Interim results for the half year to 30 June 2009 have been announced by Ladbrokes plc. The Group reports that net revenue fell 6.6% to £504.4 million and operating profit decreased by 25.6% to £98.6 million, although High Rollers profit was up from £40 million in the first half of 2008 to £58.4 million.

Christopher Bell, Chief Executive, commented: “Since we updated the market in mid-May, the deterioration in staking levels has been partially mitigated by lower costs. Our priorities are to continue to vigorously reduce costs, drive revenues and thereby improve profitability. In the period from 1 July to 4 August Group net revenue (excluding High Rollers) fell by 11.3%. The fall in UK OTC amount staked of 8.0% was in line with our latest expectations but net revenue was adversely impacted by a weak margin.”

Ladbrokes’ Management is focused upon the following cost reduction and revenue enhancement measures: Improving operating margins and further reducing costs; Driving machine revenues through an improved portfolio of machines and games; Maximising revenues through the use of the OddsOn! programme; Selling the Italian Retail business; Relocating Ladbrokes online sportsbook to Gibraltar by the end of the year; Strengthening the market leading position of our UK online sportsbook; and Maintaining a strong balance sheet.

Commenting on the challenging regulatory environment in Europe, Ladbrokes says that the ten infringement proceedings against Member States have yet to result in a case being brought before the European Court of Justice. The company adds that, following Italy’s lead, countries such as France and Sweden are moving to regulated and taxed regimes where current intentions make the commercial viability questionable.

UK Retail net revenue fell by 7.4% over the period to £343.6 million. Over the past six months six new B2 and B3 games have been introduced. To further improve the machines performance Cyberview/IGT have committed to launch upgraded software associated with the operating platform for their Cyberview terminals in Q4. This will offer improved graphics, customer interaction and 20 games, nine of which will be exclusive to Ladbrokes.

At 30 June 2009 there were 2,093 shops and 48 on-site trading outlets in Great Britain, representing six openings, four closures, 11 relocations and 27 shops refurbishments, and closed four on-site outlets. At the end of the first half there were 7,897 machines.

The environment in Ireland is particularly challenging and 36 shops have closed across the industry so far this year. At 30 June 2009 there Ladbrokes had 208 shops in the Republic of Ireland and 78 shops in Northern Ireland. Five unprofitable shops will be closed in the second half of the year.

Gross win in Belgium showed a rise of 27.8% owing to the net addition of 33 shops which brings the estate total to 304 at 30 June 2009. Operating profit was flat at £1.8 million largely reflecting the increased costs associated with the higher amount staked in the estate and the legal requirement to index employee costs, which this year rose 4.6%.

Despite the difficult economic environment in Spain, Ladbrokes’ performance is encouraging and Sportium is now the clear market leader. The long term success of the business remains dependent on regulatory change in other regions. At 30 June 2009 the estate numbered 68 corners and two stand alone shops. By the year end Sportium expects to have around 100 outlets open and trading in Madrid.

eGaming has shown good growth in customer numbers with sign-ups growing 5.1% and active customers up 9.4% as a result of some very successful recruitment activity. This positive performance was offset by a poor gross win margin for the sportsbook, softer yields in the casino business, particularly from the high staking players, and a very competitive and difficult poker market. Net revenue fell by 2.3% to £84.6 million with average player yield down from £160 to £143.

Ladbrokes intends to operate its sportsbook from Gibraltar by the end of 2009. The Group’s preference to date has been to operate its online sportsbook from its UK base, but intense competitive pressures have forced this move, which will materially improve competitiveness and, in 2010, eGaming’s operating margins. Ladbrokes has today introduced “Best Odds Guaranteed” on all UK and Irish horseracing.

Ladbrokes intends to sell its Italian operations as revenue growth has been below expectations due to the continued presence of illegal shops. The company is seeking to sell its Paddington Casino in London and is presently in talks with potential buyers.

Christopher Bell said, “The economic and trading environment remains challenging and continuing uncertainty makes forecasting difficult. Given the revised cost guidance for UK Retail and phasing of marketing costs in the eGaming business, the Group still aims to meet its full year expectations.” (E-08.06.09)

© Copyright 2009 CasinoCompendium



>>> return to archives
>>> return to frontpage