US boosts Sportech as egaming underperforms
Operator's US business continued to grow in first half of 2013 but UK revenues drop as egaming posts £0.7m loss
A disappointing performance from Sportech’s egaming business contributed to a fall in overall revenues during the half of 2013, with the operator’s US business continuing to grow in importance.
Sportech posted a £0.7m loss from its egaming division, down from a £0.7m profit in 2012, despite revenues rising 8% to £2.8m on the back of an increased marketing spend.
Overall revenues were broadly stable in the six-month period at £57m, down from £57.7m in H1 2012. Adjusted profit before tax stood at £5.9m, down from £7.4m in 2012.
Sportech Racing, the operator’s US online horseracing business, continued to gather momentum with EBITDA up 22% which now accounts for more than 40% of operational EBITDA.
“We have delivered a solid set of results and continue to make strategic and operational progress and build on our unique market position,” Ian Penrose, chief executive of Sportech, said.
Penrose said the strong performance of the US business has helped mitigate the challenges faced in egaming during the period and analysts cited the US division as a key source of growth.
“With several significant new contracts in place, new products coming into the market soon, a flagship betting and sports bar opening later this year in Connecticut and full launch of Connecticut’s only legal online horseracing betting platform by the year end, we are pleased with the momentum in our US business for 2014 and beyond,” Penrose said.
Sportech’s egaming brands were migrated to software partner Playtech’ platform during 2012 in a process the CEO described as “challenging” during the company’s previous results announcement.
With the migration complete Sportech said profitability has been “depressed” during H1 due to increased marketing spend.
Simon French of Panmure Gordon said Sportech will broaden the distribution of its Football Pools products later this year, including in France, and will introduce the online pools game into its egaming platform in 2014.
Sportech also updated shareholders on its long-running VAT claim, which it said is likely to net the company £95m following a hearing in April 2014. The claim was previously valued at around £80m.