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UPDATE 1-Betfair lifted by World Cup, defends its accounting
September 4, 2014 / 1:37 PM / 3 years ago

UPDATE 1-Betfair lifted by World Cup, defends its accounting

(Writes through with comments from annual meeting)

By Keith Weir

LONDON, Sept 4 (Reuters) - Online gambling company Betfair reported strong growth in quarterly profit on Thursday thanks to the soccer World Cup and defended its accounting policies after an error relating to past dividend payments.

Betfair said it generated revenue of almost 16 million pounds ($26.3 million) from the month-long soccer tournament in Brazil, more than double what it made during Euro 2012.

This year’s summer soccer boost helped to lift core profit 39 percent to 34.5 million pounds in the three months to July 31, the first quarter of its financial year.

“We are encouraged by the performance in the first quarter and the momentum of the business, and accordingly remain confident that we can deliver our expectations for the full year,” Chief Executive Breon Corcoran said in a statement.

Shares in Betfair rose more than 3 percent to 11.32 pounds by 1230 GMT, valuing the company at about 1.15 billion pounds.

Betfair, which operates an exchange that allows gamblers to bet against each other, has sought to attract more mainstream customers by developing products where the bookmaker sets the odds centrally.

Its shares trade at a premium to more conventional bookmakers, including market leader William Hill and Ladbrokes.

ACCOUNTING APOLOGY

Speaking to shareholders at the company’s annual meeting, Chairman Gerald Corbett apologised for an error that resulted in it paying dividends in the past three years without its parent company having adequate reserves to cover the payments.

“It’s disappointing. I‘m sorry that it has happened,” Corbett told a sparsely attended meeting at the company’s headquarters in west London.

One shareholder voiced concern about a mistake that had prompted a call for investors to vote against the company’s latest set of annual accounts.

“The issue for us is to what extent can we be confident about the accounting process and auditing that is going on?” asked Richard Greening, chairman of the pension fund for Islington council in London, which holds Betfair shares.

Corbett described the error as a technicality. Betfair is profitable and generating cash, he said, adding that he retains confidence in auditor KPMG.

Explaining the error, which it flagged in its annual report, Betfair said that funds to cover payouts had been held by a subsidiary rather than at parent company level and that this had now been rectified.

More than 96 percent of shareholders voted to approve the company’s accounts despite a call from advisory group PIRC for them to take the unusual step of rejecting them. ($1 = 0.6092 British Pounds) (Editing by Mark Potter and David Goodman)

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