14 May 2013 07:00
14 May 2013
AGM and Interim Management Statement
Sportech PLC ("Sportech" or "the Group")
Sportech PLC, one of the world's leading pool betting organisations, releases its interim management statement.
Highlights
·; Trading in the current financial year has started well and is in line with expectations.
·; Net debt increased slightly following capital expenditure and marketing investment.
·; Tote Services division performing well with successful contract extensions and new business wins exemplified by sales to UK Tote and Denmark's Danske Spil.
·; Soft launch of Connecticut's exclusive online betting platform, full launch due shortly.
·; Good progress in reshaping Football Pools division.
Roger Withers, Non-executive Chairman of Sportech, said:
"Trading for the current financial year has started well and we are pleased to report that the Group is performing in line with the Board's expectations with operational progress being made in all areas of our business.
The Group remains highly cash generative, and following the successful negotiations to improve our banking facilities in 2012, we have been investing in capital expenditure and marketing initiatives. Accordingly, net bank debt as at 30 April 2013 has increased slightly to £59.5m (31 December 2012 £57.1m).
We continue to make good progress with Sportech Racing, our predominantly North American based gaming business.
Our retail betting venues and telephone betting business in Connecticut is performing well, following an investment programme to reinvigorate the customer offering. The highlight of the racing calendar in North America, the Kentucky Derby, took place on 4 May. The total betting turnover at our venues for that day of $4.0m set an all time record for the Connecticut operation, slightly up on the previous all time high in 2012, and this countered the overall industry's 2% decline. The exclusive state-wide online betting platform soft launched in April, and we anticipate a full launch to Connecticut's four million residents shortly.
Trading in our Tote Services division remains encouraging. Underlying improvements in our core tote business in the USA have been complimented by a strong revenue performance from our customer in the Dominican Republic, following our investment there in new terminals and technology in 2012. We are pleased to have extended this important customer contract to 2025. Further evidence of the international reach of our business is demonstrated with the sale of 1,000 new terminals to the UK Tote announced in March, and the announcement last week of a significant deal to provide our Quantum tote systems, online betting platforms and associated technology to Danske Spil, the state owned Danish gaming operator. Due to the timing of these transactions, a greater proportion of the annual profit will occur in the second half of the year compared to 2012.
The integration of eBet, one of the leading providers of internet and mobile betting services for horseracing in the USA, is proceeding in line with expectations, following its acquisition in December 2012. We are pleased that this acquisition has enhanced the quality of our management team and the Group's customer and technology base.
The Football Pools business is performing in line with management expectations. The reshaping of the business continues, as we work towards a maintainable EBITDA and annuity stream from this division in 2015 and beyond. Good progress has been made in this area with an ongoing focus on customer retention, increasing the proportion of direct debit playing customers whilst driving efficiencies through the continuing investment programme.
Following the challenging migration of brands, customers and software onto the Playtech platform in our e-Gaming business during 2012, and the associated trading difficulties encountered, we are pleased to see an increase in recent weeks of first time depositors. We now therefore expect a greater proportion of the annual revenues of this division, to be generated in the second half of the year.
On 7 March 2013, we announced that the First-tier Tax Tribunal ruled in the Group's favour in respect of overpaid VAT on the Spot the Ball game, dating from 1979-1996. The claim is for in excess of £40m, which will more than double with simple interest applied. On 1 May we announced that HMRC had sought permission to appeal this decision. We have been advised that we should hear during May whether the First-tier Tribunal will allow an appeal and will update accordingly.
We are pleased that at the Board Meeting which follows the AGM and the General Meeting, we will formally appoint Cliff Baty to the Board as Chief Financial Officer of Sportech. Cliff started with us yesterday and we look forward to his contribution to enhance the Executive team.
The Group continues to prepare for anticipated regulatory changes in the key international jurisdictions in which the Group trades and accordingly, we believe, Sportech will be ideally positioned to benefit from the opportunities that these changes will deliver. We look forward to the future with confidence."
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Contacts:
For further information, please contact:
Sportech PLC 020 7268 2400
Ian Penrose, Chief Executive
Brunswick Group LLP 020 7404 5959
Mike Smith, Tom Williams, Arif Shah
sportech@brunswickgroup.com