Exclusive: Betclic Everest CEO plots rebirth after "difficult" 2011
Operator preparing for Spanish re-entry " heavy loss related to written-off goodwill rather than operational losses, CEO explains.
Betclic Everest will turn 90m worth of losses into a springboard for recovery and a re-entry into Spain, its chief executive has exclusively revealed to eGaming Review.
Following a “difficult” 2011, the operator is currently trading ahead of budget for 2012 and preparing for re-entry into the Spanish market, Ignacio Martos said earlier today.
Speaking exclusively to eGR, he explained the company’s heavy 90m 2011 losses were due to “an accelerated depreciation of assets,” which prompted Betclic Everest’s co-owners Société des Bains de Mer and Lov Group “to accelerate most of [the operator’s] intangibles.” This resulted in a loss of 75m for these assets, coupled with a 16m operational loss, while Martos confirmed that during this period the operator recorded gross gaming revenues (GGR) of 300m.
The decision to take this approach, described as a “recommended accountancy practice” by the chief executive, does not impact the company’s cash reserves.
Martos said the company had written off a portion of the goodwill value of some of the company’s brands, including Everest Gaming, which he explained had been designed to give the operator a foothold in a regulated US market: “[Betclic Everest] made that investment because it was very hopeful that the US market would be quickly regulated, but obviously this did not happen, so the business has suffered.”
As a result the shareholders took the decision to drive down some of the group’s value to ease the pressure on the operator, he explained.
“In an industry like online gambling where there are massive changes with regulation and technological advances the safest thing to do is to ensure you have a low profile balance sheet. It makes for a less stressful situation as you don’t have to constantly defend the value of the company,” Martos said.
“The group has a very robust financial structure with a fully funded capital and very little debt, our shareholders are industrial investors with a long term presence and they always prefer to keep a very cautious financial approach,” he added.
For the year to date, Martos revealed that Betclic Everest is trading ahead of budget “in terms of turnover, GGR and EBITDA,” targeting a return to a “clear and comfortable EBITDA figure”.
This will be realised by focusing on improving the company’s presence in key European markets and streamlining operations “through simplifying our management structure, getting closer reach to local markets and maintaining a very important investment in IT,” he said.
In his first interview after taking over from Nicolas Beraud in September 2011 Martos told eGR that technology investment was crucial to the growth of the industry: “In the internet industry, in a new sector like online gaming you need to continuously innovate to adapt as it is a very dynamic market, and we should be in a continuous cycle of restructuring to adapt to market changes.”
He explained that in the company’s core French market, where it holds a total market share of around 40% in poker and sports betting, things were “settling down,” allowing the operator to make this investment.
“After companies initially went in and over-invested things have started settling into a sustainable and reasonable position. One of the major problems with tough regulatory terms is that they drain our resources which make it difficult to invest in IT, which in turn helps develop and enhance the market.”
Martos also confirmed that Betclic Everest, which was one of the first operators to be awarded a Schleswig-Holstein licence through its bet-at-home subsidiary, is beginning to formulate plans to enter the Spanish market, after originally deciding to delay applying for a licence: “We will go into Spain. Not now, but we will go in.
“At the moment we see too many uncertainties, so though we are in discussions with the Spanish regulator we will wait until we have a better picture of the market, and are comfortable that it is the right time to make a move,” he explained.
The former Opodo CEO was speaking to eGR after a year in which a number of Betclic Everest’s senior staff have left following a widespread company restructure which saw operations for Betclic Expekt divided into three separate regional teams with a divisional head responsible for the P&L of each area. Former Betclic Expekt CMO Marc Guigo was given control of French-speaking territories, while Ricardo Domingues and Tomasz Mazur took charge of the Southern and Northern European markets respectively.
As a result Betclic Expekt CEO Thomas Winter left the company in November 2011, followed by co-founder Eric Monçada and former CTO Pierrick Pétain in January this year. A number of other senior staff, including vice president of sales and marketing Christophe Blot; chief of regulatory and corporate affairs James Scicluna; head of social media Joakim Nilsson and head of central online marketing Lloyd Purser, have now also left, either to pursue other projects or as a direct consequence of the restructuring.