Ladbrokes and Coral owner Entain has warned it faces a hit of around £40 million this year due to regulatory challenges in the UK and overseas.
The group revealed it swung to a pre-tax loss of £842.6 million in 2023 from profits of £102.9 million in 2022 after paying £585 million to resolve a probe into alleged bribery at a former Turkish subsidiary, as well as impairment charges largely related to the Australia operations.
On an underlying basis, it saw earnings edge 1% higher to £1.01 billion last year.
It’s Results Day for our Full Year 2023 performance.
This year, we’re focusing on delivering against this with a clear plan on how we are reshaping our business for customers, colleagues and shareholders.https://t.co/T9flIR5XLa#ItsYourGame pic.twitter.com/QeiB4aSAfU
— Entain (@EntainGroup) March 7, 2024
Entain warned that earnings over the year ahead will be affected by around £40 million due to regulatory changes in the UK and the Netherlands, and said it will provide a new profit forecast for the year in August.
Shares in the group tumbled 6% on Thursday morning after the announcement.
It comes after a difficult recent time for Entain, whose former boss, Jette Nygaard-Andersen, stepped down suddenly in December just weeks after the legal settlement and sports results that went against the bookmaker.
Ms Nygaard-Andersen has been replaced by non-executive director Stella David on an interim basis until a permanent successor is appointed.
Entain has also been under pressure from activist investors.
In January, it revealed it had appointed activist investor Ricky Sandler – who has previously called for the group to sell off some or all of its stake in a major US joint venture – to its board.
Mr Sandler sits on its capital allocation committee as well as its people and governance committee.
The company said it will also work with his outfit, Eminence Capital, to find another director who can sit on Entain’s board.
Entain said in its full-year results that a safer gambling crackdown in the UK will affect betting in the short term, with limits on online slot games among new measures.
It said: “In the UK, we are delighted to see the long-awaited regulatory review draw closer to conclusion.
“We look forward to the implementation of stake caps on online slot games and a potential agreement on uniform safer gambling measures across the market.
“While we expect these changes to be a positive for Entain in the long run, we may see continued player disruption over the short term.”
Regulatory changes in the Netherlands are also set to weigh on the group as the country proposes tighter deposit limits from the second quarter.
Entain added that it is pressing ahead with plans to simplify the business and make annual savings of £70 million by 2025.
Interim boss Ms David said: “2023 presented a number of challenges for the group, both industry-wide and Entain-specific.
“We have started the new financial year with a clear plan to accelerate our operational strategy, and are making pleasing progress across a range of initiatives to re-focus our market portfolio, prioritise organic growth, drive our share in the US, and expand our margins.”