Betfair results could be good news for investors
30.09.2007Reports in the weekend UK press indicate that online gambling group Betfair will reveal this week that the company is sitting on a cash pile of GBP 180 million which it may deploy to return money to investors.
However the figures, for the year to April 2007, will also show that earnings before interest, tax, depreciation and amortisation (ebitda) were GBP 36 million, down from the GBP 40 million reported the previous year. This is after allowing for a number of one-off expenses such as the acquisition of race-data publisher Timeform and investment to pay for changes in its online poker room. Ebitda before these exceptional items actually rose to GBP 48 million.
Investors can look forward to a “liquidity event” to allow some of its shareholders, many of whom have been investors since it was formed in 2000, to realise their holdings. It is not clear what form this will take, but options include a refinancing, bringing in a third-party investor, or a straightforward return of cash. A flotation has been ruled out in the short term.
Softbank took a 23 percent stake in Betfair in January last year in a deal that valued the company at GBP1.5 billion.
The Telegraph took a more pessimistic view, claiming that Betfair saw its profits decline by 30 percent in its last financial year, as it paid the price for a heavy investment programme.
The newspaper says that accounts due to be filed with Companies House next week will reveal that pre-tax profit has fallen from GBP 36.5 million in 2006 to GBP 25.3 million this year.
Betfair has expanded its workforce by 60 percent and invested in a slew of new products, the Telegraph explains. Much of the GBP22 million investment programme went towards supporting the company's international growth....and roughly GBP12 million was a one-off spend on infrastructure and technologies. Other one-off investments included establishing a casino operation, the building of a poker platform following the acquisition of Pokerchamps in 2005, and the integration of Timeform, the horseracing form guide business bought in November 2006.
Betfair will shortly begin trading in Italy. It already holds licences for Malta, Germany, Austria and Australia as well as the UK. Its long-term policy of refusing bets from the US meant revenues were unaffected by the Unlawful Internet Gambling Enforcement Act.
Directors point to like-for-like revenue growth of 30 percent
