The Week Ahead: Online betting firms becoming a bigger gamble

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The Independent Online

The timing of the arrest last week of Peter Dicks, chairman of Sportingbet, could not have been any worse for the online gambling industry, coming smack in the middle of reporting season. 888 Holdings, the second-largest online gambling group, will have to produce blockbuster figures on Wednesday if the ongoing legal drama is not to overshadow its own performance.

888 Holdings derives approximately 50 per cent of revenues from US gamblers, significantly less than its main rival PartyGaming and compared to the rest of the sector. The group, in line with its rivals, has also made efforts to expand its business in Asia and Europe and minimise its reliance on the US market.

Talk of consolidation in the sector has been rife and despite the arrest of Mr Dicks, 888 remains one of the most widely-tipped takeover targets. The real question for investors is whether or not traditional gambling companies will be prepared to invest in an online business with such high-profile legal issues. The answer, for the time being anyway, is probably not. HSBC is looking for first half pre-tax profits from 888 Holdings of $46.5m.

TODAY: NETeller, which provides internet casinos with the means to transfer cash to and from players, should be relatively immune to the industry's legal woes. Broker Canaccord Adams expects a bumper set of results showing revenues up by 60.1 per cent to $117.6m, compared to last year's first half. However, given the current atmosphere in the industry attracting buyers to the shares will remain difficult.

UTV, the commercial broadcasting group, had two merger proposals with SMG rejected last month, so investors will be hoping to hear more on the company's corporate strategy. A merger with SMG could still be on the cards, but UTV shareholders will have to be prepared to accept only 45 per cent of the enlarged group.

Results: First half - Bovis Homes Group; Chaucer Holdings; Enterprise; Forth Ports; Group 4 Security; Hiscox; Imperial Energy; Lighthouse Group; Monterrico Metals; NETeller; Oxford Catalysts; Property Recycling; Psion; Star Energy Group; TT Electronics; UTV; Whatman.

TOMORROW: French Connection investors will be keen to see some sort of improvement in first half performance. The shares have shown some signs of life in recent sessions, after another profit warning in May, its third in less than 12 months. With the activist fund manager Brandes now owning 8.5 per cent of the company, another warning will surely result in pressure for the company to put itself up for sale. Broker forecasts are split, ranging from a pre-tax loss of £4m to a £2m profit.

It isn't so long ago that Chime Communications looked like it was not going to survive the fallout from the boom, as shares in the marketing and public relations group collapsed from 150p to under 10p. Since early 2003 the shares have more than trebled to trade at 36p by the market close last week. Interim results should show a solid first half following on from a bullish pre-close statement given the to market on 7 June. Consensus forecasts are for £5.3m in first half pre-tax profits.

Results: Full year - Allergy Therapeutics; Ascribe; GlistenGroup; Macro 4; Surfcontrol; Teesland; Thorntons. First half - Brady; Charter; Chime Communications; Cobham; Computacentre; Drax Group; Evolution Group; French Connection; Gyrus Group; Interior Service Group; IP Group; Kiln, Litho Supplies; NSB Retail Systems; Redrow; Sirius Financial; Vernalis.

WEDNESDAY: SMG follows swiftly on the heels of UTV, although by the time SMG reveals first half numbers the merger could be back on, depending on what UTV says on Monday. Broker Dresdner Kleinwort is looking for first half pre-tax profits of £7.5m.

Results: Full year - Alumasc Group. First half - Acambis; Alliance Parmaceuticals; BAE Systems; Celoxica Holdings; Econergy International; Ennstone; Hikma Pharmaceuticals; Next; Omega International; Osmetech; Provident Financial; Puricore; Restaurant Group; SIG; SMG; Xaar.

THURSDAY: Home Depot, the US do-it-yourself giant, ruled out a bid for Kingfisher last week, ending months of take over speculation. The owner of B&Q in the UK and Castorama in France has had a difficult 12 months, in line with its rivals. Second quarter like-for-like sales at B&Q were weak and the market is expecting some improvement, but in a rising interest rate environment delivering margin and sales growth is a big ask. Consensus forecasts are for pre-tax profit of £164m.

Results: Full year - Kier Group; Quayle Munro. First half - 888 Holdings; Aggreko; Ant; BATM Advanced Communications; Cattles; Dignity; Kingfisher; nCipher; NWD Group; Old Mutual; Unite Group.

FRIDAY: Results: First half - Stem Cell Sciences.