Leisure and Gaming Finals 14/05/2008: losses fall but still losses
Leisure and Gaming (LNG) another Netbet favourite released their long awaited finals today. In early trading the shares were up 7% albeit after a very poor performance of late.
The continued losses are unacceptable but the forward looking statements are encouraging. LNG are not yet out of the woods but could be a tentative recovery story and they remain a takeover target.
The LNG business model is one I am far from convinced about.
Final Results [ADVFN]
2007 Results
* Net Win of EUR25.0m
* Gross Profit of EUR3.5m
* EBIT loss of EUR1.6m
* Successful restructuring of the Company's direct cost structure, including changes to its affiliate commissions
* Strengthening of the Company's risk management process and team
* The opening of a new operations centre in Italy, encompassing a customer service call centre
Post period end developments
* Trading continues to be in line with management expectations; profitable growth
continues in 2008
* Launch of a new marketing partner in Greece to exclusively promote Betshop.com
* Appointment today of Richard Creed to the Board as Finance Director, replacing
Michael Baird
* Appointment today of Neil Craven to the Board as a non-executive director; Benjamin Shaw today steps down from the Board as a non-executive director
Hopefully the appointment of Neil Craven to the board will shake things up and realise some shareholder value. This is one of the few positive.
Some remaining issues:
1. They have singularly failed to sell Acropolis Casino despite it being on the market for a long time.
2. The number Betshop branded shops is down from 470 from over 1000. That is some cull and even if necessary makes LNG a less attractive takeover proposition.
3. Goalslive is a very poor website. Why do they not invest in an overhaul. How much can it cost to have a site updated daily.
4. The roll out of the over-the-counter shops has been painfully slow.
On the plus side, LNG are on a relatively low rating going forward and could double in price with little trouble although cash flow needs to be watched closely.
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1 comments:
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You're spot on about the cashflow - it seems tight as hell to me. Management is also decidedly ropey, in my view. Still quite a risky punt.
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