Ladbrokes sank to its first annual loss in a decade in the run-up to a planned £2.2bn merger with bingo giant Gala Coral, blaming higher taxes and a costly marketing drive.
The chief executive, Jim Mullen, emphasised the bookmaker’s underlying results, which he said showed growth in revenues across all divisions amid a renewed focus on small bets.
Ladbrokes sank to a £43.2m loss before tax in 2015, compared with a £38m profit the previous year, after taking into account a range of one-off factors.
The bookmaker lamented the £50m impact of increased taxes on machine gaming and a new point of consumption tax on gambling operators based overseas. It spent more on marketing to promote its digital business, but Mullen said this was already paying off, with revenue in the division up more than 31% in the fourth quarter.
Ladbrokes also booked £99m of impairments, of which £58m was due to revaluation of its UK and Ireland portfolio and £18m was attributed to costs associated with the Gala Coral merger.
Mullen brushed off fears that Andy Hornby, widely expected to be chief operating officer of the combined group, might be barred from being a company director amid an inquiry by regulators into the collapse of HBOS, the bank he ran. “Our view on Andy hasn’t changed,” said Mullen. “He’s an accomplished executive. We’ll assume that he’s joining and that continues to be the case.”
The amount Ladbrokes took from so-called high rollers sank from £16m to £4m, but Mullen said this was due to a strategic withdrawal from high-stakes bets, rather than an unlucky streak.
“I’m trying to move away from high rollers towards retail customers with £2 or £3 bets. We want the man in the street who might put on a £5 half-time full-time score.”
Ladbrokes has addressed concerns about responsible gambling amid an increase of online betting firms. Mullen said the bookmaker had a 100-member team in Gateshead using an algorithm to detect potential problem gamblers on the high street and online.
He said the system could detect potentially worrying changes in an individual’s betting patterns, triggering a warning that would result in staff discussing the issue with the customer.
