Ladbrokes Reports Progress In Preliminary F.y. 2015 Results

Good digital performance, but overall profits plunge 37.5 percent and company faces a hefty tax bill

The impact of the UK's FOBT and point of consumption online tax on gambling group Ladbrokes was quantified Tuesday in the release of the company's preliminary results for Q4 and FY 2015, with the company warning that it faces around GBP 50 million of increased taxation.
Key numbers listed in the report include:
* Group net revenue up 3.2 percent, H2 up 5 percent with favourable Q4-2015 sporting results;
* UK Retail net revenue up 2 percent with Q4-2015 delivering strong growth and up 6.5 percent;
* Digital net revenue growth at 12.9 percent with Q4-2015 up 31.4 percent y-o-y and good growth in active players;
* Multi-channel delivered over 35,000 active players – higher than expected – by year end after a full launch at the end of August 2015;
* Australian growth strategy delivering, with active players up 65 percent and net revenue up 71 percent;
* Group operating profit down 35.7 percent at GBP 80.6 million, with high marketing investment exacerbated by increased taxation;
* Exceptional items at GBP 99 million – primarily retail impairments of GBP 53.2 million, Coral merger transaction costs of GBP 17.6 million and shop closure costs of GBP 19.8 million;
* GBP 35 million corporation tax credit primarily from crystallisation of historic tax losses;
* Full year dividend at 3p per share (1p interim; 2p final) in line with strategy;
* 2016 expectations unchanged: sustained product and marketing investment planned to drive customer metrics;
* Ladbrokes Coral merger on track with shareholder approval secured and the CMA phase 2 process underway.
Chief executive officer Jim Mullen said the company has enjoyed a good start to a strategy introduced in July 2015.
"Although it remains early days there is positive progress to report," he said. "In UK Retail, self-service betting terminals are delivering growth, football is up and our Retail team are delivering strong Multi-channel growth.
"In Digital in Q4, increased marketing delivered more customers and more staking with Ladbrokes.com net revenue up over 25 percent and Australia, where the business goes from strength to strength, up over 75 percent.
"The full year figures reflect the costs needed to undertake significant investment to deliver the strategy as well as facing circa GBP 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."

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