William Hill has reduced its ‘cashburn’ and further restructured terms on its debt bonds, as the company secures full financial flexibility navigating COVID-19 headwinds.
Publishing both a Q1 trading update for the unaudited 17 weeks to 28 April 2020 as well as a COVID-19 update, William Hill revealed that retail closures, a drop in sports betting markets and international coronavirus lockdowns had hampered operations during the period.
The operator divided its update into a pre-Coronavirus period (the period to 10 March), and the COVID-19 impacted period (period from 11 March – 28 April).
Prior to international lockdowns, group total net revenue fell by 5%. US operations continued to drive growth, with a 26% increase in sportsbook amounts wagered, and a 30% increase in total net revenues.
Sportsbook amount wagered fell by 6% for the group’s online division, with a 7% growth in UK online total net revenues.
In the period from 11 March – 28 April, William Hill revealed a 57% slump in group-wide total net revenue driven by a combination of retail closures, a drop in sports betting markets and international coronavirus lockdowns.
The operator also confirmed that it is targeting a H2 ‘phased reopening’ of its retail estate across the UK, and is ‘carefully monitoring developments across the US in the nine states where it is in operation.
The drop in online sports wagers was ‘less than anticipated’ for the group, with customers ‘continuing to place bets on alternative products such as table tennis and emerging market football’.
Total net revenue in the US took the largest hit, having fallen by 90% in the seven weeks to April 28, while retail like-for-like dropped by 85%.
The operator currently offers online sports betting across four states, and confirmed that it ‘will be launching online casino in the second half of the year’.
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.”
William Hill also addressed previous guidance issued on COVID-19 contingency measures, revealing that each additional month of shop closures to impact core earnings by up to £15 million – which equates to approximately half of the initial estimate.
The bookmaker further confirmed that it has waived its Revolving Credit Facility (RCF) covenants for 2020 – which will see William Hill defer payments on £200 million bond deferred to 2021/2022.
Undertaking analysis of COVID-19 developments, William Hill stated that due to ‘limited visibility’ regarding the duration of ‘virus related restrictions’, the company would withdraw all future guidance.
Instead, the betting group will focus its resources on the resumption of sports beginning with this weekend’s restart of the German Bundesliga and UK and French horseracing taking place in June.
Bengtsson added: “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.”