We are going to have to stop describing Ladbrokes as a bookie and call it a slot machines operator, as machine revenue continues to drive revenue growth.

Group net revenue in the third quarter of 2012 was up 3.9% year-on-year, with operating profit up 0.4% to £49.2m from £49.0m in the third quarter of last year.

Net revenue in the UK shops was up 5.4% on the third quarter of 2011. However, over the counter (OTC) net revenue was up just 0.6%, while machines net revenue surged 11.5% from a year earlier. The OTC gross win margin improved to 16.9% from 16.0% the year before, which offset a 4.9% reduction in the value of bets taken over the counter; the decline in amounts wagered partly reflected weather-related cancellations of race meetings, as well as the effect of the Olympics.

Digital net revenue was up 6.1% year-on-year.

The group has been lagging behind its perennial rival William Hill with its online offering and is working on a new online sportsbook which Panmure Gordon, for one, sees as key to driving growth - it thinks the new online sportsbook could boost sportsbook revenue by around 20% a year. Shareholders will be comforted, therefore, by the group's assurance that the web site development remains on plan, and the first iterations of the new online sportsbook have been successfully released. The transfer of active and new customers to the new platform is on track to complete by the end of the first quarter of 2013, as previously indicated.

Once the group has launched the new online sportsbook, the focus will switch to improving customer relations management.

"Consistent growth of both machine and OTC net revenue, as well as a robust control of costs reinforces the resilience and strong cash generation of our UK Retail business. Despite having fully annualised last year's launch of the Global Draw terminals, we remain confident that our focus on player and machine yields, as well as an increase in machine density, will generate further growth," said Richard Glynn, Chief Executive of Ladbrokes.

"Though the economic outlook remains uncertain, we remain confident in our delivery and are in line with the board's expectations for 2012," Glynn revealed.

JH

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