Had Ladbrokes been offering odds in recent weeks on a shake-up of its betting shops business in the Republic they would have been pretty slim.
It had been known for some time that the operation was under pressure as the group announced a review of the division when it published its 2014 results in February.
Following a period of declining profitability, the business last year lost €5 million. One of the causes highlighted by Ladbrokes was that it was still paying bubble-era rents in an economy just emerging from a recession.
Alongside those high fixed-costs it is coping with falling turnover. Last year net revenue in its overall Irish business, including the North, which is not affected by yesterday’s events, fell 11 per cent to £72.2 million.
While it did not break out figures for the Republic, it said that its punters bet 5.6 per cent less here in 2014.
Accounts filed for Ladbrokes Ireland Ltd show that in 2013 net revenues in that business were down 3 per cent at €50 million.
This combination of factors led the directors of its trading companies in the Republic: Ladbroke Ireland, Ladbroke Leisure Ireland and Dara Properties; to ask the High Court yesterday to grant all three protection from their creditors and to appoint Ken Fennell of Deloitte as interim examiner.
Court’s protection
If Fennell’s appointment is confirmed at a second hearing scheduled for May 1st, the three businesses will remain under the court’s protection, barring creditors from enforcing any debts against them.
The idea is to give them time – up to 100 days – to come up with a rescue plan that they can sell to those creditors and the court.
Job losses and shop closures are likely. Up to 250 of the group's 840 staff here face possible redundancy. The group hopes it can offer redeployment to some, and Ladbrokes Ireland retail director, Jackie Murphy, said that as far as possible any lay-offs would be voluntary.
Between 50 and 60 of its shops are likely to close. The final number will boil down to negotiations between Fennell and some of the chain’s estimated 150-plus landlords. Unusually for a bookmaker, Ladbrokes really has only one ace it can draw in these talks: the examinership itself.
This allows tenants to walk away from leases with no obligations. Faced with that, some landlords may decide to renegotiate their terms, others may be happy to take their chances in a recovering market.
Bottom line
The bottom line is that the group intends to maintain a presence here. Its chief executive,
Jim Mullen
, indicated that it intended staying for the long term, and also signalled it may reverse a decision of a few years ago to shift responsibility for the Republic back to Britain, which could have contributed to its woes.
