firm’s balance sheet. Apart from the goodwill impairment of the Australian business following adverse tax and regulatory changes, other charges were from the costs of the Group-wide transformation programme and from retrospective VAT payments in Germany and three other markets.

The firm added: “However, adjusted operating profit, which gives a clearer picture of underlying performance, was up 11% to £291.3m, supported in particular by strong growth in our Online and US businesses.”

William Hill hailed its omnichannel capabilities and its position in the US ahead of potential deregulation, but following its £6.2m Gambling Commission fine earlier in the week it is now making a major play for developing a ‘sustainable’ business.

It explained: “We are focused on improving our approach to responsible gambling to build a long-term, sustainable business for all our stakeholders, and especially for any of our customers who are at risk from problem gambling.

We recognise that it is not enough to grow: we have to grow the right way. That means acting in a sustainable way that takes account of all our stakeholders. We remain a company with commercial objectives but commercial gain should not come at the expense of being a responsible company. We are committed to treating customers fairly and openly, to protecting the vulnerable and to keeping crime out of gambling.”

After the regulatory settlement with the Gambling Commission, William Hill also announced it is introducing ‘new and improved policies and increased levels of resourcing’ to improve its ability to ensure full regulatory compliance, committing to an independent process review.

It added: “We are fully committed to operating a sustainable business that properly identifies risk and better protects customers and we will continue to assist the Commission and work with other operators to improve practices in this area.

“We can and will do more to embed sustainability for the long term. In the months ahead we will be taking a number of important steps in key areas, including improving the transparency of our marketing and communications, increasing responsible gambling measures and enhancing our stakeholder engagement. We will update on these measures in due course.”


Executive shake-up sees William Hill appoint Ulrik Bengtsson as Group Digital Chief

Further to publishing its full-year 2017 results, FTSE-listed William Hill Plc has today confirmed the appointment of former Betsson AB Group President & CEO Ulrik Bengtsson to the newly created role of Group Chief Digital Officer.

Bengtsson is expected to join the group’s leadership team this April and will report directly to William Hill CEO Philip Bowcock as a member of the firm’s Executive Committee.

Last September, Bengtsson ended his six-year tenure as leader of Stockholm-listed European online gambling group Betsson AB.

A seasoned industry leader, Bengtsson will gain full group oversight on global data, brand, marketing and customer service for William Hill’s digital operations.

The executive appointment sees Crispin Nieboer current William Hill Online MD, take on the newly created role of Group Corporate Development Director, which will primarily focus on William Hill’s international growth initiatives.

Appointing Nieboer as group international lead, William Hill governance further details that US market opportunities will be made an immediate priority for the FTSE bookmaker’s long-term growth strategy.

The executive restructure will see Ulrik Bengtsson further supported by Grant Williams current Chief Operating Officer for digital operations, who will assume the position of MD of William Hill Online.


New look William Hill leadership confident of delivering successful ‘next chapter’

William Hill’s new leadership team is confident of delivering the FTSE bookmaker’s ‘next chapter’ having closed a group-wide transformative 2017.

The bookmaker’s £238 million impairment charge on the value of its Australian business, dominated industry headlines last week, as William Hill Chief Executive Philip Bowcock presented full-year 2017 results.

Despite the Australian downturn, Bowcock details to investors that William Hill has undertaken critical decisions through its transformation programme, which will ‘strengthen the organisation for the long-term’.

Closing 2017 accounts, Bowcock states that William Hill has been successful at delivering its three strategic priorities in; ‘rejuvenating its digital enterprise, bolstering its omni-channel proposition and gaining significant growth within the US’.

Further positives see the transformation programme deliver on its year1 target of generating £25 million in group cost savings, which William Hill governance believes can be further expanded to ‘£40 million annualised run rate’.

Bowcock and William Hill’s executive team will seek to invest the group savings in initiatives that will deliver ‘the fastest profitable growth’.

William Hill’s 2017 results, saw Ruth Prior deliver her first corporate update as Group Chief Financial Officer (CFO). Prior who joined William Hill last October, from ‘FTSE100 darling Worldpay Plc’, has been quick to lay down her approach as group financial lead.

William Hill is clearly going through its period of transition. But you cannot cost-cut your way out of this situation. From my experience, I believe that you have to face historic issues, reshape your cost-base, transform your talent pool and invest in marketing and technology”.

2017 has not only been a year of structural change for William Hill. The bookmaker has brought a number of fresh faces to its governance and senior executive teams ‘expanding the skillset of its leadership’.

This February, UK leisure and hospitality guru Roger Devlin joined William Hill governance as new Group Chairman, taking over from Gareth Davis.

Furthermore, Bowcock and Prior’s corporate strategy will soon be supported by former Betsson AB CEO Ulrik Bengtsson who will take on the newly created role of Group Chief Digital Officer.

Bowcock and Prior are confident that William Hill can ‘deliver growth in the pieces that it controls…Facing a number of 2018 headwinds, sector analysts and investors will monitor closely whether industry outsiders Bowcock and Prior can revive the sector’s sleeping giant.


Crownbet & Paddy Power Betfair in duel for William Hill Australia

The Australian Financial Review has revealed that CrownBet and Paddy Power Betfair subsidiary Sportsbet.com.au are the two suitors bidding for William Hill Australia.

Both operators are reported to have confirmed their interest this week in pursuing William Hill’s troubled Australian business division and will be allowed to perform due diligence on the asset to prepare their formal bids.

The update, sees Australia’s two biggest online bookmakers compete for William Hill’s division which has been active in the Australian market since 2012, formed through the acquisitions of Sportingbet Australia, Centrebet and TomWaterhouse.com.

Confirming a strategic review of its Australian business in January, William Hill is reported to have invested AUS $700 million (€440 million) to date on its Australian enterprise.

Deal insiders believe that William Hill governance will target an AUS $200 million (€126 million) sale for its asset.

FTSE100 Paddy Power Betfair seeks to continue the strong momentum of its Sportsbet Australia asset, which in 2017 became the outright market leader in online wagering with an estimated 15% of market share.

Led by industry veteran Matt Tripp, this February CrownBet secured Toronto TSX The Stars Group Inc as its new majority shareholder completing a €95 million investment in the operator.

Both Paddy Power Betfair and The Stars Group governances seek to expand further in a rapidly changing Australian online betting market, which has seen restrictions in credit-line betting and bookmaker advertising.

Furthermore, Australian state legislators are assessing whether to impose further taxes on online betting transactions, creating harsher terrain for market incumbents.

Facing severe operational restrictions, industry analysts believe that the Australian online wagering market may contract to become a small field of players from its current state, as European operators revise their market options.

William Hill sells Australia business to CrownBet

The governance of William Hill Plc has today disclosed that it has signed a binding agreement to sell its William Hill Australia division to CrownBet for AUS $300 million (€185 million).

The FTSE bookmaker had placed its William Hill Australia division under strategic review in January, as a result of the Australian government’s ban on credit betting and the likely introduction of a Point of Consumption tax in a number of states impacting the division’s profitability.

Last week, business news sources reported that CrownBet, the newly acquired subsidiary of Toronto TSX-listed The Stars Group Inc, would compete in an auction against FTSE100 operator Paddy Power Betfair for William Hill’s Australian business.

Active in the market since 2012, William Hill is reported to have invested AUS $700 million (£450 million) on its Australian expansion, acquiring the online assets of Sportingbet.com.au. Centrebet and TomWaterhouse.com

Led by industry veteran Matt Tripp, Crownbet seeks to become Australia’s number 1 online gambling destination, in market that could soon compact in the number of competitors.

Confirming the transaction Philip Bowcock, William Hill’s Chief Executive Officer, commented:

“We are pleased to announce the sale of William Hill Australia to CrownBet. The disposal follows a strategic review of the Business, launched in January after its profitability came under increased pressure due to the recent credit betting ban and the likely introduction of a Point of Consumption tax.

The disposal will allow William Hill to focus on continuing to grow our UK Online and US businesses, particularly as we prepare for the decision on the PASPA appeal due in 2018.”

The disposal is expected to complete following regulatory approvals from the Foreign Investment Review Board and the Northern Territory Racing Commission, which William Hill expect will be obtained in a timely manner. An announcement confirming completion will be issued in due course.

William Hill poised to up the stakes in US expansion

An underlying narrative from William Hill’s departure of the Australian market this week, was that the operator is readying itself to expand its US footprint should the US Court overturn the PASPA act this year.

Since 2012 William Hill has had betting outlets in Nevada, however since the possibility of legal sports betting grew in New Jersey, the group has explored the possibility of expansion to Monmouth Park.

Furthermore having first entered the Australian market in 2013 William Hill has announced that is has agreed to dispose of William Hill Australia to Crownbet. A deal that the group’s Chief Executive Officer, Philip Bowcock emphasised would allow them “to focus on continuing to grow our UK Online and US businesses, particularly as we prepare for the decision on the PASPA appeal due in 2018.”

Don Best Sports supplies odds and data services for North American sports, the group’s Managing Director Benjie Cherniak spoke to SBC about William Hill’s decision and whether it emphasises how much focus the operator is putting on the American market.

Cherniak stated: “I think this decision is in some part based on William Hill’s desire to focus on the US market, albeit in reality they have been preparing for US expansion for a number of years now, led by William Hill CEO Joe Asher and his capable team. In fact, one can surmise that William Hill’s entry into the US six years ago, while in part based on the Nevada opportunity, was in larger part to position themselves for the eventuality of legislation and US expansion, which at the time seemed light years away but now appears to be right around the corner.

“The other factor in play here is that William Hill clearly struggled in Australia from day one. There are a preponderance of reasons for their inability to turn the corner in Oz but that is a story for another day. Would William Hill be turning their backs on Australia if they were achieving great success in said market? Highly doubtful. But given their struggles in Oz, and given the opportunity the US represents, the timing is opportune to exit at this juncture, as they now have.”

Further looking ahead to the just how competitive the market could be should it open up, he added: “We are really early in the game but it is clear that the US market will be both massively competitive and highly challenging. Competition will come in various forms, as each State will have its own legislation and its own operators, making it difficult to establish a national strategy.

“Not only does an operator need to consider its competitors from state to state, but they also have to adjust to varying tax rates, laws, and potentially sharing revenues with professional sports leagues in select jurisdictions. Not to mention the at least initially the grey market remains active, adding a less defined layer of competition to the mix. It will be interesting to see which operators are flexible enough to adapt to these challenges and realities.

William Hill, as mentioned above, have been preparing for legislation for years, and appear to be well positioned to navigate the landscape. Interestingly, Crown buying out William Hill Australia and in turn selling 80% of shares to Stars Group may play into the US story as well. Stars already has US operations, and with Crown on board, Stars is now seemingly better positioned to formulate a US strategy then they were previously.

“It may turn out that the entity William Hill sold to in Australia eventually emerges directly or indirectly as a competitor to William Hill in the US market. It will be fascinating to see how all the above plays out in the years ahead,” concluded Cherniak.