Financial Updates 28 – 06 – 16

Betfred Group accounts published

Betfred has published its accounts to 27 September 2015 with UK Companies House. Turnover (is, bets placed) has increased 18.0% to £10.4bn, driven by an increase in customers and stake size. However, gross win increased by 8.2% to £526.1m (less favorable results) and gross profit by 6.4% to £420.5m. EBITDA fell 16.8% to £56.5m while an £83.2m impairment (mostly online and tote) led to a £76.7m operating loss.

From a cash flow perspective, capex was £7.3m, however this is still relatively low and suggests strong underlying cash flow (c. £50m). Net Debt of £99m has been reduced by £46m, which is manageable in a stable operating and regulatory environment (neither of which can be taken for granted).

The number of LBOs operated in the period increased by 4 (net) to 1,402, reinforcing the view that the overall expansionary period for LBOs is over, a degree of resilience (from some operators) notwithstanding. The group reported £56.2m of MGD paid, which implies a machine revenue of £250m (25% duty came in half way through the period), or c. £890 MWA (up an implied 11%), which suggests a degree of OTC pressure. If machines represented 55% of LBO revenue, this would imply a revenue per LBO of c. £320k pa : still materially below the ‘big brand’ average of c. £380k.

Racing contributions were £13.3m (£10.2m of which Levy), a 4.5% increase, suggesting racing revenue continues to be resilient within the group, albeit underperforming overall growth.

Since period end, Betfred has taken the bold decision to outsource its online backend to GVC, which brings considerable remote and technological expertise; for Betfred to reverse its remote issues it must bring considerable UK market knowledge and project management skills to bear: this is not trivial but could be transformational.

(NB, the comps are from an annualised 78 week period so not LfL)