Analyst Views: What did you make of Ladbrokes’ performance during the first half of 2014?
PATRICK COFFEY | BARCLAYS
While the Digital performance is likely to excite the bulls, we believe these results throw up many questions which are central to the debate. Marketing as a percentage of revenue was 31 per cent in the first half. A key debate is how this marketing spend progresses and how much re-investment is needed to compete.
NICK BATRAM | PEEL HUNT
With a regulatory storm (point of consumption tax, betting terminals duty) and a general election on the horizon, the risk of further disappointment is high. We expect some recovery short-term on relief that the firm has delivered an in-line set of numbers. However, the risk of further disappointment remains significant.
DAVID JENNINGS | DAVY
Our primary concerns remain the real possibility that consensus forecasts are materially too high in both 2014 and 2015, and the likelihood that there will have to be a material cut to the dividend in 2015 as a result. We also think that the market is under-estimating the potential impact of machine legislation for 2015.
LADBROKES TROUBLED WEBSITE TIMELINE
In December 2010, Ladbrokes made a £240m bid for online gaming group 888 in order to get a headstart over online rivals Sportingbet and the soon-to-be-merged PartyGaming and bwin.
By August 2012, Ladbrokes had sacked its head of online strategy Richard Ames, following repeated delays to the launch of its revamped website and mobile service, which had seen more than £50m of investment in the previous two years.
In January 2013, Ladbrokes bought betting exchange website Betdaq for €30m (£23.9m) to try to bolster its online presence.
In March 2013, Ladbrokes announced a partnership with gambling software firm Playtech to move its website over to a new platform and add a host of new casino games as well as improved online marketing and customer retention features.