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Thursday, 13 December, 2018

William Hill report strong results but Australian business under review

William Hill: revenue up for start of 2018
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William Hill could pull out of the Australian market after launching a strategic review of the business in the face of increased regulation and taxation.

The news came on Monday as the bookmaker brought forward a trading update which revealed the company’s overall profits for 2017 would be ahead of expectations, thanks to a run of favourable sports results.

Hills' Australian arm was created through the acquisition of Sportingbet, including the Centrebet brand, and in 2013 and employs around 325 people based in Sydney, Darwin and Manila.

However, they have found the environment tough, with the industry facing similar criticism and regulatory pressures to those present in the British market.

The company had tentative talks about a deal with rivals Crownbet which came to nothing, and do not have the scale of the dominant players in Australia Sportsbet, owned by by Paddy Power Betfair, and the newly merged Tabcorp and Tatts Group.

The company said: "Given the credit betting ban in Australia and the likely introduction of a point of consumption tax in a number of states, it is clear that profitability will increasingly come under pressure and therefore we are undertaking a strategic review of our Australia business."

Hills said full-year adjusted operating profit for 2017 was expected to be around £290 million, up 11 per cent on the previous year.

A statement read: "This is ahead of expectations, reflecting good momentum in both the UK and US markets, stronger gross win margin and the benefits of the transformation programme."

It added that retail and online gross win margins were ahead of expectations, and significantly ahead of the same period in 2016 "due to favourable football and horseracing results" in the nine weeks after their previous trading statement on November 20.

While Australia has been challenging for Hills, the company's business in the US puts them in a good position should the Supreme Court allow wider legalisation of sports betting.

Chief executive Philip Bowcock said: "We have delivered a strong result in 2017, reflecting our focus on rejuvenating online, growing the US and building an attractive omni-channel proposition.

"At the same time, we are continuously improving how we enable customers to gamble responsibly. We are excited about the opportunities ahead in 2018 – a World Cup year – with our competitive position reasserted in the UK and with the potential for sports betting to open up in the US."

The City is waiting to see whether Hills will be the next major gambling company to get involved in the consolidation sweeping the industry following GVC's planned takeover of Ladbrokes Coral.

There has been speculation Hills might try to resurrect a deal with Canadian gaming company Stars Group as the sector waits for the results of the government's review of FOBT stakes.

Analysts at Goodbody said it was a "very positive update" but added: "Longer term as a standalone entity we continue to highlight that the triennial review has the potential to severely impact profits."

Hills' share price ended Monday down 0.3p at 335p.

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It is clear that profitability will increasingly come under pressure and therefore we are undertaking a strategic review of our Australia business
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