Bookies betting on a recovery

Jan 31 2008 by Karen Dent, The Journal

A DOWNTURN in the betting market is being blamed for a planned refinancing and restructuring of County Durham bookmaker Neville Porter.

The business, which is listed on the Alternative Investment Market (AIM), runs a betting call centre and online gambling facilities from Birtley, as well as pitches at UK and Irish racecourses.

To raise funds, the independent directors have accepted an offer from director Neville Porter to buy the business’s UK racecourse betting pitches. Mr Porter has also agreed to make up to £270,000 available to the business as an interest-free loan. Fellow director Brian Morton is also providing an interest-free advance of £80,000. The money will be used as working capital.

The refinancing and restructuring must be agreed at an extraordinary general meeting of shareholders, expected to be held in mid-February, a year after the business was floated on the stock market. In a statement, the company said: “There have been various recent announcements by well-known national bookmaking firms setting out details of significant losses, which seem to have affected the industry as a whole.”

The gambling industry is notoriously volatile and Neville Porter’s new phone and online betting wings – launched at Birtley in April last year – have not brought in the expected revenue. It said the generous odds offered to attract new customers and build up client loyalty, coupled with a run of good results for punters, had caused the current problems.

Neville Porter said after taking steps to reduce its cost base and limit its exposure on certain races, the board was hopeful that 2008 would be a more positive year for the business. Last year was expensive for Neville Porter – it spent the £650,000 (£850,000 before costs) raised when it floated to launch its internet betting site, a call centre, and purchase two race pitches, using the remaining £250,000 as working capital.

It had hoped this investment would return the business, which had a turnover of £4m in 2006 and was operating at a slight loss during the first half of 2007, to profit.

However, in addition to the credit crunch and economic slowdown, the gambling industry is expected to be hit this year by England’s failure to qualify for the Euro 2008 football tournament.

The company added: “The group operates in a sector where results can vary from favourable to unfavourable in a short space of time and where bets on one sport can be positive at the same time as losses are incurred on another sport.

“With this in mind, the directors have taken steps to limit the group’s liabilities by hedging bets with other bookmakers where appropriate and by broadening the spread of bets between different sports.”