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Bookmaker William Hill is fancied to extend a recent run of good results. Analysts at Investec reckon the FTSE 250 group’s low level of hedging on the recent boxing match between Floyd Mayweather and Conor McGregor will have helped it to outperform rival Ladbrokes Coral. Analysts at Barclays reckon a less draconian government crackdown on fixed odds betting terminals could mean it loses nearer £55m than £284m in revenue – and the odds on this are shortening. And all analysts are looking forward to 2018’s quadrennial festival of punter stupidity known as the football World Cup. Expect an extremely “low level of hedging” on any England victory. Or even a goalless draw against Costa Rica.
In fact, get a result in the government review, and William Hill may be off to the races.
This morning, ahead of that political decision, it has reported another quarter of growth: retail net revenue rose 3 per cent in the 17 weeks to October 24, in line with bullish analyst estimates.
Online business proved most rewarding, with net revenues up 6 per cent, slightly below the most confident analyst expectations of 9 per cent.
But it wasn’t the English punters who have proved most lucrative – the World Cup doesn’t kick-off for seven months. In the meantime, it is US that’s growing fastest, with revenue up 28 per cent, or 30 per cent in local currency.
And the biggest win may be yet to come: William Hill is awaiting a US Supreme Court hearing on allowing liberalisation of the betting regime. It is currently the largest operator of sports books in Nevada, where betting is already legal.
Attention will turn to the UK for the Westminster result, however – and greater clarity on UK regulation could boost William Hill’s share price, according to Investec. Indeed, it reckons the chances of a favourable outcome from the FOBT review are now higher.
Investec also thinks William Hill could now be better placed to engage in mergers and acquisitions, at a time when the gambling industry is poised for a round of consolidation – and has upgraded its rating on the shares from ‘hold’ to ‘buy’ with a 30p higher target price of 300p.
Today, chief executive Philip Bowcock said only that:
The Triennial Review has now moved into the second consultation stage and we look forward to receiving much needed clarity. We will contribute both directly and via the industry trade associations, emphasising the need for evidence-based decision making. Betting shops have a unique and positive role to play in supporting problem gamblers who typically, use five or six gambling products… We continue to make good progress on our transformation programme, which is on track to deliver £40m of annualised savings by the end of this year. This is supporting reinvestment in our business, including marketing increases in this second half to promote online’s reinvigorated product and customer experience.
Centrica, the owner of British Gas, has also read the form on government intervention – and decided to get a bet down early.
This morning, it has pre-empted a crackdown on expensive household energy tariffs by announcing – somewhat grandiosely – “proposals to reform UK Energy Market”. Isn’t that up to the Department of Energy & Climate Change?
Apparently not. Centrica has got there first with some “unilateral steps”. It said it has “a package of actions and proposed measures to reform the UK energy market and benefit customers… This will increase engagement and choice, result in better deals and reduce average bills, deliver a fairer allocation of energy policy costs, and further protect vulnerable customers.”
It even has “seven recommended actions for Ofgem and the Government, designed to improve the market further”. How very helpful.
In fact, it’s amazing how helpful Centrica can be when trying to avoid the threat of government price caps. Chief executive Iain Conn said his plans will be “significantly more effective than further Government intervention through temporary price controls.”
Those seven actions are to:
- Unilaterally withdraw the Standard Variable Tariff (SVT) for new customers;
- Provide new offers to respond to customers’ changing needs;
- Proactively offer customers a choice of fixed term tariffs at the end of their contract;
- Introduce a new fixed term default tariff, for any customer who does not make an active decision when their tariff ends;
- Engage customers on legacy Standard Variable Tariffs and offer them better deals;
- Introduce simple no nonsense bills for all our customers;
- Drive further improvements in customer service and in our own efficiency.
Mr Conn said:
We fully recognise that the energy market can and should be improved, but further price controls will only set this back. We believe more action is needed and are ready to play a leading role. Today we have set out the unilateral actions we will take to improve the UK energy market for our customers. This starts with the withdrawal of the Standard Variable Tariff which contributes to lower levels of customer engagement.
But he can’t do it all himself:
We also believe that further measures by Ofgem and the Government are required so that together we can create a market that works for everyone… Politicians, regulators and energy companies acting together can do better than simply imposing a temporary cap or freezing household energy bills… We ask that the Government and Ofgem engage with us and other members of the industry to evaluate these proposals in the period up to March 2018.
They are sure to be thrilled at being told what to do by Centrica.
And, finally, support services contractor Mitie is facing a stewards enquiry. This morning, the Financial Reporting Council said it was opening a new investigation into financial reporting practices at the troubled company.
It will examine the preparation and approval of Mitie’s 2016 accounts, following a series of profit warnings by the group, which carries out work such as cleaning and supplying receptionists for office buildings.
The watchdog was already looking at work done for Mitie by Deloitte, relating to the outsourcer’s financial statements for the years to March 2015 and 2016.
This is not the first time the FRC has looked at Mitie. It opened a separate line of inquiry into Mitie’s impairment testing of goodwill in its healthcare unit earlier in the year – but decided that these issues had been “satisfactorily addressed” in the group’s 2017 annual report.
FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.