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bet365 posts loss in Australia but confident of longer term profitability

6th August 2014 1:30 pm GMT

The Australian subsidiary of UK-based online gaming operator bet365 maintains that its brand and product offering are gaining momentum in the Australian market and will become profitable over the longer term and deliver a positive financial contribution to the group.

It follows publication of the company’s results for the year ended March 30th, with bet365’s Australian business posting a net loss AUD$40.8m in its first full year of trading since its inception.

Based in Darwin, bet365 was granted a bookmaking licence to operate in Australian in February 2011, and began to take bets from customers the following year.

In a filing to the Australian Securities and Investments Commission, bet365 revealed that its sports betting activities generated total revenue of $29.1m during the year, versus $7.7m in the prior year period, through its online, mobile and telephone betting channels.

Total amounts wagered were in excess of $1,475m, an increase of 133 per cent year-on-year, with the company’s mobile channel accounting for more than 30 per cent of the total ($447m).

Total expenses rose 59 per cent to $69.9m during the year, with the company paying out $11.9m in levy costs and $2.3m in affiliate commissions. Employee benefits expenses rose 63 per cent to $20.0m, advertising expenses were up 9 per cent to $17.3m, and IT and communication expenses climbed 54 per cent to $2.4m.

bet365 said that it continues to invest in IT infrastructure and technology to ensure it has “both the flexibility and scalability” to evolve with internal and external developments.

“Significant marketing expenditure was incurred in the period, promoting and building the bet365 brand further in the Australian market,” the company said, with television adverts in Australia featuring Hollywood actor Samuel L Jackson.

Staff numbers grew by 15 per cent during the period, which the company claimed would ensure the business is “suitably resourced to manage and support business growth.”

As a result of the increase in expenses, bet365’s Australian business generated a net loss of $40.8m, up 13 per cent compared to the previous year.

Full Year 2013/14 Results

Australian Dollars (AUD$) FY 2012/13FY 2013/14
    
Revenue 7.7m29.1m
Levy Expense (3.9m)(11.9m)
Affiliate Commissions Expense (1.2m)(2.3m)
Depreciation and Amortisation Expense (2.2m)(2.4m)
Employee Benefits Expense (12.2m)(20.0m)
Occupancy Expense (0.6m)(0.6m)
Repairs and Maintenance Expense (0.1m)(0.1m)

Aadvertising Expense

 (15.8m)(17.3m)
Travel and Accomodation Expense (2.3m)(0.4m)
IT and Communication Expense (1.5m)(2.4m)
Legal and Professional Expense (0.8m)(0.9m)
Allocation of Group Costs (1.5m)(5.8m)
Other Expenses (1.8m)(5.9m)
Total Comprehensive Income/(Loss) (36.2m)(40.8m)

bet365 said that customer numbers increased significantly compared to last year, with active sports betting users up 83 per cent to 73,000, demonstrating that the brand and product offering are “gaining momentum” in the market.

This supports the company’s view that “over the longer term the company will become profitable and, therefore, deliver a positive financial contribution to the group.”

 “The directors remain confident of improving the future financial performance of the company and are committed to maintaining the present level of operations to support that aim,” said bet365.

As at March 30th the company held cash and cash equivalents of $16.0m compared to $9.6m a year ago.

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