Sportingbet hurt by Greek and Spanish exposure

published 29 February 2012

Sportingbet, the online gaming company, lost money in the six months to 31 January 2012 as the euro crisis saw punters rein in their gambling.

The group says its operating loss for the half-year was £5.2m against a profit of £18.2m in the equivalent period of 2010/11.

Total wagers rose from £1,069m to £1,266m while net gaming revenue increased from £106.8m to £109.4m.

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The company's second and third biggest markets are Greece and Spain, so no prizes then for guessing where some of the losses came from.

The sale of the Turkish language site (which provided 29% of European and emerging market revenues) also dented the figures as the company sought to bring its operations into regulated markets.

Australia remains the group's powerhouse market, and it seems Aussie punters are really getting into betting online, whether via their computers or mobile phones.

Amounts wagered in the land down under rose 86%, boosted by the Centrebet acquisition. On a like-for-like basis amounts wagered still rose a not unreasonable 12%. The amount wagered via mobile devices was up an eye-popping 395% on a year earlier.

Net gaming revenue in Oz was up 134% year-on-year, or 28% on a like-for-like basis.

Commenting on the results Chief Executive, Andrew McIver, said: "We have acquired additional regulated businesses in Australia and Denmark and disposed of our Turkish language website. These, together with the movement towards regulation in Spain and Greece, mean that by the end of our year we expect to derive over 75% of our revenues from regulated markets".

According to Nick Batram at brokers Peel hunt, the strategy to increase revenues from regulated markets is a sound one, and the acquisition of Centrebet "is a transforming deal that is delivering everything expected and more."

Partially offsetting this, Batram acknowledges, is the performance of Europe "and the outlook does not look any the less challenging than it is at present."

Batram thinks shareholders can put to bed any ideas of a bid emerging in the immediate future as things settle down after the structured and elongated exit from Turkey.

Sportingbet shares dropped by about 6% in the morning session to 39.5p.

Peel Hunt thinks the shares are worth holding on to, though, with the continued strong performance from Australia supporting the valuation. Peel Hunt has a 39p price target for the company.