UK betting operator Ladbrokes profit fell hard in 2014 despite significant improvements in its much-maligned online offering.
Full-year revenue (excluding high-rollers and exceptional items) rose 3.8% to £1.16b but earnings fell 9.3% to £125.4m and profits fell 13.4% to £93.1m. The statutory numbers were much harsher, with earnings falling 71% to £66.2m and profit down 61% to £41m. Despite the carnage, Lads’ shares rose nearly 6% on Thursday to 121p.
Ladbrokes’ overall digital revenue rose 22.9% to £215.1m and operating profit rose 70.7% to £14m. That latter figure is nearly double the 2013 figure but still well short of the £31.8m earned in 2012, the year before Ladbrokes undertook its infamously prolonged transition to a Playtech-powered online platform.
UK online operations reported revenue up 7.5% to £178.5m while online profit rose 17.7% to £17.3m. The 2014 FIFA World Cup helped push online sports betting revenue up 21% to £84.8m, but the company experienced its “worst ever football daily loss on record” on Boxing Day, which cost the company £8m.
Mobile sports betting stakes were up 110% from 2013, representing 63% of Lads’ digital sports wagers, while desktop stakes declined. Outgoing CEO Richard Glynn said the numbers support Lads’ decision to switch its desktop front end to a Playtech-powered Mobenga mobile platform, although the back end will continue to be powered by OpenBet technology. The transition is scheduled to take place in H2.
Ladbrokes exchange wagering products also had a good year, with revenue up 36% to £13.2m. The other verticals weren’t as fortunate, with casino falling 1.6% to £66.4m and bingo falling 6.7% to £11.1m although Lads said gaming returned to growth in Q4 following the completion of its transition to a full suite of Playtech casino products.
Online poker revenue fell a whopping 56.5% to £3m as unique active poker player ranks fell 40% while average monthly active player days fell 48.5%.
In Australia, Lads reported revenue up 765% to £34.8m thanks to the recent acquisitions of the Bookmaker and Betstar brands. Lads’ down under division posted an operating profit of £2.6m vs. a £2.9m loss in 2013.
Things were less bright in Lads’ other regulated markets in Belgium, Denmark and Spain, which saw revenue fall 59% to just £2m and losses increase 64% to £5.9m thanks to heavy start-up costs.
Lads said its 2014 withdrawals from multiple grey markets will trim online revenue by around £6m in 2015. The UK-facing business will also suffer under the new 15% online point-of-consumption tax.
Telephone wagering stakes fell 13.7% to £160.9m but margins nearly doubled, resulting in a £2m operating profit compared to a £1.6m loss in 2013. Lads doesn’t expect the good times to last, however, predicting a return to a small loss in 2015. Lads’ high-roller business was also way up, generating an operating profit of £14.2m, a 240% gain from 2013.
On the retail front, UK betting shop revenue inched up 1.3% to £811.5m but profit fell 11% to £119.3m. OTC betting stakes fell 1.4% while gaming machine stakes rose 1.4%. Similarly, OTC revenue fell 3.3% to £379.5m while machine revenue rose 5.8% to £432m.
Lads said the March 1 implementation of increased Machine Games Duty would cost the company an estimated £17m in 2015. Confirming earlier reports, Lads said it would close 60 betting shops in 2015 to adapt to the new tax environment. Lads also intend to roll out “at least” another 2k self-service betting terminals in 2015 to capitalize on the machines’ popularity with punters.
Retail ops in Belgium, Ireland and Spain saw profit fall 16.7% to £13m. Belgian revenue was up 14.5% while the Sportium joint venture with Spanish operator CIRSA saw revenue rise 47%. Ireland was a different story, with revenue falling 10.8% and profit down 57%.
