LONDON (Alliance News) - Ladbrokes PLC reiterated its outlook for 2016 on Tuesday as it reported a swing to a pretax loss in 2015 as a result of heavy exceptional costs and an increase in gambling taxation, though it said it remains focused on reaching or exceeding its financial targets for 2017 and said its merger with Gala Coral Group Ltd remains on track.
The company undertook a "short and intense" internal review, and in July set out a three year investment programme to build its UK retail, digital and Australian recreational customer base. However, the company said this plan "came at a cost", as it addressed an urgent need to invest more heavily in its business, which resulted in cutting its dividend to finance its strategy.
As a result the company proposed a final dividend of 2 pence, taking its full year dividend to 3 pence, down 66% from 8.9 pence a year before.
Ladbrokes reported a pretax loss of GBP43.2 million, swung from a pretax profit of GBP37.7 million a year before, as result of exceptional costs of GBP99.3 million and higher operating expenses, which offset a rise in revenue to GBP1.20 billion from GBP1.17 billion.
Exceptional items included a GBP58.3 million impairment following the review of its UK retail and Ireland shops and software, GBP19.8 million related to losses on the closure of shops in the UK and Ireland, and GBP17.6 million related to the company's proposed merger with Gala Coral.
Additionally, Ladbrokes said it had seen an around GBP50 million increase in gambling taxation.
Elsewhere, the company said that its merger with Coral is on track, having secured shareholder approval, with a phase 2 probe by the Competition and Markets Authority underway. It expects preliminary findings of this probe in late April.
Ladbrokes said its second half results gave it encouragement that its strategy is working, and said its current year has started well, as the "unpredictability of the football season has thus far favoured bookmakers."
"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," said Chief Executive Jim Mullen in a statement.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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