20th Jan 2015 10:46
LONDON (Alliance News) - William Hill PLC Tuesday said revenue and adjusted operating profit fell in the fourth quarter of 2014 as football results went against it over the Christmas holidays, and it suffered a similar fate in the third week of 2015 although it said it has started the new year in a strong position.
The company also said it will rebrand its Australian operations to the William Hill brand.
In a trading statement, the betting operator said net revenue was down 2% in the 13 weeks to December 30, while its adjusted operating profit, which excludes exceptional items and some amortisation, fell 7%.
The company said it experienced generally weaker sporting results in December, alongside a very tough November comparative, although gaming revenue continued to grow.
"In particular, Boxing Day - one of the busiest days in our year - was a very good day for the customer with all but one of the top ten football favourites winning that day," it said, having also highlighted unfavourable horse racing results too.
Still, the company's revenue was up 8% for the financial year as a whole, while its adjusted operating profit rose 11%, which it said was its best-ever operating result. It expects adjusted operating profit for the year to be about GBP371 million, while amortisation is expected to be about GBP9 million and its pre-exceptional effective tax rate 20%. The tax rate will drop to 19% in 2015, it said.
It reported an 18% increase in online revenue, a 41% increase in its Australian operations or 11% in local currencies, and US revenue was up 30%. Telephone revenue fell 28%.
William Hill said its profits in the US were ahead of expectations for both the fourth quarter and the year as a whole. It said it saw year-on-year gaming growth in the fourth quarter in both its online and retail operations.
"Notwithstanding a difficult start to the new year with highly unfavourable football results in week 3, we remain in a strong position going into 2015. Online is very well positioned as the new Point of Consumption Tax regime starts and we continue to diversify successfully, with 18% of our revenues now coming from outside the UK," it said.
The government recently introduced a point of consumption tax on online gaming in the UK at the beginning of December, which means that duty is now 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 this year.
William Hill said it will start rebranding its Australian operations next month. William Hill Australia currently operates the Sportingbet, Centrebet and tomwaterhouse.com brands.
"The board has concluded that there is potential to drive substantial longer term value from rebranding all of its existing Australian trading operations under the William Hill brand," the bookmaker said.
"This rebrand will enable William Hill to focus its brand media and other marketing support on promoting a single brand name, enabling more cost-effective marketing and more focused IT investment, and reducing brand confusion," it added.
William Hill said it plans to invest an incremental GBP5 million in marketing and other costs to launch the William Hill brand in Australia later this year.
It will also writedown the value of the Australian brand assets it currently has on its balance sheet as the three brands become one. It said it will charge up to GBP108 million to its income statement, partly in 2014 and partly in 2015, through accelerated amortisation of the brands. However, this will be partly offset by a GBP32 million deferred tax credit, meaning the net impact is about GBP76 million.
The group said it will announce its full year results on February 27.
William Hill shares were down 3.7% at 362.50 pence, the worst-performing stock on the FTSE 250 Tuesday morning.
By Steve McGrath and Rowena Harris-Doughty; [email protected]; @stevemcgrath1; [email protected]; @rharrisdoughty
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