Betting exchange company Betfair (BET) has spent much of the past 18 months getting its house in order under a new management team. The newly slimmed down company has added a conventional sportsbook to its signature betting exchange and taken out £18m of costs in the process. These results were the first real chance to assess the effects of the strategy, which could only really work if Betfair managed to cross-sell more to existing customers, as well as tempt casual gamblers to use its other products.
The addition of a conventional sportsbook raised a few eyebrows at the time, but, judging by the 39 per cent increase in sports revenue to £11.4m, the decision has been largely vindicated. The important point for Betfair was that 38 per cent of sportsbook users switched across to more lucrative products once they had signed up, which in turn increased the number of active players by 25 per cent. Meanwhile, although the decision to withdraw into regulated markets knocked around £11.5m from total sales, what management terms "stable" regulated markets showed underlying revenue growth of about 1 per cent to £145m.
After upgrading full-year forecasts by 9 per cent, broker Numis Securities now expects adjusted pre-tax profit of £73.8m, giving adjusted EPS of 58.7p (from £47.6m/38.3p in 2013).
BETFAIR (BET) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,065p | MARKET VALUE: | £1.12bn | |
| TOUCH: | 1,065-1,067p | 12-MONTH HIGH: | 1,118p | LOW: 644p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 144p* | NET CASH: | £171m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 201 | -64.1 | -58.9 | 4.00 |
| 2013 | 188 | 31.7 | 25.9 | 6.00 |
| % change | -6 | - | - | +50 |
Ex-div: 9 Dec Payment: 17 Jan *Includes intangible assets of £51.2m, or 49p a share | ||||
