Sportech profits down after SGR acquisition
Sportech's annual pre-tax profit is down 20% due to last year's acquisition of Scientific Games Racing.
Sportech’s annual pre-tax profit has suffered a 20% downturn due to its lengthy nine-month acquisition of US pari-mutuel and tote business Scientific Games Racing (SGR) last year, the Liverpool-based business announced this morning.
Despite seeing its revenues rise 10% from £64.6m in 2009 to £71.2m in 2010, Sportech reported a 20% dip in adjusted pre-tax profits of £11.9m compared to 2009’s £14.7m.
Ian Penrose, CEO of Sportech, told eGaming Review he was pleased with the results but that 2010 had been a “transformational” year due in part to the £51.4m acquisition of SGR in October last year.
“Clearly we’ve had to report a loss because all the costs of the transaction have been written off under new accounting guidelines, whereas it used to be on the balance sheet. We’ve got to deal with that.
“But that’s all history. We’ve gone through a transformational year; we’ve bought a business that has huge strategic market share, huge presence; we now process 17% of all the tote and horse racing bets in the world; and we’ve changed the board structure dramatically and added some real operational and strategic international prowess.
“As a consequence we’ve made £19.7m EBITDA in a very challenging year and analysts expect us to hit £26m EBITDA in 2011,” he added.
Asked to break down revenues Penrose said two-thirds comes from pools and egaming or as he called it the “old Sportech business”, while the remaining third comes from the acquisition of SGR, renamed Sportech Racing.
In November last year Penrose told eGaming Review the company would move its entire egaming operation including casino, bingo and poker onto the Playtech platform by the end of the year. Its egaming division generated £1.5m in profit and around 30,000 active customers in 2010. Sportech currently has partnerships with St Minver for its bingo and 888 for its casino and poker.
“Over the course of this year we’re moving everything to Playtech so customers can play all products from their single wallet. In a nutshell we want our relationship with Playtech to do for our egaming business what Playtech did and helped with William Hill’s egaming business. I’m not talking about scale but the transformation.”
The company also announced today that Playtech chief executive Mor Weizer would replace his Playtech colleague Shmuel Weiss as a non-exeutive director on the Sportech board. The news comes only weeks after Roger Withers, Playtech chairman, was announced as Sportech’s new chairman.
“We needed to develop the existing egaming operation so we didn’t have a silo approach and Playtech offered to do that for us, said Penrose. “As a consequence, and because of the scale of the opportunity they [Playtech] also bought 10% of the company, they had a right to a director and appointed Shmuel Weiss, and today he’s been replaced by Mor.
“Separately, we were looking to augment the board. Roger Withers maybe chairman of Playtech and was chairman of my previous business, Arena Leisure, and he is clearly a well known figure in the global gaming industry and we’re delighted he’s chairman.