Ladbrokes joins the move to Offshore

We  reported less than one week ago that William Hill was rumoured to be moving their online operations offshore and that Ladbrokes might follow as a reaction (see “Betting Tax too much for William Hill”) and after results have been published we now know it is more than rumour.

Yesterday Ladbrokes published a 25%  fall in half year profits and said it was going to relocate its online business to Gibraltar. Chief Executive Chris Bell reckons to save more than £7 million per year by avoiding the 15% tax on gross profit, 15% Vat and a 10% horse racing levy which he says over 400 websites of competitors do not pay. The move will require relocation of computer servers from the current base in Harrow near London to Gibraltar and will affect around a dozen staff. Whilst delivering the results and announcing a cut in the interim dividend from 5.1p to 3.5p, Mr Bell said “We have not fallen off a cliff but it’s tough”. Having said that pre tax profits did rise by £400,000 to £130 million boosted by profits from high roller telephone customers. Without the additional profits from that customer group profits reduced 25.6% to £98.6 million on net revenues of £504 million. The slots side of the business was partly to blame and Mr Bell added “On machines we have definitely been behind the curve. We have been too slow, particularly with new operational software and games”. He also announced the sale of its Italian betting shops taking a loss on the £70 million investment.

Despite all this bad news, the results were above expectation and the share price rose 3.6p to 171.1p.