Picking a winner among the UK's bookies in the past two years has depended on which companies have the biggest exposure to regulated betting while being able to broaden their appeal to punters by offering 'in-play' betting and betting via mobile phones. Clear divisions have opened up between the big bookmakers. Shares in William Hill (WMH) and Paddy Power (PAP) have got premium ratings after these companies successfully 'digitised' their services. That has left Ladbrokes (LAD), the Queen's bookmaker, struggling to catch up, although its bosses are determined to improve its digital offering through a self-help programme. Even so, Ladbrokes' rating is significantly lower than its main rivals because investors assume the group won't be able to improve its digital offering quickly. However, that assumption is starting to look dated as the latest results show that Ladbrokes' core business of taking and placing bets is in excellent shape and that its strengths are being undervalued.
- Leader in machine gaming
- Strong retail business
- Online finally improving
- Excellent cash generation
- More online investment needed
- May not make up lost ground
The healthy state of the core UK over-the-counter betting business was the biggest factor behind Ladbrokes' solid results for 2012, which showed basic earnings per share up 62 per cent to 21p. The 8 per cent growth in the UK retail division's net revenue to £740m translated into an impressive 18.6 per cent increase in operating profit to £180m and emphasises Ladbrokes' success in 'fruit' machines.