11th of November 2010 Author: Johnny Karp
Still, after-tax profit may be affected, cautions the company
An online gambling group from Alice Springs, Australia - Centrebet, has announced that it plans to boost its market share in Australia and wider. It has, however, warned that this initiative that involves doubling of the market share by around 20 percent by the end of 2015, may initially have a short-term impact on net profit after tax. Still, it was estimated that this could in the end lead to a 50 percent increase in net profit after tax to A$32 million.
The company also specified that in order to achieve this goal, it will increase investments into marketing and product development, which should acquire it new customers. It was explained that this investment will initially affect the after-tax profit with full year 2011 by A$8 million, compared to the current net profit after tax (NPAT) of A$16 million.
The benefits from this initiative will be noticeable as early as 2013, and dividends will be paid throughout, stated Centrebet.
'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,' said the company Chairman Graham Kelly.
He added that '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.'
On the other hand, 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,' explaining that '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.'
This new Centrebet venture will focus on new racing products, some of which are already in development, whereas its European operations will be oriented toward cash generation which will fund the Australian investment program.
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