Join our community of smart investors

Ladbrokes' profits suffer

Ladbrokes (LAD) suffered hefty profit decline at the half-year stage, despite a strong mobile-led World Cup performance
August 13, 2014

The performance of Ladbrokes' (LAD) mobile app platform during this year's World Cup prompted chief executive Richard Glynn to conclude that "2014 was the mobile World Cup". It's easy to see why: the mobile business saw active customer numbers soar 700 per cent and that helped the overall digital division to increase stake values by 40 per cent compared with 2010's tournament.

IC TIP: Hold at 134p

But Mr Glynn says the bookie still has much to do to turn around the first-half's profit decline. Half-year operating profit fell 24 per year on year cent to £67.5m, driven by a string of punter-friendly sports results in the UK. For the second half, however, there's a three-pronged plan: build on the mobile platform's success, increase machine gaming revenue in the retail business, and expand further internationally.

Ladbrokes still has to tackle impending regulatory upheaval, too. Mr Glynn says the plan to offset December's Point of Consumption (PoC) tax involves cutting costs, increasing cross-selling and improving customer retention rates. But he reckons the message to the government is clear: "The gambling industry desperately needs a period of fiscal and regulatory stability if it is to grow and remain vibrant".

Broker Numis Securities expects full-year pre-tax profit of £119m, giving EPS of 11.5p (from £113m and 11.6p in 2013).

LADBROKES (LAD)
ORD PRICE:134pMARKET VALUE:£1.2bn
TOUCH:133-134p12-MONTH HIGH:205pLOW: 125p
DIVIDEND YIELD:6.6%PE RATIO:29
NET ASSET VALUE:44p*NET DEBT:105%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201356755.15.24.3
201458927.72.64.3
% change+4-50-50-

Ex-div: 24 Sep

Payment: 13 Nov

*Includes intangible assets of £781m, or 85p a share