Monday 19 August 2019

Betfair will publish documents tomorrow for €8bn Paddy Power deal

Betfair reported a 15pc increase in first-half revenue. Photo: Clint Hughes/PA Wire
Betfair reported a 15pc increase in first-half revenue. Photo: Clint Hughes/PA Wire
John Mulligan

John Mulligan

British gambling firm Betfair will release additional information to shareholders tomorrow on its planned €8bn merger with Paddy Power.

Releasing first-half results yesterday, Betfair confirmed that all relevant regulatory filings related to the deal have now been filed and that it remains on course to be completed in the first quarter of 2015.

Betfair chief executive Breon Corcoran has previously indicated that he thought the deal could be finalised in January. Betfair will hold a general meeting for shareholders on December 21 to seek their approval for the merger, which will create one of the biggest gambling groups in the world.

Betfair reported a 9pc increase in its first-half earnings before interest, tax, depreciation and amortisation (EBITDA) to £80.5m (€114.6m), while its revenue climbed 15pc to £274.4m (€390.8m) in the same period. That revenue increase came on the back of a tougher comparative, with the World Cup having taken place in Brazil in 2014. Underlying EBITDA was 45pc higher.

The increase in EBITDA in the first-half also came despite higher taxes. The company paid £26.8m in point of consumption tax in the period. The 15pc point of consumption tax on all UK gaming operators came into effect a year ago.

Its two biggest markets - the UK and the United States - accounted for most of the growth in the latest period.

Betfair said that it had experienced a "significant increase" in the number of new customers, as well as increased activity from existing clients, and successful cross-selling of gaming products.

"Betfair's relatively low exposure to unregulated jurisdictions meant that even though revenue decline in these markets accelerated, primarily due to the impact of suspending operations in Portugal, it was more than offset by growth in sustainable markets," said Mr Corcoran.

Since the former Paddy Power executive took over at Betfair in 2012, he has extracted the group from unregulated markets.

Betfair said it continues to target investment in jurisdictions where it believes there is good regulatory visibility. Those markets are currently considered to include the UK, US, Australia, Ireland, Italy and Spain.

"These markets, having grown by 24pc in the first-half, are driving our overall growth," the company noted, adding that the regions contributed 88pc of revenue in the second quarter of the current financial year.

Analyst David Jennings at Davy Stockbrokers said the results were in line with expectations.

He said that he does not anticipate making any material changes to the broker's forecasts for Betfair. Davy is expecting Betfair to generate full-year EBITDA of £138.6m.

Mr Jennings said the planned merger with Paddy Power should create "substantial shareholder value over time".

Shares in Betfair were up over 3pc at lunchtime yesterday in London.

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