Weak Q1-2014 performance from Ladbrokes

The British online and land gambling group Ladbrokes plc has posted its Q1-2014 results showing declining group revenues but encouraging developments in mobile sports betting.

CEO Richard Glynn added his voice to other executives in the industry in warning that government over-regulation and taxation in the UK presented a danger of betting shop closures and lost jobs, and are “unwelcome”.

Highlights of the group’s digital operational report include:

* Gaming products transitioned to Playtech Casino on 27 March

* Digital integration onto Playtech IMS/ single wallet platform completed on 29 April

* Positive Q1 mobile sportsbook key performance indicators, with mobile active player counts up 32 percent, and stakes up 95 percent.

* Operating profit came in at GBP 18.4 million – down from GBP 37.4 million in Q1 last year.

* UK retail gross win margin was down 2.7 percent at 16.2 percent

* Digital results were pulled down by online sportsbook revenue, which fell y-o-y by 17.9 percent; Gaming NGR likewise declined 17.7 percent.

* Since the end of the reporting quarter, Grand National sportsbook and mobile digital operational performance has been strong, and the group is anticipating enhanced activity in June from the World Cup football in Brazil.

However, group net revenues were down 2.3 percent at GBP 6.5 million, and in UK Retail net revenue sank a similar amount, although over-the-counter stakes were up 8.5 percent. High Roller net revenue soared 80.6 percent to GBP 13 million.

Group operating profit came in at GBP 18.4 million, consistent with FY14 guidance issued in February this year

Chief Executive Officer Richard Glynn reported:

“In Q1 we delivered all of our stated operational targets on track or ahead of plan and our financial performance remains consistent with our expectations at the time of our annual results announcement in February.

“Retail competed well demonstrating its continued appeal to the customer. In particular, it was pleasing to see OTC staking grow, driven by a strong performance in football.

“In Digital, the early encouraging customer response to our more competitive mobile and sportsbook offer has continued and our Grand National performance, particularly on mobile, shows that our product and platform improvements are starting to gain traction.

“The unexpected recent tax increases and ongoing uncertainty surrounding regulation are unwelcome.  We continue to advocate an evidence-based debate and to demonstrate our commitment to social responsibility.

“The significant economic impact of excessive regulation on the business and in terms of jobs, is clear.  However, we are heartened by the strong support we have received from customers who continue to enjoy using our products, with one million people recently signing an industry petition in support of their local betting shop.

“Looking ahead, the build up to the World Cup will see heightened competition.  We are now in position to compete hard, targeting customers through our brand and improved products along with aggressive but sensible offers and promotions.

“In Digital, with the move to IMS and single wallet capability, we now have in place all of the operational infrastructure from which to drive growth in H2 and beyond.”

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