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Sportech betting on regulatory change

The gambling group is pinning its hopes on an upcoming legislative change to sports wagering in the US
April 25, 2018

It’s all change at gambling group Sportech (SPO). Last year was frenetic, with a formal sales process concluding in a huge restructuring of the company, a brand-new management team still under assembly, and a planned base in Toronto to oversee the group’s future in the North American sports betting market. That’s still heavily dependent on legislative outcomes in the US, specifically in the state of Connecticut, where two bills are making their way through the US Senate to legalise all sorts of sports wagers, including basketball and baseball.

IC TIP: Hold at 63p

Last year’s figures were heavily skewed by the disposal of the football pools business – although this did give rise to a £75m, two-tranche, shareholder return. It also allowed the group to pay off all its debt and finish up the year in a net cash position. But don’t get overexcited: non-executive director Richard Cooper says any spare funds are likely to be directed towards internal investments, particularly if the US regulatory light turns green.

Analysts at Peel Hunt expect pre-tax profit of £6.2m for the year ending December 2018, giving EPS of 2.3p, compared with £1.5m and 0.6p in 2017.

SPORTECH (SPO)   
ORD PRICE:63pMARKET VALUE:£117m
TOUCH:63-64p12-MONTH HIGH:83pLOW: 32p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:28p*NET CASH:£18.6m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20131105.31.7nil
2014104-20.0-10.4nil
20151009.73.3nil
201664.863.622.6nil
201766.3-23.2-12.0nil
% change+2---
Ex-div:na   
Payment:na   
*Includes intangible assets of £11.6m, or 6p a share