Retail write-down sees Betfred post £40.7m 2017-18 loss

Land-based and online betting and gaming operator Betfred has posted a loss of £40.7m (€45.8m/$51.8m) for its financial year ended September 30, 2018.

The loss was largely down to exceptional costs in relation to the write-down in value of its retail business following the UK government’s decision to reduce fixed-odds betting terminal (FOBT) stakes from £100 to £2, effective April 2019.

Despite this, the operator posted strong figures for the year, with amounts wagered up 6.4% year-on-year to £13.5bn.

After customer winnings were stripped out, turnover amounted to £727.6m, a 14.7% improvement on the prior year’s total of £634.5m. The operator’s performance was boosted by the expansion of the retail estate in the prior year, Betfred noted, and growth in online customer numbers.

Betfred’s tax contribution increased over the period, with the operator paying out £54.7m in betting duty; £87.1m in machine gaming duty, and contributing £12.8m to the statutory betting levy on horseracing.

This left gross profit of £573.0m. Earnings before interest, tax, deprecation, amortisation and exceptional items rose 43.2% to £119.4m.

Administrative expenses rose 8.1% year-on-year to £478.6m, and the business incurred goodwill and licence amortisation-related costs of £18.9m.

It was then hit by an exceptional charge of £119.6m, relating to the write-down of the retail business. After £2.7m in other operating income was factored in, this saw the business’ operating loss for the year grow to £41.4m.

Once finance-related costs were stripped out, Betfred’s pre-tax loss stood at £43.8m, which was reduced by a tax benefit of £3.0m for a post tax loss of £40.7m, up from the 2016-17 net loss of £28.7m.

Looking ahead, the operator said that it would review its retail estate in the wake of the FOBT stake cut, as well as that of its online business, which since April has seen remote gaming duty increased to 21% of revenue. As of September 30, 2018, its retail network amounted to 1,650 shops, down from 1,666 in the prior year.

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