Betfair Financial Results for 2007

Betfair's results for the year to 30 April 2007, represent the first full year of results delivered under the stewardship of CEO David Yu. Group revenue was up 28% to 185.9m, with profit before tax down 30% at 25.3m GBPs. Betfair reported like-for-like EBITDA of 36.5m GBPs, compared with 40m GBP the previous year.

The past twelve months have been marked by a significant increase in the rate of investment by Betfair, as the company has sought not only to consolidate its position as the world's leading betting exchange operator, but also, to broaden its product portfolio, so as to create a one-stop-shop solution for online gambling, under the Betfair umbrella.

Betfair's Australian based betting exchange went live at the end of August 2006. In recently filed accounts, Betfair's Australian partner PBL (50%) said that the business continues to build critical mass in its first full year of operations, and that its share of after tax losses for the year was $2 million. Betfair said that total Australian revenue for the year was 8m stg.

Betfairpoker.com was launched in May 2004, and in November 2005, Betfair demonstrated its strategic intent in this area, through the acquisition of Aglet Technolgies, an innovative Danish-based software company, and Poker Champs, that utilised its own cutting edge technology. Further to this acquisition, in October 2006 Betfair Poker left CryptoLogic Inc. to move to an in-house technology solution.

In July 2007 Betfair announced that it had executed a non-binding Letter of Intent with Harrah’s License Company LLC, an affiliate of Harrah’s Entertainment, Inc which designated Betfair.com as the “Presenting Sponsor” of the World Series of Poker (WSOP)Europe through 2011. As part of the agreement, Betfair will be integrated into several facets of WSOP Europe and will promote the event internationally on a year-round basis.

David Yu, Chief Executive Officer of Betfair was quoted as saying; "To present the WSOP, with its 38-year tradition, on its first venture into Europeis a great honour....Betfair is renowned for its ground-breaking moves in the world of fixed-oddssports betting....This deal puts Betfair alongside the most important brand in offline poker, and bonds us with Harrah’s Entertainment, the largest casino operator in the world."

The World Series of Poker Europe consisted of three events; the largest of which was the "Main Event", a 10,000 GBP buy-in. Before the Main Event got underway it had been suggested that it would be a 750-player, six-day tournament spread over three casinos with a prize pool of roughly 7.5 million pounds; with the winner taking home more than 1.5 million pounds in cash. As it turned out, the field was significantly smaller at 362, with a prize pool of just 3.7 million. And somewhat embarrassingly, the presenting sponsor Betfair was forced to add an additional £57,000 to the prize pool, so as to ensure that the winner took away £1 million.

In July 2007, Betfair announced a deal with Tattersalls, Europe's largest Bloodstock Auctioneers, which will see it sponsoring the Tattersalls October Yearling Sale.

In October 2006, Betfair broadened its product portfolio with the launch of an online casino. The Casino incorporates an area known as the Zero Lounge, where the customary ‘house edge’ has been removed. Zero Lounge games include Baccarat (launched June 2006), Blackjack (launched November 2005), Jacks or Better, Roulette and Omaha Hi (launched April 2007); all with zero house edge.

At the end of November 2006 Betfair announced that it had acquired Portway Press Limited, the owner of Timeform, the world-renowned brand publishing horseracing ratings, form guides and analysis. At the time of the acquisition Betfair announced that whilst Timeform would retain full editorial independence, it would bring capital investment, technology, marketing and communication skills to the table. It is believed that the acquisition cost Betfair somehwere in the region of £15m. Betfair said that although Timeform had "made a small loss in its first five months of trading after acquisition" it was confident that it would generate positive returns in the near future.

The results for the year to 30 April 2007, also incorporate nine moths of operation of Betfair mobile, the launch of Betfair Radio, launched in February 2007, and the company's rebranding campaign, launched in March 2007, around the theme "a different kind of betting company". Looking ahead, Betfair, which has £180m in corporate funds and no debt, will launch its betting exchange service in Italy and will also enter into the area of financial spread betting.

Betfair stated that its number of registered customers had now passed the one million mark, with active users up to 443,300 at the end of April, a rise of 57% on the previous year. Customers outside Britain contributed 38% of total revenues last year, up from 32% in 2006. The company also saod that it had invested 22m GBPs in research and development during the year, compared with 12m GBPs the previous year.