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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sportech Plc | LSE:SPO | London | Ordinary Share | GB00BRV2F192 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 84.00 | 82.00 | 86.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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.
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