William Hill To Return £25 Million Of Furlough Cash

Summary

• Bookmaker William Hill plans to return £24.5 million of government support taken through JRS
• As of now most of the stores of the company have recommenced operations
• The sports betting companies have been doing well in recent times; have delivered double-digit returns in the last year

Amid the looming threat of another lockdown on the backdrop of the rising number of coronavirus cases, Bookmaker William Hill (LON: WMH) vows to return the taxpayer’s money it took to survive during the peak of the unprecedented crisis in March. As of now, most of the stores of the company have recommenced operations; however, 10 per cent of the stores remain shut where the coronavirus infections are high.

As the lockdown was lifted, William Hill reopened its stores in a phased manner. The Company witnessed a good performance in UK retail segment as its saw footfall return to pre-pandemic levels. William Hill earlier took measures to bolster liquidity and preserve cash to strengthen the balance sheet. Given the good trading performance recorded by the company, William Hill has announced to repay £24.5 million which was taken under the Coronavirus Job Retention Scheme (JRS) to stay afloat as the coronavirus crisis unfolded.  Online International net revenue grew by 17 per cent YoY for the half year ended on 30 June 2020, furthering strategic goals of both geographic and product diversification. The Bookmaker was recently making headlines as it struck a deal with ESPN and is set to be acquired by US casino operator Caesars Entertainment.

The Group has been impacted by the effects of Covid-19 due to the cancellation of sporting events across the world and the shutting down of retail shops in the UK. The company has already forecasted a loss of £2 million due to shutting down of 100 shops in the light of second lockdown induced by the coronavirus pandemic. In the last one year, WMH shares have returned 38.88 per cent to the investors.

Also read: William Hill Plc Get A Leg-Up with ESPN Deal

Let us find out what’s happening at other LSE-listed sports-betting companies -

Flutter Entertainment Plc

United Kingdom-based global sports betting and gaming operator, Flutter Entertainment Plc (LON: FLTR) did not subscribe to furlough schemes during the peak of the unprecedented crisis.

Due to well diversified geographic and product portfolio, the Group’s financial performance during the first half of 2020 exceeded management’s expectations. The Group witnessed strong customer growth in the period prior to Covid-19 related disruption. The cancellation of sports and closure of shops led to reduced sports revenues in the UK and Ireland during the lockdown induced by the coronavirus crisis.

However, coronavirus induced lockdown had pushed people to sought new ways of home entertainment that led to an increase in the number of recreational customers playing poker and gaming products across the world. Horse racing has picked up steam in Australia and the United States leading to overall sports revenue growth in both the regions.

The Group has joined forces with The Stars Group (TSG) during the first half of 2020 that could lead to increased scale and enhanced diversification of the revenue streams both in terms of product portfolio and geography. 

Gaming performance has remained resilient during the start of the second half while sports betting activities increased following the return of major sports events. The company did not announce any interim dividend for 2020. Due to potential further Covid-19 related disruption, the outlook remains highly uncertain in the near term.  In the last one year, FLTR shares have given a return of 65.41 per cent to the investors.

GVC Holdings Plc

Despite online gambling picking up steam and expanding into the United States, SportingBet owner GVC Holdings Plc (LON: GVC) has shown no intention to hand back furlough cash it took during the unprecedented crisis. The taxpayer-funded furlough scheme was used to cut costs and support nearly 14,000 people. GVC did not showed any intention of returning the taxpayer’s money as it expects a gloomy outlook where further lockdowns and retail closures still remain a possibility in the near term.

The company’s online net gaming revenue was up by 26 per cent during the third quarter of 2020. GVC witnessed an increase of 64 per cent in net gaming revenue at constant currency in Australia.

In the United States, GVC’s full-year net revenue is expected to remain slightly ahead of expectations, between US$150-US$160 million. GVC’s EBIDTA is expected to be in the range of £770-£790 million for the fiscal year 2020.

GVC has delivered double-digit growth in online business. Overall results showed that the Group has a strong foundation and is looking forward to international expansion. Despite the significant challenges created by COVID-19, the Company has delivered a good performance (on a year to date basis); delivered a price return of 9.25 per cent.

Also read: Rank Group, William Hill, And Flutter Entertainment- How Are These UK Gambling Stocks Performing?

1-Year Comparative chart: WMH, FLTR, and GVC

(Source: Refinitiv, Thomson Reuters)

The prevailing uncertainties in the trading environment with reference to Covid-19 and increasing unemployment could weigh down heavily on the sports-betting companies as people would tend to save cash rather than spending on entertainment and leisure activities. Moreover, a second lockdown might cause severe devastation in contrast to the first one. The government offered help to businesses when they needed the most through several support schemes. Now when the businesses are on their path to recovery, they should think of returning the taxpayers money as it could be utilised in resurrecting the nation’s economy and reducing the nation’s debt pile.