Betfred hit by profit slump despite turnover growth
Betfred has cited the impact of increased UK gaming taxes and lower margins as the main reasons behind a significant year-on-year drop in profit during the 12 months to September 27, 2015.
In its annual accounts, the company reported an operating loss of £76.7 million (€89.6 million/$99.1 million), a stark contrast to a profit of £31.5 million that it was able to achieve in the 78 weeks ending September 28, 2014.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was also down from £101.9 million to £56.5 million.
Betfred said operating profit was impacted by exceptional items of £83.7 million, mainly relating to a one-off impairment of goodwill in relation to the acquisition of its digital business, which has been hit by the UK’s new point of consumption tax and the closure of its operations in Australia.
On a like-for-like basis, the bookmaker said that EBITDA actually grew by 7.5%.
Although both operating profit and EBITDA fell in the 12 months, Betfred did record an increase in gross turnover, which came in at £10.4 million, the equivalent of £200.7 million per week, compared to the £13.3 billion and £170 million per week in the preceding 78-week period.
Reflecting on the results in a report accompanying its account, the bookmaker said: “On an annualised gross basis, turnover for the period has significantly increased across the business as a result of an increased number of customers and an increased stake per bet.
“This demonstrates the group's commitment and continued investment in both the UK real estate, the online presence through Betfred.com and totesport.com, and through Totepool betting on UK racecourses and through internal partners.
“Despite the significant increase in annualised turnover, the group's results have been impacted by increased UK gaming taxes and lower margins as a result of a series of unfavourable results.
“The online business through Betfred.com and totesport.com has felt the most significant impact of these challenges with a significant decline in earnings.”
Meanwhile, Betfred has agreed a multi-year deal with the Sky to begin offering the UK pay-television broadcaster’s Sky Sports channels across its network of shops.
The complete portfolio of all seven Sky Sports channels will be made available in all 1,360 Betfred shops across the UK from this month.
Sky Sports content will be broadcast via the bookmaker’s in-house Betfred TV channel, with coverage to include football’s English Premier League, golf’s Ryder Cup and the Formula 1 motor-racing championship.
Mark Stebbings, managing director of Betfred Retail, said: “Exciting live sport and a great customer experience are at the heart of our brand, so it's great news for Betfred customers that we'll be bringing them live Sky Sports content in our high-street shops.
“Sky Sports will greatly enhance our in-house Channel Betfred TV and make live betting even more exciting.”
James Tweddle, sales director at Sky Business, added: "We're really pleased to be working with Betfred to distribute our unrivalled schedule of live sport throughout their estate.
“We bring more of the sport that matters to betting customers, from live Premier League, with 75% of matches exclusively live on Sky, to Sky Sports News HD, offering Betfred customers non-stop valuable information about live scores, team formations, injuries, form and more.
“We're looking forward to strengthening this great new partnership over the coming years.”
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