William Hill Ordinary 10p (WMH)

Company overview

The Group's core activities are the operation of licensed betting stores and the provision of telephone and Internet betting and online casino and poker services.

HL Comment (2 August 2007)

After floating at 225p a share in June 2002, William Hill shares have made impressive progress, with the acquisition of Stanley Leisure’s 624 betting shops positioning the group as the country’s biggest shop operator ahead of rival Ladbrokes - with around 2267 outlets.

Changes in the law to allow Fixed Odds Betting Terminals - effectively electronic casino games - into betting shops, along with the Government's replacement of betting duty with a tax on the gross profits of bookmakers, have both helped to propel the shares in the right direction. The group’s internet access to an array of gaming and betting facilities has also helped drive the share price forward.

Recent half year results (early August) saw the group report relatively flat pre-tax profits, with the figure rising from £160m for H1 2006 to £161.2m. The results were set against a difficult backdrop. Not only were comparatives made difficult via last year’s World Cup football tournament, but floods across much of middle England have cancelled many racing events. That said, the continued rollout of Fixed Odds Betting Terminals across the group’s estate of licensed betting offices is more than compensating for the negative effects to its over the counter business. Furthermore, like rival Ladbrokes, the group is also progressing a slow move overseas, with moves into Spain and Italy.

Negative investor concerns focus on the coming change of the Chief Executive and the often volatile nature of gaming profits. On the positive, management did provide a relatively upbeat outlook statement to accompany the half year results, the share buy-back scheme is to be resumed and the group is attempting to diversify via its move overseas. On balance, current market consensus opinion is cautiously positive in tone.

All yield figures are variable and not guaranteed.

Fundamental Data

* Prior to 26th December 2006, figures were stated under UK Generally Accepted Accounting Principles (GAAP). Recent figures stated under International Financial Reporting Standards (IFRS).