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Betfair in £80m payout blunder following ICAEW rule change

Betfair, the world's largest internet betting platform, has admitted a £80m ($135m) payout to its investors violated Institute of Chartered Accounts in England and Wales (ICAEW) guidelines, according to the Financial Times (FT).

Three payouts in 2011, 2012 and 2013, worth £30m overall, as well as a £50m share buy-back constitute a breach of accounting rules as they occurred at a time when the company's insufficient distributable reserves would have prohibited such payments.

The issue is grounded in a 2010 change to the way a company's realised profits and distributable reserves are defined.

Both Betfair and KPMG, the company's auditors, appear to have failed to register the change.

Betfair's latest annual report explained: "As a result of certain changes to the technical guidance issued by the Institute of Chartered Accountants in England and Wales (ICAEW) in October 2010, the Company did not have sufficient distributable reserves to make those distributions and so they should not have been paid by the Company to its shareholders."

According to the FT, deed polls have been put in place to protect investors from having to repay the dividends and the company is expected to approve the cancellation of affected shares at its annual general meeting in September.

A spokesman for the company described the error as a "minor technical point arising from 2010", with "no impact on shareholders", reported the FT.

At the time of publication, KPMG was unavailable for comment.

 

Related links:

Institute of Chartered Accountants in England and Wales (ICAEW)

KPMG UK

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