Betfair Unveils Reform Plans
LONDON -- This morning, Betfair revealed plans to reinvigorate its business with three key elements: to focus on regulated jurisdictions, to invest in the brand, and to introduce greater accountability.
With this three-point plan, the gambling firm hopes to increase revenue sustainability, enhance its competition position, drive growth, and become a leaner and more dynamic business.
The news was announced within its interim results, which saw a 22% decline in underlying pre-tax profit to 21 million pounds from 27 million pounds at the same stage last year. EBITDA also dropped off by 2% to 42.3 million pounds against 43.1 million pounds, while basic earnings per share were slipped 25% from 23.2 pence at H1 FY12 to 17.4 pence today.
However, group revenue increased 5% to 200.6 million pounds, and more than 20 million pounds of savings have been identified to date, while Betfair has confirmed it is "exiting from investments in LMAX and Kabam."
Chief executive officer Breon Corcoran, who joined Betfair from Paddy Power on Aug. 1 this year, commented:
This is a solid set of results for the first six months of the year. ... The review we have carried out over the past four months has demonstrated a number of strengths. Betfair has a unique product offering, strong brand affinity, and scale in the U.K. However, we have also identified a number of areas requiring change and fixing these will take time.
Recent regulatory developments have been challenging and we are reducing our exposure to markets with an uncertain regulatory future. We will focus investment within regulated markets with sustainable revenues. Creating a simpler product that retains the key advantages of the exchange, combined with investment to return the brand to its previously strong position, will allow us to increase our audience and accelerate revenue growth.
The gambling firm also announced a review of its dividend policy, with the medium-term payout target "increased to 40% of group profit after tax." The interim dividend has been increased by 25% to 4 pence per share.
Betfair floated at 13 pounds a share during 2010, and despite the shares' falling 50% -- having previously hit a low of 567 pence in 2011 -- the firm is still valued at about 20 times profits and offers a minuscule dividend.
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