Sportech (SPO) is playing the waiting game. The Professional and Amateur Sports Protection Act that has banned sports betting in the US since 1992 was overturned in May 2018, leaving it up to individual states to pass their own laws around regulations concerning sports betting. Sportech has been meeting with potential customers about providing sports betting capabilities for their businesses. Interim executive chairman Richard McGuire said these potential customers are unwilling to do any deals until the legislation comes through. Sportech also warned in November that contracts in Turkey and Asia had been delayed.
In the meantime, the new management team is focused on cutting costs in an effort to avoid any future further pre-tax losses. In 2018, the group conducted a strategic review to find areas for cost-cutting. Despite a decline in revenue, these efforts helped deliver an 18.8 per cent year-on-year increase in adjusted cash profits before sports betting costs. Analysts at Peel Hunt believe management’s focus on improving racing technology while trimming costs should result in “a business which can grow into its valuation”. The recent acquisition of LOT.TO brings new technology, know-how and skills to the group.
Analysts at Peel Hunt expect adjusted pre-tax profits of £2.9m this year, giving EPS of 1.2p, compared to £2m and 0.8p in 2018.
| SPORTECH (SPO) | ||||
| ORD PRICE: | 39p | MARKET VALUE: | £74m | |
| TOUCH: | 38-39p | 12-MONTH HIGH: | 87p | LOW: 32p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 28p* | NET CASH: | £17.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 104 | -20.0 | -10.4 | nil |
| 2015 | 100 | 9.7 | 3.3 | nil |
| 2016 | 64.8 | 63.6 | 22.6 | nil |
| 2017 | 66.3 | -23.2 | -12.0 | nil |
| 2018 | 63.7 | -2.4 | -2.4 | nil |
| % change | -4 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £13.6m of intangible assets, or 7p a share | ||||
