Sportech announces return to profit
Pools and tote betting business posts a £13.9m turnaround from 2010
Sportech has announced a return to profit in its first full-year results since acquiring Scientific Games Racing (SGR) in 2010.
Overall revenues are up by 66% to £118.2m for the 12 months ended 31 December, compared to £71.2m in 2010, while EBITDA increased by 33% to £26.1m from £19.7m.
Sportech’s pools and tote betting business posted a £8m pre-tax profit, representing a £13.9m turnaround from 2010 when it recorded a £5.9m loss. Last year’s results reported a 20% downturn in pre-tax profits.
Sportech Racing, the re-named SGR business, has already boosted income. It contributed revenues of £67.3m, up £15m from 2010, and generated an EBITDA of £10.0m, a year-on-year increase of £1.7m. Some 40% of the Sportech Racing revenue was derived from providing tote services to race tracks and betting shops across the world, particularly the United States, where the business processes approximately half of all bets on horseracing.
Sportech’s egaming business “ which has been in a period of transition since a deal in January 2010 with with Playtech saw the Israeli software provider become a 10% shareholder in the company “ posted a profit of £1.4m, down £100,000 from 2010.
The egaming division has been preparing to migrate its systems and customers to a single wallet and platform offering from Playtech, while relaunching poker and casino on Vernons.com in December which incorporated the VernonsCasino.com and VernonsPoker.com brands on Playtech’s iPoker network.
Ian Penrose, chief executive of Sportech, told eGaming Review that while the egaming business currently only represents around 5% of group profits, the transition onto the new platform and the cross-selling opportunities it brings will see this number grow significantly. “We’ve now got all of our casino and poker brands on the Playtech network, and bingo will follow later this year. The benefit of that is already being seen, with gross win up 30% in the first two months of 2012. The board has clear plans for growing the egaming operation; we want our digital activity to be representing not 5% of our business but a much more significant percentage going forward,” he said.
The last year has also seen Sportech make its first foray into social gaming, signing a distribution and white label agreement with Bodugi Limited, a social-gaming based pool operator. “We believe pools-type games, where you can play for money or just for fun with and against your friends in a sports prediction format, offer potential to Sportech,” Penrose told eGR. “We want to have a series of games within which we become content providers to social media platforms. Our relationship with Bodugi is the first example of that. It’s very early days but we hope to have it up and running later this year.”
Penrose said the results reflect the company’s diversification of business interests and revenue streams from a focus on the UK market, in which pools betting has a small market share, to establishing business interests where pools and tote betting is a significant form of betting. “We have invested in technology, facilities and our people as we improve our focus and delivery to the customer in order to drive improved profitability,” he said.
“Our financial results for 2011 highlight the significant improvement in the financial position of Sportech. Whilst we are conscious of the ongoing economic uncertainties in our two principal markets of the UK and USA, we have started 2012 well, with trading for the first two months in line with management’s expectations.”
“We have been researching the Indian market for four years and believe it has great potential. Playwin’s parent company has a provisional gaming license in the state of Sikkim, and when that becomes a full gaming license we will provide pool-related games there, starting with cricket. The work has been done behind the scenes and we hope full licensing will happen shortly,” he explained.