William Hill left counting the cost

Jan 11 2008 by Peter McCusker, The Journal

BOOKMAKER William Hill took a £26m profits hit after it ditched a major upgrade of its internet betting operation.

The group has spent three years developing technology which would have allowed punters to place multiple bets during a variety of sports fixtures.

But after a management review in, bosses decided to write off the work done and bring in experts to install separate technology.

William Hill said its system would taken several more years to develop, while already available software could be installed within the year. The write-off led to a £22m one-off charge for the business in 2007, with another £4m of associated restructuring costs to come this year. The internet also impacted on a trading update from William Hill yesterday, with underlying earnings for the 53 weeks to January 1 due to be around £285m – down from broker forecasts of around £292m.

The retail and telephone phone betting arms comprise around 88% of the business, with the internet making a disappointing contribution due to the “legacy technology issues”, the group said.

Management said they expected the performance of the internet arm to “remain challenged” until new the technology is installed, around the end of the year.

Hill said it was also in talks with racing channel Turf TV, a breakaway service that provides footage from 31 courses including Ascot and Aintree.

The channel was set up after the courses broke away from 28 others and formed their own broadcasting service for bookmakers.

Other betting firms Ladbrokes, Coral and smaller firms Paddy Power and Stan James have all agreed to show Turf TV, with just William Hill and BetFred yet to take the service.

Hill’s shares suffered after the trading update, losing 7% or 28.25p to 405p. This reflected broker caution, with Investec downgrading 2008 profit estimates by 7.5%.

Analyst Matthew Gerard said: “There is a chance of further downgrades through the first half of 2008.”