In a regulatory announcement to the stock market, the recently appointed Chairman, Piers Pottinger, said the business of Sportech is undergoing a transformation and the company has taken immediate steps to focus on its profitable business streams whilst eliminating the loss making elements.
Sportech turnover for the year was of £490.8 million, down 1% on 2004. Profit before tax and exceptional restructuring costs increased by 3% to £9.7 million, however an exceptional charge of £16.1 million, associated with the termination of the contract to provide betting services to ITV, determined a loss for the year of £6.4 million (2004: profit of £8.2 million).
“Sportech owns and operates some of the strongest brands in the UK gaming industry. A new energy and enthusiasm to succeed is permeating the business. It is early days, but sport, leisure and gaming are at the heart of our culture and offer exciting opportunities in rapidly evolving sectors. Sportech is in a strong position to capitalise on these. I look forward to the future with confidence,” commented Pottinger.
“We have commenced the process of building the Group into a more profitable and focused sports, leisure and gaming company. We have installed a new management team, undertaken a strategic analysis of all divisions and developed a number of new products and distribution channels for the future. The new Board and management team have instilled energy, drive and passion throughout the business which will deliver a successful future taking advantage of the opportunities for the Group,” added Ian Penrose, the company\’s Chief Executive.
The new strategy for the company looks to put the football pools business at the heart of the group. Littlewoods Football Pools and Zetters reported profits for £24.4m (2004:£24.3m) on revenues of £67.1m, down 16% on 2004. In advance of the 2006 World Cup, the company will focus on product diversification and multi-channel distribution. In particular, Littlewoods plans to strengthen the current offering of casino, poker, bingo and fixed odds games.
The Bet Direct business had a disappointing year due to a lack of management focus and, in common with the bookmaking industry, adverse sports results. The Bet Direct Sports Betting business lost £4.8m, offset in part by a profit of £1.7m generated by the online Casino and Poker businesses.
In particular, gross win (defined as poker commission received and casino stakes less winnings), across the company\’s Casino and Poker products was up 14% to £10.0m, driven by good growth in LittlewoodsPoker.com and the introduction of a branded Bet Direct Casino and Poker service. Active customers increased by 12% to 82,000 (80%. for casino and poker), while registered customers we up by 22% to 459,000.
“The turnaround of Sportech has commenced with critical business decisions being taken. Cash generation continues to be strong and revenues from our football games are in line with expectations with improved customer retention in the first 11 weeks of the new financial year of 87% (2005: 86%). Gross win from Betting has been 26% higher than in the comparable period in 2005, reflecting improved sports margins and strong poker growth. The poker rake is 185% higher than the comparable period in 2005,” added Ian Penrose, commenting on current trading and outlook.
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