13 May 2014 07:00
13 May 2014
AGM and Interim Management Statement
Sportech PLC ("Sportech" or "the Group")
Sportech PLC, one of the world's leading operators and suppliers of pools and tote betting services, today issues the following Interim Management Statement for the period from 1 January 2014 to date.
Highlights
Financial
· Overall trading remains in line with expectations despite the severe winter weather in the North East of the United States impacting the Venues business.
· Bank debt refinanced on improved terms and extended to August 2018.
Operational
· The Group continues to make advances in its key strategic initiatives in the United States:
o Opened a $4m flagship sports bar, restaurant and betting venue in Bradley, Connecticut.
o Approvals won for a sports bar, restaurant and betting venue in downtown San Diego, California.
o "MyWinners" mobile betting application launched in Connecticut and available in the Apple App Store on iTunes.
· Football Pools modernisation continues with over 7,000 new players acquired since the beginning of the year helping the core direct channel move closer to stabilisation of player numbers.
Financing
The Group has successfully refinanced its bank debt on improved terms by entering a new £80m multi-currency, revolving credit facility with its existing lenders, the Royal Bank of Scotland plc, Barclays Bank plc and Bank of Scotland plc. The facility has a maturity date of 31 August 2018.
Sportech Racing and Digital
Trading in our technology betting business, Sportech Racing and Digital, remains in line with expectations, helped by a robust performance from our Dominican Republic customer. During the period we also successfully completed the operational delivery of prior year system sales to Danske Spil and Penn National Gaming. We continue to develop prospective customers with our investment in new online and mobile pools betting products creating strong sales interest.
Venues
Our venues business has made further progress with the successful launch of the innovative new flagship venue in Bradley, approval for the expansion of our Californian activities into San Diego, and the launch of the exclusive online and mobile wagering betting service, MyWinners.com in Connecticut.
Our flagship sports bar and restaurant at Bradley has seen encouraging food and beverage revenues since opening on 2 February. Both customer and media feedback has been positive. The anticipated initial opening losses are now trending to reverse throughout the remainder of 2014 as the contribution from normalised trading is realised.
The severe snow storms and extreme cold across the East Coast of the US resulted in the closure of our retail venues on several days this year. In the first four months of the year, there were 237 race cancellations compared to 74 in 2013 and 27 in 2012 with a consequential impact on business performance. Operating margins have also come under pressure with increased content costs being charged by certain racetracks. One of the highlights of the US racing calendar, the Kentucky Derby, was run on 3 May and betting turnover across the business was $4.0m, in line with our record total established in 2013.
Connecticut's only legal online betting platform, MyWinners.com, was launched in the period and continues to be improved. Our mobile wagering app for Connecticut is now available in the Apple App Store. Growth in customer numbers and betting volumes will be augmented following the expected issuance of formal cease and desist letters by the Connecticut Attorney General to unlicensed online wagering operators in the state.
In April, our Californian joint venture obtained all the necessary regulatory approvals to open its second sports bar, restaurant and betting venue, in the heart of downtown San Diego near the convention centre and Padres ballpark. This venue will have a three-mile exclusivity radius for betting which covers the majority of the San Diego population and it is expected to open in the autumn, in time for the Breeders Cup.
Football Pools
The Football Pools continues to progress with its modernisation plan. New player recruitment for the Classic Pools is continuing with 7,000 new players to date in 2014 compared to 3,500 in the same period of 2013. This recruitment is being driven through telephone and digital marketing activity through our website, www.footballpools.co.uk. The overall decline in players in the direct channel continues to slow as a result of modernisation and the increase in new player acquisition.
The Football Pools business remains in line to meet expectations for the full year.
VAT Claim
The appeal case relating to a £95m VAT repayment claim (the "Claim") on the "Spot the Ball" game was heard by the Upper Tribunal on 29 April, 30 April and 2 May 2014.
The Claim, which includes simple interest, was successfully determined in the Group's favour by the First-tier Tax Tribunal in March 2013. The Group has been advised to expect a decision from the Upper Tribunal by late summer this year and remains confident of a successful outcome.
AGM
The 2014 Annual General Meeting will be held at the offices of Olswang LLP, 90 High Holborn, London, WC1V 6XX today at 10.00am.
- Ends -
For further information, please contact:
Sportech PLC 020 7268 2400
Ian Penrose, Chief Executive,
Cliff Baty, Chief Financial Officer
Brunswick Group LLP 020 7404 5959
Mike Smith, Tom Williams sportech@brunswickgroup.com
About Sportech PLC
Sportech PLC is a sports gaming and entertainment company and one of the world's leading pool betting organisations, focusing on highly regulated markets worldwide. Sportech provides betting technology for football (soccer), horseracing and greyhound tracks. Sportech PLC processes over $13 billion in bets annually with a presence in 30 countries. Sportech is headquartered in London, England with operational offices in Liverpool, Bristol, Atlanta, Connecticut, California, New Jersey, Netherlands, Germany and Ireland. For more information about Sportech PLC, please visit www.sportechplc.com.