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Following a restructuring bout, gaming group Leisure & Gaming now intends to clear its name with the department of Justice in America next year.

Chief executive and finance director Richard Creed claims that the company’s current undervaluation reflects a perception among investors that Leisure & Gaming is ‘tainted by unlawful activity’. To recap, shares in the business collapsed from a May 2006 high of 167p to 5.5p in October of that year, following regulatory changes in the US, which tarnished the reputations and savaged many industry players. Creed hopes to draw a line under the company’s activities in the US and says a name change to Betshop (after the group’s popular Italian brand) will help restore investor confidence further.

Indeed, in August, Leisure & Gaming issued positive interim results to June, which showed a turnaround in progress. Losses of £1.5m were converted into maiden pre-tax profits of £1.3m, with Creed attributing the swing into the black to cost cutting and the weeding out of unprofitable turnover. He also intends to clear the rest of the group’s debts by the end of the year – the company currently has £600,000 in cash and £1.6m in borrowings.

Creed then plans a strategy of diversification that will include opening franchises in emerging markets, including Greece where the company currently only has an online presence. He insists the funding for these operations will not be significant as they do not represent ‘bricks and mortar’ costs.

With analysts predicting a swing from losses of €1.8m (£1.45m) to pre-tax profits of €3m (£2.4m) for December 2008, giving earnings of around 2p per share, the leaner and stronger Leisure & Gaming has a degree of speculative recovery appeal.

Leisure & Gaming	AIM	£3.88m	4.12p	0.50p
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