The growth in net revenue and EBITDA reported by William Hill PLC in its interim results for the 26 weeks ended 29 June 2010 was, according to the company, driven by its gaming machines and William Hill Online (WHO). An outstanding football World Cup was offset by poor horseracing results but the highly competitive machine offering delivered double-digit net revenue growth.

Ralph Topping, Chief Executive of William Hill, commented: "This is a positive first half performance, driven by William Hill Online and, in particular, a very strong Sportsbook. We had our best ever World Cup, far exceeding expectations. Despite turnover decline in OTC, overall Retail turnover and gross win were up, driven by an exceptionally good performance from machines. We have also completed the restructuring of the balance sheet, continued to invest to great effect in our people and have increased our focus on marketing and advertising.”

William Hill is the UK's largest bookmaker by number of licensed betting offices (LBOs) and also operates in Ireland. The Group has over 2,300 LBOs that provide betting opportunities on a wide range of sporting and non-sporting events and, in the UK, offer gaming machines. The Group's online business, William Hill Online, is one of the leading European online betting and gaming businesses by profitability, providing sports betting, casino games, poker, bingo, numbers betting and skill games.

Turnover rose 12% from the same period last year and whilst retail net revenue fell by 1% to just under £530 million, online net revenue rose by 24% to just over £124 million. The Telephone channel lost money in the first half of 2010 but the Group intends to close its existing Telephone betting business and to open a new Telephone betting operation in William Hill Online, based in Gibraltar. In doing so, the Group expects that the new operation will benefit from commercial synergies, cost savings and an improved customer offering that will improve the channel’s contribution to the Group in future.

Reflecting industry trends, online Poker revenue declined 5% and online Bingo revenue grew 52%. Online Casino revenue was up 8% with a strong performance from an enhanced suite of Flash-based products. However, following the Group’s decision to withdraw from the French market, it is likely that Casino net revenue in the second half will be below that seen in the prior year, as announced in May.

In the company’s retail sector the roll-out of the 22-inch, high-definition ‘Storm’ machines, which started in August 2009, was completed on schedule in March 2010 with approximately 75% of the machine estate sourced from Inspired Gaming. This initiative delivered a very competitive machine offering in time to benefit from increased traffic during the World Cup, contributing to a strong machines performance. Good growth was also seen from the remainder of the estate currently using Global Draw machines and William Hill says the roll-out of the Videobet platform on these machines will be in the fourth quarter of 2010. Gross win per machine per week was £836 (2009: £759).

In its fiscal and regulatory update William Hill says it will be making a submission on the Horserace Betting Levy Board consultation on betting exchanges, which will make clear that the failure of the previous Government to address the issue of taxing and levying business users of exchanges is a key reason for falling tax and levy yield. The company states that the establishment and growth of betting exchanges has resulted in structural changes to the UK betting market which has impacted the levy yield, and that the asymmetrical taxation of betting exchanges and particularly their business users needs to be addressed.

Commenting on the DCMS proposal that online operators who are outside the UK but who contract with or target UK consumers should be licensed by the British Gambling Commission, William Hill points out that such regulation is neither proportionate nor necessary and would impose dual regulation on large operators which offends better regulation principles. The company adds that as the majority of offshore operators are large corporations with good corporate governance procedures, there is little or no public protection risk, and that these proposed measures will neither materially increase industry contributions towards research, education and treatment of problem gambling (William Hill already contributes at three times the funding formula) nor address concerns about intra-regulator relationships.

Looking to the future, Ralph Topping said, “We are on track to deliver against the Board's expectations for the full year but we remain cautious moving into 2011 given the ongoing consumer uncertainty particularly affecting Retail OTC. We are confident that our strategy of expanding William Hill Online both in the UK and internationally whilst continuing to manage Retail tightly will strengthen our competitive position as the economic backdrop improves." (E-08.27.10)

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