NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018

FOR IMMEDIATE RELEASE

26 June 2023

SPORTECH PLC

('Sportech' or the 'Company')

Share Capital Restructure, Distribution and Notice of General Meeting

Sportech, an international betting and technology business, today announces a proposed rationalisation of its capital structure through a 10,000 to one share consolidation (the "Share Consolidation") immediately followed by a one for 1,000 share sub-division (the "Share Sub-division" and, together with the Share Consolidation, the "Share Capital Restructure"). Further, following and subject to the Share Capital Restructure taking place, the Company intends to declare a special interim distribution of 35 pence per New Ordinary Share in issue at the relevant record date (equivalent to 3.5 pence per Existing Ordinary Share subject to fractional entitlements), which will represent a return of, in aggregate, approximately £3.5 million to shareholders remaining following the Share Capital Restructure (the "Distribution").

Background

The Company's directors (the "Directors") have, for some time, been considering ways to reduce the Company's ongoing cost base and rationalise its capital structure whilst, simultaneously, being mindful of opportunities to return value to its shareholders. After a period of review, the Directors have concluded that the Share Capital Restructure, followed by the Distribution to holders of New Ordinary Shares, is in the best interests of the Company's shareholders as a whole for the following reasons:

·      Efficient exit for minority shareholders: The Company has been a publicly traded company for over 25 years, and during this time, has witnessed a significant increase in the number of small shareholders on its register. This may be attributed to various factors, including historical corporate activities. In particular, as at 23 June 2023 (being the latest practicable date prior to the publication of this announcement), of the Company's approximate 3,760 holders of Existing Ordinary Shares (as defined below) ("Existing Shareholders"), 20 per cent. held less than 100 Existing Ordinary Shares, 81 per cent. held less than 1,000 Existing Ordinary Shares and 97 per cent. held less than 10,000 Existing Ordinary Shares, with the 97 per cent. representing approximately 2.5 per cent. of the Company's total issued share capital. It has come to the attention of the Directors that a considerable number of these Existing Shareholders with small shareholdings face challenges when attempting to sell their Existing Ordinary Shares in the market. In many cases, the costs associated with such transactions are expected to surpass the actual value of those shares or otherwise be uneconomical. Furthermore, Existing Shareholders with smaller holdings are likely to be disproportionately impacted by the lack of market liquidity being experienced in the Existing Ordinary Shares. In light of these factors, the Directors consider the Share Consolidation to represent an efficient exit for minority shareholders holding less than 10,000 Existing Ordinary Shares.

·      Efficient return of funds to shareholders: The Directors expect to declare the Distribution by way of an interim dividend. The Directors believe that the declaration of the Distribution allows the Company to make this return in a flexible, efficient and cost-effective manner when compared to, for example, an on-market buyback programme, which could take a number of months to effect and may be constrained by daily trading limits, or a tender offer, which would be more costly.

·      Company ongoing administration costs: The number of Existing Shareholders which the Company has determines certain of the ongoing administration costs the Company incurs. For example, the costs incurred by the Company with its Registrar and the Company's costs in connection with producing and circulating shareholder documentation such as the annual report and accounts and notice of annual general meeting are directly related to the number of shareholders. The Company estimates that the number of Existing Shareholders will reduce by approximately 97 per cent., from approximately 3,760 Existing Shareholders to approximately 120 shareholders, as a result of the Share Capital Restructure. A reduction in the number of shareholders in the Company is expected to reduce the Company's ongoing administrative costs by approximately £250,000 over the next five years.

·      Improvement in marketability: The Directors are proposing to carry out the Share Sub-division subject to, and immediately following, the Share Consolidation in the expectation that the Share Sub-division will improve the marketability of the Company's issued shares.

The Share Capital Restructure and certain related matters will be subject to the approval of Existing Shareholders at a general meeting.  The Company expects to post a circular, by no later than 30 June 2023, to its shareholders (the "Circular") setting out full details of the Share Capital Restructure and Distribution (including associated resolutions), the expected timetable and a notice of the general meeting at which the relevant resolutions will be proposed (the "General Meeting").

Share Capital Restructure

The Company currently has 100,000,000 ordinary shares of one pence each ("Existing Ordinary Shares") in issue. Immediately following the Share Capital Restructure, the Company expects to have 10,000,000 new ordinary shares of 10 pence each ("New Ordinary Shares") in issue (although this will reduce as a result of the repurchase by the Company of New Ordinary Shares representing aggregate fractional entitlements (as described below) in the period shortly following the Share Capital Restructure). The New Ordinary Shares will be equivalent in all respects to the Existing Ordinary Shares, including their dividend, voting and other rights.

Existing Shareholders' percentage holdings in the issued share capital of the Company will, save for changes connected to fractional entitlements, remain broadly unchanged following the Share Capital Restructure.

Share Consolidation

To effect the Share Consolidation, the Company will issue one ordinary share of £100 each ("Post-Consolidation Ordinary Shares") for every 10,000 Existing Ordinary Shares. As the Company cannot issue fractions of shares, no Existing Shareholder will be entitled to a fraction of a Post-Consolidation Ordinary Share. Instead, their entitlement will be rounded down to the nearest whole number of Post-Consolidation Ordinary Shares. As a result, Existing Shareholders who hold fewer than 10,000 Existing Ordinary Shares at the record date will not be entitled to any Post-Consolidation Ordinary Shares in connection with the Share Consolidation and will, therefore, cease to be a shareholder of the Company following the Share Consolidation.

All fractional entitlements will, however, be aggregated and the shares representing such aggregate fractional entitlements will be sold on behalf of all relevant Existing Shareholders. The proceeds of such sales will be distributed to the relevant Existing Shareholders in due proportion subject to a minimum payment of £5 (described in more detail below).

Share Sub-division

To effect the Share Sub-division, the Company will issue 1,000 New Ordinary Shares for every one Post-Consolidation Ordinary Share. The Share Sub-division is subject to, and conditional on, the Share Consolidation taking place and will take place immediately following the Share Consolidation.

Fractional entitlements

Fractional entitlements arising from the Share Consolidation will be aggregated and sold on behalf of the relevant Existing Shareholders. At the point of sale, the Share Sub-division will have taken place and, as a result, such fractional entitlements will be represented by New Ordinary Shares (not Post-Consolidation Ordinary Shares).

The Company will carry out an on-market buy back of the New Ordinary Shares which represent fractional entitlements, immediately following admission of the New Ordinary Shares to trading on AIM ("Admission"), at a price of £1.70 per relevant New Ordinary Share. This price has been calculated by reference to the Company's recent share price performance, adjusted for the proposed Share Capital Restructure.

Settlement will be made in due proportion to the relevant Existing Shareholders, save that where any one Existing Shareholder's entitlement is £5 or less, such Existing Shareholder's entitlement will be donated to WellChild, a national UK children's charity.

Distribution

Following and subject to the Share Capital Restructure taking place, the Company intends to declare a special interim distribution of 35 pence per New Ordinary Share in issue at the relevant record date (equivalent to 3.5 pence per Existing Ordinary Share subject to fractional entitlements), which will represent a return of, in aggregate, approximately £3.5 million to shareholders remaining following the Share Capital Restructure.

Whilst the Distribution is not subject to shareholder approval at the General Meeting, the Directors do not expect to declare it unless: (a) shareholder approval is given for the Share Capital Restructure at the General Meeting; and (b) Admission takes place by or as soon as practicable following a date shortly following the General Meeting. The Distribution timetable will be set out in more detail in the Circular.

Recommendation to Shareholders

The Directors consider that each of the proposals outlined in this announcement is in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that Existing Shareholders vote in favour of the resolutions to be proposed at the General Meeting (which will be set out in full in the Circular) as Richard McGuire and Clive Whiley (being the Directors who are interested in Existing Ordinary Shares) intend to do in respect of their own beneficial holdings, insofar as they are able to control or direct the exercise of the voting rights attaching to the relevant Existing Ordinary Shares.

Contacts:

Notes to Editors:

About Sportech

Sportech operates in the gaming market and has two main businesses. Firstly, it runs Sports Bars and other betting venues in Connecticut, USA, where it has an exclusive license to offer pari-mutuel wagering, it also has a distribution agreement with the Connecticut Lottery Corporation to provide retail sports betting. Secondly, Sportech provides online gaming through two separate lines of business. Mywinners.com operates under an exclusive license to offer pari-mutuel betting online in Connecticut, while 123bet.com offers pari-mutuel betting online across the wider USA.

Important notices:

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United Kingdom by the FCA, is acting as Corporate Broker to Sportech and no one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Sportech for providing the protections afforded to clients of Peel Hunt, or for providing advice in connection with the matters referred to herein. Neither Peel Hunt nor any of its group undertakings or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Peel Hunt in connection with this Announcement or any matter referred to herein.