Exceptional items tip Sportingbet into the red

Bid stock Sportingbet fell into the red last year after tax charges and mergers & acquisitions costs bit hard.

Bid stock Sportingbet fell into the red last year after tax charges and mergers & acquisitions costs bit hard.

The year ended July 31st 2012 was described as one of "significant change" by company Chairman, Peter Dicks, as the online bookie offloaded its Turkish operations and assimilated its Centrebet acquisition.

Amounts wagered in the year rose to £2,349.2m from £2,053.9m the year before. Core net gaming revenue (NGR), however, eased to £188.9m from £206.3m. The market had been expecting core total revenue of around £199m. NGR was down 2% on a like-for-like basis, as business was hit by Greece and Spain making changes to gambling duties.

The disposal of the Turkish business, the acquisition of Australian operator Centrebet and the passing of online gaming laws in two of its largest markets, Greece and Spain, saw the bookmaker's revenue mix shift decisively towards licensed and taxed jurisdictions. The group's revenue derived from regulated and/or taxed countries has risen to a current run rate of over 80%, Sportingbet revealed.

Earnings before interest, tax, depreciation and amortisation improved to £56.8m from £51.4m a year earlier, but a £71.6m exceptional charge tipped the company into the red, with a core pre-tax loss of £56.2m, versus a profit of £20.7m the year before.

The market consensus forecast for pre-tax profit was £28.94m. Even adding back the exceptional charge and throwing in a £10.7m contribution from non-core businesses, the pre-tax profit only rises to £26.1m.

Looking at the exceptional items, £18.1m were costs associated with the disposal of the Turkish language website and £16.8m related to the acquisition and integration of Centrebet. An impairment charge of £18.7m was taken relating to these transactions for computer hardware and software. A further £14.7m was incurred settling a Spanish tax charge.

The exceptional charge has resulted in a cash outflow of £48.8m this year and a further £4.6m will be cash outflows in future periods.

Adjusted diluted earnings per share (EPS) slipped to 5.3p from 6.3p the year before, but those exceptional costs mean the unadjusted figures were very different, with a loss per share of 6.8p, versus a positive figure of 3.9p the year before.

"With over 80% of our revenue coming from regulated countries we are confident that the increased advertising opportunities, improved payment processing and stable business platform provided by our regulated market presence will drive profitable growth in the medium-term," said Andrew McIver, Group Chief Executive.

"Whilst the economic outlook remains challenging, our robust position gives us confidence for the current financial year," McIver added.

The full year dividend has been maintained at 1.7p.

Shares in Sportingbet fell to 50p from 53p overnight in the first hour of trading after the results before recovering somewhat.

JH

Recommended

Share tips of the week - 12 August
Share tips

Share tips of the week - 12 August

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
12 Aug 2022
Britain’s ten most-hated shares – w/e 9 August
Stocks and shares

Britain’s ten most-hated shares – w/e 9 August

Rupert Hargreaves looks at Britain's ten most-hated shares, and what short-sellers are looking at now.
10 Aug 2022
Aviva: One for income investors to tuck away
Share tips

Aviva: One for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
10 Aug 2022
Director dealings w/e 5 August: what company insiders are buying and selling
Stocks and shares

Director dealings w/e 5 August: what company insiders are buying and selling

Directors’ share dealings can often give investors an insight into the sentiment of company insiders. Here are some of the biggest deals by company di…
9 Aug 2022

Most Popular

UK House Prices Set To Fall? It’s Not So Simple
House prices

UK House Prices Set To Fall? It’s Not So Simple

Figures suggest UK house prices are starting to slide, but we shouldn’t take these numbers at face value, explains Rupert Hargreaves.
11 Aug 2022
Are UK house prices finally heading for a crash?
House prices

Are UK house prices finally heading for a crash?

The latest house price figures show a fall of 0.1% in July. With interest rates rising, inflation hitting double figures and a recession on the cards,…
5 Aug 2022
Three solar stocks to invest in
Renewables

Three solar stocks to invest in

This week, professional investor Nicholas Mersch of the HANetfS&P Global Clean Energy Select HANzero UCITS ETF tells us three solar stocks to invest i…
12 Aug 2022