12 Nov 2013 07:00
12 November 2013
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, releases its interim management statement for the period from 22 August 2013 to 11 November 2013.
Trading from continuing businesses is in line with the Board's expectations for the full year.The Group continues to make substantial progress against its strategic objectives and is well positioned to capitalise on future growth opportunities across its key markets.
Highlights
• Investment in the U.S. business is driving growth, with Connecticut's flagship sports bar and betting venue redevelopment to open next month.
• Acquisitionof Data Tote significantly strengthens European Tote operations.
• Joint venture agreement signed with Picklive to launch an innovative new gaming product targeting the rapidly growing U.S. fantasy sports market.
• Disposal of loss making e-Gaming division for total consideration of £3m.
Sportech Racing
Trading in our B2B business, Tote Services and Equipment sales, remains in line with expectations. Sportech continues to invest in new online and mobile products in order to drive improved customer revenues and cost efficiencies. As exclusive provider of betting systems for California, we were delighted that November's Breeders' Cup meeting held at Santa Anita, California saw a 10% increase in betting turnover ("handle") processed during the two days through our systems to $160 million. Elsewhere in the division, implementation plans and technology development work to supply our two significant contract wins during the period, Penn National and Danske Spil, continue on schedule.
During September we purchased Data Tote, a leading provider of on-track and online Greyhound and Horse Race betting services in Europe, for an initial consideration of £3.1m. This strengthens our European operations through an increased customer base and complementary product suite. On 4 November the Office of Fair Trading announced that it has asked for comments about the transaction and we continue to co-operate with them. Within our US Interactive division, the integration of eBet, acquired in December 2012 is complete and is delivering the expected synergies and business enhancements.
The Group signed a joint venture agreement with Picklive US at the end of September to target the rapidly growing US fantasy sports market. The website is scheduled to go live in mid 2014.
In our B2C business, Sportech Venues, we have seen handle in line with prior year. We have continued to invest in the business, and the new flagship sports and betting bar at Windsor Locks, Connecticut within our 38,000 sq ft freehold gaming and entertainment location will open in December following the completion of the £2.4m project.
Having soft launched earlier in the year, the upgraded version of our internet wagering platform will go live in December. This is Connecticut's only legal online betting platform and a full marketing campaign will commence in the New Year.
Football Pools
The Football Pools is in line to meet the Board's expectations for the full year as it continues its progress of business rationalisation. During the period we commenced the distribution agreement with France-Pari, following approvals received from Arjel, the French regulator, to enable French residents to bet into our Football Pool.
e-Gaming
Our loss making e-Gaming business was sold on 31 October 2013 to Netplay TV PLC for total cash consideration of £3m. This followed a detailed strategic review where management concluded that the business was not of sufficient scale to compete in a highly competitive UK market with impending UK Point of Consumption tax.
VAT Claim
On 7 March 2013 we outlined that the Group was successful in its VAT claim for £95m including simple interest (the "Claim") at the First-tier Tribunal's Tax Chamber ("FTT"). In June, Sportech was notified that Her Majesty's Revenue & Customs had been given leave to appeal this decision to the Upper Tribunal with the appeal hearing due to be held on 29 and 30 April 2014. The Group continues to explore options available to secure financial benefit in the event of the favourable decision of the FTT being ultimately reversed.
Summary
The Group continues to perform operationally in line with expectations and has made substantial strategic progress during the period. The Group is well positioned to capitalise on future growth opportunities across its key markets.
- 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, through its recent acquisition of Data Tote Limited, the majority of the UK and Ireland's 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.