View from City Road: Decks clear for change at Ladbroke

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It is hard not to feel for a man who, after 37 years building up a pounds 2bn business, sees its shares jump on news that he has cleared his desk for the last time. It would be surprising, however, if a pounds 1m pay- off - largely a dubious ex gratia payment for future consultancy services - did not ease the pain of Cyril Stein's departure from Ladbroke

What is perhaps sadder is the fact that in this instance the market has got it right. The single- minded determination that drove the company was always likely to be Mr Stein's undoing when it came to taking a back seat role. He is temperamentally unsuited to being a non-executive director.

The good news for Ladbroke is that new management under chief executive Peter George will now be free to change its spots. Expect a flurry of announcements over the next couple of months - new divisional heads, non-executives and, inevitably, a dividend cut at the beginning of March.

A 50 per cent cut in the final payout would give an 8p total for the year which - unlike 1992 - would be just covered by earnings per share. Profits of just under pounds 150m will compare with last year's pounds 40m, assuming there are no further provisions against property or hotel values.

Ladbroke needs some good news. The decision to welcome new foreign income dividend rules before changing its mind a week later has been firmly pinned on Mr Stein, but it made the company look rudderless.

The bungled announcement of the imminent departure of the head of the Hilton hotel chain confirmed the company's inability to communicate effectively with its shareholders and the rest of the outside world.

With any luck that should change under the new regime. All that remains then is for trading to pick up across the board and for the property market to harden sufficiently to allow disposals to pay down the company's still precipitous debt mountain.

Even after the expected dividend cut, the shares will yield an above-average 5.2 per cent. Given the remaining uncertainty that is probably reasonable, but Mr Stein can rest assured that, having been largely responsible for the rise and rise of Ladbroke, he has been personally responsible for arresting its fall.