Revenue down for Betfred in 2020 but VAT refund helps profit grow

| By Conor Mulheir
Online and retail operator Betfred has released its annual report for the 12 months ended 27 September 2020, showing lower wagering and revenue, but increased profits thanks in part to a VAT refund.

Results showed that players wagered a total £6.48bn (€7.58bn/$8.98bn) with the operator during the period, down 35.8% on the £10.10bn wagered in the previous year.

From this total, Betfred made revenue of £524.9m, down 15.5%, as margins improved. Of this, the operator paid £55.1m in betting duty, up 3.3%, £38.1m in machine gaming duty, down 40.8%, £8.4m in statutory betting levy, down 12.5%, and commissions of £13.2m, down 31.2%.

These costs left the business with a gross profit of £410.2m, down from £475.0m in the previous year. Administrative expenses were also lower, however, at £394.2m down from £447.2m.

Of these expenses, £158.7m was spent on staff costs, down from £187.9m in the previous year. The operator received a total government grant of £28.1m during the period via the furlough scheme which was introduced to secure jobs during the novel coronavirus (Covid-19) pandemic. The value of the grant has been deducted from the total staff expense reported, meaning its staff received roughly the same amount of compensation in 2020 as the previous year, despite the operator’s spend declining.

The average number of staff employed by the group throughout the period was 6,993, down slightly from 7,154 in the prior year.

The company received £99.2m in exceptional credit during the period, compared to £57.9m in the previous year, and after other operating income of £3.1m, was left with an operating profit of £104.5m, up 39.8% from £74.8m in the previous year.

The exceptional credit received consisted mainly of a £97.7m VAT credit, which Betfred was able to claim from HMRC in respect of VAT paid on the group’s FOBT machines between 2005 and 2013, during which period several operators were discovered to have overpaid.

The group’s investments brought in a further £94.3m of income, down slightly from £97.7m, while interest receivable and similar income brought in an additional £6.6m, compared to £2.4m previously.

Betfred said its acquisition of Sharp Gaming Limited, for a total cash consideration of £3.6m in January 2020, contributed no revenue to its annual total but added a net loss of £1.4m.

After interest payable and similar expenses of £907,000, down significantly from £3.7m in the previous year, Betfred registered a total profit before taxation of £204.5m, up 19.5%, on which it paid £39.5m in tax, more than double the £14.5m paid in the previous year.

This left the business with a profit after taxation of £165.0m, up 5.3%. The business made some other small losses, including via foreign exchange differences on translation of foreign operations (£498,000), and re-measurement of the net defined benefit liability (£1.7m).

After a tax benefit of £403,000 on its other income, the business was left with a total comprehensive income for the period of £163.2m, up 6.3% from £153.6m.

In March, Betfred announced that its founder and chief executive, Fred Done, would step down from the company’s lead role, allowing Joanne Whittaker to take the position from April.

Done was to remain as the company’s chairman, and it was confirmed by a spokesperson to iGB that the operator’s founder was “going nowhere”.

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