Progress at a future date was very much the theme of Ladbrokes' full-year results, with chairman Peter Erskine promising investors: "The new Ladbrokes can hold its head up high at the end of 2012." The results for 2011 reflected Ladbrokes' brands strength which, despite some adverse sports results, were solid enough with operating profit flat at £193m. Nevertheless, it was obvious that a lot of incremental improvement will have to take place this year now that the board has ruled out big-money acquisitions as a way of boosting its under-powered digital offering.
A lot of attention was focused on this area as Ladbrokes' chief executive Richard Glynn has made the improvement of digital revenues a key part of his turnaround plan. Poor sports results and a decline in online poker caused net revenue there to fall by 3.5 per cent to £163m and operating profits to slide by 12.3 per cent to £55m. However, Mr Glynn said the new marketing campaign for digital delivered a big impact in the last quarter, which resulted in a 77 per cent rise in sportsbook sign-ups and the number of consistently active players increasing by 24 per cent. Online casinos benefited from these initiatives, too, and players are increasingly using mobile devises to place their bets in both channels.
The UK over-the-counter (OTC) business continued to be the bedrock of Ladbrokes' business, with net revenue 2.7 per cent higher at £683m – that helped operating profits edge ahead to £152m. Although amounts staked in betting shops were marginally higher than last year, adverse football and horseracing results in the second half meant a 5.9 per cent decline in net revenue for the retail estate to £385m. That meant the division had to rely on the successful roll-out of new betting machines – there are now over 8,100 terminals in 2127 shops – to stay in positive territory. In fact, net revenue from machine betting jumped 16.6 per cent to £298m.
Ladbrokes' European OTC business delivered slightly lower sales of £124m and a £0.5m dip in operating profit to £13.4m due to weakness in the highly competitive Irish market and deepening losses in Spain. That more than offset the profit boost resulting from regulatory changes in Belgium.
Broker Peel Hunt forecasts pre-tax profits for 2012 of £168m and EPS of 15.6p (from £160.7m and 15.3p in 2011).
LADBROKES (LAD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 144p | MARKET VALUE: | £1.31bn | |
| TOUCH: | 143-144p | 12-MONTH HIGH: | 157p | LOW: 113p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 34p* | NET DEBT: | 148% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.23 | 345 | 39.8 | 11.8 |
| 2008 | 1.15 | 258 | 31.2 | 12.1 |
| 2009 | 1.03 | 174 | 19.5 | 3.0 |
| 2010 | 0.98 | 147 | 41.5 | 7.6 |
| 2011 | 0.97 | 135 | 13.0 | 7.8 |
| % change | -1 | -8 | -69 | +3 |
Ex-div: 14 Mar Payment: 26 Apr *Includes intangible assets of £629m, or 69p a share | ||||
