2 March 2017

 

Sportech PLC ("Sportech" or the "Group")

Final results for the year ended 31 December 2016

 

Sportech, one of the world's leading pool betting operators and technology suppliers, focused on highly regulated markets worldwide, is pleased to announce its final results for the year ended 31 December 2016.

 

Group highlights

 

·        Profit before tax increased to £30.7m (2015: £9.7m)

·        Results in line with expectations with overall EBITDA up 3% to £23.8m (2015: £23.1m)

·        Successful outcome to our eight year £97m VAT refund appeal after rulings at the Supreme Court and the Court of Appeal

·        Announced today an intention to return capital to shareholders by way of a tender offer for approximately £20m of Sportech ordinary shares, representing a buyback of around 10% of the issued share capital, details of which are set out in a separate announcement

·        Transformation in Group's financing with adjusted net cash balances at 31 December 2016 of £36.5m compared to adjusted net debt of £57.7m in 2015

·        Balance sheet strengthened by £22.6m despite a detailed review of assets leading to a non-cash impairment of £63.7m

·        Board restructured to include relevant industry experience and associated knowledge

·        Announced today the sale of The Football Pools for £83.0m, subject to certain conditions, details of which are set out in a separate announcement

 

Financial Highlights

 

	Reported 2016 £m	Reported 2015 £m	Change %
Revenue	98.6	100.2	-2%
EBITDA1	23.8	23.1	3%
Adjusted profit before tax2	13.8	11.8	17%
Adjusted earnings per share 2 Statutory profit before tax	5.2p 30.7	4.4p 9.7	18% 216%
Adjusted net cash/(debt) 3	36.5	(57.7)	n/a

 

·      Adjusted profit before tax is up by 17% to £13.8m (2015: £11.8m)

·      The Group holds adjusted net cash of £36.5m at 31 December 2016 (2015: adjusted net debt of £57.7m), which reduces by £21.5m once the Spot the Ball tax and fees are paid, and following receipt of the remaining £3m

·      On a constant currency basis, EBITDA, excluding the closed collector channel, remained level with prior year at £23.8m:

o Sportech Racing and Digital - EBITDA of £9.4m, £0.3m down on prior year, new contract wins mitigating impact on business of loss of material contract in California

o Sportech Venues - EBITDA of £2.7m, £0.5m decrease from prior year with online handle growth partly offsetting the industry handle decline

o Football Pools - EBITDA from continuing channels up by £0.7m (5%) to £15.0m

 

 

Ian Penrose, Chief Executive of Sportech PLC, said:

"This has been a transformational year. We have moved into a strong net cash position and have today announced details of a return of capital to shareholders.

We have also announced the sale of our Football Pools business for £83m, following a highly successful modernisation programme.

The Group is now in a strong position and more focused to take advantage of the strategic positioning of its predominantly US based businesses. We look forward to delivering further progress in 2017."

 

 

⁽¹⁾   EBITDA is stated before exceptional costs, impairment of assets and share option expense.

⁽²⁾   Adjusted profit figures are stated before amortisation of acquired intangibles, impairment of assets, exceptional items, share of loss after tax and impairment of joint ventures and associates, and other finance income.

⁽³⁾   Adjusted net cash/(debt) excludes any cash held on behalf of customers.

 

 

For further information, please contact:

 

Sportech PLC                                                                                Tel: +44 (0)20 7268 2400

Ian Penrose, Chief Executive

Mickey Kalifa, Chief Financial Officer

 

Brunswick Group LLP                                                                   Tel: +44 (0)20 7404 5959

Mike Smith, Stuart Donnelly

 

Investec Bank PLC                                                                        Tel: +44 (0)20 7597 4000

Patrick Robb, Henry Reast

 

Peel Hunt LLP                                                                               Tel: +44 (0)20 7418 8900

Dan Webster, Adrian Trimmings

 

 

Forward-looking statements

 

Certain statements in this Final Results Statement are forward-looking. Although the Group believes that the expectations reflected in this forward-looking statement are reasonable, it can give no assurance that these expectations will prove to be correct. As these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

 

Sportech PLC ("Sportech" or the "Group")

Final results for the year ended 31 December 2016

 

Group Overview

 

Sportech is one of the world's leading sports pool betting operators and technology suppliers, focused on highly regulated markets worldwide.

 

The Group comprises three divisions: Racing and Digital, Venues and The Football Pools. Both the Racing and Digital division (which processes over $11 billion bets annually) and the Venues division (which operates all legal betting exclusively and in perpetuity in Connecticut in venues, online and via mobile), are based in the US and Canada where we employ 570 people across field operations, 14 betting venues and four corporate offices. We are licensed by gaming regulators in 28 US States. We also have smaller operations of these divisions based in the UK, Ireland, Germany, Turkey and The Netherlands. The Football Pools is based in Liverpool, operating under a licence from the UK Gambling Commission, and is the oldest football gaming business in the world.

 

Group Financial Overview

 

	Revenue		EBITDA
£m	2016	2015	2016	2015
Sportech Racing and Digital	36.0	38.8	9.4	9.7
Sportech Venues	35.1	36.6	2.7	3.2
Football Pools - continuing channels	28.4	28.4	15.0	14.3
Trading divisions	99.5	103.8	27.1	27.2
Inter-segment elimination and corporate costs	(0.9)	(0.9)	(3.3)	(3.5)
Results from continuing channels	98.6	102.9	23.8	23.7
Football Pools - closed collector channel	-	5.4	-	0.9
Total Group at constant currency	98.6	108.3	23.8	24.6
FX effect	-	(8.1)	-	(1.5)
Total Group	98.6	100.2	23.8	23.1

* 2015 divisional results are at "constant currency", retranslated using 2016 exchange rates.

 

At constant currency, excluding the results of the closed collector channel in the Football Pools, Group EBITDA has been maintained at £23.8m on revenues which have reduced by £4.3m (4%).

 

Sportech Racing and Digital

 

(i)  Sportech Racing and Digital: Business Review

 

Over the past five years, we have invested heavily in new and improved betting technology products and licensing in order to create a leading gaming technology business, servicing the global horseracing industry and more recently, the North American sports industry. We are pleased that this diversification into new geographies and sports, is now beginning to deliver results. As a consequence, we have recognised an impairment charge against our old technology.

 

In order to build upon our long-term market strength in North America and Europe and to increase our global presence, we have established a base in Singapore with the aim of driving expansion into the significant Asian market. This has led to several new contracts (which generally are for 5 to 10 years) for the supply of Tote system software and hardware during 2016. New customers include the Macau Jockey Club, Royal Sabah Turf Club in Malaysia, and Vung Tau greyhound track in Vietnam, to whom we have supplied a full range of betting software and hardware, including our Quantum™ Tote System and newly developed BetJet Aero™ terminals. Contracts include ongoing software licensing, maintenance and support services.

 

The expansion of our customer base follows the successful installation of our Quantum^TM Tote system for Betfred in the UK, which now processes all Tote bets on live UK Racing from all UK domestic and international sources. Licensing and software maintenance services also continue to be supplied under this contract.

 

Importantly, we completed the delivery of a project to enable Betfred and its full UK wagering network currently connected into their Quantum Betfred system (including all major UK LBOs and key online partners), to comingle directly into the Hong Kong Jockey Club pools. We have also delivered a similar solution for others internationally including the Great Canadian Gaming Corporation, and will watch the growth of this new business stream closely.

 

We were also pleased to conclude a system sale to our first customer in Russia in December 2016, having developed and successfully tested a new local language Russian betting/wagering system. This is our fifth local language deployment following the development in Macau earlier this year and we now have a suite of English, Russian, Spanish and simple and traditional Chinese language options.

 

Existing contracts continue to be renewed in North America and Europe and we were pleased to open live racing for new customers including Lone Star Park in Texas, Remington Park in Oklahoma and Kentucky Downs. Our Digital services business has shown good growth following a tough trading period in the second half of 2015, having secured new customers including Penn National Gaming.

 

Our Bump 50:50 business which was acquired in June 2014 and supplies in-stadia electronic lotteries to professional sports teams has had another year of growth from an initial customer base of seven to 37 professional sports teams to date. The business was loss making when we acquired it and pleasingly has generated EBITDA of £0.2m in 2016, and has a strong run rate going into 2017. We have been delighted with the calibre of our customer roster, with new customers contracted in the year including Dallas Cowboys, Miami Dolphins and San Francisco 49ers (NFL), Dallas Stars and Tampa Bay Lightning (NHL), Cleveland Cavaliers and LA Clippers (NBA), and our first MLB teams, San Diego Padres and Detroit Tigers. We have also developed the business outside of sport, offering 50:50 lotteries at the Fiesta Bowl, the Cactus Bowl and at Canada's biggest music festival, the Festival d'été de Québec. During 2016, Bump's systems raised over $8m for charitable causes, and it is believed that this could grow by more than 50% in 2017.

 

In February 2016, the Group's existing joint venture with Playwin, India's largest lottery provider, commenced supplying technology to an Indian company engaged to provide pool services for a Sikkim licence holder. Revenues generated are currently small as we look to establish a proof of concept for the broader market in India, as legislation permits.

 

(ii) Sportech Racing and Digital: Financial Review

 

	Revenue		EBITDA
£m	2016	2015	2016	2015
Tote services and maintenance contracts	22.5	26.5	2.6	3.8
System software and equipment sales	6.0	5.4	3.0	2.5
Digital services including sports and other lotteries	7.5	6.9	3.8	3.4
FX effect	-	(4.2)	-	(1.1)
Total	36.0	34.6	9.4	8.6

* 2015 channel results are at "constant currency", retranslated using 2016 exchange rates.

 

Total revenue has increased by 4% to £36.0m (2015: £34.6m) and EBITDA for the division was also ahead of prior year by 9% at £9.4m (2015: £8.6m). On a constant currency basis, revenue and EBITDA have reduced by £2.8m and £0.3m respectively, reflecting the effective repositioning of the business following the loss of our California Tote contract in October 2015 which had contributed $2.4m of EBITDA annually. New service contracts, including Lone Star Park and Remington Park, have each made a positive contribution towards earnings for the division.

 

As noted in the business review, we have seen growth in revenues and EBITDA in our system software and equipment sales (primarily in Asia) and our digital service contracts. This demonstrates the benefits of our expanded international focus in recent years, and the investment in our core technology. We are confident about the prospects for the division in 2017.

 

 

Sportech Venues

 

(i)  Sportech Venues: Business Review

 

In Connecticut, Sportech Venues operates all legal betting on horseracing, greyhound racing and Jai Alai under an exclusive and in perpetuity licence for retail, telephone, internet and mobile. The business, which is operated with close consultation and oversight from the State of Connecticut, and is the only legally permitted betting operator in Connecticut.

 

Our strategy is to broaden the product offering and become a betting operator which is able to offer the full suite of gaming products (as regulation develops) in an omni-channel environment, including at venues where bets can be placed watching sport, eating and drinking. We anticipate that betting on sports is now more likely to become legalised in the US in the next few years than previously.

 

We have commenced construction of our 20,000 sq.ft. flagship sports bar, restaurant and betting venue in downtown Stamford, just north of the New York State border, which is due to open in June. We are again partnering with Bobby Valentine for this venue as we did with our Bradley location in the north of Connecticut. Bobby will be relocating his existing Stamford sports bar and restaurant into the new facility which is bigger, better and more centrally located in the city.

 

Further to this, we remain involved in the ongoing debate and discussions concerning the expansion of slots (a "third casino") in the State. Our involvement is based on the potential opportunity for the business, but also acts as a defensive move to counter the expected loss of taxation revenues for, and employment in, the State through the future expected opening of new casinos in neighbouring States.

 

We continue to look for further sites where a betting venue would deliver opportunities to further expand our reach in the State and anticipate opening in Windham next month, together with an additional unit before the end of 2017. Furthermore, we have appointed the land and property consultant, CBRE, to apply to change our permitting (planning) designation, to enable us to realise value from our nine-acre site in New Haven whilst relocating our existing Sports Haven venue. Realising capital next year from this surplus land asset would fund the majority of our venues build out strategy in 2017 and 2018.

 

We still face competition from unlicensed illegal internet operators who continue to take bets (together with tax and jobs) from Connecticut residents, despite the State's issue of cease and desist letters. We anticipate support from the State to actively protect the terms of our licence, and to grow in State jobs and State tax revenues.

 

Our expansion into California gained pace in 2016 with the opening of our first sports bar, restaurant and betting venue, in San Diego, in partnership with The Silky Sullivan Group under the brand name "Striders". The venue has been steadily building a customer base and increasing its revenues. We have an agreement to develop up to ten similar facilities across Southern California under which the Group currently has approval to construct a second site in the town of Norco and is considering further potential sites.

 

In The Netherlands, we operate a number of OTBs, point-of-sale terminals and online betting on horseracing, all on an exclusive basis under a licence from the Ministry of Justice. This licence has been extended to June 2017 and we continue to work closely with the Government, the regulator and the horseracing industry regarding the future regulatory plans.

 

(ii) Sportech Venues: Financial Review

 

	Revenue		EBITDA
£m	2016	2015	2016	2015
Connecticut Venues	29.4	30.9	2.5	2.9
Other Venues	5.7	5.7	0.2	0.3
FX effect	-	(3.9)	-	(0.4)
Total	35.1	32.7	2.7	2.8

* 2015 channel results are at "constant currency", retranslated using 2016 exchange rates.

 

Overall revenues for the division have increased from prior year by £2.4m to £35.1m and EBITDA has remained broadly flat at £2.7m. On a constant currency basis, revenue and EBITDA have fallen by £1.5m and £0.5m respectively.

 

We continue to see the decline in industry handle across the US impacting our Connecticut retail business. However, our online betting platform ("ADW") benefitted from the expected switch towards digital products with a 16% increase in handle. Last year, racing revenue was higher than normal during the Triple Crown season as a result of the interest in American Pharaoh who won all three races, the first horse to do so for 37 years. With no similar contender in 2016, revenues were lower during the Triple Crown season. Offsetting this benefit in 2015, we were also impacted by the closure of a Jai Alai venue which reopened in 2016, although revenues have not returned to levels from prior to the closure.

 

We are encouraged that our innovative sports bar, restaurant and betting concept is beginning to produce positive results. At our Bradley venue, we now generate a contribution of over $1.0m, which includes, a first-time contribution from food and beverage of $0.2m, with total revenues up by 16%. This bodes well for our new flagship venue which will open in downtown Stamford.

 

In our other venues in California and The Netherlands the combined revenues and EBITDA were in line with prior year.

 

The Football Pools

 

(i)  Football Pools: Business Review

 

We have implemented significant operational and technological change in order to turn around the fortunes of our 93-year-old football gaming business over the past few years. We are pleased therefore that the final important stages in this process were implemented in the year, such that the business now has strong foundations to move forward.

 

The logistically challenging and cost intensive paper coupon collector network, which has been in decline for many years, was phased out over a number of months and finally closed in June 2016. Customers from this network are now transacting with the business on a subscription or digital basis. A new customer database is now in operation following a lengthy process to move away from old legacy systems, which have now been closed down.

 

Having made significant improvements in technology, we are now able to extend the distribution of our products digitally through the launch of The Football Pools App, which has been downloaded 20,000 times to date. 6,000 downloads have occurred in the last four weeks since the start of the promotional campaign.

 

We have also continued to develop new products to drive additional revenues and increase customer engagement. This summer, we have introduced pool games with cash out functionality to footballpools.com and a new online Spot the Ball game to replace the traditional Spot the Ball paper coupon offering.

 

The significant improvement in the technology base has enabled us to broaden the distribution of our products not just to digital, but also to retail consumers. From the end of January 2017, the traditional Football Pools game is now available to be played in many of the WH Smiths stores nationwide. We have embarked on a supporting digital and TV advertising campaign, as we look to boost our customer numbers.

 

(ii) Football Pools: Financial Review

 

	Revenue		EBITDA
£m	2016	2015	2016	2015
Continuing channels - subscription and wallet	28.4	28.4	15.0	14.3
Closed collector channel	-	5.4	-	0.9
Total	28.4	33.8	15.0	15.2

 

Revenues were stable at £28.4m and EBITDA was up by £0.7m to £15.0m when excluding the impact of the contribution last year from the now closed collector channel (which had become loss making in 2016).

 

Weekly spend per Classic Pools customer has increased by 7% to £3.24 per week. Total new player acquisition in the year was 16,000, with 68% being recruited online. Total customer numbers at 31 December 2016 were 215,000 (2015: 230,000), with 64% of our Classic Pools customer base now playing by direct debit. A continued focus on the cost base has achieved a further reduction of £0.7m in the continuing business, in addition to stripping out £4.5m of costs in relation to the collector channel.

 

We have announced today the sale of the Football Pools business and have reflected on the carrying value of this division by recognising a goodwill impairment charge of £37.7m. This reduces the carrying value of goodwill to £81.8m. In addition, we have impaired fixed assets by £4.8m, taking the total Football Pools asset impairment to £42.5m.

 

Corporate costs

 

Corporate costs of £3.3m (2015: £3.5m) have been reduced by 6% and remain tightly controlled. In addition, we have a non-cash share option credit under IFRS 2 of £0.1m (2015: charge of £0.5m).

 

Depreciation, amortisation and impairments

 

The Group's normal depreciation and amortisation charge increased in the period to £8.4m (2015: £7.6m), owing principally to the ongoing investment into our businesses in North America.

 

The Group has recognised various non-cash impairments to assets across the business, including £42.5m in the Football Pools, £17.2m in Sportech Racing and Digital and £4.0m in Sportech Venues. The impairments were identified through a review of the asset base of each division following the end of modernisation in the Football Pools business, the completion of a six-year road map of software and ancillary product development in Sportech Racing and Digital and a review of fixed assets in Connecticut, as well as our intention to realise value through sale of our venue in New Haven, Connecticut.

 

The Group incurred a non-cash amortisation charge of £0.6m (2015: £1.2m) on the intangible assets acquired with eBet in 2012, Datatote in 2013 and Bump in 2014.

 

Net exceptional income

 

The Group has recorded a pre-tax net gain of £91.0m in relation to the VAT refund which was successfully concluded by the Supreme Court in December 2016. Total income of £93.9m has been received with an expected further £3.0m to be received in the next few weeks. Costs in relation to this successful eight-year legal process of £5.9m have been recognised and are detailed in note 4.

 

Exceptional costs

 

The Group has incurred exceptional administration costs of £9.7m (2015: £2.6m) in the year. Of those costs, £2.4m relates to the modernisation of the Football Pools division (representing £2.2m of restructuring costs and £0.2m of losses in winding down and closing the collector channel). Costs of £4.4m (2015: £0.3m) have been incurred in relation to ongoing corporate activity and a loss of £0.7m was realised on the sale of 25% of our holding in NYX Gaming Group Limited. A further £0.5m of redundancy and restructuring costs were incurred within our US business, £1.0m has been provided in respect of irrecoverable VAT on asset impairments and £0.7m of other exceptional costs have been incurred in the year (see note 4 for further analysis). All these costs are considered to be one-off in nature and not relevant to the underlying performance of the Group or of such a size that their exclusion from underlying profits is considered necessary to understand the true performance of the Group. 

 

Net finance costs

 

The Group has reduced its finance costs by 47% in the year to £1.7m (2015: £3.2m) due to the lower average levels of net debt. In addition, other finance income amounted to £1.1m (2015: £0.6m), representing foreign exchange gains on inter-company loans and cash balances held.

 

Taxation

 

A tax charge for the period of £17.6m (2015: £3.0m) has been provided at the weighted average applicable tax rate for the Group of 16.2% (2015: 17.0%) together with the tax effects of permanent differences and other adjustments. The increase in the Group's tax charge is a result of the Spot the Ball net gain. The underlying adjusted effective tax rate has marginally reduced to 22.8% (2015: 23.7%).

 

Tax has been provided on the net Spot the Ball gain of £91.0m at the UK corporation tax rate of 20%. Impairments to goodwill have impacted the overall effective tax rate, increasing it to 57.3%.

 

The Group has a net deferred tax asset of £3.1m (2015: £0.5m), representing primarily carried forward net operating losses and foreign taxes withheld which can be utilised against future profits. The Group has made a value adjustment of £3.1m to the carrying value of its carried forward foreign tax credits as a result of a reassessment of future recoverability. Tax payments of £3.1m were made during the year (2015: £2.3m), principally representing final payments for prior-year tax liabilities and overseas tax deducted at source.

 

VAT claim

 

On 4 May 2016, the Court of Appeal judges found unanimously in favour of the Group in respect of its £97m VAT reclaim relating to its "Spot the Ball" game. On 13 May 2016, HMRC sought permission from the Court of Appeal to appeal to the Supreme Court, which was refused. We announced on 6 June 2016 that HMRC had lodged an application to appeal directly to the Supreme Court which we were delighted to hear on 8 December 2016 had been refused which brought the litigation to an end in the Group's favour.

 

The Group has currently received £93.9m and expects to receive the remaining balance within the next few weeks. Following the successful conclusion to this case, the Group has recognised the income net of costs in the income statement.

 

Cash position and banking facility

 

The Group ended the year in an adjusted net cash position of £36.5m. Our £50.0m facility with the banking syndicate of Royal Bank of Scotland plc, Barclays Bank PLC and Bank of Scotland plc will be reviewed during 2017. £25.0m of the original facility of £75.0m was cancelled in December 2016 to reduce commitment charges being incurred. The Group's bank leverage covenant under the existing facility is 2.50x in June 2017. There was no leverage to be tested at 31 December 2016.

 

Foreign exchange

 

The Group generates approximately 40% and 10% of EBITDA in US dollars and Euros respectively. Movements in overseas currency rates are closely monitored by management and action taken to minimise cash flow risk arising from this. The Group has benefited in its reported results from the weakening of Sterling in 2016; EBITDA in prior year would have been £1.5m higher had 2016 exchange rates prevailed.

 

Capital expenditure

 

Capital expenditure in the year of £11.9m (2015: £8.4m) includes platform and product modernisation in the Football Pools, approximately 40% of the Stamford venue build out, and improvements made to the Group's Digital offering.

 

Distributions to shareholders

 

The Board has decided to return money to shareholders by way of the Tender Offer announced today. Once the Board has considered the impact of the Tender Offer, the timing of The Football Pools sale and ongoing strategic initiatives, alongside new banking facilities, the Board will determine the appropriate capital structure and ongoing distribution policy. Therefore, no dividend is currently proposed.

 

Shareholders' funds

 

Total equity and the Group's net assets at 31 December 2016 have increased to £148.8m (31 December 2015: £126.2m).

 

Board and employees

 

In January 2017, Andrew Gaughan was appointed to the Board as an Executive Director having served as President, Sportech Racing and Digital for the last four years. Andrew has extensive experience over the last 20 years in the gaming, technology and horseracing sectors, having previously held senior positions at Scientific Games Corporation, Magna Entertainment Corporation and Woodbine Entertainment Group.

 

Richard McGuire was appointed as a Non-Executive Director of the Board on 24 August 2016. Richard has extensive experience in capital markets and the leisure and gaming industries.

 

Rich Roberts, Peter Williams and David McKeith left the Board since the preliminary results announced on 3 March 2016. We would like to thank them for their contributions to the Company.

 

Sportech is a geographically diverse business which places significant demands upon executives and employees. The Board would like to thank them for their dedication and commitment to the Group.

 

Outlook

 

Sportech has been through a transformational period.

 

We have established a unique position in the regulated gaming market worldwide, most notably with our licensed gaming businesses in the US. Following a number of years of significant investment in our technology, licensing and geographical reach, we are now in a position to grow our business, dispose of surplus property assets, benefit from regulatory change and deliver increased value to our shareholders.

 

We have had a good start to the year, are trading in line with management expectations, and look forward to delivering a successful 2017.

 

 

 

 

Ian Penrose

Chief Executive

 

2 March 2017

 

 

 

 

Notes

 

Adjusted performance measures

The Executive Committee assesses the performance of the operating segments based on a measure of adjusted EBITDA. This excludes the effects of non-recurring expenditure such as exceptional items and asset impairment charges. The share option expense is also excluded. This measure provides the most reliable indicator of underlying performance of each of the trading divisions. Group adjusted EBITDA for the year increased by £0.7m from £23.1m to £23.8m. An adjusted profit before tax measure is also used in assessing the Group's performance. This is calculated as adjusted EBITDA less share option expense, depreciation and amortisation and finance costs. Again, this is deemed by the Executive Committee to be the most reliable indicator of Group performance. Adjusted profit before tax increased by £2.0m from £11.8m to £13.8m.

 

The Executive Committee assesses the Group's liquidity using a measure of adjusted net debt which excludes customer funds which the Group does not have beneficial ownership of. It also excludes the VAT refund in the time period prior to it becoming "free and clear" to the Group. This is consistent with the measure used by the Group's lenders to assess the liquidity financial covenant.

 

Consolidated income statement
For the year ended 31 December 2016

		2016	2015
	Note	£m	£m
Revenue		98.6	100.2
Cost of sales		(58.6)	(58.2)
Gross profit		40.0	42.0
Distribution costs		(0.2)	(0.6)
Administrative expenses		(98.3)	(36.3)
Other operating income		91.0	8.1
EBITDA before exceptional items, share option expense and impairment of assets		23.8	23.1
Share option credit/(expense)		0.1	(0.5)
Depreciation and amortisation (excluding amortisation of acquired intangibles)		(8.4)	(7.6)
Amortisation of acquired intangibles		(0.6)	(1.2)
Impairment of assets		(63.7)	(6.1)
Exceptional income	4	91.0	8.1
Exceptional costs	4	(9.7)	(2.6)
Operating profit		32.5	13.2
Finance costs	5	(1.7)	(3.2)
Other finance income	5	1.1	0.6
Net finance costs		(0.6)	(2.6)
Share of loss after tax and impairment of joint ventures and associates		(1.2)	(0.9)
Profit before taxation		30.7	9.7
Adjusted profit before taxation *		13.8	11.8
Taxation	6	(17.6)	(3.0)
Profit for the year		13.1	6.7
Attributable to:
Owners of the Company		13.1	6.7
Non-controlling interests		-	-
		13.1	6.7
Earnings per share attributable to owners of the Company
Basic	7	6.4p	3.3p
Diluted	7	6.2p	3.1p
Adjusted earnings per share attributable to owners of the Company
Basic	7	5.2p	4.4p
Diluted	7	5.0p	4.2p

* Adjusted profit before taxation is profit before taxation, amortisation of acquired intangibles, impairment of assets, exceptional items, share of loss after tax and impairment of joint ventures and associates, and other finance income.