Uh oh. Is this the beginning of the end?
UK Bookmakers, Ladbrokes, has announced that it made their first annual lost in ten years, after trying to turn around its under-performing digital operations. And after all its efforts, it seems to have backfired. This comes after the company lost over £43 million in a tax-avoidance lawsuit which occurred last year — a dramatic turn-over from 2014 which saw the company earning £37.7 million in profit. Yikes! It would seem this tax fiasco has put a serious dent in the bookmaker giant after all.
What Went Wrong
As stated above, Ladbrokes has been in trouble recently.
The company has involved itself in some rather dubious tax avoidance activities in which its lawyers exploited a legal loophole. In an effort to punish those who have cheated the system, HMRC have come down hard on major corporations who haven't been paying their taxes as they should have. Ladbrokes was one of their targets and they were forced to cough up over £50 million.
On top of that, the whole online operations thing isn't going so well either. Ladbrokes spent a total of £99m to help restore its Irish retail operations and assist in its coming merger with the Gala Coral Group. Bad news all around, it seems, but the company CEO, Jim Mullen, remains optimistic.
He says that the numbers of 2015 reflect a ‘good start' to the company's rejuvenation scheme which was launched the previous year in an attempt to restructure the way the company operated. He also believes the company will be back on track by 2017. We can only hope so after this drama.
Can It Recover?
Shareholders of Ladbrokes may have brushed off this loss, but to the world at large this raises some serious concerns. With other companies crying out over the proposed Ladbrokes/Coral merger being too monopolising for the market, the chances of said proposal going through seem dimmer by the day.
If the merge goes through, then the company could gain up to £1 billion every year. If Coral/Gala decides to pull out at the last minute however, things could go south very quickly.
We do hole out hope, however, that the deal does not fall through and that we see Ladbrokes and Coral thrive in the new partnership. If not, and if Ladbrokes continues to spend so much money on no-go ventures, then it could go bust. Let's hope they are smart enough to do that.