8 November 2012
Sportech PLC ("Sportech" or "the Group")
Interim Management Statement
Sportech PLC, one of the world's leading operators and suppliers of pools and tote betting services, today announces its Interim Management Statement relating to the period from 1 July 2012 to date.
Financial Summary
The Board is pleased to report that the Group is trading in line with the Board's expectations for the full year with operational progress being made in all areas of our business.
Key Operational Highlights
Sportech Racing
We continue to make good progress with Sportech Racing, our predominantly North American based gaming business.
Trading in our Tote services business remains encouraging and in our venues division, handle is tracking ahead of last year, a reversal of several years of decline. We continue to work on developing our product and technical capabilities, most notably with our online, mobile and core tote technology. Since the half year, we have installed a new terminal network for a client in the Dominican Republic, and last weekend provided the tote systems and terminals to Santa Anita, in Los Angeles, for the hosting of the Breeders Cup where we processed over $127m of handle over the two days. In California, we anticipate receiving City planning approval for a fifth Sports Bar mini satellite betting venue shortly.
Our Interactive Products & Services division also continues to move forward. The previously announced full service contract with Pocono Downs, part of the Mohegan Sun casino group, launched successfully in October, and we have also signed a multi-year contract to provide full interactive products and services to 123 Racing. We have continued to invest in our products and our new online software platform remains on schedule to be available to customers next spring. We are keen to accelerate the development of this division which operates in the legal online gaming area of Horseracing in North America.
In Connecticut, USA, Sportech Venues operate all betting on horseracing under an exclusive and perpetual licence, through its venues and telephone betting activities. Performance remains ahead of last year and, the investment programme into facilities, customers and staff undertaken following the acquisition has reversed many years of decline in handle.
Hurricane Sandy has had a temporary impact on the business as it led to the closure of all our trading units on Monday and Tuesday last week. We are pleased to say that due to the great efforts of the team, the majority of the units were back trading by Wednesday. However, business continues to remain affected as cleanup efforts and dealing with power outages take obvious priority for many of our customers.
Football Pools
The Football Pools business is performing in line with management expectations, with continued focus on customer retention and cost effective recruitment whilst delivering ongoing cost savings and business improvements. This football season is the 90th anniversary since the launch of the football pools and it is pleasing that the world's oldest football gaming business continues to be a part of many people's leisure enjoyment.
The recently announced strategic technology services agreement with Longitude, for exclusive distribution of its single pools product within Europe and India for sports pool betting, is expected to open new markets for our football business. The benefits of this are expected to be realised later in 2013.
e-Gaming
2012 has seen the transition of our e-Gaming operations onto the Playtech platform. We are pleased to report that we have now completed the transition of bingo onto the Playtech platform and so now our customers can enjoy a single wallet solution for all our of e-Gaming products. Trading across our e-Gaming estate has been slower than anticipated during recent months as the impact of brand changes and system migrations have affected performance. However, new player recruitment to the Vernons brand remains encouraging, and management are pleased to now be in a position to move forward positively after such a disruptive period.
Banking Facilities
As announced on 19 July 2012, the Group has entered into a new £75.0m revolving credit facility provided by Bank of Scotland Plc, Barclays Bank Plc and The Royal Bank of Scotland Plc. This enlarged and enhanced facility will enable Sportech to move forward utilising the strong cash flow of the Group as we seek to capitalise on the growth opportunities ahead.
VAT Claim
As announced on 11 October 2012, the VAT claim for in excess of £40m, which would more than double with simple interest applied, submitted by the Group in respect of Spot the Ball, has been heard at the First Tier Tax Tribunal, with the hearing closing on Wednesday 10 October 2012. Sportech has been advised that it should expect to be notified of the Tribunal's decision by the end of January 2013.
Summary
This has been a period of good progress across the business units. The Group is now in a strong position to capitalise on the international growth opportunities that are available in regulated and emerging gaming markets.
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Contacts:
For further information, please contact:
Sportech PLC 020 7268 2400
Ian R Penrose, Chief Executive
Steve Cunliffe, Finance Director
Pelham Bell Pottinger 020 7861 3232
David Rydell / Emma Kent / Malika Shermatova