Sportingbet takes 35% hit to profits

Disappointing update could lead to cut in offer for group

William Hill may try to use a disappointing update from Sportingbet to cut its joint offer for the online gambling group, people close to the situation said.

Sportingbet took a 35 per cent hit to first-quarter revenues, describing trading as “challenging”, but talked up performance in November in Australia, the market William Hill is keen to buy.

The online gambling group is the subject of a joint £530m takeover approach from William Hill and GVC Holdings.

William Hill has lined up a complex deal worth 61.1p a share that would see it take control of the Australian business, and probably Sportingbet’s Spanish operations, while GVC picks up the unregulated areas of the group.

A deadline for a formal offer has been extended once to give more time for GVC to prepare a prospectus.

The new date for tabling the offer is on Tuesday, and people with knowledge of the process said the joint venture partners were likely to seek another short extension.

But further talks are expected at the weekend, and two people close to the situation said questions are likely to be asked of Sportingbet as to why revenues for the period to October 21 were £38.8m, compared with £59.9m in the same period last year.

The amounts waged in the period were nearly £100m lower at £594.3m.

One person suggested that the update undermined confidence in the business and made the 61.1p offer “much more difficult to adhere to”.

Andrew McIver, Sportingbet’s chief executive, blamed calendar issues for the slowdown and said the relatively volatile trading was “not unusual”.

He pointed to this year’s October offering only four weekends of sporting fixtures, compared with five weekends last year.

This year’s Australian Derby Day, one of the biggest sports betting events of the year, was moved to November, he added.

Mr McIver said November had returned to “normal trading levels”, the Australian sports margin being “particularly strong”.

The Melbourne Cup, Sportingbet’s single biggest sports betting event in the calendar, gave the group a 21 per cent increase in the number of bets.

Mr McIver said the board remained confident of meeting expectations for the full year.

David Jennings, analyst at Davy Research, said the update meant that “some will question whether a renegotiation of the price is on the cards”.

Mr Jennings said it could be misleading to read too much into one quarter’s results, but added that growth in Australia had slowed and “an adequate explanation … will be required”.

Sportingbet declined to be drawn on the William Hill/GVC offer. Its shares closed down over 3 per cent at 44.5p.

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