Sportingbet has spent the past six months re-shaping its business after talks with Ladbrokes failed to end in a takeover. Part of that process saw management sell the profitable, but unlicensed, Turkish business for £125m and expand into regulated markets. All that upheaval meant impairment costs of £24m wiped out reported profits, but - ignore the one-off items - and operating profits were £17.4m, down from £19.6m in 2010-11.
A more positive consequence of the re-organisation is that more than half of the group's revenues are now generated within regulated markets. Most important of these is Australia, especially after the acquisition of Centrebet, where total wagers grew by 86 per cent to £756m, with net revenues after betting tax of £45.3m (£19.4m in 2011). Australia now accounts for most of the company's sports book income. That was in contrast to Europe where economic conditions in Greece and Spain, the deduction for the first time of gambling taxes and the sale of the Turkish business meant a fall in net revenues to £38.8m, down from £57.8m the last time. In response, management has had to make savings and costs have been reduced by £12m annually, with additional savings of £8m in the pipeline at a planned one-off cost of £3m.
Prior to these results, broker Numis forecasts pre-tax profits for 2011-12 of £36m, giving EPS of 4.6p.
SPORTINGBET (SBT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £266m | |
| TOUCH: | 39-40p | 12-MONTH HIGH: | 60p | LOW: 26p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 2 | |
| NET ASSET VALUE: | 24p* | NET CASH: | £14.1m | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 108 | 19.6 | 3.6 | 0.6 |
| 2012 | 111 | -7.20 | -1.6 | 0.6 |
| % change | +3 | – | – | – |
Ex-div: 9 May Payment: 6 Jun *Includes intangible assets of £184m, or 28p a share | ||||
