The United Kingdom’s second-largest bookmaker by market share, Ladbrokes, reported it has made a £42.3 million loss for the year to December 31, the first-ever full-year loss. Shares in Ladbrokes rose by 7.6% at one stage, before ending 6% up as investors were buoyed by strong fourth quarter figures.
Ladbrokes, who made a profit of £37.7 million in 2014, pointed the finger of blame at higher gambling duties, investments in the business made by its chief executive Jim Mullen, and shop closures.
Increase taxes and gambling machine duty cost the company an extra £50 million than in 2014, while costs related to its merger with Gala Coral weighed in at £17.6 million. Ladbrokes also registered impairment charges of some £53.2 million after a review of its UK and Ireland real estate’s value. In total, the company had £99.3 million worth of exceptional charges.
The UK Retail arm of Ladbrokes, its physical betting shops, made an operating profit of £116.1 million, down 2.7% from 2014, while its European Retail division saw an 11.5% increase in operating profit to £14.5 million. The closure of 56 shops generated an exception charge of £13.4m, with the company set to close around 25 shops during 2016.
However, its core telephone betting business made a loss of £2.2 million (down from a £2.0 million profit in 2014), with its Digital business posting a £23.8 million loss compared to a £14.0 million profit last year. Ladbrokes’s corporate costs also increase, by 4.8%, to £24.0 million.
Some of the increased costs stem from Mullen’s aggressive investment in marketing, which looks to be paying off if the fourth quarter of 2015 is anything to go by.
Net revenue in the digital department grew by 28.4% during Q4 2015, its strongest quarterly growth, the strongest growth since launch. Ladbrokes’ Australian business is also booming with net revenue up 76.3% In Q4 and 70.9% in the year.
In his Chief Executives review, Mullen said: “After a short and intense internal review, it was clear that we needed to change the way we ran the business, build scale, respond faster to the customer and create a sense of urgency across the business.”
Mullen also stated that the unpredictability of the current Premier League season has helped boost Q4 trading figures and that it “increased our marketing intensity to over 30% of net review” in regards to its digital products.
When asked if he believed the company’s fortunes were now turning around, Mullen replied, “I’m never going to say that because Ladbrokes has got previous with those sorts of statements. All I will say is that we welcome these results but there’s still much to do.”
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