LR Index leisure stockwatch October 2008

Leisure Report, Nov, 2008

Well there's clearly not much to cheer about this month, as the ongoing global financial crisis continues to wreak havoc on the UK leisure sector, which seems more and more unfair, given the positive numbers emerging on trading updates and interim management statements.

It's a sad but true fact that listed companies are subject to the vagaries of the markets, irregardless of their own performance--as one analyst recently remarked to me--"A stock exchange listing is really just another form of debt financing, when you look at it, and pretty much all debt is bad debt at the moment."

It's easy to see why debt plays such a huge role in determining the fortunes of listed companies--Powerleague's results earlier in October serve as a perfect example. The company has managed to post increases in revenues and turnover on both a like-for-like and non-comparable basis, and reported unchanged pre-tax profit of 5m [pounds sterling].

And yet its net debt soared as a result of the purchase of the Soccer Domes from JJB, and servicing this debt has capped the group's profit growth.

Despite this, it's hard to see such how much more of a bear case the market can sustain. Certainly there will be a consumer slowdown as the inevitable recession hits the UK, but many leisure operators are already buffered against this, and some, including tenpin operators, five-a-side players and cinema and attractions firms, ought to see an upside as corporate bookings (yes, it's Christmas party season pretty soon) look to find a cheaper alternative to the three-day jollies in the Seychelles of recent years.

And the gambling operators are still making cash, and are still cash rich. It rather looks as though major shareholders and boards are playing a dangerous game of brinksmanship in the current markets--deals are certainly there to be done, at forward P/E multiples that would have had many a potential buyer slavering in anticipation just a few short months ago.

As my contact went on to say: "Frankly a lot of these firms will see their share prices shafted if they sit on their hands, so it would make sense for someone to take a risk and get out there and make a deal."

It should be noted, he works on commission ...

Leisure Report LR Index leisure stockwatch October 2008

                           Share      Share      % up     Market
Company                    price     price2   on month   cap (fm)

888 Holdings PLC         118.75p    144.75p    -17.96%     406.42
32Red PLC                 24.00p     27.50p    -12.73%      16.65
ADDLeisure                 2.63p      2.50p      5.20%       5.50
Alphameric                16.00p     23.50p    -31.91%      36.07
Asian Logic               65.00p     80.00p    -18.75%      66.31
Arena Leisure             24.00p     27.50p     -12.7%      87.41
Betex Group               32.05p     32.05p      0.00%      43.53
BetInternet                4.86p      4.86p       0.0%      10.05
Cineworid                109.74p    113.00p      -2.9%     155.52
Coffee Republic            0.73p      0.93p     -21.5%       2.86
Fun Technologies         163.00p    163.00p       0.0%     100.69
Gaming Corporation         0.85p      1.90p     -55.3%       2.36
  (Media Corp)
Gaming VC Holdings       117.00p    180.00p     -35.0%      36.43
GamingKing                 0.65p      0.75p     -13.3%       1.89
Georgica                  25.50p     35.50p     -28.2%      24.84
Goals Soccer Centres     197.00p    200.00p      -1.5%      83.10
IG Group                 276.25p    338.25p     -18.3%     987.89
Inspired Gaming            4.20p     31.25p       -87%       3.60
Interactive Gaming         1.00p      1.00p       0.0%     959.31
JJB Sports                37.50p    112.50p     -66.7%      89.58
Ladbrokes PLC            160.75p    206.50p     -22.2%     965.40
Leisure & Gaming           4.50p      5.25p     -14.3%       4.24
Luminar                  189.00p    214.25p     -11.8%     115.19
MAMA Group                 5.00p      5.50p      -9.1%      37.64
NETeller                  56.00p     62.00p      -9.7%      67.26
Neville Porter             0.13p      0.13p       0.0%       2.10
PartyGaming              121.50p    183.75p     -33.9%     500.00
Playtech                 378.00p    449.00p     -15.8%     900.86
Playgolf                   0.50p      1.50p     -66.7%       0.39
Powerleague Group         30.50p     42.00p     -27.4%      24.96
Probability               43.00p     52.00p    -17.31%       9.29
Prezzo                    26.75p     28.75p      -7.0%      64.00
Rank                      61.50p     71.00p     -13.4%     240.00
Soccercity                 0.10p      0.10p       0.0%       0.08
Sportech                  70.00p     88.00p     -20.5%      70.46
Sportingbet               29.00p     33.00p     -12.1%     135.79
The Restaurant Group     103.75p    143.00p     -27.4%     204.10
The Weather Lottery        0.27p      0.30p     -10.0%       0.23
Top Ten Holdings           2.00p      2.75p     -27.3%       0.50
Turftrax (in               0.00p      0.00p       n/a        5.20
  administration)
Ubet2win                   0.05p      0.05p       0.0%       0.09
365 Media Group           67.47p     67.47p       0.0%      99.89
  (formally Ukbetting)
Webis Holdings             1.50p      1.50p       0.0%       3.10
Whitbread                832.50p   1049.00p     -20.6%    1450.00
William Hill             188.25p    230.50p     -18.3%     654.00
WorldSpreads              61.50p     82.00p     -25.0%      24.20
Average                   92.12p    114.31p     -20.8%     222.43

Company                  Year high   Year low   % off high

888 Holdings PLC           170.00p    100.00p       30.15%
32Red PLC                   39.00p     23.00p       38.46%
ADDLeisure                   4.50p      2.50p       41.56%
Alphameric                  36.00p     14.00p       55.56%
Asian Logic                114.00p     63.50p       42.98%
Arena Leisure               60.00p     24.00p          60%
Betex Group                 45.00p     29.75p       28.78%
BetInternet                  9.00p      3.63p          46%
Cineworid                  197.00p     93.00p          44%
Coffee Republic              0.50p      0.80p         -46%
Fun Technologies           175.00p    158.00p       12.00%
Gaming Corporation           5.25p      0.75p       83.81%
  (Media Corp)
Gaming VC Holdings         278.00p     80.00p       57.91%
GamingKing                   1.45p      0.40p          55%
Georgica                   103.00p     25.00p          75%
Goals Soccer Centres       311.00p    191.50p          37%
IG Group                   436.50p    244.25p          37%
Inspired Gaming            363.00p      6.20p          99%
Interactive Gaming           5.70p      1.00p          82%
JJB Sports                 172.00p     11.50p          78%
Ladbrokes PLC              425.00p    141.00p          62%
Leisure & Gaming            10.75p      3.50p          58%
Luminar                    601.00p    176.00p          69%
MAMA Group                   6.10p      4.50p          18%
NETeller                    80.50p     57.00p          30%
Neville Porter               3.68p      0.50p          97%
PartyGaming                312.00p    120.00p          61%
Playtech                   558.00p    308.00p          32%
Playgolf                     8.60p      0.50p          94%
Powerleague Group          104.00p     27.50p          71%
Probability                 73.00p     35.00p          41%
Prezzo                      72.00p     23.00p          63%
Rank                       115.00p     52.00p          47%
Soccercity                   0.76p      0.06p          87%
Sportech                   114.00p     64.10p          39%
Sportingbet                 60.50p     20.75p          52%
The Restaurant Group       287.00p     97.50p          64%
The Weather Lottery          1.63p      0.10p          83%
Top Ten Holdings            43.00p      2.00p          95%
Turftrax (in                45.00p      7.75p         100%
  administration)
Ubet2win                     1.74p      0.05p          97%
365 Media Group             68.00p     53.25p           1%
  (formally Ukbetting)
Webis Holdings               5.50p      1.39p          73%
Whitbread                 1776.00p    810.50p          53%
William Hill               623.00p    164.00p          70%
WorldSpreads              11 5.00p     59.00p          47%
Average                    203.12p     83.15p          64%