Telegraph – William Hill, Britain’s biggest bookmaker, celebrates its 80th anniversary this year and it’s worth reflecting on how the business has changed.
The company used the anniversary of Ralph Topping’s six years as chief executive on Friday to highlight progression during his tenure, from a predominantly UK-focused business, reliant on high street betting shops for 80pc of its revenue and profit, to one which now generates 48pc of its operating profit from its online and Australian operations.
The former was built in partnership with software group Playtech – now no longer a partner – while William Hill bought Sportingbet’s Australian and Spanish businesses last year. The group told shareholders on Friday that it expects to generate 40pc of its income from overseas in the next three to four years. It has a small business in Nevada but it is also looking at branching out into other sectors in the US such as lotteries.
Why is international expansion so important to William Hill? UK bookies have already been hit by one new tax – the Machine Games Duty –which came into force on February 1 last year. The duty was one of the main factors – plus higher finance costs – for a 7pc fall in pre-tax profit in the 52 weeks to December 31 compared with the 53 weeks to January 1, 2013 – the company’s previous reporting period. Profit fell to £257m despite revenue climbing 16pc to almost £1.5bn.
From December, bookies will face a new online gaming duty – the Point of Consumption Tax – which William Hill believes will cost it £60m-£70m in the first year. In 2013, the group generated £147.8m of its operating profit online, compared with £196.3m from its retail division. The US and Australia combined accounted for £16.9m of operating profit. The bookie expects to counter the latest tax by cutting costs by £15m-£20m.
