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Ladbrokes plc 34% Profit Decline

The British online and land gambling giant Ladbrokes plc published an unaudited interim management statement this week covering the last four months, and conveying the disappointing news that group profits compared to the same period last year had eroded by 34 percent.
Management hastened to reassure the market that the decline was not typical: "This rate of decline is not representative of our expectations for the year and has already given way to more normal trends in May,” the company said in a statement, which indicated that the drop was mainly due to an abnormal gross win margin in March and increased free bets and unspecified negative costs associated with "phasing in eGaming."
Excluding high rollers, the results were in line with management's expectations to the end of April 2009 despite an unusually high level of horse race cancellations. The company admitted that the month of March had been very profitable for the punters with group win increasing by five percent year-on-year while group gross win remained flat.
Profits from continuing operations before EBITDA from high rollers were down GPB 15 million compared with last year at GBP 25 million, although Ladbrokes recovered somewhat, taking in a further GBP 17 million since the beginning of May.
Chris Bell, the group CEO, said: “While it is difficult to predict future staking levels in the current economic climate, the general resilience of our business and strong cost control gives us confidence in the out turn for the full year.”
Net revenues from online operations dipped two percent year-on-year over the first four months of 2009, the management statement revealed. Although it experienced growth in games, this was offset by weakness in Internet poker and sportsbook margins. Active players increased 14 percent during the period with sign-ups growing by ten percent but this was offset by a decline in player yields.
The company successfully completed the migration of its online poker operations to the Microgaming Poker Network early in February.

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