Finance viewpoint: Ladbrokes vs William Hill
Ladbrokes and William Hill reported interim results last month, with Hills appearing simply to outpace Ladbrokes. But look beneath the surface and the situation is less clear, argues James Hollins, leisure analyst at broker Daniel Stewart.
LADBROKES AND WILLIAM Hill reported interim results last month and the major focus was on their online operations because of William Hill’s deal with Playtech last year, as well as the confirmation of the switch of both bookies’ online sportsbooks to Gibraltar.
With regards to trading, William Hill announced a 58% increase in egaming net revenue to £100m for the six months to 30 June 2009. This was principally driven by the Playtech deal, although underlying net revenue growth was a stellar 12%.
Sportsbook revenue fell by 1% on the back of a well-publicised weak margin (wagering volume grew by 9%) due to tough football trading in May, poor National Hunt Festivals (Grand National excluded) and unattractive flat racing.
Casino and bingo were up by a base 21% and 15% respectively, although poker fell by 15% due to the Playtech migration from Cryptologic and tough competition.
Ladbrokes reported online net revenue of £84.6m, representing a decline of 2% due to a margin-related sportsbook decline of 5% (wagering volume was up by 11%), flat casino revenue while poker was down 14%.
Comparing the figures, William Hill has had a seemingly superior performance in the key products, with higher bottom line casino growth and a lower sportsbook decline.
But Hill’s figures are against easier comparatives in pre-Orbis sportsbook trading during the first half of 2008.
However, its overall revenue growth should be applauded and we believe that William Hill is set to continue to outperform Ladbrokes, with improved online operations and a superior pan-European online growth profile.
Finally, it was announced by both groups that they are moving their online sportsbooks to Gibraltar, saving estimated annual costs of around £8m-£10m each due to lower operating costs, taxes and horse racing levies. Naturally, these cost savings and efficiencies are very welcome, although the UK racing industry is unlikely to agree with me.
This article first appeared in the September issue of eGaming Review.