Ladbrokes chairman Peter Erskine to step down amid overhaul

Ladbrokes chairman Peter Erskine will step down this year in a move that could give the struggling bookmaker's new chief executive more room for a radical shake-up.

His departure follows years of declining profits in Ladbrokes's digital gambling operations and comes just a month after Jim Mullen was promoted to chief executive.

Mr Mullen faces a tough regulatory environment as he tries to turn round the company, with higher taxes on online gambling and pressure on lucrative fixed-odds betting terminals leaving him with few options for growth, according to Simon Davies, analyst at Canaccord Genuity.

However, Mr Davies added that the departure of Mr Erskine would give Mr Mullen "greater license" to overhaul Ladbrokes. In particular, he said the move puts a question mark over the company's commitment to pay a 8.9p dividend this year, a decision that was criticised as "short-sighted" by analysts in March.

"The balance sheet is weak and it's not generating enough cash to justify the payout," said Mr Davies, who added that Mr Mullen could decide to close more lossmaking high street stores on top of the 60 already flagged this year.

A government led by the Labour party, which has promised to give local councils greater powers to ban highly profitable fixed-odds betting terminals, would likely result in even more closures, he said.

Mr Mullen will lay out his plans to revive the bookmaker in June, sooner than initially expected, after the company reported a 60 per cent fall in first-quarter profits in April.

He has already begun shaking up the business, putting its lossmaking Irish operations into a restructuring process last month that could result in the closure of almost a third of its 196 shops.

Mr Erskine said he would remain in the post until a successor had been found and that Ladbrokes had been on a "necessary and difficult journey" since he was appointed in 2009.

In that time, Britain's second-biggest retail bookmaker has fallen behind rival William Hill, with online profits plunging from £62.7m in 2010 to just over £8m in 2013.

However, a move to a new online gambling platform provided by Playtech has begun to show signs of improvement, with online profits jumping 70 per cent to £14m in 2014.

Shares fell 0.5 per cent to 105.4p in afternoon trading in London.

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