Sector news

Quarter 4 defeats the freeze

28 January 2010

 

Although winter extremes caused fixture list chaos across the key European leagues and chilled sports betting volumes in the final few weeks of the quarter, L&G results were well insulated by increased diversification.

 

Financial highlights for the quarter

Amounts wagered €34.4m (2008: €25.6m)

Net win €6.6m (2008: €5.9m)

Sports betting net win margin 22.2% (2008: 21.9%)

Overall net win margin 16.8% (2008: 14.5%)

Gross profit of €1.8m (2008: €1.9m)

 

Quarter 4 saw the freeze fail to halt the groundwork that will enable growth and further diversification of product and territorial presence in 2010.

 

The dependence on sports betting has been further diluted as poker activity in Italy increases to a level that now contributes 30% of net weekly win. Average weekly tournament fees grew from just over €0.8m per week over the first three quarters to €1.1m per week in quarter 4. 40% of Betshop sports betting customers in Italy now also play poker at Betshop tables.

 

With casino games expected to be permitted in Italy from June/July 2010 there has been investment in the structure of an exciting array of casino opportunities. It is anticipated that this increased number of offerings to customers will open further avenues for revenue growth.

 

A continuing focus on capping overheads has been balanced by significant investment in software, particularly that required to deliver white label products. A number of white label initiatives are planned for 2010 and seen as promising revenue streams as they mature into 2011 and beyond.

 

Meanwhile, the Group has been working hard on clearing a number of legacy issues. The release of €0.6m from the guarantees which support the Italian gaming licenses has been negotiated. The investifgation of the employee benefit trust is ongoing. The Board has intensified voluntary discussions with the US Department of Justice to resolve issues relating to subsidiary companies which the Group disposed of prior to 2006 legislation.

 

Richard Creed, CEO of Leisure & Gaming said, "We have seen solid progress. The last quarter has been a constructive period for numerous aspects of our business on which we can confidently develop. I believe we have good reason to take a positive view of our medium term prospects."