CENTREBET IN MAJOR MARKETING DRIVE

But Aussie company warns investors that net profit after tax could suffer
 
Centrebet, the online gambling group based in Alice Springs in Australia has notified the stock exchange of an ambitious plan to dramatically increase market share in Australia and elsewhere.
 
But the company cautioned that its plans to double market share may initially impact net profit after tax.
 
Centrebet wants to double its bookmaking market share by around 20 percent by full year 2015, and estimates that this could bring rewards of an increase in net profit after tax of 50 percent to A$32 million.
 
This goal is to be achieved through increased investment in marketing and new product development driving new customer acquisitions.
 
The marketing investment required will, the company warns, have a short term impact on group earnings with full year 2011 net profits after tax impacted by A$8 million, viewed against the current NPAT of A$16 million.
 
However, benefits are expected to flow from the marketing initiative as early as 2013, and dividends will be paid throughout.
 
Centrebet Chairman, Graham Kelly said: “The strategy follows a full review of the Australian wagering industry, as well as a detailed review of our own business.  The Australian wagering market outlook is very favourable for corporate bookmakers, particularly top tier companies like Centrebet. While we will continue to explore appropriate value adding consolidation opportunities, the strategy announced today lays out our plan to realize Centrebet’s substantial opportunity to deliver shareholder value through organic growth.”
 
“Centrebet intends to pay dividends in FY11 and throughout the Plan. Given the short-term impact on net profit after tax as we invest for higher growth, the payout ratio will be increased compared to prior periods,” Mr Kelly said.
 
Centrebet Managing Director, Con Kafataris said: “The Strategic plan is aiming to provide a step change in growth and a significant and sustainable increase in earnings.  Achievement of our objectives will create a business which has a much stronger market position, higher level of earnings and a growth profile even higher than it has today.
 
“The Company has a healthy surplus cash position and when combined with cash generation from existing operations, we can put the new growth plan into action whilst maintaining a conservative balance sheet,” Mr Kafataris said.
 
Centrebet’s plan is predicated on significantly increased brand marketing investment, a change in advertising spend and mix, and a step up in new product development in Australia.  There will be a particular focus on new racing products, some of which are already in development.  The company’s European operations will be focused cash generation in order to fund the Australian investment programme.