Ladbroke may trump casino bid

Peter George, Ladbroke's chief executive, is "watching carefully" the progress of the bid by London Clubs for Capital Corporation, owner of Crockfords casino. He left little doubt that Ladbroke could easily trump London Clubs' pounds 80m bid, pointing out that the company had pounds 800m worth of long-term borrowing power in reserve.

Analysts said that Ladbroke's share price, which rose 11p to 236p yesterday, was strong enough to mount an all-paper offer or even justify a rights issue to fund a deal.

But the exceptional costs of closing the property division, settling the long-running rent dispute over the Paris Hilton, repaying to Sainsbury's the pounds 14m it was judged to have overpaid for Texas Homecare in 1995, and sundry other outstanding items have obscured a strong profit recovery in the hotels and betting shops businesses.

After allowing for a swing from exceptional profits of pounds 23m in 1995 to exceptional costs of pounds 83.5m in 1996, the company announced yesterday that annual pre-tax profits fell 38 per cent to pounds 59.4m.

Operating profits rose 7 per cent to pounds 233m in spite of a slump in the contribution from commercial property, which fell from pounds 23m to virtually zero. The tax charge came down from 27 per cent to 25 per cent, net debt came down pounds 315m to pounds 708m, and the interest charge fell 27 per cent to pounds 70.1m. The dividend is being raised 3 per cent to 6.2p.

Most of the improvement in operating profit last year came from the UK, which increased its share of the group total from 54 to 60 per cent. The hotels division contributed pounds 160m, an improvement of 6 per cent, but allowing for the sale of the Langham Hotel the underlying improvement was 20 per cent. Occupancy rates and room rates both rose.

Profits rose in London and the provinces in spite of the strength of sterling, which has made the UK a more expensive place to visit. Overseas the improvement was less marked with a pounds 3.5m provision for exchange rate changes.

Seventeen new hotel deals were signed last year and the deal with Hilton Hotels Corporation reuniting the Hilton name world-wide through joint reservation and a world-wide loyalty schemes is expected to pay off in 1997.

Betting and gaming did even better, bouncing back from the depression caused by the competition from the national lottery in 1995. Profits rose 46 per cent to pounds 84.9m. Two thirds of that came from the betting shops, while Vernons staged a modest recovery to make pounds 5.8m in spite of a 30 per cent fall in turnover, but reduced spending by some of the high-rollers saw the contribution from casinos fall back to pounds 5.3m.

Capital expenditure increased by a quarter to pounds 137m. Spending on the betting shops rose to pounds 13m, and about half the 1,200 strong chain has been renovated, taking advantage of the deregulation of betting and the ending of the old rules requiring betting shops to have anonymous shop- fronts.

The idea is to let in more light, advertise a wider range of things to bet on, including the newly legalised numbers games and slot machines, and generally demystify the rituals of betting to attract the rapidly rising numbers of women who are having a flutter.