The bookmaker William Hill, in a bid to expand its online gaming operation, is planning the acquisition of parts of software maker Playtech.
William Hill revealed that consumer downturn had so far not affected its growth, which was boosted by strong beginning of the Premier League foot ball season.
The part acquisition by William Hill to create the biggest sports betting and online gaming company of Europe includes marketing business, customer services and gaming websites of Playtech, the provider of online gaming software.
William Hill has also entered into 5-year software license agreement for poker and casino with Playtech, with provision to enter other product areas at later stage.
The new entity being created with combination of operations between William Hill and Playtech would be called William Hill Online, under control of William Hill and operated as a subsidiary.
William Hill Online is expected to generate net revenue of £190m for the year ending 31 December on pro forma basis. Playtech is getting 29% stake from William Hill in the new entity with an option to William Hill of acquiring its shareholding in 4 to 6 years.
William Hill has so far posted 9% uplift in total gross wins. Gross wins is the difference between amount won by the company and that lost by the punters. 7% increase in gross win boosted overall performance.
Marston, the owner of the Two for One and Pitcher & Piano chains, warned that high costs of energy, food and brewing materials were taking its toll and expenses were likely to increase by £12m next year. The company is expecting an increase of 2% in turnover for the current financial year.
Marston’s managed pub division registered a 0.6% drop in like-for-like sales and needed a 3% growth in the current year to maintain the same level of operating profit.
The company is planning to offset increases in costs through improved sourcing and a reorganisation of the head office which was carried out recently.
According to Marston’s, its duty burden was quite high. Its pubs were being subjected to strict regulations and retailing of alcohol was supervised by the trained staff. It claimed that recent legislations and tax increases brought more commercial pressure on the pub operators and tenants causing increasing differential in alcohol prices between pubs and off-trade.
Marston’s is considering current trading scenario as testing and informs that it offered support of worth £2m to tenants and lessees of Pub Company division.
Maston’s is the largest brewer of premium cask ales in the UK. It operates Jennings Brewery at Cockermouth, Marston’s Brewery at Burton, Ringwood Brewery in Hampshire and Banks’s Brewery at Wolverhampton.
According to Mark Brumby, a Blue Oar Securities analyst, group’s performance figures indicate that its business model is resilient and group is sure to make profit even in the current difficult conditions.
The consumer economy data by the British Retail Consortium is supporting the view that the UK economy is heading towards a full-blown recession. The Consortium reported that sales growth at UK stores had gone down to 1.5% in September 2008 compared to September 2007.
The market research firm Gfk revealed that nearly 65% of UK shoppers were going to cut down their spending in Christmas than last year.
The air traffic control company Nats reported a fall of f 2.1% in its arrival and departures compared with last year. Its transatlantic journeys accounted for 8.9% fall in flights.
The greeting card retailer Clinton Cards suffered a whopping loss of £13.1 million for 53 weeks to August. It is planning closure of stores and reduction of staff.
Food and drink sales which were up last year in September are down this year. According to KMPG’s head of retail, Helen Dickinson, the immediate concern was the extent of impact of current economic situation on Christmas sales in the UK.
The Gfk survey of 618 households pointed out that 36% of respondents were going to spend much less while 26% had plans to cut back spending ‘a little’.
The difficult scenario however had few positive signs. The prices fell by 0.3% in September while the drop was 0.7% in August, the biggest since 1986, as reported by Office of the National Statistics.
The rise in year-on-year producer output prices fell to 8.5% form 10% peak of July as a result of slump in oil prices.
The managements of Britain’s biggest companies are losing confidence as they find capital investment and employment retention becoming riskier due to the unabated financial crisis which has threatened the global economy.
According to the accounting company Deloitte, the optimism levels of the finance directors of big companies about the financial outlook fell at the fastest rate during the third quarter of the current year. The survey revealed that most companies are planning to cut investments in business and reduce employee strength amid credit crunch and rising costs. Most of the finance directors were found favouring drastic cuts in the dividends.
The survey pointed out pessimism among respondents towards the possibility of improvements in credit conditions until the second half of 2009. A large number of companies were thinking to move their corporate base to cheaper tax regimes outside the UK in order to minimise costs.
According to Margaret Ewing, partner and vice chairman of Deloitte, financial officers are gearing up for a longer period of distress in credit markets, by initiating measures such as cash preservation and cost-cuts.
Another survey pointed out that sectors other than financial services were also facing slump in confidence. Activities in eastern England, Wales, the South-east and North-east and West Midlands had biggest fall in business for the 10th consecutive month, with exception of London which recorded modest growth.
The effect of credit crunch is spreading like a virus. Insurance companies are faced with a surge of claims by the companies holding policies of credit insurance. The surge is almost 30%, as per a report by the Association of British Insurers (ABI).
ABI data to be released this week indicated 31% rise in claims in the second quarter of 2008. Company insolvencies were likely to add to the number of claims in the third quarter.
Credit insurance policies are meant to protect suppliers from financial losses by the companies if they fail to pay on time for the material or services provided by the suppliers. According to ABI’s director of general insurance Nick Starling, trade credit insurance claims are the barometer of the economic condition and its impact on the UK businesses. He remarked that increasing number of claims was a pointer to the pinch being felt by the UK businesses.
Credit insurers had been ignored when businesses were doing well and the economy was quite strong. The pulling of credit insurance cover has affected many big companies including sports retailers JJB and Woolworths in the last two months. Starling recalled that ABI had witnessed a surge in claims and bad debts during the bust in 2000.
A large number of factories in the UK might be forced to close down due to likely surge in power prices in late autumn and winter.
The country is likely to face acute power shortage since many power stations would be undergoing repairs and coal-fired plants being closed for installation of pollution control equipments during winter. This has caused big surge in power prices much ahead of winter.
The price warning came from the Energy Intensive Users’ Group, a representative body of the factories which consume more gas and electricity. The Group’s director Jeremy Nicholson informed that increase in base-load prices was huge and prices almost doubled compared to what they were last year. This pushed up costs at a time when sales in many sectors were falling sharply.
Jeremy did not rule out possibility of suspension pf operations by the factories to save money. In addition, he added, factories were more apprehensive about power supply conditions on account of scheduled maintenance of power plants in the country during winter.
Jeremy stated that despite of current downward trend in energy prices on world commodity markets, it would take few months for the benefits to reach customers.
British Energy, the major supplier of power in the UK, declared that 2 of its nuclear reactors at Heysham and Hartlepool were likely to restart only in 2009 while four others would start functioning in 2008.
The recruitment specialists Hays recorded an 8 per cent dip in its fees in the first quarter for the UK and Ireland, indicating slowdown in the job market.
In the three months leading up to September, the company’s global performance was disappointing, with an increase of just 1 per cent in permanent placement fees, though temporary positions fetched an additional income of 8% due to strong demand in Germany.
According to Hays chief executive, Alistair Cox, the unabated decline in the housing market, coupled with big cuts in the financial services staffing, took its toll on UK recruitments. He added that a larger economic issue confronted by the corporate and weakening confidence of candidates was impacting the UK adversely. He noted that City-related activities and property and construction sectors were the most affected areas on account of huge reduction in demand.
The only sectors performing strongly included retail, purchasing, healthcare and education, reported Hays. The increase in technology industry recruitment was modest but the rise in income from clients in public sector was significantly up by 15% in the same period.
Hays itself resorted to second staff cut of 5% in the 1st quarter after cutting 7% of strength in second half of last year.
Unions were highly agitated over an announcement by Hewlett-Packard that it would be removing 3,378 staff in Britain from their jobs. HP had taken over the IT company EDS barely a few months ago. The Public and Commercial Services (PCS) Union, representing more than 2,000 EDS staff, warned that a reduction of staff during the next 2 years would severely affect Home Office and prison services, while derailing computerised services to pensioners, defence personnel and benefit claimants. The Union warned that attempts to make compulsory redundancies would be opposed vigorously.
The computer maker has plans to sack more than 24,600 workers globally and is expected to remove a large number of staff after taking over EDS. HP is however sacking more than 20% of 15,000 EDS staff in Britain, which is 10% more than what union had been fearing about.
According to PCS general secretary Mark Serwotka, HP’s announcement has created further uncertainty and given a huge blow to the employees in face of economic turmoil. He remarked that not only the jobs of employees but also delivery of public services that relied on former EDS’s IT services was thrown to a bigger risk. He said that union would demand details from management on compulsory redundancies.
HP refused to discuss which of the 200 sites across Britain including Birmingham, Aberdeen, London, Glasgow, Sheffield, Swansea and Exeter employing EDS staff, would be facing job cuts. It did however indicate that based on local legal requirements and consultations with employee representatives, it would redeploy, where possible, impacted employees.
Hit by rising costs and a decline in sales due to unfavourable weather, bakery chain Greggs made a £3m cut in its full-year profit forecasts. Greggs, which has 1,400 outlets in the UK, decided not to pass on the full increase in energy and ingredients costs to the customers.
It blamed poor weather in August and early September for a 3.9 per cent drop in like-for-like sales in the 16 weeks to October 4, although sales picked up since mid September and grew by 5.7 per cent. The analysts have predicted pre-tax profit haul of £48 million for the full year ending December.
Greggs announced that as a result of slowdown in the sales growth and temporary impact of rising costs on margins, it was revising its estimates of operating profits with a £3 million cut for the current year. Greggs claimed that it was absorbing some of impact on margins with a desire to retain the brand’s value-for money status in the market. It acknowledged that ingredient prices were stabilising and were coming down in case of vehicle fuels and vegetable oils.
This, coupled with tightening of controls on operating costs, was a promising positive outlook for its operating margins in remaining 12 weeks of the current financial year, Greggs hoped.
The WH Smith Group reported an impressive 15% jump in its full-year profits helped by strong performance by its airport, motorway and railway station stores.
The group posted £76 million surplus for the year to August 31. Store travel portfolio sales, excluding tobacco, at 449 stores rose by 3% on like-for-like basis, offsetting a 3% drop in comparable sales in high street business.
WH Smith said that it also achieved its cost saving targets of £8 million over the year and was set to generate £10 million more.
The group is expecting the Christmas trading season to be competitive but was confident of buoying business with the opening of 6 more standalone book stores at airports by the end of December, making a total of 15.
It has decided to launch postal service in its existing 400 stores in partnership with DHL targeting the eBay users market. The first DHL postal point by WH Smith was introduced yesterday. Customers are allowed to purchase pre-packaged boxes, which are put at in-store collection points for dispatch.
The group’s chief executive Kate Swann informed that travel stores continued witnessing fall in tobacco products sales due to smoking ban in enclosed areas.
She added that trade at airport had eased back on account of slowdown in travel due to soaring oil prices and collapse of XL Leisure and some other firms.