Despite its name, Sportech operates resolutely at the old fashioned end of the gambling market, with an emphasis on pool betting for football and the "spot-the-ball"game in the UK and horse racing totaliser (tote) betting in the US. Diversifying its revenue base away from these sources will be key to the group's prospects.
The addition of Sportech racing in 2010 was a major part of that strategy and in its first full year of operations it added £6.9m to operating profits, on sales of £67.3m. US sales are generated equally by processing 50 per cent of all tote bets placed in the US, alongside a licence to run retail betting outlets in Connecticut, which alone generated sales of £34.4m.
Despite the relative decline of UK football pools, this division was still the most profitable segment for Sportech after generating operating profits of £17.3m, on net sales of £47.7m. Sportech's nascent e-gaming, which it runs in partnership with shareholder Playtech, had a broadly flat year with sales of £4.1m (2010:£4.3m) because of a difficult migration of its poker and casino sites across to a new operating system causing a net loss of active customers.
Broker Peel Hunt forecasts pre-tax profits for 2012 of £14.9m, giving EPS of 5.1p (2011:£15.2m/EPS 5.1p)
SPORTECH (SPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £ 95.4m | |
| TOUCH: | 48-50p | 12-MONTH HIGH: | 50p | LOW: 34p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 18 | |
| NET ASSET VALUE: | 66p* | NET DEBT: | 45% | |
| Year to 31 dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 59.6 | 11.6 | 12.8 | nil |
| 2008 | 71.8 | 7.10 | 5.10 | nil |
| 2009 | 64.6 | -17.0 | -12.2 | nil |
| 2010 | 71.2 | -5.90 | -3.90 | nil |
| 2011 | 118 | 8.00 | 2.60 | nil |
| % change | +66 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £198m, or 100p a share | ||||
