While the main reason for that will be its aggressive investment plan aimed at improving its core UK digital and retail channels; the group is also braced for a pre-tax exceptional hit of between £75m and £85m due to its Ireland operations going into examinership in April and impairments relating to its Northern Irish and UK businesses.
The examiner in charge of Ladbrokes’ operations in the Republic, Ken Fennell of Deloitte, late last month told creditors that he favoured a rescue plan from Ladbrokes’ management over a potential takeover of operations by Boylesports, regarding the future of the Irish business. A finalised rescue plan is due to be put to the High Court next week.
In a trading update, yesterday, Ladbrokes said that the Irish business saw a 9.2% year-on-year decline in net revenue, in the first half of the year. Its UK retail division saw a 1.2% sales jump, while its online channel, there, saw revenues rise by 6.9%.
European retail — which excludes the UK, but includes Ireland — was down by just over 2%, but was aided by an 8.6% growth rate in Belgium.
Yesterday also saw Ladbrokes announced that it had reached agreement with UK rival Gala Coral to merge; creating a £2.3bn business which will be Britain’s largest high street betting group and better equipped to compete in the growing online market.
The latest deal in the gambling sector comes only a week after online betting company 888 agreed a £900m takeover of rival Bwin.party. Betting companies are responding to higher tax bills in Britain and tighter regulation of the industry.
Ladbrokes, which has struggled to keep pace with larger rival William Hill’s online expansion, said it would issue new ordinary shares to existing Gala Coral shareholders representing 48.25% of the enlarged company. Existing Ladbrokes investors will own 51.75% on the same basis.
To help fund the deal, which came after talks were announced last month, Ladbrokes is placing 93 million new shares, representing 10% of the company.
Ladbrokes chief, Jim Mullen will become boss of the merged company, named Ladbrokes Coral, with combined revenues of £2.1bn.