Ladbrokes first-half profit falls 44% on taxes, impairments

(ShareCast News) - Bookmaker Ladbrokes posted a 44% drop in first-half pre-tax profit and cut its interim dividend as the company took a hit from taxes and impairment charges, which included the closure of some of its shops.Pre-tax profit for the six months ended 30 June came in at £24.7m from £44m in the first half of last year, on revenue of £585.4m, up 1.3% from £577.8m as total exceptional items rose to £78.9m from £27m last year, which was in line with the company's guidance.This included £17.1m of losses on the closure of shops in the UK and Ireland and a £58.3m impairment loss following the review of UK retail and Ireland shops and software.Ladbrokes cut its interim dividend by 77% to 1p from 4.3p in 2014.Revenue in European Retail fell 2.1% to £60m but in the UK, revenue was up 1.2% at £410.5m.The first-half gross win margin - which measures the proportion of bets won - was 16%, reflecting industry-wide football losses recorded in January and weaker horse-racing margins due to the company's focus on value for customers and customer-friendly results.Ladbrokes said the first half of the year has seen several major regulatory developments introduced into day-to-day operations. These include point of consumption taxation, changes to regulations around gaming machine staking above £50, the introduction of mandatory set limits onto gaming machines and the imposition of voluntary codes around gambling advertising.Chief executive Jim Mullen said: "Our first half results reflect the challenge facing Ladbrokes. While we have some encouraging customer trends, we need to reset the business and invest. The results clearly show why we need to change and why we need to do so quickly."In July, we set out an organic plan to create a better business in 2017 with clear targets. While doing this removes the short-term thinking that had come to dominate our actions, we recognise it does create short-term impacts on our profitability." Mullen added that the proposed merger with Coral Group represents an exciting opportunity for the business but, with completion some way away, the focus must be on delivering the company's organic plan, building a better Ladbrokes and driving performance towards its 2017 targets.