Betfair attacks Pirc's questioning of accounts

Pirc recommended investors reject Betfair's report and accounts. Photograph: Graham Turner for the Guardian

A row has broken out between the corporate governance adviser Pirc and the online betting company Betfair, with the bookmaker accusing the former of "materially misrepresenting" facts.

Pirc is recommending that investors reject Betfair's report and accounts at the group's annual general meeting on Thursday, after the gambling group's admission that it breached new accounting rules by paying dividends to shareholders without having "sufficient distributable reserves" during the past three years.

Alan MacDougall, Pirc's managing director, said: "Pirc notes that shareholders have been asked in prior years to vote on the payment of dividends that in fact were illegal due to defective accounts.

That makes the validity of the company's accounts themselves questionable as the key source of information for shareholders at the AGM to exercise class rights. Accordingly Pirc is recommending a 'no' vote on a resolution to accept the entire annual report."

However, Betfair retorted: "Pirc's statement today materially misrepresents the facts in a number of ways. Its most serious error is to claim that Betfair's profits are overstated".

The row has erupted following publication of Betfair's 2014 annual report in July, which admitted: "The company has paid a final dividend for the year ended 30 April 2011 and interim and final dividends for the years ended 30 April 2012 and 2013. "The company has recently been advised that, as a result of certain changes to the technical guidance issued by the Institute of Chartered Accounts in England and Wales 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."

It further acknowledged that the same oversight meant that a share buyback of 6.5m shares had also breached accounting rules, although in mitigation it added: "At all relevant times, sufficient distributable reserves would have been available in the company had its subsidiary undertakings passed up distributable profits to the company through distributions from those subsidiary undertakings' own distributable reserves."

Pirc's call to vote down the annual report would be a massive turnup for the books if it succeeded, although even if investors backed the corporate governance group the vote would be purely advisory.

read more  :  www.theguardian.com

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