Ladbrokes interim statement 16/5/08: 13% rise
Ladbrokes (LAD) released an interim management statement. As the premier bricks and mortar operations LAD is the classic "sector bellwether".
One slight oddity about LAD is that they have a single high roller who is responsible for a very large chunk of their profits.
The bookmaker said profit from high rollers was 40 million pounds over the period but noted activity has recently fallen to de minimis levels.
This single individual has his own team (not surprisingly). This means they are susceptible to (1) him winning big, (2) him leaving. If the highroller is reading this I would highly recommend him clicking on one of my Sportingbet links for Horse Racing
If he has left this would be a cause for concern. One is question is why LADs deemed it necessary to use Latin in their results. Why not just say that the highroller revenues have fallen to mimimal levels.
De minimis is a Latin expression meaning about minimal things, which is used mostly as part of de minimis non curat praetor or de minimis non curat lex, to say that the law is not interested in trivial matters. De minimis, in a more formal legal sense, means something which is unworthy of the law's attention. In risk assessment, de minimis refers to a level of risk which is too small to be concerned with. Some refer to this as a "virtually safe" level.
There are lessons for others from this statement.
Interim Management Statement [ADVFN]
The Group has continued to make good progress during the period with profits* (excluding profits* from High Rollers) increasing by 13%. Gross win increased by 16% (34% including High Rollers).
The E-gaming division is of most interest:
EGAMING
eGaming has enjoyed net revenue growth of 24% during the period with customer sign ups growing 27% and unique active customers increasing 18%. We have seen particularly strong activity in the Sportsbook, Casino and Games whilst Poker net revenue fell 2% in what remains a highly competitive market. As previously indicated at the Preliminary Results, the business is intent on accelerating growth
through increased marketing and initial results from Bingo and Casino TV advertising have been encouraging. We continue to expect full year profitability in 2008 to be in line with 2007.
Note that once again Poker revenues are down DESPITE their introduction of 3D poker from Playwize (PLW) another stock we follow that I suspect has not long to go as a quoted company. Dire straits would be an understatement. The fact 3D was not mentioned suggests that this experiment has failed for LADs which is not surprising.
The Spanish and Italian expansion is also relevant for those with ambitions in these countries such as Leisure and Gaming (LNG) in Italy and William Hill in Spain.
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