Investors seem to be taking Ray Winstone's advice, pressing the 'cash-out' button on bookmaker William Hill (WMH) today as its shares fall 4.3% to 360p on a 7% drop in operating profit in the fourth quarter.

The £3.3 billion cap has been hit by punter-friendly sporting results and the introduction of the 15% Point of Consumption tax in the UK.

UK retail EBITDA (earnings before interest, taxation, depreciation and amortisation) is down 13% in the fourth quarter, but strong online gaming revenue pushes group EBITDA up by a record 11% to £371 million for the full year.

WILLIAM HILL - Comparison Line Chart (Rebased to first)

Management says 2015 has got off to a poor start with ‘highly unfavourable’ week three football results and a new EU VAT charge on electronic services. The group expects an additional tax hit of £5 million a year from this and other regulatory changes.

Although a report by the Responsible Gaming Trust on 1 December refrained from recommending a cut in the amount of money which can be gambled on betting machines, bookies still face the risk of UK politicians caving into anti-gambling campaigners in an election year.

Numis says William Hill offers exposure to a business with upside from underlying growth online, geographical expansion and continued investment in technology but it notes the regulatory uncertainty and tough comparison against a World Cup year.

The bookmaker will also spend £5 million on converting the Australian Sportingbet business it acquired two years ago to the William Hill brand.

Numis forecasts estimated EBITDA of £303 million in 2015 with a target price of 400p, representing a potential upside of 11%.

Issue Date: 20 Jan 2015