TIDMBET
RNS Number : 3677Q
Betfair Group PLC
17 June 2015
17 June 2015
Betfair Group plc ("Betfair")
FY15 Preliminary Results
"Product and marketing investment drives record customer
activity"
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
----------------------------------- ------ ------ -------
Revenue 476.5 393.6 +21%
EBITDA 120.2 91.1 +32%
Operating profit 94.3 61.6 +53%
Earnings per share 85.9p 49.0p +75%
Underlying earnings per share (1) 79.5p 49.0p +62%
Dividend per share 34.0p 20.0p +70%
----------------------------------- ------ ------ -------
Full year highlights
-- Sustainable revenue up 27% to GBP388.5m
-- Sustainable revenue mix now 82% of Group revenue (FY14: 78%)
-- EBITDA up 32% to GBP120.2m (up 53% excluding UK POC tax)
-- Underlying free cash flow up 47% to GBP103.8m, leading to a
year-end cash balance of GBP105.1m
-- Active customer numbers up 52% to 1.7m
-- New customer acquisition up 65% following increased marketing investment
-- The number of customers cross-sold from Sports to Gaming up 100%
-- TVG acquired HRTV and secured long-term contents rights,
providing an opportunity for further growth
-- Proposed full year dividend up 70% to 34.0 pence per share
Q4 highlights
-- Active customers up 46% to 1.0m (up 58% in sustainable markets)
-- Revenue up 13% to GBP124.3m (up 18% in sustainable markets)
-- EBITDA up 3% to GBP22.7m (up 60% excluding UK POC tax)
Breon Corcoran, Betfair's Chief Executive Officer,
commented:
"FY15 has been an excellent year for Betfair. We are
successfully executing our strategy and achieving profitable scale
in sustainable markets. Our investments are working, the business
now operates at pace and our people have a strong will to win.
The financial year started with the World Cup, which allowed us
to engage with many new and existing customers and gain trading
momentum. This carried on throughout the rest of the year,
culminating in record customer numbers and betting volumes at the
Cheltenham Festival and Grand National meeting.
Product is a key reason why customers join and stay with
Betfair. Important product improvements, including the extension of
Price Rush to each way bets and Cash Out to in-running horseracing,
helped to drive a strong performance during these key racing
festivals.
We continue to invest heavily in the business. This year we
spent c.GBP28m more on marketing and customer bonuses and added
more than 60 people to our product development teams.
Our "Tap Tap Boom" advertising campaign has been effective in
showing the simplicity of using Betfair, especially through our
market-leading mobile apps. We are sustaining our marketing
investment throughout the upcoming season, including leading slots
on Sky Sports and BT Sport's football coverage.
Betfair is well positioned for further growth and we look
forward to building on these results in FY16".
(1) Underlying earnings per share excludes the profit on
disposal of the Group's share of Betfair Australia. A
reconciliation of reported figures to underlying figures is set out
on page 9.
Analyst and investor results webcast
There will be a live webcast of the results presentation at 10am
BST. For access please visit the Group website
(http://corporate.betfair.com). A copy of the webcast and slide
presentation given at the meeting will be available on the Group's
website later today.
For more information, please contact:
Media: Investors / Analysts:
James Midmer Victoria Palmer-Moore Paul Rushton
Corporate Communications Powerscourt Investor Relations
Tel: +44 20 8834 6843 Tel: +44 20 7250 1446 Tel: +44 20 8834
james.midmer@betfair.com vpm@powerscourt-group.com 6139
paul.rushton@betfair.com
BUSINESS REVIEW
Since setting out our strategy in 2012, we have executed our
plan to grow in sustainable markets, investing heavily in products
and brand. We are competing aggressively on all fronts and the
business has good momentum.
Overview of FY15 results
Revenue increased by 21% to GBP476.5m (FY14: GBP393.6m), with
double-digit growth in each of Sports, Gaming and Betfair US.
Revenue growth was driven by a 52% increase in the number of active
customers to 1,715,000 (FY14: 1,129,000), supported by a 65%
increase in the number of new customers acquired in the year, as
well as a focus on reducing customer churn.
While we are investing substantially in our products and brand,
we continue to run the business with efficiency and discipline.
This, combined with the revenue growth, results in operating
leverage and has led to a 32% increase in EBITDA to GBP120.2m.
Excluding the new UK point of consumption (POC) tax, EBITDA was up
53%.
The Group generated GBP103.8m of underlying free cash flow and
ended the year with a cash balance of GBP105.1m and no debt. In
January 2015 we returned GBP199.7m to shareholders via a B share
scheme, while retaining flexibility to pursue strategic options in
a quickly evolving market.
Overview of Q4 results
Revenue increased by 13% to GBP124.3m (FY14: GBP110.2m), with
revenue from sustainable markets up 18% to GBP103.6m (FY14:
GBP87.6m) and revenue from other markets down 8% to GBP20.7m (FY14:
GBP22.6m).
Sports revenue increased by 5% to GBP84.7m (FY14: GBP80.4m).
Strong volume increases were partly offset by an GBP8.4m increase
in customer bonus deductions as a result of investment in
promotional activity to attract and retain customers.
Gaming revenue was up 22% to GBP22.5m (FY14: GBP18.5m), driven
by the cross-selling of recreational Sports customers.
Betfair US revenue increased by 53% to GBP16.8m (FY14: GBP11.0m)
following strong performances in both TVG and New Jersey
Casino.
EBITDA increased by 3% to GBP22.7m (FY14: GBP22.0m), with
revenue growth predominantly offset by the introduction of UK POC
tax, which cost GBP12.4m in the period. Excluding this, EBITDA was
up 60%.
Strategy update
Our primary objective is to achieve profitable growth in
sustainable markets. To this end, we continue to focus our
resources on regions with good regulatory visibility, which we
currently consider to be the UK, USA, Australia, Bulgaria, Denmark,
Gibraltar, Ireland, Italy, Malta and Spain. These markets
contributed 82% of revenue in FY15 (compared to 78% in FY14 and 72%
in FY13).
The number of active customers in sustainable markets increased
by 70% to 1,456,000 (FY14: 854,000), driven by record customer
acquisition during the World Cup, Cheltenham Festival and Grand
National meeting. Active customer numbers in other markets declined
by 6% to 259,000 (FY14: 275,000).
New customers are primarily joining through our Sportsbook,
which is the most efficient source of activations. These customers
are then subsequently introduced to our other products. This has
resulted in a positive impact across the rest of Betfair's
business, with increases of 20% and 74% respectively in the number
of first-time Exchange and Gaming users.
Revenue from sustainable markets was up 27% to GBP388.5m (FY14:
GBP306.1m), primarily driven by the UK and Betfair US. This growth
validates our strategy of focusing on these regions. Revenue from
other markets was up 1% to GBP88.0m (FY14: GBP87.5m). This
performance was better than expected, benefitting from the lack of
major market exits in the year.
New product development continued apace in the year. Through the
ongoing integration of our Exchange and Sportsbook we now have a
sports betting platform that gives customers a first class
experience. Our flagship Cash Out and Price Rush products, which
extend Exchange-style trading and pricing benefits to all
customers, are key reasons why customers join us and also why they
stay. We continue to expand the range of these products and
launched Cash Out for in-running horseracing and Price Rush for
each-way betting ahead of the Cheltenham Festival.
Our Brand has evolved considerably over the year as we have
sought to demonstrate that Betfair is a fun and different place to
bet. In February we launched our "Tap Tap Boom" advertising
campaign, which highlights the simplicity of betting with Betfair.
We have secured leading advertising slots for the 2015/16 football
season on the two key UK sports platforms, Sky Sports and BT Sport,
and have increased our spend in print channels substantially to
supplement our strong social and online marketing activities.
We have also significantly increased our promotional activity to
complement the attractive odds available on our Exchange and
Sportsbook. For example we offered eight places on the Open golf,
compared to the industry standard of five places, whilst at
Cheltenham we had a market leading offer where customers received
three free bets for every winner at odds of 3/1 or more on day one.
We spent GBP21.1m on customer bonuses in FY15 (up from GBP5.2m in
FY14), highlighting the level of investment we are making in
customer acquisition and retention.
International opportunities continue to be a key focus. In Italy
the market remains tough and we are ensuring we have a competitive
product before making significant marketing investment. The
acquisition of the HRTV network and related content rights deal in
the USA secures long term content and distribution to support TVG's
growth. We have also seen encouraging momentum from our online
casino business in New Jersey, although the wider market has been
slower to develop than anticipated.
Regulation
During the year Betfair obtained a gaming licence in the UK and
began paying POC tax following its introduction in December 2014
(GBP19.2m cost in FY15). Although timing remains uncertain, we
expect a new gaming tax regime for Ireland to be in place by August
2015 and are seeking to obtain a licence. If both taxes had been in
place for the whole of FY15, we estimate that the cost would have
been approximately GBP47m.
Betfair continues to engage with appropriate authorities in
international markets where there is the prospect of fair and
workable regulation. During the year we exited from Singapore and
ceased to offer the Exchange in Austria, and we continue to expect
further market exits from territories where the future of online
gaming regulation is currently unclear.
Outlook
The market remains highly competitive and, despite the
introduction of the UK point of consumption tax, operators are
still spending heavily on marketing and promotions. We continue to
believe that scale is critical and we have opportunities to invest
for profitable growth. We have momentum, current trading is good
and we are confident we can deliver our expectations for the coming
financial year.
OPERATING REVIEW
Sports
Sports revenue was up 17% to GBP328.0m (FY14: GBP280.5m). The
first half of the year was boosted by World Cup revenue of
GBP15.9m, which was approximately double the amount generated from
the last major football tournament, whilst the second half saw
strong performances at the Cheltenham and Aintree festivals.
The Exchange remains our key differentiator and total trading
volume increased to GBP55.3bn (FY14: GBP52.8bn). In September the
Exchange took centre stage during the Scottish Referendum, with its
odds predicting the eventual "No" vote from an early stage. March's
Cricket World Cup also proved popular with both semi-finals seeing
over GBP100m traded, breaking the Exchange record for a single
event twice in two days. The pricing benefits inherent on the
platform were evident throughout the year and, in April, AP McCoy's
final Grand National mount Shutthefrontdoor went off at 25/1 on
Betfair compared to an industry SP of 7/1.
Our Sportsbook has continued to perform strongly for what is
still a comparatively new product in a competitive market. Volumes
were up 140% during the year to GBP1.2bn (FY14: GBP0.5bn) and it
remains central to new customer acquisition. We have invested
heavily in our in-house trading and risk management teams, as well
as third party services, to ensure our product is competitive with
its longer standing rivals. An example of our progress is the
c.121% increase in the number of in-play events to approximately
9,500 in April 2015 (from around 4,300 in April 2014).
The mobile channel has become the driving force across the
sports betting industry and Betfair continues to lead the way. Over
70% of Sportsbook revenue now comes through mobile, with the
channel responsible for the majority of new UK customer activations
and 80% of UK Sportsbook customers now transacting via mobile.
Gaming
Gaming revenue increased by 34% to GBP88.5m (FY14: GBP66.2m).
The strong performance was primarily driven by the significant
increase in the number of Sports customers and the successful
cross-selling of Gaming products to these customers.
During the year we concentrated product development on
improvements to cross-sell, such as single sign-on across our
Sports and Gaming apps, and embedded games within our Sports app.
This helped to increase the number of Sports customers using Gaming
products for the first time by 100%.
We also focused on sourcing the best available content and over
175 new games were launched in the year. We have made significant
improvements in personalising customer experience and this,
combined with more targeted marketing, has boosted both the
acquisition and retention of customers.
The mobile channel continues to be a key driver of growth; it is
now the platform of choice for Casino customers, with over 60% of
actives in recent months playing via mobile.
Betfair US
Betfair US revenue increased by 29% to GBP58.8m (FY14:
GBP45.7m), mainly driven by TVG where handle (which is the volume
of wagers placed) and revenue increased by 11% and 20% respectively
(both constant currency). The first full year of operation from our
online casino in New Jersey generated revenue of GBP5.3m (FY14:
GBP1.2m).
TVG continues to outperform the wider US online horseracing
market and during the year it became the largest US online advanced
deposit wagering operator by market share. TVG's continued
investment in its broadcast, digital and marketing capabilities is
driving growth in its active customer base.
In February 2015, TVG completed the acquisition of the HRTV
horseracing network and agreed long-term broadcasting and wagering
rights with the Stronach Group. We believe the integration of the
two networks offers significant benefits for US racing customers;
chiefly that the combined network will now be able to show over
40,000 live races, compared to 27,000 previously.
Betfair's New Jersey Casino was launched in November 2013
following the regulation of online gaming in the state. Whilst the
wider New Jersey market has proved to be smaller than anticipated,
we are encouraged by our recent trading momentum. In October, we
switched our land-based licensing partner from Trump Plaza to
Golden Nugget.
FINANCIAL REVIEW
Summary
Revenue increased by 21% to GBP476.5m (FY14: GBP393.6m) driven
by double-digit growth in Sports, Gaming and Betfair US. EBITDA was
up 32% to GBP120.2m (FY14: GBP91.1m) as strong operating leverage
allowed the business to absorb additional marketing investment and
the introduction of POC tax in the UK from December 2014.
Reported profit before tax was GBP101.2m (FY14: GBP61.1m), which
included a GBP6.4m profit relating to the disposal of our joint
venture in Australia. Management believes that underlying results,
which exclude this item, provide additional guidance to statutory
measures to help understand the underlying performance of the
business during the financial year. Underlying profit before tax
was up 55% to GBP94.8m (FY14: GBP61.1m).
Earnings per share were up 75% to 85.9 pence (FY14: 49.0 pence)
and underlying earnings per share, which exclude the gain on
disposal, increased by 62% to 79.5 pence (FY14: 49.0 pence).
The Group ended the year with a cash balance of GBP105.1m (FY14:
GBP209.8m) and no debt, despite returning GBP223.8m to shareholders
through a B share scheme and ordinary dividends.
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
------------------------------------- ------ ------ -------
Revenue 476.5 393.6 +21%
EBITDA 120.2 91.1 +32%
Operating profit 94.3 61.6 +53%
------------------------------------- ------ ------ -------
Profit before tax 101.2 61.1 +66%
Underlying profit before tax (2) 94.8 61.1 +55%
------------------------------------- ------ ------ -------
Profit for the year 86.4 51.0 +69%
Underlying profit for the year (2) 80.0 51.0 +57%
------------------------------------- ------ ------ -------
Earnings per share 85.9p 49.0p +75%
Underlying earnings per share (2) 79.5p 49.0p +62%
------------------------------------- ------ ------ -------
(2) Underlying figures in FY15 exclude the profit on disposal of
the Group's share of Betfair Australia. A reconciliation of
reported figures to underlying figures is set out on page 9.
Revenue
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
--------------------- ------ ------ -------
Sports 328.0 280.5 +17%
Gaming 88.5 66.2 +34%
Betfair US 58.8 45.7 +29%
Customer funds 1.2 1.2 0%
--------------------- ------ ------ -------
Total revenue 476.5 393.6 +21%
--------------------- ------ ------ -------
Sports revenue was up 17% to GBP328.0m (FY14: GBP280.5m). The
first half of the year was boosted by World Cup revenue of
GBP15.9m.
Gaming revenue increased by 34% to GBP88.5m (FY14: GBP66.2m).
The strong performance was primarily driven by a significant
increase in the number of Sports customers and the successful
cross-selling of Gaming products to these customers.
US revenue increased by 29% to GBP58.8m (FY14: GBP45.7m), mainly
driven by TVG where handle (which is the volume of wagers placed)
and revenue increased by 11% and 20% respectively (both constant
currency). Growth was also boosted by our online casino in New
Jersey, which generated revenues of GBP5.3m in its first full year
of operation (FY14: GBP1.2m).
Revenue (GBPm) Q1 Q2 Q3 Q4 FY15 Q1 Q2 Q3 Q4 FY14
--------------------- ------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Sustainable markets 93.7 98.3 92.9 103.6 388.5
Change % +34% +30% +27% +18% +27% 69.9 75.4 73.2 87.6 306.1
Other markets 23.6 22.0 21.7 20.7 88.0
Change % +15% -1% -2% -8% +1% 20.5 22.2 22.2 22.6 87.5
--------------------- ------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Total revenue 117.3 120.3 114.6 124.3 476.5
Change % +30% +23% +20% +13% +21% 90.4 97.6 95.4 110.2 393.6
--------------------- ------ ------ ------ ------ ------ ----- ----- ----- ------ ------
Revenue from sustainable markets was up 27% to GBP388.5m (FY14:
GBP306.1m), primarily driven by the UK and Betfair US. Revenue from
other markets was up 1% to GBP88.0m (FY14: GBP87.5m), with no major
market closures in the year and World Cup revenue obscuring an
underlying decline following the decision to focus investment on
sustainable markets.
Actives (k) Q1 Q2 Q3 Q4 FY15 Q1 Q2 Q3 Q4 FY14
--------------------- ------ ------ ------ ------ ------ ---- ---- ---- ---- ------
Sustainable markets 653 594 638 905 1,456
Change % +65% +51% +50% +58% +70% 396 393 424 571 854
Other markets 131 114 122 135 259
Change % -2% -22% -11% -6% -6% 134 147 137 143 275
--------------------- ------ ------ ------ ------ ------ ---- ---- ---- ---- ------
Total actives 784 708 760 1,040 1,715
Change % +48% +31% +35% +46% +52% 530 540 561 714 1,129
--------------------- ------ ------ ------ ------ ------ ---- ---- ---- ---- ------
Gross margin
Gross profit for the year increased by 13% to GBP385.9m (FY14:
GBP342.7m). This represents a gross margin percentage of 81.0%
(FY14: 87.1%), with the year-on-year reduction largely driven by
additional gaming taxes including UK POC.
Administrative expenses
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
------------------------------- ------ ------- -------
Sales and marketing 136.1 124.2 +10%
Technology 62.4 60.1 +4%
Operations 36.4 35.1 +4%
G&A 30.8 32.2 -4%
------------------------------- ------ ------- -------
Operating expenses 265.7 251.6 +6%
------------------------------- ------ ------- -------
Depreciation and amortisation 25.9 29.5 -12%
------------------------------- ------ ------- -------
Total administrative expenses 291.6 281.1 +4%
------------------------------- ------ ------- -------
Average headcount during the year of 1,901 was 9% higher than
the prior year (FY14: 1,739), driven by increased investment in our
product and technology teams, alongside additional operational
staff to serve the growing customer base.
Sales and marketing spend increased by 10%, mainly driven by
World Cup investment in the first half of the year. As a proportion
of total revenue, sales and marketing spend decreased to 29% (32%
in FY14).
Technology costs before capitalisation of internal development
expenditure were up 2% on the prior year, with additional product
development spend offset by efficiencies following the expansion of
our near-shore technology centres. Internal development expenditure
capitalised was GBP6.6m (FY14: GBP7.4m). Technology costs after
this capitalisation were up 4% on the prior year.
Operations spend was up 4%, predominantly due to increased
investment in customer services resources to support significant
growth of the customer base.
General and administrative (G&A) costs were down 4%,
primarily driven by lower headcount in this area.
Depreciation and amortisation of GBP25.9m was 12% lower than
prior year (FY14: GBP29.5m), mainly due to historical assets
becoming fully depreciated.
EBITDA
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
--------------------- ------ ------ -------
Betfair excl. US 115.4 89.1 +30%
Betfair US 4.8 2.0 +140%
--------------------- ------ ------ -------
EBITDA 120.2 91.1 +32%
--------------------- ------ ------ -------
EBITDA was up 32% to GBP120.2m (FY14: GBP91.1m). The EBITDA
margin increased to 25.2% (FY14: 23.1%), or 29.3% excluding UK POC
tax.
EBITDA excluding the US was up 30% to GBP115.4m (FY14:
GBP89.1m), with revenue growth partly offset by increased costs of
sales, including GBP19.2m relating to the introduction of POC tax
in the UK, alongside increased investment in marketing and
product.
Betfair US EBITDA increased by 140% to GBP4.8m (FY14: GBP2.0m),
with reduced losses as part of our multi-year investment in New
Jersey Casino, along with strong revenue growth in TVG.
Finance income and expenses
Net finance income was GBP0.4m (FY14: GBP0.7m). This includes
interest on corporate funds of GBP1.1m (FY14: GBP1.1m), net foreign
exchange translation losses of GBP0.3m (FY14: GBP0.4m) and charges
of GBP0.4m relating to deferred and contingent consideration for
the acquisition of HRTV.
Betfair Australia
In August 2014, we sold our 50% stake in Betfair Australia to
our joint venture partner Crown Resorts Limited for GBP5.5m, which
represented a gain on disposal of GBP6.4m. Our shareholder loan to
Betfair Australia of GBP6.5m was also repaid at the same time.
Our share of operating profit in Betfair Australia was GBP0.1m
(FY14: loss of GBP1.2m), relating to the period up until the
disposal of the business.
Betfair US
In February 2015, TVG acquired the HRTV horseracing television
network and entered into a long-term content rights agreement with
the Stronach Group. Betfair US made an initial payment of $25.6m
(GBP16.6m) and will pay further consideration estimated to be
$47.8m over a seven-year period, although the total consideration
is dependent upon TVG's future handle.
Based on projected future cash flows, the present value of the
total consideration is estimated to be $56.5m.
Corporation Tax
The Group had a tax charge of GBP14.8m for the year (FY14:
GBP10.1m). The Group's effective underlying tax rate was 15.6%
(FY14 underlying: 16.5%) and we continue to expect the long-term
sustainable tax rate to remain around this level.
Return of cash
In December 2014, we announced the return of GBP199.7m of
capital to shareholders via a B share scheme and the subsequent
consolidation of our share capital on a 7 for 8 basis. This was
completed in January 2015.
Dividend
The Board is recommending the payment of a final dividend of
25.0 pence per share. Together with the interim dividend of 9.0
pence per share, the proposed full year dividend is 34.0 pence per
share (FY14: 20.0 pence). The full year dividend represents 43% of
underlying earnings per share.
The ex-dividend date will be 10 September 2015, the record date
will be 11 September 2015 and payment will be on 9 October
2015.
Capital expenditure
Year ended 30 April FY15 FY14 Change
GBPm GBPm %
--------------------- ------ ------ -------
External capex 13.2 15.0 -12%
Internal devex 6.6 7.4 -11%
--------------------- ------ ------ -------
Total 19.8 22.4 -12%
--------------------- ------ ------ -------
Capital expenditure (capex) decreased to GBP19.8m (FY14:
GBP22.4m) mainly due to lower external spend, with prior year costs
including the one-off investment in the conversion of TVG to high
definition.
Balance Sheet
The Group ended the year in a strong financial position, with
net assets of GBP49.4m (FY14: GBP171.4m). Total assets were
GBP232.0m (FY14: GBP309.5m) of which 55% were current assets (FY14:
75%). Current assets decreased primarily as a result of the cash
return to shareholders, offset in part by positive cash generated
from operations in the year.
Total liabilities increased from GBP138.1m to GBP182.6m mainly
driven by trade and other payables, primarily relating to the
deferred and contingent consideration payable in respect of the
HRTV content deal. There was also an increase in taxes payable
including the introduction of UK POC tax.
Cash and cash flow
Free cash flow was GBP103.8m in the period (FY14: GBP58.0m).
Underlying free cash flow, which excludes cash flow in the prior
year that related to separately disclosed items, increased by 47%
to GBP103.8m (FY14: GBP70.4m).
Cash at 30 April 2015 was GBP105.1m (30 April 2014:
GBP209.8m).
Year ended 30 April FY15 FY14
GBPm GBPm
------------------------------------------------------- -------- -------
Underlying free cash flow 103.8 70.4
Cash flow from separately disclosed items - (12.4)
------------------------------------------------------- -------- -------
Free cash flow 103.8 58.0
------------------------------------------------------- -------- -------
Dividends paid (24.1) (15.6)
Return of capital to shareholders, including fees and (200.7) -
duty
Proceeds from disposal of stake in Betfair Australia 12.0 -
Other (3) 4.8 1.3
------------------------------------------------------- -------- -------
Net (decrease)/increase in cash and cash equivalents
(4) (104.2) 43.7
------------------------------------------------------- -------- -------
(3) Other is comprised of the net purchase of own shares and
proceeds from the issue of share capital
(4) Excludes the effect of exchange rate fluctuations on cash
held
Year ended 30 April FY15 FY14
GBPm GBPm
------------------------------------------ ------ ------
Cash and cash equivalents as at 30 April 105.1 209.8
------------------------------------------ ------ ------
Reconciliation of Reported to Underlying
Year ended 30 April 2015 Revenue EBITDA Operating Profit for EPS
GBPm GBPm Profit the year p
GBPm GBPm
------------------------------- -------- ------- ---------- ----------- ------
FY15 reported 476.5 120.2 94.3 86.4 85.9
Disposal of Betfair Australia - - - (6.4) (6.4)
------------------------------- -------- ------- ---------- ----------- ------
FY15 underlying 476.5 120.2 94.3 80.0 79.5
------------------------------- -------- ------- ---------- ----------- ------
Consolidated Income Statement 2015 2014
For the year ended 30 April 2015 Note GBPm GBPm
------------------------------------------------------- ---- ------- -------
Continuing operations
Revenue 1 476.5 393.6
Cost of sales (90.6) (50.9)
======================================================= ==== ======= =======
Gross profit 385.9 342.7
Administrative expenses (291.6) (281.1)
======================================================= ==== ======= =======
Group operating profit 94.3 61.6
Analysed as:
======================================================= ==== ======= =======
EBITDA* 1 120.2 91.1
Depreciation and amortisation (25.9) (29.5)
======================================================= ==== ======= =======
Group operating profit 94.3 61.6
Finance income 1.1 1.1
Finance expense (0.7) (0.4)
======================================================= ==== ======= =======
Net finance income 0.4 0.7
Profit on disposal of joint venture 6.4 -
Share of profit/(loss) of equity accounted investments 0.1 (1.2)
======================================================= ==== ======= =======
Profit before tax 101.2 61.1
Tax 2 (14.8) (10.1)
======================================================= ==== ======= =======
Profit for the year 86.4 51.0
======================================================= ==== ======= =======
Attributable to:
Equity holders of the Company 86.4 51.0
Non-controlling interest - -
======================================================= ==== ======= =======
Profit for the year 86.4 51.0
------------------------------------------------------- ---- ------- -------
Earnings per share
Basic 3 85.9p 49.0p
======================================================= ==== ======= =======
Diluted 3 83.7p 48.1p
------------------------------------------------------- ---- ------- -------
* EBITDA is defined as profit for the year before net finance
income, tax, depreciation and amortisation. It excludes amounts in
respect of the Group's equity accounted investments and is
considered by the Directors to be a key measure of its financial
performance.
Consolidated Statement of Comprehensive Income 2015 2014
For the year ended 30 April 2015 GBPm GBPm
===================================================================== ===== =====
Profit for the year 86.4 51.0
Other comprehensive income/(expense)
Items that will be reclassified to profit or loss:
Foreign exchange differences arising on consolidation 1.4 (4.0)
Reclassification to profit or loss 0.1 -
===================================================================== ===== =====
Other comprehensive income/(expense) for the year, net of income tax 1.5 (4.0)
===================================================================== ===== =====
Total comprehensive income for the year 87.9 47.0
===================================================================== ===== =====
Attributable to:
Equity holders of the Company 87.9 47.0
Non-controlling interest - -
===================================================================== ===== =====
Total comprehensive income for the year 87.9 47.0
===================================================================== ===== =====
Consolidated Balance Sheet
As at 30 April 2015
2015 2014
Note GBPm GBPm
===================================================== ==== ====== ======
Assets
Non-current assets
Property, plant and equipment 14.8 16.7
Goodwill and other intangible assets 83.2 49.3
Investments 0.1 5.5
Available-for-sale financial assets 1.3 1.3
Deferred tax assets 4.2 3.9
======================================================= ==== ====== ======
103.6 76.7
Current assets
Trade and other receivables 23.3 23.0
Cash and cash equivalents 105.1 209.8
======================================================= ==== ====== ======
128.4 232.8
===================================================== ==== ====== ======
Total assets 232.0 309.5
======================================================= ==== ====== ======
Liabilities
Current liabilities
Trade and other payables 128.1 111.8
Tax payable 29.5 24.4
Provisions 4 5.1 1.2
======================================================= ==== ====== ======
162.7 137.4
Non-current liabilities
Trade and other payables 19.5 -
Provisions 4 0.4 0.7
======================================================= ==== ====== ======
Total liabilities 182.6 138.1
======================================================= ==== ====== ======
Net assets 49.4 171.4
======================================================= ==== ====== ======
Equity
Share capital 0.1 0.1
Share premium 5.3 21.9
Other reserves (9.0) (11.4)
Retained earnings 53.0 160.8
======================================================= ==== ====== ======
Equity attributable to equity holders of the Company 49.4 171.4
Non-controlling interest - -
===================================================== ==== ====== ======
Total equity 49.4 171.4
======================================================= ==== ====== ======
Consolidated Statement of Changes in Equity
For the year ended 30 April 2015
Attributable to equity holders of the Company
Foreign
currency Total
Share Share Other translation Retained parent Total
capital premium reserves reserve earnings equity Non-controlling equity
GBPm GBPm GBPm GBPm GBPm GBPm interest GBPm GBPm
================= ======== =========== =========== =========== =========== =========== =============== =======
Balance at 1 May
2013 0.1 19.4 0.9 (8.5) 120.1 132.0 - 132.0
Comprehensive
income/(expense)
for the year
Profit for the
year - - - - 51.0 51.0 - 51.0
Other
comprehensive
expense - - - (4.0) - (4.0) - (4.0)
Total
comprehensive
income/(expense)
for the year - - - (4.0) 51.0 47.0 - 47.0
================= ======== =========== =========== =========== =========== =========== =============== =======
Transactions with
owners, recorded
directly in
equity
Issue of shares - 2.5 - - - 2.5 - 2.5
Dividend paid - - - - (15.6) (15.6) - (15.6)
Equity-settled
share-based
payments - - - - 6.5 6.5 - 6.5
Sale of own
shares by the
EBT* - - - - 1.7 1.7 - 1.7
Purchase of own
shares by the
EBT* - - - - (2.9) (2.9) - (2.9)
Tax on
equity-settled
share-based
payments - - 0.2 - - 0.2 - 0.2
Total
transactions
with owners - 2.5 0.2 - (10.3) (7.6) - (7.6)
================= ======== =========== =========== =========== =========== =========== =============== =======
Balance at 30
April 2014 0.1 21.9 1.1 (12.5) 160.8 171.4 - 171.4
================= ======== =========== =========== =========== =========== =========== =============== =======
Balance at 1 May
2014 0.1 21.9 1.1 (12.5) 160.8 171.4 - 171.4
Comprehensive
income for the
year
Profit for the
year - - - - 86.4 86.4 - 86.4
Other
comprehensive
income - - - 1.5 - 1.5 - 1.5
Total
comprehensive
income for the
year - - - 1.5 86.4 87.9 - 87.9
================= ======== =========== =========== =========== =========== =========== =============== =======
Transactions with
owners, recorded
directly in
equity
Issue of shares - 5.6 - - - 5.6 - 5.6
Share premium
cancellation** - (22.2) - - 22.2 - - -
Capital - - - - - - - -
reduction***
Dividend paid - - - - (24.1) (24.1) - (24.1)
Return of capital
to shareholders,
including fees
and duty*** - - - - (200.7) (200.7) - (200.7)
Equity-settled
share-based
payments - - - - 9.2 9.2 - 9.2
Sale of own
shares by the
EBT* - - - - 4.4 4.4 - 4.4
Purchase of own
shares by the
EBT* - - - - (5.2) (5.2) - (5.2)
Tax on
equity-settled
share-based
payments - - 0.9 - - 0.9 - 0.9
Total
transactions
with owners - (16.6) 0.9 - (194.2) (209.9) - (209.9)
================= ======== =========== =========== =========== =========== =========== =============== =======
Balance at 30
April 2015 0.1 5.3 2.0 (11.0) 53.0 49.4 - 49.4
================= ======== =========== =========== =========== =========== =========== =============== =======
* Employee Benefit Trust is defined as EBT.
** Following shareholder approval at the Annual General Meeting
on 4 September 2014 and court approval on 8 October 2014, the
Company cancelled its share premium account, transferring GBP22.2m
to the retained earnings account within reserves.
*** During the year the Group returned GBP200.7m of cash to
shareholders, including fees and duty.
Consolidated Statement of Cash Flow
For the year ended 30 April 2015
2015 2014
Note GBPm GBPm
=========================================================== ==== ======= ======
Cash flows from operating activities
Profit for the year 86.4 51.0
Adjustments for:
Depreciation and amortisation 25.9 29.5
Equity-settled share-based payments and associated costs 10.4 7.3
Profit on disposal of joint venture (6.4) -
Share of (profit)/loss of equity accounted investments (0.1) 1.2
Net finance income (0.4) (0.7)
Tax 14.8 10.1
Increase in trade and other receivables (0.7) (4.4)
Increase in trade and other payables 13.6 2.4
Increase/(decrease) in provisions 4 3.6 (11.3)
=========================================================== ==== ======= ======
Cash generated from operations 147.1 85.1
Tax paid (8.0) (5.6)
=========================================================== ==== ======= ======
Net cash flows generated from operating activities 139.1 79.5
=========================================================== ==== ======= ======
Cash flows from investing activities
Acquisition of business combination, net of cash received 5 (16.6) -
Acquisition of property, plant and equipment (6.3) (8.5)
Acquisition of other intangible assets (6.9) (6.5)
Capitalised internal development expenditure (6.6) (7.4)
Cash received on disposal of joint venture 5.5 -
Cash received from repayment of joint venture loan 6.5 -
Finance income received 1.1 0.9
=========================================================== ==== ======= ======
Net cash flows used in investing activities (23.3) (21.5)
=========================================================== ==== ======= ======
Cash flows from financing activities
Proceeds from the issue of share capital 5.6 2.5
Dividends paid (24.1) (15.6)
Return of capital to shareholders, including fees and duty (200.7) -
Purchase of own shares by the EBT (5.2) (2.9)
Sale of own shares by the EBT 4.4 1.7
=========================================================== ==== ======= ======
Net cash flows used in financing activities (220.0) (14.3)
=========================================================== ==== ======= ======
Net (decrease)/increase in cash and cash equivalents (104.2) 43.7
Cash and cash equivalents at the beginning of the year 209.8 168.1
Effect of exchange rate fluctuations on cash held (0.5) (2.0)
=========================================================== ==== ======= ======
Cash and cash equivalents at year end 105.1 209.8
=========================================================== ==== ======= ======
1 Operating segments
The Group's continuing operating businesses are organised and
managed as reportable business segments according to the
information which is used by the Group's CODM in making decisions
about reporting matters. These segments are:
-- Betfair excl. US
- Sports
- Gaming
- Management of customer funds
-- Betfair US
The previous reportable segments of Sportsbook and Exchange have
been combined into one reportable segment named 'Sports'. This is
to better reflect the way financial information is reviewed by the
CODM. Sports now consists of the Exchange sports betting product,
Timeform, the Sportsbook and Multiples. The Group has restated the
operating segment information for the year ended 30 April 2014
accordingly.
Gaming consists of various Casino products and bespoke Exchange
games products. Tradefair Spreads and Poker are also classified
within Gaming. All of these gaming activities are played by
customers in a number of geographical areas.
Sports and Gaming meet the quantitative thresholds required by
IFRS 8 as reportable segments. While the revenue from the
Management of customer funds does not meet these requirements, this
segment is separately disclosed as it is monitored by the CODM.
The Group's US operations (including the TVG Network) meet the
quantitative threshold to be disclosed separately.
The results of the Australian joint venture (up to the date of
disposal) were consolidated in the Group accounts on an equity
accounting basis. As such only the Group's share of gains and
losses are presented in the operating segment note below.
The Group focuses its internal management reporting
predominantly on revenue, as the products' potential to generate
revenue is the chief driver of the Group's business and the
allocation of resources. The Group's cost base is to a large extent
fixed in nature. Corporate expenses, assets and liabilities cannot
readily be allocated to individual operating segments and are not
used by the CODM for making operating and resource allocation
decisions.
However, expenses are allocated and reviewed by the CODM between
Betfair excl. US and the Betfair US operating segment. The analysis
of EBITDA is summarised below.
Management also reviews Group revenue on a geographic basis,
determined by the location of the customers. This information is
analysed below on the following basis:
-- UK
-- Rest of World.
The majority of the Group's non-current assets are located in
the UK and the US, representing 44% and 45% of total non-current
assets respectively (30 April 2014: UK 71% and US 12%).
1 Operating segments continued
Segmental information for the years ended 30 April 2015 and 30
April 2014 is as follows:
Year ended 30 April 2015
Management
of customer Betfair
Sports Gaming funds Betfair excl. US US Group
GBPm GBPm GBPm GBPm GBPm GBPm
==================================== ====== ====== ============ ================= ======= ======
Revenue 328.0 88.5 1.2 417.7 58.8 476.5
==================================== ====== ====== ============ ================= ======= ======
EBITDA 115.4 4.8 120.2
----------------- ======= ======
Depreciation and amortisation (25.9)
Net finance income 0.4
Profit on disposal of joint venture 6.4
Share of profit of equity
accounted investments 0.1
Profit before tax 101.2
Tax (14.8)
------
Profit for the year 86.4
------
Total assets 232.0
------
Total liabilities 182.6
------------------------------------ ------ ------ ------------ ----------------- ------- ------
Year ended 30 April 2014
Management
of customer Betfair
Sports Gaming funds Betfair excl. US US Group
GBPm GBPm GBPm GBPm GBPm GBPm
============================== ====== ====== ============ ================= ======= ======
Revenue 280.5 66.2 1.2 347.9 45.7 393.6
============================== ====== ====== ============ ================= ======= ======
EBITDA 89.1 2.0 91.1
================= ======= ======
Depreciation and amortisation (29.5)
Net finance income 0.7
Share of loss of equity
accounted investments (1.2)
======
Profit before tax 61.1
Tax (10.1)
Profit for the year 51.0
------
Total assets 309.5
------
Total liabilities 138.1
------------------------------ ------ ------ ------------ ----------------- ------- ------
1 Operating segments continued
Geographical information determined by location of customers is
set out below:
Year ended 30 April 2015
Rest of World Rest of World
UK Sustainable Total Other
Sustainable GBPm Sustainable GBPm Group
GBPm GBPm GBPm
-------------------- ------------- ------------- ------------- ------------- -------
Betfair excl. US 315.5 14.2 329.7 88.0 417.7
Betfair US - 58.8 58.8 - 58.8
-------------------- ------------- ------------- ------------- ------------- -------
Total Group revenue 315.5 73.0 388.5 88.0 476.5
-------------------- ------------- ------------- ------------- ------------- -------
Year ended 30 April 2014
Rest of World Rest of World
UK Sustainable Total Other
Sustainable GBPm Sustainable GBPm Group
GBPm GBPm GBPm
-------------------- ------------- ------------- ------------- ------------- -------
Betfair excl. US 246.4 14.0 260.4 87.5 347.9
Betfair US - 45.7 45.7 - 45.7
-------------------- ------------- ------------- ------------- ------------- -------
Total Group revenue 246.4 59.7 306.1 87.5 393.6
-------------------- ------------- ------------- ------------- ------------- -------
Revenue derived from customers located in Ireland and Gibraltar
are classified within UK.
2 Tax
The Group's consolidated effective tax rate for the year was
14.6% (30 April 2014: 16.5%).
A reduction in the UK corporation tax rate from 21% to 20%
(effective from 1 April 2015) was substantially enacted on 2 July
2013. Any deferred tax assets and liabilities at 30 April 2015 have
been calculated at 20%.
3 Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the year ended
30 April 2015 was based on the profit attributable to ordinary
shareholders of GBP86.4m (30 April 2014: GBP51.0m) and a weighted
average number of ordinary shares outstanding of 100,573,899 (30
April 2014: 103,975,695). The weighted average number of shares has
been adjusted for amounts held by the Group's EBT.
2015 2014
---------------------------------- ----------- -----------
Profit for the year (GBPm) 86.4 51.0
Weighted average number of shares 100,573,899 103,975,695
Basic earnings per share 85.9p 49.0p
Diluted earnings per share 83.7p 48.1p
---------------------------------- ----------- -----------
All earnings in the current year relate to continuing
operations.
3 Earnings per share continued
Diluted earnings per share
The calculation of diluted earnings per share for the year ended
30 April 2015 was based on the profit attributable to ordinary
shareholders of GBP86.4m (30 April 2014: GBP51.0m) and a weighted
average number of ordinary shares outstanding after adjustment for
the effect of all dilutive potential ordinary shares of 103,167,618
(30 April 2014: 106,019,686).
Profit used to determine diluted earnings per share
2015 2014
GBPm GBPm
==================================================== ===== =====
Profit used to determine diluted earnings per share 86.4 51.0
==================================================== ===== =====
Weighted average number of shares (diluted)
2015 2014
===================================================== =========== ===========
Weighted average number of ordinary shares (basic) 100,573,899 103,975,695
Effect of share options on issue 2,593,719 2,043,991
===================================================== =========== ===========
Weighted average number of ordinary shares (diluted) 103,167,618 106,019,686
===================================================== =========== ===========
The average market value of the Company's shares of GBP13.92 (30
April 2014: GBP9.89) was used to calculate the dilutive effect of
share options based on the market value for the year that the
options were outstanding.
4 Provisions
Redundancy provision Onerous contracts Gaming Tax Total
GBPm GBPm GBPm GBPm
===================================== ==================== ================= ========== ============
Balance at 1 May 2013 9.7 1.9 - 11.6
Utilised in the year (9.7) (1.6) - (11.3)
Reclassification from non-current* - 0.9 - 0.9
Current provisions 30 April 2014 - 1.2 - 1.2
Additions in the year - - 4.1 4.1
Utilised in the year - (0.5) - (0.5)
Reclassification from non-current* - 0.3 - 0.3
========================================= ==================== ================= ========== ============
Current provisions 30 April 2015 - 1.0 4.1 5.1
========================================= ==================== ================= ========== ============
Balance as at 1 May 2013 1.6 1.6
Reclassification to current* - (0.9) - (0.9)
----------------------------------------- -------------------- ----------------- ---------- ------------
Non-current provisions 30 April 2014 - 0.7 - 0.7
Reclassification to current* - (0.3) - (0.3)
----------------------------------------- -------------------- ----------------- ---------- ------------
Non-current provisions 30 April 2015 - 0.4 - 0.4
----------------------------------------- -------------------- ----------------- ---------- ------------
* Non-current provisions reflect contractual obligations that
will be settled more than 12 months after the reporting date.
During the year, GBP0.3m (30 April 2014: GBP0.9m) has been
reclassified from non-current provisions to current provisions.
Onerous contracts relate to provisions made in relation to
operating leases for premises that were vacated during the year
ended 30 April 2013 as part of the restructuring.
Gaming tax provisions relate to amounts provided for taxes in
certain jurisdictions where the interpretation of tax legislation
is uncertain.
5 Acquisitions during the year
On 17 February 2015 the Group acquired 100% of the equity interests in HRTV LLC, a horseracing
television network, from The Stronach Group. As a result of the acquisition, the Group now
has long-term television rights to the racecourses owned and operated by The Stronach Group.
This strengthens the Group's ability to drive incremental wagering on its advanced wagering
platform and is expected to lead to additional advertising and distribution opportunities.
Initial cash consideration of $25.6m was paid by the Group upon acquisition, with estimated
future consideration of $47.8m to be transferred over the next 7 years. After discounting
at 10% the total fair value of consideration at the acquisition date is estimated to be $56.5m
of which $6.3m is dependent on future performance over the next 7 years. There is no maximum
cap on the amount payable however there are no reasonable changes in the assumptions used
that would result in a material impact.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration
and goodwill are as follows:
GBPm
==================================================================== ====
Cash paid 16.6
Deferred and contingent consideration 20.1
====
Total consideration 36.7
Non-current assets (excluding goodwill and other intangible assets) 0.2
Identifiable intangible assets
Broadcasting and wagering rights 31.3
Brand 0.4
Working capital 0.5
Net assets acquired 32.4
Goodwill 4.3
-------------------------------------------------------------------- ----
The main factor leading to the recognition of goodwill is the
synergies expected to be generated from the combined television and
wagering operations. The Group expects the goodwill recognised on
acquisition to be tax deductible in full.
Given the value to the Group lies predominantly in the acquired
broadcast and wagering rights and the ability to generate
incremental wagering on the existing advanced wagering platform the
post-acquisition revenue and profit and the Group performance
assuming the acquisition occurred at the beginning of the year have
not been disclosed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FFMMTMBMBTJA
Betfair Grp (LSE:BET)
Historical Stock Chart
From Jun 2024 to Jul 2024
Betfair Grp (LSE:BET)
Historical Stock Chart
From Jul 2023 to Jul 2024
