Share Name Share Symbol Market Type Share ISIN Share Description
Sportech Plc LSE:SPO London Ordinary Share GB00B28ZPV64 ORD 20P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.20 0.61% 33.00 32.60 32.90 33.00 33.00 33.00 16,893 08:51:59
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 63.7 -2.4 -1.4 - 62

Sportech PLC Interim results

22/08/2019 7:01am

UK Regulatory (RNS & others)


Sportech (LSE:SPO)
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3 Months : From Aug 2019 to Nov 2019

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RNS Number : 8477J

Sportech PLC

22 August 2019

22 August 2019

Sportech PLC

("Sportech" or the "Group")

Interim results for the six months ended 30 June 2019

Sportech (LSE: SPO), the international betting technology business, is pleased to announce its interim results for the six months ended 30 June 2019.

Highlights

-- Appointed new Chairman and CEO and strengthened senior management team by appointing new CTO and adding new COO and CCO roles, with focus on accountability and tangible long-term growth delivery.

   --       Total Group revenue of GBP32.6 million (2018: GBP33.2 million using constant currency). 

-- EBITDA before Sports Betting investments of GBP4.3 million and Adjusted EBITDA of GBP3.4 million (2018: GBP4.4 million and GBP3.9 million using constant currency). The 2019 Adjusted EBITDA includes GBP0.9 million of costs related to Sports Betting (2018: GBP0.5 million).

   --       Business turnaround driving efficiencies as transformation of business continues at pace. 
   --       Corporate costs further reduced by 22 percent. 

-- 'Challenge Everything' drive delivering future operational efficiencies, including cost reductions executed in H1 that will generate efficiencies in H2 and beyond.

-- Digital transformation initiated across Group, supported by acquisition of additional platform and talent.

   --       Revenue growth in Racing, Bump 50:50 and Lottery offset by Venues' challenges. 

-- Delivered growth in core pari-mutuel ('Tote') business, with key initiatives such as the World Pool successfully launched; Global Pool also secured and new contracts secured in the US and Europe.

-- Bump 50:50: Strengthened market position with a record number of client acquisitions during the period.

-- Venues: Challenging wagering handle being tackled via cost management, asset review and strategic initiatives.

-- Developed proprietary Sports Betting platform, certified integration with Sportradar and commenced marketing to potential clients.

-- Positive decisions taken to restructure the business in H1 resulted in Exceptional cash outflows of GBP1.5m (2018: GBP1.7m). Management are focussed on extricating the Group in 2019 from historical expensive strategies and delivering an efficient lower operational cost base going forward.

   --       Group net cash of GBP11.8 million at 30 June 2019 (31 December 2018: GBP14.7 million). 
   --       The Board's current outlook for the full year remains in line with expectations. 

Financial Summary

 
                                                                      H1 2018        H1 2018 
                                                                     Constant       Reported 
 GBPm's                                              H1 2019    Currency(6,7)    Currency(7) 
--------------------------------------------------  --------  ---------------  ------------- 
 Revenue                                                32.6             33.2           31.4 
 Gross Profit                                           22.8             24.0           22.8 
 Contribution(1)                                        22.1             23.0           21.9 
 Adjusted EBITDA pre-Sports Betting Investment(2)        4.3              4.4            3.3 
 Adjusted EBITDA(3)                                      3.4              3.9            2.8 
 Loss before tax from continuing operations(4)         (2.4)            (0.6)          (0.6) 
 Adjusted loss before tax from continuing 
  operations(5)                                        (0.5)            (0.2)          (0.2) 
 
   1.     Contribution is defined as gross profit, less marketing and distribution costs. 

2. Excludes Sports Betting Investment during the period, amounting to GBP0.9 million (2018: GBP0.5 million).

3. Adjusted EBITDA is earnings before interest, taxation, depreciation and amortisation, share option charges and exceptional items as reported in note 7 of the Interim Financial Statements.

4. Decrease from 2018 mainly due to fall in Adjusted EBITDA, higher depreciation and amortisation (GBP0.4m), amortisation of the acquired intangible with Lot.to (GBP0.3m), increased share option charge (GBP0.4), higher exceptional costs (GBP0.2m) and higher finance costs (GBP0.2m), mainly foreign exchange).--

5. Adjusted loss from continuing operations is the aggregate of Adjusted EBITDA, normalised share option charges, depreciation, amortisation (excluding amortisation of acquired intangibles) and finance charges.

6. Prior year comparatives have been adjusted for estimated impact of IFRS 16 (increase in 2018 EBITDA of GBP0.9m). IFRS 16 allows reported comparatives not to be restated for the change in accounting policy for leases.

7. 2018 numbers have been corrected for a presentational reclassification of reward points from marketing expense to net off from revenue in the Venues division (six months ended 30 June 2018 reported: GBP155k, six months ended 30 June 2018 constant currency: GBP166k).

Richard McGuire, Chief Executive Officer of Sportech PLC, said:

"2019 marks a year of transition for Sportech with a clear focus on challenging the predominantly "industrial" culture, whilst driving efficiencies and delivering a range of products that enhance user experience. Sportech has made good progress in the period, with the Group's senior management team bolstered to help ensure accountability and increased effectiveness across every business line. Rigorous cost management remains a core focus for the Group and the Board expects to see further benefits going forward from the measures already taken.

"Further digitisation across existing and new business lines, the elimination of certain expensive strategies, the implementation of a lower operational cost base, and an enhanced global suite of products form the roadmap for H2, positioning the Group for 2020 and beyond. Management remain committed to delivering a superior product range to our global clients and remain confident about the Group's future potential."

For further information, please contact:

Sportech PLC Tel: + 44 (0) 117 902 9000

Giles Vardey, Chairman

Richard McGuire, 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

Notes to Editors:

About Sportech

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, lotteries 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 29,000 betting terminals deployed to over 400 clients in 37 countries. Its global systems process 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.

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, racetracks, casinos and lottery clients, 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 29,000 betting terminals deployed to over 400 clients in 37 countries. Its global systems process 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.

 
                                                Revenue                   EBITDA 
 GBP'000                                 H1 2019   H1 2018(1,2)   H1 2019   H1 2018(1,3) 
                                        --------  -------------  --------  ------------- 
 Racing and Digital                       17,937         16,888     3,726          3,562 
 Venues                                   14,990         16,652     1,409          1,871 
 Intercompany elimination / corporate 
  costs                                    (294)          (321)     (829)        (1,063) 
                                        --------  -------------  --------  ------------- 
                                          32,633         33,219     4,306          4,370 
 Sports Betting investment                     -              -     (905)          (513) 
                                        --------  -------------  --------  ------------- 
 Total at constant currency               32,633         33,219     3,401          3,857 
 Exchange rate impact                          -        (1,794)         -          (181) 
 IFRS 16 adjustment added back                 -              -         -          (879) 
                                        --------  -------------  --------  ------------- 
 Total reported                           32,633         31,425     3,401          2,797 
                                        --------  -------------  --------  ------------- 
 

1. 2018 numbers are at constant currency.

2. 2018 revenue has been corrected for a presentational reclassification of reward points from marketing expense to net off from revenue in the Venues division.

3. The Group has adopted IFRS 16 Leases at 1 January 2019. The Group has selected the modified retrospective transition method which allows prior year reported numbers to not be restated in the financial statements. The above prior year figures have been adjusted for IFRS 16 for comparability purposes only. The adjustment represents the 2019 lease rentals which would have been operating costs in 2019 if IFRS 16 had not been adopted, translated at 2019 exchange rates. GBP673k is related to Venues and GBP206k is related to Racing and Digital.

Sportech Racing and Digital

Sportech Racing and Digital provides betting technologies and services to 295 racetrack, off-track betting network, casino, lottery and online pari-mutuel operator clients, plus an additional 145 commingling clients, in 37 countries and 37 US states. We have an estimated 29,000 betting terminals, 27 white-label betting websites and 25 white-label mobile apps deployed worldwide and our systems annually process US$12 billion in betting handle.

The increase of 6.2% in Sportech Racing and Digital's revenues resulted from growth across all products. Lottery, Bump and our international businesses led the growth against a modest decline in our US business. We continue to leverage our core global Tote wagering platform whilst developing a digital product suite to complement our global capability to deliver a robust modern platform to our B2B international client-base. The success of the inaugural World Pool event at Royal Ascot with our clients Ascot Racecourse and Betfred Totepool, and in association with the Hong Kong Jockey Club, highlighted many strengths of our international Tote systems and services, delivering key global commingling initiatives such as this. Shortly thereafter, the agreement to deliver a Global Pool for Sports Information Services ("SIS") further emphasises our clients' belief in the strengths of our systems. In addition, we seamlessly processed over 100 million transactions during the Kentucky Derby. We continue to strengthen our web and mobile platforms and to pursue financial efficiencies and user enhancements with a new wagering hardware strategy.

 
                                              H1 2018     H1 2018 
                                             Constant    Reported 
 GBP'000                         H1 2019    Currency*    Currency 
                               ---------  -----------  ---------- 
 Sales revenue                     1,007          645         637 
 Service revenue                  16,930       16,243      15,928 
                               ---------  -----------  ---------- 
 Total revenue                    17,937       16,888      16,565 
                               ---------  -----------  ---------- 
 
 Contribution                     14,834       14,535      14,247 
 Contribution margin                 83%          86%         86% 
 
 Adjusted operating expenses    (11,108)     (10,973)    (10,973) 
                               ---------  -----------  ---------- 
 Adjusted EBITDA                   3,726        3,562       3,274 
                               ---------  -----------  ---------- 
 
 Intangible assets capex           1,389        1,669       1,569 
 Tangible assets capex               810          683         646 
                               ---------  -----------  ---------- 
 Total capex                       2,199        2,352       2,215 
                               ---------  -----------  ---------- 
 

*Operating expenses are adjusted by GBP206k for IFRS 16 Leases.

In January 2019, the Group completed the acquisition of Lot.to Systems Limited and commenced the integration of Lot.to talent and technologies, in the areas of Tote digital development, Sports Betting and iLottery. Key executives have been appointed to senior management positions within Sportech to help execute the Group's strategic initiatives with an emphasis on accountability, while the "Challenge Everything" culture introduced at the beginning of the year has been used to underpin Sportech's approach to efficiency, innovation and the user experience across all divisions and at all levels of the organisation.

Sportech's Quantum(TM) System software and our global service delivery network delivered a seamless inaugural World Pool, an international commingling project designed to maximise liquidity by combining tote betting from global outlets. The division also signed new commingling client SIS for which Sportech is creating and disseminating a worldwide racing pool.

In total, the Racing team signed eight contract extensions, including one with Boyd Gaming for continued servicing of their two racetracks in Louisiana, US. New clients include Belterra Park - also a Boyd Gaming property - and SIS.

The division's digital transformation is underway, with the appointment of a new Chief of Digital Development, investment in our digital infrastructure and the delivery of the latest G4 betting website to online clients. In addition to the G4 upgrades rolled out to existing clients, digital deployments include new white label G4 websites and Digital Link(R) Mobile apps for Parx Racing in Pennsylvania and for Camarero Park in Puerto Rico.

The division also progressed its terminal hardware project, identifying a new terminal line that will be introduced in H1 2020 to streamline capex, improve efficiency and provide an innovative and engaging end user experience.

Bump 50:50

Sportech's 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.

Revenues grew 17% at constant currency versus the prior period, from GBP691k to GBP808k. In H1 2019, the Bump 50:50 business added clients at an unprecedented rate, with an additional 18 clients signed year to date. An additional 18 clients renewed their contracts. Of the 18 new clients, seven were non-sports or entertainment affiliated charities such as the Special Olympics. This is an early result of a strategy to open up a significant new potential client base for Bump 50:50's proven package of technology and raffle sales strategies that help charities maximise fundraising for their good causes.

Bump 50:50 is seeking to continue expansion into non-sports markets while continuing to enhance technology, develop new raffle variations and pursue new team clients. A new Bump 50:50 CTO was appointed in the period to drive technology initiatives. The Group also held its second annual client relations event, Bump Academy Vegas, hosting representatives from 50 clients and prospective clients to learn how to maximise fundraising using Bump 50:50's proven tools for growth.

Critical investment was made during the period to enable the business to execute its growth strategy, which seeks to deliver enhanced performance from 2020 onwards. These include new licences, new progressive product design, technology for mobile and online growth and investment in the Bump Academy client event. This has caused a reduction in EBITDA which was GBP7k for H1 2019, versus GBP141k in H1 2018.

Lottery

We increased sales agent distribution capability to a key client with the delivery of additional terminals and launched a progressive lottery. Sportech enters the Lottery marketplace in earnest with the acquisition of the technology platforms and talent of Lot.to Systems and the blending of these assets into Sportech's organisation. Sportech is combining lottery games resident on Sportech's Quantum(TM) System, its POS terminal hardware and software technology and enhanced iLottery product suite from Lot.to to offer a comprehensive lottery solution with a key mobile component and robust administrative, CRM and marketing tools.

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, online and telephone betting.

Our Connecticut retail operation experienced handle softness in H1, down 10% on the previous period, which illustrated the high operational leverage concerns. The attraction of Sports Betting in neighbouring states, some issues with the quality of racing product during the period and a lack of potential Triple Crown winner were main deficiencies. We are tackling this with immediate cost management actions, detailed analysis of our estate and a variety of strategic initiatives.

We closed one venue during the period with the expiration of a high-cost lease, resulting in no discernible loss of revenue as customers shifted to other regional outlets and to online platforms. We have also placed one of our freehold assets on the market for sale, as it's in a beneficial tax development zone for developers, and will appraise the market as events develop.

Sportech Venues now anticipates enforcement of the protections of Sportech's exclusive off-track betting licence in the State of Connecticut through legislation passed in June 2019, coming into effect October 2019, and are developing a strategy to enhance returns as the only legal and licensed operator in the State for pari-mutuel betting. To support this acquisition campaign and the anticipated addition of legal Sports Betting in the State, we launched a redesigned MyWinners.com website under a new brand unveiled with the launch.

The Group engaged in a comprehensive and sustained campaign and made significant progress elevating Sportech's profile as a key participant in any comprehensive gaming solution which Connecticut lawmakers design. Sportech continues to be a proactive supporter of legislation to regulate Sports Betting, deliver licensing to current in-state gaming operators and provide a competitive consumer product to minimise the attraction of the illegal market.

 
                                                 H1 2018        H1 2018 
                                                Constant       Reported 
 GBP'000                        H1 2019    Currency(1,2)    Currency(2) 
                               --------  ---------------  ------------- 
 F&B - Stamford                     961            1,153          1,081 
 F&B - Other                      1,294            1,350          1,265 
                               --------  ---------------  ------------- 
 F&B - Total                      2,255            2,503          2,346 
 Wagering revenue                12,735           14,149         13,273 
 Total revenue                   14,990           16,652         15,619 
 
 Contribution                     7,275            8,158          7,651 
 Contribution margin                49%              49%            49% 
 
 Adjusted operating expenses    (5,866)          (6,287)        (6,565) 
                               --------  ---------------  ------------- 
 Adjusted EBITDA                  1,409            1,871          1,086 
                               --------  ---------------  ------------- 
 
 Total capex                        153              292            274 
                               --------  ---------------  ------------- 
 

1. Operating expenses are adjusted by GBP673k for IFRS 16 Leases.

2. 2018 numbers have been corrected for a presentational reclassification of reward points from marketing expense to net off from revenue (six months ended 30 June 2018 reported: GBP155k, six months ended 30 June 2018 constant currency: GBP166k).

US Sports Betting

The B2B Sports Betting opportunity in the US is highly competitive with a B2B gold rush continuing as states adopt legislation. Sportech is engaged with targeted sales and marketing efforts during the period and continue to pursue opportunities.

In 2018, Sportech entered into an agreement with Sportradar to deliver Sports Betting solutions to US operators with Sportradar's data, trading and risk management services and a third-party technology platform. In early H1, Sportech opted to develop a proprietary Sports Betting platform in-house to integrate with the Sportradar managed trading system. This proprietary solution, development of which is nearing completion, offers Sportech greater control and flexibility and will produce greater economic efficiency as and when we deploy it at our B2C Venues in Connecticut and for B2B clients elsewhere.

Sports Betting remains a complex issue both in the State of Connecticut and in other states. Sustained government relations work in Connecticut helped keep Sportech in the forefront for a state-wide gaming solution but Connecticut lawmakers did not legalise Sports Betting in the 2019 legislative session. We remain fully cooperative with the State and all stakeholders in seeking to deliver a solution that protects Sportech's investments and the interests of Sportech staff across the State.

With the development of our proprietary Sports Betting platform, integrated with Sportradar data and risk management, we believe that Sportech remains in a good position to offer a competitive integrated sports and race betting solution in other US states and will update the market as events develop.

Corporate Costs

The focus on efficiency drive throughout the business extended to our corporate cost base where costs dropped 22% during the period to GBP829k (2018: GBP1,063k).

Depreciation and Amortisation

The Group's normal depreciation and amortisation charge increased from GBP2.4 million (constant currency) to GBP3.4 million. The increase is mainly due to adopting IFRS 16 (GBP731k).

Exceptional Costs

The Group had exceptional administration costs of GBP0.7 million (2018: GBP0.5 million). H1 2019 items include redundancy payments and staff exits in line with employment contracts, legal and actuarial costs in relation to the UK defined benefit scheme buy-in, ongoing litigation costs, professional tax advisory work and the closure of certain non-core and expensive business.

As noted below, management is focussed on extricating the Group in 2019 from historical expensive strategies and therefore anticipates a significant reduction in "Exceptional Costs" in 2020.

Net Finance (Costs)/Income

The Group has no debt. The Group has net finance costs of GBP0.4 million (2018: income of GBP0.1 million). The increase in costs is a result of adopting IFRS 16 and foreign exchange movements.

Taxation

A tax credit for the period of GBP0.5 million represents the expected weighted average annual taxation rate on profits and losses in the jurisdictions in which the Group operates of 19.7% (2018: GBP28k, 1.2%). Tax paid in the period was GBP0.4 million, being withholding taxes (2018: GBP0.8 million).

Net Cash/Net Current Assets

The Group held cash balances of GBP11.8 million, excluding customer balances (31 December 2018: GBP14.7 million). The decrease in cash is mostly attributable to working capital movements, the acquisition of Lot.to and payments of exceptional costs.

Capital Expenditure

Capital expenditure in the period was GBP2.4 million (2018: GBP2.5 million). The decrease is due to a GBP168k reduction in the capitalisation of intangible assets offset by an increase of GBP43k spend of tangible assets, mostly related to new servers to enhance our digital offering.

Shareholders' Funds

Total equity and the Group's net assets at 30 June 2019 are GBP50.8 million (31 December 2018: GBP52.4 million). The reduction being; GBP1.0 million IFRS 16 transition adjustment, GBP2.0 million loss after tax, GBP0.2 million currency movements, GBP0.2 million defined benefit buy-in cost, net of GBP1.1 million share option reserve movement and GBP0.7m increase in equity from the issue of shares in consideration for the acquisition of Lo.to Systems Limited.

Auditor change

The Company undertook a competitive tender process for the position of statutory auditor during the period. It was mutually agreed with PricewaterhouseCoopers LLP ("PwC") that PwC would not participate in the tender as the length of their possible tenure would have only allowed one more year before mandatory rotation rules applied. Also, the current PwC engagement leader had served his maximum five year term on the Sportech audit. There were no other matters connected with PwC ceasing to hold office as auditors of the Company and a letter stating such, which was received from PwC on 20 August 2019, will be sent to every person who under s423 of the Companies Act 2006 is entitled to be sent copies of the accounts by 3 September 2019 as required by s520(2) of the Companies Act 2006.

BDO LLP were selected through the tender process and will be appointed as auditor of the Company for the year ending 31 December 2019. The appointment of BDO as auditor will be subject to confirmation by the shareholders at the 2020 Annual General Meeting of the Company.

Outlook

Effective cost management, whilst assessing and delivering innovative products across the businesses, remains the core focus for the Group. Digitisation across existing and new business lines forms the roadmap for the second half and management is determined to extricate the Group from historical expensive strategies and investment plans by the end of 2019 to position Sportech appropriately, with a clear vision and growth strategy. The Board's current outlook for the full year remains in line with expectations.

Venues

The delivery of an appropriate Sports Betting licence is critical to the growth of the Connecticut venues business and will continue to be a key focus for senior management. We shall update the market with developments in the Group's real estate portfolio and will seek to execute a revenue growth model capitalising on the exclusive pari-mutuel licence. There are certain commercially sensitive partnership plans under review and Sportech shall appraise the market at an appropriate time.

Racing and Digital

Digitisation of the Group's core Quantum(TM) System Tote will continue in the second half, leading to an expansion of our global footprint and elevation of service to our core Tote clients, as we simultaneously explore new avenues for digital growth and streamlined capex. Acquired CRM, administrative and reporting tools are being integrated with our Tote and Digital platforms to deliver enhanced capabilities to clients.

The H1 investment in Bump has created the capacity to extend our range of services to a wider range of clients with an enhanced product suite, including new progressive jackpots and additional proprietary functionality.

Lottery

We will leverage our combined Sportech lottery and acquired iLottery platforms to expand our client base and enhance our product suite through digitisation and innovation.

Sports Betting

--

The Group changed tactics and developed a proprietary Sports Betting platform during H1 2019 and has commenced marketing our B2B capabilities to US clients. We believe we have a strong product offering, supported by Sportradar media agreements announced this year with the NFL and NBA leagues. The position in Connecticut, where we have our B2C business, is more complex with uncertainty around State licensing. However we are focused on seeking a solution that could provide an engaging Sports Betting product to our consumers across the State in venue and online, similar to our current pari-mutuel licence.

Tax matters

As previously announced, the Company is in ongoing discussions with tax regulators in respect of certain historical tax liabilities.

Following the Spot the Ball VAT reclaim in 2016, the Group filed tax returns and paid corporation tax on the income, some of which was treated as a capital gain and offset against capital losses in the Group of GBP23 million, reducing the corporation tax bill on the refund by GBP4.6 million. HMRC have challenged the tax treatment adopted and the Company remains in discussions with them to resolve the matter. The Board took extensive professional advice on the treatment in the tax returns and believe the tax paid was appropriate. We will continue to update as progress is made.

In addition, the Group made an 'in escrow' payment to HMRC of GBP1.3 million in Q1 2018 in order to progress an appeal the Group is making against HMRC for VAT on head office costs going back a number of years, assessments on which amount to GBP3.3 million (including the GBP1.3m already paid). The Board continues to follow professional advice on this matter and will update as progress is made.

Richard McGuire

Chief Executive Officer

21 August 2019

Interim consolidated income statement

For the six months ended 30 June 2019

 
                                                                 Six months      Six months           Year 
                                                                      ended           ended 
                                                                    30 June         30 June          ended 
                                                                       2019            2018    31 December 
                                                                                                      2018 
                                                                (Unaudited)     (Unaudited)      (Audited) 
                                                       Note          GBP000          GBP000         GBP000 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Revenue                                                             32,633          31,425         63,462 
 Cost of sales                                            6         (9,798)         (8,656)       (17,619) 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Gross profit                                                        22,835          22,769         45,843 
 Marketing and distribution costs                         6           (726)           (871)        (1,732) 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Contribution                                                        22,109          21,898         44,111 
                                                         4, 
 Operating costs                                          6        (24,186)        (22,553)       (47,196) 
 Other income                                                             -               -            173 
 Operating loss                                                     (2,077)           (655)        (2,912) 
 Finance costs                                            8           (247)               -           (67) 
 Finance income                                           8              34              40             85 
 Other financial (costs)/income                           8           (151)              13            455 
 Loss before taxation from continuing operations                    (2,441)           (602)        (2,439) 
 Taxation - continuing operations                         9             482              28        (2,019) 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Loss for the period from continuing operations                     (1,959)           (574)        (4,458) 
 Net (loss)/profit from discontinued operations          11               -           (355)          1,822 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Loss for the period                                                (1,959)           (929)        (2,636) 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 
 Attributable to: 
 Owners of the Company                                              (1,959)           (929)        (2,636) 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 
 Basic earnings per share attributable to owners 
  of the Company 
 From continuing operations                              12          (1.0)p          (0.3)p         (2.4)p 
 From discontinued operations                            12               -          (0.2)p           1.0p 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Total                                                   12          (1.0)p          (0.5)p         (1.4)p 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Diluted earnings per share attributable to owners 
  of the Company 
 From continuing operations                              12          (1.0)p          (0.3)p         (2.4)p 
 From discontinued operations                            12               -          (0.2)p           1.0p 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 Total                                                   12          (1.0)p          (0.5)p         (1.4)p 
 
 Adjusted earnings per share attributable to owners 
  of the Company 
 Basic                                                   12          (0.2)p          (0.1)p           0.3p 
 Diluted                                                 12          (0.2)p          (0.1)p           0.3p 
----------------------------------------------------  -----  --------------  --------------  ------------- 
 

Interim consolidated statement of comprehensive income

For the six months ended 30 June 2019

 
                                                             Six months             Six 
                                                                  ended          months 
                                                                                  ended 
                                                                30 June              30 
                                                                                   June 
                                                                   2019            2018     Year ended 
                                                                                           31 December 
                                                                                                  2018 
                                                            (Unaudited)     (Unaudited)      (Audited) 
                                                                 GBP000          GBP000         GBP000 
-------------------------------------------------------  --------------  --------------  ------------- 
 Loss for the period                                            (1,959)           (929)        (2,636) 
-------------------------------------------------------  --------------  --------------  ------------- 
 Other comprehensive (expense)/income: 
 Items that will not be reclassified to profit and 
  loss 
  Actuarial gain on retirement benefit liability                      -               -            315 
  UK defined benefit pension scheme "buy-in" insurance            (234)               -              - 
   contract purchased 
  Deferred tax on movement on retirement benefit 
   liability                                                          -               -           (83) 
-------------------------------------------------------  --------------  --------------  ------------- 
                                                                  (234)               -            232 
 Items that may be subsequently reclassified to 
  profit and loss 
  Currency translation differences                                (211)             766          2,411 
-------------------------------------------------------  --------------  --------------  ------------- 
 Total other comprehensive (expense)/income for 
  the period, net of tax                                          (445)             766          2,643 
-------------------------------------------------------  --------------  --------------  ------------- 
 Total comprehensive (expense)/income for the period            (2,404)           (163)              7 
-------------------------------------------------------  --------------  --------------  ------------- 
 
 Attributable to: 
 Owners of the Company                                          (2,404)           (163)              7 
-------------------------------------------------------  --------------  --------------  ------------- 
 

Interim consolidated statement of changes in equity

For the six months ended 30 June 2019

 
                                               Other reserves 
                                   ------------------------------------- 
 
                                         Capital       Share                  Foreign 
                         Ordinary     redemption      option     Pension     exchange     Retained 
                           shares        reserve     reserve     reserve      reserve     earnings     Total 
 Six months ended 30       GBP000         GBP000      GBP000      GBP000       GBP000       GBP000    GBP000 
 June 2019 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 1 January 2019 
  (audited)                37,350         10,312       7,536       (414)        8,537     (10,949)    52,372 
 Adjustment for 
  adoption of IFRS 
  16*                           -              -           -           -            -        (985)     (985) 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Restated at 1 
  January 2019             37,350         10,312       7,536       (414)        8,537     (11,934)    51,387 
 Comprehensive 
 expense 
  Loss for the 
   period                       -              -           -           -            -      (1,959)   (1,959) 
 Other comprehensive 
 expense 
  Currency 
   translation 
   differences                  -              -           -           -        (211)            -     (211) 
  UK defined benefit 
   pension scheme 
   "buy-in" 
   insurance 
   contract 
   purchased                    -              -           -       (234)            -            -     (234) 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total comprehensive 
  expense                       -              -           -       (234)        (211)      (1,959)   (2,404) 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Transactions with 
 owners 
  Share option 
   charge                       -              -       1,073           -            -            -     1,073 
  Shares issued in 
   relation to the 
   acquisition of 
   Lot.to Systems 
   Limited                    400              -           -           -            -          314       714 
 Total transactions 
  with owners                 400              -       1,073           -            -          314     1,787 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total changes in 
  equity                      400              -       1,073       (234)        (211)      (1,645)     (617) 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 30 June 2019 
  (unaudited)              37,750         10,312       8,609       (648)        8,326     (13,579)    50,770 
--------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 
 

* Net of deferred tax

 
                                                               Other reserves 
                                             -------------------------------------------------- 
 
                                                   Capital       Share                  Foreign 
                                   Ordinary     redemption      option     Pension     exchange     Retained 
                                     shares        reserve     reserve     reserve      reserve     earnings     Total 
 Six months ended 30 June 2018       GBP000         GBP000      GBP000      GBP000       GBP000       GBP000    GBP000 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 1 January 2018 (audited)         37,123         10,312       6,608       (646)        6,126      (8,313)    51,210 
 Comprehensive expense 
  Loss for the period                     -              -           -           -            -        (929)     (929) 
 Other comprehensive 
 income/(expense) 
  Currency translation 
   differences                            -              -           -          42          724            -       766 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total comprehensive 
  income/(expense)                        -              -           -          42          724        (929)     (163) 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Transactions with owners 
  Share option charge                     -              -         660           -            -            -       660 
  Employment taxes paid on 
   vesting 
   of options                             -              -        (67)           -            -            -      (67) 
  Shares issued in relation to 
   PSP                                  227              -       (227)           -            -            -         - 
 Total transactions with 
  owners                                227              -         366           -            -            -       593 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total changes in equity                227              -         366          42          724        (929)       430 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 30 June 2018 (unaudited)         37,350         10,312       6,974       (604)        6,850      (9,242)    51,640 
------------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 
 
                                                                    Other reserves 
                                           --------------------------------------------------------------- 
 
                                                 Capital       Share                  Foreign 
                                 Ordinary     redemption      option     Pension     exchange     Retained 
                                   shares        Reserve     reserve     reserve      reserve     earnings     Total 
 Year ended 31 December 2018       GBP000         GBP000      GBP000      GBP000       GBP000       GBP000    GBP000 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 1 January 2018 (audited)       37,123         10,312       6,608       (646)        6,126      (8,313)    51,210 
 Comprehensive 
 income/(expense) 
  Loss for the year                     -              -           -           -            -      (2,636)   (2,636) 
 Other comprehensive income 
  Actuarial gain on defined 
   benefit 
   pension liability *                  -              -           -         232            -            -       232 
  Currency translation 
   differences                          -              -           -           -        2,411            -     2,411 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total other comprehensive 
  income                                -              -           -         232        2,411            -     2,643 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total comprehensive 
  income/(expense)                      -              -           -         232        2,411      (2,636)         7 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Transactions with owners 
  Share option charge                   -              -       1,222           -            -            -     1,222 
  Employer taxes paid on 
   vesting 
   of options                           -              -        (67)           -            -            -      (67) 
  Shares issues in relation 
   to 
   the PSP                            227              -       (227)           -            -            -         - 
 Total transactions with 
  owners                              227              -         928           -            -            -     1,155 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 Total changes in equity              227              -         928         232        2,411      (2,636)     1,162 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 At 31 December 2018 
  (audited)                        37,350         10,312       7,536       (414)        8,537     (10,949)    52,372 
----------------------------  -----------  -------------  ----------  ----------  -----------  -----------  -------- 
 
   *              Net of deferred tax 

Interim consolidated balance sheet

As at 30 June 2019

 
 
                                                  As at            As at           As at 
                                                     30          30 June     31 December 
                                                   June             2018            2018 
                                                   2019      (Unaudited)       (Audited) 
                                            (Unaudited) 
                                  Note           GBP000           GBP000          GBP000 
-------------------------------  -----  ---------------  ---------------  -------------- 
 ASSETS 
 Non-current assets 
 Intangible fixed assets            13           15,846           12,550          13,551 
 Property, plant and equipment      14           25,533           25,766          26,337 
 Right-of-use assets                15            7,162                -               - 
 Trade and other receivables        16              601            2,289             667 
 Deferred tax assets                              6,563            7,259           5,979 
-------------------------------  -----  ---------------  ---------------  -------------- 
                                                 55,705           47,864          46,534 
-------------------------------  -----  ---------------  ---------------  -------------- 
 Current assets 
 Trade and other receivables        16           10,637           11,479           8,169 
 Inventories                                      2,864            2,609           2,576 
 Assets held for sale                                 -              270               - 
 Cash and cash equivalents          17           14,888           16,437          17,915 
-------------------------------  -----  ---------------  ---------------  -------------- 
                                                 28,389           30,795          28,660 
-------------------------------  -----  ---------------  ---------------  -------------- 
 TOTAL ASSETS                                    84,094           78,659          75,194 
-------------------------------  -----  ---------------  ---------------  -------------- 
 LIABILITIES 
 Current liabilities 
 Trade and other payables           18         (14,647)         (16,164)        (12,946) 
 Provisions                         19            (737)          (1,050)           (977) 
 Lease liabilities                  21          (1,234)                -               - 
 Financial liabilities              22            (500)                -               - 
 Current tax liabilities                        (6,516)          (7,008)         (6,563) 
-------------------------------  -----  ---------------  ---------------  -------------- 
                                               (23,634)         (24,222)        (20,486) 
-------------------------------  -----  ---------------  ---------------  -------------- 
 Net current assets                               4,755            6,573           8,174 
-------------------------------  -----  ---------------  ---------------  -------------- 
 Non-current liabilities 
 Retirement benefit liability                     (898)          (1,345)           (902) 
 Lease liabilities                  21          (7,297)                -               - 
 Provisions                         19          (1,495)          (1,452)         (1,434) 
                                                (9,690)          (2,797)         (2,336) 
-------------------------------  -----  ---------------  ---------------  -------------- 
 TOTAL LIABILITIES                             (33,324)         (27,019)        (22,822) 
-------------------------------  -----  ---------------  ---------------  -------------- 
 NET ASSETS                                      50,770           51,640          52,372 
-------------------------------  -----  ---------------  ---------------  -------------- 
 
 EQUITY 
 Ordinary shares                                 37,750           37,350          37,350 
 Other reserves                                  26,599           23,532          25,971 
 Retained earnings                             (13,579)          (9,242)        (10,949) 
-------------------------------  -----  ---------------  ---------------  -------------- 
 TOTAL EQUITY                                    50,770           51,640          52,372 
-------------------------------  -----  ---------------  ---------------  -------------- 
 
 

Interim consolidated statement of cash flows

For the six months ended 30 June 2019

 
 
                                                                 Six months       Six months            Year 
                                                                                       ended 
                                                                      ended          30 June           ended 
                                                                                                 31 December 
                                                                                                        2018 
                                                                    30 June             2018       (Audited) 
                                                                       2019      (Unaudited) 
                                                                (Unaudited) 
                                                       Note          GBP000           GBP000          GBP000 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Cash flows from operating activities 
 Net cash generated from operations, before 
  exceptional items                                      20           2,819            2,560           5,890 
 Interest received                                                       34               41              85 
 Interest paid                                                            -                -            (22) 
 Tax paid                                                             (393)            (772)         (2,029) 
 Net cash generated from operating activities 
  before exceptional items                                            2,460            1,829           3,924 
 Exceptional cash inflows                                                 -              487             487 
 Exceptional cash outflows                                7         (1,469)          (1,697)         (2,320) 
 Cash generated from operations - continuing 
  operations                                                            991              619           2,091 
 Cash used in operations - discontinued operations                        -             (83)            (37) 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Net cash flows from operating activities                               991              536           2,054 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Cash flows from investing activities 
 Investment in joint ventures and associates             23           (230)            (187)           (291) 
 Disposal of Football Pools division                                      -                -             275 
 Disposal of Sportech Racing BV (net of transaction 
  costs)                                                                235                -           2,411 
 Contingent consideration paid for Bump (Worldwide) 
  Inc.                                                                    -            (167)           (167) 
 Purchase of Lot.to Systems Limited, net of 
  cash acquired                                          10           (729)                -               - 
 Investment in intangible fixed assets                   13         (1,401)          (1,569)         (3,106) 
 Purchase of property, plant and equipment               14           (963)            (920)         (1,927) 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Cash used in investing activities - continuing 
  operations                                                        (3,088)          (2,843)         (2,805) 
 Cash used in investing activities - discontinued                         -             (54)               - 
  operations 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Net cash used in investing activities                              (3,088)          (2,897)         (2,805) 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Cash flows from financing activities 
 Payment of lease liabilities                                         (889)                -               - 
 Net cash used in financing activities                                (889)                -               - 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Net decrease in cash and cash equivalents                          (2,986)          (2,361)           (751) 
 Effect of foreign exchange on cash and cash 
  equivalents                                                          (41)             (96)            (91) 
 Net cash and cash equivalents at the beginning 
  of the period                                                      17,915           19,170          18,757 
 Net cash and cash equivalents at the end of 
  the period                                                         14,888           16,713          17,915 
 Less cash held by asset held for sale                                    -            (276)               - 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 Group cash and cash equivalents at the end 
  of the period                                                      14,888           16,437          17,915 
 
 Represented by: 
 Cash and cash equivalents                               17          14,888           16,437          17,915 
 Less customer funds                                     17         (3,093)          (3,960)         (3,187) 
 Adjusted net cash at the end of the period              17          11,795           12,477          14,728 
----------------------------------------------------  -----  --------------  ---------------  -------------- 
 
 

Notes to the consolidated interim financial statements

For the six months ended 30 June 2019

   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 2019 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 30 June 2019 (2018: 1 July 2018). 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 2019 (2018: 30 June 2018) and the financial position at the same date. The principal activities of the Group are the provision of pari-mutuel betting (B2C) and the supply of wagering technology solutions (B2B).

The condensed consolidated interim financial statements were approved for issue on 21 August 2019.

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 2018 were approved by the Board of Directors on 20 March 2019 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 2018 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 judgements have been made by management with respect to the assumptions underpinning the Group's tax liabilities 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 30 and 31 of the 2018 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, technological changes, customer concentration and industry competition, foreign exchange and failure to implement a Sports Betting strategy.

e. Management have corrected the accounting for award points granted to players in the Sportech Venues Segment, these awards were previously charged to the income statement within marketing and distribution costs. The value of the awards are now debited to revenue. The prior year presentation has been corrected for comparability purposes. The effect on prior year revenue in the six month period to 30 June 2018 was a reduction of GBP155k (year ended 31 December 2018: GBP256k), there is a corresponding reduction in marketing and distribution costs.

   3.    Accounting policies 

The following standards, amendments and interpretations that are not yet effective and have not been adopted early by the Group are as follows:

 
 
                                    Applicable 
                                 for financial 
                                year beginning 
  Standard or interpretation       on or after 
----------------------------  ---------------- 
 IFRS 17 Insurance Contracts    1 January 2021 
----------------------------  ---------------- 
 

IFRS 17 is not relevant to the Group.

The following standards, have been adopted by the Group with effect from 1 January 2019:

 
 
                                                                       Applicable 
                                                                    for financial 
                                                                   year beginning 
  Standard or interpretation                                          on or after 
---------------------------------------------------------------  ---------------- 
 IFRS 16                                                           1 January 2019 
 IFRS 9 (2014) Financial Instruments (Amendment - Prepayment       1 January 2019 
  Features with Negative Compensation and Modifications 
  of Financial Liabilities 
 IAS 28 - Investments in Associate and Joint Ventures              1 January 2019 
  (Amendment - Long-term Interests in Associates and Joint 
  Ventures) 
 Annual Improvements to IFRSs 2015 - 2017 Cycle (IFRS              1 January 2019 
  3 Business Combinations and IFRS 11 Joint Arrangements, 
  IAS 12 Income Taxes and IAS 23 Borrowing Costs) 
 IFRIC Interpretation 23 Uncertainty over Income Tax Treatments    1 January 2019 
 Amendments to IAS 19 Employee Benefits                            1 January 2019 
---------------------------------------------------------------  ---------------- 
 

Of the above, only IFRS 9 and IFRS 17 are not relevant to the Group. All of the other pronouncements are relevant, but only the application of IFRS 16 has had an impact on the Group's accounting.

Except as described below, the accounting policies applied in these condensed interim financial statements are the same as those applied in the last annual financial statements (the policy for recognising and measuring income taxes in the interim period is described in note 9).

The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements for the year ended 31 December 2019.

The Group has initially adopted IFRS 16 Leases from 1 January 2019. IFRS 16 introduced a single, on-balance sheet accounting model for leases. As a result, the Group, as a lessee, has recognised right-of-use assets recognising its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting is not applicable to the Group but would have remained the same under IFRS 16 if it were.

The Group has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings on 1 January 2019. Accordingly, the comparative information presented for 2018 has not been restated - i.e. it is presented as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below:

   A)   Definition of a lease 

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4 Determining whether an arrangement contains a lease. The Group now assesses whether a contract is or contains a lease based on a new definition of a lease. Under IFRS 16, a contract is, or contains a lease if a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not re-assessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.

At inception or reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone process.

   B)   As a lessee 

The Group leases many assets including property, vehicles and IT equipment.

As a lessee the Group previously classified leases based on its assessment of whether a lease transferred substantially all the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most leases i.e. these leases are on-balance sheet.

However, the Group has elected to not recognise right-of-use assets and lease liabilities for leases of low-value assets (<GBP4,000 asset values) and leases with terms of less than 12 months.

The Group presents right-of-use assets separate to tangible fixed assets that it owns. The carrying amounts of right-of-use assets, by nature of asset, are as per below:

 
                                                     Tangible fixed assets 
                        -------------------------------------------------------------------------------  ------- 
                         Short leasehold   Long leasehold 
                                land and         land and                         Plant        Fixtures 
                               buildings        buildings     Vehicles    and machinery    and Fittings    Total 
                                  GBP000           GBP000       GBP000           GBP000          GBP000   GBP000 
----------------------  ----------------  ---------------  -----------  ---------------  --------------  ------- 
 Balance at 1 January 
  2019                             2,668            4,987          237                -              26    7,918 
 Balance at 30 June 
  2019                             2,158            4,798          186                -              20    7,162 
----------------------  ----------------  ---------------  -----------  ---------------  --------------  ------- 
 

The Group presents lease liabilities separately on the face of the balance sheet.

   i)          Significant accounting policies 

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate in the jurisdiction in which the asset resides as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in the future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options and break clauses. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.

   ii)          Transition 

Previously, the Group classified leases as operating leases under IAS 17. These included betting venues, offices, vehicles and IT equipment. The leases typically run for periods of 3 to 5 years, but some property leases exist with significantly longer terms. Some property leases include an option to extend the lease for periods of typically 3 years and some of the longer leases have termination options, "break clauses", (some with penalties). Some leases also provide for rent changes based on local price indices.

At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate (in the jurisdiction the lease resides) as at 1 January 2019. Right-of-use assets are measured at an amount equal to the lease liability at the inception of the lease.

The Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17.

- Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term.

- Excluded initial direct costs from measuring the right-of-use asset at the date of initial applications.

- Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

   C)   Impacts on the financial statements 
   i)          Impacts on transition 

On transition to IFRS 16, the Group recognises additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings, net of deferred tax. The impact on transition is summarised below.

 
 
                                                                     At 
                                                         1 January 2019 
                                                                 GBP000 
-----------------------------------------------------  ---------------- 
 Right-of-use asset presented in property, plant and 
  equipment                                                       7,918 
 Lease liabilities                                                9,196 
 Deferred tax asset                                                 293 
 Retained earnings                                                (985) 
-----------------------------------------------------  ---------------- 
 

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rates in the jurisdictions in which the leases are located. The weighted average rate applied was 5.75%.

Deferred tax has been provided as the initial reduction in reserves on transition to IFRS 16 is spread over the remaining lease term for tax relief purposes.

 
 
                                                                              At 
                                                                  1 January 2019 
                                                                          GBP000 
--------------------------------------------------------------  ---------------- 
 Operating lease commitment at 31 December 2018 as disclosed 
  in the Group's consolidated financial statements                        12,226 
 Exclude rentals in JV company included in the above 
  commitments                                                              (474) 
--------------------------------------------------------------  ---------------- 
 Restated commitments excluding JV rentals                                11,752 
 Less: 
  Discounted using the incremental borrowing rates at 
  1 January 2019                                                         (3,526) 
 Recognition exemption for leases of low value assets                        (9) 
 Recognition exemptions for leases with less than 12 
  months lease term at transition                                           (30) 
 Correction of rental amounts to accurately reflect liability              (238) 
 Add: 
  Extension options reasonably certain to be exercised                     1,247 
--------------------------------------------------------------  ---------------- 
 Lease liabilities recognised at 1 January 2019                            9,196 
--------------------------------------------------------------  ---------------- 
 
   ii)          Impacts for the period 

In relation to those leases under IFRS 16, the Group has recognised depreciation and interest costs, instead of operating lease expense. During the six months ended 30 June 2019, the Group recognised GBP731,000 of depreciation charges and GBP247,000 of interest costs from these leases.

   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 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, adoption of IFRS 16 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:

 
 
                                                             Six months       Six months            Year 
                                                                  ended            ended 
                                                                30 June          30 June           ended 
                                                  Note             2019             2018     31 December 
                                                                                                    2018 
                                                            (Unaudited)      (Unaudited)       (Audited) 
                                                                 GBP000           GBP000          GBP000 
----------------------------------------------  ------  ---------------  ---------------  -------------- 
 Operating costs per income statement                          (24,186)         (22,553)        (47,196) 
 Add back: 
  Sports Betting investment                                         905              490           1,428 
  Depreciation                                   14,15            2,344            1,388           2,860 
  Amortisation, excluding acquired intangible 
   assets                                         13              1,065              953           1,917 
  Amortisation of acquired intangible assets      13                314                -               - 
  Share option charge, excluding acceleration 
   of charge for departing management                               324              660           1,222 
  Accelerated IFRS 2 charge for departing                                              -               - 
   management                                                       749 
  Exceptional items                                7                682              451           3,453 
                                                        ---------------  ---------------  -------------- 
 Adjusted operating costs                                      (17,803)         (18,611)        (36,316) 
 Other operating income*                                              -                -             173 
                                                        ---------------  ---------------  -------------- 
 Total adjusted net operating costs (pre 
  Sports Betting investment)                                   (17,803)         (18,611)        (36,143) 
                                                        ---------------  ---------------  -------------- 
 

*Other operating income of GBP173k in 2018 was an insurance payout for business interruption following hurricane Maria and is considered to be non-exceptional operating income and is included in adjusted net operating costs.

Adjusted EBITDA is calculated as follows:

 
 
                                                           Six months       Six months            Year 
                                                                ended            ended 
                                                              30 June          30 June           ended 
                                                                 2019             2018     31 December 
                                                                                                  2018 
                                                          (Unaudited)      (Unaudited)       (Audited) 
                                                               GBP000           GBP000          GBP000 
----------------------------------------------------  ---------------  ---------------  -------------- 
 Revenue                                                       32,633           31,425          63,462 
 Cost of sales                                                (9,798)          (8,656)        (17,619) 
----------------------------------------------------  ---------------  ---------------  -------------- 
 Gross profit                                                  22,835           22,769          45,843 
 Marketing and distribution costs                               (726)            (871)         (1,732) 
----------------------------------------------------  ---------------  ---------------  -------------- 
 Contribution                                                  22,109           21,898          44,111 
 Adjusted operating income and costs (pre Sports 
  Betting investment)                                        (17,803)         (18,611)        (36,143) 
----------------------------------------------------  ---------------  ---------------  -------------- 
 Adjusted EBITDA pre Sports Betting investment                  4,306            3,287           7,968 
 Sports Betting investment                                      (905)            (490)         (1,428) 
----------------------------------------------------  ---------------  ---------------  -------------- 
 Adjusted EBITDA                                                3,401            2,797           6,540 
 Adjustment to prior year for IFRS 16 comparability 
  purposes*                                                         -              879           1,748 
----------------------------------------------------  ---------------  ---------------  -------------- 
                                                                3,401            3,676           8,288 
----------------------------------------------------  ---------------  ---------------  -------------- 
 

*IFRS 16 transition requires that prior year numbers are not restated. The above figures for IFRS adjustments are for comparability purposes only. They represent the 2019 lease rentals which would have been operating costs in 2019 if IFRS 16 had not been adopted, translated at 2018 exchange rates.

Sports Betting investment includes lobbying costs, additional staff costs and travel and consultants, and also includes an allocation of senior management time. Of these costs, GBP335k were external costs and GBP570k were internal (year ended 31 December 2018: GBP508k were external costs and GBP920k were internal).

Contribution is also an adjusted performance measure disclosed in the financial statements, being the revenue less directly variable costs of trade. This is presented to explain the underlying profit margins earned by the Group from its trade.

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 
                                                                      2019 
                                                               (Unaudited) 
                                                             ------------- 
                                                                     Total 
 Continuing operations                                              GBP000 
-----------------------------------------------------------  ------------- 
 Adjusted EBITDA                                                     3,401 
 Share option charge, excluding acceleration of charge for 
  departing management                                               (324) 
 Depreciation                                                      (2,344) 
 Amortisation                                                      (1,065) 
 Finance income                                                         34 
 Finance costs                                                       (247) 
-----------------------------------------------------------  ------------- 
 Adjusted loss before tax                                            (545) 
----------------------------------------------------------- 
 Tax at 31.0%                                                          169 
                                                             ------------- 
 Adjusted loss after tax                                             (376) 
                                                             ------------- 
 
 
                                  Six months ended 30 June                    Year ended 31 December 
                                             2018                                       2018 
                                         (Unaudited)                                 (Audited) 
                            ------------------------------------       ------------------------------------ 
                             Continuing   Discontinued     Total        Continuing   Discontinued     Total 
                                 GBP000         GBP000    GBP000            GBP000         GBP000    GBP000 
--------------------------  -----------  -------------  --------  ---  -----------  -------------  -------- 
 Adjusted EBITDA                  2,797            114     2,911             6,540            175     6,715 
 Share option charge              (660)              -     (660)           (1,222)              -   (1,222) 
 Depreciation                   (1,388)           (48)   (1,436)           (2,860)           (93)   (2,953) 
 Amortisation (excluding 
  amortisation of 
  acquired intangibles)           (953)           (34)     (987)           (1,917)              -   (1,917) 
 Finance income/(charges)            40              -        40                18           (18)         - 
--------------------------  -----------  -------------  --------       -----------  -------------  -------- 
 Adjusted (loss)/profit 
  before tax                      (164)             32     (132)               559             64       623 
--------------------------  -----------  -------------                 -----------  ------------- 
 Tax*                                                          8                                      (139) 
                                                        --------                                   -------- 
 Adjusted (loss)/profit after 
  tax                                                      (124)                                        484 
                                                        --------                                   -------- 
 

* The adjusted tax rate for the six months ended 30 June 2018 is 6.0% and for the year ended 31 December 2018 is 22.7%.

   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 Racing and Digital - provision of pari-mutuel wagering services and systems worldwide principally to the horseracing industry;

   -     Sportech Venues - off-track betting venue management; and 
   -     Corporate costs - central costs relating to the overall management of the Group. 

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 
                                                     2019 (Unaudited) 
                            ----------------------------------------------------------------- 
                                                                                Inter-segment 
                                              Racing                Corporate     elimination 
                                         and Digital     Venues         costs                          Group 
                                              GBP000     GBP000        GBP000          GBP000         GBP000 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Revenue from sale of 
  goods                                        1,007          -             -               -          1,007 
 Revenue from food and 
  beverage sales                                   -      2,255             -               -          2,255 
 Revenue from rendering of 
  services                                    16,930     12,735             -           (294)         29,371 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Total revenue                                17,937     14,990             -           (294)         32,633 
 Cost of sales                               (2,793)    (7,299)             -             294        (9,798) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Gross profit                                 15,144      7,691             -               -         22,835 
 Marketing and 
  distribution costs                           (310)      (416)             -               -          (726) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Contribution                                 14,834      7,275             -               -         22,109 
 Adjusted operating costs                   (11,108)    (5,866)         (829)               -       (17,803) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Adjusted EBITDA (pre 
  Sports Betting 
  investment)                                  3,726      1,409         (829)               -          4,306 
 Sport betting investment                          -      (905)             -               -          (905) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Adjusted EBITDA                               3,726        504         (829)               -          3,401 
 Share option charge, 
  excluding acceleration 
  of charge for departing 
  management                                       -          -         (324)               -          (324) 
 Depreciation                                (1,206)    (1,128)          (10)               -        (2,344) 
 Amortisation (excluding 
  amortisation 
  of acquired intangibles)                   (1,001)          -          (64)               -        (1,065) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Segment result                                1,519      (624)       (1,227)               -          (332) 
 Acceleration of IFRS 2 
  charge for 
  departing management                             -          -         (749)                          (749) 
 Amortisation of acquired 
  intangibles                                  (314)          -             -               -          (314) 
 Exceptional costs                             (352)       (52)         (278)               -          (682) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Operating profit/(loss)                         853      (676)       (2,254)               -        (2,077) 
 Net finance costs                                                                                     (364) 
 Loss before taxation                                                                                (2,441) 
 Taxation                                                                                                482 
                                                                                               ------------- 
 Loss for the period from 
  continuing 
  operations                                                                                         (1,959) 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 Other segment items 
 Capital expenditure - 
  intangible 
  fixed assets                                 1,389          -            12               -          1,401 
 Capital expenditure - 
  property, plant 
  and equipment                                  810        153             -               -            963 
--------------------------  ------------------------  ---------  ------------  --------------  ------------- 
 
 
 
 
                                     Six months ended 30 June 
                                          2018 (Unaudited) 
 ------------------------------------------------------------------------------------------------ 
                                                                                    Inter-segment 
                                                  Racing                Corporate     elimination 
                                             and Digital     Venues         costs                      Group 
                                                  GBP000     GBP000        GBP000          GBP000     GBP000 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Revenue from sale of goods                          637          -             -               -        637 
 Revenue from food and beverage sales                  -      2,346             -               -      2,346 
 Revenue from rendering of services               15,928     13,273             -           (759)     28,442 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Total revenue                                    16,565     15,619             -           (759)     31,425 
 Cost of sales                                   (1,930)    (7,485)             -             759    (8,656) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Gross profit                                     14,635      8,134             -               -     22,769 
 Marketing and distribution costs                  (388)      (483)             -               -      (871) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Contribution                                     14,247      7,651             -               -     21,898 
 Adjusted operating expenses                    (10,973)    (6,565)       (1,073)               -   (18,611) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Adjusted EBITDA (pre Sports Betting 
  investment)                                      3,274      1,086       (1,073)               -      3,287 
 Sport betting investment                              -      (490)             -               -      (490) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Adjusted EBITDA                                   3,274        596       (1,073)               -      2,797 
 Share option charge                                   -          -         (660)               -      (660) 
 Depreciation                                      (838)      (537)          (13)               -    (1,388) 
 Amortisation                                      (837)          -         (116)               -      (953) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Segment result                                    1,599         59       (1,862)               -      (204) 
 Exceptional costs                                  (48)       (40)         (363)               -      (451) 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Operating profit/(loss)                           1,551         19       (2,225)               -      (655) 
----------------------------------------  --------------  ---------  ------------  -------------- 
 Net finance income                                                                                       53 
 Loss before taxation                                                                                  (602) 
 Taxation                                                                                                 28 
                                                                                                   --------- 
 Loss for the period - 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 
----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 
 
 
 
                                                         Year ended 31 December 2018 
                                                                   (Audited) 
                                           ------------------------------------------------------- 
                                                                                     Inter-segment 
                                                   Racing                Corporate     elimination 
                                              and Digital     Venues         costs                      Group 
                                                   GBP000     GBP000        GBP000          GBP000     GBP000 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Revenue from sale of goods                         1,770          -             -            (44)      1,726 
 Revenue from food and beverage 
  sales                                                 -      4,724             -               -      4,724 
 Revenue from rendering of services                32,234     25,399             -           (621)     57,012 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Total revenue                                     34,004     30,123             -           (665)     63,462 
 Cost of sales                                    (3,991)   (14,241)             -             613   (17,619) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Gross profit                                      30,013     15,882             -            (52)     45,843 
 Marketing and distribution costs                   (736)      (996)             -               -    (1,732) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Contribution                                      29,277     14,886             -            (52)     44,111 
 Adjusted net operating expenses                 (20,634)   (13,473)       (2,088)              52   (36,143) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Adjusted EBITDA (pre Sports Betting 
  investment)                                       8,643      1,413       (2,088)               -      7,968 
 Sport betting investment                               -    (1,428)             -               -    (1,428) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Adjusted EBITDA                                    8,643       (15)       (2,088)               -      6,540 
 Share option charge                                    -          -       (1,222)               -    (1,222) 
 Depreciation                                     (1,715)    (1,115)          (30)               -    (2,860) 
 Amortisation                                     (1,743)          -         (174)               -    (1,917) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Segment result                                     5,185    (1,130)       (3,514)               -        541 
 Exceptional costs                                (2,214)       (65)       (1,174)               -    (3,453) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Operating profit/(loss)                            2,971    (1,195)       (4,688)               -    (2,912) 
 Net finance income                                                                                       473 
 Share of loss after tax of joint 
  ventures                                                                                                  - 
                                                                                                    --------- 
 Loss before taxation                                                                                 (2,439) 
 Taxation                                                                                             (2,019) 
                                                                                                    --------- 
 Loss for the year - continuing 
  operations                                                                                          (4,458) 
 Net profit from discontinued operations                                                                1,822 
                                                                                                    --------- 
 Loss for the period                                                                                  (2,636) 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 Other segment items 
 Capital expenditure - intangible 
  fixed assets                                      3,095          -            11               -      3,106 
 Capital expenditure - property, 
  plant and equipment                               1,529        398             -               -      1,927 
-----------------------------------------  --------------  ---------  ------------  --------------  --------- 
 
 
   6.    Expenses by nature 
 
 
                                                            Six months       Six months           Year 
                                                                 ended            ended 
                                                               30 June          30 June          ended 
                                                                  2019             2018    31 December 
                                                                                                  2018 
                                                           (Unaudited)      (Unaudited)      (Audited) 
                                                                GBP000           GBP000         GBP000 
-----------------------------------------------  ----  ---------------  ---------------  ------------- 
 Cost of sales 
 Tote and track fees                                             5,856            5,526         11,261 
 F&B consumables                                                   665              705          1,405 
 Betting and gaming duties                                         400              363            738 
 Repairs and maintenance cost of sales                             196              169            335 
 Ticket paper                                                      467              392            888 
 Programs                                                          259              275            498 
 Outsourced service costs                                        1,000              885          1,684 
 Cost of inventories sold, including provision 
  for obsolete inventory                                           955              341            810 
 Total cost of sales                                             9,798            8,656         17,619 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 
 Marketing and distribution costs 
 Marketing                                                         525              629          1,261 
 Vehicle costs                                                      65              112            232 
 Freight                                                           136              130            239 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 Total marketing and distribution costs                            726              871          1,732 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 
 Operating costs 
 Staff costs - gross, excluding share option 
  charges                                                       14,155           13,639         27,532 
 Less amounts capitalised                                      (1,389)          (1,047)        (2,923) 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 Staff costs - net                                              12,766           12,592         24,609 
 Property costs                                                  1,930            2,562          5,314 
 IT & communications                                               671              657          1,355 
 Professional fees                                               2,356            2,040          4,391 
 Travel and entertaining                                           624              679          1,353 
 Banking transaction costs and FX                                  154              163            310 
 Provision for doubtful debts                                        -                -           (76) 
 Other costs                                                       207              408            488 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 Adjusted operating costs                                       18,708           19,101         37,744 
 Share option charge, excluding exceptional 
  accelerated charges                                              324              660          1,222 
 Acceleration of IFRS 2 charge for departing 
  management                                                       749                -              - 
 Depreciation                                                    2,344            1,388          2,860 
 Amortisation, excluding amortisation of 
  acquired intangibles                                           1,065              953          1,917 
 Amortisation of acquired intangibles                              314                -              - 
 Exceptional costs                                                 682              451          3,453 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 Total operating costs                                          24,186           22,553         47,196 
-----------------------------------------------------  ---------------  ---------------  ------------- 
 
   7.    Exceptional items 
 
 
 
                                                                  Six months              Six             Year 
                                                                       ended           months 
                                                                                        ended 
                                                                     30 June               30            ended 
                                                                                         June      31 December 
                                                                                                          2018 
                                                                        2019             2018        (Audited) 
                                                                 (Unaudited)      (Unaudited) 
                                                                      GBP000           GBP000           GBP000 
-----------------------------------------------------  ----  ---------------  ---------------  --------------- 
 Exceptional costs: 
  Redundancy and restructuring costs in respect of 
   the rationalisation and 
  modernisation of the business                                          287              251            1,178 
  Expenses in relation to the UK defined benefit 
   pension scheme "buy-in"                                               105                -                - 
  Acquisition costs in relation to Lot.to Systems 
   Limited                                                                52                -                - 
  Investment in S&S JV (immediately impaired)                            230              187              291 
  Release of onerous contract provisions provided 
   in relation to exit from California operations 
   - offsetting investment above                                       (179)            (187)            (291) 
  Costs in relation to the Spot the Ball VAT refund                        -              160              205 
  Costs in relation to legacy tax disputes                                37                -              111 
  One off start-up costs of new ventures, including 
   new venue builds and joint ventures                                     -               40               29 
  Costs in relation to exiting the Group's interests 
   in India                                                               18                -               51 
  Impairment of contingent consideration in relation 
   to NYX Gaming                                                           -                -            1,729 
  Legal costs in relation to intellectual property 
   infringement lawsuit                                                  132                -              150 
 Total exceptional costs                                                 682              451            3,453 
-----------------------------------------------------------  ---------------  ---------------  --------------- 
 
 
 Below is a summary of exceptional cash (outflows)/inflows: 
 
                                                                         Six months              Six             Year 
                                                                              ended           months 
                                                                                               ended 
                                                                            30 June               30            ended 
                                                                                                June      31 December 
                                                                                                                 2018 
                                                                               2019             2018        (Audited) 
                                                                        (Unaudited)      (Unaudited) 
                                                                             GBP000           GBP000           GBP000 
------------------------------------------------------------  ----  ---------------  ---------------  --------------- 
 Exceptional cash outflows: 
  Redundancy and restructuring costs in respect of 
   the rationalisation and 
  modernisation of the business                                               (846)            (999)          (1,332) 
  Expenses in relation to the UK defined benefit                                                   - 
   pension scheme "buy-in"                                                    (105)                                 - 
  UK defined benefit pension scheme "buy-in" insurance                                             - 
   contract purchased                                                         (234)                                 - 
  Staff bonuses paid in relation to Football Pools 
   disposal plus final costs paid                                                 -            (301)            (307) 
  Acquisition costs in relation to Lot.to Systems 
   Limited                                                                     (52)                                 - 
  Spot the Ball bonus paid to former Director and 
   associated legal fees                                                          -            (292)            (315) 
  Costs in relation to the Spot the Ball VAT refund                            (45)             (73)             (73) 
  Costs in relation to legacy tax disputes                                     (37)                -            (111) 
  One off start-up costs of new ventures, including 
   new venue builds and joint ventures                                            -             (32)             (32) 
  Costs in relation to exiting the Group's interests 
   in India                                                                    (18)                -                - 
  Legal costs in relation to intellectual property 
   infringement lawsuit                                                       (132)                -            (150) 
------------------------------------------------------------------  ---------------  ---------------  --------------- 
  Total exceptional cash outflows                                           (1,469)          (1,697)          (2,320) 
------------------------------------------------------------------  ---------------  ---------------  --------------- 
 Exceptional cash inflows: 
  Cost settlement received from HMRC regarding Spot 
   the Ball VAT refund                                                            -              487              487 
 Total exceptional cash inflows                                                   -              487              487 
------------------------------------------------------------------  ---------------  ---------------  --------------- 
 

The Trustees of the Sportech Pension Scheme entered into a contract with Just Retirement Limited ("Just") on 28 March 2019 to insure the liabilities of the scheme. The Trustees and Just are working through due diligence and under-writing in order for an anticipated full buy-out and winding up of the scheme to be completed prior to the year end. The policy cost was GBP2,450,000 which was paid utilising the assets in the scheme, which were valued at GBP2,216,000 and an additional cash payment from the Company of GBP234,000. The Company is also paying all administrative, actuarial and legal costs the Scheme is incurring in the process.

   8.    Net finance (costs)/income 
 
 
                                                                 Six months             Six            Year 
                                                                      ended          months 
                                                                                      ended 
                                                                    30 June         30 June           ended 
                                                                                                31 December 
                                                                                                       2018 
                                                                       2019            2018       (Audited) 
                                                                (Unaudited)     (Unaudited) 
                                                                     GBP000          GBP000          GBP000 
-----------------------------------------------------------  --------------  --------------  -------------- 
 Finance costs: 
  Interest payable on bank loans and overdrafts                           -               -            (22) 
  Interest on lease liabilities                                       (247)               -               - 
  Interest on defined benefit pension obligation                          -               -            (45) 
-----------------------------------------------------------  --------------  --------------  -------------- 
  Total finance costs                                                 (247)               -            (67) 
-----------------------------------------------------------  --------------  --------------  -------------- 
 Finance income                                                          34              40              85 
 Other finance (costs)/income: 
  Foreign exchange (loss)/gain on financial assets and 
   liabilities denominated in foreign currency                        (139)            (25)             363 
  Unwinding of interest on discounted non-current balances             (12)              38              92 
-----------------------------------------------------------  --------------  --------------  -------------- 
  Total other financial (costs)/income                                (151)              13             455 
-----------------------------------------------------------  --------------  --------------  -------------- 
 Net finance (costs)/income                                           (364)              53             473 
-----------------------------------------------------------  --------------  --------------  -------------- 
 
   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 2019 is 19.7% (2018: 1.2%). The movement is a result of a change in mix of profits/(losses) in jurisdictions with varying tax rates.

The Group continues to hold a tax provision of GBP4,600k for tax potentially due on the 2016 Spot the Ball refund. Further provisions are held totaling GBP2,005k for other uncertain tax positions.

   10.   Acquisition of Lot.to Systems Limited 

On 1 February 2019, the Group acquired 100% of the issued share capital of Lot.to Systems Limited ("Lot.to") a UK-based digital gaming technology business. The acquisition provides Sportech with a leading digital gaming platform, iLottery and a specialist team focused on innovative digital gaming technologies. It also helps solidify the Group's global gaming capabilities and services position. Importantly, the acquisition also provides Sportech with growth opportunities through broadening the suite of gaming services offered by the Group.

UK-regulated Lot.to is recognised as a digital specialist in the lottery sector which has developed turn-key solutions. Whilst its proprietary 'Rapid Lotto' and lotto betting verticals online have been its core consumer products, Lot.to's iLottery platform has the capability to operate in any gambling vertical including self-service POS terminals plus online and mobile interfaces.

Goodwill arising on the acquisition amounted to GBPnil.

The following table summarises the fair value of consideration paid for Lot.to and the amounts of the assets acquired and liabilities assumed recognised at acquisition date.

 
 
                                                               Unaudited 
 Fair value of consideration at 1 February 2019         Note      GBP000 
---------------------------------------------------   ------  ---------- 
 Ordinary shares in Sportech PLC (2,000,000 shares 
  at 35.7p*)                                                         714 
 Repayment of shareholder loan                                     1,300 
------------------------------------------------------------  ---------- 
 Total fair value of consideration transferred                     2,014 
------------------------------------------------------------  ---------- 
 Recognised provisional fair value of identifiable 
  assets acquired and liabilities assumed 
---------------------------------------------------   ------  ---------- 
 Intangible fixed assets - software                                2,112 
 Intangible fixed assets - licences                                  150 
 Tangible fixed assets - fixtures and fittings                         1 
 Cash at bank and in hand                                             71 
 Trade and other receivables                                          99 
 Trade and other payables                                           (14) 
 Corporation tax liability                                           (3) 
 Deferred tax on acquired intangibles                              (402) 
------------------------------------------------------------  ---------- 
 Total identifiable net assets                                     2,014 
------------------------------------------------------------  ---------- 
 Total fair value of consideration transferred                     2,014 
------------------------------------------------------------  ---------- 
 

*share price of the Company on 1 February 2019.

There was no contingent consideration payable. The shareholder loan was agreed to be repaid in three installments of GBP300,000 on completion date, GBP500,000 by 31 March 2019 and GBP500,000 by 31 December 2019.

Acquisition costs amounted to GBP52,000 and have been recognised as an expense in the consolidated income statement as an exceptional item (see note 7).

The fair values of identifiable assets acquired and liabilities assumed are considered provisional in nature due to the business combination occurring just five months prior to the period end. Management will continue to monitor the provisional values during the year ended 31 December 2019 to ensure any fair values amendments are identified as a hindsight adjustment.

No contingent liabilities have been recognised as at the acquisition date.

Lot.to has contributed revenues of GBP170,000 and a loss of GBP121,000 to the Group results from the acquisition date to 30 June 2019. Had the acquisition occurred on 1 January 2019, the Group's revenue for the period ended 30 June 2019 would have been GBP32,642,000 and the Group's loss for the period would have been GBP1,989,000. These amounts have been determined by applying the Group's accounting policies and adjusting the results of Lot.to to reflect additional amortisation that would have been charged, assuming the fair value adjustments to intangible assets had been applied from 1 January 2019.

The premium on the shares issued in Sportech PLC of GBP314k is recorded as a merger reserve in retained earnings.

   11.   Net (loss)/profit from discontinued operations 

Results from discontinued operations includes the Football Pools division, disposed of in June 2018, 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 was considered to be a held for sale asset as at 30 June 2018. 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 were 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 were included in the six months ended 30 June 2018 as those of a discontinued operation.

 
                                     Six months ended June             Year ended 31 December 
                                        2018 (Unaudited)                        2018 
                                                                              (Audited) 
                                  ---------------------------       --------------------------- 
                                      FP*   Holland     Total           FP*   Holland     Total 
                                   GBP000    GBP000    GBP000        GBP000    GBP000    GBP000 
--------------------------------  -------  --------  --------  ---  -------  --------  -------- 
 Revenue                                -     2,631     2,631             -     3,065     3,065 
 Cost of sales, marketing 
  and distribution and adjusted 
  operating expenses                   46   (2,562)   (2,516)            78   (2,968)   (2,890) 
--------------------------------  -------  --------  --------       -------  --------  -------- 
 Adjusted EBITDA                       46        69       115            78        97       175 
 Depreciation and amortisation          -      (82)      (82)             -      (93)      (93) 
 Exceptional items                      -     (461)     (461)             -     (461)     (461) 
 Finance costs                          -         -         -             -      (18)      (18) 
-------------------------------- 
 Profit/(loss) before tax              46     (474)     (428)            78     (475)     (397) 
 Tax, excluding tax arising 
  on disposal                           -         -         -         (169)         -     (169) 
--------------------------------  -------  --------  --------       -------  --------  -------- 
 Profit/(loss) after tax               46     (474)     (428)          (91)     (475)     (566) 
 Net gain on disposal (note 
  11a)                                 73         -        73            59     2,329     2,388 
--------------------------------  -------  --------  --------       -------  --------  -------- 
 Net result from discontinued 
  operations                          119     (474)     (355)          (32)     1,854     1,822 
--------------------------------  -------  --------  --------       -------  --------  -------- 
 

* Holland results for 2018 are to the date of disposal of 26 July 2018.

11a) Net gain on disposal

 
                                                                           Six months ended June 
                                                                                            2018 
                                                                                              FP 
                                                                                     (Unaudited) 
                                                                                          GBP000 
---------------------------------------------------  -------------  -----------  --------------- 
 Consideration, net of working capital adjustments                                            73 
 Gain on disposal                                                                             73 
 
                                                                        Year ended 31 December 2018 
                                                                FP      Holland               Total 
                                                         (Audited)    (Audited)           (Audited) 
                                                            GBP000       GBP000              GBP000 
---------------------------------------------------  -------------  -----------  ------------------ 
 Consideration, net of working capital adjustments              73        3,007               3,080 
 Net assets disposed of                                          -        (318)               (318) 
 Transaction costs incurred in the year                          -        (360)               (360) 
---------------------------------------------------  -------------  -----------  ------------------ 
 Pre-tax gain on disposal                                       73        2,329               2,402 
 Tax arising on disposal                                      (14)            -                (14) 
---------------------------------------------------  -------------  -----------  ------------------ 
 Gain on disposal                                               59        2,329               2,388 
---------------------------------------------------  -------------  -----------  ------------------ 
 
 

Of the consideration receivable for Sportech Racing BV, GBP2,692k was received in cash during 2018 and GBP314k was recorded as contingent consideration receivable and was received in January 2019. Transaction costs of GBP79k were also paid in January 2019, the rest having been settled in cash in 2018. No tax is payable on the disposal of Sportech Racing BV as Substantial Shareholder Relief is being applied.

12. Earnings per share

 
 
                            Six months ended                       Six months ended                     Year ended 
                              30 June 2019                           30 June 2018                    31 December 2018 
                               (Unaudited)                            (Unaudited)                        (Audited) 
                                                                                                                           ---------- 
 Basic EPS        Continuing   Discontinued    Total    Continuing   Discontinued     Total     Continuing   Discontinued     Total 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 (Loss)/profit 
  for the 
  period 
  (GBP000)           (1,959)              -   (1,959)        (574)          (355)       (929)      (4,458)          1,822     (2,636) 
 Weighted 
  average no 
  of shares 
  ('000)             188,331        188,331   188,331      186,029        186,029     186,029      186,393        186,393     186,393 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 Basic EPS            (1.0)p              -    (1.0)p       (0.3)p         (0.2)p      (0.5)p       (2.4)p           1.0p      (1.4)p 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 
 
 
 
                            Six months ended                       Six months ended                     Year ended 
                              30 June 2019                           30 June 2018                    31 December 2018 
                               (Unaudited)                            (Unaudited)                        (Audited) 
                                                                                                                           ---------- 
 Diluted EPS      Continuing   Discontinued    Total    Continuing   Discontinued     Total     Continuing   Discontinued     Total 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 (Loss)/profit 
  for the 
  period 
  (GBP000)         (1,959)          -         (1,959)        (574)          (355)       (929)      (4,458)          1,822     (2,636) 
 Weighted 
  average no 
  of shares 
  ('000)           188,331       188,331      188,331      186,029        186,029     186,029      186,393        186,393     186,393 
 Dilutive            N/A            -           N/A 
  potential                                                    N/A            N/A         N/A          N/A              -         N/A 
  ordinary 
  shares ('000) 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 Total 
  potential 
  ordinary 
  shares ('000)      188,331        188,331   188,331      186,029        186,029     186,029      186,393        186,393     186,393 
---------------  -----------  -------------  --------  -----------  -------------  ----------  -----------  -------------  ---------- 
 Diluted EPS          (1.0)p              -    (1.0)p       (0.3)p         (0.2)p      (0.5)p       (2.4)p           1.0p      (1.4)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.

 
 
                                                Six months       Six months       Year ended 
                                                     ended            ended 
                                                   30 June          30 June      31 December 
                                                      2019             2018             2018 
                                      Note     (Unaudited)      (Unaudited)        (Audited) 
----------------------------------  ------  --------------  ---------------  --------------- 
 Adjusted (loss)/profit after tax 
  (GBP000)                             4             (376)            (124)              484 
 Basic Adjusted EPS (pence)                         (0.2)p           (0.1)p             0.3p 
 Diluted Adjusted EPS (pence)                       (0.2)p           (0.1)p             0.3p 
----------------------------------  ------  --------------  ---------------  --------------- 
 
 

13. Intangible fixed assets

 
 
                                                                            Six             Six            Year 
                                                                         months          months 
                                                                          ended           ended 
                                                                        30 June         30 June           ended 
                                                                                                    31 December 
                                                                                                           2018 
                                                                           2019            2018       (Audited) 
                                                                    (Unaudited)     (Unaudited) 
                                                           Note          GBP000          GBP000          GBP000 
--------------------------------------------------------  -----  --------------  --------------  -------------- 
 At 1 January                                                            13,551          11,629          11,629 
 Additions - continuing operations                                        1,401           1,569           3,106 
 Additions - business combination                            10           2,262               -               - 
 Amortisation charge for period - continuing operations                 (1,379)           (953)         (1,917) 
 Movement as a result of foreign exchange                                    11             305             733 
                                                                 --------------  --------------  -------------- 
 Net book amount at end of period                                        15,846          12,550          13,551 
--------------------------------------------------------  -----  --------------  --------------  -------------- 
 

14. Property, plant and equipment

 
 
                                                       Six             Six            Year 
                                                    months          months 
                                                     ended           ended 
                                                   30 June              30           ended 
                                                                      June     31 December 
                                                                                      2018 
                                                      2019            2018       (Audited) 
                                               (Unaudited)     (Unaudited) 
                                                    GBP000          GBP000          GBP000 
------------------------------------------  --------------  --------------  -------------- 
 At 1 January                                       26,337          25,705          25,705 
 Additions                                             963             920           1,927 
 Additions - business combination                        1               -               - 
 Depreciation charge for period                    (1,613)         (1,388)         (2,860) 
 Movement as a result of foreign exchange            (155)             529           1,565 
                                            --------------  --------------  -------------- 
 Net book amount at end of period                   25,533          25,766          26,337 
------------------------------------------  --------------  --------------  -------------- 
 

15. Right-of-use assets

 
 
                                                       Six 
                                                    months 
                                                     ended 
                                                   30 June 
                                                      2019 
                                               (Unaudited) 
                                                    GBP000 
------------------------------------------  -------------- 
 At 1 January - on transition to IFRS 16             7,918 
 Depreciation charge for period                      (731) 
 Movement as a result of foreign exchange             (25) 
                                            -------------- 
 Net book amount at end of period                    7,162 
------------------------------------------  -------------- 
 

16. Trade and other receivables

 
 
                                                                  Six             Six            Year 
                                                               months          months 
                                                                ended           ended 
                                                              30 June              30           ended 
                                                                                 June     31 December 
                                                                                                 2018 
                                                                 2019            2018       (Audited) 
                                                          (Unaudited)     (Unaudited) 
                                                               GBP000          GBP000          GBP000 
-----------------------------------------------------  --------------  --------------  -------------- 
 Non-current 
   Trade and other receivables                                    601             660             667 
   Contingent consideration receivable from disposal                -           1,629               - 
    of Sportech-NYX Gaming, LLC 
-----------------------------------------------------  --------------  --------------  -------------- 
 Total non-current trade and other receivables                    601           2,289             667 
-----------------------------------------------------  --------------  --------------  -------------- 
 Current 
   Trade and other receivables                                 10,637          11,479           8,169 
 Total trade and other receivables                             11,238          13,768           8,836 
-----------------------------------------------------  --------------  --------------  -------------- 
 

17. Cash and cash equivalents

 
                                              Six months             Six            Year 
                                                   ended          months 
                                                                   ended 
                                                 30 June              30           ended 
                                                                    June     31 December 
                                                                                    2018 
                                                    2019            2018       (Audited) 
                                             (Unaudited)     (Unaudited) 
                                    Note          GBP000          GBP000          GBP000 
---------------------------------  -----  --------------  --------------  -------------- 
 Cash and short-term deposits                     11,795          12,477          14,728 
 Customer funds                       18           3,093           3,960           3,187 
 Total cash and cash equivalents                  14,888          16,437          17,915 
---------------------------------  -----  --------------  --------------  -------------- 
 

Customer funds are matched by liabilities of an equal value within trade and other payables (see note 18).

Included within cash and short-term deposits as at 30 June 2019 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.

18. Trade and other payables

 
                                                    Six months             Six            Year 
                                                         ended          months 
                                                                         ended 
                                                       30 June              30           ended 
                                                                          June     31 December 
                                                                                          2018 
                                                          2019            2018       (Audited) 
                                                   (Unaudited)     (Unaudited) 
                                          Note          GBP000          GBP000          GBP000 
---------------------------------------  -----  --------------  --------------  -------------- 
 Trade payables                                          6,115           6,014           4,018 
 Other taxes and social security costs                     331             157             113 
 Accruals                                                4,884           5,825           5,382 
 Deferred income                                           224             208             246 
 Player liability                           17           3,093           3,960           3,187 
 Total trade and other payables                         14,647          16,164          12,946 
---------------------------------------  -----  --------------  --------------  -------------- 
 

19. Provisions

 
                                                                  Six months             Six            Year 
                                                                       ended          months 
                                                                                       ended 
                                                                     30 June              30           ended 
                                                                                        June     31 December 
                                                                                                        2018 
                                                                        2019            2018       (Audited) 
                                                                 (Unaudited)     (Unaudited) 
                                                                      GBP000          GBP000          GBP000 
------------------------------------------------------  ----  --------------  --------------  -------------- 
 At beginning of period                                                2,411           2,626           2,626 
 Utilised during the period                                                -           (186)            (96) 
 Release of discount interest to the income statement                     12               7              22 
 Credit to income statement - share of loss of 
  JV                                                                   (179)               -           (291) 
 Currency movements                                                     (12)              55             150 
------------------------------------------------------------  --------------  --------------  -------------- 
 Total provisions                                                      2,232           2,502           2,411 
------------------------------------------------------------  --------------  --------------  -------------- 
 Provisions are in relation to: 
 Current provisions 
 Onerous contracts                                                       737           1,050             977 
 Total current provisions                                                737           1,050             977 
------------------------------------------------------------  --------------  --------------  -------------- 
 Non-current provisions 
 Onerous contracts                                                     1,377           1,338           1,315 
 Other                                                                   118             114             119 
 Total non-current provisions                                          1,495           1,452           1,434 
------------------------------------------------------------  --------------  --------------  -------------- 
 
 

20. Cash flow from operating activities

Reconciliation of loss before taxation to cash flows from operating activities for continuing operations

 
 
                                                         Six months       Six months            Year 
                                                              ended            ended 
                                                            30 June          30 June           ended 
                                                                                         31 December 
                                                                                                2018 
                                                               2019             2018       (Audited) 
                                                        (Unaudited)      (Unaudited) 
                                                             GBP000           GBP000          GBP000 
---------------------------------------------------  --------------  ---------------  -------------- 
 Loss before taxation - continuing operations               (2,441)            (602)         (2,439) 
 Adjustments for: 
 Net exceptional items                                          682              451           3,453 
Depreciation and amortisation                                 3,723            2,341           4,777 
Net finance charges/(income)                                    364             (53)           (473) 
Share option expense                                          1,073              660           1,222 
Employers' taxes paid on options vested                           -             (67)            (67) 
Changes in working capital: 
(Increase)/decrease in trade and other receivables          (2,240)          (1,556)           1,831 
(Increase)/decrease in inventories                            (306)              122              76 
Increase/(decrease) in trade and other payables, 
 excluding player liabilities                                 2,058              176         (2,805) 
(Decrease)/increase in customer funds                          (94)            1,088             315 
Cash generated from operating activities, before 
 exceptional items                                            2,819            2,560           5,890 
 

21. Lease liabilities

 
                                                                        As at 
                                                                      30 June 
                                                                         2019 
                                                                  (Unaudited) 
Maturity analysis - contractual undiscounted cashflows                 GBP000 
                                                         ----  -------------- 
Less than one year                                                      1,697 
Between 2 and 5 years                                                   4,071 
More than 5 years                                                       5,984 
Total                                                                  11,752 
                                                               -------------- 
 
 
The weighted average incremental borrowing rate applied to 
 the lease liabilities was 5.75%. 
 
                                                                            As at 
                                                                          30 June 
                                                                             2019 
                                                                      (Unaudited) 
Lease liabilities included in the balance sheet                            GBP000 
                                                             ----  -------------- 
Current                                                                     1,234 
Non-current                                                                 7,297 
Total                                                                       8,531 
                                                                   -------------- 
 
 
                                                           As at 
                                                         30 June 
                                                            2019 
                                                     (Unaudited) 
                                                          GBP000 
                                            ----  -------------- 
At 1 January 2019                                          9,196 
Interest charged to the income statements                    247 
Lease rentals paid                                         (889) 
Movement as a result of foreign exchange                    (23) 
Total                                                      8,531 
                                                  -------------- 
 

22. Financial liabilities

 
 
                                                                    Six      Six months           Year 
                                                                 months           ended 
                                                                  ended 
                                                                30 June         30 June          ended 
                                                                                           31 December 
                                                                                                  2018 
                                                                   2019            2018      (Audited) 
                                                            (Unaudited)     (Unaudited) 
                                                                 GBP000          GBP000         GBP000 
Amounts payable to former shareholder of Lot.to Systems 
 Limited                                                            500               -              - 
 

The final instalment of the original GBP1,300k shareholder loan to Lot.to Systems Limited which was assumed by Sportech PLC on the acquisition of the whole of the share capital of Lot.to Systems Limited is repayable on or before 31 December 2019.

23. 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 
                                                                                                     2018 
                                                                     2019            2018       (Audited) 
                                                              (Unaudited)     (Unaudited) 
                                                                   GBP000          GBP000          GBP000 
                                                     ----  --------------  --------------  -------------- 
Short-term employee benefits                                          623             511             752 
Consultancy fees                                                        -             174              76 
Share-based payments                                                   49             164             388 
Accelerated IFRS 2 charge for departing management                    755               -               - 
Pay in lieu of notice                                                 300               -               - 
Post-employment benefits                                                2               5               5 
Total                                                               1,729             854           1,221 
                                                           --------------  -------------- 
 

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 
                                                                             2018 
                                             2019            2018       (Audited) 
                                      (Unaudited)     (Unaudited) 
                                           GBP000          GBP000          GBP000 
                             ----  --------------  --------------  -------------- 
S&S Venues California, LLC                    230             187             291 
                                                   --------------  -------------- 
 
 
 
                                                   Six             Six            Year 
                                                months          months 
                                                 ended           ended 
                                               30 June              30           ended 
                                                                  June     31 December 
                                                                                  2018 
                                                  2019            2018       (Audited) 
                                           (Unaudited)     (Unaudited) 
S&S Venues California, LLC                      GBP000          GBP000          GBP000 
                                  ----  --------------  --------------  -------------- 
At 1 January                                         -               -               - 
Additions                                          230             187             291 
Income statement items: 
   Impairment                                    (121)            (71)            (44) 
   Share of loss after tax                       (109)           (116)           (247) 
                                                        --------------  -------------- 
   Net income statement expense                  (230)           (187)           (291) 
Total                                                -               -               - 
                                        --------------  -------------- 
 

The net income statement expense has been charged to exceptional costs (see note 7), given the provision for onerous contracts in relation to this joint venture, has been released to exceptional costs, having been recorded through exceptional costs in 2017. In 2019 the losses exceed the amounts provided which were the lease rentals only.

24. 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 have 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.

Certain contingent items exist at the reporting date with respect to tax liabilities as outlined below.

Corporation tax

Judgement has been applied by management as to the corporation tax which arises on the sale of the Football Pools in June 2017. Exposure to further liabilities as a result of differences to management judgement exists and a possible further tax liability could arise.

VAT

As disclosed in the 2015 interim financial statements, HMRC have previously challenged the recovery of VAT by Sportech PLC as an active holding company providing wholly economic activities. This challenge was aligned to European Case Law which ultimately ruled in the taxpayer's favour.

HMRC adjusted their challenge to Sportech in 2017 to instead focus on the value of the economic activities that Sportech PLC provides to its trading subsidiaries, the majority of which are based overseas. Assessments have been raised totaling GBP3.3m for the period to 30 June 2017, citing an under-valuation of the Group's management supplies which is made primarily to its exempt UK Football Pools business. The Group has continued to engage its external advisors on this issue and has entered into a formal appeals process and further dialogue with HMRC.

To continue with the appeal, and in accordance with due process, GBP1.3m was paid to HMRC in 2018 (HMRC agreed to defer payment of the remaining amount). A provision of GBP1.7m has been made in the Group accounts and Management consider that the likelihood of any further material outflow, over this amount, being made to HMRC to settle this issue is remote.

Irish subsistence claims

The Irish Revenue have assessed the Group for EUR106k for income tax allegedly underpaid in relation to subsistence claims of Irish field crew. Management believe that this assessment is incorrect and that all subsistence claims paid were made without tax deduction in accordance with relevant regulations. An appeal is being pursued and no provision has been recorded in these financial statements.

Other contingent items

M&A activity

Both the 2017 sale of the Football Pools division and the 2018 sale of the Group's Venues business in The Netherlands have 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 either deal is considered by management to be remote.

Legal

The Group is engaged in certain disputes in the ordinary course of business which could potentially lead to outflows greater than those provided for on the balance sheet. The maximum possible exposure considered to exist, in view of advice received from the Group's professional advisors, is up to GBP0.6m. Management are of the view that the risk of those outflows arising is not probable and accordingly they are considered contingent items.

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

   Richard McGuire                        Tom Hearne 
   Chief Executive Officer              Chief Financial Officer 
   21 August 2019                         21 August 2019 

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

IR EAEPFAANNEAF

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August 22, 2019 02:01 ET (06:01 GMT)

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