Shares in Ladbrokes, the online and High Street betting shop, may have risen on Thursday, but the picture ain't all that pretty when you look a little closer.
It's no secret that the firm's real weakness in the first half of 2012 has been its Digital Business, which in June issued a profit warning after an all-important new website for the Euro 2012 football championships failed to make it online in time after feedback proved unsatisfactory. This was no small problem given that the company had expected to move all its customers on to the site.
A large part of the company's problems arose from its decision to develop its digital technology in-house, an area on which it has been forced to spend £50m, diverting capital from its advertising budget.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
The firm has been widely criticised for being too slow to move in on the booming Internet betting market, with Product Director Richard Ames carrying the can for the tardiness, having been given the boot this week.
Latest Videos FromMoneyWeek
Digital profits in the half year declined more than expected, which the firm blamed on a weak Sportsbook margin in the second quarter and delays in technology.
"We remain committed to our Digital strategy of building a more competitive offer through a combination of on-going investments to enhance our marketing, product and technology," said Richard Glynn, Chief Executive.
Although overall half year profits surged by 48.9% from £71.8m to £106.9m, helped by strong growth in UK Retail, Glynn remains under pressure to regain some of the lost ground as competitors such as William Hill gallop ahead.
Clearly he is feeling confident though, having told Reuters that the company has "now got a very clear programme to deliver the new technologies over the next six months".
The company's attempts to revamp the division will focus on the overhaul of its IT systems and trading platforms, the expansion of its sports betting and gaming products, new ecommerce capabilities, and enhanced digital marketing.
Half year operating profit in the sector fell from £29.7m to £15.0m year-on-year, with the biggest per cent decline seen in Poker revenue, down 24.3% from £7.4m to £5.6m. Bingo also took a hit, while casino was flat, and Sportsbook and Games rose.
The share price rose 1.42% to 156.90p by 16:39.
NR
