Ladbrokes impresses investors despite 2015 loss

Ladbrokes impresses investors despite 2015 loss

Tuesday, February 23, 2016 Totally Gaming
Jim Mullen was positive about the company's performance in the second half of 2015

Ladbrokes’ share price was up around six per cent on Tuesday despite the UK bookmaker posting its first loss in a decade during 2015.

In preliminary results released on Tuesday, the gaming operator said that it lost £43.2m (€55.4m/$61.1m) in statutory terms in 2015, having recorded a profit of £37.7m in 2014. The figure was actually better than analyst consensus expectations, which may well account for the share price soaring.

Chief executive Jim Mullen, who took over in March 2015, was optimistic despite the loss, focusing on positive results from Ladbrokes’ UK Retail and Digital division, Australian operations and more promising figures in the second half of the year following the implementation of his new strategy

However, the new Point of Consumption tax led to a £50m increase in costs during 2015, while Ladbrokes also incurred merger costs related to its pending tie-up with Coral and heavy marketing spend at more than 30 per cent of net revenue as outlined by Mullen’s strategy.

"I am pleased to be able to report a good start to the delivery of the strategy outlined in July. Although it remains early days there is positive progress to report,” said Mullen.

"In UK retail, self-service betting terminals are delivering growth, football is up and our retail team are delivering strong multi-channel growth.

"The full-year figures reflect the costs needed to undertake significant investment to deliver the strategy as well as facing circa £50m of increased taxation.”

Ladbrokes said that revenues rose by 2.1 per cent to £1.2bn over the course of the full year, with H2 results – in the period following the introduction of the new strategy - actually up by five per cent year-on-year.

The company added that digital net revenue grew by 12.9%, with the Q4 figure up 31.4% “as marketing and product investment delivered strong growth in actives and staking”.

Mullen said: "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.”

A note by investment group Hargreaves Lansdown read: “There are further hints of recovery visible in these numbers, with digital staking up sharply in Q4. As an early progress report, investors should be pleased with these results and the positive start to the current year provides a good base; although clearly there is still much to be done.”

Ladbrokes’ share price on the London Stock Exchange was up by nearly six per cent to 129.3p just before midday on Tuesday.


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