Investors see Ladbrokes as worth a punt with galvaniser Glynn at helm

Published on Thursday 5 August 2010 17:38

NEW Ladbrokes chief executive Richard Glynn has stamped his mark on the bookmaker with the announcement of a management shake-up, the restoration of the company's dividend and a deal to buy gambling machines for its outlets.

Glynn, who joined the company from Sporting Index in April, has undertaken an operational review as he looks to close the gap on rival William Hill, which has outperformed Ladbrokes in recent times, particularly in online gambling.

The review - "Project Galvanise" - has identified a number of areas in which Ladbrokes can improve its performance.

"These include a focus on the customer, improving the e-performance, the brand effectiveness and enhancing the technology background of the group," Glynn said. "I expect these priorities, supported by targeted investment, will deliver customer satisfaction, revenue growth, margin improvement and operational efficiencies over the medium term."

The review has resulted in a management shake-up, with Nick Rust due to join the company from rival Gala Coral early next year to take up the position of retail managing director.

Richard Ames will look after the retail operations in the meantime, with Gary McIlraith joining from Alix Partners to become managing director of digital channels, international and strategy. Former Gala Coral chairman and chief executive John Kelly has joined the board as a non-executive.

Ladbrokes has also struck a four-year deal for Global Draw to supply 95 per cent of its shops with gambling machines, with the rollout starting early next year.

Shares in the company, which have risen by 17 per cent since the beginning of July on optimism over the new management, closed nearly 5 per cent higher yesterday at 145.5p.

KBC Peel Hunt analyst Nick Batram said: "With a new chief executive, a machines announcement and some strong hires, there is an emerging story at Ladbrokes beyond simply being cheap."

Ladbrokes, which owns more than 2,700 betting shops, saw the amount staked by punters at its UK shops fall 7 per cent despite the impact of the World Cup on first-half results.

The firm's win margin was also lower than last year as horse racing results, in particular a hammering at Royal Ascot, offset a decent World Cup when a high number of draws and low goal-scoring left punters clear losers.

Revenues from over-the-counter betting fell 6 per cent but a better performance from the company's 8,000-strong estate of gaming machines meant overall revenues for the UK retail business declined 3.2 per cent to 332.7m.

Profits fell 6.3 per cent to 76.9m as a planned reduction in free promotional bets off- set the lower stakes and gross win seen in over-the-counter betting.

Ladbrokes, which traces its history back to 1886, said it would pay an interim dividend of 3.85p per share.

It stopped paying dividends at the interim stage last year on the back of tough trading conditions and ahead of an equity fundraising.