21st Oct 2014 10:11
LONDON (Alliance News) - William Hill PLC Tuesday reported a jump in operating profit and revenue in the third quarter as its online and mobile gaming operating profit more than doubled, and it said it now expects its operating profit for the full year to come in at the top end of expectations.
The FTSE 250-listed bookmaker said group net revenue in the third quarter to September 30 was up 23%, boosted by a 55% rise in online revenue and a 9% increase in retail revenue. Australia revenue also increased in the period, up 17%.
"The third quarter IMS shows sharp year-on-year growth against easy comparatives and good progress year to date with a modest profit upgrade. Reassuring quality from the market leader," Numis analysts said in a research note Tuesday.
The rise in revenue across the board pushed up group operating profit by 89%. Retail operating profit was up 31%, having declined in the first-half of the year, while online operating profit more than doubled and Australia operating profit nearly quadrupled, the company said.
Online wagering was up 18% and online net revenue up 55%, it said.
Chief Executive James Henderson said the strong performance in the third quarter was driven by favourable sporting results and the development of its business in the UK and Internationally. The positive sporting results for the quarter, including a good end to the World Cup for the company, meant it moved towards normalised gross win gross margins for the year-to-date, he said.
William Hill said the strong performance in the third quarter meant it now expects operating profit for the year to be towards the top end of the consensus range, assuming results for the fourth quarter are in line with forecasts.
"We believe that the top of the range was EBITA for full year expectations of GBP366 million. We have upgraded our forecast to GBP362 million from GBP350 million and left forecasts for subsequent years unchanged," Numis said.
UK bookmakers are facing multiple regulatory changes, including a hike in tax gaming duty as part of a crackdown on gambling by the UK government.
The government plans to introduce a point of consumption tax on online gaming in the UK from December 1, which means that duty will be payable on all bets made by UK customers irrespective of where the online operator is located. The legislation is likely to have a significant impact on the betting sector, as is a tax rate hike on high-speed, high-stake gambling machines from the start of March next year.
Earlier this year, in response to the increase in machine gaming duty, William Hill outlined plans to shut 109 of its loss-making betting stores.
William Hill said 70 of those shops were closed at the end of July, 12 in August, and it expects to close a further 27 shops by the end of the year, adding about GBP4 million in additional net exceptional costs to the GBP16.6 million provision it took in the first-half of the year.
Still, William Hill shares were up 0.7% at 366.10 pence Tuesday mid-morning.
By Sam Unsted and Rowena Harris-Doughty; [email protected]; @SamUAtAlliance; [email protected]; @rharrisdoughty
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