Management accounting decisions at Williamhill

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  1. Company Background

Betting shops became legal in 1961, with William hill joining the market in 1966. shops then were heavily regulated, during this period, a reputation was built around dodgy shops with their blacked –out windows , and smoky atmosphere. However with the arrival of the television, gambling became another pastime. With people spending times at bar’s or shops to watch races or football.in 1994 the UK’s national lottery began , betting became much more socially acceptable. Eventually legislations changed. Shops became bigger, more open, brighter, air-conditioned, and included games as well as betting.

1998 was among the most important years for William hill, they became the first in the industry to kick start an online betting facility, our Sportsbook. The internet has changed everything for William hill , bringing in new , younger punters for a range of gambling and gaming activities as well as procuring for the public an easy way to place a bet. There are something’s that never change though. Our reputation for integrity , honesty and exceptional customer service are just as imperative to today’s punter as it was back then .

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The company was eventually listed on the London Stock Exchange in 2002.

  1. Vision and Mission

The Home Of Betting is a heritage held by William Hill. William Hill’s vision is to be a responsible business. Being a major employer with a staff of 17,000 people working in 9 different countries . William Hill aims to give a safe and fair working environment as well as opportunities for employees to learn , grow, and develop alongside William hill. A great deal of consideration has been taken into account about how colleagues behave toward one another , our customers as well as the communities in which we operate. All detail are located in the William Hill Commitment

The William Hill Commitment is briefly described as follows

- “We encourage colleagues to grow and develop in their career with us and invest in supporting their career aspirations. We actively promote from within and don’t have a glass ceiling”

- “We aim to treat our customers in the way that we would, ourselves, like to be treated”

- “We put our customers at the heart of what we do, providing a personal, open and fair service whether taking a bet, addressing a complaint or resolving a dispute”

-“ By investing in research, education and treatment, we seek to minimize the effects of problem gambling”

-“ We prevent crime and disorder in our business”

-“ As a responsible business operating in a regulated industry, we both comply with the regulations and legal frameworks under which we operate and actively engage with our regulators to develop best practices and achieve consistently high operating standards. “

  1. Key Financial Data

William hill online net revenue has increased by 14%. Our online betting faculty grew strongly by 38%. With a gross win margin of 8.1% reflecting an improvement of 6.3% as seen in the third quarter. The mobile platform continues to perform well with Sportsbook ,mobile stakes 92% higher than in 2012 and a gross win margin of 9.7%. Our investment is giving rise to a high quality mobile gaming experience. With new features on its way, Mobile gaming net revenue was 199% higher than in 2012 an increases to 23% of online’s total gaming net revenue

  1. Management Accounting Decision
    1. Newly opened shops

“We continue to invest in our estate. In 2013 , we put 10 million euroes capex into opening 59 new shops , meaning we increased our estate by 2% as we only closed 19 shops last year” (william hill pg 17)

  1. Attracting customers

“We continue to invest in product channel offerings to make our products attractive to customers.”(willliam hill pg 39)

2.3 Diversifying income

“As a Group, we are seeking to reduce our exposure to the UK, which accounted for 85% of 2013 revenues down from 91% in 2012, by investing selectively in other territories.” (William hill pg 38)

2.4 Investing in more efficient process

“We have also been able to increase our capital investment in the Online business, which was 60% higher in 2013, following the removal of the previous £20m contractual cap. This has enabled us to invest, for instance, in developing mobile offerings for Italy and Spain” (William hill pg7)

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. 2.5 Simplifying shop operations

“In the predominantly sports betting focused Spanish online market, we were able to enhance our market share by exercising a call option over Sportingbet’s Spanish business, miapuesta, in September 2013.We have established ourselves as the third largest online sports betting operator in Spain, increasing our market share

to 15% as at Q3 2013” (William hill pg 11)

2.6 Safe guarding intangible assets

“We have also invested in incident management systems such as safe havens and StaffSafe, as well as high definition CCTV in every shop. Crime in our shops fell yet again in 2013, with robberies down 25%, cash-in-transit incidents down 34% and burglaries down 43%” (William hill (page 29)

2.7 Strategic Decision

“. As part of our development plan, we have expanded the product range substantially and enhanced the user experience by providing single sign on, wallet transfer and multiple payment methods We increased mobile gaming net revenue by 166% to £40m. Our target is for mobile to generate 40% of gaming net revenue by mid-2015. We progressed from 6% in 2012 to 17% in 2013 as a whole,” (pg 31 william hill)

  1. a whole (page 14)

2.8Final Dividend Recommendation

“The Board has approved a final dividend of 7.9p per share (2012: 7.2p per share after rights issue adjustment), giving a total 2013 dividend of 11.6p per share (2012: 10.4p). This represents 12% growth, reflecting the results delivered in the 2013 financial year” (William hill pg 06)

2.9 Short term planning with the efficient use of resources.

“In addition, we aim to mitigate some of the impact in 2015 by achieving £15-20m of cost savings against what we would otherwise have expected to spend in that year” (William hill pg 14)

  1. Modern Management Accounting

Management accounting significantly differs from financial accounting . Management accounting is the process of using in accounting data (processed usually by financial accountants) to assist the management sector of a company by giving them the basis to make informed business decision. This will leave the company better equipped to face future struggles

There are many ways to look at management at management accounting. there are both financial and management reports. Financial reports tend to be of more importance to lenders, tax authorities , share holders . As for management reports its usually used for decision making pertaining to controlling and planning the business activities

Retrospectively, management reports are used more frequently compared to financial reports. Financial reports are used usually at the end of the quarter or year. Management reports on the other hand, are usually produced at much faster rate with minimum delay. Decisions in management accounting really depend on time frame. Its decision relies on managers looking towards the future or the past.

Management accountant revolves around the upbringing of a company. Being something that is internal to the organisation it is usually targeted at achieving company goals, budgets , directive and so on . Also, management accounting partially dictates how a company operates in the future or the past. For example, all necessary data for operating a certain segment of a company optimally and also the resources allocated to it would be stated in the management accounting information.

Management accounting explained by CIMA and Other sources

-Inform strategic decisions and formulae to operate business strategy.

-Plan long, medium and short run operations.

-Determine capital structure and fund that structure.

-Design rewards strategies for executive and shareholders.

-Inform operational decisions.

-Control operations and ensure the efficient use of resources.

-Measure and report financial and non-financial performance to management and stakeholders.

-Safeguard tangible and intangible assets.

-Implement corporate governance procedures, risk management and internal controls.

- budgeting

- making capital expenditure decisions

  1. Relation to modern management accounting
    1. Safeguarding intangible assets

William Hill also decided to invest in incident management system such as safe havens and staff safe. Not only that, William hill also invested in high definition cctv in every shop . In this effort to prevent crime , William Hill has indefinitely safeguarded their Money from physical robbery. Crime at William Hill fell yet again in 2013 . With Robberies down 25% , cash in transit incidents have also seen a significant drop by 34% and burglaries down by 43%.

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4.2 Inform strategic decisions and formulae to operate business strategy.

With Relations to paragraph 2.7,In 2013 William Hill focused on developing a mobile gaming offering with a strong background offering . The company, seeing the internet as a big business gain took the opportunity for growth. Being part of their on-going development plan , William Hill succeeded in in expanding their product range significantly and these showed great changes in their mobile gaming net revenue . William Hill manage to increase mobile gaming net revenue by 166% to 40 million euros. Their target is to generate 40% of gaming net revenue by mid-2015.They have progressed from 6% in 2012 to 17% in 2013 as a whole

4.3 Capital expenditure decisions

In relation to 2.1, With new efforts to invest in their estate , William Hill decided to put 10 million euroes into capital expenditure into expanding their business by another 59 new shops. In 2012, William Hill closed down a total of 19 shops . factoring all of this into account, William hill managed to increase their estate by 2%, and this will bring back significant gains due to the ratio at which new shops are opening compared to those closing down .

4.4 Inform strategic decisions and formulae to operate business strategy.

In relation to 2.5, William Hill has also decided to operate a business strategy. Based in the Spanish Online Market, William Hill were able to enhance their market share by exercising a simple call option over Sportingbet’s Spanish business, miapuesta in September 2013. Following close behind is great success. William hill has established themselves as the third largest online sports betting operator in spain , This significantly increased our market share by 15% as at Q3 2013

4.5 Plan long, medium and short run operations.

With relations to 2.3 ,As of 2013 revenues had dropped from 91% to 85% from 2012 . This then |pushes William hill to make gains by neglecting local grounds and selectively investing in other territories. As for example, In august 2013 , William Hill completed an acquisition of Sportingbet’s Australian online businesss. With this acquisition, William Hill has established Australia as their second home market. (William hill pg 11)

4.6 Capital investment decisions

In addition to 2.4, William hill has managed to increase its capital investment in the online business, Following the dismissal of a previous £20m contractual cap , the company is no longer being held down and sees the opportunity to readily invest more. This in return has enabled them to invest, for instance , in the mobile development scene in Italy and Spain . As of 2013, capital investment increase by 60%

4.7 Reporting financials to stake holder and management

In relation to 2.8, after through calculations the board members of William Hill approved a final dividend of 7.9p per share. Previously this figure was at 7.2p per share after rights issue adjustment. As of 2013 ,the total dividend of 11.6 p per share , this figure in 2012 was just 10.4 p per share. Retrospectively this represented a 12 % growth, reflecting the results delivered by William Hill in 2013 financial year .

Reference

Colin Wilks . (2005) Decision Management : For May and November 2005 Exams, CIMA Publishing

Leslie G. Eldenburg, Albie Brooks, Judy Oliver, (12 August 2010) Management Acoounting , John Wiley & Sons Australia Ltd

Peter Atrill; E. J McLaney, 2007, Management Accounting For Decision Makers, Prentice Hall, New York