UPDATE 1-Betfair sees growth prospects in Italy, United States

Tue Dec 3, 2013 3:20am EST

* H1 underlying EBITDA up 16 pct to 48.9 mln stg

* H1 dividend up 50 pct to 6 pence a share

* Sees full-year underlying EBITDA 82-87 mln stg

* Shares up 1.3 percent

By Keith Weir

LONDON, Dec 3 (Reuters) - Online gambling company Betfair said it was looking to grow its business in Italy and the United States after having pulled out of a number of countries because of unfavourable regulations and tax rates.

Betfair, which operates an exchange that allows gamblers to bet against each other, has been slimming down its operations and cutting costs under chief executive Breon Corcoran, seeking to focus on fewer markets where returns are more secure.

Reflecting a retreat from markets including Germany and Greece, revenues fell six percent to 188 million pounds ($308 million) in the six months to the end of October, the company said on Tuesday.

However, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 16 percent to 48.9 million pounds, just beating analysts' average forecast.

The company, which has built a cash pile of around 200 million pounds, increased its interim dividend by 50 percent to 6 pence per share.

Under Corcoran, Betfair has also begun to expand its more conventional sports book betting, where the bookmaker sets the odds. That broadens its appeal to mainstream gamblers but brings it into more direct competition with William Hill and Paddy Power.

"Betfair has continued to make progress against the strategic objectives we set out in December 2012 and has delivered a good first half performance," Corcoran said.

"Our focus on regulated jurisdictions and Sportsbook-led acquisition continues to be successful," added Corcoran who joined the company from Paddy Power in 2012.

TAKEOVER REJECTED

Betfair has been forced to defend its strategy after rejecting a 1 billion pound ($1.5 billion) takeover by private equity firm CVC Capital Partners in May.

The shares rose 1.3 percent to 1,043 pence in early trading, comfortably above the 950p offer price from CVC that the company rejected. However, the shares are still a long way short of the 13 pound level at which they floated three years ago.

Betfair is one of a number of European companies looking to build its business as U.S. states start to ease a ban on online gambling and it launched online casino operations in New Jersey late last month.

It is also working with the Italian regulator to win approval to set up a betting exchange there and hopes the site will be live before the end of its financial year.

The company has pencilled in start-up losses of between 5 and 10 million pounds in Italy and the United States but said it was still able to maintain its profit forecast for the year.

"Notwithstanding this incremental investment, the progress we have made in the first six months means we expect underlying EBITDA for the full year to be between 82 and 87 million pounds," Corcoran said.

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