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William Hill pays back furlough funds, closes more shops after up and down half-year

Adjusted profit before tax plunged to £11.8mln from £76.2mln, though this was better than expected

William Hill PLC -

William Hill PLC (LON:WMH) says it made a good start to the second half of the year after underlying profits fell 85% in the first half due to impact of the coronavirus lockdown on live sport. 

However, the bookmaker is still not feeling confident enough about the outlook to provide financial guidance, mainly because of the uncertainty about the effects of the COVID-19 pandemic in the US.

But, after raising £224mln cash in June, operating cash flow of £37mln in the period and with a “robust recovery” in the opening weeks of the second half after the resumption of football and other big sports and the reopening of its betting shops, the company has decided to return £24.5mln of funds that had been received as part of the UK government furlough scheme.

The decision has also been taken not to reopen 119 of its shops, leaving it with an estate of 1,414.

For the first half of the year, reported net revenue fell 32% to £554.4mln as online net revenue increased 1%, with 39% of revenue from overseas up 35% in the previous period, but could not offset the temporary closure of the retail estate.

The FTSE 250 group swung from a loss at this point last year to a statutory profit of £148.5mln, however, including recognition of an expected £201.6mln VAT refund, offset by an £81.9m intangible impairment of the retail estate. Adjusted profit before tax plunged to £11.8mln from £76.2mln, though this was better than expected.

Net debt fell to £340mln from £536mln at the end of December.

Chief executive Ulrik Bengtsson said while it was a challenging or “extraordinary” period the changes during the half have left the group with “the financial strength to confidently pursue our growth agenda”. 

He highlighted the “terrific opportunity” in the US, where the completion of the merger of Hill’s partner Eldorado with Caesars last month means the UK experts have taken control of Caesars' sports book, meaning it now has access to 25 states via a leading 29% market share in sports betting in the US, up from 12 states and 23% share before, though the short-term outlook is highly uncertain.

WMH shares rose 4% to 121.5p on Wednesday morning.

Analyst Emilie Stevens at Hargreaves Lansdown said: “William Hill’s online proposition lags behind some of its rivals, but it’s crucial to future growth, so it was good to see the division held its own over the first half, boosted by higher gaming revenues and growth overseas. A lesser sporting calendar is still impacting the division, particularly in the UK, so ideally higher gaming revenues will become a more permanent fixture."

Most analysts agreed the US is the big story, where wagering before the impact of COVID-19 had increased 26%, with nearly 90% growth in less-mature markets outside Nevada.

"Taking control of Caesars' sports book is significant, a strong brand with a big client base and providing William Hill with the licence to operate in six additional states."

She noted that making a UK recovery is still the most important factor to William Hill this year. "And that’s the potential worry, with the sporting calendar still limited and retail needing an overhaul, the focus is online and online games in particular – not the group’s strong point."

   --Adds share price and broker comment--

Quick facts: William Hill PLC

Price: 218.5 GBX

LSE:WMH
Market: LSE
Market Cap: £2.29 billion
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