£79 million expense costs see Ladbrokes post H1 profit slump

mullen
Jim Mullen – CEO – Ladbrokes

Reporting on its half year 2015 performance (period ending 30 June), FTSE250 betting operator Ladbrokes Plc posted group operating losses of £41.4 million (after tax).

As expected by business analysts Ladbrokes’ retail betting division had been hit by a £51.8 million impairment charge, following a strategic review of its 2169 betting shop portfolio. The write-down of retail assets, would form part of £79 million in expenses incurred by the operator during the period.

In its presentation, Ladbrokes governance had little cheer about as group revenues for the opening six months of 2015 remained flat at £588 million. The operator would record a total group operating loss of £37.2 million.

Ladbrokes governance stated that its operations had met ‘externally imposed headwinds’ during the period which included the introduction of the UK POC, additional machine game charges and grey market withdrawals.

POC charges would impact Ladbrokes’ growing Digital division to pre-tax losses of £11.2 million (H1 2014 – £3 million), creating further bad news for the Ladbrokes executive team who had outlined the division as a key area for its future growth strategy.

Commenting on corporate performance Jim Mullen,  Ladbrokes Chief Executive, stated:

“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.”

“Going forward, we expect to see the Ladbrokes brand more prominent across the media, a retail driven multi-channel offer rolling out to more customers, an evolving and improved Digital offer and further progress in Australia.

“The proposed merger with the Coral Group represents an exciting opportunity for the business but, with completion some way away, the focus for me and my team must be on the here and now of delivering on our organic plan, building a better Ladbrokes and driving performance towards our 2017 targets.”

On the release of its H1 2015 performance, London business analysts and commentators have stated that the operator’s poor results should have no impact on its planned £2.3 billion merger with Gala Coral that was announced in July of this year.

Ladbrokes H1 2015 Performance Overview

unaudited

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