Respite for boss despite profit fall as Ladbrokes finally gets smart
Bookmaker cashes in on the boom in smartphone gambling
Wednesday 13 August 2014
The chief executive of Ladbrokes gained ground in his battle for survival yesterday amid signs that the struggling bookmaker is finally set to cash in on the boom in smartphone gambling.
Richard Glynn is under intense scrutiny from investors after a string of profit warnings as the bookie plays catch-up with more well-established online rivals such as William Hill and Paddy Power.
Ladbrokes had a “strong” World Cup as punters left £28m with the group, although interim results showed that overall pre-tax profits halved to £27.7m. This was put down to an unprecedented run of football favourites winning at the start of the year and a poor Ascot and Epsom, as well as exceptional costs as the bookie shut struggling shops.
But the company’s digital arm is back in the black with a £3m profit, after losses in the second half of last year, as it reaps the initial benefits of a deal with Playtech to use the Israeli software firm’s superior mobile and online software.
Encouragingly for Ladbrokes, more and more gamblers have been using smartphones to part with their cash. During the World Cup mobile accounted for almost two-thirds of sports-betting stakes, with 164,000 active gamblers during the tournament. Ladbrokes is now pressing to keep as many as possible betting as the new Premier League season gets under way.
Mr Glynn joined in 2010 on a deal that could potentially net him £12m in shares if he gets the shares above 297p. But yesterday, after initial gains, the shares closed at 130p, below the 147p level when he joined.
The chief executive insisted he retained the support of investors, adding: “Shareholders understand how much work needed to be done in the business. They understand that we’re one year into a five-year arrangement with Playtech and they understand we’ve hit our milestones.”
Its World Cup performance, while strong, still lagged William Hill, which took nearly twice as much cash during the tournament. The amount staked with Ladbrokes was up 20 per cent on the 2010 World Cup, but the increase at William Hill was 80 per cent.
Mr Glynn admitted there is “more to do” but set out ambitious plans: “In retail we are about 22 per cent or 23 per cent, in digital we are about 8 per cent. I don’t see any reason why over the next few years we can’t get our digital share of the market to reflect our position in retail.”
The City remains to be convinced of the strength of the revival as the group also faces a new tax on online betting and tougher rules on controversial “crack cocaine” betting machines. James Ainley, an analyst at Citi, said the results offered “a glimmer of hope for a digital revival”, but Nick Bartram at the broker Peel Hunt said: “Against a regulatory storm and a general election on the horizon, the risk of further disappointment is high.”
The second half of the year started strongly despite golfer Rory McIlroy’s winning run – including the British Open and US PGA tournaments – costing Ladbrokes £5m.
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