William Hill Continue to Struggle with their Online Casino Division

It’s been a tough old time for William Hill Plc these last few years.  The popular and well recognised UK high street bookmaker has continued to struggle with it’s online casino and gambling division.  It’s full year results for 2016 were released publicly on their website last month, and it certainly makes interesting reading.

Over the last 5 years, the online division of William Hill has struggled to keep pace with more dynamic, smaller rivals, particularly since the ending of their joint-venture partnership with Playtech.  In particular it can be argued that their online casino platform has been a little too generic, especially when compared to a number of new entrents in recent years, particularly from Scandinavian operators such as Casumo Casino.

Though it’s not only the online division that have been struggling at William Hill.  Whilst revenue for the year was up 1%,  underlying profit, a more indicative measure of business performance, was down 10% to £261.5m.  This is surprising given the inclusion of the Euro 2016 football tournament, a major event that would normally boost annual results.  The good news for investors is that both the Retail and Australian Divisions performed well throughout the year.

Yet it’s also clear that 2016 represented a year of technological development within William Hill.  A redesigned sportsbook platform was launched in June 2016, and whislt this has clearly offered a better customer experience, it’s apparent that other areas within the business have struggled.  So much so, that a change of leadership occured in the online division during the year.  However, analysts have been quick to point out that key performance indicators have been a concern, particularly the lower revenue per customer figures thathave been reported.

It’s clear that 2016 has been another year of ‘transition’ for William Hill.  With a saturated UK market, it’s apparent that growth lies in international markets in the United States (Nevada), Spain and Italy.  However the issue of regulation is one that looks likely to continue to restrict growth into new markets, particularly in Europe.  For example, the Swiss online casino and sports betting market in would be a market where William Hill could leverge their brand awareness and recognition, yet this market remains unregulated and therefore ‘out of bounds’, for the mean time anyway.

Though it looks as if the William Hill Board are getting on top of things.  Whilst financial results were “below what the Board expected at the start if this year”, it’s clear that they came close to their revised figures.  It should be an interesting year for them, and we look forward to seeing how they perform, particularly in respect to their online casino and gaming products.

William Hill Goes from Strength to Strength

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“A 16% increase in the net revenue,” reported Britain’s biggest bookmaker – William Hill.  Now that William Hill celebrates its 80th anniversary this year, much of the success that this traditional firm has experienced is a direct result of its transformation over the past five years. From Britain’s traditional chain of high street betting shops, William Hill have diversified its focus to it’s online gambling operations, and have extended their reach to new and emerging markets, some of which have proved extremely lucrative, judging by the latest financial results released to the market.  In fact the Australian gambling market has attributed a considerable amount to William Hill’s success this year with revenue for the 52 weeks to December 31 rising 16pc to £1.5bn.  It’s clear that the obsession ‘down under’ with Aussie slots and other forms of gambling, should in theory continue to contribute handsomely to William Hill’s success in this market, particularly as their brand gains more recognition amongst their Australian audience.

William Hill achieved this success despite the introduction of a new tax on gaming machines last year. The annual sales posted by William Hill were £1.3 billion, but its pre-tax profit fell to 7 percent i.e. £277.7 million. This was because of significant one off costs associated with  incorporating the newly acquired Sportingbet business into the William Hill empire. Once these exceptions are put aside, William Hill reported an operating profit up 1 percent which is £330.6 million. Net revenue from online business jumped 10 percent to £446.3 million and 8 percent increase to £907 million from its high street shops. The numbers continue to show the process of growth in William Hill’s strength.

The sports book side of the business continued its strong performance with revenues up to 29 percent. William Hill also successfully attained the remaining 29 percent stake of William Hill Online from Playtech and made important investments in this regard. One of the major boosters of William Hill is now mobile gaming. William Hill reported a 166 percent growth in mobile gaming net revenue. RalphTopping, William Hill’s outspoken but highly respected CEO said: “Our focused transformation of the group over the last five years means William Hill is now one of the world’s leading multi-channel betting and gaming businesses, with revenues diversified through the rapid growth of online and through careful expansion into selected international markets.”  With the business now firmly established within the Australian sector, the future looks bright for William Hill, particularly if they can grab a share of the lucrative Aussie slots market, where popular games from Aristocrat and IGT have continued to boost the financial performance of a number of William Hill’s rivals.

Another significant investment of William Hill in online market share is the launch of websites williamhill.it and Williamhill.es for Italy and Spain respectively. Moreover, William Hill launched mobile gaming in Italy and effectively incorporated the Miapuesta brand in Spain. William Hill strengthened its position in Australia by completely procuring Sportingbet and Tomwaterhouse.com. The expansion of revenue in online business and Australia paid back in the form of 48 percent of operating profit. Also, there has been an increase of 15 percent of net revenue from international markets. Ivor Jones, analyst at Numis, said he believed William Hill “overpaid” for its acquisitions last year. But he added: “It now has control of its online destiny and market leadership in Australia. These are the foundations on which a thriving international online business can be built. We believe the current share price does not reflect the scale of the opportunity.”

William Hill’s annual results have been compared with its rival Ladbrokes which shows 66 percent decline in a whole year’s pre-profits to £67.6million. Ladbrokes has been struggling to improve its online business to compete with rivals such as Bet365 and William Hill.

Apart from these successes, William Hill’s business is expanding namely from gaming machine estate (3% increase) and also over the counter betting which remained strong throughout the year, rising by 2 percent. All of the areas of the business mentioned have brought good profits to William Hill. Overall, the year 2013 proved to be very good for this biggest bookmaker.

A novel view of accounting

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Accountants and tax

Accountants are well placed to address both your personal and business tax matters.  However, please be aware that tax is a complex area, and whilst many accountants have a broad range of tax skills and experience, for more complex matters you may need to use the services of a tax accountant.  In this article we take a look at the main areas of tax that your local chartered accountancy firm is likely to be able to assist you with.
Personal Taxation:

As Greg Roberts & Shantaram have stated on numerous occassions, personal taxation is becoming an increasingly complex area and the HMRC are active in ensuring penalties for non-compliance and imposed.   Your chartered accountant is best placed to assist you with personal tax issues and particularly in respect to completion of annual Self Assessments.  In many cases local accountancy practices use third party software, which makes the whole Self Assessment process easier and smoother.  In particular your local chartered accountant will be able to assist with tasks such as calculating your tax liability, completing tax returns and advising you of exactly how much to pay and when these payments are due.

Personal Tax Planning:
Proactive tax planning can ensure your tax liabilities are minimised and it is for this reason that all accountants advise their personal clients that they should proactively manage their tax affairs.   Working with your local chartered accountant in advance of the financial year end will help you ensure that you are in the best position to optimise your tax liability as well as ensure that all compliance requirements are legally met.

A key element of personal tax planning relates to estate planning and how best to ensure your estate is well managed from an accounting tax perspective.  Naturally this is not a popular topic amongst clients, but by addressing the issue with your local chartered accountant you will be in a better position to ensure that your wealth is maximised when it is passed onto your family.  Accountants will be able to assist you with this process, as they will be up to date with the current tax arrangements and legislation.  The current trend in this area that is popular with chartered accountants is to establish trusts, a method which is seen as a tax efficient way of passing assets onto future generations.

Corporation Tax:
Most chartered accountancy practices would agree that the HMRC has over the last few years become increasingly aggressive in their pursuit of non-compliance in all issues related to corporation tax.  Again, this can be a complex area and you should seek professional advice from a qualified chartered accountant.  The legal responsibility for accurately calculating corporation tax actually lies with the directors of a business, a fact that many business owners are unaware of.  Always seek professional advice on corporation tax matters – your accountant will be only too happy to explain how tax is calculated under the Corporation Tax Self Assessment (CTSA) scheme.

Accountancy for authors

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The vast majority of novelists are self employed, yet few fully  understand the different company structures that they can set up to both help them effectively run their business as well as protect their personal assets from their business liabilities.

Here in the UK, most authors such as Greg Roberts & Shantaram, decide to go down the self employed route, though whilst this is certainly convenient it offers little protection as this form of business structure is simply an extension of your personal life. It’s worth having a brief chat with your local chartered accountant to see if this structure is suitable for you, particularly in respect to how you manage and account for your expenses in the business and whether you are VAT registered.   There is an actual financial figure that your accountant will be able to give you at which point it is generally accepted that it would be more financially beneficial to move from a self employed basis to another company structure – in most cases a limited company.

Operating as a limited company certainly has a number of benefits.  The main advantage is that it separates your personal life from your business one, and your liability is generally limited to the amount that you have invested in shares in the business.  Your local chartered accountant would be best placed to advise you if establishing this type of company is in your interests, and this will depend heavily on your current earnings, expenses and attitude to risk.  Your accountant will be able to setup a limited company for you within a couple of hours, but be warned, there will be costs involved and you will be required to submit accounts and annual returns to Companies House on an annual basis.  This information is in the public domain.  Your accountant is also likely to point out that you simply can’t dip into the business accounts to withdraw funds in the same manner that you can when you are self employed.  As you and your business are separate entities you will need to withdraw funds by either paying yourself (and accounting for the necessary income tax and national insurance contributions) or by declaring a dividend (and accounting for the relevant capital gains tax).  Please ensure you check with your accountant about how best to withdraw funds out of your business in a tax efficient and legal manner, and be aware that you can only declare a dividend if there is a profit within the business that is available for distribution amongst shareholders.