Tote deal pushes Betfred sales to £6.7bn

LAST year’s acquisition of the Tote had a dramatic impact on the performance of Betfred, pushing revenues to £6.7bn and earnings above £50m.

Betfred, led by Fred Done, acquired the state-owned bookmaker in July 2011 for £265m. The deal has added around 5,000 staff and 495 shops to the Warrington-based Betfred operation which is now the fourth biggest bookmaker with around 1,370 shops and 10,000 staff.

Newly-filed accounts for Lightcatch, the holding company for the Tote, Betfred and Totepool, shows turnover jumped from £4.1bn to £6.7bn in the year to March.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 36% to £53.2m from £39m. But significant costs associated with the deal led to a pre-tax loss of £5.8m, compared to a £13.8m profit last time.

There were acquisition costs of £18.5m, with £11.7m of this a non-cash depreciation charge. Some £4.8m was associated with around 147 redundancies which included many of the Tote’s senior executives when head office functions at its Wigan base were merged with Betfred.

Finance director Barry Nightingale told TheBusinessDesk.com: “We went into it with a meticulous strategy for integration and delivered to plan.

“We’ve now rebranded the Tote retail estate as Betfred and still have some further work to do on the digital business, aligning the online platforms. There’s also improvements to the call centre operation and further efficiencies to the racecourse Totepool business.

“We’re performing very much in line with the plan in terms of the business but we’re results dependent, as in football and racing results determine our performance. But we’re managing effectively in a highly competitive market and are delivering growth, and we’re on target to deliver numbers we placed before the banks.”

The Tote deal was funded with a £185m package from a syndicate of banks – RBS, Barclays, Yorkshire Bank, Santander, and the Co-op. Net debt was £171m at the year-end, up from £15m before the deal. The group borrowed a further £90m from the Government which it will not have to start repaying until 2014.

Under the terms of the deal Betfred agreed to pay the horse racing industry £11m in the first year and £7m in the following six. Mr Nightingale said the group had exceeded this target, paying £12.5m. “It’s the highest contribution to racing in the history of the Tote,” he said.