Intelligent report for Investors (William Hill Plc)
Updated: Nov 26, 2019
2.1 William Hill PLC Key Company Facts
Headquarters: William Hill PLC Greenside House 50 Station Road Wood Green London N22 7TP UK
Contact: +44 (0)208+9183600 00800 35513551
Fax: +44 2089183775
Company Number: 4212563
Industry Sector: Gambling industry / Betting Industry, includes betting in almost all the games, and various slot machines.
Financial Year End: December
Type of Betting: Sports Betting, Poker, Casino, & Bingo Games
London Stock Exchange (LON) Ticker: WMH
1934 – William Hill, UK
1971 – Sears Holdings
1988 – Grand Metropolitan, Mecca
1989 – Brent Walker
1997 – Nomura, Japanese bank
William Hill (WMH) is one of the leading and familiar Bookmaker in the UK and is also listed in the top 3 online betting operator in Italy and Spain. Out of 8500 licensed Betting offices William hill owns 2,342 shops. WMH is now one of the leading betting company to clients in the UK, Spain and Italy (WMH, Annual Report, 2017). WMH started online betting in 1998 through websites, in 2008 the company entered a joint venture with Playtech and created WMH online, in 2009 William Hill took complete ownership of the Playtech Online Business, around 2.4 million clients bet with WMH online in 2017. The company is a Public Limited Company(PLC) is listed in the London Stock Exchange, and is a member of FTSE 250 and FTSE4, and the current CEO of the company is Ruth Prior (William Hill, Annual Report, 2017).
2.2 Change in Employee Numbers 2013-2017
Source: Financial Analysis Made Easy (2018) – William Hill PLC.
In the year 2013 the company had 17,089 employees Which was the highest compared, 2015 the company had the least Employees of 15,747 and employees started to increase at the end of the year 2017 with 16,436.
3.0 Key financial information:
3.1 WMH Financial Performance 2013-2017
WMH’s National turnover has raised from £1.4bn to £1.7bn Which is an increase of 6.7% from 2013 to 2017 respectively (Graph-2), however the turnover is highest in 2017, but the net profit/loss of WMH fell in the same year to - 83200 GBP (Table-1) as the administrative expenses were high was one of the reasons, though the company had less turnover in 2013 i.e. £1.4bn, the company’s profit was the highest figuring to a sum of 226500 GBP.
Source: Financial Analysis Made Easy (2018) – William Hill PLC and Mintel (2018)
The global net income has gradually dropped from 2013-2016 i.e. 9% - 13%, in the year 2017 all of a sudden the company experienced loss decreasing up to 150% (Graph-2). However, WMH anticipated 11% profit hike in 2017 due to retail and online gross win margin were ahead of expectations Which resulted in slow growth rate Whereas the net revenue increased in 2017.
Source: Financial Analysis Made Easy (2018) – William Hill PLC and Mintel (2018)
Key financial points from the WMH Annual Report (2017):
• Due to the increase trend in online betting the strategy of the company is to evolve technological infrastructure so that it meets the consumer needs in a significant way. • The boost to online revenues helped to push the shares up 6%, Which made them the biggest riser in the FTSE 350, even though the profit was down in the span of 6 months.
• Attracting gamblers those Who bet online using a tablet or a phone is a vital part of the business today.
• The rival for WMH is Ladbrokes Coral Group (LCG), Where both retains thousands of licensed betting shops in the streets of UK.
• The company aims to expand their sports betting in the US to enable a swift return to profit growth (The Sunday Telegraph, 2018).
3.2 Comparison of Key Financial Ratios:
WMH’s liquidity ratio has been maintained consistently between 0.83 and 0.71 from the last 5 years Which is closer to 1 and the company is able to maintain short term obligations, how-ever we can see a fall in the year 2015, Whereas LCG saw increase from 0.42 to 0.65 in 2015 and then dropped to 0.33 in 2016 Which indicates a poor financial year for LCG.
Source: Financial Analysis Made Easy (2018) – William Hill PLC
In 2013 WMH was highly geared Where the profits were also high minimizing the risk and gradually came down in the year 2016 Where the profits were low resulting in low risk, Whereas LCG geared up in 2014 Which is 128.21 Which is high risk for the company and slowly dropped to 87.76 in 2016 (Graph-4).
Source: Financial Analysis Made Easy (2018) – William Hill PLC
WMH has maintained low risk compared to LCG in terms of borrowing, however both LCG and WMH maintained low risk by the end of 2016.
4.0 Industry and Competitor analysis:
The Betting activities and Gambling industries are performing well from the past five years though there is weak income growth with various taxes and regulations, the growth in online gambling is growing high in recent years. The report focuses on William Hill betting shop and the other competitors in the field and try to analyse how the companies are performing overall (IBIS, 2018).
4.1 Market Share:
The top market leaders in the betting industry are Ladbrokes Coral Group (LCG) and William Hill (Graph-5) with 3,370 and 2,372 betting shops respectively. In 2017 WMH shut 41 shops and released eight new shops with an annual efficiency savings of £40 million. Paddy Power is the fourth leader in the market with 626 operating shops across UK and Ireland by the end of 2017 (Mintel, 2018).
4.2 Market Forecast
The estimation of consumer expenditure in betting industry is forecasted to be £m 4113 for the year 2021/22. Graph-6 shows a gradual increase in consumer expenditure every year, there is a 25% increase by the end of 2016 and it is forecasted about a 50% increase in 2021 compared to 2011. However, there are socio-economic factors influencing the betting industry, according to (Smith, 2016) BREXIT may be one of the impact as the betting industry is not governed at the EU level.
4.3 Advertising Expenditure and Social Media
The media advertising of betting industry grew by 15% in 2017, though the international football tournament in the year 2016 was called off Which lead to a spike in marketing investment. WMH maintained consistent levels towards investing for media advertising from 2015-2017, the competitors like LCG and Paddy Power increased their advertising (Table-2). WMH spent about £11.4 million on sport sponsorship in the year 2017 from £8 million in the previous year, whereas competitors like LCG reported spending £8 million (Mintel, 2018).
4.4 Social Media presence
The expenditure on advertising is consistent from 2015-2017, social media is best platform Which is cheaper and convenient to engage with consumers, the WMH Facebook page is https://www.facebook.com/WilliamHillSports/, the page has 601,069 likes and 586,417 followers and they reply within seconds Which was tested by the writer, and the page is very active they keep updated every 10hrs approximately. The page encourages users to login to their services by offering offers and discounts.
5.0 Key Issues affecting the company
5.1 Current Issues
• America withdraws its sports betting ban, this paved the way for Britain’s bookies to setup up business in the US (Gerrard, 2018).
• William Hill has agreed in ground breaking partnership with Atlantic City’s Ocean Resort Casino (Davies, 2018).
• The change Which might take place in 2019 that is Fixed odd betting terminals to £2 from£100 may affect half of the revenue of the bookmakers like WMH (Davies, 2018).
• Due to the maximum stake fixed by the government, the share prices of the betting industry fell across UK, WMH tumbled more than 6.5% on 17th May 2018 (Morrison, 2018).
• Australian online sports betting business of WMH would be sold to Crown Bet Holdings and Group founder Matthew Tripp for an equity value of £176m after the regulatory changes (Rovnick, 2018).
5.2 SWOT Analysis: William Hill (WMH)
The growth of betting industry through online gambling is growing in a fast pace in the recent years with the development in technology. WMH offers a wide variety of betting games to its customers with 2,372 betting shops in the UK, the main products by offered are, horse racing, greyhound racing, football and electronic online casino style gaming. WMH acquired 29% stake from Playtech in the William Hill online joint venture, so the company had ownership of online business which gave room to increased strategic and operational opportunities, which in return in 2015 the online customers grew by 9%, as of 2015 December the company had three million active online customers (William Hill plc, 2017).
The company entered into Australian market by launching a local website ‘WilliamHill.co.au’, this made WMH have a strong online presence and aims to increase profits with less operational costs (Mintel, 2018).
WMH generates about 80% of the revenue from the UK market, this could create risk if the business in expanded over different geographic areas, if there is any affect to the industry through the socio-economic change in the UK, though the revenue is high in 2017 compared to previous four years the company has faced loss as the expenditure in various fields has increased (Fame, 2018). Due to the growth in online gambling there might be less individuals participating in the betting shops.
According to Statista (2018) the online gambling market from 2009 to 2017 is almost doubled, and forecasted to be 59% in the year 2020, initially in 2009 the online gambling was 20%, there is very rapid growth in the online gambling. As a strong industry in online this is a good benefit for WMH to improve their online business and can also cut down the costs to improve profits. The casino and betting market shows a steady growth in the UK and customer expenditure also in growing steadily in the recent years, it is estimated that the betting market is going to have an increase of 6.5% in the year 202o since 2015 (Mintel, 2018).
Although William Hill is well positioned in the betting market, it has an intense competition pressure from several other competitors in the field, the intense competition may affect the company market share, as stated above the decision above the fixed odd betting may be affected to the company in bringing down the share prices and revenue.
The company has to follow the rules which are led by gambling Commission and other trade organizations, where the organizations change the rules and regulations constantly which may affect the company which may restrict the operations of WMH which may significantly add expense to the company (William Hill plc, 2017).
6.0 Market Analysis
6.1 Market Demographics
The online method has taken over the betting shops with an increase of 1% in one year and a drop of 2% in betting shops, a clear picture is shown in graph-7.
The maximum betting participation done in the shops are on Horse racing which is 70% of the bets and the next highest bets are done on football in shops (Graph-8).
6.2 Customers and Social media
The customers for this market is individuals aged from 45-54 in the year 2018, and the second age group who spend on this market are aged between 25-34, the market can improve if focused on other age groups which can drive the company into profits (Graph-9).
The presence of WMH on the Facebook page (https://www.facebook.com/WilliamHillSports/) is highly active and very fast in giving response to their customers and the posts are encouraging people to communicate about the game in their comments. Frequent posts on social media makes them highly active on social media. Other social media like Twitter (@WilliamHillPLC) and linkedin (www.linkedin.com/company/william-hill).
7.0 Conclusion and Recommendations for Potential Investors
Betting is becoming one of the lucrative business activities in the entire world in general and UK in particular. There is a vast scope for the industry to expand as there is increase in sports activities. Cricket betting through online is widening its scope. As mentioned in the report, there are many strengths and also opportunities. This activity generates employment opportunities, revenue to the government and the entrepreneurs. The share price of WMH was £464 in 2013 and gradually it has dropped to £323 (London Stock Exchange, 2018) today which is a good time to invest in the company as the forecast in the industry is almost the double, there are so many chances to earn profit if invested. Though betting is not advisable but the people involved in betting therefore, the investors can venture into this business to make more profit. However the Gambling commission rules may change according to time which may not satisfy the company and may be prone to some loss.
Boles, T. (2018, May 30). WM Hill US deal TRACEY BOLES pg 43. The Sun (england) Retrieved from: https://www.nexis.com/results/enhdocview.do?docLinkInd=true&ersKey=23_T27587674167&format=GNBFI&startDocNo=1&resultsUrlKey=0_T27587706458&backKey=20_T27587706459&csi=234674&docNo=5
Davies, R. (2018, May 17). The Fixed-odds betting terminals Retrieved from: https://www.theguardian.com/uk-news/2018/may/17/maximum-stake-for-fixedoddsbetting-terminals-cut-to-2
Gerrard, B. (2018, May 20). Britain’s bookies set for US touchdown; retrieved from pg5 .The Sunday Telegraph. Retrieved from: https://www.nexis.com/results/enhdocview.do?docLinkInd=true&ersKey=23_T27585488512&format=GNBFI&startDocNo=0&resultsUrlKey=0_T27585488514&backKey=20_T27585488515&csi=334988&docNo=18
IBIS 2018 Gambling and betting activities UK Market Research Report Retrieved from: https://www.ibisworld.co.uk/industry-trends/market-research-reports/artsentertainmentrecreation/gambling-betting-activities.html
Londonstockexchange.com. (2018). WILLIAM HILL share price (WMH) - London Stock Exchange. [online] Retrieved from: http://www.londonstockexchange.com/exchange/pricesandmarkets/stocks/summary/company-summary/GB0031698896GBGBXSTMM.html
Mintel (2018), Betting Shops UK – April 2018. Retrieved from: Mintel Academic database.
Mintel (2018), Sports Betting UK – August 2017, Retrieved from: Mintel Academic database.
Mintel (2018), Betting Shops UK – December 2017, Online Gaming and Betting 2017, Retrieved from: Mintel Academic database.
Morrison. (2018).Hundreds of William Hill stores at risk of Clousure after government FOBT Decision pg6.The Independent-Daily Edition. Retrieved from: https://www.nexis.com/results/enhdocview.do?docLinkInd=true&ersKey=23_T27587674167&format=GNBFI&startDocNo=1&resultsUrlKey=0_T27587722223&backKey=20_T27587722224&csi=8200&docNo=24
Rovnick, N. (2018 March 6th).William hill sells Australia unit to crown bet after writedown. Financial Times Retrieved from: https://www.ft.com/content/9982ce76-210c-11e8-a895-1ba1f72c2c11
Smith, K. (2016). How will Brexit impact the betting and gaming industry? Retrieved from: https://www.sis.tv/news/how-will-brexit-impact-the-betting-and-gaming-industry/ William Hill PLC Official website Retrieved from: https://www.williamhillplc.com/