Ladbrokes upbeat after internet boom

The online gambling performance of bookmaker Ladbrokes left it in bullish mood today as the former Hilton company marked its first day as a standalone business.

The world’s largest betting shop chain announced its second best profits as internet earnings – driven by its poker and casino games – climbed 94%.

However it was held back by poor trading at its traditional bookmaking business and losses from phone betting to leave overall profits 2% lower than last year’s record at £266.6m (€391.4m).

Ladbrokes said it had “strong foundations” in place after the disposal of Hilton’s hotels to its American sister company, which was officially completed today and reunited the Hilton company after more than 40 years apart.

In a final set of results before the split, profits before tax were up 9.9% to £413.9m (€607.9m) on sales of £11.5bn (€16.9bn).

The Hilton Group pleased investors with news it would pay them £4.2bn (€6.2bn) through a higher-than expected 240p-a-share dividend, following the £3.3bn (€4.8bn) hotel sale. The FTSE 100 Index group, which is based in Watford, Hertfordshire, will now be renamed Ladbrokes.

In 2005 its average weekly commission from online poker was £793,000 (€1.2m) while it made £749,000 (€1.1m) from online blackjack and roulette.

While e-gambling flourished, Ladbrokes’ telephone betting service lost £100,000 (€146,900) over the year after earning £17.8m (€26.1m) in 2004. Losing £9.5m (€14m) to big-time gamblers, known as “high rollers”, did not cheer investors.

The surplus from the chain’s high street stores fell 3.2% with favourites winning a series of horse races in the first half of the year.

Ladbrokes said a larger-than-usual number of horse races cancelled because of heavy frost had taken its toll in early 2006 – but it was braced for an “action-packed” year with the football World Cup described as “what promises to be the biggest betting event ever”.

The tournament being played in a European time zone meant more people would watch and therefore bet, the company said.

Christopher Bell, who is the new chief executive of Ladbrokes after joining the business in 1991, said: “This new chapter in the company’s journey promises to be more exciting than any in our 120-year history.

“We have a strong brand, an excellent experienced management team, a track record of success and a clear strategy for growth.”

Ladbrokes was bolstered during the year by the acquisition of Welsh bookmakers chain Jack Brown. It also owns the football pools company Vernons and later this year will open its first new casino in Paddington, west London.

There was scope for international expansion it said, adding discussions were underway about opportunities in Asia and Europe.

Mr Bell said Ladbrokes would continue its policy of not taking online bets from the US, where a political and legal question mark hangs over the future of online gambling.

Hilton’s hotels business saw profits rise 17.9% to £187.5m (€275.4m). Underlying profits in the UK and Ireland fell 3.4% to £81.3m (€119.4m), which it said reflected a tough first half outside of London and a weak third-quarter in the capital after the July terrorist attacks.

There was profits growth of 42.1% in Europe and Asia to £82.7m (€121.4m), as well as a 45.9% hike to £27m (€39.6m) in the Middle East and Asia Pacific and a 27% increase in earnings in the Americas to £24m (€35.2m).

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