26th Feb 2015 09:11
LONDON (Alliance News) - UK bookmaker Ladbrokes PLC Thursday reported a hefty drop in its pretax profit for 2014, as shop closure costs and impairment charges more than offset revenue growth during the year, while the company said it is confident in its business outlook for 2015, as it plans to expand internationally, close more betting shops, improve its online offer, and bolster its competitive position.
"Ladbrokes entered 2014 clear on what needed to be done to deliver a successful World Cup and to move from operational delivery in the first half to financial growth in the second half," said Chief Executive Richard Glynn in a statement.
The betting company reported a statutory pretax profit of GBP37.7 million for 2014, down from GBP67.6 million in 2013. Its headline pretax profit, which excludes exceptional items and high rollers, was down 13.5% at GBP98.0 million, from GBP113.3 million the year before. Revenue during 2014 grew by 4.5% on a statutory basis to GBP1.17 billion from GBP1.12 billion.
High rollers refers to high-spending gamblers who place large wagers, primarily over the phone.
The group booked a total of GBP74.5 million in exceptional items during the year, a combination of shop closure costs, an impairment due to recent regulation and tax changes, and transition costs associated with its planned launch of an improved desktop product on the Mobenga platform in the second half of 2015.
Ladbrokes closed closed 89 betting shops in 2014 to deal with the recent changes in UK government regulation and incoming tax hikes. The group said it plans to make a further 60 closures in 2015 as its streamlines its portfolio and prepares for the impact of regulatory and tax changes, it said. At the end of 2014, Ladbrokes had a total of betting 2,209 shops in the UK.
"We delivered against all our operational targets, enjoyed a successful World Cup and saw clear growth in key areas of the business. The changes put in place have made us competitive and our customers are responding," he added.
"2015 will see new management but the focus on satisfying customer demands, improving the resilience of our retail estate, growing internationally and further improving our Digital offer remains. Whilst recognising there are regulatory headwinds, Ladbrokes is confident in its plans for 2015," said Glynn.
The company left its dividend for 2014 unchanged at 8.9 pence per share, and said it plans to maintain its dividend at that level for 2015.
Ladbrokes' online offering is currently lagging behind its bigger rival William Hill PLC.
The group said that judging by the fourth quarter of 2014, UK based revenue now accounts for around 90% to 95% of revenue in Ladbrokes.com, with Ireland, Sweden and Germany - where it was recently awarded a digital sportsbetting licence - being the next largest jurisdictions.
In December, Ladbrokes announced that Chief Executive Richard Glynn would be stepping down as CEO at the end of 2015, as he comes to the end of his five-year mandate to turn the business around.
Glynn has struggled in that task in the face of a shift to online gambling in the industry as a whole, and as traditional betting companies have faced increased regulation from the government.
Ladbrokes said that net revenue since the start of 2015 to February 24 was up 1.5% excluding high rollers, which it said was despite the impact of losses to a small number of larger customers in the period, as well as industry-wide punter-friendly football results during the period.
Online, the group said that sportsbook trading remains good and Australia is generating strong growth both organic and from the recent acquisition of the Betstar business.
"In 2015, Ladbrokes faces significant headwinds from the increases in Machine Gaming Duty in March and the Point of Consumption Tax. However, we have clear plans to improve further our business. Barring the imposition of material unforeseen adverse regulation and/or taxation and assuming normalised sporting results, we are confident in our plans for 2015 and in generating continued underlying growth," the company said.
Ladbrokes shares were trading 3.0% higher Thursday morning at 117.60 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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