Bookmaker Ladbrokes made its first full-year loss in a decade after it was hit by investment costs and new taxes as the group prepares for its £2.3 billion mega-merger with Gala Coral. It slumped to a £43.2 million pre-tax loss in 2015 against profits of £37.7 million in 2014 as it was impacted by new online and gaming machine taxes, which cost it around £50 million.
The firm, which last made an annual loss in 2006, added that its three-year investment programme to upgrade its UK shops and digital arm also hit the business.
Ladbrokes is attempting to complete a merger with Gala, but the deal still needs to get regulatory clearance and the pair are likely to have to sell shops to achieve the thumbs up from the Competition and Markets Authority (CMA). The business revealed £99 million of exceptional items over the period as a result of its three-year investment programme announced in July, including a £53.2 million writedown against the value of its retail estate of over 2,000 UK shops. It also spent £19.8 million on store closures and has so far amassed £17.6 million on merger costs. The firm said sales lifted 3.2 per cent in the year to £1.2 billion, but in the second half of the year revenues rose by 5 per cent , signalling that investments such as new betting terminals in stores were beginning to generate growth. It added that favourable football results so far had been a benefit to bookmakers.
Chief executive Jim Mullen said: "The full-year figures reflect the costs needed to undertake significant investment to deliver the strategy as well as facing circa £50 million of increased taxation. "While it is pleasing to report that after two quarters we have made a good start, we are only at the beginning of the journey."
Ladbrokes and Gala are joining forces to gain greater might in the face of new taxes and the need for more investment in marketing and technology. The merger was first announced last July, in a bid to make ground on market leader William Hill. Gala recently announced the sale of 130 bingo clubs for £241 million to help pave the way for the proposed Ladbrokes merger.
The firm said it expected the latest preliminary ruling from the CMA on the merger in late April. The move from the pair comes amid a wave of consolidation in the sector, with Paddy Bower and online gambling group Betfair also set to merge in a £5 billion tie-up. Analysts at Liberum said the annual figures from
Ladbrokes were “broadly in line” with City forecasts and had shown “operational improvement” in the final quarter of the year.