TIDMWMH
RNS Number : 9820M
William Hill PLC
15 May 2020
William Hill PLC
Trading Statement and covenant waiver
15 May 2020
William Hill PLC (LSE: WMH) (William Hill or the Group), one of
the world's leading betting and gaming companies, provides a
trading update for the unaudited 17 weeks to 28 April 2020 and
COVID-19 update.
In response to the COVID-19 pandemic we have acted swiftly and
responsibly to protect our customers and colleagues and to ensure
the future of William Hill. We have implemented decisive mitigation
strategies to minimise cash outflow, reduce our cost base, and
preserve our long-term growth opportunities.
-- Strong performance achieved in international markets, led by
growth in gaming, reflecting continued investment in product
enhancements.
-- Material impact from the absence of live sport and social
distancing requirements leading to the closure of the UK and US
retail estates.
-- Revolving Credit Facility (RCF) covenants waived for 2020 and
reset for 2021, cash burn reduced to c.GBP15m per month and
liquidity in excess of GBP700m.
-- Well positioned across the Group to 'power up' quickly as
live sporting events resume and health considerations permit.
To aid transparency we have split this trading update into two
parts: weeks 1-10 (pre-Coronavirus) and weeks 11-17 (Coronavirus).
For completeness and historical comparison, the full figures for
the 17-week period can be found at the end of this statement.
Weeks 1-10: Pre-Coronavirus (period to 10 March):
In GBP (1)
------------------------- -----------------------------------------------------------------
Total net Gaming Sportsbook Sportsbook Change in
revenue net revenue amounts gross win gross win
wagered margin margin
-------------------------- ---------- ------------- ----------- ----------- -----------
Online +16% +9% -6% 10.0% +2.2 ppts
Online UK +7%
Online International +35%
Retail Like-for-like(2) -3% -30% +17% 21.0% +2.0 ppts
US +30% +26% 7.4% +0.3 ppts
-------------------------- ---------- ------------- ----------- ----------- -----------
Group -5% -24% 0%
Prior to the impact of the Coronavirus pandemic, disruption to
sporting activities and the closure of the retail estate as a
result of social distancing requirements, the Group generated a
robust performance across all business areas.
o In line with our ambition to diversify internationally, 29% of
revenue was generated outside the UK compared to 20% during the
same period last year;
o Online International net revenue grew 35% driven by a strong
performance in gaming. Mr Green, which was launched in Spain during
the period, and new product developments - a new sportsbook front
end and a single wallet - have gained traction in Italy and Spain.
On a pro forma(3) basis Online International grew 11%;
o Online UK grew in line with expectations as net revenue grew
7% or 6% on a pro forma(3) basis. During the period, both NPS and
customer satisfaction scores saw material increases reflecting the
launch of a new gaming front end and improvements made to the user
experience;
o Retail like-for-like (2) growth, which was impacted by the
implementation of the GBP2 stake limit on 1 April 2019, was
resilient as customers continued to substitute gaming with sports
betting;
o Our US business continued to perform strongly driven by
positive momentum in sportsbook wagering and gross win margin
expansion.
Weeks 11-17: Coronavirus-impacted (period 11 March to 28
April):
In GBP(1)
------------------------- -----------------------------------------------------------------
Total net Gaming Sportsbook Sportsbook Change in
revenue net revenue amounts gross win gross win
wagered margin margin
-------------------------- ---------- ------------- ----------- ----------- -----------
Online -21% +6% -56% 8.3% +0.1 ppts
Online UK -33%
Online International +5%
Retail Like-for-like(2) -85% -82% -83% 13.8% -4.8 ppts
US -90% -86% 5.4% -0.9 ppts
-------------------------- ---------- ------------- ----------- ----------- -----------
Group -57% -33% -70%
o Online sports wagers declined although less than anticipated
as our customers continued to place bets on alternative products
such as table tennis and emerging market football;
o Online UK was materially impacted by the reduction in sporting
activity with some substitution from sports betting into
gaming;
o Online International benefitted from continued strong growth
in gaming, some substitution from sports betting and increasing
traction from product developments launched late last year;
o UK and US retail have been effectively closed for the
period;
o In the US, where we offer online sports betting in four
states, we continued to take wagers on alternative activities.
Product development has accelerated throughout the period and we
will be launching online casino in the second half of the year.
During this time all of our shop colleagues have been furloughed
and we are topping up payments to ensure they receive 100% of their
pay.
Mitigating activities, financial position and bank covenants
Given the absence of live sports content and social distancing
requirements across our major geographies, we took decisive action
as the COVID-19 pandemic unfolded to reduce cash outflow and
operating costs, retain liquidity and secure financial
flexibility.
We have reduced monthly cash outflow to c.GBP15m through the
following actions:
o Reducing staff costs by deferring recruitment, cancelling
salary increases and all bonus payments and incentive schemes for
2020, furloughing employees and utilising government support
schemes, including business rate relief;
o A reduction in marketing spend;
o Thoughtful supplier management including cost deferrals and
reductions.
At the end of the reporting period the Group's unrestricted
liquidity was in excess of GBP700m. As the COVID-19 pandemic began
to unfold, RCF facilities totalling GBP425m were fully drawn down
to maximise liquidity and a number of strategies were implemented
to retain cash within the business:
o The suspension of dividend payments until further notice;
o The deferral of non-essential capital expenditure;
o Rigorous working capital management.
In order to provide maximum financial flexibility for the Group
through this challenging period, we are pleased to have agreed a
covenant waiver with our lending group of banks:
o A covenant waiver has been granted up to and including
December 2020;
o Thereafter, the net debt covenant has been amended to 4.5x in
June 2021 and 4.0x in December 2021, returning to 3.5x in June
2022.
We conclude the period in a strong financial position with
significant headroom. The outstanding amount on the 2020 bond of
GBP203m is scheduled for repayment in June and we have ensured that
capital expenditure related to growth opportunities has been
preserved, enabling us to press ahead with our plans to grow the US
business and continue to develop our product. In collaboration with
our partners, suppliers and colleagues, we have ensured the
business is positioned to bounce back quickly and strongly when
conditions return to normal.
Customer protection and regulatory activity
We acted early to undertake additional safer gambling measures,
including a six-fold increase in the volume of responsible gambling
messages sent to our customers. Where relevant we have implemented
safer gambling 'guard rails' to ensure player safety and we will
continue to take decisive action to protect our customers.
In the UK we are fully committed to adhering to the COVID-19
pledges put in place by the Betting and Gaming Council (BGC) on 27
March which build on the actions already made to safeguard our
customers. We, along with the UK's other largest betting and gaming
operators, voluntarily adopted the TV and radio gaming advertising
ban which will remain in place until 5 June.
The UK credit card ban came into force on 14 April 2020 and we
implemented the ban on time and in full. We saw no material drop
off in deposits and we will be able to gauge the longer-term impact
more accurately when sports betting resumes.
We welcome the Gambling Commission's publication of their
research on 12 May 2020 which confirmed there was no evidence of an
increase in problem gambling behaviours during the Covid-19
lockdown. The Gambling Commission also published formal guidance
for online operators during lockdown and we will review the
measures that we have already implemented against that guidance, to
ensure we are taking sufficient action to protect our customers and
are following that guidance.
Outside the UK, the regulatory environment remains fluid with a
variety of measures adopted across Europe. We saw developments in
Spain, Latvia and Sweden restricting advertising and proposing
further consumer protection measures. We have also seen ongoing
regulatory activity (both in licencing and payment processing) in
Germany and The Netherlands.
We continue to keep a close watch on, and engage with,
regulatory activity but clearly uncertainty remains in this
area.
Scenario analysis
As Government restrictions begin to relax and sporting events
gradually recommence, we will continue to monitor developments
closely. Our plan to 'power up' the business is designed to be
flexible and responsive, with customer and colleague welfare our
highest priority.
We are planning for a staged opening of the UK retail estate in
the second half of 2020 and we are carefully monitoring
developments across the US in the nine states where we have retail
activities.
In our previous update on the 16 March 2020 we outlined a
scenario where limited sporting activity until the Autumn, and one
month of shop closures, would lead to a reduction in EBITDA of
GBP100m to GBP110m. As a consequence of the COVID-19 mitigation
activities, we are performing ahead of the initial scenario which
now incorporates three months of shop closures.
Furthermore, each additional month of shop closures will now
lead to a reduced EBITDA impact of GBP12m to GBP15m, assuming the
continuation of Government support for furloughed workers,
approximately half of the initial estimate of GBP25m to GBP30m.
In light of the limited visibility regarding the nature and
duration of COVID-19 related restrictions, we are withdrawing all
future guidance.
As attention turns to the resumption of sports activities, we
note some encouraging recent updates:
-- Football, which accounts for approximately half of Online UK
sportsbook, is expected to recommence in May as the German
Bundesliga returns to play behind closed doors;
-- Horseracing, which contributes nearly a third of Online UK
sportsbook, has resumed in France and is expected to return behind
closed doors in the UK in June;
-- While this is clearly an evolving situation, there are
positive signs that some sports organisations are considering the
resumption of live sports behind closed doors as early as this
summer.
Ulrik Bengtsson, CEO, commented:
"William Hill has overcome many challenges in its 86-year
history, and I am exceptionally proud of the team and their
response to the COVID-19 pandemic. We have worked hard to protect
them, and in turn they have done the same for our customers.
"We reacted quickly to the cancellation of sports activities and
the closure of our retail estate. We took immediate measures to
save costs, reduce cash outflow and minimise non-essential
expenditure by negotiating with our suppliers, cancelling pay rises
and executive bonuses and suspending the dividend. We have
preserved liquidity and amended the terms of our net debt covenant,
leading to significant, balance sheet headroom. This will enable us
to continue to invest for growth, most notably in the US, as plans
there to roll out sports betting continue apace.
"Our ambition to build a digitally led, internationally diverse
business of scale is proving beneficial during the disruption as
our international online business has performed very strongly. We
have accelerated product developments in the US in particular to
ensure we are well positioned when sports activity reopens. Our
product development teams elsewhere have also excelled themselves
during this period of remote working, deploying a range of
important new products, most notably a gaming front end to improve
navigation and speed for the UK market.
"We remain focused on player safety employing ever more customer
protection. We are taking care of our teams, securing as many
employment opportunities as possible and we are ready to power up
the business as soon as COVID-19 restrictions permit.
"Our strategy for the Company remains a simple one - to win with
our customers, build agile collaborative teams, and get things done
- execution. We are developing products that we are proud of and
that will improve William Hill's competitiveness for the long
term."
Analyst conference call
Ulrik Bengtsson, CEO, Ruth Prior, CFO, and Matt Ashley, CFO
(Designate), will host a conference call for analysts at 8:00 a.m.
BST today. Dial-in details for the call are:
Telephone: +44 20 3936 2999
Participant code: 037434
A replay of the call will be available until 22 May 2020.
Dial-in details for the replay are:
Telephone: +44 20 3936 3001
Replay code: 086999
Trading for the consolidated 17-week period to 28 April 2020
In GBP(1)
------------------------- -----------------------------------------------------------------
Total net Gaming Sportsbook Sportsbook Change in
revenue net revenue amounts gross win gross win
wagered margin margin
-------------------------- ---------- ------------- ----------- ----------- -----------
Online -1% +7% -28% 9.5% +1.5 ppts
Online UK -11%
Online International +21%
Retail Like-for-like(2) -35% -47% -29% 20.2% +1.4 ppts
US -16% -19% 7.2% +0.5 ppts
-------------------------- ---------- ------------- ----------- ----------- -----------
Group -27% -27% -31%
Notes
1. Growth rates are based on statutory results unless stated otherwise.
2. Like-for-like (LFL) presents the cumulative results for the
period on a same-shops basis (excluding those permanently closed in
the prior and current year but including those temporarily closed
due to Covid-19).
3. Where pro forma results are stated, this assumes Mr Green was
consolidated into the Group at the beginning of January 2019, in
order to provide a meaningful comparison.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation EU 596/2016. The person
responsible for arranging the release of this announcement on
behalf of William Hill PLC is Simon Callander, General Counsel and
Company Secretary.
OAM: Additional Regulated Information
William Hill LEI: 213800MDW41W5UZQIX82
Enquiries
=============================================================
William Hill Louise Turner-Smith, Director of Tel: +44 (0) 20 7612
Investor Relations 3251
Alison Cole, Director of Corporate Tel: +44 (0) 20 7612
Communications 3233
Brunswick Andrew Porter / Samantha Chiene Tel: +44 (0) 20 7404
5959
About William Hill
===============================================================
William Hill PLC is one of the world's leading betting and
gaming companies, employing c.12,000 people. Its origins are in the
UK where it was founded in 1934, and where it is listed on the
London Stock Exchange. The majority of its GBP1.6bn annual revenues
are still derived from the UK, where it has a national presence of
licensed betting offices and one of the leading online betting and
gaming services. William Hill's European Online business is
headquartered in Gibraltar and Malta, and is licensed online in 10
countries following the acquisition of Mr Green & Co AB in
January 2019. In 2012, it established William Hill US with a focus
on retail and mobile operations in Nevada and became the largest
sports betting business in the US. Following the ruling in May 2018
by the Supreme Court that the federal ban on state sponsored sports
betting was unconstitutional, William Hill US has expanded and
continues to expand as new states regulate sports betting. It is
now operating in nine states: Delaware, Indiana, Iowa, Mississippi,
Nevada, New Mexico, New Jersey, Rhode Island and West Virginia in
addition to Washington DC. Eldorado Resorts, Inc. currently owns
shares representing 20% of the share capital of William Hill US
Holdco, Inc., the holding company of William Hill US.
Cautionary note regarding forward-looking statements
=====================================================
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "plans", "goal", "target",
"aim", "may", "will", "would", "could" or "should" or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout
these results and the information incorporated by reference into
these results and include statements regarding the intentions,
beliefs or current expectations of the directors, William Hill or
the Group concerning, amongst other things, the results of
operations, financial condition, liquidity, prospects, growth,
strategies and dividend policy of William Hill and the industry in
which it operates. By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future and
may be beyond William Hill's ability to control or predict.
Forward-looking statements are not guarantees of future
performance. The Group's actual results of operations, financial
condition, liquidity, dividend policy and the development of the
industry in which it operates may differ materially from the
impression created by the forward-looking statements contained in
these results and/or the information incorporated by reference into
these results. In addition, even if the results of operations,
financial condition, liquidity and dividend policy of the Group and
the development of the industry in which it operates, are
consistent with the forward-looking statements contained in these
results and/or the information incorporated by reference into these
results, those results or developments may not be indicative of
results or developments in subsequent
periods. Other than in accordance with its legal or regulatory
obligations ( including under the Market Abuse Regulation
(596/2014), the Listing Rules, the Disclosure Guidance and
Transparency Rules and the Prospectus Rules ), William Hill does
not undertake any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information,
future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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