Sportingbet’s operations are focused on Europe and Australia. The European operation is based in the Channel Islands, operating under a licence provided by the Alderney Gambling Control Commission. This is supported by an operational centre in Dublin providing customer service and administrative support, together with an IT function located in London. In addition, the European business includes a licensed Italian operation, based in Rome. The Group’s Australian division is located in Darwin, operating under a licence from the Northern Territory Government. Both operational divisions are supported by a head office function based in London. In total the Group employs approximately 460 people.
Sports betting remains the core focus of the Group and accounts for approximately 61% of Group net gaming revenue (“NGR”) 2007: 52%). The systems and experience of the European sports trading team are amongst the best in the industry and this is demonstrated by a market leading sports margin. As the European online sports betting market continues to grow, the Board believes that the Group’s strength in this key operating area will stand it in good stead to capitalise on the enormous potential of this industry. In Australia, Sportingbet is the clear market leading independent bookmaker.
The European and Australian operations have grown significantly in the past year, in terms of new customers, yields from those customers and profitability. In addition, major steps have been taken in the development of the Group’s product offering, through an increased number of betting markets, enhancements to the in-running betting products and, in Australia, significant development of the region’s CRM tools.
Group Restructuring
The last stages of the Group’s post US restructuring and the European business operational move to the Channel Islands were completed during the year. All European management, finance and risk management functions are now conducted in Guernsey.
Exceptional costs were incurred during the year amounting to £12.0m. These related to costs associated with the move of the European operational base to the Channel Islands, redundancy costs relating to the restructuring of the Group’s head office function and the set-up and termination costs relating to the cessation of certain Group marketing partner contracts.
A significant amount has been achieved over the past 12 months. The restructuring of the European operation and Group Head Office is now complete and the revised structure has led to a more than three-fold increase in operating profit. These actions, whilst difficult for the business and its employees now leaves us well positioned to capitalise on the strong position we have in many of our markets. In addition, the completion of our marketing partner review has resulted in us bringing in-house a number of these operations, which will further enhance our ability to maximise our growth potential.
During the first two months of the new financial year the Group continued to drive growth out of its main Southern and Eastern European and Australian markets. In Spain, now wholly owned by the Group, NGR is up 20% year on year. In Greece, which continues to be run by the marketing partner, revenues are up 120% year on year. Across Eastern Europe, the main markets of Bulgaria, Poland, Hungary and the Czech Republic continue to perform strongly, exhibiting growth of 68% over last year. Elsewhere, the Group is building on its nascent Latin American business and has a licence pending in South Africa for the launch of a licensed sportsbook in early 2009.