William Hill Unruffled By Gloomy Economic Picture

William Hill, which vies with Ladbrokes for the title of Britain’s biggest bookmaker, said today it did not expect to see a significant impact from the consumer spending slowdown.

Ralph Topping, its new chief executive, said that although it was “difficult to be definitive” at this stage of the economic cycle, he could find no evidence of any impact so far and, based on his past experience, he did not expect to see any.

Analysts agreed that the small stakes nature of most of its business and the social aspect of visiting a betting shop for regular punters meant it was less exposed to the economic cycle.

Mr Topping also remained sanguine about last week’s £1 million win by a customer in Thirsk, North Yorkshire, who put a 50p stake on an eight-horse accumulator. He said it would act as a great marketing tool, although he added: “I wouldn’t like to see it happen every day.”

He revealed that he had been telephoned by colleagues just before the last of the eight races to alert him to the potential losses riding on it. “They were very cruel. They made me listen to the commentary live.”

Mr Topping said he had not spoken to Freddie Craggs, a 60-year-old grandfather, but added: “Fantastic, well done to him. If I find myself in Thirsk, I’d happily buy him a pint.”

William Hill this morning reported a 5 per cent fall in pre-tax profits to £223.4 million in the year to January 1, on the back of a 6 per cent increase in the gross win — the amount left behind by the punter — to £983.7 million. Adjusted earnings per share rose by 4 per cent to 47.4p and the final dividend is 7 per cent higher at 15.5p.

Those numbers do not include the impact of the group’s recent decision to scrap a protracted programme to change its internet technology and replace it with a new technology platform from Orbis.

The move, designed to allow William Hill to cash in on the boom on “in-running” betting during a race or match, resulted in an exceptional charge of £20.9 million and there will be a further £4 million hit against this year’s profits.

The poor quality of its existing technology compared with rivals meant that operating profits from its interactive division fell by £10.6 million to £50.9 million from a gross win 8.2 per cent lower at £119.8 million.

Its 2,294 betting shops reported a 9 per cent increase in the gross win to £802.6 million, with over-the-counter bets up 3 per cent on a comparable basis and gaming machines up 15 per cent.

The net contribution from its 8,382 machines rose from £433 a week to £466, despite a £38 hit from the imposition of duty in August 2006. The incremental cost of the duty during the year was £10 million.

Mr Topping appeared unruffled by the prospect of a fresh review of the controversial machines by the Gambling Commission as part of the Government’s continuing campaign against problem gambling. “The Government will do what the Government will do,” he said.

Its over-the-counter performance was affected by poor fotball results in September and October, reversing early season gains, and the loss of 88 horserace meetings to the poor summer weather.

Telephone betting gross win was £4.5 million lower at £53 million due to the absence of a World Cup and lower high-roller activity.

The company said that the gross win across the group in the first seven weeks of the current year had risen by 4 per cent — “a solid start given strong prior-year comparatives” — and it remained confident of further growth in its retail business, despite the estimated £11 million to £12 million cost of securing TV coverage of race meetings from Turf TV.

There will also be an estimated £8 million start-up loss this year from its fledgling joint venture with Codere in Spain and Italy and its international operations are not expected to break even until 2010.

It also faces a legal challenge to its recently awarded licence to run betting outlets in the Basque region. A complaint of bias in the awarding of the licence has been made by some of the unsuccesful bidders, including Ladbrokes.

Its bitter rival is also pursuing opportunities further afield, in China and Vietnam. But Mr Topping pointedly ruled out a similar move for William Hill. “I live in the real world. You’ll never catch me in a canoe up the Mekong Delta. We’ll focus on what we’re doing and doing it well.”

Mr topping refused to comment on the court case being brought against it by a punter who claims the bookmaker should have stopped him betting as he ran up losses of £2 million. He insisted the company adopted a socially responsible approach, but conceded: The outcome could be very interesting.

Shares of William Hill added 11p to 413.5p while Ladbrokes rose by 3.5p to 326.5p.

Tag Cloud

External Information

Additional Information

Where Am I?