Ladbrokes Outperformed in 2010

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* FY operating profit 202.3 million sterling vs forecast 195 million
* New machines, in-play betting a hit with punters
* No comment on progress of 888 takeover talks
* CEO says focused on organic plan
* Shares down 3 percent as investment plan launched
By Matt Scuffham at reuters:
Britain's biggest bookmaker Ladbrokes reported a 20 percent rise in full year operating profit on Thursday, at the upper end of expectations, as new gambling machines and in-play betting proved popular.
The company's shares fell 3 percent on investor scepticism over plans to invest 50 million pounds developing new software over the next two years, but top bosses reaffirmed their focus on the organic growth that depends in part on innovation.
Ladbrokes said the performance of its gambling machines had continued to improve with gross win (total bets minus payouts) per terminal per week up 10.2 percent in the second half, reflecting the rollout of machines provided by a new supplier.
Turnover from online sports betting grew by 17 percent with the number of "Bet in Play" events, allowing gamblers to bet while the match is taking place, rising by 27 percent. In-play now accounts for 42 percent of total sports betting online said.
New chief executive Richard Glynn, who joined the group last year from spread betting company Sporting Index, declined to comment on the progress of its ongoing takeover talks with 888 but stressed the company is focused on its plans for organic growth.
"This is a business that is absolutely focused on its organic plan," he said on a conference call with reporters.
The software development investment is part of Glynn's long-term strategy. Rival William Hill wrote off 26 million pounds after scrapping a similar project in 2008 and instead forming what proved to be a successful joint venture with software provider Playtech.
"It has to be remembered that land based operators going down the in-house development route seldom show success," said Espirito Santo analyst Alistair Macdonald.
The project, which will be led by new director of consumer operations Richard Ames, will see Ladbrokes develop a new ecommerce platform and software that will enable it to integrate its best sports betting and gaming products.
Investec analyst Paul Leyland agreed it represents a risk.
"Given the completely new team, the scale of the task, and betting companies' historically patchy record with in-house technology projects, we would prefer to see evidence before assuming the trading gap with William Hill will be closed," Leyland said.
Glynn added, however, that Ladbrokes, which has also been linked with a possible bid for Playtech, would consider making acquisitions to strengthen its technology if companies were available for the right price.
"Shareholders would expect us to look at things which have the right technology (and) the right people to accelerate our technology drive, most particularly for the right price in parallel with a very fully costed organic plan," he said.
Ladbrokes said in December that it was in early-stage talks about an offer for online gambling firm 888. Last week 888 said talks were ongoing and it remained hopeful of being taken over.
The group, which owns over 2,700 betting shops, made an operating profit of 202.3 million pounds ($325.1 million) in 2010, up from 168.5 million the year before.
Market expectations had ranged between 186 and 204 million pounds with the consensus at 195 million, according to a Thomson Reuters I/B/E/S poll of 16 analysts.
Rival William Hill said in January that full-year operating profit would be at the top end of expectations after a surge in demand for in-play betting underpinned a strong fourth quarter.
(Editing by Neil Maidment and Andrew Callus) ($1=.6222 Pound)

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