UPDATE 1-Ladbrokes to maintain dividend after fall in profit

Wed Apr 30, 2014 4:15am EDT

(Adds comments on shop closures, shares)

LONDON, April 30 (Reuters) - British bookmaker Ladbrokes promised on Wednesday to keep its annual dividend at last year's level despite a big drop in first quarter operating profit.

The dividend commitment underlined the company's message that it believed its business would start to grow again in the second half of the year after a series of setbacks that have put pressure on Chief Executive Richard Glynn.

Ladbrokes, Britain's second largest bookmaker, reported operating profit of 18.4 million pounds ($31 million) in the first three months of 2014 - less than half what it earned in the same period a year earlier.

In common with other bookmakers, Ladbrokes has been hit by big payouts to gamblers on two weekends when many of the top soccer teams won. It is also having to invest in upgrading its online service to try to make up lost ground on larger rival William Hill.

"Our financial performance remains consistent with our expectations at the time of our annual results announcement in February," Glynn said in a statement.

"We now have in place all of the operational infrastructure from which to drive growth in H2 and beyond," he added, referring to upgrades to its online and mobile products launched ahead of this summer's World Cup.

BETTING SHOP CLOSURES

Ladbrokes said it would pay a dividend of at least 8.9 pence per share, in line with 2013. Shares in the company rose 2.3 percent to 146.8p by 0725 GMT.

A familiar sight in Britain's town centres with 2,300 betting shops, Ladbrokes formed an alliance with software developer Playtech last year to help serve the growing number of gamblers who bet on sports events through their computer, tablet or smartphone.

Bookmakers have been hit by government plans to increase taxes on high stakes gambling machines that account for a large slice of their traditional betting shop business.

Ladbrokes said the tax rise would cost it around 19.5 million pounds a year and that it would have to look at further shop closures when it takes effect next year. The company is already closing 50 shops this year to cut costs.

William Hill said last week it would close 109 loss-making shops this year. It blamed the government for increasing tax on the machines, which offer games including roulette, to 25 percent from 20 percent. ($1 = 0.5936 British Pounds) (Writing by Keith Weir. Editing by Jane Merriman)