City analysts praised high-street bookie William Hill (WMH) for a “much improved” financial performance last year. At the operating level, this might be true: profits rose by 11 per cent thanks to solid revenue growth and stronger-than-expected gross win margins towards the end of the period. But that didn't translate into improved earnings. A strategic review of the Australian business – prompted by a toughening regulatory environment there – led to a £238m exceptional charge, leaving the group deep in the red on a statutory basis.
Changing gambling regulation is still the biggest risk to progress this year, although broker Numis believes it could provide an opportunity in some cases. For instance, the possible repeal of The Professional and Amateur Sports Protection Act (PASPA) of 1992 could liberate the legal status of sports betting throughout the US. On home soil, however, the group’s online business is coming under increased scrutiny: just days prior to these results, William Hill was fined £6.2m by the Gambling Commission for breaching anti-money laundering and social responsibility regulations.
Analysts at Numis expect operating profits of £305m for the year ending December 2018, giving EPS of 26.8p, compared with £291m and 27.6p in FY2017.
| WILLIAM HILL (WMH) | ||||
| ORD PRICE: | 332p | MARKET VALUE: | £2.85bn | |
| TOUCH: | 331.9-332.1p | 12-MONTH HIGH: | 345p | LOW: 239p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | NA | |
| NET ASSET VALUE: | 124p* | NET DEBT: | 48% | |
| Year to 27 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 1.49 | 257 | 25.2 | 11.6 |
| 2014 | 1.61 | 234 | 23.6 | 12.2 |
| 2015 | 1.59 | 185 | 21.6 | 12.5 |
| 2016 | 1.60 | 181 | 18.9 | 12.5 |
| 2017 | 1.71 | -74.6 | -9.7 | 13.2 |
| % change | +7 | - | - | +6 |
| Ex-div: | 26 Apr | |||
| Payment: | 7 Jun | |||
| *includes intangible assets of £1.58bn, or 184p a share | ||||
