Since that coup was executed on July 5 the shares have been in freefall. Just four days later Earthport, an Aim-listed company specialising in the provision of secure electronic payment systems, confirmed it had sent a letter to Baltimore concerning a series of agreements which it alleges were entered into in March 2001. The letter sought the return of £4.5m (€6.75m) which Earthport alleged was paid under contracts. Taken together with damages and other claims the potential bill, should Earthport prove successful, is estimated at £13.5m.
With this legal action hanging over the company it is little wonder the shares have collapsed to 24p. The battle between Acquisitor and the Khezri-led board was centred on Baltimore’s cash pile of £24m but even before the changing of the guard Khezri had surprised investors with the news that £18m of this figure would be eaten up by liabilities.
Having spent so much time and energy winning control of the company we imagine Aquisitor wishes it had given Baltimore a wide berth. Penny-share aficionados should do the same.
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Bet on it
This year has been heaven for British bookies. Ladbrokes, the betting arm of Hilton, the international hotelier, will prove this when it reports interim figures on Thursday. The main reason is the boom in fixed-odds betting terminals, the modern version of the fruit machine.
New gaming legislation in the UK means that Ladbrokes can have 5,800 terminals in its 1,850 shops, and customers can’t get enough of them. Touch-screen roulette is the big game, and users find the odds much better than the lottery.
Deutsche Bank said that in the first six months Ladbrokes is expected to make £148m (€219m) from gaming — the same as in the whole of last year. Fixed-odds terminals are already eclipsing the money made from horseracing and other traditional betting.
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Good news is everywhere. First, Ernie Els, the South African favourite, fluffed the play-off at the British Open, and saved Ladbrokes £2m. Then Serena Williams, the women’s final favourite, lost to Maria Sharapova and, of course, Greece won the European football championship.
But the biggest profit generator is the terminals. Therein lies the rub. The City will get terribly excited by this huge new revenue, but investors should be cautious. We have probably already seen the best of the growth and unless the market is liberalised again, future prospects will depend on e-gaming and telebetting, an area where Ladbrokes is still catching up with its rival, William Hill.
Some 65% of Hilton’s profits now comes from gaming (compared with 40% a few years ago) and the latest figures could rekindle hopes that David Michels, Hilton’s chief executive, will demerge gaming and hotels into two companies. But if he does it is at least two years away.
For the time being, gaming is a good foil for the hotel business, which is still trying to make up for the £65m of profit it lost last year after the tourist trade collapsed in the wake of September 11. There are signs that customers are starting to come back. The Middle East and Asian markets are firing on all cylinders, but some capitals, such as Paris and Tokyo, are still finding the going tough.
Hilton’s full-year profits are expected to be £355m, against £272m last time. Deutsche has set a target share price of 265p against Friday’s close of 257p. The shares are trading on a forward p/e of 14 times, but if they are to climb further, investors will want an explanation of Hilton’s tax position.