William Hill announced in a trading update issued Tuesday the company has seen strong recovery in the recent weeks, related to the easing of restrictions and the gradual return of sporting events. Despite the trading backdrop remaining uncertain, the online gambling operator is encouraged to see both its online and US divisions perform ahead of expectations.
Cash Flows Reduced, Windfall from the HMRC
William Hill outlined that its financial position has strengthened as the cash outflow posted in the previous update, May 15, was reduced, allowing the company to repay £203 million of outstanding debt on the 2020 bond. The UK-based gaming operator has now unrestricted liquidity in excess of £500 million and the opportunity to generate positive cash flow during the second part of the year.
On top of that, liquidity during the second half of 2020 will be boosted by a material refund of VAT due to the latter being incorrectly applied to fixed-odds betting terminals (FOBTs) operations. The gambling industry led by Betfred and Rank Group won the legal battle with the HMRC last month, and William Hill, after further engagement with their legal advisors and the HMRC, is expecting a VAT refund roughly equivalent to the bond repayment value.
Table Tennis Keeping Interest Despite the Return of the King
William Hill’s sports betting vertical improved significantly throughout the period as horse racing resumed action, shortly followed by the German Bundesliga, alongside the continuation of wagering by customers during March and April on the less popular sports such as table tennis. Betting on these sports events continued to be high despite the return of football, much to the surprise of the sports book operator.
The lagging so far retail vertical is expected to gain traction as betting kiosks are permitted to re-open in the UK in phases, a re-opening that will coincide with the popular horse races at Royal Ascot Festival and the return to action of the much anticipated games from the Premier League. Betting outlets of the company will be gradually re-opening with a deliberate focus on the most profitable footfall anticipated. Retail will re-open implementing measures to ensure distancing and the protection of clients and employees.
William Hill outlined its US operations significantly profited from the availability of alternative sports, as well as the resumption of the NASCAR Series and UFC in May. Despite casinos in Nevada being shut down making almost impossible to fulfill the requirement to register in person for online betting for the William Hill mobile app, the operator found a way around this limitation by utilizing drive-through sports books, an approach that proved popular and helped re-engage customers online.
“While we remain cognisant that sports betting activity and retail footfall are likely to remain uncertain throughout the rest of 2020 and into 2021, our mitigation strategies have reduced costs, retained liquidity and ensured that capital expenditure related to growth plans has been preserved.”William Hill