LADBROKES DROPS THE OTHER SHOE

7 August 2009

Online operations to move to Gibraltar, but not telephone betting call centre
 

Ladbrokes has announced that it is to follow William Hill plc offshore to a kinder tax regime in Gibraltar, confirming speculation that it would use the publication of its H1 2009 results to make the announcement. CEO Chris Bell said the company expected to save in excess of GBP 7 million a year from the move.

However, the group said that it would keep its telephone betting call centre in Britain.

Industry observers are now watching for reactions from the Tote and Gala Coral groups, which have not yet made public their positions on shifting online operations offshore in order to more effectively compete. Betfair has already indicated that it is not considering such a move at present but is keeping its options open.

The Ladbrokes land and online gambling group reported a decline in first-half pre-tax profit and cut its dividend as it warned trading had worsened since May and economic conditions remained challenging.

The company reported an underlying pre-tax profit of GBP 131.3 million (H1 2008: GBP 136.6 million).

CEO Bell said the company was still aiming to meet full-year expectations - Reuters reports that the consensus of analysts for full-year underlying pre-tax profit currently stands at GBP 180 million).

The gambling group cut its dividend by 31 percent to 3.5 pence given the results to date and uncertain outlook.

Ladbrokes posted a 21 percent drop in first-half 2009 profit as horse-racing and soccer results favoured customers. Net income dropped to GBP 74.7 million from GBP 94 million, in the comparable period in 2008.

Group net revenues slid 6.6 percent to GBP 504.4 million (H1 2008: GBP 539.8 million) and before-tax profits fell 3.9 pecent to GBP 131.3 million.

In online gambling operations, operating profit dropped 21 percent to GBP 20.8 million. Net Internet revenue of GBP 84.6 million represented a 2.3 percent decline, compared with a 12 percent pro forma gain for rival William Hill’s online operation.

The group is to launch a revamped sportsbook during the second half of the year as part of its drive to reverse the downward trend, the company revealed, with a younger player demographic a particular target. It will feature a greater product range, video-streamed sports and improved functionality. Player sign-ups were up 5.1 percent with active clients increasing by 9.4 percent, although betting expenditure per head fell from GBP 160 to GBP 143, and this impacted online casino returns.

In-running betting activity was up a creditable 48 percent, but net sportsbetting margins declined by 5 percent to GBP 30.5 million.

UK advertising helped the online casino player database grow by 31.3 percent, but spending was lower, resulting in net revenues growing only 0.8 percent to GBP 26.8 million.

The company’s Internet poker operations were hurt by intensified competition, with net revenue falling 13.6 percent to GBP 12.7 million. Second half plans to drss the situation include product and service enhancements and the launch of an Italian poker service.

Online bingo net revenues grew impressively 29.8 percent to GBP 6.1 million, and this operational area is looking promising for the second half.

The shares have dropped 5.1 percent this year, giving the company a market value of 1.05 billion pounds.

Previous reports have revealed that Ladbrokes is looking to sell its Italian retail business and Bell said the company has received expressions of interest.

Shares in Ladbrokes have lost nearly a third of their value over the past year.

Online Casino News Courtesy of Infopowa

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