Wm Hill defies relegation

Ros Snowdon Deputy City Editor Britain's biggest bookmaker William Hill is looking forward to a bumper 2006 as punters place bets on the outcome of the football World Cup in Germany this summer.

England has been seeded as one of the favourites to win the tournament and interest is riding high following the news that the group has a relatively easy passage through to the later stages.

The fact that Germany is hosting the competition also makes it easier for England fans to watch the matches live as the time difference is minimal.

Wm Hill said yesterday that annual profits in 2005 were likely to be above expectations.

Analysts had expected the group would make pre-tax profits of between 230m and 240m before exceptional items.

But in its first trading update since it was relegated from the FTSE 100 Index to the FTSE 250 Index last month, Wm Hill said it expected profits to be slightly in excess of the previously indicated range for the year to December 27 2005.

It also said it was also confident about its prospects for 2006 – buoyed by the roll-out of new technology and the prospect of heavy betting on the World Cup in June and July.

The group was hit by an extraordinary string of accurate tips from a columnist on punters' bible, the Racing Post.

Over the summer months writer Tom Segal tipped a winner on ten consecutive Saturdays in his Pricewise column, including one tip at 20-1 odds.

"That hurt us in July and August," said chief operating officer Tom Singer.

In mid-November the group cut profit forecasts to between 230m and 240m, down from previous estimates of between 240m and 260m.

In May 2005, Wm Hill paid

504m for 624 Stanley Leisure betting shops to become Britain's biggest bookmaker, ahead of Ladbrokes.

Following the announcement of the deal it was ordered to sell 50 outlets by the Office of Fair Trading.

The group said yesterday that the successful integration of the Stanley Retail Betting businesses and roll-out of electronic points of sale and text systems should be beneficial in 2006.

Wm Hill will report full-year results for 2005 on March 2.

In spite of the better news, analysts remain sceptical about the betting industry's overall health.

"Although the bookies were due a run of better form, we remain concerned about the underlying structural issues at work within the industry," said analysts at Merrill Lynch in a research note.

They added that while the continuing 250m share buyback is likely to act as a support for the shares, continuing trading volatility and risks associated with the integration would provide further uncertainty in the near term.