William Hill reveals Covid-19 revenue impact amid £224m share capital issue boost
London-listed bookmaker eyes US gains with latest cash injection after well-flagged revenue drop-off
William Hill has raised £224m in a new ordinary share rights issue to provide the operator with a timely financial boost amid the coronavirus pandemic.
The FTSE 250 bookmaker last night confirmed the placement of ordinary shares totalling 20% of the total share capital of the business, approximately 174,854,257 shares.
Ordinary shares were placed at a price of 128p per share, representing a discount of 7.8% on the closing price on 16 June.
William Hill revealed the completion of the ordinary shares portion of the capital issue on Wednesday, with 169,111,584 shares successfully placed by Barclays and Citigroup.
A secondary placement of ordinary shares in Hills was also completed, with 5,600,860 being sold to retail investors through investment brokers PrimaryBid.
The firm said proceeds from both sales will be used to strengthen its balance sheet and to provide “strategic and financial” flexibility in line with long-term growth ambitions.
“We believe that the placing will allow us to continue to execute on those ambitions, most noticeably in building on our leading position in the fast-growing US market. Importantly, it will also provide wider group resilience in the event of further economic and regulatory disruption,” Hills said in a statement.
In addition, directors and senior managers within the business have purchased 160,013 ordinary shares with a value of approximately £200,000.
In its latest trading update, William Hill revealed that total group revenue dropped by 50% in the six weeks up to 9 June as a result of Covid-19.
Total online group revenue fell by 3%, following an 8% drop in UK online revenue but this was marginally offset by 7% growth in international online revenue during the period.
The international growth was attributed to the return of behind-closed-doors horseracing and the German Bundesliga.
In the US, William Hill revenue slumped by 62% during the period, despite an uptick in bets placed on alternative sports and the resumption of UFC and NASCAR in May.
Like-for-like retail revenue dropped by 100% during the period as betting shops remained closed during Covid-19 lockdown measures.
Despite the expected drop-off, William Hill is confident that company-wide mitigation strategies have left the operator in a “stronger competitive position” as lockdown measures are eased.
“The return of sporting events has driven a strong recovery in our online volumes. Our UK Online business is in a better place than ever and our international business is displaying solid growth,” said CEO Ulrik Bengtsson.
“In the US we have used this period of lockdown wisely to move our product forward and we are now in a strong position to capitalise on the US growth opportunity that lies ahead,” he added.
In addition to the financial results, Hills has said it expects to receive a VAT refund from HMRC totalling £203m in the second half of 2020.
Peel Hunt analyst Ivor Jones reiterated his Buy rating for the operator. He said: We had been confident the group had the liquidity to trade through Covid-19.
“Now it has the resources to continue to invest in opportunities without always having one eye on its bank balance,” he added.