Launching new products and a continued assault on the US market is helping Betfair (BET) to differentiate itself from its peers. But the betting exchange operator faces challenges, too. Regulatory change in the UK is drawing nearer, for instance, while growth could suffer after deciding to exit various unsustainable and unlicensed markets.
The decision to focus less on what management describes as unsustainable markets - including Greece, Germany, Cyprus and Spain - has weighed on revenues. Indeed, that cost the group £13m in revenue, although the absence of a significant football tournament in the period - unlike with Euro 2012 the year before - also wiped £8m from the top line.
Meanwhile, the Point of Consumption (PoC) tax in the UK looms large, as do gaming duties in Ireland and Italy. Betfair is therefore spending over £100m on marketing this year to boost customer numbers in order to ramp up revenues ahead of future taxation costs. So far, partnerships with Channel 4 Racing, Sky Sports and ITV Sport, as well as new social media initiatives, have pushed new customer numbers up 54 per cent year-on-year in the UK and Ireland. Similarly, the number of active customers grew 35 per cent in the period.
Broker Numis Securities expects pre-tax profit of £85.4m for 2015, giving EPS of 67.6p (from £77.1m and 60.7p in 2014).
BETFAIR (BET) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,042p | MARKET VALUE: | £1.09bn | |
| TOUCH: | 1,038-1,043p | 12-MONTH HIGH: | 1,179p | LOW: 805p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 163p* | NET CASH: | £210m | |
| Year to 30 April | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 341 | 17.8 | 14.4 | nil |
| 2011 | 393 | 26.6 | 22.6 | 5.9 |
| 2012 | 389 | 54.2 | 45.4 | 10.2 |
| 2013 | 387 | -49.4 | -65.1 | 13 |
| 2014 | 394 | 61.1 | 49.0 | 20 |
| % change | +2 | - | - | +54 |
Ex-div: 3 Sep Payment: 3 Oct *Includes £49.3m of intangible assets, or 47p a share | ||||
