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2006 profits should come in at GBP 18.4 million for Internet gambling and football pools company
British gambling group Sportech is in the fortunate position of not losing sleep or business over the American problems associated with the UIGEA, due to its European gambling base and this week gave an optimistic trading update on its online gambling and football pool action.
Business has been on the up it appears, with operating profits for the year to January 5 predicted to come in at GBP 18.4 million.
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Keeping the football pool side of the business up and at 'em has proved a challenge in today's internet-enabled era, but previously rapid annual attrition rates have now slowed to "an overall single-digit percentage level" the update reveals and the direct channel business "...has seen an absolute halt in customer numbers decline for the first time since launch in the 1990s".
New management at the online businesses appears to be making a difference. Online bingo has added 5 500 customers in a year and online casino and poker have continued their recovery from the first half of 2006 and increased turnover and profitability, reversing an under-performing 18 month trend.
CEO Ian Penrose says these improvements are part of a wide-ranging plan to get the basics right, dispose of unprofitable interests and build a strong backbone, with the new IT system on schedule. Sportech is now much more cash generative, netting around GBP680 000 of free cash flow per month during 2007, and this has helped reduce net debt 17 percent from this time last year to GBP90 million.
Having largely stabilised the core business, Penrose is planning a big marketing push for the start of the Premiership season, and analysts are speculating that this could lift pre-tax profits for the year to December 2007 to around GBP13.6 million.
Sportech shares have advanced by almost a third.
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