William Hill falls as pre-tax profits falls on higher expenses

William Hill has reported a 9% drop in annual pre-tax profit to £233.9m as the gaming company’s expenses increased.

The group, which last week failed in a bid for online rival 888 Holdings, expensed £45.9m of pre-exceptional net financing costs versus £44.3m in 2013. Pre-exceptional cost of sales rose 10.5% to £294.5m.

Net revenue increased 8% to £1.6bn on the back of a strong performance in online, gaming and the benefit of the World Cup.

Online gaming net revenue increased 17%, driven by growth in mobile. The online sportsbook turnover rose 28%.

The company achieved record operating profit of £372.2, up 10% on the prior year, a counterpoint to the decline seen at rival Ladbrokes on Thursday.

Chief executive James Henderson said: "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.

“I am particularly pleased with the progress in our three strategic areas of focus: differentiation through technology; continued internationalisation; and maximising the omni-channel opportunity of retail and online.”

The dividend climbed 5% to 12.2p per share.

However, revenue was behind expectations in the first eight weeks of the first quarter to 24 February, due to unfavourable football results but William Hill said it was confident in its outlook for 2015 despite revenue missing estimates in the first quarter.

Numis analyst Ivor Jones waxed lyrical, but not in a good way. "Into the valley of FY15 rides William Hill. Excellent strategic preparation cannot fully offset the impact of additional taxes, fees and regulation in FY15 and we expect profits to fall.

"Nor do we believe the strategic changes are over; management highlights that there is headroom on the balance sheet to fund M&A. We will stick with a hold recommendation until we can see what is coming back out of the valley."