14 Mar 2018 07:00
For immediate release | 14 March 2018 |
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
This announcement contains inside information
Sportech PLC
("Sportech", the "Group" or the "Company")
Update on Formal Sale Process
Trading Update
Appointment of CEO
Sportech provides the following update on the Formal Sale Process along with a trading update and the announcement of a new CEO.
Formal Sale Process
On 19 October 2017, the Company announced a Formal Sale Process (the "FSP") as referred to in the City Code on Takeovers and Mergers (the "Takeover Code") as part of a wider previously announced Strategic Review. Whilst the Board engaged in detailed discussions with interested parties during the course of the FSP, it has concluded that these discussions were unlikely to result in an offer for all or a material part of the Group that it would be able to recommend to shareholders. As a result, the Board today confirms that it has closed the FSP and terminated all discussions with interested parties. Accordingly, the Company is no longer in an "Offer Period" as defined in the Takeover Code.
The Strategic Review, announced on 18 September 2017, has concluded that Sportech has significant potential for long-term value creation through: growing its core businesses; diversification; and benefitting from the possible liberalisation of sports betting in a number of states in the US. The Company is focused on delivering this strategy through its strong leadership, capable team, enviable footprint across the US, and exceptional products.
Trading Update
Trading in the first ten weeks of the current financial year has been fairly challenging, with some weather-related softness in the Connecticut based, Venues division. Offsetting this, the Racing and Digital business (incorporating Bump 50:50) has secured new long-term contracts and, as such, the Board sees no reason currently to change its expectations for 2018.
As part of the Strategic Review, the Board has undertaken a comprehensive review of the Company's financial position including a review of the Group's assets, liabilities and provisions. As a result of this comprehensive review, the Board has identified a number of write-offs and restatements which require to be made to the Group's financial statements for the year ended 31 December 2017.
Whilst the audit is not yet complete, the Board now anticipates that adjusted EBITDA*, a non-IFRS measure, is expected to be below expectations at around £6.5 million and includes a series of accounting corrections including write-downs of old stocks and doubtful debtors.
In addition, there are around £8 million (net) of exceptional items of which four are highly material: the departure of former board members and other senior management caused a non-cash accelerated option charge of £4.3 million; restructuring costs and associated provisions arising from the Strategic Review are expected to be £2.5 million; and the sale of the NYX shares for cash consideration of £2.3 million resulted in a book loss of £1.6 million. These costs were offset by £1.4 million of additional net income from the "Spot The Ball" dispute. As part of the audit process, the Group is reviewing the accounting carrying value of its Cash Generating Units which may or may not lead to further impairments of a non-cash nature.
The Group, which is currently in a close period, will be giving a more detailed update when it releases its Final Results for the year ended 31 December 2017 on Tuesday, 24 April 2018.
Appointment of CEO
As a result of the Strategic Review, the Company is pleased to announce the appointment, with immediate effect, of Andrew Gaughan as Chief Executive Officer. Andrew joined Sportech in 2010 following the acquisition of Scientific Games Racing, and was appointed to the Board in January 2017. He is based in Toronto, where certain Group business operations are situated. Andrew is a qualified lawyer and is well known to the Group's customers and staff and has more than 25 years' experience in the gaming, technology and horseracing industry having served in senior positions with other leading international gaming companies.
In addition, Sportech is conducting a formal search process for a Group Chief Financial Officer, to be based in North America. In the interim, Richard Cooper, a Non-Executive Director of Sportech, will continue to provide financial oversight to the Group.
Mr Gaughan is currently a director of the Company and there are no further details in respect of Mr Gaughan to be disclosed pursuant to LR 9.6.13 of the Listing Rules.
Richard McGuire, Non-Executive Chairman of Sportech, commented:
"The Board and senior management invested considerable time in diligently managing the Formal Sale Process. Whilst a sale of the Company might have delivered an immediate further return to shareholders, in addition to the £75 million returned last year, I am confident that the Company has the potential to deliver significant long-term value to shareholders, especially if the US sports betting market is liberalised and also from further diversification strategies. We are focused on ensuring Sportech benefits fully from any changes in the US sports betting market and we anticipate announcing exciting new initiatives in due course.
"We have a strong balance sheet, professional management, dedicated staff and industry leading products being delivered to supportive clients across 37 countries. I welcome Andrew Gaughan to the role of Chief Executive Officer as part of a new leadership team to ensure we execute on our commitment to deliver tangible returns to shareholders."
A copy of this announcement is also available on the Company's website at www.sportechplc.com.
- Ends -
*Adjusted EBITDA is EBITBA before exceptional items, share option charges, and asset impairments.
Contacts:
Sportech PLC | Tel: +44 (0) 20 7268 2400 |
Richard McGuire, Non-Executive Chairman Andrew Gaughan, Chief Executive Officer | |
Richard Cooper, Non-Executive Director | |
Canaccord Genuity Limited (Financial adviser to Sportech) | |
Chris Robinson | Tel: +44 (0) 20 7523 8000 |
Miles Cox | |
Mike Kogan | Tel: +1 (416) 867 7368 |
Peel Hunt LLP | Tel: +44 (0) 20 7418 8900 |
(Corporate Broker to Sportech) Dan Webster George Sellar | |
Buchanan | Tel: +44 (0) 20 7466 5000 |
(Financial PR adviser to Sportech) Henry Harrison-Topham Mark Court Jamie Hooper | Sportech@buchanan.uk.com |
Notes to Editors:
About Sportech
Sportech PLC, listed on the London Stock Exchange, provides and operates technology solutions for some of the world's best-known gaming companies, sports teams, horse and greyhound racetracks, as well as owning and operating its own gaming venues in Connecticut, USA and the Netherlands under exclusive licences.
The Group is a leading player in the global pari-mutuel betting technology sector focusing on highly regulated markets worldwide. It has more than 27,000 betting terminals deployed to over 400 clients across 37 countries including those in the USA, where it operates under 35 licences across 37 States and processes approximately US$12 billion of bets annually. The Group has invested over US$60 million in developing its technology services to clients and the successful expansion of its leading US gaming Venues in the last five years, resulting in its proprietary Quantum™ product being the most widely deployed pari-mutuel betting system globally.
Inside information and responsibility
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement this inside information is now considered to be in the public domain. The person responsible for this announcement on behalf of Sportech is Richard McGuire, Chairman of the Board of Directors of Sportech.