TIDMBET
RNS Number : 2979T
Betfair Group PLC
17 July 2015
Betfair Group plc
17 July 2015
Betfair Group plc ("the Company")
Annual Report and Annual General Meeting
The Company announces that it has today circulated the Annual
Report and Accounts for the year ended 30 April 2015 (the "2015
Annual Report and Accounts") and Notice of Annual General Meeting
("AGM") (the "AGM Notice") to shareholders. Copies of these
documents are available on the Company's website:
http://corporate.betfair.com/.
In compliance with LR 9.6.1 a copy of the AGM Notice and the
2015 Annual Report and Accounts have been uploaded to the UKLA
National Storage Mechanism and will shortly be available for
inspection at http://www.morningstar.co.uk/uk/NSM.
The AGM will be held at the Company's offices at 2nd Floor,
Waterfront, Hammersmith Embankment, Winslow Road, London W6 9HP,
United Kingdom on 9 September 2015 at 11.00am.
A condensed set of the Company's financial statements and
information on important events that have occurred during the
financial year ended 30 April 2015 and their impact on the
financial statements were included in the Company's preliminary
results announcement released on 17 June 2015. That information,
together with the information set out below in the Appendix, which
is extracted from the 2015 Annual Report and Accounts, constitute
the material required by Disclosure and Transparency Rule 6.3.5 to
be communicated to the media in full unedited text through a
Regulatory Information Service. This announcement is not a
substitute for reading the full 2015 Annual Report and
Accounts.
Page and note references in the text below refer to page numbers
in the 2015 Annual Report and Accounts.
Appendix
OUR PRINCIPAL RISKS AND POTENTIAL KEY STRATEGIC IMPACTS (pages
23 to 26)
During the year a comprehensive bottom-up review of risks was
undertaken throughout the Group, supported by facilitated risk
workshops, to ensure that all potentially material risks have been
identified, owners agreed and management/mitigation plans
established accordingly. An Executive Management workshop reviewed
the risks completing the top-down review.
We see successful risk management as an opportunity to set us
apart from our competitors.
The principal risks and uncertainties which are considered to
have a potentially material impact on the Group's long-term
performance and achievement of strategy are set out on the
following pages. External and internal risk factors are considered.
This is not intended to be an exhaustive and extensive analysis of
all risks which may affect the Group. Additional risks and
uncertainties not presently known to management, or currently
deemed to be less material, may also have an adverse effect on the
business. Further details of how our risk management framework and
policies are embedded can be found on pages 47 to 52.
CHANGE IN POTENTIAL WHY WE NEED TO HOW WE MANAGE THIS
IMPACT. MANAGE THIS
------------------------- ---------------------------- -------------------------------
Online gaming regulation and licensing
----------------------------------------------------------------------------------------
Territories/countries New licensing We work closely
introducing regulation. regimes which with regulators
Potential for make it commercially and governments
increased regulation unviable for us throughout the EU
of advertising. to operate our and elsewhere to
products can restrict try to secure favourable
our ability to regulation for our
grow the business. products. We obtained
a UK licence during
While opportunities the year.
exist, they are
not without risks We have dedicated
- such as internal and external
commercial viability, legal, tax, compliance
delays in and public affairs
licensing of betting resources with responsibility
exchanges compared for advising business
with other products, units in these matters
how our products and through appropriate
are taxed and policies, processes
licensing one and controls.
section of the
online market, External third parties
such as sports help us to substantiate
betting, but not evidence to support
another, such using a gross profits
as casinos or tax model.
poker. We monitor developments
in advertising practice.
Restrictions on
advertising can
reduce our ability
to reach new customers
and market new
product offerings.
Consequently this
could impact our
strategic objectives
to focus on sustainable
revenues and to
accelerate growth
through international
opportunities.
------------------------- ---------------------------- -------------------------------
Competition/our brand, products and customers
----------------------------------------------------------------------------------------
Competition continues Online gambling Investment in brand
to grow, consolidation is a very competitive and marketing tools
creates larger industry. Our and activity. Monitoring
competitors and competitors are of competitors and
new entrants constantly looking their promotional
continue to enter to gain advantage offers.
the market and through aggressive
innovate. marketing campaigns, Continuous development
pricing, promotional of product with
behaviour and emphasis on mobile
new product features products and innovative
which could impact features and acquisition
revenue or margins. through marketing.
Product and delivery We closely monitor
to market is vital the behaviour of
to gain competitive our customers and
edge over other have teams focused
operators. on their acquisition,
management and retention.
Our customers
are at the heart We aim to ensure
of the business, we provide a service
reduced activity and platform which
by major customers grow value for both
and/or a significant the customer and
number of customers Betfair, and reduce
could have a material the risk of customers
negative impact leaving.
on our financial
performance and
growth.
Consequently this
could impact all
of our strategic
objectives to
focus on sustainable
revenues, to invest
in product and
brand and to accelerate
growth through
international
opportunities.
------------------------- ---------------------------- -------------------------------
Technology infrastructure, systems stability &
availability
----------------------------------------------------------------------------------------
Limited change We rely on our Continuous investment
from prior periods. customers being in a cost effective
Our technology able to access technology platform
and infrastructure markets via the and infrastructure
remain capable internet and any to ensure stability
of supporting extended loss and availability,
our growth. External of connectivity eliminate single
malicious threats could have a material points of failure
to our products effect on revenues. and improve performance.
and networks Focus is on a secure
will always exist, A major failure and scalable offering
our ability to of the Group's across all products.
manage such threats and/or third party
has kept pace infrastructure Robust development
with changes could lead to and change management
in the threat significant costs processes help reduce
landscape. and disruptions the risk of unplanned
that could reduce outages.
revenue and harm
our business reputation.
Reduced availability
of our products
arising through
software, infrastructure
and systems issues
could result in
a poor customer
experience and
may impact customer
loyalty.
Consequently this
could impact all
of our strategic
objectives, to
focus on sustainable
revenues, to invest
in product and
brand and to accelerate
growth through
international
opportunities.
------------------------- ---------------------------- -------------------------------
Taxation
----------------------------------------------------------------------------------------
Impact largely Changes in tax Adherence to tax
unchanged from regimes can undermine planning is monitored
prior periods. existing tax planning through regular
creating unexpected reviews of governance
liabilities. Consequently structures.
this could impact
all of our strategic Proactive involvement
objectives, to of tax specialist
focus on sustainable in key business
revenues, to invest decisions ensures
in product and tax planning remains
brand and to accelerate effective.
growth through
international We complied with
opportunities. the UK Point of
Consumption Tax
during the year.
Revenue growth and
operating leverage
is helping to offset
the tax.
------------------------- ---------------------------- -------------------------------
Reliance on third parties
----------------------------------------------------------------------------------------
No significant We rely on third Where possible we
change to prior parties across limit reliance on
periods. our business. a single supplier
All of our products to reduce potential
are dependent single points of
on third party failure.
suppliers for
content/data. We use formal contract
Operational functions and service level
also rely on third management processes
parties for software supported by continuous
solutions and communication to
infrastructure. focus on quality
and availability
Consequently this of services delivered
could impact all by our key suppliers.
of our strategic We assess their
objectives, to resilience and review
focus on sustainable the potential options
revenues, to invest in the event of
in product and a need to change.
brand and to accelerate
growth through
international
opportunities.
------------------------- ---------------------------- -------------------------------
IT disaster recovery and business continuity
----------------------------------------------------------------------------------------
No significant Availability of We regularly review
change to prior our product is our Business Continuity
periods. paramount. A significant Plans and our IT
outage or unavailability Disaster
of any of our Recovery capability
products can cause and have service
reductions in level agreements
revenue and loss in place with third
of customers. parties. Where possible
Delays in restoring we have failover
services following solutions available
an outage or incident and seek to limit
could result in single points of
loss of customers failure.
and reputational
damage.
Consequently this
could impact our
strategic objective
to focus on sustainable
revenues.
------------------------- ---------------------------- -------------------------------
Recruitment and retention of key employees
----------------------------------------------------------------------------------------
Risk has reduced Continued success The Board reviews
in the current and growth is key positions
period - no significant dependent on the through the Remuneration
issues with retention performance of and
or recruitment key directors, Nomination Committees.
of staff. managers and staff.
Key senior staff
Retention and and directors are
recruitment of part of long term
these individuals incentive plans
is a key component which reward high
in securing our performance and
ability to grow loyalty.
and develop our
business. All staff are offered
regular salary reviews,
Our ability to a comprehensive
continue to attract, benefit package
retain and motivate and are able to
passionate and join (subject to
highly skilled local jurisdictional
employees in an requirements) share
intensely competitive save schemes which
environment means give them a long
that competitive term stake in our
packages and development success.
opportunities
must be available. Group HR actively
manage succession
Consequently this planning and processes
could impair our which are in place
operations, financial throughout the business
performance and to identify key
ultimately impact roles, conduct regular
all of our strategic appraisal, succession
objectives to and talent reviews,
focus on sustainable and to provide competitive
revenues, invest package and career
in product and development opportunities.
brand and to accelerate
growth through Our employees participate
international in
opportunities. engagement surveys
which help us to
link improvements
to achieving our
corporate goals
while reducing employee
turnover and improving
productivity and
wellbeing.
------------------------- ---------------------------- -------------------------------
Security of customer funds and reliance on financial
institutions
----------------------------------------------------------------------------------------
Risk remains Some jurisdictions We have strong relationships
the same as in continue to put with key financial
prior periods. pressure on banks institutions and
to refuse to process banking and payment
transactions from suppliers. Wherever
online gaming possible we avoid
companies. A reduced reliance on a single
ability to transact provider. We regularly
with customers assess their resilience
can impact our and alternative
growth and expansion options in the event
into new territories. of a need to change
supplier.
Actual or perceived
mismanagement Under the terms
of customer funds of a Trust Deed,
could have severe approximately 95%
reputational and/or of all customer
financial impacts. funds is held on
There is the possibility trust in separate
of loss arising bank accounts which
in the event of are ringfenced from
failure of counterparties. our corporate funds.
The remaining sums
Consequently this are customer funds
could impact all which certain regulators
of our strategic require Betfair
objectives, to to hold in separate
focus on sustainable non set-off bank
revenues, invest accounts in the
in product and name of the licence
brand and to accelerate holder.
growth through
international Daily and monthly
opportunities. reconciliations
of customer funds
take place to ensure
timely detection
of potential fraud
or error. All customer
funds are subject
to the Group Treasury
policy which is
reviewed annually
by the Audit Committee
on behalf of the
Board. At 30 April
2015 the majority
of the
Group's customer
and corporate funds
were held with major
systemically important
counterparties or
pooled AAA rated
money market funds.
Exposure to counterparties
are regularly reviewed
by the Chief Financial
Officer and adjusted
accordingly.
------------------------- ---------------------------- -------------------------------
Data management and security
----------------------------------------------------------------------------------------
Limited change Breach or loss Specialist monitoring
from prior periods. of customer or and detection solutions
External malicious other sensitive and teams used across
threats to our data and information development and
products and could lead to live product. Access
networks will significant costs to customer and
always exist, and disruptions other sensitive
our ability to that could impact data and information
manage such threats revenue and harm is restricted and
has kept pace our business reputation. monitored in a variety
with changes of ways. We have
in the threat Consequently this appropriate policies,
landscape. could impact all process and controls
of our strategic and mandatory security
objectives, to awareness training.
focus on sustainable
revenues, to invest We comply with the
in product and relevant data protection
brand and to accelerate and privacy legislation.
growth through
international An independent review
opportunities. of cyber threat
has been undertaken
and supports our
approach to managing
this threat.
------------------------- ---------------------------- -------------------------------
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
ANNUAL REPORT (page 76)
Each of the Directors, whose names and functions are listed on
page 39 of this Annual Report, confirm that, to the best of each
person's knowledge and belief:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- the Management Report, which comprises the Strategic Report
and the Directors' Report, includes a fair review of
-- the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
-- the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's performance, business
model and strategy.
RELATED PARTIES (Note 24, page 116)
Group
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Betfair Pty Limited
During the year, up to the date of disposal, the Group recharged
the Australian joint venture, Betfair Pty Limited, the following
costs:
-- operational costs amounting to GBP2.3m (30 April 2014: GBP4.6m).
During the year the Australian joint venture recharged the Group
the following costs:
-- operational costs amounting to GBP1.1m (30 April 2014: GBP2.9m).
The outstanding balance of loans receivable from the Australian
joint venture was fully repaid during the year (balance at 30 April
2014: GBP6.3m). The balance was not interest bearing.
In addition to the recharges detailed above, the Group collected
revenue on behalf of the joint venture and to a lesser extent the
Australian joint venture collected revenue on behalf of the
Group.
As at 30 April 2014, the Group owed GBP2.1m to the former
Australian joint venture.
Featurespace Limited
During the year the Group was charged GBP0.1m (30 April 2014:
GBP0.1m) for consultancy services by Featurespace Limited in which
the Group has a non-controlling interest.
LMAX Limited
In the year ended 30 April 2014, the Group utilised tax losses
amounting to GBP1.1m that were transferred from LMAX limited, for
consideration of GBP0.3m. This consideration was paid in the year
ended 30 April 2015.
Transactions with key management personnel
Key management personnel compensation, including the Group's
Directors and Non-Executive Directors, is shown in the table
below:
2015 2014
Short-term benefits 5.7 5.4
Share-based payment
expense 5.4 4.6
----- -----
Total 11.1 10.0
----- -----
Enquiries:
Paul Rushton
Commercial Finance Director
020 8834 8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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