WH suspends dividend as part of Covid-19 mitigation plan

16 March 2020

William Hill has announced that it expects a material impact on revenue and earnings from the novel coronavirus (Covid-19) pandemic, and has therefore suspended its 2019 dividend to retain financial resources within the business.

While the operator said it was too soon to determine the impact of Covid-19, it faces significant disruption from the suspension of professional sports - with 53% of 2019 revenue coming from sports betting - and the closure of US casinos.

However, to offer an idea of the sort of disruption it faces, it has estimated a decline in earnings before interest, tax, depreciation and amortisation of between £100m (€110.2m/$122.9m) and £110m in 2020. This has been determined based on a series of expected outcomes.

It believes that UK and international football is most likely to resume in August - a month later than GVC Holdings’ estimate - with the summer’s Uefa European Football Championship to either be cancelled or pushed back to 2021.

It expects its UK retail estate to be shuttered for a month, horse racing’s Grand National and Royal Ascot festival to be cancelled, and US sports to resume in time for the new National Football League season in September.

However, each month that its retail estate is closed would lead to an additional EIBITDA reduction of between £25m to £30m.

“These are truly unprecedented times but William Hill has been around for 86 years and over that time we have gained huge experience and understanding of our customers,” the operator’s chief executive Ulrik Bengtsson said. “People want to place sports bets and they will continue to do so where possible.

“In recent days we have seen betting on horses, greyhounds, international football and our well-stablished virtual sports.”

Faced with this situation, the William Hill board has decided to suspend its 2019 dividend, due to be proposed at its Annual General Meeting on 15 May, until further notice.

The operator added that it has a “robust financial position” and liquidity to absorb the impact of the scenario it has outlined. Furthermore, it has an undrawn committed revolving credit facility of £425m, William Hill added, and is working closely with banking partners to further enhance its liquidity position.

The operator said it has already taken a number of mitigating actions to reduce its variable cost base and manage cash flow, as well as a series of measures to ensure normal operations. Large parts of the group had already transitioned to working from home.

“We are taking action to maintain our operational capability, to secure and enhance our liquidity and to ensure we are in a strong position to resume full operations when the sporting calendar returns to normal,” Bengtsson said.
 
“We have been quick to initiate our business continuity plans, which have been in place for some weeks, with our colleague’s and customer’s welfare highest on the agenda,” he added. “Large parts of the business continue to operate on a ‘business as usual’ basis.”

William Hill is the latest operator to publish an estimate of the impact of Covid-19 on its business today (16 March). Earlier, GVC Holdings revealed that up to £150m of EBTIDA could be wiped out by the pandemic, while Flutter Entertainment said its earnings will be down by up to £110m.

The Stars Group, which is to merge with Flutter later this year, did not provide any estimates on the potential impact on earnings. However, it noted that with 62% of revenue coming from poker and gaming in 2019, the sporting shutdown would have less of an effect.