It seems the bookies don’t always come out on top.
Ladbrokes, one of the biggest High Street bookmakers in Britain, made a pre-tax loss of £43.2 million last year, according to preliminary accounts released on Tuesday. That’s down from a £37.7 million profit the year before.
But the loss was down to restructuring costs and other exceptional items that totalled £99 million. Ladbrokes is in the process of merging with Coral and that has cost £17.3 million so far. Closing underperforming shops also cost it £19.8 million.
Ladbrokes is also trying to reposition itself to win over more “recreational” gamblers. It’s doing this by investing heavily in digital products and marketing. That effort seems to be working, with digital revenue growing by 12.9% in the year, compared to growth of just 2% in Ladbrokes’ stores.
Overall revenue rose 3.2% to £1.19 billion. CEO Jim Mullen says in Tuesday’s statement:
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. Therefore, 2016 will see the same focus on winning more recreational customers, excellent operational delivery, and a performance driven approach as the basis for delivering on our clear 2017 financial targets.
Mullen says Ladbrokes has seen a strong start to the year, with an increase in football betting and winnings for the bookmaker thanks to an unpredictable season in the Premier League.
Despite the big loss, the costs have been well flagged and Ladbrokes’ performance is actually slightly better than expected. As a result, shares are up over 7% on Tuesday morning:
Russ Mould, investment director at stockbroker AJ Bell, says in an emailed statement:
Betting tax changes, shop closures, and a write-down on some shops and software were the principal reasons for the red figures. But the group saw some encouraging customer metrics in the second half and good progress on strategy and its financial objectives.
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