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Betfair results boost with merger looming

26 November 2015

BETFAIR produced results ahead of expectations yesterday as the company prepare for their merger with Paddy Power next year. 

Despite being up against a comparative period containing the 2014 World Cup in Brazil,Betfair reported revenue up 15 percent to £274.4 million for the six months to the end of October,with growth driven by their sportsbook with stakes up 93 percent year-on-year. 

Betfair said improving their racing product had been a major area of focus in the last 12 months and it had made a positive impact in the period. 

Royal Ascot produced record betting activity across both exchange and sportsbook, while there were strong performances at several UK autumn meetings and in the Breeders’ Cup, the latter benefiting from the launch of in-play betting on US racing. 

However, football remained Betfair’s most important sport and is the focus of most of their advertising and promotional spend. 

Profit before tax was down one percent to £66.3m while Ebitda– earnings before interest,taxation, depreciation and amortisation – was up nine percent to £80.5m. Point of consumption tax hit the company to the tune of £26.8m.

Chief executive Breon Corcoran said Betfair had traded strongly,adding: “These results, which came against a tough comparative period featuring last year’s football World Cup, are ahead of our original expectations and demon strate the group's continued strong momentum.Our strategy of focusing investment in markets with good regulatory visibility continues to pay off.” 

Sustainable markets contributed 88 per cent of revenue in the second quarter.Corcoran added: “Our markets remain highly competitive and,alongside our strategy of giving customers generous pricing and promotions, we believe it is essential that we continue to invest.

“Over the last 12 months we have added more than 100 people to our product development teams, and, adjusting for the World Cup, our sales and marketing costs were up 13 percent.” 

The proposed merger with Paddy Power is on track for completion in the first quarter of 2016, subject to shareholder and regulatory approval. Shareholder documents are set to be published tomorrow. 

Corcoran told analysts: “We are very excited about the opportunities that will be available to us post the recommended merger.” 

Analysts responded favourably to the announcement, with Davy Research saying that although the results contained “few surprises, investors are unlikely to lose sight of the substantial progress that has been made”.Betfair’s share price ended the day up 4.14 per cent at 3625p.

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