William Hill's share price fell more than 5.5 per cent in early trading this morning, despite posting a record year's results.
Profits for the 52 weeks to December 30 rose 11 per cnet year on year to £371m, as revenue climbed eight per cent. The growth came from its online arm, which grew 18 per cent across the 52 weeks, while its retail arm was only slightly up.
That pattern was emphasised by its fourth quarter figures, which showed a one per cent drop in the amount of money placed on sports at its betting shops, compared with a 16 per cent rise online.
William Hill said sports betting revenues had also been affected by “customer-friendly results”. Gross win margins were down 2.6 percentage points in retail and 1.3 percentage points in online betting.
Group operating profit is expected to be £371m, with pre-exceptional defined amortisation expected to be around £9m.
However, exceptional items are expected to be £39m before tax and the impact of its plans to rebrand the business in Australia. In addition, William Hill expects to pay an exceptional corporation tax credit of £15m.
Why it's interesting
Other bookies have reported a similar impact from “customer-friendly results”, with Paddy Power noting back in August that “punter friendly results” had proved “more costly than John Cleese's divorce payments”.
Both businesses are clearly doing well in Australia however.
William Hill is now planning a rebrand in the country, for which it has put aside several million pounds. The bookie said there was “potential to drive substantial longer-term value from rebranding all of its existing Australian trading operations under the Willian Hill brand”. It currently operaqtes as Sportingbet, Centrebet and tomwaterhouse.com.
The business will start the process – which will cost £5m in marketing and other charges, as it moves to “reduce brand confusion” - in February.
As a result, intangible assets will be hit with “accelerated amortisation” totalling A$205m (£108m), though this will be offset by a deferred tax credit of around £76m.
What did William Hill say?
Chief executive James Henderson said: "Overall it's been a good performance in 2014 for the Group, driven by both the continued development of our UK-facing operations and our international diversification, together with a successful World Cup. On a full-year basis, operating profit from online, William Hill Australia and William Hill US all continued to grow very strongly and Retail delivered another resilient performance, benefiting from effective cost control.
"In Q4, generally weaker sporting results in December impacted our revenue progression, as did a very tough November comparative, but gaming continued to grow. In particular, Boxing Day - one of the busiest days in our year - was a very good day for the customer with all but one of the top ten football favourites winning that day."
William Hill is confident about 2015, with online doing particularly well, and growing international revenues (up to 18 per cent of total) helping it to diversify.