William Hill makes provision for FOBT losses in latest H1-2018 report

News on 3 Aug 2018

William Hill plc’s H1-2018 results posted this week highlight the severe impact that the UK government’s radical reduction in Fixed Odds Betting Terminal maximum deposits is expected to have on retail betting shops across the country.

Hill had already warned that the new GBP 2 staking limit on FOBTs in shops would cut Retail’s gaming revenues by 35-45 percent and operating profit, after mitigation, by GBP 70-100 million.

That would make 900 shops or 38 percent of its estate loss-making it said today, with exceptional charges of GBP 50,000 to GBP 60,000 per shop.

The group has made provision for a GBP 882 million “non-cash impairment” of its retail division to accomodate the changes that will see mazimum stakes reduced from GBP 100 to GBP 2 by 2020. These charges, and others totalling GBP 916 million in all will cause a statutory loss in the period before tax of GBP 820 million.

The group highlighted developments that include:

* GBP 241 from the disposal of its Australian assets to CrownBet and unloading its investment in NYX Gaming to Scientific Games:

* 1 million active punters signed up during the Russian World Cup football festival;

* Group net revenues up 3 percent at GBP 802 million;

* Underlying interim profits rose by 1 percent to GBP 130.8 million, though the group invested GBP 17.2 million to expand in the US;

* Substantial growth across digital assets, with the firm’s online sportsbook up 18 percent in net revenues and 16 percent in new accounts;

* Online gaming bet revenues up 4 percent overall;

* Retail net revenues down 3 percent due to a ‘challenging environment for the UK high street’, and cancelled racing fixtures due to inclement weather;

* Expanding the group presence in the newly liberalised US sports betting market with a new sportsbook at Ocean Casino in Atlantic City;

* Costs of GBP 29.9 million for the closure of the Tel Aviv office and other restructuring costs.

CEO Philip Bowcock, reported:

“William Hill has performed well during the first half of 2018 and, following major regulatory decisions in the UK and US, we now have greater clarity over the challenges and opportunities that lie before us.

“During the first half, our Online business continued to deliver double-digit growth. In Retail, we are beginning to put in place plans to mitigate the impact of the Triennial Review. In the US, we have moved quickly following the repeal of PASPA as we grow into newly regulating states. We will continue to invest in the US to ensure we are well placed to capture the substantial potential available to us.”

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