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Sportech interim management statement

Tuesday May 14, 2013 : SPORTECH POSTS INTERIMS
Management takes an optimistic line
The UK pool betting group Sportech plc released its interim management statement Tuesday, highlighting:
* 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 GBP 59.5 million (31 December 2012 GBP 57.1 million).
"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 million 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 percent 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.
"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.
"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 GBP 40 million, 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."
Withers announced the forthcoming appointment of Cliff Baty to the Board as Chief Financial Officer of Sportech.

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