Ladbrokes PLC Annual Report & Accounts 2014
  • On
    track

    On Track
  • Making retail
    competitive

    We entered 2014 clear on the operational
    milestones needed to allow us to improve
    our competitive offer, deliver a successful
    World Cup and ensure our retail estate
    remained an attractive proposition for
    customers and a major source of cash
    flow for the business.

    Making retail competitive
  • Delivering the
    World Cup

    Our aim was to deliver the necessary
    operational metrics to ensure we could
    enter the World Cup match fit and
    attract and retain customers to the
    Ladbrokes brand.

    Delivering the World Cup
  • Competitive
    in digital

    Building on operational improvements
    through the year and utilising the expertise
    in our Ladbrokes Israel team we have
    begun to see the customer respond
    positively to the new Digital offer
    at Ladbrokes.

    Competitive in digital
  • International
    diversification

    We continue to expand and grow
    our international operations
    in regulated jurisdictions.

    International diversification
Overview
  • 2014 Highlights

    Group

    Operationally competitive
    Customers are responding
    Successful World Cup

    Operating profit excluding High Rollers
    down 9.3% (H1: -33.7%, H2: +30.4%)
    World Cup gross win of £28.0m Dividend confirmed at 8.9 pence per share

    Group net
    revenue £m
    +5.1%

    UK retail

    Football offer demonstrates customer appeal
    Gaming machines and self service betting terminals drive growth
    Retail remains resilient

    29.4% growth in football staking Machine gross win +3.6%, SSBTs
    amounts staked +618%
    Gross win per shop at £362,000
    remains above the five year average

    UK Retail net
    revenue £m
    +1.3%

    Digital

    Strong mobile sportsbook growth
    Gaming returns to growth
    Australia goes from strength to strength

    Mobile Sportsbook staking +110%,
    actives +62%
    Gaming net revenue £80.5m
    - improving trends build confidence
    Australia staking +24.5% (pro forma basis)

    Digital net
    revenue £m
    +22.9%
  • At a glance

    UK Retail

    Ladbrokes UK Retail

    Net revenue

    £811.5m+1.3%

    Digital

    Ladbrokes Digital

    Net revenue

    £215.1m+22.9%

    European Retail

    Ladbrokes European Retail

    Net revenue

    £122.1m-5.2%

    Telephone

    Ladbrokes Telephone

    Net revenue

    £10.2m+56.9%
  • Our strategic priorities

    Retail excellence

    Retail Excellence

    Retail betting is increasingly a genuine leisure experience in both our core market and overseas. We strive to innovate continually, providing customers with a differentiated product offer, whilst optimising both margin and operational efficiency.

    Digital capability

    Digital capability

    The digital betting and gaming market continues to grow and remains highly competitive. We aim to provide competitive products and digital offers across all digital devices supported by resilient and flexible technology platform.

    Pricing, trading and liability management

    Pricing, trading and liability management

    The utilisation of a proprietary trading platform, enhancement of algorithms and increasing use of automated trading tools enables us to improve liability management and reduce earnings volatility.

    Customer and Brand

    Customer and brand

    Ladbrokes is still the most recognised betting brand in the UK. We invest to evolve the brand with an emphasis on excitement. The development of our offer, be it in Digital or Retail, is centred around improving the experience of our customers.

    Regulatory leadership

    Regulatory leadership

    The continued evolution of tax and regulation is a key influence on the development of our business. Ladbrokes is playing a leading role in ensuring that the Government and all regulatory authorities fully understand our commitment to responsible gambling and our significant contribution to the economy, employment and taxes.

Strategic report
  • Peter Erskine, Chairman

    Chairman's statement

    2014 was a year in which the strength of the ladbrokes brand began to be fully matched by a competitive offer.
    We entered the year believing that the first half would all be about operational delivery and the second half would be about growth.
    Read more
  • Richard Glynn, Chief Executive Officer

    Chief executive's review

    In h2 2013 we committed to
    undertake and complete a major
    operational restructuring in
    time for the 2014 world cup

    in order to ensure ladbrokes
    was competitive and could
    return to growth in h2 2014.
    Read more
  • Ian Bull FCMA, Chief Financial Officer

    Financial Review

    2014 saw the operational
    focus in H1 lead to
    improved performance
    in h2.
    Read more
  • Risk management process
    and methodology

    We have adopted an integrated
    federated and proactive approach
    to our risk management and
    responsibilities.
    The effective understanding, acceptance
    and management of risk are fundamental
    to the strategy of the Group and what
    could materially affect the ability to
    achieve strategic goals.

    Continuous Improvment
  • Corporate responsibility

    Fair play is built into the way
    we do business at Ladbrokes.

    We are leading the way in
    responsible betting and gaming,

    having a positive impact
    on our communities and

    operating with integrity.
    Read more Corporate Responsibility: Leading the way in responsible betting and gaming
Key Events
  • January 2014

    TOP BEATS
    BOTTOM

    The weekend of 11th and 12th of January sees the top half of the
    Premiership table beat the bottom half combined with only one
    draw in 20 fixtures of the top two English leagues. It starts a bad
    run of football results and three weekends alone see us lose
    £10.5 million as customers benefit from the most backed
    teams all delivering.

    Key events | January 2014
  • March 2014

    A good
    Gold Cup

    As ever the Cheltenham Festival saw good business with over £40m
    being staked. A good Gold Cup day rescued the overall result of the
    Festival with Lord Windemere at 20/1 being the stand out surprise
    result in the main race. The most profitable race of the week went to
    the Champion Hurdle with Jezki seeing us profit to the tune of £1.4m.

    Key events | March 2014
  • April 2014

    Over 4M bets placed on Grand National

    The Nation's race saw over four, million bets struck on
    the Grand National. Luckily not too many customers had
    seen Pineau De Re at 25/1 on the race card and it was
    another year when the Grand National delivered a result
    that favoured the bookmakers.

    Key events | April 2014
  • June 2014

    Over 250,000 bets placed
    on World Cup final

    The World Cup kicks off and the tournament starts in a bad way for the
    bookies as favourite after favourite triumphs. But once the knock-out
    stages start, fortunes change. The World Cup Final brings an end to the
    World Cup tournament which saw over eight million bets staked. A nil-nil
    draw after 90 minutes and the winning goal by a substitute means that
    Ladbrokes finishes the tournament off with a very good result. The match
    itself was unsurprisingly the highest turnover match of the year with
    over 250,000 bets placed and £2.75m staked.

    Key events | June 2014
  • July 2014

    Summer
    of pain

    Rory McIlroy inflicts a summer of pain for bookmakers by adding the
    Open to his BMW PGA win. It makes the Open the worst result of any
    golf tournament in recent history. His golden summer saw a WGC title
    and the USPGA added in five weeks and saw us pay out circa £4m.
    Smiling along with Rory was his Dad, who had bet £200 at 500/1
    ten years ago that his son would win the Open within ten years.

    Key events | July 2014
  • September 2014

    St Leger results
    favours customers

    Favourite, Kingston Hill wins the Ladbrokes St Leger at 9/4 and turnover and once again a flat festival ends up favouring the customer with us losing £500,000 over the festival, primarily driven by a £400,000 loss on the St Ledger itself.

    Scotland votes No and the Scottish referendum enters history as the most bet on political event in our history with £2.5m staked. For many it was a case of the heart ruling the head with Yes attracting the most money meaning the No vote was a profitable result for us.

    Key events | September 2014
  • November 2014

    The race that
    stops a nation

    The race that stops a Nation, The Melbourne Cup, does not work
    out too well for Ladbrokes Australia with the pre-race favourite
    winning at 8/1 and the ever popular Red Cadeaux finishing second
    for the third time.

    However the Spring Carnival, with 95 group and listed races across
    109 meetings and 63 race days, sees our Australian business come
    out on top overall.

    Key events | November 2014
  • December 2014

    Christmas
    bonanza

    The Boxing Day football fixtures prove a Christmas Bonanza
    for customers as just three draws from the top three English
    divisions (none of which are in the premiership) and 17 of
    the most backed teams winning meant we lost over £8m.
    The day is reported as the worst in living memory.

    Key events | December 2014
Financial statements