VAT windfall helps Betfred maintain profits in face of impact from pandemic

A windfall from HM Revenue & Customs and investment in rival William Hill helped Betfred maintain profitability despite the effect of the Covid-19 pandemic, according to the bookmaker's latest set of accounts.

Betfred's annual report for the year to September 27, 2020, lodged with Companies House this week, reported profit after tax of £165 million, up from £156.7m the previous year.

That was despite the amounts wagered with the company falling to just short of £6.5 billion from £10.1bn the previous year due to the impact of Covid-19 on sport and the closure of betting shops during the period.

Operating profits rose to £104.5m from £74.8m after a credit to exceptional costs of £99.2m. Of that figure, £97.7m came from Betfred's successful claim last year against HMRC over the amount of VAT the company paid on FOBTs between 2005 and 2013.

The accounts also note income from investments of £94.3m, principally arising "from a fair value gain of the group's investment in shares listed on the London Stock Exchange".

Betfred founder Fred DoneCredit: Edward Whitaker

In recent years Betfred founder Fred Done built up a six per cent stake in William Hill, an investment that proved very shrewd when US casino giant Caesars Entertainment took over William Hill in April.

The company's ebitda (earnings before interest, taxation, depreciation and amortisation) before exceptional items fell to £35.3m from £48.5m.

Also falling were the number of betting shops operated by Betfred, which numbered 1,529 at the end of the period compared to 1,578 the previous year. The number of people employed by the company fell to 6,993 from 7,154.

Caesars Entertainment has begun the process of selling off William Hill's operations outside the United States and Betfred are believed to be interested in buying at least some of their betting shop estate.

However, it is understood that Caesars will be selling off William Hill's non-US business in its entirety and so Betfred would have to wait for a successful bidder to split up the operations further.

The Times reported on Friday that US private equity firm Advent International is among the leading suitors for William Hill’s European operations.

Fellow private equity firm Apollo Global Management, which was an unsuccessful rival to Caesars for the whole of William Hill, is said to be favourite this time, while online gaming and betting operator 888 is also said to be in the running.

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