Tax break brightens the balance sheet
Online betting and gaming company Ladbrokes plc has reported another generally weak performance, this time in its half-year 2010 numbers, where a drop in pre-tax profit was sustained for the six-months ended June 30, due to reduced revenues.
The good news was that profit from continuing operations rose from last year, driven by a substantial GBP 340 million tax gain following a settlement with HM Revenue and Customs. The net effect for shareholders was the resumption of dividends.
"The settlement resulted in the recognition in the 2010 income statement, within the tax charge, of a GBP261.9 million tax credit in relation to prior years," Ladbrokes noted.
Pre-tax profit for the first-half declined to GBP 105.1 million from GBP 130.0 million in the previous H1 results. Pre-tax profit before non-trading items dipped 12.6 percent to GBP 114.7 million from GBP 131.3 million in H1/2009.
First-half profit from continuing operations surged to GBP 347.6 million from GBP 110.7 million in H1/2009.
Profit for the first half attributable to equity holders of the parent surged to GBP 321.8 million or 35.5 pence per share from GBP 74.7 million or 10.5 pence per share in the same period last year. On an adjusted basis, profit improved to GBP 346.1 million from GBP 106.7 million in the comparable period a year ago.
Revenue from continuing operations for the six months period slipped 11.5 percent to GBP 500.2 million from GBP 565.1 million in the first six months of 2009.
Net revenues, excluding High Rollers, dropped 2.4 percent to GBP 492.1 million from GBP 504.4 million in the corresponding period of last year, mainly as a result of reduced OTC performance in the UK retail estate and a decline in revenue in other European retail. Net revenue from High Rollers plummeted to GBP 8.1 million from GBP 60.7 million in H1/2009.
Revenue from UK retail fell to GBP 332.7 million from GBP 343.6 million in the comparable period of last year. The company said that the benefits of the World Cup 2010 were largely offset by the disappointing horse performance, notably at Royal Ascot.
With regard to current trading, the company said net revenue, excluding High Rollers, rose 8 percent year on year in July. However, the company said that it sees a challenging consumer environment.
The company’s online interests produced a mixed performance, with e-gaming operating profit up from GBP20.8 million to GBP29.1 million, with sportsbook revenues positively impacted by the move to a more tax-friendly Gibraltar and a buoyant betting season on the World Cup football. Sportsbook operations recorded an almost 10 percent growth in revenues to GBP33.5 million.
In common with other on line gambling companies, Ladbrokes experienced a decline in poker net revenue, which fell 15.7 percent to GBP107 million.
Telephone betting revenues shrank 2.2 percent down to GBP8.9 million, which Management attributed to a tendency for punters to change to the internet, exacerbated by the competition from other operators in friendlier tax regimes.
Chief executive officer Richard Glynn reported on a recent review of the company, saying: “The review identified a number of key areas where we have the opportunity to improve our performance. These include a focus on the customer, improving the ‘e’ performance, the brand effectiveness and enhancing the technology backbone of the group.
“I expect these priorities, supported by targeted investment, will deliver customer satisfaction, revenue growth, margin improvement and operational efficiencies over the medium term.”