TIDMSPO
RNS Number : 8196X
Sportech PLC
01 September 2022
1 September 2022
Sportech PLC
("Sportech" or the "Group" or the "Company")
Interim Results
Sportech (AIM:SPO), an international betting technology
business, is pleased to announce its interim results for the six
months ended 30 June 2022 ("H1 2022" or the "period").
Summary
The Group stabilised revenue, improved EBITDA and returned GBP7
million to shareholders during the period as a result of online
retail marketing projects, lower costs, the development of sports
betting initiatives in Connecticut and the proceeds from an asset
sale announced on 4 January 2022.
Group Adjusted EBITDA improved markedly during the period to
GBP0.3 million (H1 2021: loss of GBP0.9 million). The commencement
of Sports Betting in Connecticut in late 2021, where the Group has
a commercial retail sports betting arrangement with the State via
the Connecticut Lottery Corporation; stronger food and beverage
revenues, digital business growth and lower corporate costs
supported the improvement.
Following a return to pre-COVID revenues, a significant part of
the former Sportech Lotteries division was sold to Inspired
Entertainment Inc, as announced on 4 January 2022 (LEIDSA
disposal). This enabled the Group to return a further GBP7 million
to shareholders by means of a 7p per share dividend, announced on
27 April 2022, taking shareholder repayments to GBP42.5 million
during the last 12 months and GBP117.5 million since 2017.
Comparatives for H1 2021 have been restated to classify LEIDSA
operating results to discontinued operations.
Restated
Constant Reported
Currency(4) Currency(4)
GBPm's H1 2022 H1 2021 H1 2021
--------------------------------------- -------- -------------- -------------
Revenue 12.6 12.6 11.8
Gross Profit 6.5 6.4 5.8
Contribution(1) 6.3 6.2 5.6
Adjusted EBITDA(2) 0.3 (0.8) (0.9)
(Loss)/profit pre-tax from continuing
operations (0.8) 0.4 0.3
Adjusted loss before tax(3) (0.4) (1.7) (1.7)
Distributions to shareholders 7.0 35.5 35.5
1. Contribution is defined as gross profit, less marketing and distribution costs.
2. Adjusted EBITDA is earnings from continuing operations before
interest, taxation, depreciation and amortisation, share option
charges, impairments and separately disclosed items as reported in
note 1 of the Interim Financial Statements.
3. Adjusted loss is the aggregate of Adjusted EBITDA, share
option charges, depreciation, amortisation (excluding amortisation
of acquired intangibles) and certain finance charges.
4. Prior year comparatives have been adjusted for discontinued operations (LEIDSA contract).
As the Group moves through the rest of the financial year, the
corporate focus remains on delivering positive shareholder returns,
operationally executing the delivery of sports betting across key
locations and escalating the Group's digital wagering
opportunities. The Board remain positive in the quality of the
Group's innovative products, management strategy and continuing
commercial relationships and are confident of achieving full year
2022 forecasts. There remains deferred contingent consideration
potentially due to the Group in Q1 2023 of cGBP1.1 million (CAD$2
million) in connection with the Bump disposal, however this has not
been recognised on the Group's balance sheet as a receivable due to
the uncertainty over the revenue hurdle being achieved.
The business transformation continues with the following
objectives:
-- Secure position within Connecticut expanded gaming.
-- Deliver a less capital-intensive business and significantly
reduce the future corporate cost base.
-- Execute further licensing opportunities within digital lottery.
-- Evaluate and execute material corporate opportunities,
delivering tangible investor returns.
Richard McGuire, Executive Chairman of Sportech, said : "The
first half of 2022 recorded the successful execution of Group
strategic objectives. Online revenue growth; non-core asset
disposals; further shareholder capital returns and a US team
focused on developing sports betting initiatives, all positive
hallmarks of 2021, continued during the period. As previously
announced, Nicola Rowlands, our outgoing CFO, will be leaving at
the end of September, we wish her continued success. We also
welcome Paul Humphreys to the Board as of today, as an Independent
Non-executive Director. Paul's appointment further strengthens the
Board, and he brings with him significant experience that is highly
relevant to the strategy of the Group. Paul will chair the Group's
Audit Committee.
The Group has a clear vision, a strong Board, a variety of
attractive operating assets, no debt, and cash to meet strategic
objectives in the second half of 2022 and beyond."
For further information, please contact:
Sportech PLC enquiries@sportechplc.com
Richard McGuire, Executive Chairman
Nicola Rowlands, Chief Financial Officer
Peel Hunt Tel: +44 (0) 20 7418 8900
(NOMAD and Corporate Broker to Sportech)
George Sellar / Andrew Clark / Lalit Bose
Group Overview
The Group underwent significant restructuring during 2021,
completing the sale of various operational divisions, returning
significant capital to investors and retaining sufficient net cash
for a potential combination of growth investment and future
investor returns. That momentum continued in H1 2022, following the
sale of Sportech Lotteries LLC on 31 December 2021 and the payment
of a 7p dividend per share. Positive marketing initiatives, lower
costs and sports betting resulted in positive EBITDA despite a
modest reduction in gross revenues, on a constant currency
basis.
Revenue EBITDA
GBP'000 H1 2022 H1 2021(1) H1 2022 H1 2021(1)
Continuing operations
-------- ----------- -------- -----------
Venues 11,714 12,235 1,525 1,097
Digital 857 351 (107) (375)
Corporate costs - - (1,107) (1,497)
-------- ----------- -------- -----------
Total at constant currency 12,571 12,586 311 (775)
Exchange rate impact - (759) - (121)
Total reported 12,571 11,827 311 (896)
-------- ----------- -------- -----------
1. 2021 numbers are at constant currency.
Sportech Digital
The acquisition of the technology platforms and talent of Lot.to
Systems and the integration of these assets into Sportech's
organisation completed in early 2019, resulting in further
expansion of the Group's B2B lottery capabilities with a key mobile
component and robust administrative, CRM and marketing tools. The
team advanced digital lottery capabilities facilitating the sale of
Sportech Lotteries LLC and the agreement to provide a digital
lottery platform to Inspired Entertainment Inc.
The continuing digital business revenues increased versus H1
2021, and expenses were reduced resulting in an improved EBITDA for
the period. The core focus for the Digital team, based in Chester,
UK, remains pursuing licensing opportunities drawing on the
Sportech brand, legacy, and digital expertise to deliver an
enhanced consumer experience.
Constant Reported
Digital Currency Currency(2)
GBP'000 H1 2022 H1 2021 H1 2021
-------- ---------- -------------
Service revenue 857 351 322
Contribution 355 127 115
Contribution margin 41.4% 36.2% 35.7%
Adjusted operating expenses(1) (462) (502) (496)
-------- ---------- -------------
Adjusted EBITDA (107) (375) (381)
-------- ---------- -------------
Intangible assets capex 97 95 95
Tangible assets capex 22 2 2
-------- ---------- -------------
Total capex 119 97 97
-------- ---------- -------------
1. Adjusted operating expenses exclude depreciation and
amortisation, impairments and separately disclosed items as
reported in note 1 of the Interim Financial Statements.
2. Prior year comparatives have been adjusted for discontinued
operations (LEIDSA contract).
Sportech Venues
Sportech Venues operates ten gaming venues, providing 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. In 2021, an agreement was
concluded whereby Sportech can offer betting on all other sports
across a number of Venue locations under licence of the Connecticut
Lottery Corporation, (CLC). Management have worked tirelessly with
the CLC to introduce retail sports betting across the State since
Q4 2021 and have comprehensive marketing plans in place ahead of
the 2022/23 American football season, commencing September
2022.
COVID related travel and hospitality restrictions within retail
outlets eased during the period resulting in an 80.6% increase in
food and beverage ("F&B") revenue. However, the H1 F&B
revenue of GBP1.6 million remains below the GBP2.5 million H1 2018
high, indicating upward potential when office workers return to
'normal occupancy'.
Sportech was delighted to announce in August 2021 a commercial
arrangement with the Connecticut Lottery Corporation ("CLC") which,
subject to required regulatory consents, provided Sportech Venues
Inc., in conjunction with CLC's sports book provider Rush Street
Interactive Inc. ("RSI"), an ability to deliver sports betting
across certain locations and promote CLC's online and mobile
channels.
Contribution margin of 50.7% (H1 2021: 49.7%) was marginally
better despite the costs of introducing sports betting capabilities
during the period. At the end of the period, the division operated
nine leasehold premises and one freehold premise in Connecticut,
USA.
H1 2021 H1 2021
Venues Constant Reported
GBP'000 H1 2022 Currency Currency
-------- ---------- ----------
Wagering revenue 9,412 11,358 10,681
F&B 1,584 877 824
Sports betting commission 718 - -
Total revenue 11,714 12,235 11,505
Contribution 5,939 5,864 5,506
Contribution margin 50.7% 47.9% 47.9%
Adjusted operating expenses(1) (4,414) (4,767) (4,505)
-------- ---------- ----------
Adjusted EBITDA 1,525 1,097 1,001
-------- ---------- ----------
Total capex 15 - -
-------- ---------- ----------
1. Adjusted operating expenses exclude depreciation and
amortisation and separately disclosed items as reported in note 1
of the Interim Financial Statements.
Corporate Costs
Corporate costs reduced by GBP0.4 million to GBP1.1 million due
to staff costs savings, having restructured in H2 2021, as well as
a general drive to reduce costs of the PLC. Costs are expected to
continue to be reduced though H2 2022 as we aim to align the costs
as close as possible to the reduced size of the Group.
Depreciation and Amortisation
Capital expenditure and depreciation/amortisation is much
reduced in the continuing group from that of the Group prior to the
2021 disposals. Depreciation and amortisation in the period reduced
from GBP0.8 million to GBP0.7 million. This is despite 2022
depreciation increasing following the change in assumption on the
lease term of the Stamford venue as at 31 December 2021 and the
upward revaluation of certain assets at the same venue.
Separately Disclosed Items
The Group incurred administration costs in continuing operations
during the period of GBP0.6 million (H1 2021: GBP0.5 million) which
are shown as separately disclosed items. H1 2022 items include pay
in lieu of notice payments to former Directors and settlement of
contract liabilities. The Company does not expect further costs in
H2 2022 as the business has mostly completed restructuring.
Net Finance Income
The Group has no debt. The Group had a net finance income in
continuing operations of GBP0.1 million (H1 2021: GBP0.1 million),
including GBPnil (H1 2021: GBP0.1 million) interest accrued on
potential tax liabilities payable, GBP0.1 million (H1 2021: GBP0.1
million) interest payable on lease liabilities and GBP0.2 million
(H1 2021: GBP0.2 million) foreign exchange gain on financial assets
and liabilities denominated in foreign currency.
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 2022 is (3.7)% (2021: 49%). The movement is a result of
a change in mix of profits/(losses) in jurisdictions with varying
tax rates, the non-recognition of deferred tax on losses in the UK
due to uncertainty of non-recovery as well as the utilization of
previously unprovided tax assets in the US.
The Group paid tax on account during the period of GBP4.6
million to HMRC for tax potentially due on the 2016 Spot the Ball
VAT refund (excluding interest). The payment was in line with the
tax provision held on the balance sheet of GBP4.6 million at both
30 June 2021 and 31 December 2021. The current tax asset on the
balance sheet as at 30 June 2022 is an estimated overpayment of
preliminary taxes in the US on profits generated in the six months
to 30 June 2022.
Net Cash
The Group held cash balances of GBP8.1 million, excluding
customer balances (31 December 2021: GBP21.9 million). The
reduction is due to the payment of a GBP7.0 million dividend,
settling lease and other legacy liabilities as well as paying tax
on account of GBP4.6 million relating to the Spot the Ball tax
dispute with HMRC. Legacy liabilities are now substantially
settled.
Capital Expenditure
Capital expenditure was controlled again in the period and
amounted to GBP0.1 million (H1 2021: GBP1.1 million). GBP1.0
million in the prior year related to the discontinued operations
and was mainly staff costs capitalised or expenditure agreed to be
reimbursed by the buyer of the operation. Capital expenditure will
increase into H2 2022 and 2023 as venues are improved to support
continued sports betting growth and with the move of Sports Haven
to a new building.
Shareholders' Funds
Shareholders' funds decreased by GBP6.8 million from 31 December
2021 to GBP13.0 million (31 December 2021: GBP19.8 million)
following the dividend paid in the period. The loss made in the
period of GBP0.8 million is offset in reserves by a foreign
exchange gain on translation of net assets denominated in US dollar
of GBP1.0 million, given the weakening of Sterling over the
period.
Going Concern
After making reasonable enquiries and forecasting the Group's
cash flows with reasonable downside assumptions applied, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the interim condensed consolidated financial
statements. The Directors have not included in the downside model
any assumption of a further local or more widespread "lockdown" as
a result of COVID-19 cases or a new pandemic arising. Under this
scenario the Directors will take all actions necessary (as
evidenced in 2020 and 2021) and make use of all government support
available to ensure the Company and the Group continues in
operational existence.
Outlook
Enhancing Group value remains the Board's key focus and the
Group strategy is structured accordingly with regard to this
central measure.
Interim consolidated income statement
For the six months ended 30 June 2022
Restated
Six months Six months Year
ended ended
30 June 30 June ended
2022 31 December
2021 2021
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
---------------------------------------------------- ------- --------------- -------------- --------------
Revenue 12,571 11,827 22,942
Cost of sales 6 (6,043) (5,982) (11,489)
---------------------------------------------------- ------- --------------- -------------- --------------
Gross profit 6,528 5,845 11,453
Marketing and distribution costs 6 (234) (224) (276)
---------------------------------------------------- ------- --------------- -------------- --------------
Contribution 6,294 5,621 11,177
Other income 20a&23 155 2,575 4,101
Operating costs 6 (7,390) (8,019) (15,680)
Operating (loss)/profit (941) 177 (402)
Finance costs 8 (93) (154) (305)
Finance income 8 232 230 461
(Loss)/profit before taxation from continuing
operations (802) 253 (246)
Taxation - continuing operations 9 (29) (170) (192)
---------------------------------------------------- ------- --------------- -------------- --------------
(Loss)/profit for the period from continuing
operations (831) 83 (438)
26,69
Profit after taxation from discontinued operations 20g - 9 35,001
---------------------------------------------------- ------- --------------- -------------- --------------
(Loss)/profit for the period (831) 26,782 34,563
---------------------------------------------------- ------- --------------- -------------- --------------
Attributable to:
Owners of the Company (831) 26,782 34,563
---------------------------------------------------- ------- --------------- -------------- --------------
Basic (loss)/profit per share attributable
to owners of the Company
From continuing operations 10 (0.8)p - (0.3)p
From discontinued operations 10 - 14.1p 20.6p
---------------------------------------------------- ------- --------------- -------------- --------------
Total 10 (0.8)p 14.1p 20.3p
---------------------------------------------------- ------- --------------- -------------- --------------
Diluted (loss)/profit per share attributable
to owners of the Company
From continuing operations 10 (0.8)p - (0.3)p
From discontinued operations 10 - 14.1p 20.6p
---------------------------------------------------- ------- --------------- -------------- --------------
Total 10 (0.8)p 14.1p 20.3p
---------------------------------------------------- ------- --------------- -------------- --------------
Adjusted loss per share attributable to
owners of the Company
Basic 10 (0.4)p (0.7)p (1.7)p
Diluted 10 (0.4)p (0.7)p (1.7)p
---------------------------------------------------- ------- --------------- -------------- --------------
See note 4 for a reconciliation of the above interim
consolidated income statement to the adjusted performance measures
used by the Board of Directors to assess divisional
performance.
Prior half year comparatives have been restated to exclude the
results of the LEIDSA contract which have been included with the
results of the Global Tote and Bump 50:50 within profit after
taxation from discontinued operations.
Interim consolidated statement of comprehensive income
For the six months ended 30 June 2022
Restated
Six Six months
months ended
ended
30 June 30 June Year ended
2022 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------------- --------------- -------------- -------------
(Loss)/profit for the period (831) 26,782 34,563
Other comprehensive expense:
Items that will not be reclassified to profit
and loss
Actuarial gain on retirement benefit liability - 186 186
- 186 186
Items that may be subsequently reclassified to
profit and loss
Currency translation differences - continuing operations 983 (1,324) (617)
Currency translation differences - discontinued
operations - 432 (550)
Less: gain reclassified to profit and loss on disposal
of foreign operations - (3,133) (3,373)
----------------------------------------------------------- --------------- -------------- -------------
983 (4,025) (4,540)
----------------------------------------------------------- --------------- -------------- -------------
Total other comprehensive income/(expense) for
the period, net of tax 983 (3,839) (4,354)
----------------------------------------------------------- --------------- -------------- -------------
Total comprehensive income for the period 152 22,943 30,209
----------------------------------------------------------- --------------- -------------- -------------
Attributable to:
Owners of the Company 152 22,943 30,209
----------------------------------------------------------- --------------- -------------- -------------
The prior half year comparatives have been restated to show the
reclassification of the cumulative foreign exchange gain on
disposal of foreign operations to the profit and loss account, as
well as splitting the currency translation differences in the
period to 30 June 2021 between continuing operations and
discontinued operations.
Interim consolidated statement of changes in equity
For the six months ended 30 June 2022
Other reserves
-------------------------------------
Retained
Capital Foreign earnings/
redemption exchange accumulated
Ordinary reserve Other reserve losses
shares reserve Total
Six months ended 30 June 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 1 January 2022 (audited) 1,000 888 314 2,325 15,295 19,822
Comprehensive expense
Loss for the period - - - - (831) (831)
Other comprehensive items
Currency translation differences - - - 983 - 983
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total other comprehensive items - - - 983 - 983
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total comprehensive items - - - 983 (831) 152
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Transactions with owners
Dividend paid - - - - (7,000) (7,000)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Total transactions with owners - - - - (7,000) (7,000)
Total changes in equity - - - 983 (7,831) (6,848)
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
At 30 June 2022 (unaudited) 1,000 888 314 3,308 7,464 12,974
----------------------------------- ---------- ------------- --------- ----------- ------------- --------
Other reserves
-------------------------------------
Retained
Capital Foreign earnings/
redemption exchange accumulated
Ordinary reserve Other reserve losses
shares reserve Total
Six months ended 30 June 2021 (Restated) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
At 1 January 2021 (audited) 37,750 10,312 (638) 6,865 (29,130) 25,159
Comprehensive income
Profit for the period - - - - 26,782 26,782
Other comprehensive items
Actuarial gain on defined benefit
pension liability* - - 186 - - 186
Cumulative actuarial loss on defined
benefit pension liability
Disposed of, transferred to retained
earnings - - 766 - (766) -
Currency translation differences - - - (4,025) - (4,025)
Total other comprehensive items - - 952 (4,025) (766) (3,839)
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
Total comprehensive items - - 952 (4,025) 26,016 22,943
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
Transactions with owners
Share option charge - - - - 261 261
Total transactions with owners - - - - 261 261
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
Total changes in equity - - 952 (4,025) 26,277 23,204
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
At 30 June 2021 (unaudited) 37,750 10,312 314 2,840 (2,853) 48,363
------------------------------------------ ---------- ------------- --------- ----------- ------------- --------
* Net of deferred tax.
Other reserves
Retained
Capital Foreign earnings/
Ordinary redemption Other exchange accumulated
shares reserve reserve reserve losses Total
Year ended 31 December 2021 (Audited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
At 1 January 2021 37,750 10,312 (638) 6,865 (29,130) 25,159
Comprehensive (expense)/income
Profit for the year - - - - 34,563 34,563
Other comprehensive items
Actuarial gain on defined benefit
pension liability* - - 186 - - 186
Cumulative actuarial loss on defined
benefit pension liability
Disposed of, transferred to retained
earnings - - 766 - (766) -
Currency translation differences - - - (4,540) - (4,540)
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
Total other comprehensive items - - 952 (4,540) (766) (4,354)
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
Total comprehensive items - - 952 (4,540) 33,797 30,209
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
Transactions with owners
Share option charge - - - - 334 334
Cancellation of capital redemption
reserve - (10,312) - - 10,312 -
Capital reduction (35,862) - - - 35,862 -
Fees in relation to capital reduction - - - - (66) (66)
Fees in relation to share buy-back - - - - (314) (314)
Share buy-back (888) 888 - - (35,500) (35,500)
----------------------------------------
Total transactions with owners (36,750) (9,424) - - 10,628 (35,546)
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
Total changes in equity (36,750) (9,424) 952 (4,540) 44,425 (5,337)
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
At 31 December 2021 1,000 888 314 2,325 15,295 19,822
---------------------------------------- --------- ------------ --------- ---------- ------------- ---------
* Net of deferred tax
Interim consolidated balance sheet
As at 30 June 2022
Restated
As at As at As at
30 June 30 June 31 December
2022 2021
(Unaudited) 2021
(Unaudited) (Audited)
Note GBP000 GBP000 GBP000
---------------------------------------- ----- --------------- -------------- --------------
ASSETS
Non-current assets
Goodwill 604 604 604
Intangible fixed assets 11 6,939 6,657 6,357
Property, plant and equipment 12 4,409 4,932 4,261
Right-of-use assets 13 4,813 1,079 4,657
Trade and other receivables 14 176 154 158
Total non-current assets 16,941 13,426 16,037
---------------------------------------- ----- --------------- -------------- --------------
Current assets
Trade and other receivables 14 1,393 5,694 1,750
Inventories 140 128 124
Current tax receivable 54 - -
Cash and cash equivalents 15 8,588 49,139 22,367
---------------------------------------- ----- --------------- -------------- --------------
Total current assets 10,175 54,961 24,241
---------------------------------------- ----- --------------- -------------- --------------
TOTAL ASSETS 27,116 68,387 40,278
---------------------------------------- ----- --------------- -------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 16 (6,959) (9,754) (7,945)
Provisions 17 (17) (1,402) (736)
Lease liabilities 19 (678) (1,099) (923)
Current tax liabilities - (4,871) (4,718)
Deferred tax liabilities - (46) -
---------------------------------------- ----- --------------- -------------- --------------
Total current liabilities (7,654) (17,172) (14,322)
---------------------------------------- ----- --------------- -------------- --------------
Net current assets 2,521 37,789 9,919
---------------------------------------- ----- --------------- -------------- --------------
Non-current liabilities
Lease liabilities 19 (6,477) (2,852) (6,091)
Deferred tax liabilities (11) - (43)
(6,488) (2,852) (6,134)
---------------------------------------- ----- --------------- -------------- --------------
TOTAL LIABILITIES (14,142) (20,024) (20,456)
---------------------------------------- ----- --------------- -------------- --------------
NET ASSETS 12,974 48,363 19,822
---------------------------------------- ----- --------------- -------------- --------------
EQUITY
Ordinary shares 1,000 37,750 1,000
Other reserves 4,510 13,466 3,527
Retained earnings/(accumulated losses) 7,464 (2,853) 15,295
---------------------------------------- ----- --------------- -------------- --------------
TOTAL EQUITY 12,974 48,363 19,822
---------------------------------------- ----- --------------- -------------- --------------
Interim consolidated statement of cash flows
For the six months ended 30 June 2022
Restated
Six months Six months Year
ended
ended 30 June ended
30 June 2021 31 December
2021
2022 (Unaudited) (Audited)
(Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------------------- ------ --------------- -------------- --------------
Cash flows (used in)/from operating activities
Cash (used in)/generated from operations,
before separately disclosed items 18 (544) 2,467 511
Interest received - 27 -
Interest paid - (2) -
Tax refund received - 1,442 1,442
Tax paid (4,843) (378) (1,029)
Net cash generated (used in)/from operating
activities before separately disclosed items (5,387) 3,556 924
Cash inflows - other income 23 100 1,057 2,483
Cash outflows - separately disclosed items 7 (1,219) (634) (2,407)
Cash generated (used in)/from operations (6,506) 3,979 1,000
--------------------------------------------------- ------ --------------- -------------- --------------
Cash flows (used in)/from investing activities
Disposal of freehold property in New Haven,
Connecticut (net of disposal costs) 20a - 4,193 4,193
Disposal of LEIDSA contract (net of cash disposed
of and transactions costs) 20f 26 - 9,417
Proceeds net of cash disposed of and disposal
costs - Global Tote 20f - 18,664 22,636
Proceeds net of cash disposed of and disposal
costs - Bump 50:50 20f - 4,732 4,644
Proceeds from sale of other intangible assets 20c - 150 150
Investment in intangible fixed assets 11,20 (97) (920) (1,012)
Purchase of property, plant and equipment 12,20 (38) (146) (582)
--------------------------------------------------- ------ --------------- -------------- --------------
Net cash generated from/(used in) investing
activities (109) 26,673 39,446
--------------------------------------------------- ------ --------------- -------------- --------------
Cash flows used in financing activities
Principal paid on lease liabilities 19,20 (622) (675) (1,333)
Interest paid on lease liabilities 19,20 (69) (103) (179)
Share buy-back including transaction costs - - (35,880)
Dividend paid (7,000) - -
Interest received - - 27
Interest paid - - (2)
Cash used in financing activities (7,691) (778) (37,367)
--------------------------------------------------- ------ --------------- -------------- --------------
Net (decrease)/increase in cash and cash
equivalents (14,306) 29,874 3,079
Effect of foreign exchange on cash and cash
equivalents 527 (194) (171)
Cash and cash equivalents at the beginning
of the year 22,367 11,821 11,821
Add cash included in assets held for sale - 7,638 7,638
Group cash and cash equivalents at the end
of the period 15 8,588 49,139 22,367
--------------------------------------------------- ------ --------------- -------------- --------------
Represented by:
Cash and cash equivalents 15 8,588 49,139 22,367
Less customer funds 15 (450) (530) (455)
Adjusted net cash at the end of the period 15 8,138 48,609 21,912
--------------------------------------------------- ------ --------------- -------------- --------------
Notes to the consolidated interim financial statements
For the six months ended 30 June 2022
1. General information
Sportech PLC (the "Company") is a company domiciled in the UK
and listed on the London Stock Exchange's Alternative Investment
Market ("AIM"). 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 2022 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 2022. The principal activities of the Group were the
provision of pari-mutuel betting (B2C) and the supply of wagering
technology solutions (B2B) up until the disposal of the Group's
Global Tote business on 17 June 2021, the disposal of the Group's
50:50 Lottery division (Bump 50:50) on 2 June 2021 and the disposal
of the Group's supply contract with LEIDSA in the Dominican
Republic on 31 December 2021. Following the disposals, the Group
now operates ten retail venues and MyWinners.com offering
pari-mutuel betting (and also betting through an arrangement with
the Connecticut Lottery Corporation) as well as a pari-mutuel
betting site, 123Bet.com and a has a lottery technology development
arm (B2B).
The condensed consolidated interim financial statements were
approved for issue on 31 August 2022.
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 2021 were approved by the Board of Directors on 31 March
2022 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.
2. Basis of preparation
a. These condensed consolidated interim financial statements
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' and also in accordance with the measurement and
recognition principles of UK adopted international accounting
standards. 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 2021 which have been prepared in accordance
with UK adopted international accounting standards.
b. After making reasonable enquiries and forecasting the Group's
cash flows with reasonable downside assumptions applied, 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 condensed consolidated interim
financial statements. The forecasts used in the analysis of the
Group's ability to continue in operational existence for the
foreseeable future include both the base plan and downside
scenarios which although Sportech has no connections with Russia or
Ukraine through its operations (no employees located there nor any
customers or suppliers in the region), include assumptions taking
into account macro-economic potential indirect impacts of the
events unfolding including impacts of prices rising globally.
c. The preparation of condensed consolidated 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, the valuation
of contingent consideration receivable 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 17 to 19 of the 2021 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, third party technology, foreign
exchange, political marginalisation in Connecticut and global
pandemics.
3. Accounting policies
There are no new standards or amendments to standards or
interpretations that are mandatory for the first time for the
financial year beginning 1 January 2022 that would impact the Group
financial statements. Therefore, all accounting policies applied in
these condensed consolidated interim financial statements are
consistent with those of the annual financial statements for the
year ended 31 December 2021, as described in those annual financial
statements.
The standards, amendments and interpretations that are not yet
effective and have not been adopted early by the Group are listed
in the 2021 Annual Report and accounts.
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 expenditure management believe should be added back
(separately disclosed items) and other income. The share option
expense is also excluded given it is not directly linked to
operating performance of the divisions. Interest is not allocated
to segments as the Group's cash position is controlled by the
central finance team. This measure provides the most reliable
indicator of underlying performance of each of the trading
divisions as it is the closest approximation to cash generated by
underlying trade, excluding the impact of separately disclosed
items and working capital movements.
Adjusted EBITDA is not an IFRS measure, nevertheless although it
may not be comparable to adjusted figures used elsewhere, it is
widely used by both the analyst community to compare with other
gaming companies and by management to assess underlying
performance.
A reconciliation of the adjusted operating expenses used for
statutory reporting and the adjusted performance measures is shown
below:
Restated
Six months Six months Year
ended ended
Note 30 June 30 June ended
31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------------------- ---------- --------------- --------------- --------------
Operating costs per income statement (7,390) (8,019) (15,680)
Add back:
Depreciation 12,13,20d 537 379 982
Amortisation, excluding acquired intangible
assets 11 132 131 129
Amortisation of acquired intangible
assets 11 29 254 509
Reversal of impairment of property,
plant and equipment 12 - - (335)
Loss on disposal of property, plant
and equipment 12 131 - -
Share option charge 5 - 261 334
Separately disclosed items 7 578 477 1,101
---------------------------------------------- ---------- --------------- --------------- --------------
Total adjusted net operating costs (5,983) (6,517) (12,960)
---------------------------------------------- ---------- --------------- --------------- --------------
Adjusted EBITDA is calculated as follows:
Restated
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------- --------------- --------------- --------------
Revenue 12,571 11,827 22,942
Cost of sales (6,043) (5,982) (11,489)
---------------------------------- --------------- --------------- --------------
Gross profit 6,528 5,845 11,453
Marketing and distribution costs (234) (224) (276)
---------------------------------- --------------- --------------- --------------
Contribution 6,294 5,621 11,177
Adjusted net operating costs (5,983) (6,517) (12,960)
---------------------------------- --------------- --------------- --------------
Adjusted EBITDA 311 (896) (1,783)
---------------------------------- --------------- --------------- --------------
Prior year comparatives for the period ended 30 June 2021 have
been adjusted for discontinued operations related to the LEIDSA
contract (prior full year comparatives were adjusted in the 2021
financial statements to exclude results of the Global Tote, Bump
50:50 business and LEIDSA).
Adjusted profit is also an adjusted performance measure used by
the Group. This uses adjusted EBITDA, as defined above 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
certain 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.
Restated
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
From continuing operations: GBP000 GBP000 GBP000
-------------------------------------------------- --------------- ------------- --------------
Adjusted EBITDA 311 (896) (1,783)
Share option charge - (261) (334)
Depreciation (537) (379) (982)
Amortisation (excluding amortisation of acquired
intangibles) (132) (131) (129)
Net finance costs (excluding certain finance
costs - note 8) (69) (55) (130)
-------------------------------------------------- --------------- ------------- --------------
Adjusted loss before tax (427) (1,722) (3,358)
Tax at 6.0% (30 June 2021: 20.1%, 31 December
2021: 16.4%) 26 346 551
-------------------------------------------------- --------------- ------------- --------------
Adjusted loss after tax (401) (1,376) (2,807)
-------------------------------------------------- --------------- ------------- --------------
Restated
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
From discontinued operations: GBP000 GBP000 GBP000
-------------------------------------------------- ---------------- ------------- --------------
Adjusted EBITDA - 5,590 6,879
Depreciation - (100) (221)
Amortisation (excluding amortisation of acquired
intangibles) - (75) (151)
Net finance costs (excluding certain finance
costs - note 8) - (24) 54
-------------------------------------------------- ---------------- ------------- --------------
Adjusted profit before tax - 5,391 6,561
Tax at n/a% (30 June 2021: 22.9%, 31 December
2021: 25.8%) - (1,234) (1,693)
-------------------------------------------------- ---------------- ------------- --------------
Adjusted profit after tax - 4,157 4,868
-------------------------------------------------- ---------------- ------------- --------------
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 Digital - a pari-mutuel betting website and provision
of lottery software and services worldwide;
- 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
2022 (Unaudited)
------------------------------------------------- ------------------------------------------------
Sportech Sportech Corporate
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
------------------------------------------------- ----------- ----------- ------------ --------
Revenue from rendering of services 857 9,412 - 10,269
Revenue from food and beverage sales - 1,584 - 1,584
Revenue from sports betting services - 718 - 718
------------------------------------------------- ----------- ----------- ------------ --------
Total revenue 857 11,714 - 12,571
Cost of sales (452) (5,591) - (6,043)
------------------------------------------------- ----------- ----------- ------------ --------
Gross profit 405 6,123 - 6,528
Marketing and distribution costs (50) (184) - (234)
------------------------------------------------- ----------- ----------- ------------ --------
Contribution 355 5,939 - 6,294
Adjusted operating costs (462) (4,414) (1,107) (5,983)
------------------------------------------------- ----------- ----------- ------------ --------
Adjusted EBITDA (107) 1,525 (1,107) 311
Depreciation (6) (518) (13) (537)
Amortisation (excluding amortisation of
acquired intangibles) (69) (1) (62) (132)
------------------------------------------------- ----------- ----------- ------------ --------
Segment result (182) 1,006 (1,182) (358)
Amortisation of acquired intangibles (29) - - (29)
Loss on disposal of Property, plant and
equipment - (131) - (131)
Separately disclosed items - (307) (271) (578)
Other income - 155 - 155
------------------------------------------------- ----------- ----------- ------------ --------
Operating (loss)/profit (211) 723 (1,453) (941)
Net finance income 139
Loss before taxation from continuing operations (802)
Taxation - continuing operations (29)
--------
Loss for the period from continuing operations (831)
Profit after taxation from discontinued -
operations
--------
Loss for the period (831)
------------------------------------------------- ----------- ----------- ------------ --------
Other segment items - capital expenditure
Intangible fixed assets 97 - - 97
Property, plant and equipment 22 15 1 38
------------------------------------------------- ----------- ----------- ------------ --------
Six months ended 30 June
2021 (Unaudited)
--------------------------------------------------- -------------------------------------------------
Restated
Sportech Sportech Corporate Restated
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
--------------------------------------------------- ---------- ----------- ------------ ----------
Revenue from rendering of services 322 10,681 - 11,003
Revenue from food and beverage sales - 824 - 824
--------------------------------------------------- ---------- ----------- ------------ ----------
Total revenue 322 11,505 - 11,827
Cost of sales (188) (5,794) - (5,982)
--------------------------------------------------- ---------- ----------- ------------ ----------
Gross profit 134 5,711 - 5,845
Marketing and distribution costs (19) (205) - (224)
--------------------------------------------------- ---------- ----------- ------------ ----------
Contribution 115 5,506 - 5,621
Adjusted operating costs (496) (4,505) (1,516) (6,517)
--------------------------------------------------- ---------- ----------- ------------ ----------
Adjusted EBITDA (381) 1,001 (1,516) (896)
Share option charge - - (261) (261)
Depreciation (5) (366) (8) (379)
Amortisation (excluding amortisation of
acquired intangibles) (41) - (90) (131)
--------------------------------------------------- ---------- ----------- ------------ ----------
Segment result (427) 635 (1,875) (1,667)
Amortisation of acquired intangibles (254) - - (254)
Profit on disposal of Sports Haven - 2,575 - 2,575
Separately disclosed items (173) (8) (296) (477)
--------------------------------------------------- ---------- ----------- ------------ ----------
Operating (loss)/profit (854) 3,202 (2,171) 177
Net finance income 76
Profit before taxation from continuing operations 253
Taxation - continuing operations (170)
----------
Profit for the period from continuing operations 83
Profit after taxation from discontinued
operations 26,699
----------
Profit for the period 26,782
--------------------------------------------------- ---------- ----------- ------------ ----------
Other segment items - capital expenditure
Intangible fixed assets 95 - - 95
Property, plant and equipment 2 - - 2
--------------------------------------------------- ---------- ----------- ------------ ----------
The above table has been restated to exclude discontinued
activities in relation to the LEIDSA contract. Results from the
LEIDSA contract were within the Sportech Digital division in 2021,
formally known as Sportech lotteries. Those in relation to Global
Tote and Bump 50:50 were classified as discontinued in 2021
also.
Year ended 31 December 2021
(Audited)
--------------------------------------------------- -------------------------------------------
Sportech Sportech Corporate
Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
--------------------------------------------------- --------- --------- ---------- ---------
Revenue from rendering of services 1,032 19,515 - 20,547
Revenue from food and beverage sales - 2,115 - 2,115
Revenue from sports betting services - 280 - 280
--------------------------------------------------- --------- --------- ---------- ---------
Total revenue 1,032 21,910 - 22,942
Cost of sales (548) (10,941) - (11,489)
--------------------------------------------------- --------- --------- ---------- ---------
Gross profit 484 10,969 - 11,453
Marketing and distribution costs (76) (200) - (276)
--------------------------------------------------- --------- --------- ---------- ---------
Contribution 408 10,769 - 11,177
Adjusted net operating costs (note 1) (987) (9,409) (2,564) (12,960)
--------------------------------------------------- --------- --------- ---------- ---------
Adjusted EBITDA (579) 1,360 (2,564) (1,783)
Share option charge - - (334) (334)
Depreciation (10) (950) (22) (982)
Amortisation (excluding amortisation of
acquired intangible assets) (97) - (32) (129)
--------------------------------------------------- --------- --------- ---------- ---------
Segment result before amortisation of acquired
intangibles (686) 410 (2,952) (3,228)
Amortisation of acquired intangibles (509) - - (509)
Reversal of impairment of property, plant
and equipment - 335 - 335
Separately disclosed items (165) (84) (852) (1,101)
Other income 100 4,001 - 4,101
--------------------------------------------------- --------- --------- ---------- ---------
Operating (loss)/profit (1,260) 4,662 (3,804) (402)
Net finance costs 156
Loss before taxation from continuing operations (246)
Taxation (192)
---------
Loss for the year from continuing operations (438)
Profit after tax from discontinued operations 35,001
---------
Profit for the year 34,563
--------------------------------------------------- --------- --------- ---------- ---------
Other segment items - capital expenditure
Intangible fixed assets (continuing operations) 165 - - 165
Intangible fixed assets (discontinued operations) 847 - - 847
Property, plant and equipment (continuing
operations) 4 27 - 31
Property, plant and equipment (discontinued
operations) 551 - - 551
--------------------------------------------------- --------- --------- ---------- ---------
6. Expenses by nature
Restated
Six months Six months Year
ended ended
30 June 30 June ended
2022 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
--------------------------------------------- ---- --------------- -------------- --------------
Cost of sales
Tote and track fees 5,266 5,426 10,205
F&B consumables 536 305 818
Betting and gaming duties 54 48 99
Repairs and maintenance cost of sales 15 18 34
Programs 127 147 266
Cost of sales 45 38 67
Total cost of sales 6,043 5,982 11,489
--------------------------------------------------- --------------- -------------- --------------
Marketing and distribution costs
Marketing 224 210 253
Vehicle costs 10 14 23
Total marketing and distribution costs 234 224 276
--------------------------------------------------- --------------- -------------- --------------
Operating costs
Staff costs - gross, excluding share option
charges 3,161 3,415 6,661
Less amounts capitalised (89) (95) (165)
--------------------------------------------------- --------------- -------------- --------------
Staff costs - net 3,072 3,320 6,496
Property costs 1,201 1,378 2,581
IT & communications 301 224 457
Professional fees and licences 765 959 2,323
Insurance 500 475 968
Travel and entertaining 41 72 26
Banking transaction costs and FX 48 37 109
Other costs 55 52 -
--------------------------------------------------- --------------- -------------- --------------
Adjusted operating costs 5,983 6,517 12,960
Share option charge - 261 334
Depreciation 537 379 982
Amortisation, excluding amortisation of
acquired intangibles 132 131 129
Amortisation of acquired intangibles 29 254 509
Loss on disposal of property, plant and
equipment 131 - -
Reversal of impairment of property, plant
and equipment - - (335)
Separately disclosed items 578 477 1,101
--------------------------------------------------- --------------- -------------- --------------
Total operating costs 7,390 8,019 15,680
--------------------------------------------------- --------------- -------------- --------------
7. Separately disclosed items
Six Six Year
months months
ended ended
30 June 30 ended
June
2022 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
----------------------------------------------------- -------- -------------- -------------- -------------
Continuing operations
Included in operating costs :
Onerous contract provisions and other losses
resulting from
exit from California operations 17 (69) - 91
Redundancy and restructuring costs i 330 179 625
Corporate activity 8 290 21
Costs in relation to the Spot the Ball VAT refund - - 10
Settlement of a contract ii 304 - -
Costs in relation to exiting the Group's interests
in India 5 8 13
Costs in relation to the Group's move from Main
Market to AIM - - 341
578 477 1,101
Discontinued operations
Included in operating costs 20b,20c - 371 371
Total included in operating costs 578 848 1,472
----------------------------------------------------- -------- -------------- -------------- -------------
Included in finance costs:
Interest accrued on corporate tax potentially
due and unpaid at the balance sheet date on
STB refund received in 2016 8 24 74 150
Total Separately disclosed items 602 922 1,622
----------------------------------------------------- -------- -------------- -------------- -------------
i) Redundancy and restructuring costs relate to settlements made
to former Directors in lieu of notice.
ii) The Group exited a royalty arrangement in the period
relating to branding at its Connecticut venues. This required a
termination fee to be paid amounting to GBP304k.
Below is a summary of cash outflows from separately Restated
disclosed items:
Six Six Year
months months
ended ended
30 June 30 ended
June
2022 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------- ---- --------------- -------------- --------------
Continuing operations - cash outflows from
separately disclosed items:
Redundancy and restructuring costs (242) (44) (625)
Costs in relation to the Spot the Ball VAT refund - (27) (37)
Costs in relation to corporate activity (8) (48) (71)
Costs in relation to the Group's onerous leases
in California (660) (1) (785)
Costs in relation to exiting the Group's interests
in India (5) (8) (13)
Costs in relation to the Group's move from Main
Market to AIM - - (341)
Settlement of a contract (304) - -
(1,219) (128) (1,872)
Cash outflows from separately disclosed items
- discontinued operations - (506) (535)
(1,219) (634) (2,407)
---------------------------------------------------------- --------------- -------------- --------------
8. Net finance costs
Restated
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------------ -------- -------------- -------------- ---------------
Continuing operations:
Finance costs:
Interest accrued and paid on tax liabilities (24) (74) (150)
Interest on lease liabilities 19 (69) (80) (155)
Total finance costs (93) (154) (305)
------------------------------------------------ -------- -------------- -------------- ---------------
Finance income:
Foreign exchange gain on financial assets and
liabilities denominated in foreign currency 232 205 436
Interest received on overpaid tax - 25 -
Interest received on bank deposits - - 25
------------------------------------------------ -------- -------------- -------------- ---------------
Total finance income 232 230 461
------------------------------------------------ -------- -------------- -------------- ---------------
Discontinued operations 20b,20c - 54 54
Net finance income 139 130 210
------------------------------------------------ -------- -------------- -------------- ---------------
Of the above amounts the following have been excluded for the
purposes of deriving the alternative performance measures in note
4.
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
Continuing operations GBP000 GBP000 GBP000
----------------------------------------------------------- -------------- -------------- --------------
Foreign exchange gain on financial assets and liabilities
denominated in foreign currency 232 205 436
Interest accrued and paid on tax liabilities (24) (74) (150)
----------------------------------------------------------- -------------- -------------- --------------
208 131 286
----------------------------------------------------------- -------------- -------------- --------------
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 2022 is (3.7)% (2021: 49.0%). The movement is a result
of a change in mix of profits/(losses) in jurisdictions with
varying tax rates, the non-recognition of deferred tax on losses in
UK due to uncertainty of recovery as well as the utilisation of
previously unprovided deferred tax assets in the US.
At the prior period ends the Group held a tax provision of
GBP4,600k for tax potentially due on the 2016 Spot the Ball refund
(excluding interest). During the current reporting period the Group
paid GBP4,600k into its UK corporate tax account to stop interest
potentially payable accruing further. Management continues to
remain of the view that the 2016 Sportech Pools Limited tax return
was accurately filed, and no further tax is due. If this is
ultimately found to be correct, the GBP4,600k is repayable to the
Group plus interest from 15 March 2022. The remaining current tax
asset is an estimated overpayment of preliminary taxes in the US on
profits generated in the six months to 30 June 2022.
10. Earnings per share
2022 2021 (restated)
Six months ended 30 June
(Unaudited) Continuing Discontinued Total Continuing Discontinued Total
------------------------------- ----------- ------------- -------- ----------- ------------- --------
Basic EPS
(Loss)/profit for the period
(GBP000) (831) - (831) 83 26,699 26,782
Weighted average no of shares
('000) 100,000 100,000 100,000 188,751 188,751 188,751
Basic EPS (0.8)p - (0.8)p - 14.1p 14.1p
------------------------------- ----------- ------------- -------- ----------- ------------- --------
2021
Year ended 31 December (Audited) Continuing Discontinued Total
-------------------------------------- ----------- ------------- --------
Basic EPS
(Loss)/profit for the year (GBP000) (438) 35,001 34,563
Weighted average no of shares ('000) 169,785 169,785 169,785
Basic EPS (0.3)p 20.6p 20.3p
-------------------------------------- ----------- ------------- --------
2022 2021 (restated)
Six months ended 30 June
(Unaudited) Continuing Discontinued Total Continuing Discontinued Total
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
Diluted EPS
(Loss)/profit for the period
(GBP000) (831) - (831) 83 26,699 26,782
Weighted average no of shares
('000) 100,000 100,000 100,000 188,751 188,751 188,751
Dilutive potential ordinary N/A N/A N/A N/A N/A N/A
shares ('000)
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
Total potential ordinary shares
('000) 100,000 100,000 100,000 188,751 188,751 188,751
Diluted EPS (0.8)p - (0.8)p - 14.1p 14.1p
--------------------------------- ----------- ------------- -------- ----------- ------------- --------
2021
Year ended 31 December (Audited) Continuing Discontinued Total
---------------------------------- --- ----------- ------------- --------
Diluted EPS
(Loss)/profit for the year
(GBP000) (438) 35,001 34,563
Weighted average no of shares
('000) 169,785 169,785 169,785
Dilutive potential ordinary N/A N/A N/A
shares ('000)
---------------------------------- --- ----------- ------------- --------
Total potential ordinary shares
('000) 169,785 169,785 169,785
Diluted EPS (0.3)p 20.6p 20.3p
----------------------------------------- ----------- ------------- --------
Adjusted EPS
Adjusted EPS is calculated by dividing the adjusted profit after
tax attributable to owners of the Company, as defined in note 4, by
the weighted average number of ordinary shares in issue during the
year.
Restated
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2022 2021 2021
Continuing operations Note (Unaudited) (Unaudited) (Audited)
------------------------------------- ------- -------------- -------------- ---------------
Adjusted loss after tax (GBP000) 4 (401) (1,376) (2,807)
Basic Adjusted EPS (pence) (0.4)p (0.7)p (1.7)p
Diluted Adjusted EPS (pence) (0.4)p (0.7)p (1.7)p
------------------------------------- ------- -------------- -------------- ---------------
11. Intangible fixed assets
Six Six months Year
months ended
ended
30 June 30 June ended
31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------------------ ---- -------------- -------------- --------------
At 1 January 6,357 7,343 7,343
Additions 97 95 188
Amortisation charge for period (161) (460) (789)
Disposal - (82) (456)
Movement as a result of foreign exchange 646 (239) 71
-------------- -------------- --------------
Net book amount at end of period 6,939 6,657 6,357
------------------------------------------------ -------------- -------------- --------------
12. Property, plant and equipment
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------------------ -------------- -------------- --------------
At 1 January 4,261 5,077 5,077
Additions 38 2 438
Disposal - - (992)
Depreciation charge for period (215) (225) (669)
Loss on disposal (131) - -
Reversal of impairment - - 335
Movement as a result of foreign exchange 456 78 72
-------------- -------------- --------------
Net book amount at end of period 4,409 4,932 4,261
------------------------------------------ -------------- -------------- --------------
13. Right-of-use assets
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
------------------------------------------- ----- -------------- -------------- --------------
At 1 January 4,657 1,133 1,133
Additions - 169 1,240
Depreciation charge for period (322) (254) (534)
Disposed of - exited lease early (17) - -
Reassessment of lease assumptions - break
clause 19 - - 2,835
Transferred from held for sale - - 45
Movement as a result of foreign exchange 495 31 (62)
-------------- -------------- --------------
Net book amount at end of period 4,813 1,079 4,657
------------------------------------------- ----- -------------- -------------- --------------
14. Trade and other receivables
As at As at As at
31 December
2021
30 June 30 (Audited)
June
2022 2021
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
----------------------------------- -------------- -------------- -------------
Non-current
Trade and other receivables 176 154 158
Current
Trade and other receivables 1,393 5,694 1,750
Total trade and other receivables 1,569 5,848 1,908
----------------------------------- -------------- -------------- -------------
Included in current trade and other receivables in the prior
half year is GBP3,377k consideration to be received for the
disposal of the Global Tote division (note 20e).
15. Cash and cash equivalents
As at As at As at
31 December
2021
30 June 30 (Audited)
June
2022 2021
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------- ----- -------------- -------------- -------------
Cash and short-term deposits 8,138 48,609 21,912
Customer funds 16 450 530 455
Total cash and cash equivalents 8,588 49,139 22,367
--------------------------------- ----- -------------- -------------- -------------
Customer funds are matched by liabilities of an equal value
within trade and other payables (see note 16).
16. Trade and other payables
Restated
As at As at As at
31 December
2021
30 June 30 (Audited)
June
2022 2021
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
--------------------------------------- ----- --------------- -------------- --------------
Trade payables 3,769 3,806 3,545
Other taxes and social security costs 307 575 178
Accruals and other payables 2,433 4,823 3,767
Deferred income - 20 -
Player liability 15 450 530 455
Total trade and other payables 6,959 9,754 7,945
--------------------------------------- ----- --------------- -------------- --------------
17. Provisions
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
-------------------------------------------- ---- -------------- -------------- --------------
At beginning of period 736 1,442 1,442
Utilised during the period (660) - (785)
(Released)/charged to the income statement (69) - 91
Currency movements 10 (40) (12)
-------------------------------------------------- -------------- -------------- --------------
Total provisions 17 1,402 736
-------------------------------------------------- -------------- -------------- --------------
Provisions are in relation to:
Current provisions
Onerous contracts 17 1,402 736
-------------------------------------------------- -------------- -------------- --------------
The Group had committed financial obligations arising from
leases it entered into in California. The amounts provided for in
the prior year represented management's best estimate based on
scenario analysis of what the Group was expecting to pay to settle
the liabilities. During the prior year one lease dispute was
settled resulting in a cash outflow of GBP785k (including legal
fees). The second lease dispute was settled in early 2022, for
GBP660k (including legal fees to date). Legal fees estimated as at
31 December 2021 were higher than actual fees incurred and
therefore GBP69k of provision has been released to the income
statement in operation expenses and shown as a negative separately
disclosed item given the original expense was disclosed here. The
estimated remaining legal fees to finalise the Group's exit from
California amount to GBP17k, actual legal fees incurred to complete
the process may differ from management's estimate.
18. Cash flow from operating activities before separately
disclosed items
Reconciliation of (loss)/profit before taxation to cash flows
from operating activities before separately disclosed items:
Restated
Six months Six months Year
ended ended
30 June 30 June ended
31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
Note GBP000 GBP000 GBP000
----------------------------------------------------- --------- --------------- -------------- ---------------
(Loss)/profit before taxation from continuing
operations (802) 253 (246)
Profit before taxation from discontinued operations 20b,c&d - 27,332 35,987
----------------------------------------------------- --------- --------------- -------------- ---------------
Total (loss)/profit before tax (802) 27,585 35,741
Adjustments for:
Net Separately disclosed items (included in
operating costs) 7 578 848 1,472
Other income (excluding profit on disposal
of Sports Haven) 23 (155) (1,057) (2,583)
Depreciation and amortisation 11,12,13 698 939 1,992
Loss on disposal of property, plant and equipment 12 131 - -
Profit on disposal of Sports Haven 20a - (2,575) (2,575)
Profit on disposal of discontinued operations 20e - (21,109) (28,625)
Profit on disposal of software - (65) (68)
Profit on disposal property, plant and equipment - - (47)
Reversal of impairment of assets 12,13 - - (335)
Net finance charges 8 (139) (130) (210)
Share option expense - 261 334
Changes in working capital:
Increase in trade and other receivables (84) (5,774) (2,162)
(Increase)/decrease in inventories (16) 205 192
(Decrease)/increase in trade and other payables,
excluding player liabilities (750) 2,776 (448)
(Decrease)/increase in player liabilities 15 (5) 563 (2,167)
Cash (used in)/generated from operating activities,
before separately disclosed items (544) 2,467 511
----------------------------------------------------- --------- --------------- -------------- ---------------
19. Lease liabilities
As at As at As at
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Maturity analysis - contractual undiscounted cashflows GBP000 GBP000 GBP000
-------------------------------------------------------- -------------- -------------- -------------
Less than one year 810 1,416 1,211
Between 2 and 5 years 3,000 2,880 2,615
More than 5 years 5,093 1 4,824
Total 8,903 4,297 8,650
-------------------------------------------------------- -------------- -------------- -------------
The weighted average incremental borrowing rate applied to the
lease liabilities was 4.16%, lowest rate being 4.00% and the
highest being 5.75%.
As at As at As at
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Lease liabilities included in the balance sheet GBP000 GBP000 GBP000
------------------------------------------------- -------------- -------------- -------------
Current 678 1,099 923
Non-current 6,477 2,852 6,091
Total 7,155 3,951 7,014
------------------------------------------------- -------------- -------------- -------------
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Movement in lease liability during the Note GBP000 GBP000 GBP000
period
-------------------------------------------- ----- -------------- -------------- -------------
At 1 January 7,014 3,882 3,882
Interest charged to the income statement 8 69 80 155
New leases entered into 13 - 633 1,698
Reassessment of lease assumptions - break
clause 13 - - 2,835
Lease rentals paid (691) (621) (1,354)
Disposed of on settlement of lease dispute - - (169)
Disposal - early exit of lease (23) - -
Movement as a result of foreign exchange 786 (23) (33)
At period end 7,155 3,951 7,014
-------------------------------------------- ----- -------------- -------------- -------------
20. Discontinued operations and profit on disposal
20a) On 28 April 2021 the Group completed the disposal of its
freehold property in New Haven, Connecticut, known as "Sports
Haven" for gross consideration of GBP4,346k ($6,000k). The asset
was classified as held for sale as at 31 December 2020 and was part
of the Sportech Venues division. Costs related to the disposal
amounted to GBP153k ($210k). The property is to be leased back for
18 months to 31 October 2022 at a rental of cGBP36k per month
($50k). On disposal, a lease liability of GBP633k was recognised as
well as a right-of-use asset of GBP169k. The profit on disposal is
analysed as follows:
Six months
ended
Six months 30 June Year
ended ended
30 June 2021 31 December
2022 (Unaudited) 2021
(Unaudited) (Audited)
Note GBP000 GBP000 GBP000
---------------------------------- ---- ----- -------------- -------------- --------------
Cash consideration received - 4,346 4,346
Net book value disposed of - (1,154) (1,154)
Right-of-use asset recognised 13 - 169 169
Lease liability recognised 19 - (633) (633)
Costs of disposal - (153) (153)
---------------------------------------- ----- -------------- -------------- --------------
Profit after tax on disposal net
of costs - 2,575 2,575
---------------------------------------- ----- -------------- -------------- --------------
20b) On 2 June 2021 the Group completed the disposal of its 100%
interest in Bump (Worldwide) Inc. ("Bump") for gross final
consideration of GBP4,941k ($8,462k), including a working capital
settlement of GBP277k which differed slightly from the estimate
which had been included in the 2021 Interim Financial Statements of
GBP307k (which was received in the period to 30 June 2021). Final
settlement was less than management's estimate and as a result
GBP30k was repaid to the buyer in H2 2021. The division was
classified as held for sale as at 31 December 2020 and was part of
the Sportech Racing division.
The profit for the period and cashflows from Bump are shown
below:
Restated
Period Period
ended ended
30 June 30 June
2022 2021
(Unaudited) Year
ended
31 December
2021
Note (Unaudited) (Audited)
Bump (Worldwide) Inc.: GBP000 GBP000 GBP000
------------------------------------------------- ------ -------------- ------------- -------------
Revenue - 810 810
Cost of sales, marketing and distribution and
adjusted operating expenses - (487) (487)
------------------------------------------------- ------ -------------- ------------- -------------
Adjusted EBITDA - 323 323
Finance income - 78 78
-------------------------------------------------
Profit before tax - 401 401
Tax, excluding tax arising on disposal - - -
------------------------------------------------- ------ -------------- ------------- -------------
Profit after tax - 401 401
Gain from selling discontinued operations after
tax (net of disposal costs) 20e - 3,836 3,805
------------------------------------------------- ------ -------------- ------------- -------------
Profit for the period - 4,237 4,206
------------------------------------------------- ------ -------------- ------------- -------------
Net cash flow from operating activities - 462 462
Net cash flow used in investing activities - (37) (37)
------------------------------------------------- ------ -------------- ------------- -------------
Net cash generated - 425 425
------------------------------------------------- ------ -------------- ------------- -------------
The difference in gain from selling discontinued operations
after tax (net of disposal costs) between the prior year half year
numbers and the full year is the adjustment to the estimated
working capital settlement and the amount agreed as final
settlement.
Restatements:
i) Gain on disposal has been restated to recycle the cumulative
foreign exchange loss to the gain on disposal from P&L reserve
as well as some corrections to disclosure of disposal costs which
were incorrectly allocated to the gain on disposal of Global
Tote.
ii) Net cash flow from operating activities was misstated in the
prior year interim statements (GBP134k), and has been restated to
the correct amount of GBP462k in the above table.
Deferred contingent consideration
There remains deferred contingent consideration potentially due
to Sportech of cGBP1.1m (CAD$2.0m) which is receivable if Bump
achieves revenues in 2022 calendar year of CAD$6.5m or more (net of
employee incentives of cGBP150k). The receivable and incentives
payable thereon have not been recognised in the Group Consolidated
accounts as at 30 June 2022 due to uncertainty over achievement of
the target, see note 22.
20c) On 17 June 2021 the Group completed the disposal of its
Global Tote division which also formed part of the Sportech Racing
division and was classified as held for sale as at 31 December
2020. Final Gross Consideration amounted to GBP33,906k including a
payment for cash transferred to the buyer with the business of
GBP3,609k net of debt like items of GBP1,294k, received in July
2021 and a settlement of net working capital which was in excess of
an agreed Target working capital (and other adjustments) of
GBP559k. The estimate was lower than management's estimate of
GBP781k which was accrued for at 30 June 2021. In addition, the
historical underlying tote software code was disposed of by
Sportech PLC to BetMakers Technology Group Limited within the same
agreement, proceeds of GBP150k resulted in a profit on disposal of
GBP68k.
The profit for the period and cashflows from Global Tote are
shown below:
Restated
Six
months Six months
ended ended
30 June 30 June
2022 2021
Year
ended
31 December
2021
Note (Unaudited) (Unaudited) (Audited)
Global Tote Group: GBP000 GBP000 GBP000
------------------------------------------------- ------ -------------- ------------- -------------
Revenue - 12,245 12,245
Cost of sales, marketing and distribution and
adjusted operating expenses - (8,140) (8,140)
------------------------------------------------- ------ -------------- ------------- -------------
Adjusted EBITDA - 4,105 4,105
Other income - 1,057 1,057
Profit on disposal of intangible assets - 68 68
Separately disclosed items - (371) (371)
Finance costs - (24) (24)
-------------------------------------------------
Profit before tax - 4,835 4,835
Tax, excluding tax arising on disposal - (195) (195)
------------------------------------------------- ------ -------------- ------------- -------------
Profit after tax - 4,640 4,640
Gain from selling discontinued operations after
tax (net of disposal costs) 20e - 17,273 17,051
------------------------------------------------- ------ -------------- ------------- -------------
Profit for the period - 21,913 21,691
------------------------------------------------- ------ -------------- ------------- -------------
Net cash flow from operating activities - 1,944 1,944
Net cash flow used in investing activities - (930) (930)
Net cash flow used in financing activities - (160) (160)
------------------------------------------------- ------ -------------- ------------- -------------
Net increase in cash generated - 854 854
------------------------------------------------- ------ -------------- ------------- -------------
Separately disclosed items incurred in 2021 were redundancy and
restructuring costs in respect of a rationalisation of this
business. The difference in gain from selling discontinued
operations after tax (net of disposal costs) between the prior year
half year numbers and the full year is the adjustment to the
estimated working capital settlement and the amount agreed as final
settlement.
Restatements:
i) Gain on disposal has been restated to recycle the cumulative
foreign exchange loss to the gain on disposal from P&L reserve
as well as certain corrections to disclosure of disposal costs
which were incorrectly allocated to the gain on disposal of Bump
and under accruals of disposal costs.
ii) Net cash flow from operating activities was misstated in the
prior year interim financial statements (GBP1,780k), and has been
restated to the correct amount of GBP1,944k in the above table.
20d) On 31 December 2021 the Group completed the disposal of its
wholly owned subsidiary, Sportech Lotteries, LLC which had the
legal rights to the service contract with LEIDSA who operates the
Dominican Republic national lottery. Gross Consideration amounted
to GBP9,854k including an estimate for settlement of net working
capital which was in excess of an agreed Target working capital of
GBP431k. Of the consideration, GBP9,423k was received on 31
December 2021, the final working capital settlement has been
received in Q1 2022, there was no variance to estimate as at 31
December 2021.
In addition, the Group's lottery software provider, Lot.to
Systems Limited has signed a five-year contract with the buyer of
Sportech Lotteries, LLC to provide an online lottery platform for
LEIDSA in return for commission revenue up to cGBP1.5m ($2.0m) over
the period.
The profit for the period and cashflows from Sportech Lotteries,
LLC are shown below:
Six months
ended
30 June
2021 Year ended
Six months (Unaudited
ended
30 June 31 December
2022 2021
Note (Unaudited) (Audited)
Sportech Lotteries, LLC: GBP000 GBP000 GBP000
-------------------------------------------- ------ -------------- ------------ -------------
Revenue - 1,618 3,364
Cost of sales, marketing and distribution
and adjusted operating expenses - (456) (913)
-------------------------------------------- ------ -------------- ------------ -------------
Adjusted EBITDA - 1,162 2,451
Depreciation and amortisation - (175) (372)
Profit on disposal of property, plant and
equipment - - 47
--------------------------------------------
Profit before tax - 987 2,126
Tax, excluding tax arising on disposal - (438) (791)
-------------------------------------------- ------ -------------- ------------ -------------
Profit after tax - 549 1,335
Gain from selling discontinued operations
after tax (net of disposal costs) 20e - - 7,769
-------------------------------------------- ------ -------------- ------------ -------------
Profit for the period - 549 9,104
-------------------------------------------- ------ -------------- ------------ -------------
Net cash flow from operating activities - 327 1,068
Net cash flow used in investing activities - - (429)
-------------------------------------------- ------ -------------- ------------ -------------
Net cash inflow - 327 639
-------------------------------------------- ------ -------------- ------------ -------------
20e) A summary of the gain on disposal for the year ended 31
December 2021 of each discontinued operation is as follows:
Global Sportech
Tote Group Bump (Worldwide) Lotteries
Inc. LLC Total
Note GBP000 GBP000 GBP000 GBP000
--------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received and receivable 33,906 4,941 9,854 48,701
Cash disposed of (3,609) (116) - (3,725)
Cash consideration received and receivable
net of cash disposed of 20f 30,297 4,825 9,854 44,976
--------------------------------------------- ----- ------------ ----------------- ----------- --------
Add cumulative foreign exchange movements
recycled to the income statement 3,234 (101) 240 3,373
Costs of disposal (1,511) (118) (405) (2,034)
Less net assets disposed of:
Intangibles 6,582 274 209 7,065
Property, plant and equipment 5,001 210 180 5,391
Right-of-use assets 761 - - 761
Deferred tax assets 12 - - 12
Trade and other receivables 4,621 380 1,542 6,543
Inventories 2,479 - - 2,479
Income tax payable (44) - - (44)
Trade and other payables (2,660) (63) (11) (2,734)
Lease liabilities (786) - - (786)
Retirement benefit liability (997) - - (997)
--------------------------------------------- ----- ------------ ----------------- ----------- --------
14,969 801 1,920 17,690
Pre-tax gain on disposal of discontinued
operations 17,051 3,805 7,769 28,625
Taxation - - - -
--------------------------------------------- ----- ------------ ----------------- ----------- --------
Gain on disposal of discontinued
operations 17,051 3,805 7,769 28,625
--------------------------------------------- ----- ------------ ----------------- ----------- --------
Costs of disposal include bonuses paid to Group employees of
GBP1,173k for Global Tote, GBP85k for Bump and GBP375k for Sportech
Lotteries, LLC (including employer's taxes payable).
A summary of the gain on disposal for the year ended 30 June
2021 of each discontinued operation is as follows:
Restated Global Bump (Worldwide)
Tote Group Inc. Total
Note GBP000 GBP000 GBP000
--------------------------------------------- ----- ------------ ----------------- --------
Cash consideration received and receivable 34,127 4,972 39,099
Cash disposed of (3,609) (116) (3,725)
Cash consideration received and receivable
net of cash disposed of 20f 30,518 4,856 35,374
--------------------------------------------- ----- ------------ ----------------- --------
Add cumulative foreign exchange movements
recycled to the income statement 3,234 (101) 3,133
Costs of disposal (1,510) (118) (1,628)
Net assets disposed of:
Intangibles 6,582 274 6,856
Property, plant and equipment 5,001 210 5,211
Right-of-use assets 761 - 761
Deferred tax assets 12 - 12
Trade and other receivables 4,621 380 5,001
Inventories 2,479 - 2,479
Income tax receivable (44) - (44)
Trade and other payables (2,660) (63) (2,723)
Lease liabilities (786) - (786)
Retirement benefit liability (997) - (997)
--------------------------------------------- ----- ------------ ----------------- --------
14,969 801 15,770
Pre-tax gain on disposal of discontinued
operations 17,273 3,836 21,109
Taxation - - -
--------------------------------------------- ----- ------------ ----------------- --------
Gain on disposal of discontinued operations 17,273 3,836 21,109
--------------------------------------------- ----- ------------ ----------------- --------
Costs of disposal include bonuses paid to Group employees of
GBP1,068k for Global Tote and GBP167k for Bump.
20f) A summary of the cash consideration at the prior year end
received and receivable net of cash disposed of is as follows:
Global Sportech
Tote Group Bump (Worldwide) Lotteries
Inc. LLC Total
Note GBP000 GBP000 GBP000 GBP000
-------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received in 2021
net of cash disposed of 24,352 4,825 9,423 38,600
Disposal costs paid in 2021 (1,716) (181) (6) (1,903)
-------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received net of
cash disposed of and disposal costs
paid in the period 22,636 4,644 9,417 36,697
Add back cash disposal costs paid
in the period 1,716 181 6 1,903
-------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received net of
cash disposed of before disposal
costs paid in the period 24,352 4,825 9,423 38,600
Cash consideration received in 2020
(including FX movement) 5,945 - - 5,945
Consideration to be received in 2022 - - 431 431
-------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received and receivable
net of cash disposed of before disposal
costs paid in the period 20e 30,297 4,825 9,854 44,976
-------------------------------------------- ----- ------------ ----------------- ----------- --------
Cash consideration received in 2020 related to an Initial
Payment received from BetMakers Technology Group Ltd for the
disposal of Global Tote, the deposit was unconditional and
non-returnable.
A working capital settlement of GBP425k was received for the
disposal of Sportech Lotteries LLC in H1 2022, costs of disposal
were also settled relating to bonuses, including employer taxes
(GBP376k) and legal fees (GBP23). Net inflow of GBP26k is shown in
investing activities in the cashflow statement.
A summary of the cash consideration at the prior half year end
received and receivable net of cash disposed of is as follows:
Global Bump (Worldwide)
Tote Group Inc. Total
Note GBP000 GBP000 GBP000
--------------------------------------------- ----- ------------ ----------------- --------
Cash consideration received in 2020 6,180 - 6,180
Cash consideration received in H1 2021
net of cash disposed of 20,961 4,856 25,817
Disposal costs paid in H1 2021 (2,297) (124) (2,421)
--------------------------------------------- ----- ------------ ----------------- --------
Net cash received in H1 2021 18,664 4,732 23,396
Cash consideration receivable in H2 2021 3,377 - 3,377
Cash consideration received and receivable
net of cash disposed of and disposal costs
paid in the period 28,221 4,732 32,953
Add back cash disposal costs paid in the
period 2,297 124 2,421
--------------------------------------------- ----- ------------ ----------------- --------
Cash consideration received and receivable
net of cash disposed of before disposal
costs paid in the period 20e 30,518 4,856 35,374
--------------------------------------------- ----- ------------ ----------------- --------
20g) Reconciliation to profit for the period included in the
income statement:
Restated
Six Six months
months ended
ended 30 June
30 June 2021
2022
(Unaudited) (Unaudited) Year
ended
31 December
2021
Note (Audited)
GBP000 GBP000 GBP000
------------------------- ------ --------------- ------------- -------------
Global Tote 20c - 21,913 21,691
Bump 20b - 4,237 4,206
Sportech Lotteries, LLC 20d - 549 9,104
------------------------- ------ --------------- ------------- -------------
- 26,699 35,001
------------------------- ------ --------------- ------------- -------------
The differences between the prior half year numbers and the full
year is true up of estimates in working capital settlements to
actual, the half year included estimates for both Global Tote and
Bump.
21. 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
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
GBP000 GBP000 GBP000
------------------------------ ---- -------------- -------------- --------------
Short-term employee benefits 294 722 1,236
Share-based payments - 51 45
Pay in lieu of notice 245 - 391
Post-employment benefits 11 9 18
Total 550 782 1,690
------------------------------------ -------------- -------------- --------------
22. Contingencies
Contingent items
Bump deferred contingent consideration receivable
On 2 June 2021 the Group completed the disposal of its 50:50
lottery division, Bump 50:50. In addition to the consideration
received during the year, there is potential further consideration
due to the Group of CAD$2m if Bump 50:50 achieves revenues in the
financial year ending 31 December 2022 of CAD$6.5m or more. The
Group has received information from the buyer indicating that they
believe Bump is likely to achieve revenue marginally in excess of
CAD$6.5m, however insufficient information was provided for the
Directors to conclude that it is virtually certain that the amount
will be received. It is therefore concluded there is not sufficient
evidence of virtual certainty to recognise the asset, as such it is
being disclosed as a contingent asset. Employee incentives are also
payable of cGBP150k if the contingent consideration is received by
the Group.
The recoverability of the receivable is binary (as are the
incentives) i.e. it is either paid in 2023 if 2022 revenue is
CAD$6.5m or more, or it is not payable if this level of revenue is
not reached. The Directors will reassess the recoverability at each
period end.
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 has 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.
Penalties could potentially be imposed on the Group's
corporation tax filing position for the STB VAT refund, however
Management consider this possibility to be remote and therefore are
not disclosing a contingent liability in relation to this item. The
Group has paid on account GBP4.6m into its corporate tax account in
order to cease the accruing of interest, which would be payable if
the Group were to accept a restatement of the Sportech Pool's
Limited 2016 tax return to tax GBP23.0m of the STB VAT refund as
income not capital. Management believes that the filing position
taken was the correct one, however HMRC currently have an open
investigation into the return.
Other contingent items are summarised as follows:
M&A activity
Both the 2017 sale of the Football Pools division, the 2018 sale
of the Group's Venues business in The Netherlands, the 2021 sale of
the Bump 50:50 and the 2021 sale of the Global Tote business have
customary seller tax warranties under the terms of the Sale and
Purchase Agreements. The possibility of material claims being made
under the seller tax warranties in any of the deals is considered
by management to be remote. In addition, the sale of Sportech
Lotteries, LLC on 31 December 2021 has 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 the deal
is considered by management to be remote.
Legal
The Group has been engaged in certain disputes in the ordinary
course of business which could have potentially led to outflows
greater than those provided for on the balance sheet. The maximum
possible exposure which was considered to exist, in view of advice
received from the Group's professional advisors, was up to GBP0.1m
at 30 June 2021 and GBP0.1m at 31 December 2021, the exposure at 30
June 2022 is nil. Management was of the view that the risk of those
outflows arising was not probable and accordingly they were
considered contingent items.
23. Other income
Other income recognised in the income statement is as
follows:
Six Six Year
months months
ended ended
30 June 30 ended
June 31 December
2021
2022 2021 (Audited)
(Unaudited) (Unaudited)
Note
GBP000 GBP000 GBP000
Settlement for early termination of a contract - - 100
CARES Act credits received - continuing operations 155 - 1,426
Profit on disposal of Sports Haven 20a - 2,575 2,575
Total - continuing operations 155 2,575 4,101
CARES Act credits received - discontinued
operations 20c - 1,057 1,057
Total 155 3,632 5,158
CARES Act credits were received given the impact on the Group's
operations of the COVID-19 restrictions imposed in the USA. 2021
amounts from continuing operations were received in cash during H2
2021, those from discontinued operations were received in H1 2021.
2022 amounts relate to amended returns submitted for 2020 and were
received in cash in August 2022. Proceeds from the settlement for
early termination of a contract (GBP100k) were received in H1
2022.
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END
IR WPUAWRUPPGAG
(END) Dow Jones Newswires
September 01, 2022 02:00 ET (06:00 GMT)
Grafico Azioni Sportech (LSE:SPO)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Sportech (LSE:SPO)
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Da Apr 2023 a Apr 2024
