15th Nov 2007 07:02
Ladbrokes PLC15 November 2007 15 November 2007 TRADING UPDATE FOR THE FOUR MONTHS ENDED 31 OCTOBER 2007 Profit* for the four months ended 31 October 2007 increased by 84% reflectingcontinued contribution from Telephone High Rollers, which significantly offset abelow target performance in the UK Retail business. Profit* excluding HighRollers and the cost of our recent TV advertising campaign** decreased by 12%. Total gross win increased by 33% including High Rollers (up 7% excluding HighRollers). UK Retail gross win increased by 4%: • Machine gross win increased by 25% with average weekly gross win perGaming Machine*** of £586 compared to £467 for the same period in 2006. Thereplacement of our Amusement With Prizes (AWP) machines is complete and thereare now 8,217 Gaming Machines deployed throughout the shop estate. • Over The Counter (OTC) gross win declined by 5% with lower amountsstaked on horses in July and August partly due to record race cancellations inJuly (23 lost meetings), before an improvement in the trend in September andOctober following the commencement of winter evening opening. • While football comparatives were tough in July due to last year'sWorld Cup, amounts staked on football since the start of the 2007/2008 seasonwere significantly higher than last year. However the margin was poor due tounfavourable results. • The UK Retail cost**** increase of 8.5% was lower than originallyplanned, due to a continuing focus on cost control which has partially offsetthe impact of winter evening opening and Amusement Machine Licence Duty (AMLD). Ireland and Belgium Retail gross win increased by 10%. eGaming net revenue grew by 5%. Customer sign ups grew 21% and unique activecustomers grew 11% despite the impact of the World Cup in 2006. New playernumbers were boosted by an advertising campaign for Ladbrokes Bingo and customergrowth was experienced across all products. Net revenue grew in Sportsbook,Casino and Games but this growth was partially offset by slightly weaker marginsand lower Poker net revenue in a very competitive market. Telephone Betting net revenue was £91.8 million reflecting strong High Rollers'activity, which has continued into November. In Italy, 17 shops have been acquired and are now trading satisfactorily and theItalian management team are active in the rollout of new licences. We expect ourItalian local language website to launch shortly. In Spain, premises are being fitted out in anticipation of receiving anoperating licence in the Madrid region in the near future. The 47th levy scheme was referred to DCMS for determination at the end ofOctober and the impasse with Turf TV over UK horse picture rights for 31 of the59 tracks continues. Ladbrokes commenced its share buyback programme on 10 August 2007 and to datehas purchased just over 8 million shares at a total cost of £33.4 million. Netdebt at 31 October was £922.8 million. On 7 November, Ladbrokes announced the conditional disposal of Vernons for cashconsideration of £51 million, of which £45 million will be payable oncompletion, with a further £3 million payable in each of the two years followingcompletion. Outlook Christopher Bell, Chief Executive, said, "Early trading in November has seen thecontinuation of High Rollers' Telephone activity and, encouragingly, reachedinto double digit year on year growth in UK Retail gross win. Ladbrokes remainsfocused on growing its established businesses, whilst developing the newopportunities in Italy and Spain." * Profit from continuing operations, before interest and tax. This excludesresults from Vernons which have been treated as discontinued operations. ** Ladbrokes' £4.7 million TV advertising campaign commenced in October andcosts of £3.7 million have been recognised in Corporate costs in the period. *** Since the introduction of the Gambling Act on 1 September, Ladbrokes nolonger offers the traditional Fixed Odds Betting Terminal (FOBT) and AmusementsWith Prizes (AWP) products and instead runs Gaming Machines which offer both B2content (primarily roulette) and B3 content (jackpot games), all of which offera maximum payout of £500. Consequently (FOBT) gross win per terminal per weekwill no longer be disclosed. Gaming Machine gross win per terminal per week isoutlined below. UK Retail 2007 2006 2005 Gross win per 4 months H1 2007 FY 2006 4 months H1 2006 FY 2006 4 months H1 2005terminal per week £ to Oct to Oct to Oct 2007 2006 2005 FOBTs (as previously N/A 651 538 524 548 545 536 576disclosed) Total Gaming machines 586 572 481 467 492 487 480 513(new disclosure) **** Operating costs excluding gross profits tax, VAT, free bets, promotions andbonuses Note: The figures in this trading update are unaudited. Enquiries Brian Wallace Julian Arlett Ciaran O'BrienGroup Finance Director Head of Investor Relations Head of Public Relations Ladbrokes plc IR and PR enquiries +44 (0) 207 355 0340 A conference call for analysts and investors will be held at 8am (GMT) today. Toparticipate in the conference call, dial +44 (0) 20 7162 0025 ahead of 8am andask for 'Ladbrokes Plc trading update'. A recording of the call will beavailable until midnight, 22 November 2007 on +44 (0) 20 7031 4064 (access code769215). 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