Betfair profit races ahead amid talk of flotation

BETFAIR, the world's biggest person-to-person betting exchange, has posted an 87 per cent rise in underlying full-year profit amid growing speculation of a stock market flotation.

The company, which saw its profits soar to 22.3 million in the year to April 30 on revenues that were up 61 per cent to 107m from 66.7m, is understood to be looking to appoint advisors within the next few weeks ahead of a possible flotation.

But Betfair has declined to comment on a flotation, which is estimated will put a value of between 700m and 800m on the firm.

The group's annual report also shows that Stephen Hill, a former chief executive of the Financial Times Group and chief executive of Betfair, stands to receive around 3.13m shares in an employee benefit trust put into his name. His pay last year jumped 21 per cent to 325,000.

He said: "Betfair has celebrated its fifth birthday with a further display of excellent results. Betfair's technology remains second to none. We now process more than three million bets a day."

He added: "We remain committed to providing the best service to our customers."

The online gambling company has seen its number of active customers reach 95,000 in April.

Mr Hill added horse racing remained Betfair's single highest source of revenue, although the website offers punters a range of bets - from yachting to the result of Big Brother.

He added the company would this year be the sponsor of Channel 4 cricket - its first broadcast sponsorship.

Betfair, which employees amore than 500 workers at its two UK offices, is believed to have shortlisted Goldman Sachs, Morgan Stanley and UBS as its possible advisors.

Analysts said Betfair was unlikely to make any decision until the outcome of the Treasury's tax review of betting exchanges, probably towards the end of this year.

Founded by Andrew Black and Edward Wray, who each own about 13.5 per cent of the shares, Betfair ran its first market on the 2000 Oaks, attracting bets from just 27 people.

Mr Hill added the company's plans for 2005-2006 included further growth and expansion of the business.

The company, which recently has been granted licences for Malta and Austria - its first outside the UK, also hopes to get a licence in Australia in a joint venture with entrepreneur Kerry Packer. It is also pursuing licences in South Africa and Germany.

In the past year, international active users grew by 57 per cent to 16,000 and international revenues now account for 23 per cent of exchange revenues.

Betfair is the fourth major gambling business considering a potential stock market float, alongside poker sites PartyGaming and 888.com and bingo operator Gala.