William Hill off to a racing start with record £100m interim profits

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The Independent Online

William Hill, Britain's number two betting shop operator, provided a fillip for the gaming sector yesterday, after it told investors to expect record interim profits.

The company, which listed on the stock market last year, said strong trading across the board meant it would post record profits before interest, taxation and exceptional items for the six months to 1 July of more than £100m, against £80.1m a year earlier.

The news sent its shares, which were floated at 225p, 7p higher to 290p and also buoyed other gaming stocks. Hilton, which owns Ladbrokes, gained 5.25p to 190.75p, while Stanley Leisure, rocked by a profit warning in April on the back of a poor Cheltenham Festival for the industry, added 8.5p to 325p.

David Harding, William Hill's chief executive, said the group had benefited from longer opening hours across its 1,500-strong betting shop estate, the addition of virtual horse and dog racing, more income from football bets and extra gaming machines. "We are clearly still seeing the effect of GPT [gross profits tax] working through. The customer is finding that betting is good value for money," he said. The Government replaced a tax on punters' winnings with a gross tax on company profits in October 2001.

Asked whether the company could sustain growth rates that will see underlying earnings increase by double digits, he was bullish. "We can extend our product range. We are looking at ways to diversify and don't rule out other acquisitions up and down the value chain, as well as adding more shops," Mr Harding added.

The company said it was "experiencing real growth in customer spend across all channels". It added: "Subject to sporting results adhering to long-term norms in the second half of 2003, the current trend in the group's trading performance would indicated a full year out-turn materially ahead of market expectations."

Smith Barney raised its forecast for earnings before interest and tax this year by 10 per cent to £182m. At Investec Securities, James Wheatcroft said he would increase his pre-tax profit estimate of £142.9m by up to 10 per cent.

Mr Harding said he expected a High Court case that will establish the legality of fixed odds betting terminals to be heard after the summer recess. The casino industry is challenging the legality of the machines, cash cows for bookmakers, because they allow punters to bet on casino-style games such as roulette.

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