31 Oct 2013 07:00
31 October 2013
Sportech PLC
Sportech PLC announces disposal of its e-Gaming business, Vernons.com, to NetPlay TV
Sportech PLC ("Sportech" or the "Company"), one of the world's leading operators and suppliers of pools and tote betting services, today announces that it has sold the assets of its UK facing e-Gaming business, Vernons.com (the "Disposal") to the Gaming division of NetPlay TV plc, NetPlay TV Group Limited, for a total cash consideration of £3m.
Strategic rationale for the Disposal
At the interim results on 22 August 2013 Sportech outlined that the e-Gaming business faced a number of challenges and that the performance in 2013 to date had been disappointing. Brand and platform migrations undertaken in 2012 had a negative impact on the established customer base and despite an increase in marketing spend the business reported a loss of £0.7m for the half year to June 2013. These losses have continued in H2 2013.
Following a detailed strategic review of the e-Gaming business in the last six months, Sportech's management has concluded that the operation is not of sufficient scale and that Sportech would need to invest further or acquire additional e-Gaming assets to derive an acceptable financial return. Given the investment opportunities in other parts of the business, including those presented by US online regulation and our exclusive horseracing betting platform in Connecticut, the Board have decided to sell our e-Gaming business to a more focused and larger e-Gaming operator which can grow the customer base and better mitigate the impact of UK Point of Consumption tax when implemented in December 2014.
Terms of the Disposal
The Disposal comprises the Vernons branded online casino, poker, bingo and sportsbook websites, the rights to the customer database of these websites, together with transfer of customer accounts and the transfer of a number of employees.
The net cash consideration receivable for the Disposal is £2.9m following a £0.1m contribution to restructuring costs, to be settled in full, in cash, on completion.
Key financial information
For the year ended 31 December 2012, Sportech's e-Gaming business reported revenue of £4.8m, producing a profit before tax and exceptional items of £1.1m. Losses in the period to 30 June 2013 were £0.7m. As at 30 June 2013 the gross assets of the business to be sold were £0.5m.
Commenting on the transaction, Ian Penrose, Chief Executive of Sportech, said:
"Our loss making Vernons casino, poker and bingo business has had a difficult year, and the impending introduction of Point of Consumption tax next year increases the challenges ahead for a sub scale operation in an increasingly competitive marketplace.
We are delighted to have realised £3m in cash for the sale to NetPlay, who will be able to combine increased scale and market leading interactive gaming television skills to take the business forward.
This is another positive step in increasing the focus of Sportech on operations where we hold competitive advantage, particularly those in the US."
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For further information, please contact:
Sportech PLC 020 7268 2400
Ian Penrose, Chief Executive
Brunswick Group LLP 020 7404 5959
Mike Smith, Tom Williams sportech@brunswickgroup.com