Investors are still waiting to see whether pool-betting company Sportech (SPO) will eventually win its case against HMRC over historic VAT over-charging related to the 'Spot-the-Ball' competition. The tax tribunal won't be held before April, but management raised its estimate of the potential rebate from £80m to £95m. In the meantime, the market has to digest an operationally mixed set of half-year results after an especially poor online gaming performance caused adjusted pre-tax profits to slide by 20 per cent to £5.9m.
The online gaming platform, supplied by Playtech, was beset by problems related to migrating customers to a new system. The result was that, despite spending £1.5m on marketing, the division's revenues increased by only £0.2m to £2.8m, while a £0.7m profit in the first half of 2012 reversed into a loss of £0.7m. The bright spot was the better than expected performance from Sportech's horse racing division, where a turnaround plan has started to benefit what had been declining business - revenues increased by 2 per cent to £34.3m, with cash profits rising by 22 per cent to £6.1m. However, the football pools business continues its slow decline and cash profits slipped £0.5m to £8.2m as the customer base shrank a further 11 per cent to 350,000.
Broker Peel Hunt cuts its full-year pre-tax profit estimates by 10 per cent to £13.5m, giving EPS of 4.5p (from £15.5m and 5.3p in 2012).
SPORTECH (SPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 87p | MARKET VALUE: | £173m | |
| TOUCH: | 87-88p | 12-MONTH HIGH: | 117p | LOW: 57p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 41% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 57.7 | 3.2 | 1.00 | - |
| 2013 | 57.0 | 1.9 | 0.70 | - |
| % change | -1 | -41 | -30 | - |
*Includes intangible assets of £201m, or 101p a share | ||||
