03/07/2012 : SPORTECH TURNS IN POSITIVE RESULTS
Diversification paying off
Pool and tote betting organisation Sportech presented its preliminary results for the year ended December 31, 2011 – showing pleasing progress on the road towards a return to profit.
The group is bullish on the year ahead and says it is well positioned for continued growth in 2012 and beyond.
Financial highlights include:
– Revenue increased by 66 percent to GBP 118.2 million (2010: GBP 71.2 million)
– EBITDA increased by 33 percent to GBP 26.1 million (2010: GBP 19.7 million)
– Adjusted profit before tax increased by 33 percent to GBP 15.8 million (2010: GBP 11.9 million)
– A return to profit, with profit before tax of GBP 8.0 million (2010: loss of GBP 5.9 million)
– Adjusted earnings per share ("EPS") of 5.7p (2010: 5.4p)
– Basic EPS of 2.6p (2010: loss per share of 3.9p)
– Net bank debt reduced by 18 percent to GBP 59.2 million (2010: GBP 72.2 million)
These results include the first full twelve months' contribution from Sportech Racing, which was acquired in October 2010.
Strategic and operational highlights over the period:
– Continued refinement of product offering, leading to an increase in spend per customer and enhanced distribution.
– Initial entry into social gaming through a white label distribution agreement with Bodugi Limited.
– Subject to the award of a full licence, cricket pools ready for launch in India by the Essel Group, Playwin's parent company and Sportech's joint venture partner. Provisional gaming licence awarded to the Essel Group.
– Appeal on VAT claim, which could exceed GBP 80 million with simple interest applied, expected to be heard by the First Tier Tax Tribunal in the summer.
– Completed the integration of the Sportech Racing business into the Sportech Group, across all offices in the UK, USA, Netherlands, Ireland, France and Germany.
– Established an interactive division in the USA to focus on the current, and future, online opportunities.
– Invested GBP 2.2 million in refurbishing the venues business in Connecticut where we have gross betting revenues ("handle") of $180 million, reversing four years of decline in betting handle and outperforming industry trends.
– Successful migration of the casino and poker customer base onto Playtech gaming software at end of 2011.
– Division moving to growth phase, ending 18 months of transition.
– Concentration of promotion on the Vernons brand including launch of television advertising campaign.
– A unique and leading position in the USA.
Ian Penrose, Chief Executive of Sportech PLC, commenting on the results, said:
"We are continuing to make good progress.
“We have diversified our business interests and revenue streams from a focus on the UK market, in which pools betting has a small market share, to establishing business interests where pools and tote (pari-mutuel) betting is a significant form of betting, and in those markets which are exploring the liberalisation of betting and gaming.
“Our acquisition of one of the oldest gaming businesses in the USA has given us a unique and leading licensed position in North America, expected to be one of the world's largest gaming markets.
“We have invested in technology, facilities and our people as we improve our focus and delivery to the customer in order to drive improved profitability.
“Our financial results for 2011 highlight the significant improvement in the financial position of Sportech. Whilst we are conscious of the ongoing economic uncertainties in our two principal markets of the UK and USA, we have started 2012 well, with trading for the first two months in line with management's expectations."