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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 |
From Apr 2019 to Apr 2024
TIDMSPO
RNS Number : 4903Y
Sportech PLC
22 August 2018
22 August 2018
Sportech PLC
("Sportech" or the "Group")
Interim results for the six months ended 30 June 2018
Sportech, the international betting technology business, is pleased to announce its interim results for the six months ended 30 June 2018.
Highlights
-- Completed agreement with Sportradar for sports betting data, trading, risk management, and technology platforms enabling delivery of a comprehensive sports betting platform
-- Working proactively with key constituencies in Connecticut to secure the right to conduct sports betting as a licensed operator in the state
-- Announced sale of Sportech Racing BV for EUR2.8 million, which closed on July 26, 2018 -- The Bump 50:50 division added seven new professional sports teams and thirteen festivals -- Appointment of Andrew Gaughan to the position of Chief Executive Officer -- Appointment of Thomas Hearne to the position of Chief Financial Officer
-- Group has cash of GBP12.5 million at 30 June 2018, and no bank debt. In July the Group received GBP2.5 million on the closing of the Sportech Racing BV sale
-- Total Group revenue of GBP31.6 million from continuing operations (2017: GBP31.2 million using constant currency)
-- EBITDA before sports betting investments of GBP3.3 million and total Adjusted Group EBITDA of GBP2.8 million from continuing operations (2017: GBP3.4 million using constant currency). The 2018 adjusted EBITDA includes GBP490k of costs related to the new sports betting division, (2017: nil)
Financial Summary
The financial summary below excludes the results in the six months of Sportech Racing BV, which was sold after the period end, and is accounted for as an asset available for sale. The H1 2017 numbers are presented on a constant currency and a reported currency basis. Constant currency translates the prior year's results at the current years exchange rates.
Hot Features
Premium
GBPm's H1 2017 H1 2017
Constant Currency Reported
H1 2018 Currency
--------------------------------------------- ----------- ------------------- ----------
Revenue 31.6 31.2 33.5
Gross Profit 22.9 22.8 24.3
Contribution(1) 21.9 21.8 23.2
EBITDA before sports betting investments(2) 3.3 3.4 3.6
Adjusted EBITDA(3)
2.8 3.4 3.6
(Loss)/profit before tax from continuing
operations (0.6) 0.1 (0.3)
Adjusted (loss)/profit from continuing
operations(4) (0.2) 0.9 0.9
1 Contribution is defined as gross profits, less marketing and distribution costs.
2 Excludes Sports Betting investments during the period, amounting to GBP490k
3 Adjusted EBITDA is earnings before interest, taxation, depreciation and amortisation, share option charges and separately identifiable items as reported in note 7 of the interim financial statements.
4 Adjusted profit from continuing operations is the aggregate of adjusted EBITDA, normalised share option charges, depreciation, amortisation (excluding amortisation of acquired intangibles), and finance charges.
Andrew Gaughan, Chief Executive Officer of Sportech PLC, said: "The May 2018 US Supreme Court decision that effectively permitted US states to enact legislation to license and regulate sports betting was very exciting for Sportech. Soon after the decision was announced, we signed an agreement with Sportradar for sports betting data, trading and risk management services, and technology platforms.
In Connecticut, we believe that we will have a strong direct-to-consumer sports betting offering for our brick-and-mortar and web/mobile betting services. We also believe that we are very well positioned to offer a competitive integrated sports and race betting solution in other US states.
We concluded the previously announced sale of Sportech BV, realising EUR2.8 million (GBP2.5 million), enhancing our cash reserves, and providing capital to execute on our US sports betting opportunities.
Our Racing and Digital business maintained consistent levels of service revenues for H1 2018 versus the prior year. We continue to assess further operational efficiencies to maintain profit levels in the business. We also believe the market outside of North America is moving to more service-based contracts versus one-time sales contracts and are positioning our teams accordingly.
Our Stamford, Connecticut Bobby V's Restaurant & Sports Bar has begun to grow both in terms of handle and food and beverage sales. Growth is slower than originally forecast, but we expect our new highly-experienced Food and Beverage and Group Sales Managers to deliver a beneficial impact as we enter the 2019 financial year."
For further information, please contact:
Sportech PLC Tel: +44 (0) 20 7268
2400
Andrew Gaughan, Chief Executive Officer
Thomas Hearne, Chief Financial Officer
Peel Hunt Tel: +44 (0) 20 7418
8900
(Corporate Broker to Sportech)
Dan Webster / George Sellar
Buchanan Tel: +44 (0) 20 7466
5000
(Financial PR adviser to Sportech)
Henry Harrison-Topham / Mark Court
/ Jamie Hooper
Sportech PLC
("Sportech" or the "Group")
Interim results for the six months ended 30 June 2018
Group Overview
Sportech PLC, the international betting technology business, provides and operates betting technology solutions for some of the world's best-known gaming companies, sports teams, and horse and greyhound racetracks, as well as owning and operating its own gaming venues in Connecticut under exclusive licences.
The Group focuses on highly regulated markets worldwide. It has more than 27,000 betting terminals deployed to over 400 clients in 37 countries. Its global systems process nearly US$12 billion in betting handle annually. In the US, it operates under 35 licences across 37 states. The Group has invested over US$60 million in the last five years in the successful expansion of its US gaming Venues and in developing its technology services, resulting in its proprietary Quantum(TM) System being the most widely deployed pari-mutuel betting system globally.
GBP'000's Revenue EBITDA
H1 2018 H1 2017* H1 2018 H1 2017*
Racing and Digital 16,565 16,639 3,274 3,724
Venues 15,774 15,056 1,086 1,374
IC elimination / corporate
costs (759) (477) (1,073) (1,737)
Subtotal: Year-over-year
comparison 31,580 31,219 3,287 3,362
Sports betting - - (490) -
Total at constant currency 31,580 31,219 2,797 3,362
Exchange rate impact 2,283 - 243
Total at reported currency 31,580 33,502 2,797 3,605
--------- ---------- --------- ----------
* 2017 results have been restated at 2018 exchange rates.
Sportech Racing and Digital
Sportech Racing and Digital provides betting technologies and services to 293 racetrack, off-track betting network, casino, lottery, and online pari-mutuel operator customers, plus an additional 145 commingling customers, in 37 countries and 37 US states. We have approximately 27,000 betting terminals, 26 white-label betting websites, and 23 white-label mobile apps deployed worldwide and our systems annually process nearly US$12 billion in betting handle.
GBP'000s H1 2017 H1 2017
Constant Reported
H1 2018 Currency Currency
Sales revenue 637 645 660
Service revenue 15,928 15,994 16,944
---------- ---------- ----------
Total revenues 16,565 16,639 17,604
---------- ---------- ----------
Contribution 14,247 14,648 15,438
Contribution margin 86% 88% 88%
Adjusted operated expenses (10,973) (10,867) (11,570)
---------- ---------- ----------
Adjusted EBITDA 3,274 3,781 3,868
---------- ---------- ----------
Intangible assets capitalised 1,569 1,620 1,731
Purchase of PPE 646 721 785
---------- ---------- ----------
Total capex in year 2,215 2,341 2,516
---------- ---------- ----------
Development of the new HTML5 version of our G4 betting website was completed and the initial launches are underway. All customer websites will be converted over time, allowing R&D to increase software development and maintenance efficiency and freeing resources to focus on new digital sports betting opportunities.
Service revenues were comparable year-over-year on a constant currency basis.
We signed five new contracts, four in the US and one in Europe, and renewed and extended eight existing customer contracts. Four of the renewals included enhanced Digital offerings. We are also pleased to report that we have not experienced any contract losses in the period.
In June, the Group hosted over 95 attendees, including racing customers, regulators and other constituencies at our "Sports Betting Crash Course" to educate and inform on the Sportech offering in the sports betting space. The division is aggressively developing our sports betting integration, and envisages being able to supply many of our racing customers with a sports betting solution that is integrated with their pari-mutuel betting solution.
Bump 50:50 (part of the Racing and Digital Division)
The Bump 50:50 sports raffle business provides the technologies and services that allow charitable foundations associated with professional and college sports teams and entertainment venues to sell and fulfil 50/50 raffles to generate funds for their charitable missions. Jackpots are divided equally between the foundation and the winner.
The Bump 50:50 business continued to grow in H1 2018, with a customer base that increased from 48 professional sports teams in June 2017 to 72 teams in June 2018. Revenues grew 42% versus the prior period, from GBP0.5 million to GBP0.7 million. We added seven new customers in H1 2018 and renewed an additional seven customers, while losing only two smaller customers. The new customers included two MLB(R) teams, one NHL(R) team and one NBA(R) team. We also added 13 new festivals.
Bump 50:50 is looking to expand to new markets with offerings that are mobile focused and designed for charities outside of the sports space. These development projects are taking place during 2018, and the new initiative investment will likely reduce EBTIDA growth in the short term, but open up significant long-term opportunities. EBITDA was GBP138k for H1 2018 +12% in H1 2018 versus the prior year at constant currency.
Sportech Venues
Sportech Venues operates all betting on horse racing, greyhound racing and jai alai in the state of Connecticut under an exclusive and in-perpetuity licence for retail, telephone and online. We believe that Connecticut will be an adopter of a comprehensive legal and regulatory framework for sports betting, either in a Fall special session or in H1 2019. We believe that we will have a strong direct-to-consumer sports betting offering in Connecticut and that our 16 current (24 potential) Venues and our online / mobile betting service form an ideal base from which to offer sports betting within the state, alongside the two Tribal Casinos. We continue to be a proactive supporter of legislation to regulate sports betting and combat illegal Advanced Deposit Wagering 'ADW' operators within the State to reduce the spread of illegal activity and protect consumers.
GBP'000s H1 2017 H1 2017
Constant Reported
H1 2018 Currency Currency
F&B - Stamford 1,081 40 41
F&B - Other 1,265 1,274 1,388
---------- ---------- ----------
F&B - Total 2,346 1,314 1,429
Wagering revenue 13,428 13,742 14,945
---------- ---------- ----------
Total revenues 15,774 15,056 16,374
---------- ---------- ----------
Contribution 7,651 7,227 7,861
Contribution margin 49% 48% 48%
Adjusted operated expenses (6,565) (5,853) (6,382)
---------- ---------- ----------
Adjusted EBITDA 1,086 1,374 1,479
---------- ---------- ----------
PPE - Stamford - 4,764 5,142
PPE - Other 274 354 367
---------- ---------- ----------
PPE - Total 274 5,118 5,509
---------- ---------- ----------
Within the Venues business, our Stamford, Connecticut Bobby V's Restaurant & Sports Bar has begun to grow both in terms of handle and food and beverage sales. Growth is slower than originally forecast and margins are being impacted by increased costs, most noticeably from wage inflation, property costs and food costs, but we expect the new highly-experienced Food and Beverage and Group Sales Managers, both of whom started in July 2018, to deliver a beneficial impact as we enter the 2019 financial year.
Total H1 food and beverage revenue was up 79% over the prior year at constant currency, with EBITDA from food and beverage at GBP158k, up 105% versus the prior year.
Wagering revenues softness versus the prior year is from a combination of lower VIP betting and a reduced number of track racing days in key markets such as New York, Florida and Pennsylvania. This was offset somewhat by our successful Triple Crown where turnover was up 25% over the previous year.
US Sports Betting
In May 2018 we announced our agreement with Sportradar to deliver sports betting solutions to US operators. Since that announcement we have been working diligently to create our unique integrated solution for both the consumer market in Connecticut and to be delivered as a B2B offering for our racing customers across the 36 other US states where we have a B2B presence. While only a few states have adopted new legislation to allow sports betting, we anticipate that many more will adopt legislation during 2019.
We have already begun the integration and pre-sales processes to allow Sportech to be a significant operator and solution provider in the US sports betting business, investing GBP490k in H1 2018. We expect sports betting expenses to be GBP1.1m to GBP1.3 million for 2018.
Corporate Costs
Corporate costs are significantly reduced versus the prior year, down 39%, with the shift in management from London to Toronto, Canada. In March 2018 Andrew Gaughan was appointed to the role of Chief Executive Officer and in May 2018 Tom Hearne was hired as the new Chief Financial Officer. Both are based in Toronto.
Depreciation and Amortisation
The Group's normal depreciation and amortisation charge from continuing operations increased in the period to GBP2.3m (2017: GBP2.0m). In the prior year the Group also incurred a non-cash amortisation charge of GBP0.1m on the intangible assets acquired with Datatote in 2013. This was fully written down by the end of 2017.
Exceptional Costs
The Group has exceptional administration costs of GBP0.5m comprised of redundancy and restructuring costs of GBP0.3m and costs related to the Spot the Ball legal case of GBP0.2m offset by reduced licensing costs in relation to New Jersey, lower accrued contingent consideration costs for Bump, and lobbying costs, which are now in ordinary expenses (GBP0.1m).
Net Finance Income/(Costs)
With no debt, the Group has finance income of GBP53k versus finance costs in the prior year of (GBP0.9m). The prior year's costs were made up of (GBP0.2m) of interest on bank overdrafts and a foreign exchange loss of (GBP0.7m). Foreign exchange gains and losses arise from the retranslation of foreign currency denominated inter-company loans and cash balances held within the Group. The Company delivers approximately 80% of net revenues in US Dollars and the Company is not currently engaged in any currency hedging.
Taxation
A tax charge for the period of GBP28k (2016: GBP53k) has been provided at the weighted average applicable tax rate for the Group of 1.2% (2016: 1.0%) together with the tax effects of permanent differences and other adjustments.
The Group has a net deferred tax asset of GBP7.3m (31 December 2017: GBP6.4m), representing primarily foreign taxes withheld which can be utilised against future profits. Tax payments of GBP0.7m were made during the period (2017: GBP12.1m), principally representing final payments for prior-year tax liabilities and overseas tax deducted at source in the US.
Following the successful Spot the Ball VAT reclaim, the Group is aware that HMRC are closely examining all the Group's tax affairs. The Board, after taking professional advice, believe the liabilities recorded in the financial statements are correct, and whilst they are open to challenge, the Group's position will be defended robustly.
In order to process an appeal, the Group is making one against HMRC for VAT for head office costs going back a number of years. The Group has made an 'in escrow' payment to HMRC of GBP1.3 million in Q1-2018. The Board, having taken professional advice on this matter, believe this is fully recoverable.
Net Cash/Net Current Assets
The Group held cash balances of GBP12.5m at 30 June 2018, net of customer deposits, and has no debt. In July we closed our previously announced Sportech BV sale, bringing in EUR2.8 million (GBP2.5 million) on a debt free cash free basis. Cash actually received was EUR3.3 million (purchase price and cash adjustment on closing). Net current assets amounted to GBP6.6m (December 2017: GBP8.1m).
Capital Expenditure
Capital expenditure in the period was GBP2.5m (2017: GBP8.1m). The prior year's number includes GBP5.5m for venues, mostly related to the newly opened 20,000 sq. ft Stamford venue.
Shareholders' Funds
Total equity and the Group's net assets at 30 June 2018 are GBP51.6m (31 December 2017: GBP51.2m).
Outlook
Venues
The Stamford, Connecticut location continues to build market position and financial momentum and with the addition of our new Food and Beverage and Group Sales Managers we expect further improvements, particularly in the 2019 financial year. We do expect to see continued softness in wagering revenue for the remainder of the year.
Racing and Digital
We are seeing a shift in the market outside of North America from primarily one-time sales contracts to long-term service-based contracts. This will mean lower one-time sales revenues, but an increased and more consistent service revenue base.
With continued strong growth in Bump 50:50 contracts, we are investing in technology projects to further expand the market for Bump's technologies and services.
We are also continuing to look for efficiencies in all lines of business to enhance profitability.
Corporate costs
Corporate costs should be consistent with the H1 costs incurred.
Sports Betting
We believe that we will have a strong direct-to-consumer sports betting offering in Connecticut and that we are very well positioned to offer our Racing and Digital customers a competitive integrated sports and race betting solution.
Sports betting costs for 2018 should be in the range of GBP1.1m to GBP1.3m. Given the legislative windows of various states we would anticipate our sports betting revenues to begin in the second half of 2019.
Andrew Gaughan
Chief Executive
22 August 2018
Interim consolidated income statement
For the six months ended 30 June 2018
Restated Year
Six months Six months ended
ended ended
30 June 30 June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------------------ ----- --------------- -------------- --------------
Revenue 31,580 33,501 66,271
Cost of sales 6 (8,656) (9,181) (18,562)
------------------------------------------------------ ----- --------------- -------------- --------------
Gross profit 22,924 24,320 47,709
Marketing and distribution costs 6 (1,026) (1,128) (2,118)
------------------------------------------------------ ----- --------------- -------------- --------------
Contribution 21,898 23,192 45,591
4,
Operating costs 6 (22,553) (22,484) (68,065)
Other income (net) 7 - - 827
Operating (loss)/profit (655) 708 (21,647)
Net finance income/(charges) 8 53 (869) (19)
Share of loss after tax and impairment of joint
ventures - (159) (1,484)
Loss before taxation (602) (320) (23,150)
Taxation 9 28 53 230
------------------------------------------------------ ----- --------------- -------------- --------------
Loss from continuing operations (574) (267) (22,920)
Net loss from discontinued operations 10 (355) (2,974) (1,522)
------------------------------------------------------ ----- --------------- -------------- --------------
Loss for the period (929) (3,241) (24,442)
------------------------------------------------------ ----- --------------- -------------- --------------
Attributable to:
Owners of the Company (929) (3,241) (24,300)
Non-controlling interests - - (142)
------------------------------------------------------ ----- --------------- -------------- --------------
(929) (3,241) (24,442)
------------------------------------------------------ ----- --------------- -------------- --------------
Loss per share attributable to owners of the Company
from continuing operations
Basic 11 (0.3)p (0.1)p (12.0)p
Diluted 11 (0.3)p (0.1)p (12.0)p
Loss per share attributable to owners of the Company
from discontinued operations
Basic 11 (0.2)p (1.5)p (0.8)p
Diluted 11 (0.2)p (1.5)p (0.8)p
Adjusted (loss)/earnings per share attributable
to owners of the Company
Basic 11 (0.1)p 2.8p 2.9p
Diluted 11 (0.1)p 2.8p 2.9p
------------------------------------------------------ ----- --------------- -------------- --------------
Interim consolidated statement of comprehensive income
For the six months ended 30 June 2018
Six months Six Year ended
ended months 31 December
ended 2017
30 June 30 (Audited)
June
2018 2017
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
----------------------------------------------------- -------------- -------------- -------------
Loss for the period (929) (3,241) (24,442)
----------------------------------------------------- -------------- -------------- -------------
Other comprehensive items:
Items that will not be reclassified to profit and
loss
Actuarial gain on retirement benefit liability - - (171)
Deferred tax on movement on retirement benefit
liability - - 55
----------------------------------------------------- -------------- -------------- -------------
- - (116)
Items that have been reclassified to profit and
loss
Realised fair value loss on available-for-sale
financial assets - - 2,500
----------------------------------------------------- -------------- -------------- -------------
Items that may be subsequently reclassified to
profit and loss
Revaluation of available for sale financial assets - (136) -
Currency translation differences 766 (2,646) (4,935)
----------------------------------------------------- -------------- -------------- -------------
766 (2,782) (4,935)
----------------------------------------------------- -------------- -------------- -------------
Total other comprehensive items for the period,
net of tax 766 (2,782) (2,551)
----------------------------------------------------- -------------- -------------- -------------
Total comprehensive expense for the period (163) (6,023) (26,993)
----------------------------------------------------- -------------- -------------- -------------
Attributable to:
Owners of the Company (163) (6,038) (26,862)
Non-controlling interests - 15 (131)
----------------------------------------------------- -------------- -------------- -------------
(163) (6,023) (26,993)
----------------------------------------------------- -------------- -------------- -------------
Interim consolidated statement of changes in equity
For the six months ended 30 June 2018
Attributable to owners of the Company
----------------------------------------------------------------------------------------
Other reserves
----------------------------------------------------
Capital Share Available-for-sale
Ordinary Redemption option Pension FX reserve Retained
shares Reserve reserve reserve reserve** earnings NCI*** Total
Six months ended 30 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
June 2017
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
At 1 January 2017
(audited) 103,119 - 2,198 (530) 11,072 (2,500) 35,323 131 148,813
Comprehensive
expense
Loss for the period - - - - - - (3,241) - (3,241)
Other comprehensive
items
Revaluation of
available-for-sale
financial asset - - - - - (136) - - (136)
Currency
translation
differences - - - - (2,661) - - 15 (2,646)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total other
comprehensive
items - - - - (2,661) (136) - 15 (2,782)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total comprehensive
items - - - - (2,661) (136) (3,241) 15 (6,023)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Transactions with
owners
Share option charge - - 466 - - - - - 466
Employer taxes paid
on options vesting - - (21) - - - - - (21)
Share buyback - - - - - - (21,192) - (21,192)
Cancellation of own
shares (10,312) 10,312 - - - - - - -
Total transactions
with owners (10,312) 10,312 445 - - - (21,192) - (20,747)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total changes in
equity (10,312) 10,312 445 - (2,661) (136) (24,433) 15 (26,770)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
At 30 June 2017
(unaudited) 92,807 10,312 2,643 (530) 8,411 (2,636) 10,890 146 122,043
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Attributable to owners of the Company
----------------------------------------------------------------------------------------
Other reserves
----------------------------------------------------
Capital Share Available-for-sale
Ordinary Redemption option Pension FX reserve Retained
shares Reserve reserve reserve reserve** earnings NCI*** Total
Year ended 31 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
December
2017
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
At 1 January 2017
(audited) 103,119 - 2,198 (530) 11,072 (2,500) 35,323 131 148,813
Comprehensive
expense
Loss for the period - - - - - - (24,300) (142) (24,442)
Other comprehensive
items
Actuarial loss on
defined benefit
pension
liability * - - - (116) - - - - (116)
Realised fair value
losses on
available-for-sale
financial assets - - - - - 2,500 - - 2,500
Currency
translation
differences - - - - (4,946) - - 11 (4,935)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total other
comprehensive
items - - - (116) (4,946) 2,500 - 11 (2,551)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total comprehensive
items - - - (116) (4,946) 2,500 (24,300) (131) (26,993)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Transactions with
owners
Share option
charge,
excluding
accelerated
IFRS 2 charge - - 666 - - - - - 666
Acceleration of
IFRS
2 charge for
departing
management - - 3,765 - - - - - 3,765
Employer taxes paid
on vesting of
options - - (21) - - - - - (21)
Share buyback - - - - - - (21,192) - (21,192)
Cancellation of
share
capital (10,312) 10,312 - - - - - - -
Capital reduction (55,684) - - - - - 55,684 - -
Special dividend - - - - - - (53,828) - (53,828)
Total transactions
with owners (65,996) 10,312 4,410 - - - (19,336) - (70,610)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
Total changes in
equity (65,996) 10,312 4,410 (116) (4,946) 2,500 (43,636) (131) (97,603)
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
At 31 December 2017
(audited) 37,123 10,312 6,608 (646) 6,126 - (8,313) - 51,210
--------------------- --------- ----------- -------- -------- ----------- ------------------- ---------- -------- ---------
* Net of deferred tax
** Foreign exchange reserve
*** Non-controlling interests, representing stakes not held in Norco, California by the Sportech Group
Interim consolidated balance sheet
As at 30 June 2018
Restated
As at As at As at
30 30 June 31 December
June 2017 2017
2018 (Unaudited) (Audited)
(Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------------- ----- --------------- -------------- --------------
ASSETS
Non-current assets
Intangible fixed assets 12 12,550 24,132 11,629
Property, plant and equipment 13 25,766 28,584 25,705
Net investment in joint ventures and associates - 1,270 -
Trade and other receivables 14 2,289 2,156 2,443
Deferred tax assets 7,259 3,375 6,406
------------------------------------------------- ----- --------------- -------------- --------------
47,864 59,517 46,183
------------------------------------------------- ----- --------------- -------------- --------------
Current assets
Trade and other receivables 14 11,479 12,303 10,342
Inventories 2,609 3,194 2,652
Assets held for sale 270 - 778
Available for sale financial assets - 1,180 -
Cash and cash equivalents 15 16,437 78,986 18,757
------------------------------------------------- ----- --------------- -------------- --------------
30,795 95,663 32,529
------------------------------------------------- ----- --------------- -------------- --------------
TOTAL ASSETS 78,659 155,180 78,712
------------------------------------------------- ----- --------------- -------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 16 (16,164) (17,245) (16,058)
Provisions 17 (1,050) (27) (1,103)
Financial liabilities - (152) (175)
Current tax liabilities (7,008) (13,928) (7,106)
------------------------------------------------- ----- --------------- -------------- --------------
(24,222) (31,352) (24,442)
------------------------------------------------- ----- --------------- -------------- --------------
Net current assets 6,573 64,311 8,087
------------------------------------------------- ----- --------------- -------------- --------------
Non-current liabilities
Retirement benefit liability (1,345) (1,284) (1,537)
Provisions 17 (1,452) (501) (1,523)
(2,797) (1,785) (3,060)
------------------------------------------------- ----- --------------- -------------- --------------
TOTAL LIABILITIES (27,019) (33,137) (27,502)
------------------------------------------------- ----- --------------- -------------- --------------
NET ASSETS 51,640 122,043 51,210
------------------------------------------------- ----- --------------- -------------- --------------
EQUITY
Ordinary shares 37,350 92,807 37,123
Other reserves 23,532 18,200 22,400
Retained earnings (9,242) 10,890 (8,313)
------------------------------------------------- ----- --------------- -------------- --------------
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 51,640 121,897 51,210
Non-controlling interests - 146 -
------------------------------------------------- ----- --------------- -------------- --------------
TOTAL EQUITY 51,640 122,043 51,210
------------------------------------------------- ----- --------------- -------------- --------------
Interim consolidated statement of cash flows
For the six months ended 30 June 2018
Restated
Six months Six Year
ended months
ended
30 June 30 June ended
31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------------------------- ----- -------------- -------------- --------------
Cash flows from operating activities
Net cash from operating activities, before exceptional
items 18 2,560 (485) 6,418
Interest received/(paid) 41 (316) (235)
Tax paid (772) (12,146) (15,859)
Net cash generated from/(used in) operating activities
before exceptional items 1,829 (12,947) (9,676)
Exceptional cash inflows 487 3,146 3,685
Exceptional cash outflows (2,051) (10,449) (8,391)
Net cash flows from operating activities - continuing
operations 265 (20,250) (14,382)
Net cash flows from operating activities - discontinued
operations (83) 4,091 (7,114)
--------------------------------------------------------- ----- -------------- -------------- --------------
Net cash flows from operating activities 182 (16,159) (21,496)
--------------------------------------------------------- ----- -------------- -------------- --------------
Cash flows from investing activities
Investment in joint ventures and associates - (78) (173)
Disposal of shares in NYX Gaming Group Limited - - 2,333
Disposal of Football Pools division - 86,200 86,200
Investment in intangible fixed assets 12 (1,569) (1,808) (3,948)
Purchase of property, plant and equipment 13 (920) (6,316) (6,905)
--------------------------------------------------------- ----- -------------- -------------- --------------
Net cash flows from investing activities - continuing
operations (2,489) 77,998 77,507
Net cash flows from investing activities - discontinued
operations (54) (1,008) (1,104)
--------------------------------------------------------- ----- -------------- -------------- --------------
Net cash flows from investing activities (2,543) 76,990 76,403
--------------------------------------------------------- ----- -------------- -------------- --------------
Cash flows from financing activities
Distributions to shareholders - (21,192) (75,020)
Net cash used in financing activities - (21,192) (75,020)
--------------------------------------------------------- ----- -------------- -------------- --------------
Net movement in cash and cash equivalents (2,361) 39,639 (20,113)
Exchange (loss)/gain on cash and cash equivalents (96) (293) (357)
Net cash and cash equivalents at the beginning
of the period 19,170 39,640 39,640
Net cash and cash equivalents at the end of the
period 16,713 78,986 19,170
Less cash held by asset held for sale (276) - (413)
--------------------------------------------------------- ----- -------------- -------------- --------------
Group cash and cash equivalents at the end of
the period 16,437 78,986 18,757
Represented by:
Cash and cash equivalents 16,437 78,986 18,757
Less customer funds (3,960) (2,783) (2,872) Adjusted net cash at the end of the period 12,477 76,203 15,885 --------------------------------------------------------- ----- -------------- -------------- --------------
Notes to the consolidated interim financial statements
For the six months ended 30 June 2018
1. General information
Sportech PLC (the "Company") is a company domiciled in the UK and listed on the London Stock Exchange. 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 2018 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. Consistent with the normal monthly reporting process, the actual date to which the balance sheet has been drawn up is to 2 July 2018 (2017: 3 July 2017). For ease of reference in these condensed interim financial statements, all references to the results for the period are for the period ended 30 June 2018 (2017: 30 June 2017) and the financial position at the same date. The principal activities of the Group are the provision of a tote technology platform to around 300 contracted parties (disclosed as segment "Racing and Digital"), and the operation, in Connecticut and California of licensed sports wagering venues (disclosed as segment "Venues"). Following the US Supreme Court decision to repeal PASPA and allow state regulation of sports betting, the Group has a new targeted market for this new product opportunity, and investment is being made to allow capitalisation of this as regulation allows (disclosed as segment "Sports betting").
The condensed consolidated interim financial statements were approved for issue on 21 August 2018.
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 2017 were approved by the Board of Directors on 23 April 2018 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.
These condensed consolidated interim financial statements have not been reviewed or audited.
2. Basis of preparation
a. These condensed consolidated interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. 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 2017 which have been prepared in accordance with IFRSs as adopted by the European Union.
b. After making reasonable enquiries, 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 financial statements.
c. The preparation of 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 judgments have been made by management with respect to the assumptions underpinning the Group's tax liabilities, the carrying value of intangible fixed assets, and the carrying value of contingent consideration receivable.
Restatement of previous periods
In accordance with IFRS 5, the historic results of Sportech Racing BV, the Venues business in the Netherlands, have been disclosed separately as those arising from a discontinued operation. This is due to the sale of this business to RBP Luxembourg S.A, which completed on 26 July 2018. This business was considered to be an asset held for sale as at 31 December 2017, and accordingly the interim results for the period ended 30 July 2017 have been restated to reflect this.
Certain intangible assets were presented within property, plant and equipment as at 30 June 2017 in the previous period. This has been identified and adjusted for. Note that this has no impact on the total non-current assets, net assets or any other financial statement category other than intangible assets and property, plant and equipment for that period.
d. The principal risks and uncertainties for the Group remain the same as those detailed on page 36 of the 2018 Sportech PLC Annual Report and Accounts, where descriptions of mitigating activities carried out by the Group are also outlined. Those risks include product popularity, technological changes, foreign exchange, and industry competition.
3. Accounting policies
The following standards, have been adopted by the Group with effect from 1 January 2018:
Applicable
Content for financial
year beginning
Standard or interpretation on or after
---------------------------- -------------------------------------- ----------------
IFRS 15 Revenue from contracts with customers 1 January 2018
IFRS 9 Financial instruments 1 January 2018
---------------------------- -------------------------------------- ----------------
Following the performance of an impact assessment by management, it was noted that there were considered to be immaterial amendments to the historic accounting treatment of its revenue or financial instruments in ensuring compliance with IFRS 15 or IFRS 9.
The following standards, amendments and interpretations that are not yet effective and have not been adopted early by the Group are as follows:
Applicable
Content for financial
year beginning
Standard or interpretation on or after
---------------------------- ---------- ----------------
IFRS 16 Leases 1 January 2019
---------------------------- ---------- ----------------
A review of the impact of IFRS 16 will be performed in the second half of 2018, and an analysis of this impact will be provided in the Annual Report for the year ended 31 December 2018.
Adjusted performance measures
The Executive Committee assesses the performance of the operating segments based on a measure of adjusted EBITDA which excludes the effects of non-recurring expenditure such as exceptional items and asset impairment charges. 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. This is considered the most reliable indicator as it is the closest approximation to cash generated by underlying trade, excluding the impact of one-off items of a material nature and working capital movements.
Adjusted EBITDA is not an IFRS measure, nevertheless 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:
Restated
Six months Six months Year
ended ended
30 June 30 June ended
Note 2018 2017 31 December
2017
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------------------- ------ --------------- -------------- --------------
Operating costs per income statement (22,553) (22,484) (68,065)
Add back:
Depreciation 13 1,388 1,251 2,740
Amortisation, excluding acquired intangible
assets 12 953 725 1,540
Amortisation of acquired intangible assets 12 - 140 350
Impairment of intangible assets 12 - - 12,040
Impairment of property, plant and equipment 13 - - 874
Share option charge, excluding acceleration
of charge for departing management 660 466 666
Accelerated IFRS 2 charge for departing
management - - 3,765
Fair value losses realised on shares held
in NYX Gaming Group - - 1,603
Exceptional items 7 451 310 5,603
--------------- -------------- --------------
Adjusted operating costs (19,101) (19,592) (38,884)
--------------- -------------- --------------
Adjusted EBITDA is calculated as below. Note that "other income", i.e. income arising on exceptional items (see note 7) is also excluded from adjusted EBITDA.
Restated
Six months Six months Year
ended ended
30 June 30 June ended
2018 2017 31 December
2017
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------- --------------- -------------- --------------
Revenue 31,580 33,501 66,271
Cost of sales (8,656) (9,181) (18,562)
---------------------------------- --------------- -------------- --------------
Gross profit 22,924 24,320 47,709
Marketing and distribution costs (1,026) (1,128) (2,118)
---------------------------------- --------------- -------------- --------------
Contribution 21,898 23,192 45,591
Adjusted operating costs (19,101) (19,592) (38,884)
---------------------------------- --------------- -------------- --------------
Adjusted EBITDA 2,797 3,600 6,707
---------------------------------- --------------- -------------- --------------
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 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 ended 30 June
2018
------------------------------------
Continuing Discontinued Total
GBP000 GBP000 GBP000
------------------------ --- ----------- ------------- --------
Adjusted EBITDA 2,797 114 2,911
Share option charge (660) - (660)
Depreciation (1,388) (48) (1,436)
Amortisation (953) (34) (987)
Finance income 40 - 40
-------------------------------- ----------- ------------- --------
Adjusted (loss)/profit
before tax (164) 32 (132)
-------------------------------- ----------- -------------
Tax at (6.0)% (8)
--------
Adjusted profit after
tax (124)
--------
Six months ended 30 June Year ended 31 December
2017 2017
------------------------------------ ------------------------------------
Continuing Discontinued Total Continuing Discontinued Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ----------- ------------- -------- ----------- ------------- --------
Adjusted EBITDA 3,600 5,940 9,540 6,707 6,172 12,879
Share option charge (466) - (466) (666) - (666)
Depreciation (1,251) (115) (1,366) (2,740) (179) (2,919)
Amortisation (excluding
amortisation of
acquired intangibles) (725) (520) (1,245) (1,540) (561) (2,101)
Finance charges (225) - (225) (212) - (212)
------------------------- ----------- ------------- -------- ----------- ------------- --------
Adjusted profit
before tax 933 5,305 6,238 1,549 5,432 6,981
------------------------- ----------- ------------- ----------- -------------
Tax* (886) (1,508)
------------------------- ----------- ------------- -------- ----------- ------------- --------
Adjusted profit
after tax 5,352 5,473
------------------------- ----------- ------------- -------- ----------- ------------- --------
* The adjusted tax rate for the six months ended 30 June 2017 is 14.2%, and for the year ended 31 December 2017 is 21.6%.
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 Executive Committee, which makes strategic and operational decisions.
The Group has identified its business segments as outlined below:
- Sportech Racing and Digital - provision of pari-mutuel wagering services and systems worldwide principally to the horseracing industry;
- Sportech Venues - off-track betting venue management;
- Sports betting - investments made to capitalise on regulation of sports betting in the US; and
- Corporate costs - central costs relating to the Company in its capacity as the holding company of the Group.
The Executive Committee 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 2018 (Unaudited)
---------------------------------------------------
Inter-segment
Racing Corporate Sports elimination
and Digital Venues costs betting Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Revenue from sale of goods 637 - - - - 637
Revenue from rendering of services 15,928 15,774 - - (759) 30,943
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Total revenue 16,565 15,774 - - (759) 31,580
Cost of sales (1,930) (7,485) - - 759 (8,656)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Gross profit 14,635 8,289 - - - 22,924
Marketing and distribution costs (388) (638) - - - (1,026)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Contribution 14,247 7,651 - - - 21,898
Adjusted operating expenses (10,973) (6,565) (1,073) (490) - (19,101)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Adjusted EBITDA 3,274 1,086 (1,073) (490) - 2,797
Share option charge - - (660) - - (660)
Depreciation (838) (537) (13) - - (1,388)
Amortisation (excluding
amortisation
of acquired intangibles) (837) - (116) - - (953)
Exceptional costs (48) (40) (363) - - (451)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Operating profit/(loss) 1,551 509 (2,225) (490) - (655)
------------------------------------ -------------- --------- ------------ ---------- --------------
Net finance income 53
Loss before taxation (602)
Taxation 28
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Loss from continuing operations (574)
Net loss from discontinued
operations (355)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Loss for the period (929)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Other segment items
Capital expenditure - intangible
fixed assets 1,569 - - - - 1,569
Capital expenditure - property,
plant and equipment 646 274 - - - 920
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Six months ended 30 June 2017 (Unaudited)
(Restated)*
---------------------------------------------------
Inter-segment
Racing Corporate Sports elimination
and Digital Venues costs betting Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Revenue from sale of goods 660 - - - - 660
Revenue from rendering of services 16,944 16,374 - - (477) 32,841
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Total revenue 17,604 16,374 - - (477) 33,501
Cost of sales (1,714) (7,837) - - 370 (9,181)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Gross profit 15,890 8,537 - - (107) 24,320
Marketing and distribution costs (452) (676) - - - (1,128)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Contribution 15,438 7,861 - - (107) 23,192
Adjusted operating expenses (11,570) (6,382) (1,747) - 107 (19,592)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Adjusted EBITDA 3,868 1,479 (1,747) - - 3,600
Share option charge - - (466) - - (466)
Depreciation (827) (374) (50) - - (1,251)
Amortisation (excluding
amortisation
of acquired intangibles) (673) - (52) - - (725)
Amortisation of acquired
intangibles (140) - - - - (140)
Exceptional costs (32) (32) (166) (80) - (310)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Operating profit/(loss) 2,196 1,073 (2,481) (80) - 708
------------------------------------ -------------- --------- ------------ ---------- --------------
Net finance charges (869)
Share of loss after tax of joint
ventures (159)
Loss before taxation (320)
Taxation 53
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Loss from continuing operations (267)
Net loss from discontinued
operations (2,974)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Loss for the period (3,241)
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Other segment items
Capital expenditure - intangible
fixed assets 1,731 - 77 - - 1,808
Capital expenditure - property,
plant and equipment 785 5,509 22 - - 6,316
------------------------------------ -------------- --------- ------------ ---------- -------------- ---------
Year ended 31 December 2017 (Audited)
(Restated)*
----------------------------------------------------
Inter-segment
Racing Corporate Sports elimination
and Digital Venues costs betting Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
Revenue from sale of goods 1,389 - - - (4) 1,385
Revenue from rendering of
services 34,080 31,606 - - (800) 64,886
---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
Total revenue 35,469 31,606 - - (804) 66,271
Cost of sales (4,335) (14,760) - - 533 (18,562)
---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
Gross profit 31,134 16,846 - - (271) 47,709
Marketing and distribution costs (754) (1,364) - - - (2,118)
---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
Contribution 30,380 15,482 - - (271) 45,591
Adjusted operating expenses (22,672) (13,985) (2,498) - 271 (38,884)
---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
Adjusted EBITDA 7,708 1,497 (2,498) - - 6,707
Share option charge, excluding
acceleration of charge for
departing
management - - (666) - - (666)
Depreciation (1,738) (928) (74) - - (2,740)
Amortisation (excluding
amortisation
of acquired intangibles) (1,400) - (140) - - (1,540)
Amortisation of acquired
intangibles (350) - - - - (350) Impairment of assets - (12,914) - - - (12,914) Acceleration of IFRS 2 charge for departing management - - (3,765) - - (3,765) Fair value losses realised on sale of shares held in NYX Gaming Group - (1,603) - - - (1,603) Exceptional income - - 827 - - 827 Exceptional costs (1,701) (1,480) (2,268) (154) - (5,603) ---------------------------------- -------------- ---------- ------------ ---------- -------------- ---------- Operating profit/(loss) 2,519 (15,428) (8,584) (154) - (21,647) ---------------------------------- -------------- ---------- ------------ ---------- -------------- Net finance charges (19) Share of loss after tax of joint ventures (1,484) Loss before taxation (23,150) Taxation 230 ---------------------------------- -------------- ---------- ------------ ---------- -------------- ---------- Loss from continuing operations (22,920) Net loss from discontinued operations (1,522) ---------------------------------- -------------- ---------- ------------ ---------- -------------- ---------- Loss for the period (24,442) ---------------------------------- -------------- ---------- ------------ ---------- -------------- ---------- Other segment items Capital expenditure - intangible fixed assets 3,891 - 57 - - 3,948 Capital expenditure - property, plant and equipment 1,281 5,608 16 - - 6,905 ---------------------------------- -------------- ---------- ------------ ---------- -------------- ----------
* Segmental results for 2017 periods have been restated to present any items attributable to the Group's new fourth segment, "Sports betting". Those costs in 2017 were solely costs of lobbying the State of Connecticut for expanded gaming. The comparative operating costs for 2018 have been presented within adjusted operating expenses.
4. Expenses by nature
Restated
Six months Six months
ended ended
30 June 30 June Year
2018 2017 ended
31 December
2017
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------- ---- --------------- -------------- ---------------
Cost of sales
Tote and track fees 5,526 6,232 12,166
F&B consumables 705 486 1,322
Betting and gaming duties 363 231 480
Repairs and maintenance cost of sales 169 176 402
Ticket paper 392 451 855
Programs 275 261 472
Outsourced service costs 885 889 1,605
Cost of inventories sold, including provision
for obsolete inventory 341 455 1,260
----------------------------------------------------- --------------- -------------- ---------------
Total cost of sales 8,656 9,181 18,562
----------------------------------------------------- --------------- -------------- ---------------
Marketing and distribution costs
Marketing 784 837 1,664
Vehicle costs 112 157 234
Freight 130 134 220
----------------------------------------------------- --------------- -------------- ---------------
Total marketing and distribution costs 1,026 1,128 2,118
----------------------------------------------------- --------------- -------------- ---------------
Adjusted operating costs
Staff costs - gross, excluding share option
charges 13,639 14,403 28,562
Less amounts capitalised (1,047) (1,099) (3,026)
----------------------------------------------------- --------------- -------------- ---------------
Staff costs - net 12,592 13,304 25,536
Property costs 2,562 2,645 5,454
IT & Communications 657 667 1,351
Professional fees 2,040 1,823 3,249
Travel and entertaining 679 765 1,524
Banking transaction costs and FX 163 77 271
Provision for doubtful debts - - 762
Other costs 408 311 737
----------------------------------------------------- --------------- -------------- ---------------
Total adjusted operating costs 19,101 19,592 38,884
----------------------------------------------------- --------------- -------------- ---------------
5. Exceptional items
Restated Restated
Six months Six Year
ended months
ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
--------------------------------------------------------- ---- --------------- -------------- --------------
Exceptional costs:
Redundancy and restructuring costs in respect of
the rationalisation and
modernisation of the business 251 - 2,291
Onerous contract provisions and other losses resulting
from exit from Californian operations - - 2,740
Compensation received in relation to 2016 New Jersey
data outage - - (45)
Costs in relation to the Spot the Ball legal case 160 - -
Licencing costs in New Jersey in respect of the
acquisition of Sportech Racing - 90 110
One off start up costs of new ventures, including
new venue builds and joint ventures 40 90 390
Earn out and similar costs required to be recognised
as an expense - 50 74
Release of provisions which did not arise during
period of Sportech ownership - - (261)
Professional fees associated with new remuneration
arrangements approved by shareholders - - 150
Costs of lobbying the State of Connecticut for
expanded gaming and enforcement of exclusive licence - 80 154
451 310 5,603
Exceptional income:
Net gain on successful outcome of Supreme Court
Spot the Ball ruling - - (827)
Net exceptional costs 451 310 4,776
--------------------------------------------------------------- --------------- -------------- --------------
6. Net finance income/(charges)
Six months Six Year
ended months
ended
30 June 30 June ended
31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
-------------------------------------------------------------- -------------- -------------- --------------
Finance income/(charges):
Interest payable on bank loans and overdrafts - (225) (159)
Interest earned on cash balances held 40 - -
Interest on defined benefit pension obligation - - (53)
-------------------------------------------------------------- -------------- -------------- --------------
Total finance costs 40 (225) (212)
-------------------------------------------------------------- -------------- -------------- --------------
Other finance income/(charges):
Foreign exchange (loss)/gain on financial assets and
liabilities denominated in foreign currency (25) (684) 97
Unwinding of interest on discounted non-current liabilities 38 40 96
-------------------------------------------------------------- -------------- -------------- --------------
Total other financial income/(charges) 13 (644) 193
-------------------------------------------------------------- -------------- -------------- --------------
Net finance income/(charges) 53 (869) (19)
-------------------------------------------------------------- -------------- -------------- --------------
7. 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 2017 is 1.2% (2017: (1.0)%). The movement is a result of a change in mix of profits/(losses) in jurisdictions with varying tax rates.
Profit/(loss) from discontinued operations
Results from discontinued operations includes the Football Pools division, disposed of in June 2017, and also the Venues business in The Netherlands, Sportech Racing BV and its subsidiaries ("Sportech Holland"). Sportech Holland was disposed of in full on 26 July 2018 and is considered to be a held for sale asset as at the reporting date. The sale of this business to RBP Luxembourg SA was structured as a locked box, with an effective date of 1 January 2018. The risks and benefits of its cash generation are therefore transferred to the purchaser from that date. Control of the entity did not however transfer until completion of the deal on 26 July 2018, and accordingly its results have been included in the six months ended 30 June 2018 as those of a discontinued operation.
Six months ended June
2018 (unaudited)
---------------------------
FP* Holland Total
GBP000 GBP000 GBP000
-------------------------------- --- ------- -------- --------
Revenue - 2,631 2,631
Cost of sales, marketing
and distribution and adjusted
operating (expenses)/income 46 (2,562) (2,516)
---------------------------------------- ------- -------- --------
Adjusted EBITDA 46 69 115
Depreciation and amortisation - (82) (82)
Exceptional costs - (461) (461)
Tax, excluding tax arising - - -
on disposal
-------------------------------- --- ------- -------- --------
Profit after tax 46 (474) (428)
Gain on disposal (note 10a) 73 - 73
---------------------------------------- ------- -------- --------
Net result from discontinued
operations 119 (474) (355)
---------------------------------------- ------- -------- --------
Exceptional costs incurred in the period by Sportech Holland are redundancy and restructuring costs in respect of a rationalisation of this business.
Six months ended June Year ended 31 December
2017 (unaudited) 2017 (audited)
----------------------------- -----------------------------
FP* Holland Total FP* Holland Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- -------- --------- -------- -------- ---------
Revenue 13,971 2,914 16,885 13,971 6,038 20,009
Cost of sales, marketing
and distribution and adjusted
operating expenses (8,226) (2,719) (10,945) (8,226) (5,611) (13,837)
-------------------------------- -------- -------- --------- -------- -------- ---------
Adjusted EBITDA 5,745 195 5,940 5,745 427 6,172
Depreciation and amortisation (523) (112) (635) (523) (216) (739)
Exceptional items (258) - (258) 917 (37) 880
--------------------------------
Profit before tax 4,964 83 5,047 6,139 174 6,313
Tax, excluding tax arising
on disposal (1,067) - (1,067) 632 - 632
-------------------------------- -------- -------- --------- -------- -------- ---------
Profit after tax 3,897 83 3,980 6,771 174 6,945
Loss on disposal (note
10a) (6,954) - (6,954) (8,467) - (8,467)
-------------------------------- -------- -------- --------- -------- -------- ---------
Net result from discontinued
operations (3,057) 83 (2,974) (1,696) 174 (1,522)
-------------------------------- -------- -------- --------- -------- -------- ---------
* Football Pools results for 2017 are to the date of disposal of 26 June 2017.
10a) Gain/(loss) on disposal is calculated as follows in respect of the Football Pools. As the sale of Holland did not complete until after the reporting date, no gain/loss on disposal has been recognised in these financial statements in respect of that disposal. This will be reflected in the financial statements for the year ended 31 December 2018.
Six months Six months Year ended
ended June ended June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBP000 GBP000 GBP000
----------------------------------------- ------------------ ------------------ ----------------
Consideration, net of working capital
adjustments 73 86,549 86,149
Net assets disposed of - (3,124) (3,124)
Goodwill relating to the Football Pools
division - (81,849) (81,849)
Transaction costs incurred in the year - (2,135) (3,248)
----------------------------------------- ------------------ ------------------ ----------------
Pre-tax gain/(loss) on disposal 73 (559) (2,072)
Tax arising on disposal - (6,395) (6,395)
----------------------------------------- ------------------ ------------------ ----------------
Gain/(loss) on disposal 73 (6,954) (8,467)
----------------------------------------- ------------------ ------------------ ----------------
8. (Loss)/earnings per share
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
(Unaudited) (Unaudited) (Audited)
-----------
Basic EPS Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
(Loss)/profit
for the
period
(GBP000) (574) (355) (929) (267) (2,974) (3,241) (22,778) (1,522) (24,300)
Weighted
average no
of shares 186,029 186,029 186,029 194,581 194,581 194,581 190,135 190,135 190,135
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
Basic EPS (0.3)p (0.2)p (0.5)p (0.1)p (1.5)p (1.7)p (12.0)p (0.8)p (12.8)p
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
(Unaudited) (Unaudited) (Audited)
-----------
Diluted EPS Continuing Discontinued Total Continuing Discontinued Total Continuing Discontinued Total
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
(Loss)/profit
for the
period
(GBP000) (565) (355) (920) (267) (2,974) (3,241) (22,778) (1,522) (24,300)
Weighted
average no
of shares 186,029 186,029 186,029 194,581 194,581 194,581 190,135 190,135 190,135
Dilutive
potential N/A N/A N/A N/A N/A N/A N/A N/A N/A
ordinary
shares
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
Total
potential
ordinary
shares 186,029 186,029 186,029 194,581 194,581 194,581 190,135 190,135 190,135
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
Diluted EPS (0.3)p (0.2)p (0.5)p (0.1)p (1.5)p (1.7)p (12.0)p (0.8)p (12.8)p
--------------- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- -----------
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.
Restated Restated
Six months Six months Year
ended ended
30 June 30 June ended 31
December
2017
2018 2017 (Audited)
Note (Unaudited) (Unaudited)
------------------------------ ------ -------------- -------------- ------------
Adjusted profit before tax 4 (124) 5,352 5,473
Basic Adjusted EPS (pence) (0.1)p 2.8p 2.9p
Diluted Adjusted EPS (pence) (0.1)p 2.8p 2.9p
------------------------------ ------ -------------- -------------- ------------
9. Intangible fixed assets
Six Six Year
months months
ended ended
30 June 30 June ended
31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------------------------------- -------------- -------------- --------------
At 1 January 11,629 27,833 27,833
Additions - continuing operations 1,569 1,808 3,948
Additions - discontinued operations - 952 1,032
Disposals - continuing operations - - (11)
Disposals - discontinued operations - (5,288) (5,029)
Transfer from property, plant and equipment - - 221
Amortisation charge for period - continuing operations (953) (865) (1,890)
Amortisation charge for period - discontinued operations - (520) (561)
Impairment - - (12,040)
Movement as a result of foreign exchange 305 212 (1,874)
-------------- -------------- --------------
Net book amount at end of period 12,550 24,132 11,629
---------------------------------------------------------- -------------- -------------- --------------
Property, plant and equipment
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------------------------------- -------------- -------------- --------------
At 1 January 25,705 26,182 26,182
Additions - continuing operations 920 6,316 6,905
Additions - discontinued operations - 56 72
Disposals - discontinued operations - (720) (1,063)
Transfer to intangible assets - - (221)
Depreciation charge for period - continuing operations (1,388) (1,251) (2,740)
Depreciation charge for period - discontinued operations - (115) (178)
Impairment - - (874)
Movement as a result of foreign exchange 529 (1,884) (2,378)
-------------- -------------- --------------
Net book amount at end of period 25,766 28,584 25,705
---------------------------------------------------------- -------------- -------------- --------------
10. Trade and other receivables
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
----------------------------------------------------- -------------- -------------- --------------
Non-current
Trade and other receivables 660 609 897
Contingent consideration receivable from disposal
of Sportech-NYX Gaming, LLC 1,629 1,547 1,546
----------------------------------------------------- -------------- -------------- --------------
Total non-current trade and other receivables 2,289 2,156 2,443
----------------------------------------------------- -------------- -------------- --------------
Current
Trade and other receivables 11,479 12,303 10,342
Total trade and other receivables 13,768 14,459 12,785
----------------------------------------------------- -------------- -------------- --------------
Contingent consideration receivable relates to that due on the 2015 disposal of Sportech-NYX Gaming, LLC to NYX Gaming Group Limited. This amount is payable as CAD $1.0m for each customer that goes live on the NYX Real Money Wagering Platform in the US, its territories and Commonwealth, Canada and all sovereign Indian Nations in these countries prior to 28 May 2020, up to a maximum of CAD $3.0m. Management continue to believe that NYX will acquire at least three customers to the relevant platform by this date, and therefore continue to recognise the contingent consideration in full (discounted to today's value at a rate of 8.3%). Movements on this receivable in the reporting period include unwinding this discount, plus exchange rate movements, given the consideration receivable is denominated in CAD.
11. Cash and cash equivalents
Six months Six Year
ended months
ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------- ----- -------------- -------------- --------------
Cash and short-term deposits 12,477 76,203 15,885
Customer funds 16 3,960 2,783 2,872
Total cash and cash equivalents 16,437 78,986 18,757
--------------------------------- ----- -------------- -------------- --------------
Customer funds are matched by liabilities of an equal value within trade and other payables (see note 16).
Included within cash and short-term deposits as at 30 June 2018 are amounts held in tills and vaults and other estimated amounts required by the Group to fund day to day working capital commitments totalling approximately GBP2.5m.
Trade and other payables
Six months Six Year
ended months
ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------- ----- -------------- -------------- --------------
Trade payables 6,014 7,560 5,356
Other taxes and social security costs 157 2,045 435
Accruals 5,825 4,728 7,107
Deferred income 208 129 288
Player liability 15 3,960 2,783 2,872
Total trade and other payables 16,164 17,245 16,058
--------------------------------------- ----- -------------- -------------- --------------
12. Provisions
Restated
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------------------------- ---- -------------- -------------- --------------
At beginning of period 2,626 558 558
Net charge to income statement, excluding releases
of provisions which did not arise during period
of Sportech ownership - - 2,553
Reclassification of provision for doubtful debts - - (125)
Utilised during the period (186) - -
Unwinding of discount on non-current provisions 7 - -
Release of provisions which did not arise during
period of Sportech ownership - - (261)
Reclassification as held for sale asset - - (30)
Currency movements 54 (30) (69)
---------------------------------------------------------- -------------- -------------- --------------
Total provisions 2,501 528 2,626
---------------------------------------------------------- -------------- -------------- --------------
Provisions are in relation to:
Current provisions
Onerous contracts 1,050 - 1,103
Other - 27 -
---------------------------------------------------- ---- -------------- -------------- --------------
Total current provisions 1,050 27 1,103
---------------------------------------------------------- -------------- -------------- --------------
Non-current provisions
Onerous contracts 1,338 112 1,411
Other 114 389 112
Total non-current provisions 1,452 501 1,523
---------------------------------------------------------- -------------- -------------- --------------
13. Cash flow from operating activities
Reconciliation of (loss)/profit before taxation to cash flows from operating activities for continuing operations
Restated
Six Six Year
months months
ended ended
30 June 30 June ended
31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------------------------------- -------------- -------------- --------------
(Loss)/profit before taxation - continuing operations (602) (320) (23,150)
Adjustments for:
Net exceptional items 451 310 4,776
Realised loss on sale of shares in NYX Gaming Group - - 1,603
Share of loss after tax and impairment of joint ventures
and associates - 159 1,484
Depreciation and amortisation 2,341 2,116 4,630
Impairment of assets - - 12,914
Net finance (income)/charges (53) 869 19
Acceleration of IFRS 2 charge for departing management - - 3,765
Share option expense 660 466 666
Employers' taxes paid on options vested (67) (21) (21)
Changes in working capital:
(Increase)/decrease in trade and other receivables (1,556) (2,090) 1,099
Decrease/(increase) in inventories 122 (842) (177)
Increase/(decrease) in trade and other payables,
excluding player liabilities 176 (1,087) (939)
Movement in customer funds 1,088 (45) (251)
Net cash from operating activities of continuing
operations, before exceptional items 2,560 (485) 6,418
---------------------------------------------------------- -------------- -------------- --------------
14. 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
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------------------------------- ---- -------------- -------------- --------------
Short-term employee benefits 511 842 1,438
Consultancy fees 174 - 146
Share-based payments 164 239 373
Accelerated IFRS 2 charge for departing management - - 3,567
Pay in lieu of notice - - 964
Post-employment benefits 5 1 51
Total 854 1,082 6,539
---------------------------------------------------------- -------------- -------------- --------------
b. The Group invested the following amounts of cash into each of its joint ventures and associates during the period:
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2017
2018 2017 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
---------------------------- ---- --------------- -------------- --------------
S&S Venues California, LLC - 78 173
Total - 78 173
---------------------------------- -------------- -------------- --------------
Statement of Directors' responsibilities
The Directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the Interim Management Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report and Accounts.
A list of current Directors of Sportech PLC is maintained on the Sportech PLC website: www.sportechplc.com.
On behalf of the Board
Andrew Gaughan Tom Hearne Chief Executive Chief Financial Officer 21 August 2018 21 August 2018
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.
END
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