Britain's second biggest bookmaker William Hill, reported a decline in full-year earnings reflecting a 'disappointing' performance from the company's internet division, offsetting gains from the retail business.

The group's online division has been impacted by ongoing technology issues and an increasingly competitive trading environment. Shares were off marginally, down half a pence at 402p.

Pretax profit for the year to 1 January came in at £209.2 million, compared with £235.4 million the year before. That was below market expectations which ranged between £212-229 million. Pretax profit before exceptional items fell 2% to £286.7 million.

Total gross win increased by 6% to £983.7 million, from £931.3 million. Total revenue was £940.4 million, compared with £894.2 million the year before.

'2007 has seen the group deliver a solid performance in light of the additional cost burden from a full year's charge for Amusement Machine Licence Duty and the competitive market environment in which our Interactive business operates,' said chairman Charles Scott.

Scott said the company expects 2008 to be a 'transitional' year for the online business as investments are made to 'lay the foundations for future growth'.

'The most significant of these is the replacement of our interactive sportsbook technology system with the new, more flexible ORBIS platform. We will also be focusing on exploiting the opportunities available to our online gaming business,' he said.

Scott said the company remains confident in the prospects for its retail business which, despite increased costs relating to Turf TV, is expected to benefit from continued machine income growth, the full-year impact of evening opening, targeted investment in estate development.

The company said its gross win increased by 4% in the seven weeks to 19 February, against a strong comparative period. Last week, William Hill appointed Ralph Topping, who has been at the company since 1973, as its new chief executive.