Ladbrokes Coral hikes dividend as increased cost savings emerge
LADBROKES Coral has doubled its dividend on the back of higher cost savings as it nears the end of its process to combine the two bookies.
Jim Mullen, the chief executive, said the company had decided to raise the dividend for the first half of the year, from 1p to 2p, because it was now expected to save £150m annually by 2019 thanks to the successful integration of Ladbrokes and Coral.
The savings are more than double what was originally estimated due to factors such as reduced IT costs and the ability to use its clout to secure better prices with contractors. “I took the dividend down at Ladbrokes to invest in the business so it is only right that, with the business performing how it is, we pay it back out,” Mr Mullen said.
“The move is demonstrative of the progress the company has made.”
Mr Mullen said the company had also agreed to pay a voluntary levy to the greyhound racing industry, equivalent to 0.6pc of the amount staked on the sport via Ladbrokes Coral. This is expected to be equivalent to £750,000, which will be on top of other payments the company makes to the industry such as through media rights.
Besides greyhound racing, horse racing is a major draw for customers to Ladbrokes’ shops. These suffered a drop in like-for-like revenues as a dispute between Ladbrokes Coral and the Racing Partnership meant the bookmaker was unable to show some races on TV for several months.
The amount of money punters bet over the counter at Ladbrokes shops dropped 10pc, or 7pc on a like-for-like basis, contributing to a 6pc drop in revenue to £697.2m in its retail estate for the first half of the year.
But the company’s digital business more than pulled its weight with its online sports betting division seeing net revenue climb 25pc. Sales in the online gaming business rose 11pc.
Mr Mullen said this was down to its improved product offering and better marketing. There was no comment from Mr Mullen on the recently revealed approach for the company by acquisition-hungry rival GVC. While he said the company had an obligation to shareholders to consider mergers and acquisitions, the focus was on finishing the Ladbrokes and Coral integration. Since the period end on June 30, Mr Mullen said group net revenue was 6pc ahead of last year, thanks partly to Floyd Mayweather’s defeat of Conor Mcgregor in their bout at the weekend, which went according to bookies’ predictions.
The group’s debt dropped by 2pc to £1.06bn, which means it remains above the company’s targeted level of borrowing to be between 1.5x-2x core earnings before interest, taxes, depreciation and amortisation.
Mr Mullen also said it had launched a new product development centre called LC2 in Here East in Stratford, east London, the former media centre for the London 2012 Olympics.