27th Jul 2012 10:02
Betfair Group plc27 July 2012
Betfair Group plc ("the Company")
Annual Report and Annual General Meeting
Further to the release of the Company's 2012 Preliminary Results announcement on 29 June 2012, the Company announces that it has today circulated the Annual Report and Accounts 2012, Notice of Annual General Meeting and Form of Proxy to shareholders. Copies of all of these documents are available from the offices of the Company, Waterfront, Hammersmith Embankment, Chancellors Road (access on Winslow Road), London W6 9HP or from the Company's corporate website: http://corporate.betfair.com/
In compliance with LR 9.6.1 copies of the following documents have been uploaded to the UKLA National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do:
·; Annual Report and Accounts 2012;
·; Notice of AGM; and
·; Form of Proxy.
The Annual General Meeting of shareholders will be held at Thomas Lord Suite (entry via Grace Gate on St John's Wood Road), Lord's Cricket Ground, St John's Wood, London, NW8 8QN on 11 September 2012 at 11.00am.
A condensed set of the Company's financial statements and information on important events that have occurred during the financial year ended 30 April 2012 and their impact on the financial statements were included in Betfair's preliminary results announcement released on 29 June 2012. That information, together with the information set out below in the Appendix, which is extracted from the 2012 Annual Report, constitute the material required by Disclosure and Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full 2012 Annual Report.
Page and note references in the text below refer to page numbers in the 2012 Annual Report and notes to the financial statements.
Appendix
PRINCIPAL RISKS AND UNCERTAINTIES (pages 36 & 37)
This section highlights the principal risks which are considered to have a material potential impact on the Group's long-term performance and achievement of strategy. It is not intended to be an exhaustive and extensive analysis of all risks which may affect the Company. Further details of how our risk management framework and policies are embedded can be found on pages 48 and 49.
Risk summary
Risk | Impact | Mitigation |
Online gambling regulation(EU/non-EU) Many jurisdictions are beginning to regulate their online gambling market by introducing a licensing regime.
While opportunities exist, they are not without risks - such as commercial viability, delays in licensing of betting exchanges compared to other products, how our products are taxed and licensing one section of the online market such as sports betting but not another, such as casino or poker. |
Any new licensing regime, adverse regulatory decisions or tax-base that makes it commercially unviable for Betfair to operate its exchange and products could restrict our ability to grow the business, gain access to new customers and ultimately, increase revenues. |
We work closely with a wide variety of organisations involved in the regulation of online gambling. We are fully engaged with the UK government regarding the ongoing review of how operators licensed elsewhere are regulated in the UK.
External third parties help us to substantiate evidence to support using a gross profits tax model.
We have a dedicated internal and external legal, tax, compliance and public affairs resource. |
Our Products Online gaming is a very competitive industry. Our competitors are constantly looking to gain advantage through aggressive marketing campaigns, pricing and promotional behaviour and new product features which could impact revenue or margins.
Product and delivery to market is vital to gain competitive edge to other operators.
Like all betting operators we recognise that our platform could be targeted by those who seek to benefit from corrupt activity on a market or to use the site for the illegal transfer of funds.
|
Our product offering could become less attractive in relation to competitors' offers.
Disproportionate growth in risk products such as multiples and fixed odds could result in a volatile earnings pattern.
We could fail to maximise the revenues earned from products offered.
Betfair products could be used by criminals for money laundering or other criminal purposes. This, or fraud and corruption in sport more generally, could result in negative publicity for sports betting and Betfair. |
Our product delivery activity includes an approval process whereby appropriate products are assessed for suitability and priority to bring to market.
Our experienced Trading team and new Client Services Division constantly monitor client activity and betting patterns relating to risk products. We monitor competitor promotional activities, pricing and products and continue to invest in exchange technology and product development to make it more difficult for a competitor to launch comparable products.
We have a fully staffed and highly skilled Integrity Team who investigate any potentially suspicious activity and liaise with sports regulatory bodies. We carry out routine risk assessments for specific territories in relation to anti-money laundering, fraud, terrorism financing and other crimes.
|
Customers Our customers are at the heart of the business. Macroeconomic factors such as; licensing, regulatory, tax or other developments outside Betfair's control could deter a significant number of customers from using our products.
|
Reduced activity by a significant number of customers could have a material adverse effect on our operations, financial performance and prospects.
Poorly designed promotional activity could result in negative financial and reputational impacts. |
We closely monitor the behaviour of customers and have a team focused on their management and retention.
We aim to ensure we provide a service and platform which grow value for both the customer and Betfair, and significantly reduce the risk of customers leaving.
We review our terms and conditions to ensure they are fit for purpose and have processes in place to assess risk and approve promotions. |
People Our success and anticipated future growth is in part dependent on the continued services and performance of certain Directors, managers and key staff.
Our ability to continue to attract, retain and motivate highly skilled employees in an intensely competitive environment means that competitive packages and development opportunities must be available. |
Reduced ability to:
• retain executives, managers and key staff;
• attract, retain and motivate highly skilled employees; or
• engage staff with their jobsand the Company's objectives
could impair our operations, financial performance and prospects. |
Succession planning and processes are in place throughout the business to:
• Identify key roles in line with business continuity plans
• Conduct regular succession and talent reviews
• Recognise competitive package and career development opportunities.
Our employees participate in regular surveys which help us to link improvements to achieving our corporate goals while reducing employee turnover and improving productivity and wellbeing. |
Infrastructure and systems We rely on IT infrastructure and systems for our core operations and their overall management.
Potential risks include:
• Site outages and/or loss of customer connectivity
• Software error
• Reliance on third parties
• Unauthorised access to customer data by employees, third-party providers or cyber attack. |
We rely on our customers being able to access markets via the internet and any extended loss of connectivity could have a material effect on revenues.
Any failure of the Company's and/or other infrastructure could lead to significant costs and disruptions that could reduce revenue and harm our business reputation. |
We regularly review our business continuity plans and have service level agreements in place with third parties.
Our Group Security team regularly review and assess our systems in terms of potential threat and vulnerability. We carry out targeted infrastructure testing and have implemented our own Secure Coding Standard for use within the business. We use a variety of systems and applications testing tools for critical customer-facing applications. |
Financial Due to the international nature of the business, the Company is exposed to the impact of foreign exchange fluctuations on deposits as well as cash flows.
The future of the Eurozone is currently uncertain and could expose the Company to a wide range of issues, such as currency payment methods and loss of business in certain jurisdictions.
Financial institutions could refuse to process transactions from online gaming companies.
Betfair holds all Core customer moneys in separately managed bank accounts which are safeguarded independently of Betfair's corporate funds, under the terms of a Trust Deed. |
Adverse foreign exchange exposures could impact on Group revenues.
A break-up of the Eurozone, or defaults within it, could have a wide range of negative impacts.
Refusal by card processors to process transactions could impair our ability to operate.
Actual or perceived mismanagement of customer funds could have severe financial and reputational impacts.
|
We monitor exposure to foreign exchange risk and where appropriate use financial instruments to mitigate any associated risk.
Incident management plans are in place to address the unpredictable nature of events which could lead to the potential default or break-up of the Eurozone.
We review arrangements with card processors and, in the event of moving certain currency transactions to another provider, our customers would be contacted and our websites updated.
Daily and monthly reconciliations of the customer funds balance take place to ensure timely detection, in the event of fraud or error.
|
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL REPORT (page 41)
Each of the Directors, whose names and functions are listed on page 43, confirm that, to the best of each person's knowledge and belief:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• the Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
RELATED PARTIES (Note 24, page 94)
Group
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Betfair Pty Limited
During the year the Group recharged the Australian joint venture, Betfair Pty Limited, the following costs:
• Salary and related costs amounting to £0.1 million (2011: £nil)
• Operational costs amounting to £0.9 million (2011: £0.8 million).
During the year the Australian joint venture recharged the Group the following costs:
• Salary and related costs amounting to £0.5 million (2011: £0.8 million)
• Operational costs amounting to £2.0 million (2011: £2.1 million).
The outstanding balance as at 30 April 2012 of loans receivable from the Australian joint venture is £7.5 million (2011: £7.7 million). The balance is not interest bearing.
In addition to the recharges detailed above, the Group collects revenue on behalf of the joint venture and to a lesser extent the Australian joint venture collects revenue on behalf of the Group.
As at 30 April 2012, the Group owed £3.0 million (2011: £3.0 million) to the Australian joint venture.
Featurespace Limited
During the year the Group was charged £0.5 million (2011: £0.4 million) for consultancy services by Featurespace Limited in which the Group have a non-controlling interest.
Transactions with key management personnel
Key management personnel compensation, excluding the Group's Directors, is shown in the table below:
2012 | 2011 | ||||||
£'000 | £'000 | ||||||
Short-term benefits | 2,509 | 2,469 | |||||
Share-based payment expense | 2,197 | 3,113 | |||||
Total | 4,706 | 5,582 |
Enquiries:
Laura KnightDeputy Company Secretary
020 8834 8000
Related Shares:
BET.L