Betfred revenues up 10% on retail expansion

Betfred has today reported a 9.6% increase in group revenue to £634.5m for the 12 months to September 24 2017, with the uptick largely driven by the acquisition of 322 Ladbrokes Coral shops during the period.

Group EBITDA grew by 3% to £83.3m, with an operating loss of £13.4m thanks to a goodwill impairment to the digital business.

“Revenue for the period significantly increased across the business as a result of the expansion of the retail estate, an increased number of online customers and the international expansion of the Totepool business” Betfred said.

“This demonstrates the group’s commitment and continued investment in both the UK retail estate, the online presence through betfred.com and toestport.com and through Totepool betting on and off course.”

The results, did not break out specifics for online, but Regulus Partners estimated the division grew 3% to approximately £90m.

“This suggests reasonable scale but lacklustre growth in an increasingly unforgiving UK market for tier two (and below) operators,” the analyst said.

The Tote business also grew at 12% to £329m, although not all of that was booked as Betfred revenue thanks to B2B partnerships.

“Betfred has demonstrated a level of organic progress, while also increasing its LBO footprint (and likely net shop quality),” Regulus added.

“However, we believe that a heavy reliance on LBOs (83% EBITDA), which in turn are heavily reliant on machine income (materially more than any other major operator, at lower operating margins), puts Betfred Group in a particularly difficult position.

“The Tote might be partly protected in terms of lack of direct exposure and third-party willingness to invest, but the core business is likely to require structural change, in our view. Given Betfred’s scale and importance to both racing and high street betting, what happens next could have significant implications for the entire UK industry.”