1.1 Introduction
William Hill, ‘The Home of Betting’, is one of the worlds leading betting and gaming companies, employing more than 17,000 people. Founded in 1934, it is now the UK’s largest bookmaker with around 2,430 licensed betting offices. William Hill PLC is listed on the London Stock Exchange and became part of the FTSE100 in May 2013 (William Hill PLC, 2014). ‘William Hill’s company strategy is as follows; with our core capability in sports betting and expertise in gaming, we focus on three areas to expand our business: S.1 developing a wider product range; S2 encouraging greater multichannel usage; and S3 increasing the internationalisation of the business’ (Williamhillplc.com, 2014).
Over the year WH completed three acquisitions, one of these was the purchase of the 29% minority interest held by Playtech in WH Online for a cash consideration of £423.8m. This was financed by a combination of the existing revolving credit facility a short-term bridge loan and the proceeds of a £373m 2-for-9 rights issue completed on the 5th April Figure 1- Revenue Segmentation
Figure 1 shows the segmentation split of revenue over the past two reported years, it also illustrates the percentage change between the two years. The group has made significant progress on their company strategy, allowing their revenue streams to continue diversifying. With all main revenue streams increasing over the past two years, this reflects their movement into the Australian market through their acquisitions of Sportingbet and tomwaterhouse.com with WH Australia already contributing £86.7m in revenue in the ownership period. International markets now account for 15% of revenue; up from 9% in 2009 this reflects S3. Figure 2 below helps to display the different revenue streams; it shows how WH is starting to become less dependent on solely retail as their main source, therefore implementing S1, increasing their product range.

Figure 2 – Revenue Segmentation

1.2 Profitability
William Hill has experienced a very encouraging year regarding profitability, with group net revenue increasing by 18%, from £1,254.9m in 2012 to £1,486.5m in 2013. Operating profit has also improved over the year period, by 4% from £142.1m to £147.8m. When examining William Hill’s profitability, analysing their results against one of their main competitors ‘Ladbrokes’ gives a clearer view of how they are performing against market competition. Figure 3 illustrates the comparison between the two company’s gross profit margins. It is clear to see that William Hill’s is significantly more profitable than Ladbrokes with WH’s 2013 figure (82.07%) over 5 times that of Ladbrokes (16.3%). Figure 3 – Profit Margin Comparison
William Hill’s gross profit margin has not dropped below 80% over the past 6 years which is remarkable, considering the events that have occurred within this time period such as the great recession. However there is cause for concern for potential investors as 2013 is the first time in 6 years that William Hill’s gross profit margin has weakened, dropping 5.13% from 86.51% (2012) to 82.07% (2013). This is due to the cost of sales increasing over the period by 158.1%, however Revenue has only improved by 116.4% for the period. Pre-exceptional cost of sales grew with retail being the main perpetrator, with a £66.2m increase in Cost of sales mainly caused by the introduction of MGD. Another major factor affecting expenses has been the acquisitions undertaken, along with the amortisation, accounting for a £67.2m increase over the year. Figure 4 gives an overview of how WH have performed over the last 5 years, with the majority of calculations positively increasing year on year Figure 4 – Profitability Trend Analysis
1.3 Short Term Liquidity
Figure 5 – Short Term Liquidity
William Hill is currently in a very encouraging position regarding short term liquidity. Figure 5 shows a line graph