Paddy Power’s bet on Oz taxes its earnings
PADDY POWER BETFAIR scored a £45million revenue boost from the World Cup but investors lost out after it warned that annual profits would be hit by extra taxes in Australia and losses from its fantasy sports business.
Shares in the FTSE 100 bookmaker and online betting exchange fell 580p to 7540p as it trimmed its full-year pre-tax earnings guidance to £460-480million from £470-495million.
Chief executive Peter Jackson said the lower forecast was partly due to changes in the taxation of online betting Down Under, as well as its $770million (£597million) takeover of US fantasy sports company FanDuel.
Jackson was more upbeat on the company’s prospects for withstanding Government moves to slash stakes on fixed-odds betting terminals, which rival William Hill warned last week could lead to it closing 900 sites.
He said: “We do not expect the proposed new £2 stake limit for gaming machines to have a material impact on our retail strategy and we are continuing to invest.
“Our shops are more profitable and outperform on sports betting, enabling them to better withstand the impact of lower machine stakes limits. We operate in high footfall, highly competed locations, which means we are well placed to benefit from competitor-shop closures.” Paddy made about £8million profit from the World Cup and Jackson said the bookmaker had “got its mojo back” after it explained the conservation aims of its commercial featuring a painted polar bear which had been heavily criticised.
But increased competition from rivals such as Bet365 was hitting horseracing commissions on its Betfair Exchange, adding to the pressure from the cancellation of fixtures in the first quarter due to the poor weather.
Half-year pre-tax profit was up 4 per cent to £106million on 5 per cent higher revenue of £867million.
Jackson said: “We have made substantial progress against our strategic priorities and trading in the second quarter was good. We have better visibility of the regulatory and fiscal changes in the UK, Australia and the US.”