William Hill Plc (WMH), a U.K. bookmaker with about 2,350 outlets, said full-year profit fell 11 percent after a writedown on its loss-making telephone betting business which saw a decline in amounts wagered and win margins.
Net profit for the year ended Dec. 27 declined to 115 million pounds ($182 million) from 130 million pounds a year earlier, the company said today in a statement. Sales rose 6 percent to 1.14 billion pounds. Operating expenses increased to 758 million pounds from 659 million pounds a year ago. Net revenue in the seven weeks to Feb. 14 rose 13 percent.
The company is “convinced we should be expanding” outside the U.K., Chief Executive Officer Ralph Topping said today on a conference call. “You’ve got to look at regulated territories,” he said, adding that the company is continuing to expand its online and mobile phone offerings and that overseas expansion would “ideally” be multi-channel.
William Hill and rivals such as Ladbrokes Plc (LAD) are focusing on growing their online business, which is more profitable than town-center shops. Online net revenue grew 28 percent to 321 million pounds, William Hill said today, while online operating profit jumped 17 percent to 107 million pounds. Operating profit from retail fell 4 percent to 197 million pounds.
“With many governments either introducing or liberalising gambling regulations, opportunities are opening up for William Hill to take its expertise into new territories,” the company said in the statement. Expansion may be through increased brand marketing, acquisitions or partnerships, the company said.
William Hill, which last year announced plans to acquire three land-based sports betting businesses in the U.S., is awaiting license approval from authorities in Nevada. The company launched a website in Italy in the last quarter.
“It’s all broadly in line with expectations, current trading looks very strong,” Simon Davies, an analyst with Collins Stewart who has a ‘buy’ rating on the stock, said in a phone interview. “Online is the sensible route to expand internationally because the costs are limited. It’s been a resilient year for the business.”
One of the “key risks” for 2012 is the impact of U.K. and overseas taxation, the company said today. The U.K. government may increase gaming machine tax in the March budget. Topping said he has “no way of knowing,” what U.K. Chancellor of the Exchequer George Osborne will decide.
William Hill shares fell as much as 2.2 pence, or 0.9 percent, to 231.3 pence and were at 232.1 pence in London at 9:44 a.m.
To contact the reporter on this story: Colm Heatley in Belfast at firstname.lastname@example.org
To contact the editor responsible for this story: Colin Keatinge at email@example.com