TIDMSPO
RNS Number : 9355L
Sportech PLC
11 September 2023
11 September 2023
Sportech PLC
("Sportech" or the "Group" or the "Company")
Interim Results & Proposed Delisting
Sportech (AIM:SPO), an international betting technology
business, is pleased to announce its interim results for the six
months ended 30 June 2023 ("H1 2023" or the "period").
Summary
The Group has continued to deliver solid operational
performance, marked by stable revenue growth and a renewed emphasis
on margin enhancement. This strategic approach has led to a 7.2%
increase in gross profit and a notably improved Adjusted EBITDA
performance, in comparison to the same period of the previous
year.
The Group's Adjusted EBITDA demonstrated positive momentum,
reaching GBP0.9 million (GBP0.4 million in H1 2022). This
improvement was fuelled by several key factors, most notably growth
in contributions from US gaming and a sustained focus on optimizing
operational and corporate costs.
In July 2023, the Group completed a share capital restructuring
that helped to provide approximately 3,600 smaller shareholders
with a cost effective exit. Additionally, the Company announced a
meaningful return of capital to shareholders totalling GBP3.5
million, paid in August 2023, bringing the cumulative shareholder
repayments to c.GBP46 million over the past two years and c.GBP121
million since 2017. Group cash (excluding customer balances) at the
end of H1 2023 was GBP7.8 million and at the end of August 2023 was
GBP3.6 million.
However, it is important to acknowledge the significant
financial burden associated with maintaining a listing on the
public markets, particularly given the Company's reduced size,
following the successful implementation of the strategic drive to
return capital to investors. In light of this, the Board will today
also announce, subject to shareholder approval, a proposed
cancellation of its ordinary shares to trading on AIM (the
"Proposed Cancellation"). The background to and reasons for the
Proposed Cancellation will be set out in a separate announcement,
and if approved by shareholders, is expected to deliver significant
future cost savings and strengthen the Company's financial
position.
Constant Actual
Currency Reported
Key Financials (GBP million) H1 2023 H1 2022 H1 2022
--------------------------------- -------- ----------- ----------
Revenue 13.5 13.4 12.6
Gross Profit 7.4 6.9 6.5
Contribution(1) 7.1 6.7 6.3
Adjusted EBITDA(2) 0.9 0.4 0.3
Loss before tax from continuing
operations (0.3) (0.9) (0.8)
Adjusted loss before tax(3) (0.3) (0.4) (0.4)
Distributions to shareholders - 7.0 7.0
1. Contribution is defined as gross profit, less marketing and distribution costs.
2. Adjusted EBITDA is earnings from continuing operations before
interest, taxation, depreciation and amortisation, share option
charges, impairments and separately disclosed items as reported in
note 1 of the Interim Financial Statements.
3. Adjusted loss is the aggregate of Adjusted EBITDA, share
option charges, depreciation, amortisation (excluding amortisation
of acquired intangibles) and certain finance charges.
Richard McGuire, Executive Chairman of Sportech, said : "Despite
delivering improving operational results announced today, the
substantial financial cost associated with maintaining a public
listing, given our current scale, and the increasing volatility in
the market valuation is adversely impacting net returns and future
prospects. Regrettably, in light of these circumstances, we find it
necessary to take the difficult but pragmatic step of proposing
delisting from the AIM market today."
For further information, please contact:
Sportech PLC enquiries@sportechplc.com
Richard McGuire, Executive Chairman
Clive Whiley, Senior Independent Director
Peel Hunt Tel: +44 (0) 20 7418 8900
(NOMAD and Corporate Broker to Sportech)
George Sellar / Andrew Clark / Lalit Bose
Group Operational Overview
Navigating Challenges and Seizing Opportunities: A Solid
Performance in H1 2023
Amidst the intricacies of a predominantly physical retail
business within a heavily regulated industry, the Group's
performance in H1 2023 stands as a testament to resilience and
strategic prowess. Overcoming the challenges inherent to delivering
scalable growth in such an environment, the Company managed to
deliver enhanced results in H1.
The Board has remained proactive in charting the path forward.
Management continue to address the operational cost structure of
the Group and expand operations beyond its historic major
dependence on pari-mutuel wagering. In January 2023 the Company
unveiled the divestiture of certain non-core assets. This strategic
move coupled with the receipt of contingent proceeds resulting from
a prior year disposal, resulted in both streamlining future
operating costs and bolstering Group cash by a net amount of GBP1.5
million.
The dedication to positive initiatives, coupled with the
cultivation of an efficient operational cost base, yielded a
commendable outcome. Despite a modest yet steady revenue growth,
the Group was pleased to achieve positive Adjusted EBITDA, a
testament to the Group's prudent financial management.
Looking ahead to the latter half of 2023, operational focus
remains resolute. Strengthening Company affiliations with betting
partners, seizing scalable growth opportunities, and realigning
non-operational costs to harmonize with the Group's scale stand out
as pivotal objectives for the management team. We are committed to
capitalizing on our strengths, adjusting the operational cost to
manage growth prospects, and optimizing our performance within this
intricate and opportunistic landscape.
Revenue EBITDA(1)
GBP'000 H1 2023 H1 2022(1) H1 2023 H1 2022(2)
Continuing operations
-------- ----------- -------- -----------
Venues 12,651 12,442 1,923 1,612
Digital 894 912 (24) (101)
Corporate costs - - (1,030) (1,125)
-------- ----------- -------- -----------
Total at constant currency 13,544 13,354 869 386
Exchange rate impact - (783) - (75)
Total reported 13,544 12,571 869 311
-------- ----------- -------- -----------
1.Adjusted EBITDA
2. 2022 numbers are at constant currency.
Sportech Digital
Following the 2021 sale of the core lottery contract and
delivery of the contractual obligations the decision was taken to
sell the remaining non-core lottery related assets in January
2023.
Constant Reported
Digital Currency Currency
GBP'000 H1 2023 H1 2022 H1 2022
-------- ---------- ----------
Service revenue 857 912 857
Contribution 354 378 355
Contribution margin 41.4% 41.5% 41.4%
Adjusted operating expenses(1) (379) (479) (462)
-------- ---------- ----------
Adjusted EBITDA (24) (101) (107)
-------- ---------- ----------
Intangible assets capex - 97 97
Tangible assets capex - 22 22
-------- ---------- ----------
Total capex - 119 119
-------- ---------- ----------
1. Adjusted operating expenses exclude depreciation and
amortisation, impairments and separately disclosed items as
reported in note 1 of the Interim Financial Statements.
Sportech Venues
Sportech Venues operates nine gaming locations/venues in the
State of Connecticut under an exclusive and in-perpetuity license
for pari-mutuel betting and under agreement with the state lottery
for sports betting. This section outlines the company's performance
in key areas and highlights its strategies for growth.
Financial Performance:
Food and Beverage (F&B) Revenue:
In H1 2023, F&B revenue increased +10%, reaching GBP1.85
million, (H1 2022 GBP1.68m) demonstrating stability, until the
anticipated return to normal office occupancy occurs.
Betting Handle:
The overall betting handle within venues increased by 2.2% to
$101.8 million. This growth was primarily driven by a $5.1 million
increase in gross sports betting handle, effectively offsetting the
$2.9 million decline in pari-mutuel.
Betting handle represents the gross wagering by the Group retail
customers in Pari-Mutuel (Tote) and Sports Betting. It is an
essential Key Performance Indicator, however is not recorded as
revenue within the Group. The Revenue recorded from pari-mutuel
(pool betting) handle is the gross take out. Essentially the 'take
out' is removed from the pool, and the remaining money returned to
winning wagers. For Sports Betting the revenue contribution is
precisely the 'commission' received from our sports betting
arrangement with the Connecticut Lottery Corporation. Sports
Betting handle is a core KPI, there is no direct relationship to
profitability however as its risk-based fixed odds and the clear
KPI remains the hold on the handle or simply the gross profit
(Gross Gaming Revenue) which ultimately defines the Group sports
betting commission/revenue.
Sports Betting:
Sportech offers sports betting in collaboration with the
Connecticut Lottery Corporation (CLC). The net commission generated
supports the Group's operational cost base. H1 2023 saw significant
growth in retail sports betting handle (+10.6%) and gross profit
(+39.5%). This achievement is notable, especially in the face of
competition from neighbouring Massachusetts.
Risk Management:
Sportech reminds investors of the inherent risk in fixed odds
sports betting compared to traditional pool betting (pari-mutuel).
During the period, the Group managed approximately $50.1 million in
retail sports betting handle, with a Sportech risk exposure of
around $12.5 million. Despite challenges and a tough June when
customers certainly enjoyed better Baseball results, the gross
profit ('hold') stood at an impressive 10.2% of handle. The
American Football season, which is the Group's busiest season, has
now commenced bringing additional opportunity and risks to the
Group.
Pari-Mutuel Betting:
While pari-mutuel betting across the estate handled $51.7
million, there was a decline of 5.3% compared to H1 2022. Physical
locations remained stable, but Telebetting and online products
faced increased competition from iCasino gaming and sports betting
for the consumer discretionary betting dollar.
Strategic Outlook:
1. Contribution Margin: The contribution margin improved to
53.4% (compared to 50.8% in H1 2022). This positive trajectory is
commendable, considering the costs associated with meeting sports
betting requirements and enhancing infrastructure.
2. Operational Footprint: Sportech operates across eight
leasehold premises and one freehold property in Connecticut, USA.
The company is actively exploring opportunities to expand its
product range and enhance promotion efforts.
Conclusion:
Sportech Venues' performance in H1 2023 demonstrates resilience
and growth potential. The company's focus on sports betting,
despite its inherent risks, has yielded support to date, offsetting
the higher cost of operating a physical retail business. As the
gaming landscape in Connecticut evolves with changes in sportsbook
providers and competitive pressures, the Group remains committed to
managing relationships and optimizing its operational and financial
performance.
Constant Reported
Venues Currency Currency
GBP'000 H1 2023 H1 2022 H1 2022
-------- ---------- ----------
Wagering revenue 9,786 9,997 9,412
F&B 1,852 1,682 1,584
Sports betting commission 1,012 763 718
Total revenue 12,651 12,442 11,714
Contribution 6,751 6,315 5,939
Contribution margin 53.4% 50.8% 50.7%
Adjusted operating expenses(1) (4,827) (4,703) (4,414)
-------- ---------- ----------
Adjusted EBITDA 1,923 1,612 1,525
-------- ---------- ----------
Total capex 120 15 15
-------- ---------- ----------
1. Adjusted operating expenses exclude depreciation and
amortisation and separately disclosed items as reported in note 1
of the Interim Financial Statements.
Corporate Costs
Corporate costs reduced a further GBP0.1 million during the
period. However the Board is acutely aware of the cost of
maintaining a public company listing and has proposed today a
delisting from AIM, which would significantly reduce corporate
costs going forward if approved by shareholders and align costs as
close as possible to the reduced size of the Group.
Separately Disclosed Items
The Group incurred costs of GBP0.1 million (H1 2022: GBP0.5
million) during the period, which are shown as separately disclosed
items. H1 2023 items are associated with corporate activity, as the
Group continues to assess and explore its strategic options.
Net Finance Costs
The Group has no debt. The Group had a net finance expense in
continuing operations of GBP(0.2) million (H1 2022: GBP0.1
million), this was primarily the interest payable on lease
liabilities.
Taxation
Taxation is provided based on management's best estimate of the
expected weighted average annual taxation rate for the full year.
The estimated weighted average annual tax rate for the year ended
31 December 2023 is (10)% (2022: (8.5%)). The movement is a result
of a change in mix of profits/(losses) in jurisdictions with
varying tax rates, the non-recognition of deferred tax on losses in
the UK due to uncertainty of non-recovery as well as the
utilization of previously unprovided tax assets in the US.
The Group has submitted an appeal to HMRC to contest the
treatment of GBP4.6 million of taxation potentially due on the 2016
Spot the Ball refund. This amount was paid to HMRC, however in the
event the Company is unsuccessful in its appeal there remains a
potential c GBP0.7 million interest due. There is nothing held on
the balance sheet in respect of the tax itself, the interest is
accrued and if payable will be a cash outflow.
Net Cash
The Group held cash balances of GBP7.8 million, excluding
customer balances (31 December 2022: GBP7.4 million) as of 30(th)
June 2023. Post the period end the Group has repurchased c.GBP0.5
million of shares as part of the share restructuring and returned
GBP3.5 million to shareholders in August 2023 via a capital return
distribution. The updated cash balance at the end of August 2023
was c GBP3.6 million
Capital Expenditure
Capital expenditure ("Capex"), was controlled again in the
period and amounted to GBP0.1 million (H1 2022: GBP0.1 million),
whilst management anticipate higher Capex in H2 2023 due to
upgrading security recording equipment and general heating and
ventilation system improvements.
Shareholders' Funds
Shareholders' funds decreased by GBP0.8 million from 31 December
2022 to GBP13.2 million (31 December 2021: GBP14.0 million). The
loss made in the period of GBP0.3 million is coupled with a
reduction in reserves due to foreign exchange loss on translation
of net assets denominated in Sterling over the period.
Going Concern
After making reasonable enquiries and forecasting the Group's
cash flows with reasonable downside assumptions applied, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the interim condensed consolidated financial
statements.
Interim consolidated income statement
For the six months ended 30 June 2023
Six months Six months Year
ended ended
30 June 30 June ended
2023 31 December
2022 2022
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
---------------------------------------------------- ----- --------------- -------------- --------------
Revenue 13,544 12,571 26,004
Cost of sales 6 (6,183) (6,043) (11,847)
---------------------------------------------------- ----- --------------- -------------- --------------
Gross profit 7,361 6,528 14,157
Marketing and distribution costs 6 (256) (234) (386)
---------------------------------------------------- ----- --------------- -------------- --------------
Contribution 7,105 6,294 13,771
Other income - 155 (14,803)
Operating costs 6 (7,231) (7,390) 120
Operating loss (126) (941) (912)
Finance costs 8 (178) (93) (254)
Finance income 8 - 232 232
Loss before taxation from continuing operations (304) (802) (934)
Taxation - continuing operations (30) (29) (79)
---------------------------------------------------- ----- --------------- -------------- --------------
Loss for the period from continuing operations (334) (831) (1,013)
Profit after taxation from discontinued operations - - 1,183
---------------------------------------------------- ----- --------------- -------------- --------------
(Loss)/ profit for the period (334) (831) 170
---------------------------------------------------- ----- --------------- -------------- --------------
Attributable to:
Owners of the Company (334) (831) 170
---------------------------------------------------- ----- --------------- -------------- --------------
Basic (loss)/profit per share attributable
to owners of the Company
Total 10 (0.3)p (0.8)p 0.2p
---------------------------------------------------- ----- --------------- -------------- --------------
Diluted (loss)/profit per share attributable
to owners of the Company
Total 10 (0.3)p (0.8)p 0.2p
---------------------------------------------------- ----- --------------- -------------- --------------
Adjusted loss per share attributable to
owners of the Company
Basic 10 (0.2)p (0.4)p 0.2p
Diluted 10 (0.2)p (0.4)p 0.2p
---------------------------------------------------- ----- --------------- -------------- --------------
See note 4 for a reconciliation of the above interim
consolidated income statement to the adjusted performance measures
used by the Board of Directors to assess divisional
performance.
Interim consolidated statement of comprehensive income
For the six months ended 30 June 2023
Six Six months
months ended
ended
30 June 30 June Year ended
2023 2022 31 December
2022
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------------- --------------- --------------- -------------
(Loss)/profit for the period (334) (831) 170
Other comprehensive expense:
Items that will not be reclassified to profit
and loss
Actuarial gain on retirement benefit liability - - -
(334) (831) 170
Items that may be subsequently reclassified to
profit and loss
Currency translation differences - continuing operations (529) 983 1,047
Total other comprehensive income/(expense) for
the period, net of tax (529) 983 1,047
----------------------------------------------------------- --------------- --------------- -------------
Total comprehensive income for the period (863) 152 1,217
----------------------------------------------------------- --------------- --------------- -------------
Attributable to:
Owners of the Company (863) 152 1,217
----------------------------------------------------------- --------------- --------------- -------------
Other reserves
-------------------------------------
Capital Foreign
redemption exchange
Ordinary reserve Other reserve Retained
shares reserve earnings Total
Six months ended 30 June 2023 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
At 1 January 2023 (audited) 1,000 888 314 3,372 8,465 14,039
Comprehensive income/(expense)
Loss for the period - - - - (334) (334)
Other comprehensive items
Currency translation differences - - - (529) - (529)
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
Total other comprehensive items - - - (529) - (529)
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
Total comprehensive items - - - (529) (334) (863)
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
Transactions with owners
Dividend paid - - - - - -
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
Total changes in equity - - - (526) (334) (863)
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
At 30 June 2023 (unaudited) 1,000 888 314 2,823 8,151 13,176
----------------------------------- ---------- ------------- --------- ----------- ---------- -------
Interim consolidated statement of changes in equity
For the six months ended 30 June 2023
Other reserves
-------------------------------------
Retained
Capital Foreign earnings/
redemption exchange accumulated
Ordinary reserve Other reserve losses
shares reserve Total
Six months ended 30 June 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 1 January 2022 (audited) 1,000 888 314 2,325 15,295 19,822
Comprehensive expense
Loss for the period - - - - (831) (831)
Other comprehensive items
Currency translation differences - - - 983 - 983
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total other comprehensive items - - - 983 - 983
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total comprehensive items - - - 983 (831) 152
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Transactions with owners
Dividend paid - - - - (7,000) (7,000)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total transactions with owners - - - - (7,000) (7,000)
Total changes in equity - - - 983 (7,831) (6,848)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 30 June 2022 (unaudited) 1,000 888 314 3,308 7,464 12,974
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
* Net of deferred tax.
Other reserves
-------------------------------------
Retained
Capital Foreign earnings/
redemption exchange accumulated
Ordinary reserve Other reserve losses
shares reserve Total
Year ended 31 December 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 1 January 2022 (audited) 1,000 888 314 2,325 15,295 19,822
Comprehensive expense
Loss for the period - - - - 170 170
Other comprehensive items
Currency translation differences - - - 1,047 - 1,047
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total other comprehensive items - - - 1,047 - 1,047
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total comprehensive items - - - 1,047 170 1,047
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Transactions with owners
Dividend paid - - - - (7,000) (7,000)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total transactions with owners - - - - (7,000) (7,000)
Total changes in equity - - - 1,047 (6,830) (5,783)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 31 December 2022 (audited) 1,000 888 314 3,372 8,465 14,039
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
* Net of deferred tax
Interim consolidated balance sheet
As at 30 June 2023
As at As at As at
30 June 30 June 31 December
2023 2022
(Unaudited) 2022
(Unaudited) (Audited)
Note GBP000 GBP000 GBP000
--------------------------------------------- ----- --------------- --------------- --------------
ASSETS
Non-current assets
Goodwill - 604 87
Intangible fixed assets 11 6,166 6,939 6,939
Property, plant and equipment 12 4,165 4,409 4,522
Right-of-use assets 13 4,315 4,813 5,042
Trade and other receivables 14 167 176 177
Deferred tax asset 15 - 15
Total non-current assets 14,829 16,941 16,782
--------------------------------------------- ----- --------------- --------------- --------------
Current assets
Trade and other receivables 14 1,685 1,393 1,978
Inventories 146 140 146
Current tax receivable 2 54 228
Contingent consideration (gross receivable) - - 1,229
Cash and cash equivalents 15 8,240 8,588 7,811
--------------------------------------------- ----- --------------- --------------- --------------
Total current assets 10,073 10,175 11,392
--------------------------------------------- ----- --------------- --------------- --------------
TOTAL ASSETS 24,902 27,116 28,174
--------------------------------------------- ----- --------------- --------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 16 (5,243) (6,959) (6,564)
Provisions 17 - (17) -
Lease liabilities 19 (927) (678) (1,155)
Current tax liabilities 43 - -
Deferred tax liabilities - - -
--------------------------------------------- ----- --------------- --------------- --------------
Total current liabilities (6,127) (7,654) (7,935)
--------------------------------------------- ----- --------------- --------------- --------------
Net current assets 3.946 2,521 3,457
--------------------------------------------- ----- --------------- --------------- --------------
Non-current liabilities
Lease liabilities 19 (5,620) (6,477) (6,200)
Deferred tax liabilities 21 (11) -
(5,559) (6,488) (6.200)
--------------------------------------------- ----- --------------- --------------- --------------
TOTAL LIABILITIES (11,276) (14,142) (14,135)
--------------------------------------------- ----- --------------- --------------- --------------
NET ASSETS 13,176 12,974 14,039
--------------------------------------------- ----- --------------- --------------- --------------
EQUITY
Ordinary shares 1,000 1,000 1,000
Other reserves 4,022 4,510 4,574
Retained earnings 8,154 7,464 8,465
--------------------------------------------- ----- --------------- --------------- --------------
TOTAL EQUITY 13,176 12,974 14,039
--------------------------------------------- ----- --------------- --------------- --------------
Interim consolidated statement of cash flows
For the six months ended 30 June 2023
Six months Six months Year
ended
ended 30 June ended
30 June 2022 31 December
2022
2023 (Unaudited) (Audited)
(Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------------- ----- --------------- --------------- --------------
From operating activities
Cash (used in)/generated from operations,
before separately disclosed items 18 (141) (544) 119
Interest received - - -
Interest paid - - -
Tax refund received 150 - -
Tax paid (43) (4,843) (5,083)
Net cash generated from/(used in) operating
activities before separately disclosed
items (34) (5,387) (4,964)
Cash inflows - other income - 100 -
Cash outflows - separately disclosed
items 7 (99) (1,219) (1,457)
Cash used in operations (133) (6,506) (6,421)
--------------------------------------------- ----- --------------- --------------- --------------
From investing activities
Disposal of LEIDSA contract (net of
cash disposed of and transactions costs) - 26 -
Contingent consideration in relation
to sale of Bump 50:50 1,012 - -
Proceeds from sale of other intangible
assets 500 - -
Investment in intangible fixed assets 11 - (97) (196)
Purchase of property, plant and equipment 12 (120) (38) (147)
--------------------------------------------- ----- --------------- --------------- --------------
Cash generated from/(used in) investing
activities 1,392 (109) (343)
--------------------------------------------- ----- --------------- --------------- --------------
From financing activities
Principal paid on lease liabilities 19 (579) (622) (1,127)
Interest paid on lease liabilities 19 (162) (69) (230)
Dividend paid - (7,000) (7,000)
Cash used in financing activities (741) (7,691) (8,357)
--------------------------------------------- ----- --------------- --------------- --------------
Net increase/ (decrease) in cash and
cash equivalents 519 (14,306) (15,121)
Effect of foreign exchange on cash and
cash equivalents (90) 527 565
Cash and Cash equivalents at beginning
of year 7,811 22,367 22,367
Group cash and cash equivalents at
the end of the period 15 8,240 8,588 7,811
--------------------------------------------- ----- --------------- --------------- --------------
Represented by:
Cash and cash equivalents 15 8,240 8,588 7,811
Less customer funds 15 (448) (450) (391)
Group cash and cash equivalents at
the end of the period 15 7,792 8,138 7,420
--------------------------------------------- ----- --------------- --------------- --------------
Notes to the consolidated interim financial statements
For the six months ended 30 June 2023
1. General information
Sportech PLC (the "Company") is a company domiciled in the UK
and listed on the London Stock Exchange's Alternative Investment
Market ("AIM"). The Company's registered office is Collins House,
Rutland Square, Edinburgh, Midlothian, Scotland EH1 2AA. The
condensed consolidated interim financial statements of the Company
as at and for the period ended 30 June 2023 comprise the Company,
its subsidiaries, joint ventures and associates (together referred
to as the "Group"). The Company's accounting interim reference date
is 30 June 2023. The principal activities of the Group were the
provision of pari-mutuel betting (B2C), the Group now operates nine
retail venues and MyWinners.com offering pari-mutuel betting (and
also betting through an arrangement with the Connecticut Lottery
Corporation) as well as a pari-mutuel betting site, 123Bet.com.
The condensed consolidated interim financial statements were
approved for issue on 9(th) September 2023.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
December 2022 were approved by the Board of Directors on 17 April
2023 and delivered to the Registrar of Companies. The Report of the
Auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
2. Basis of preparation
a. These condensed consolidated interim financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' and also in accordance with the measurement and
recognition principles of UK adopted international accounting
standards. They do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements for the
year ended 31 December 2022 which have been prepared in accordance
with UK adopted international accounting standards.
b. After making reasonable enquiries and forecasting the Group's
cash flows with reasonable downside assumptions applied, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the condensed consolidated interim
financial statements. The forecasts used in the analysis of the
Group's ability to continue in operational existence for the
foreseeable future include both the base plan and downside
scenarios which although Sportech has no connections with Russia or
Ukraine through its operations (no employees located there nor any
customers or suppliers in the region), include assumptions taking
into account macro-economic potential indirect impacts of the
events unfolding including impacts of prices rising globally.
c. The preparation of condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. In preparing these
condensed consolidated interim financial statements, significant
judgements have been made by management with respect to the
assumptions underpinning the Group's tax liabilities, the valuation
of contingent consideration receivable and the carrying value of
intangible fixed assets.
d. The principal risks and uncertainties for the Group remain
the same as those detailed on pages 15 to 18 of the 2022 Sportech
PLC Annual Report and Accounts, where descriptions of mitigating
activities carried out by the Group are also outlined. Those risks
are regulation, product popularity, third party technology, foreign
exchange, political marginalisation in Connecticut and global
pandemics.
3. Accounting policies
There are no new standards or amendments to standards or
interpretations that are mandatory for the first time for the
financial year beginning 1 January 2023 that would impact the Group
financial statements. Therefore, all accounting policies applied in
these condensed consolidated interim financial statements are
consistent with those of the annual financial statements for the
year ended 31 December 2022, as described in those annual financial
statements.
The standards, amendments and interpretations that are not yet
effective and have not been adopted early by the Group are listed
in the 2022 Annual Report and accounts.
4. Adjusted performance measures
The Board of Directors assesses the performance of the operating
segments based on a measure of Adjusted EBITDA which excludes the
effects of expenditure that management believes should be added
back (separately disclosed items) and other income. The share
option expense is also excluded given it is not directly linked to
operating performance of the divisions. Interest is not allocated
to segments as the Group's cash position is controlled by the
central finance team. This measure provides the most reliable
indicator of underlying performance of each of the trading
divisions as it is the closest approximation to cash generated by
underlying trade, excluding the impact of separately disclosed
items and working capital movements.
Adjusted EBITDA is not an IFRS measure, nevertheless although it
may not be comparable to adjusted figures used elsewhere, it is
widely used by both the analyst community to compare with other
gaming companies and by management to assess underlying
performance.
A reconciliation of the adjusted operating expenses used for
statutory reporting and the adjusted performance measures is shown
below:
Six months Six months Year
ended ended
Note 30 June 30 June ended
31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------------------- ------- --------------- --------------- --------------
Operating costs per income statement (7,231) (7,390) (14,803)
Add back:
Depreciation 12,13 862 537 1,216
Amortisation, excluding acquired intangible
assets 11 48 132 252
Amortisation of acquired intangible
assets 11 - 29 29
Impairment of goodwill 88 - 517
Reversal of impairment of property,
plant and equipment 12 - - (190)
Loss on disposal of property, plant
and equipment 12 (103) 131 150
Separately disclosed items 7 99 578 657
---------------------------------------------- ------- --------------- --------------- --------------
Total adjusted net operating costs (6,236) (5,983) (12,172)
---------------------------------------------- ------- --------------- --------------- --------------
Adjusted EBITDA is calculated as follows:
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------- --------------- --------------- --------------
Revenue 13,544 12,571 26,004
Cost of sales (6,183) (6,043) (11,847)
---------------------------------- --------------- --------------- --------------
Gross profit 7,361 6,528 14,157
Marketing and distribution costs (256) (234) (386)
---------------------------------- --------------- --------------- --------------
Contribution 7,105 6,294 13,771
Adjusted net operating costs (6,236) (5,983) (12,172)
---------------------------------- --------------- --------------- --------------
Adjusted EBITDA 869 311 1,599
---------------------------------- --------------- --------------- --------------
Prior year comparatives for the period ended 30 June 2023 have
been adjusted for discontinued operations related to the LEIDSA
contract (prior full year comparatives were adjusted in the 2022
financial statements to exclude results of the Global Tote, Bump
50:50 business and LEIDSA).
Adjusted profit is also an adjusted performance measure used by
the Group. This uses adjusted EBITDA, as defined above as
management's view of the closest proxy to cash generation for
underlying divisional performance, and deducting share option
charges, depreciation, amortisation of intangible assets (other
than those which arise in the acquisition of businesses) and
certain finance charges. This provides an adjusted profit before
tax measure, which is then taxed by applying an estimated adjusted
tax measure. The adjusted tax charge excludes the tax impact of
income statement items not included in adjusted profit before
tax.
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
From continuing operations: GBP000 GBP000 GBP000
-------------------------------------------------- --------------- -------------- --------------
Adjusted EBITDA 869 311 1,599
Depreciation (862) (537) (1,216)
Amortisation (excluding amortisation of acquired
intangibles) (48) (132) (252)
Net finance costs (excluding certain finance
costs - note 8) (162) (69) (230)
-------------------------------------------------- --------------- -------------- --------------
Adjusted loss before tax (203) (427) (99)
Taxation (30) 26 (79)
-------------------------------------------------- --------------- -------------- --------------
Adjusted loss after tax (233) (401) (178)
-------------------------------------------------- --------------- -------------- --------------
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
From discontinued operations: GBP000 GBP000 GBP000
-------------------------------------------------- ---------------- -------------- --------------
Adjusted EBITDA - 5,590 1,183
Depreciation - (100) -
Amortisation (excluding amortisation of acquired - (75) -
intangibles)
Net finance costs (excluding certain finance - (24) -
costs - note 8)
-------------------------------------------------- ---------------- -------------- --------------
Adjusted profit before tax - 5,391 1,183
Taxation - (1,234) -
-------------------------------------------------- ---------------- -------------- --------------
Adjusted profit after tax - 4,157 1,183
-------------------------------------------------- ---------------- -------------- --------------
5. Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, which
makes strategic and operational decisions.
The Group has identified its operating segments as outlined
below:
- Sportech Venues - off-track betting venue management; and
- Sportech Digital - a pari-mutuel betting website and provision
of lottery software and services;
- Corporate costs - central costs relating to the overall
management of the Group and listing costs
The Board of Directors assesses the performance of the operating
segments based on a measure of adjusted EBITDA as defined in note
4. The share option expense is also excluded. Interest is not
allocated to segments as the Group's cash position is controlled by
the central finance team. Sales between segments are at arm's
length.
Six months ended 30 June
2023 (Unaudited)
------------------------------------------------- ------------------------------------------------
Sportech Sportech Corporate
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
------------------------------------------------- ----------- ----------- ------------ --------
Revenue from rendering of services 894 9,786 - 10,680
Revenue from food and beverage sales - 1,852 - 1,852
Revenue from sports betting services - 1,012 - 1,012
------------------------------------------------- ----------- ----------- ------------ --------
Total revenue 894 12,651 - 13,544
Cost of sales (486) (5,697) - (6,183)
------------------------------------------------- ----------- ----------- ------------ --------
Gross profit 407 6,954 - 7,361
Marketing and distribution costs (53) (203) - (256)
------------------------------------------------- ----------- ----------- ------------ --------
Contribution 354 6,751 - 7,105
Adjusted operating costs (379) (4,787) (1,071) (6,236)
------------------------------------------------- ----------- ----------- ------------ --------
Adjusted EBITDA (24) 1,964 (1,071) 869
Depreciation - (862) - (862)
Amortisation (excluding amortisation of
acquired intangibles) (15) - (33) (48)
------------------------------------------------- ----------- ----------- ------------ --------
Segment result (39) 1,102 (1,105) (42)
Loss on disposal of Property, plant and
equipment 103 - - 103
Amortisation of goodwill (88) - - (88)
Separately disclosed items - (10) (89) (99)
Operating (loss)/profit (24) 1,093 (1,194) (126)
Net finance income (178)
Loss before taxation from continuing operations (304)
Taxation - continuing operations (30)
Loss for the period (334)
------------------------------------------------- ----------- ----------- ------------ --------
Other segment items - capital expenditure
Property, plant and equipment - 120 - 120
------------------------------------------------- ----------- ----------- ------------ --------
Six months ended 30 June
2022 (Unaudited)
------------------------------------------------- ------------------------------------------------
Sportech Sportech Corporate
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
------------------------------------------------- ----------- ----------- ------------ --------
Revenue from rendering of services 857 9,412 - 10,269
Revenue from food and beverage sales - 1,584 - 1,584
Revenue from sports betting services - 718 - 718
------------------------------------------------- ----------- ----------- ------------ --------
Total revenue 857 11,714 - 12,571
Cost of sales (452) (5,591) - (6,043)
------------------------------------------------- ----------- ----------- ------------ --------
Gross profit 405 6,123 - 6,528
Marketing and distribution costs (50) (184) - (234)
------------------------------------------------- ----------- ----------- ------------ --------
Contribution 355 5,939 - 6,294
Adjusted operating costs (462) (4,414) (1,107) (5,983)
------------------------------------------------- ----------- ----------- ------------ --------
Adjusted EBITDA (107) 1,525 (1,107) 311
Depreciation (6) (518) (13) (537)
Amortisation (excluding amortisation of
acquired intangibles) (69) (1) (62) (132)
------------------------------------------------- ----------- ----------- ------------ --------
Segment result (182) 1,006 (1,182) (358)
Amortisation of acquired intangibles (29) - - (29)
Loss on disposal of Property, plant and
equipment - (131) - (131)
Separately disclosed items - (307) (271) (578)
Other income - 155 - 155
------------------------------------------------- ----------- ----------- ------------ --------
Operating (loss)/profit (211) 723 (1,453) (941)
Net finance income 139
Loss before taxation from continuing operations (802)
Taxation - continuing operations (29)
--------
Loss for the period (831)
Other segment items - capital expenditure
Intangible fixed assets 97 - - 97
Property, plant and equipment 22 15 1 38
------------------------------------------------- ----------- ----------- ------------ --------
Year ended 31 December 2022
(Audited)
------------------------------------------ --------------------------------------------------------------
Sportech Sportech Corporate
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
------------------------------------------ ---------------------------- --------- ---------- ---------
Revenue from rendering of services - 1,974 - 1,974
Revenue from food and beverage sales - 3,443 - 3,443
Revenue from sports betting services 1,471 19,116 - 20,587
------------------------------------------ ---------------------------- --------- ---------- ---------
Total revenue 1,471 24,533 - 26,004
Cost of sales (944) (10,903) - (11,847)
------------------------------------------ ---------------------------- --------- ---------- ---------
Gross profit 527 13,630 - 14,157
Marketing and distribution costs 4 (390) - (386)
------------------------------------------ ---------------------------- --------- ---------- ---------
Contribution 531 13,240 - 13,771
Adjusted net operating costs (note 1) (838) (9,194) (2,140) (12,172)
------------------------------------------ ---------------------------- --------- ---------- ---------
Adjusted EBITDA (307) 4,046 (2,140) 1,599
Depreciation (10) (1,192) (14) (1,216)
Amortisation (excluding amortisation of
acquired intangible assets) (162) - (90) (252)
------------------------------------------ ---------------------------- --------- ---------- ---------
Segment result before amortisation of
acquired
intangibles (479) 2,854 (2,244) 131
Amortisation of acquired intangibles (29) - - (29)
Reversal of impairment of property, plant
and equipment - 190 - 190
Loss on sale of property, plant and
equipment - (133) (17) (150)
Impairment of goodwill (517) - - (517)
Separately disclosed items - (307) (350) (657)
Other income - 120 - 120
------------------------------------------ ---------------------------- --------- ---------- ---------
Operating (loss)/profit (1,025) 2,724 (2,611) (912)
Net finance costs (22)
Loss before taxation from continuing
operations (934)
Taxation (79)
---------
Loss for the year from continuing
operations (1,013)
Profit after tax from discontinued
operations 1,183
---------
Profit for the year 170
------------------------------------------ ---------------------------- --------- ---------- ---------
Other segment items - capital expenditure
Intangible fixed assets (continuing
operations) 951 27,055 168 28,174
Intangible fixed assets (discontinued
operations) (50) (12,831) (1,254) (14,135)
Property, plant and equipment (continuing
operations) 196 - - 196
Property, plant and equipment
(discontinued
operations) 5 142 - 147
------------------------------------------ ---------------------------- --------- ---------- ------------
6. Expenses by nature
Six months Six months Year
ended ended
30 June 30 June ended
2023 2022 31 December
2022
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
--------------------------------------------- ---- --------------- --------------- --------------
Cost of sales
Tote and track fees 5,248 5,266 10,208
F&B consumables 586 536 1,144
Betting and gaming duties 48 54 125
Repairs and maintenance cost of sales 6 15 28
Programs 121 127 256
Cost of sales 174 45 86
Total cost of sales 6,183 6,043 11,847
--------------------------------------------------- --------------- --------------- --------------
Marketing and distribution costs
Marketing 250 224 368
Vehicle costs 6 10 18
Total marketing and distribution costs 256 234 386
--------------------------------------------------- --------------- --------------- --------------
Operating costs
Staff costs - gross, excluding share option
charges 3,210 3,161 6,323
Less amounts capitalised - (89) (171)
--------------------------------------------------- --------------- --------------- --------------
Staff costs - net 3,210 3,072 6,152
Property costs 1,420 1,201 2,688
IT & communications 240 301 628
Professional fees and licences 860 765 1,524
Insurance 451 500 913
Travel and entertaining 32 41 94
Banking transaction costs and FX 38 48 107
Other costs (15) 55 66
--------------------------------------------------- --------------- --------------- --------------
Adjusted operating costs 6,236 5,983 12,172
Depreciation 862 537 1,216
Amortisation, excluding amortisation of
acquired intangibles 48 132 252
Amortisation of acquired intangibles - 29 29
Impairment of goodwill 88 - 517
Loss on disposal of property, plant and
equipment - 131 150
Reversal of impairment of property, plant
and equipment (103) - (190)
Separately disclosed items 99 578 657
--------------------------------------------------- --------------- --------------- --------------
Total operating costs 7,231 7,390 14,803
--------------------------------------------------- --------------- --------------- --------------
7. Separately disclosed items
Six Six Year
months months
ended ended
30 June 30 ended
June
2023 2022 31 December
2022
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
----------------------------------------------------- ----- -------------- -------------- -------------
Continuing operations
Included in operating costs :
Onerous contract provisions and other losses
resulting from
exit from California operations 17 - (69) (120)
Redundancy and restructuring costs - 330 414
Corporate activity 86 8 57
Settlement of a contract - 304 304
Costs in relation to exiting the Group's interests
in India 13 5 2
Total included in operating costs 99 578 657
Included in finance costs:
Interest accrued on corporate tax potentially
due and unpaid at the balance sheet date on
STB refund received in 2016 8 - 24 24
Total Separately disclosed items 99 602 681
----------------------------------------------------- ----- -------------- -------------- -------------
Below is a summary of cash outflows from separately
disclosed items:
Six Six Year
months months
ended ended
30 June 30 ended
June
2023 2022 31 December
2022
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------- ---- --------------- --------------- --------------
Cash outflows from separately disclosed items:
Redundancy and restructuring costs - (242) (414)
Costs in relation to corporate activity (86) (8) (49)
Costs in relation to the Group's onerous leases
in California - (660) (688)
Costs in relation to exiting the Group's interests
in India (13) (5) (2)
Settlement of a contract - (304) (304)
Cash outflows from separately disclosed items
(all Continuing operations) (99) (1,219) (1,457)
-
8. Net finance costs
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------------ ----- -------------- --------------- ---------------
Continuing operations:
Finance costs:
Interest accrued and paid on tax liabilities - (24) (24)
Interest on lease liabilities 19 (162) (69) (230)
Total finance costs (162) (93) (254)
------------------------------------------------ ----- -------------- --------------- ---------------
Finance income:
Foreign exchange gain on financial assets and
liabilities denominated in foreign currency (16) 232 232
Total finance income (16) 232 232
------------------------------------------------ ----- -------------- --------------- ---------------
Net finance income (178) 139 (22)
------------------------------------------------ ----- -------------- --------------- ---------------
Of the above amounts the following have been excluded for the
purposes of deriving the alternative performance measures in note
4.
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
Continuing operations GBP000 GBP000 GBP000
----------------------------------------------------------- -------------- -------------- --------------
Foreign exchange gain on financial assets and liabilities
denominated in foreign currency (16) 232 232
Interest accrued and paid on tax liabilities - (24) (24)
----------------------------------------------------------- -------------- -------------- --------------
(16) 208 208
----------------------------------------------------------- -------------- -------------- --------------
9. Taxation
Taxation is provided based on management's best estimate of the
expected weighted average annual taxation rate for the full year.
The estimated weighted average annual tax rate for the year ended
31 December 2023 is (10)% (2022: (8.5%)). The movement is a result
of a change in mix of profits/(losses) in jurisdictions with
varying tax rates, the non-recognition of deferred tax on losses in
the UK due to uncertainty of non-recovery as well as the
utilization of previously unprovided tax assets in the US.
The Group has submitted an appeal to HMRC to contest the
treatment of GBP4.6 million of taxation potentially due on the 2016
Spot the Ball refund. This amount was paid to HMRC, however in the
event the Company is unsuccessful in its appeal there remains a
potential c GBP0.7 million interest due. There is nothing held on
the balance sheet in respect of the tax itself, the interest is
accrued and if payable will be a cash outflow.
10. Earnings per share
2023 2022
Six months ended 30 June
(Unaudited) Continuing Discontinued Total Continuing Discontinued Total
------------------------------- ----------- ------------- -------- ----------- ------------- --------
Basic EPS
(Loss)/profit for the period
(GBP000) (334) - (334) (831) - (831)
Weighted average no of shares
('000) 100,000 100,000 100,000 100,000 100,000 100,000
------------------------------- ----------- ------------- -------- ----------- ------------- --------
Basic EPS (0.3)p - (0.3)p (0.8)p - (0.8)p
------------------------------- ----------- ------------- -------- ----------- ------------- --------
2022
Year ended 31 December 2022 (Audited) Continuing Discontinued Total
----------------------------------------------------- ----------- ------------- --------
Basic EPS
(Loss)/profit attributable to owners of the Company
(GBP000) (1,014) 1,183 169
Weighted average no of shares ('000) 100,000 100,000 100,000
----------------------------------------------------- ----------- ------------- --------
Basic EPS (1.0)p 1.2p 0.2p
----------------------------------------------------- ----------- ------------- --------
2023 2022 ()
Six months ended 30 June
(Unaudited) Continuing Discontinued Total Continuing Discontinued Total
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
Diluted EPS
(Loss)/profit for the period
(GBP000) (334) - (334) (831) - (831)
Weighted average no of shares
('000) 100,000 100,000 100,000 100,000 100,000 100,000
Dilutive potential ordinary N/A N/A N/A N/A N/A N/A
shares ('000)
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
Total potential ordinary shares
('000) 100,000 100,000 100,000 100,000 100,000 100,000
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
Diluted EPS (0.3)p - (0.3)p (0.8)p - (0.8)p
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
2022
Year ended 31 December 2022
(Audited) Continuing Discontinued Total
--------------------------------- --- ----------- ------------- --------
Diluted EPS
(Loss)/profit for the year
(GBP000) (1,014) 1,183 169
Weighted average no of shares
('000) 100,000 100,000 100,000
Dilutive potential ordinary N/A N/A N/A
shares ('000)
--------------------------------- --- ----------- ------------- --------
Total potential ordinary shares
('000) 100,000 100,000 100,000
---------------------------------------- ----------- ------------- --------
Diluted EPS (1.0)p 1.2p 0.2p
---------------------------------------- ----------- ------------- --------
Adjusted EPS
Adjusted EPS is calculated by dividing the adjusted profit after
tax attributable to owners of the Company, as defined in note 4, by
the weighted average number of ordinary shares in issue during the
year.
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2023 2022 2022
Continuing operations Note (Unaudited) (Unaudited) (Audited)
---------------------------------- ------- -------------- --------------- ---------------
Adjusted loss after tax (GBP000) 4 (233) (401) (143)
Basic Adjusted EPS (pence) (0.2)p (0.4)p (0.1)p
Diluted Adjusted EPS (pence) (0.2)p (0.4)p (0.1)p
---------------------------------- ------- -------------- --------------- ---------------
11. Intangible fixed assets
Six Six months Year
months ended
ended
30 June 30 June ended
31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------------------ ---- -------------- -------------- --------------
At 1 January 6,943 6,357 6,357
Additions - 97 196
Amortisation charge for period (48) (161) (281)
Disposal (393) - (5)
Movement as a result of foreign exchange (335) 646 671
-------------- -------------- --------------
Net book amount at end of period 6,166 6,939 6,939
------------------------------------------------ -------------- -------------- --------------
12. Property, plant and equipment
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------------------ -------------- -------------- --------------
At 1 January 4,521 4,261 4,261
Additions 120 38 147
Disposal (4) - -
Depreciation charge for period (239) (215) (433)
Loss on disposal - (131) (133)
Reversal of impairment - - 190
Movement as a result of foreign exchange (233) 456 490
-------------- -------------- --------------
Net book amount at end of period 4,165 4,409 4,522
------------------------------------------ -------------- -------------- --------------
13. Right-of-use assets
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------ ------ -------------- -------------- --------------
At 1 January 5,041 4,657 4,657
Additions 134 - 652
Depreciation charge for period (623) (322) (782)
Disposed of - exited lease early - (17) (17)
Movement as a result of foreign exchange (237) 495 533
-------------- -------------- --------------
Net book amount at end of period 4,315 4,813 5,042
-------------------------------------------------- -------------- -------------- --------------
14. Trade and other receivables
As at As at As at
31 December
2022
30 June 30 (Audited)
June
2023 2022
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
----------------------------------- -------------- -------------- -------------
Non-current
Trade and other receivables 167 176 177
Current
Trade and other receivables 1,685 1,393 1,978
Total trade and other receivables 1,852 1,569 2,155
----------------------------------- -------------- -------------- -------------
15. Cash and cash equivalents
As at As at As at
31 December
2022
30 June 30 (Audited)
June
2023 2022
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------- ----- -------------- -------------- -------------
Cash and short-term deposits 7,792 8,138 7,421
Customer funds 16 448 450 391
Total cash and cash equivalents 8,240 8,588 7,811
--------------------------------- ----- -------------- -------------- -------------
Customer funds are matched by liabilities of an equal value
within trade and other payables (see note 16).
16. Trade and other payables
As at As at As at
31 December
2022
30 June 30 (Audited)
June
2023 2022
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------- ----- --------------- --------------- --------------
Trade payables 3,203 3,769 4,588
Other taxes and social security costs 187 307 148
Accruals and other payables 956 2,433 1,437
Player liability 15 448 450 391
Total trade and other payables 4,795 6,959 6,564
--------------------------------------- ----- --------------- --------------- --------------
17. Provisions
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------- ---- --------------- -------------- --------------
At beginning of period - 736 736
Utilised during the period - (660) (677)
Released to the income statement - (69) (69)
Currency movements - 10 11
---------------------------------------- -------------- -------------- --------------
Total provisions - 17 -
---------------------------------------- -------------- -------------- --------------
Provisions are in relation to:
Current provisions - - -
Onerous contracts - 17 -
---------------------------------------- -------------- -------------- --------------
18. Cash flow from operating activities before separately
disclosed items
Reconciliation of (loss)/profit before taxation to cash flows
from operating activities before separately disclosed items:
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
----------------------------------------------------- --------- --------------- --------------- ---------------
Total (loss)/profit before tax (304) (802) 249
Adjustments for:
Net Separately disclosed items (included in
operating costs) 7 99 578 657
Other income (excluding profit on disposal
of Sports Haven) - - (120)
Depreciation and amortisation 11,12,13 910 698 1,497
(Profit)/loss on disposal of property, plant
and equipment 12 (103) 131 150
Impairment/ (reversal of impairment) of assets 12,13 88 - 327
Net finance charges 8 162 (139) 22
Changes in working capital:
Increase in trade and other receivables 205 (180) (1,476)
Increase in inventories (8) (16) (22)
Decrease in trade and other payables, excluding
player liabilities (1,274) (809) (1,101)
Increase/(decrease in player liabilities 15 83 (5) (64)
Cash (used in)/generated from operating activities,
before separately disclosed items (141) (544) 119
----------------------------------------------------- --------- --------------- --------------- ---------------
19. Lease liabilities
As at As at As at
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Maturity analysis - contractual undiscounted cashflows GBP000 GBP000 GBP000
-------------------------------------------------------- -------------- -------------- -------------
Less than one year 1,168 810 1,211
Between 2 and 5 years 2,660 3,000 2,615
More than 5 years 4,201 5,093 4,824
Total 8,030 8,903 8,650
-------------------------------------------------------- -------------- -------------- -------------
The weighted average incremental borrowing rate applied to the
lease liabilities was 4.16%, lowest rate being 4.00% and the
highest being 5.75%.
As at As at As at
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Lease liabilities included in the balance sheet GBP000 GBP000 GBP000
------------------------------------------------- -------------- -------------- -------------
Current 927 678 923
Non-current 5,620 6,477 6,091
Total 6,547 7,155 7,014
------------------------------------------------- -------------- -------------- -------------
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Movement in lease liability during the Note GBP000 GBP000 GBP000
period
-------------------------------------------- ----- -------------- -------------- -------------
At 1 January 7,355 7,014 7,014
Interest charged to the income statement 8 162 69 230
New leases entered into 13 134 - 652
Lease rentals paid (741) (691) (1,357)
Disposed of on settlement of lease dispute - - -
Disposal - early exit of lease - (23) -
Movement as a result of foreign exchange (363) 786 816
At period end 6,547 7,155 7,355
-------------------------------------------- ----- -------------- -------------- -------------
20. Related party transactions
The extent of transactions with related parties of the Group and
the nature of the relationship with them are summarised below.
a. Key management compensation is disclosed below:
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2022
2023 2022 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------ ---- -------------- -------------- --------------
Short-term employee benefits 110 294 365
Pay in lieu of notice - 245 266
Post-employment benefits - 11 -
Total 110 550 631
------------------------------------ -------------- -------------- --------------
21. Contingencies
Contingent items
Tax
The Group's activities in recent periods have resulted in
material tax liabilities crystallising. The ultimate tax liability
due, in all instances, is subject to a degree of management
judgement. The judgements which are made are done so in good faith,
with the aim of always paying the correct amount of tax at the
appropriate time. Management work diligently with the Group's
external financial advisors in quantifying the anticipated accurate
and fair tax liability which arises from material one-off events
such as the Spot the Ball legal case and the disposal of the
Football Pools. Management has an open, transparent and
constructive relationship with tax regulators, and engage
positively when discussing any difference in legal interpretation
between that of the Group and the regulators.
Penalties could potentially be imposed on the Group's
corporation tax filing position for the STB VAT refund, however
Management consider this possibility to be remote and therefore are
not disclosing a contingent liability in relation to this item. The
Group has paid on account GBP4.6m into its corporate tax account in
order to cease the accruing of interest, which would be payable if
the Group were to accept a restatement of the Sportech Pool's
Limited 2016 tax return to tax GBP23.0m of the STB VAT refund as
income not capital. Management believes that the filing position
taken was the correct one. Post the period end, the Group appealed
a 'closure notice' and lodged an appeal with HMRC.
Other contingent items are summarised as follows:
M&A activity
Both the 2017 sale of the Football Pools division, the 2018 sale
of the Group's Venues business in The Netherlands, the 2021 sale of
the Bump 50:50 and the 2021 sale of the Global Tote business have
customary seller tax warranties under the terms of the Sale and
Purchase Agreements. The possibility of material claims being made
under the seller tax warranties in any of the deals is considered
by management to be remote. In addition, the sale of Sportech
Lotteries, LLC on 31 December 2021 has customary seller warranties
under the terms of the Sale and Purchase Agreements. Those
warranties have been provided in good faith by management in light
of the probability of certain events occurring. The possibility of
material claims being made under the seller warranties in the deal
is considered by management to be remote.
Legal
The Group has been engaged in certain disputes in the ordinary
course of business which could have potentially led to outflows
greater than those provided for on the balance sheet. Management
was of the view that the risk of those outflows arising was not
probable and accordingly they were considered contingent items.
22. Statement on Rounding
The financial information presented in this report has been
rounded to either whole numbers or the nearest decimal place.
Rounding is employed for the purpose of simplifying complex
numerical data and enhancing readability, while ensuring
consistency and adherence to generally accepted accounting
principles.
We believe that the rounded figures accurately represent the
financial position and performance the Group and subsidiaries in
accordance with applicable accounting standards. Materiality
considerations have been taken into account, and rounding has not
been used to obscure any significant financial information. It is
important to note that the use of rounded figures may result in
minor discrepancies when summing subtotals or totals.
For a complete understanding of the financial data presented
herein, including the exact unrounded figures, interested parties
are encouraged to refer to the underlying financial records and
detailed notes to the financial statements.
Sportech is committed to maintaining transparency and compliance
with relevant accounting standards, and we are available to provide
additional information or clarification upon request.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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contained in this communication, and to share such analysis on an
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use the personal data you provide us, please see our Privacy
Policy.
END
IR GPUQCBUPWGRU
(END) Dow Jones Newswires
September 11, 2023 02:00 ET (06:00 GMT)
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