Betfair Announce Shares Buyback

Betfair, the betting exchange group, has unveiled one of the swiftest share buybacks in City memory as it disclosed its first full-year results as a public company.

The company announced plans to re-purchase US$80m shares from investors just nine months after its flotation, which has subsequently seen the company lose 41% of its value after a series of underwhelming announcements, regulatory concerns and management departures.

Betfair was sold to investors in October as a company that had strong growth opportunities.

When asked if the management had run out of ideas about how to grow, finance director Stephen Morana insisted: “Not at all. We are investing huge amounts in this business. We announced this at our initial public offering. This was published in the prospectus. It complies exactly with that.”

The move to buoy the share price comes after Betfair confirmed that David Yu, its embattled chief executive, would be leaving the company following the group’s troubled introduction to the public markets.Betfair’s own polling of employees revealed that staff believed its management was lacking direction.

The company are expected to make an external appointment to succeed Yu in an attempt to halt the share price slide.

The latest intrigue came as the company announced its full-year figures, which showed pre-tax profits up 49% to US$42.6m and revenues up 15% at US$629.9m.

However, the numbers were flattered by last year’s football World Cup and the company conceded: “Revenue growth during [the financial year] could have been stronger but we have delivered a significant improvement in margin resulting in profitability for the year above expectations.”

James Hollins, a leisure analyst at Evolution Securities, added: “Bears will focus on fourth-quarter revenue growth of just 3% and [first-quarter] revenues declining year on year, reflecting [a] tough comparison against the World Cup. We expect continued difficult first-half trading, although superior returns on marketing spend and product development should support both future top-line growth.”

Espirito Santo analyst Geetanjali Sharma, who advises clients to sell Betfair shares, added: “We are disappointed by the revenue trends. We also anticipate a period of uncertainty as the search for a CEO begins.”

This news follows the company’s announcement that it has increased it’s premium charge of profits to 60%, but that the change will only affect 500 of its customers who make profits of over US$400,000.