Under-performing Swedish sports betting operator to review its business

Industry veteran Peter Åström (remember him from the Entraction management?), has his hands full with the under-performing Swedish sports betting operation Betting Promotion, where he is currently chairman.

The company has turned in another weak set of results, prompting Åström to assure investors that he intends to work with the company management in undertaking a comprehensive internal review of the business to see what’s wrong and how to fix it.

Betting Promotion’s Q2-2013 report made largely dismal reading. For the period April to June 2013:

* Betting turnover down at 127,865 KEUR (170,589 in Q2-2012)
* Net turnover after trading fees: 502 KEUR (842)
* Gross margin: 0.39 percent (0.49)
* Operating income:  Negative 255 KEUR
* Operating margin:  Negative 51 percent (0)
* Net Income: Negative 424 KEUR (15)

For the half-year January to June 2013:

* Betting turnover: 282,651 KEUR (345,768 in Q2-2012)
* Net turnover after trading fees: 776 KEUR (1,121)
* Gross margin: 0.27  percent (0.32)
* Operating income: Negative 811 KEUR (-574)
* Operating margin: Negative 105  percent (-51)
* Net income: Negative 948 KEUR (-578)

In its review, the board of directors acknowledged that “….the company has not been able to deliver satisfactory results for some time”, and for this reason the chairman will assume an executive role in working with management on a review of operations.
The company’s two products, Trading and Bookmaking, will be subject to an analysis and a new business plan will be established.

“Second-quarter earnings were well below budget. For Trading the margin was 0.3 percent, i.e. the bottom limit of the expected margin of between 0.3 percent to 0.6 percent,” the board notes. “For Bookmaking the margin was in line with expectations, albeit with very low volumes.”

The report blames negative net income on lower gaming turnover, write-downs during the quarter in question and continued investment in the product Bookmaking.

“The lower gaming turnover is a consequence of the fact that there are no major championships in 2013. We have made a final agreement with Key Quest Ltd and a new payment plan has been established with Game Village, involving write-downs of 123 KEUR,” the company’s CEO, Jonas Ornstein commented.

At the end of last year, online gambling company Tain AB acquired around 18.5  percent of the shares of Betting Promotion Sweden AB to become the largest shareholder of the company .

The sellers include, among others, the former major shareholders, Key Quest Limited, who sold its entire stock, and Hampus Hägglöf, who sold 500 000 shares, which means that Hägglof’s holding is currently less than 5 percent.

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