Date: Friday 19 Oct 2012
William Hill has got the bean counters in as it ponders whether to exercise its right to buy up gaming software firm Playtech's minority stake in the William Hill Online (WHO) business.
The group, which is already running the rule over online sports bookie Sportingbet, expects to make a decision by the end of March 2013 on whether to exercise its option to buy Playtech's 29% stake in WHO. Meanwhile, the deadline for making a firm bid for Sportingbet has been extended to 17:00 on November 13th at the request of the Sportingbet directors.
A number of management changes were announced at WHO, including the departure of Henry Birch as Chief Executive Officer. He will be succeeded by Andrew Lee, who will have the title of Managing Director. Lee was formerly head of the Mobile division of WHO.
The announcement came in a third quarter trading update from the group which revealed that the summer Olympics played its part in reducing customer visits to William Hill's betting shops, and the stay-away punters were not at home logging on to bet on the Olympic Games either.
Nevertheless, group net revenue in the third quarter was 9% higher than a year earlier, and operating profit was up 26% as a lot more results went the bookie's way this summer than last summer.
William Hill Online delivered 18% growth in net revenue, while online operating profit at £34.8m was 42% higher than the prior year. Playtech's non-controlling interest entitles it to £10.2m of this.
Sportsbook turnover overall was up 27%, with in-play - where bets are taken while events are in progress - up 47% and pre-match up 14%. The Sportsbook gross win margin was 7.8%, up from 6.9% in the third quarter of 2011 and, as a result, Sportsbook net revenue grew by 43% year-on-year in the period.
Mobile Sportsbook turnover grew 331% and accounted for 27% of the total Sportsbook turnover in the period.
Gaming net revenue, i.e. poker and other casino games, was up 5% year-on-year.
On the Retail side, net revenue grew 3%, primarily driven by a strong over the counter (OTC) gross win margin of 18.5%, versus 16.6% in the corresponding quarter of 2011. Operating costs were up 2% and operating profit increased by 8%.
OTC net revenue increased by 5% and gaming machine net revenues grew 2% with August, when the Olympics and Paralympics were on, proving a drag on growth. Gross win per machine per week was £888, down from £890 a year earlier.
"The strong profit growth across the business in Q3 [third quarter] is pleasing, albeit benefiting from gross win margins above the normalised and expected ranges as well as from favourable timing on costs," declared Ralph Topping, the Chief Executive of William Hill.
"Our continuing marketing investment and further innovations underpin progress across the business and the board remains confident in its expectations for the full year," Topping added.
Meanwhile, Playtech, the junior partner in William Hill Online, said it continues to engage in constructive discussions with William Hill regarding the future of the joint venture, and should William Hill choose to exercise its option to buy out Playtech, it would do its bit to ensure a smooth handover of the 29% stake in order to ensure a seamless transition and support WHO's growth going forward.
Mor Weizer, Chief Executive Officer of Playtech, said of WHO: "Current trading is very encouraging and regardless of William Hill's as yet undetermined final decision on the call option, we look forward to working with WHO and maintaining our very positive relationship. Playtech actively supports all of its licensees and believes that there is significant continued growth potential for WHO."
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