SPO.L Regulatory News (SPO)

SPORTECH PLC

('Sportech' or the 'Group')

FY 2021 pre-close update

Sportech, an international betting and technology business, announces a pre-close update in respect of the financial year ended 31 December 2021 ('FY 2021').

During FY 2021, the Group has seen significant change as a result of successfully executing its strategy of delivering tangible shareholder returns. Significant events for the Group in FY 2021 were:

· The sale of the Sports Haven property in Connecticut at the end of April

· The completion of the disposal of Bump 50:50 in early June

· The completion of the sale of the Global Tote business in mid June

· Move from Main Market to AIM at the end of July

· Return of capital to shareholders through a tender offer in October

· Roll out of sports betting in the Connecticut Venues during October and November

· Removal of all COVID restrictions in Connecticut in December

· Sale and completion of the Dominican Republic lottery business on the last day of the year

The Venues business remains a key component of the Group. The announcement by the Connecticut State in March 2021 that Sportech had not been included in their grant of sports betting licences in the State was a disappointment to the Group, but the deal with the Connecticut Lottery Company (CLC) secured mid August 2021 ensured that litigation with the State was averted and the Venues business would be a participant in sports betting, albeit as agent of CLC instead of principal. December 2021 saw mandatory mask wearing removed from all Venues and food and beverage and pari-mutuel revenues approaching pre-COVID levels. Furthermore, Sports delivered strong handle with weekly growth over December, improving the leverage of the Venues infrastructure, translating directly to divisional profits.

During FY 2021, capital preservation and the net cash position remained crucial metrics and the Group year-end cash was c.£21.75 million(1). The Board will be assessing the ongoing capital requirements of the business (particularly taking into account future COVID risk and tax payable on certain FY 2021 transactions) and the potential for further returns to shareholders.

The Board anticipates that FY 2021 Group adjusted EBITDA will be in line with the Board's expectations, although the final results of the year will be published with the contribution from the Dominican Republic lottery business treated as a discontinued business and removed from the reported EBITDA.

Moving into FY 2022, the recovery from COVID and new footfall in Venues for sports betting should beneficially impact revenues for all product lines. Growth at the revenue level will be the core measurable to assess the underlying health and future prospects of the business, with operational efficiencies continuing to be a focus for all divisional management teams. January trading has been encouraging giving the Board confidence in the outlook for FY 2022.

The Group plans to announce its FY 2021 Final Results on 31 March 2022.

Andrew Lindley, Chief Executive Officer of Sportech, said: 

"The Group has changed significantly over the course of a busy year and a period of consolidation of the remaining operations and reshaping PLC costs is paramount in 2022 to provide a platform for the future activities of the Group. The full recovery from COVID and introduction of sports began to impact the Venues positively in December 2021 and, subject to some mild impact on staffing and expected footfall in January due to the surge of the Omicron variant in the US, the outlook for 2022 and beyond is very positive. We will be discussing the shape of the future business with key shareholders to ensure alignment with the Board on objectives and direction for the divisions and Group."

(1) Excluding customer balances. The balance sheet includes provisions for corporation tax on the STB VAT refund from 2016 (£5.3m) and a lease dispute in California (£0.7m), as well as other working capital accruals in excess of receivables and potential tax payable on 2021 disposals leaving an approximate free cash position of £11.7m.