27th Feb 2015 08:04
LONDON (Alliance News) - UK bookmaker William Hill PLC Friday posted a lower profit for 2014, as a number of exceptional costs associated with higher taxes and store closure costs more than offset growth in revenue.
The gambling industry is trying to deal with recent changes in UK government regulation and incoming tax hikes, after the government introduced a 15% point of consumption tax on online gaming in the UK at the end of last year. 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 reported a pretax profit of GBP233.9 million for 2014, 9% lower than the GBP257.0 million profit it made in 2013, having booked a total of GBP83.4 million in exceptional costs, compared with only GBP22.8 million last year.
Out of the GBP83.4 million in exceptional costs, GBP44.5 million was a non-cash amortisation charge linked to the acceleration of amortisation of its Sportingbet and Centrebet intangible brand assets. Other charges were made up from indirect European gambling taxes and costs associated with the 108 store closures it made during 2014.
William Hill said 2014 benefited from a successful World Cup, gaming net revenue growth in both online and retail, and net revenue growth from its more recent international acquisitions in the US and Australia.
Revenue increased 8% to GBP1.61 billion, from GBP1.49 billion, driven by strong growth in its online sportsbook and online gaming net revenue. It also saw strong growth in net revenue in Italy and Spain, up 39% and 64% respectively, while it said trading in the US was "ahead of its expectations". William Hill also received a welcome boost from the World Cup in June.
"2014 was a record year for William Hill, with good operating profit growth benefiting from the continued digital and international diversification of our revenue streams, and from a record-breaking World Cup performance," said Chief Executive James Henderson in a statement.
William Hill said it will pay a final dividend of 8.2p per share, taking its full year dividend for 2014 to 12.2 pence, a 5% increase on its pay out for 2013.
William Hill said that excluding one significant loss-making week, due to punter-friendly football results, the remainder of the first eight weeks of the first quarter of 2015 has been in line with its internal revenue expectations.
"Whilst inclusion of the loss-making week leaves us behind internal expectations for the period as a whole, the board's view is that this volatility in sporting results is now a normal part of the group's trading given the increased proportion of accumulator football betting in Online as well as Retail. Therefore, the board remains confident in its expectations for 2015," the bookmaker said.
The company recently rebranded all of its existing Australian trading operations under the William Hill brand. Australia is a market a lot of online gaming companies have been expanding into, as regulatory changes tighten in the UK.
"Internationally, we have reshaped our Australian business and are moving it to the William Hill brand, enhancing its competitiveness in this attractive market. Our US operations continue to progress strongly and we are well positioned in the event of regulatory change. Retail remains resilient," said Henderson.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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