Bookmaker Ladbrokes (LAD) had already warned that its half-year performance would be below average in the first half, as management tries to reorganise the business for a greater push in online gaming. However, the market wasn't prepared for how quickly headwinds hit the company's UK retail division, where a combination of one-off costs and slowing growth in machine gaming combined to knock nearly 20 per cent off underlying operating profits. Ladbrokes' chairman Peter Erskine said that operational progress was not reflected in the numbers and that: "With hindsight, we were too optimistic about the timeline for shareholder returns."
The problem for Ladbrokes is that machine gaming revenues have been highly volatile during the past quarter, particularly, which management blamed on the hot weather putting punters off. That trend has continued and footfall into the company's betting shops was down between 10 per cent and 15 per cent in July. The lack of a major sporting event didn't help the comparisons with the first half of 2012, either, which meant a fall in amounts staked of 10.9 per cent on a like-for-like basis. The one bright spot was a higher-than-average win margin of 17.8 per cent, driven by favourable football results and a good Grand National for the bookies.
Broker Numis Securities cut its 2013 EPS forecast by 6 per cent to 14p, recovering to 18.3p in 2014 (from 18.3p in 2012).
LADBROKES (LAD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 197p | MARKET VALUE: | £1.81bn | |
| TOUCH: | 196-197p | 12-MONTH HIGH: | 245p | LOW: 162p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 49p* | NET DEBT: | 84% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 551 | 107 | 12.5 | 4.30 |
| 2013 | 567 | 55 | 5.2 | 4.30 |
| % change | +3 | -49 | -58 | - |
Ex-div: 18 Sep Payment: 31 Oct *Includes intangible assets of £742m, or 81p a share | ||||
