Sportech Share Discussion Threads

[nod] 29/5/2015 00:57

The profits have been flat, which has been fine given SPO's investments in the U.S. The profit from SNG will boost this years earnings plus the U.S. Dollar has been rising strongly in 2015 and looks set to continue its rise. Over 50% of sales are in USD.Stripping out the impairment charge, and other exceptional costs, the group's profit in 2014 was GBP14.4 million, flat on the 2013 figure.

[stephan1946] 28/5/2015 23:12

SPO really motoring now, shareholders must be delighted with their significant returns through the years plus the rising share price.

Board of directors deserve their £m salaries. Expenses of £m`s is also worth every penny. Well done Sportech another wonderful year.

This outfit make the AIM market look a good investment.

[nod] 28/5/2015 22:04

A surprise sale of the partnership. SNG appeared to be going great guns with the Resorts contract and NJ full licence. SPO still retains a significant holding in NYX and will be rewarded for their next 3 contracts. SPO takes cash off the table early - I wonder if they have plans for a U.S. acquisition. This would explain them putting Football Pools up for sale.The deal in pounds:Sportech shall receive a total consideration of up to GBP12.0 million which comprises: GBP5.2 million cash, 2.2 million NYX ordinary shares equating to an aggregate value of GBP5.2 million based on the NYX closing price on 27 May 2015 of CAD$4.51 per share and up to a maximum of GBP1.6 million in deferred consideration (3 contracts).

[o1dsmokie] 28/5/2015 12:20

Cash return from sale?

[utterly pointless] 14/5/2015 12:04

Somerset lad - I agree it won't go to the SC or ECJ. As to whether it could go on a sale of the pools business I have no view, save that if it went it would attract a high valuation. Good of you to be frank that you know nothing about UK tax.

[nod] 14/5/2015 10:51

I think the VAT claim would go with the Pools business in the same way that it was transferred (albeit unknowingly) from the Littlewoods family to SPO. I think SPO will be happy to be rid of it. I don't think you could sell a business without transferring the tax liabilities (or returns) but I know nothing about UK tax, having not lived there for over 30 years. The Pools business is a cash cow because of the way Pari mutuel is structured - the operator always makes a profit. The VAT claim would be something that would attract risk-taking private equity that love this sort of higher risk profile. This is most likely where the offer came from.

[somerset lad] 14/5/2015 10:22

SPO didn't say the pools business was not for sale. It said that the offer didn't match SPO's valuation. This suggests it may be trying to set up an informal auction.

If SPO sells the pools business, I don't expect it to sell the VAT claim with it. The VAT claim is hard to value for a buyer (hence SPO's failure to insure against the outcome), so it is move valuable in SPO's hands than as part of a sale package.

SPO had no reason to update on the VAT claim as there was nothing to be said: it's listed before the Court of Appeal and the next step will be the Court of Appeal's judgment.

IMO, the Court of Appeal's judgment is likely to be the end of the road for the VAT claim(few cases go to the Supreme Court and it's not clear what issue could be referred to the European Court of Justice).

DYOR as always.

[utterly pointless] 14/5/2015 09:58

Nod: I think an awful lot of investors are. There is some incredulity amongst those who know that the decision of the FTT was overturned.

[nod] 14/5/2015 00:10

Trent, I don't think the current share price reflects the likelihood of a win. After the UT decision the share price fell to 50p. Has it climbed to 65p on the basis of a VAT win? 15p would seem to be a small premium for a 50/50 chance of a £96 million windfall (less fees).I don't think many investors will be speculating on a VAT Claim win.Will the share price fall back to 50p if the Appeal Court rules in HMRCs favour? Probably.The VAT Claim is not a part of SPOs core business. I will be glad when the Claim is over one way or the other.

[stephan1946] 13/5/2015 20:36

BUT. Did I miss what was said in the overview regarding the VAT claim? or was it ignored for the first time since it was lodged? what has not been said is what should interest holders.

The HMRC rebate is lost, SPO is a 50p share until it shows results, not just smoke and mirrors, but real money, like a small divi for instance. PLEASE, PLEASE, can we stop saying, "Sportec is investing profits for holders benefit"

This song has been playing since Rodime takeover in 2000, in my book 14 years is quite a long time for nothing to be paid back to holders, I hold all gambling stocks in my portfolio, from today, that excludes, Sportech, Why? because it will all end in tears.

I personally do not believe the pools story, not for a nano second.
Is there any investor out there who thinks a refusal of a refuted £75m for the pools is smart? Is there a single spo investor who thinks the decision not to buy the TOTE was Smart?

This is a badly run company, where the Board keep taking their eyes off the ball(no pun intended) with few idea`s and certainly no good ones, my very best wishes to all who stay with this.

[trentendboy] 13/5/2015 19:52

Indeed nod but are those odds in the price? Hence share price will fall if they lose?

SPO are still nicely positioned.

I wonder if the pools buyer will return with a higher offer

[nod] 13/5/2015 19:07

The VAT Claim is certainly not lost. It is 50/50 with only two horses in the race and only two possible outcomes. A win for SPO would be a huge financial windfall. A loss would not be a financial loss as SPO never had this tax money in the first place. It is a claim for overpayment of tax by SPO's predecessor company, Littlewoods and dates back to tax payments made in the last century (the last millennium in fact).There is not cost to SPO in making the Claim as it is handled by a third party tax specialist on a no-win no-fee basis. The share price today reflects the last decision I.e. That SPO is not successful. A reversal would see the share price rise significantly.

[finkie] 13/5/2015 15:42

utterly pointless - we agree!

Trent I think you are possibly reading too much into them I don't see a big whammy coming here......I think the updates have been fairly open and honest.

[utterly pointless] 13/5/2015 11:53

the vat claim is certainly not lost. i have bought in for the sole reason that i expect it to be reversed in the court of appeal.

[trentendboy] 12/5/2015 17:55

Decent update but some poor US trading and whilst reasons are plausible enough one wonders whether there is an underlying problem.

Will continue holding

[finkie] 12/5/2015 17:03

I don't agree that the VAT ruling is lost Stephan haven't they had like 2-3 rounds already with SPO winning 2-0 then vat appeal was upheld which means they have to go to round 4 in November.......my experience of vat recovery is that it normally falls in favour of the claimant not HMRC, this bit is just racking up fees for the establishment and delaying the inevitable for the government........I think at 67p they are a play some sizable stake building also Henderson etc.

[nod] 09/5/2015 10:54

The First Tier Tribunal ruled twice in SPO's favour. The Second Tier Tribunal ruled once in IRD's favour. On the basis that the STT is twice as influential as FTT then it's 50/50 and that is a good bet given that third party specialists are handling the claim on a no win no fee basis. There is no cost to the buyer.Pools has stabilised and is worth 7 times ebitda. As SPO has proven over 15 years Pools is low risk and profitable as they determine winner payout after costs. So long as the company is managing costs tightly then they will make a good profit even if revenue is declining. This is not fixed odds betting where the bookmaker sometimes takes big losses. SPO wins every week.The profits has been ploughed back into developing new business lines. In the early years (2000-2006) these were leading edge and too early. In recent years good progress has been made with a more conservative approach.

[trentendboy] 09/5/2015 10:10

Lol

If you do the math it is simple enough to get a 100 million valuation

[stephan1946] 09/5/2015 08:14

All of this is of course of no benefit to Private investors, rather like the fallacy, "cash cow". Spo don't have a cash cow that feeds P.I.`s.
The Times article said, £15m a year profit for the pools, a rival bidder has offered £75m but Spo want £100m.
I say, "utter nonsense". Never in a million years has anyone offered, £75m, if they did it would be trousered double quick.

A chance of a £90m VAT payout?? in your dreams, Penrose knows he has lost and Spo needs a get out to save face. If a sale happens, which I doubt, it will be surrounded in secrecy.

This bunch at Euxton are losers and bluffers. Led by top bluffer, Hemmings.

[nod] 09/5/2015 03:54

The EBITDA has stabilised in recent years at a healthy £15 million. Pools has been a cash cow for SPO. Plus there is a 50/50 chance of a VAT windfall for a buyer. SPO obviously want the cash to invest in the USA now they have a few licences."The rumoured sale of Sportech's last remaining UK-facing operation, The Football Pools, could put in motion a series of events that will fundamentally change the nature of the London-listed gaming operator.If the rumour proves to be true, it could signal the final step in the transformation of Sportech into a fully-fledged US-facing operator.The Football Pools business has suffered from declining revenue and player numbers since - and prior to - its acquisition by Sportech, as the National Lottery and online gaming proved more attractive to players than the 90-year old Football Pools.But with Pools EBITDA having stabilised at around £15m, a sale could provide Sportech with the cash it needs to complete its transformation into a US-facing operator.

[brownie69] 08/5/2015 07:39

Its not going to make a lot of money if sold, aging customer base and pools is in decline having been poorly managed by Sportech. .

[trentendboy] 06/5/2015 11:11

Interesting article. Pools is a cash cow and used for paying off the debt. Everything has a price but I cannot see it myself. It is ticking over nicely really. The vernons sale looks good in hindsight even though I own NPT shares

[yesrupnel] 06/5/2015 08:28

Thanks Nod for that find.

[nod] 06/5/2015 02:44

Sportech caught up in football pools sale rumours5 May 2015Scott Longley Sportech was batting away questions over the future of its football pools business in the UK today after rumours hit the wires that the unit was up for sale with the company hoping to turn its full focus towards the US.A spokesperson for the company said it did not respond to media speculation after a Times reporter tweeted that the company was "rumoured to be mulling" a possible sale.One analyst suggested the rumours might be a delayed reaction to the news from the 2014 results statement in March that the company had written down £28m against the value of the football pools business.It would come as no surprise should it emerge that the football pools business was up for sale. Ever since Sportech bought Scientific Games Racing (SGR) in October 2010, its corporate focus has increasingly been trained across the Atlantic.In October 2013 the company also vacated the UK online gaming space when it sold its Vernon's branded business to NetPlay for £3m.Sportech has tried various means to arrest the decline of the football pools business, including a complete rebrand and online re-launch.In the 2014 results the company trumpeted that its direct business had acquired 23,000 new customers over the year, and that total customers from that channel had declined only 3% year-on-year. However, none of the moves have managed to stop the slide in total customer numbers, down to 286,000 at the end of 2014. (See chart). Revenues have suffered a corresponding decline, down to £38m in 2014 from £61.8m in 2008, and although operating profit has held up better in the past four years with tight cost control, it has still declined over the same period to £15.1m from £23.1m. (See chart 2).The biggest problem for Sportech – or any potential acquirer of the football pools business – would be the under-powered online business.In its 2014 annual report Sportech talks about the new footballpools.com website, powered under a new deal by NYX Gaming, but revenues from online are thought to be small.All of this should be seen in the context of a business where the focus in the past five years has switched dramatically.The Sportech Racing pool-betting arm contributed £34.5m in revenues in 2014 while the venues business, largely based in Connecticut, southern California and the Netherlands was worth £32.5m.Part of Sportech's plans include the launch in New Jersey where the firm launched a joint venture in February with NYX to supply Resorts Casino.Yet if the company were to dispose of the football pools business, it would be losing what one source close to the company described as a "cash cow".The operating profit figure of £15.1m still makes up three-quarters of the adjusted group total before corporate costs of £21.7m.The Sportech share price rose 0.5p on the day today to close at 67.5p

[nod] 30/4/2015 21:56

Stephan, if you are going to invest in bookmakers or gaming companies you will need to understand how they calculate revenues. This is not the same as transactions. SPO's accounts show their revenues and gross profit.SPO has always been encouraged to carry a large debt and to invest in developing new areas through acquisitions. A major UK bank was a major shareholder for a decade. A large debt is not an issue while interest rates are very low. There seems little likelihood of interest rates rising any time soon. While you complain that Resorts Casino is "window dressing" it has resulted in one of the first casino licences granted to a UK company.