William Hill (LSE: WMH) has seen its shares surge from £2 to nearly £5 over the last 18 months, as investors have warmed to its new online focus. The company has also joined the FTSE 100.
The last six months have been particularly busy, with the betting company spending nearly £900m on buying out the minority stake in its own online business, and acquiring Sportingbet‘s Australian operations. Funds of £750m were raised to finance this move, split equally between a rights issue and a convertible bond issue.
As well as the boost from these acquisitions, underlying revenue growth has also been impressive in the last six months. In its interim results, released earlier today, amounts wagered were shown to have increased by 27.5% on last year, and revenue rose by nearly 20%.
William Hill’s traditional retail operations still managed 11% revenue growth, but it is online, and particularly mobile sports betting, that appears to be the sweet spot at the moment. According to a report published by Onavo, William Hill’s is the most popular sports betting app, actively used by 38% of iPhone-owning sports gamblers. Furthermore, in two years from now, William Hill hopes to generate 40% of its gaming net revenue from mobile devices.
Moving to the bottom line, and statutory profits were level with last year. However, there are a number of acquisition-related items complicating matters here. On an adjusted earnings per share basis, the increase on last year was 16%, which led the company to raise its dividend by 16% as well, despite a net debt more than doubling to £820m.
Looking ahead, William Hill is excited by the prospects for its Australian business, and the increased control it now has over its online operations. However, the company didn’t give an specific commentary on how it saw the remainder of this year panning out.
The shares fell 5% to 470p following the release of these results, which values the company at £4.1bn.
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> Stuart does not own any share mentioned in this article.