22/02/2007 Preliminary Results for the year ended 31 December 2006

Ladbrokes plc today announced its full year preliminary results for the 12 months ended 31st December 2006. Commenting on the results Ladbrokes Chief Executive Christopher Bell said:

"We can look back on a significant year of achievement at home and internationally and we are pleased to post a record profit performance. We began the year by selling the hotel division, delivering one of the biggest returns to shareholders on record and announcing our consultancy in China. Along the way we have expanded our online business, invested in our retail estate by launching Ladbrokes Xtra and commenced rollout of the latest FOBTs. We ended the year by winning licences and acquiring shops in Italy and began 2007 by signing a JV to launch a betting business in Spain. Early trading in 2007 has been satisfactory with good football results but more cancellations of horseracing fixtures this year than last. 2007 has its own challenges but we remain confident in the future prospects for Ladbrokes plc."

Financial Highlights
  • Ladbrokes operating profit (1) from continuing operations increased by 7.7% to a record £268.1 million (2005: £249.0 million).
  • Total profit before tax was £669.8 million, which included the profit from the sale of the Hilton International to Hilton Hotels Corp. Following the sale, £4.2 billion cash was returned to shareholders.
  • Gross win rose by 9.9% to £1,008 million (2005: £918.0 million).
  • European retail gross win increased by 6.0% to £799.8 million while operating profit decreased by 3.1% to £212.7 million. Ladbrokes Ireland recorded operating profit of £14.3 million, an increase of 107%.
  • eGaming gross win increased by 17%, reaching £144.4 million. Operating profit increased to £47 million, up 13.5%. Ladbrokes Sportsbook and Ladbrokes Games were the star online performers. Active customers were up 26.4% and real money sign-ups (new customers) were up 22.6%.
  • Telephone betting recorded an increase of 119.5% in gross win to £46.1 million, and turned the small loss in 2005 into a profit of £17.7 million, helped by a positive impact from high rollers.
  • Final dividend of 8.6 pence per share, total dividend 13.2 pence. Earnings per share (2) of 22.0 pence.
Trading Highlights
  • Good World Cup with Italy not heavily backed and the final going to penalties - a total of £17.5 million gross win achieved across the tournament.
  • Horseracing bettors had a good last quarter with a historically high number of winning 1st and 2nd favourites (54.6%).
Growth Areas
- Targeted Retail Investment
  • UK retail estate well invested and ready for the introduction of year-round evening opening, new £500 jackpot machines and increased opportunities to advertise from September 2007.
  • Ladbrokes Xtra launched and rollout completed. New EPOS software will be fully installed by Q2 to further increase the range and flexibility of our product offering. Ladbrokes is trialing self-service terminals, which enable the full range of Internet betting opportunities to be offered in the retail environment.
  • We expect the full renewal of our FOBT estate to be completed by the end of the first quarter of 2007 and we are encouraged by early performance.
  • Continued investment in Irish estate paying off with 107% growth in operating profit to £14.3 million. Ladbrokes is now market leader in Ireland 195 shops and continues to look at acquisitions. Smoking ban in Ireland and Scotland has had no adverse effect and we don't believe it will have a negative impact in England, Wales and Northern Ireland.
- Online Expansion
  • In eGaming Ladbrokes recently completed the acquisition of its Nordic partner Sponsio Ltd.
  • We commenced discussions with 888 last November. These discussions continue and are complex because of the current trading conditions in the US. We will update the market as and when appropriate.
  • Following the success of new online product launches including Ladbrokes Bingo and Deal or No Deal in 2006 a number of new products and services are planned including a newly designed sportsbook.
- International Expansion
  • Internationally Ladbrokes is now operating 4 shops in Italy, 3 in Milan and 1 in Turin. It won 142 licences in the Italian tender process and will combine them to launch a total of 61 shops (30 dual sport and horseracing betting shops, 28 sport only betting shops and 3 horse only betting shops) over the next 18 months. It will also open a further 51 sports corners offering betting in cafes or retail outlets.
  • A JV has been established in Spain with market leader Cirsa Slot to launch a betting business in Spain. The Madrid region will be the first region to regulate betting in Spain.
  • Elsewhere in Europe Ladbrokes continues to challenge member states that infringe EU law by restricting competition and freedom of establishment. It is encouraged by the actions of the EU Commission in investigating the betting and gaming laws of several EU member states. Ladbrokes continues to appeal in the Dutch courts for the freedom to accept Dutch customers online. Ladbrokes' appeal against the Norwegian government's rejection of a licence application has led to the case being referred to the EFTA Court in Luxembourg. The court is expected to issue an advisory opinion on a number of questions relating to whether European states can justify betting monopolies in the single market in March. Ladbrokes' case against the Swedish Government for the rejection of its application of a betting licence is being taken up European Court of Human Rights.
Commenting on its legal cases in Europe Chief Executive Christopher Bell said: "The single market should apply to betting and gaming as it does other services and we will continue to challenge those states that restrict competition and choice in betting. Meanwhile we are beginning to successfully export the Ladbrokes brand, our technology and expertise in Spain and Italy."
- New Casino Licences
  • Ladbrokes confirms it will bid to operate the regional casino in Manchester and is interested in operating several of the 16 new small and large casinos to be awarded under the 2005 Gambling Act.
Julian Arlett, Head of Investor Relations
mobile +44 (0)7976 348 913

Ciaran O'Brien, Head of Public Relations
mobile +44 (0)7976 180 173

Switchboard
+44 (0) 207 355 0340

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(1) Profit before tax, finance costs and non-trading items(2) Before non-trading items for continuing operations