William Hill cites tax increases for £21m drop in profits

William Hill CEO James Henderson has described the past six months as a period of ‘significant regulatory and taxation change for the industry’ as the bookmaker reported a 30% drop in profits after tax to £69.5m.

Despite group net revenue marginally growing, even against 2014 World Cup comparatives, operating profit dropped 12% to £155.7m for the first half. Group net revenue was slightly ahead at £808.1m (H1 2014: £805.2m), with good growth in Online and William Hill US offset by declines in Retail and William Hill Australia.

Henderson commented: “Revenues are flat, and profits down 12%. However, we’ve had significant changes this year, not least there was the World Cup last year.  We closed 108 shops.  And of course the increase in MGD and Point of Consumption Tax.

“In fact, the tax is worth £44m increase, in regards to Point of Consumption, which was £36m, and machine game duty, which was £8m. Now, with profits down £21m, that would suggest that the underlying metrics are quite strong.”

The firm has also announced that it has taken a stake of 29.4% in online lottery software and service provider NeoGames S.a.r.l. as the firm moves into iLotteries for the first time. Henderson added that the group was likely to focus on organic growth in the short term.

“There is a lot of consolidation going on in our sector. And that’s why we looked at 888 to be able to accelerate our strategy, because there were many elements of the 888 opportunity that allowed us to do that. Unfortunately, we weren’t able to agree a price at the time, but it does mean that we can focus on organic growth, and there’s a lot of that in both retail and online.”

Henderson said that this was particularly true in retail as the firm focuses on the omni-channel strategy. “I’m very encouraged by what’s upcoming. We’ve got the Trafalgar front-end platform that we’re going to be introducing this coming football season. We’ve got the bonus engine for Vegas, our proprietary gaming platform.  We’ve got our bespoke SSBT coming, and we’ve obviously announced the going into iLotteries or the lottery product with NeoGames. So lots of exciting things coming up, which I think bodes well and will support the underlying metrics which are reported in the half year.”

Henderson also defended William Hill’s social responsibility record: “We’ve been very busy this year, and we’ve been building on what we’ve been doing for the last two or three years. Already this year, we’ve introduced mandatory limits on the machines. We’ve had two responsible gambling weeks. We’ve been working on the self-exclusion trial in Chatham and in Glasgow, and also we’ve been using the RGT research that was published in December to be able to work on algorithms for at-risk gamblers.

“So we’ve been very busy, and we’ll continue to work on those and also work with the government in regards to how to communicate what we’ve done and what we’re going to be doing in the future.”