Sportingbet Update

Final results reflected the significant shift in the business during FY12, with the acquisition of Centrebet in Australia, sale of the Turkish-facing website business and new taxes in regulating markets. There is much greater clarity for FY13, with 80% of revenues now coming from regulated or taxed markets, the Australian business fully integrated and growing strongly and European cost cutting sufficient to “produce a profit at budgeted revenue levels”. The market is awaiting further news on the approach from William Hill and GVC and as a connected party under Takeover Panel rules, we are unable to publish estimates.

Strong FY12 Performance In Australia
Normalised FY12 operating profit was £32.2m (FY11: 38.1m), with £31.8m coming from Australia (FY11: £8.9m) and only £0.4m from the rest (Europe and emerging markets, less PLC costs), versus £29.2m in FY11. Australian net gaming revenue (NGR) grew by 31% on a like-for-like basis and Centrebet was fully integrated onto the Sportingbet platform by June, generating synergies of £15m (original estimate £9.8m). European profits were affected by new taxes, the sale of the Turkish website business, economic pressures and the temporary closure of the Spanish website.

Greater Clarity For FY13
Sportingbet’s business mix has been transformed during FY12 and 80% of revenues now come from regulated and/or taxed countries. Medium term, the Australian experience is that an initial reduction in profitability in regulating markets from new taxes is more than offset by new growth opportunities in the medium term. Meanwhile, management reports that “the group has had a solid start to the year in line with our expectations… while the economic outlook remains challenging our robust position across a variety of attractive territories gives us confidence in the outlook for the current financial year”.

Bid Situation: Awaiting Developments
On 1 October, Sportingbet confirmed that it had received an indicative offer from William Hill and GVC Holdings of 52.5p (45p in cash from William Hill and 7.5p of shares in GVC). The Sportingbet board responded that “this indicative offer significantly undervalues the business and its future prospects”. William Hill and GVC have until 16 October to announce a firm intention to make an offer or announce that they do not intend to make an offer (unless the deadline is extended by the Panel).

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