Sportech (SPO) received £93m from the taxman in the first half as part of a five-year long VAT dispute, but it isn't game over yet. HMRC appealed against the initial decision, and if it emerges victorious in the final judgement the gambling operator will have 30 days to pay the money back.
In the meantime, chief executive Ian Penrose says the company must not lose sight of its strategic goals - particularly in the US, where 64 per cent of revenues are now generated. Importantly, Sportech established a foothold in the lucrative New Jersey market during the first six months by agreeing to supply online gambling services to the Resorts Casino Hotel in Atlantic City.
However, extreme cold weather and soaring development and start-up costs hit the performance of its venues business in Connecticut. Certain venues were forced to close. Coupled with 280 race cancellations and currency headwinds, that cut profits by almost a third to £2m.
The strong pound remains a problem, and could knock up to £5m off full-year revenues. But Mr Penrose is optimistic: he expects Sportech's launch of the first legal betting website in Connecticut to encourage more gamblers to play from home, helping offset the lower footfall experienced in the first half.
Broker Investec Securities expects pre-tax profit of £13.5m in 2014, giving EPS of 5.2p.
| SPORTECH (SPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 80p | MARKET VALUE: | £164m | |
| TOUCH: | 79-80p | 12-MONTH HIGH: | 93p | LOW: 77p |
| DIVIDEND YIELD: | nil | PE RATIO: | 15 | |
| NET ASSET VALUE: | 101p* | NET DEBT: | 32% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 54.4 | 2.6 | 2.5 | nil |
| 2014 | 52.6 | 87.8 | 2.4 | nil |
| % change | -3 | - | -4 | - |
Ex-div: na Payment: na *Includes intangible assets of £195m, or 95p a share | ||||
