William Hill's online operation was the clear winner at these half-year results. The division's 30 per cent hike in net revenues helped the bookmaker maintain a decisive edge over its rivals and justifies our continued buy recommendation.
But such success is posing a strategic headache for Hill's management; the greater the online growth, the more the company will eventually have to pay Playtech for the technology group's 29 per cent share of the business, thus shortening the odds on a major fundraising exercise prior to the first call option to fall due this year.
The addition of a major football tournament this year was one factor in higher online usage, and punters using mobile phones to place bets has grown into a huge underlying trend. The division's net revenues grew by a third to £198m, with operating profits 23 per cent higher at £68.9m. In fact, the online sportsbook is fast catching up with the bricks-and-mortar business, with bets placed now equivalent to 83 per cent of those made in shops. Machine betting meant the retail business grew net revenues by 5 per cent to £417m, with operating profits up 6 per cent to £110m.
Broker Shore Capital upped its 2012 forecasts by 5 per cent to show pre-tax profits of £273m and EPS of 27p.
WILLIAM HILL (WMH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 313p | MARKET VALUE: | £2.2bn | |
| TOUCH: | 313-314p | 12-MONTH HIGH: | 316p | LOW: 183p |
| DIVIDEND YIELD: | 3.23% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 135p* | NET DEBT: | 37% | |
| Half-year to 26 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 568 | 127 | 12.3 | 2.90 |
| 2012 | 628 | 143 | 14.1 | 3.40 |
| % change | +11 | +13 | +15 | +17 |
Ex-div: 24 Oct Payment: 7 Dec *Includes intangible assets of £1.4bn, or 199p a share | ||||
