Sportech 2012 Financials Show Lackluster Results

Internet betting destination Sportech plc has released its full year 2012 financial results, noting lower revenues and a performance below expectations.

Key financial indicators for the year ending December 31st, 2012 were:

• Revenue down by 5% to £112 million (2011: £118.2 million), due primarily to discontinuing unprofitable customer acquisition activities

• EBITDA slightly better by 1% to GBO 26.4 million (2011: £26.1 million)

• Adjusted profit before tax pretty much the same as 2011 at £15.7 million (2011: £15.8 million)

• Statutory profit before tax down at £2.1 million following refinancing and exceptional costs (2011: £8 million)

• Earnings per share up 2% to 5.8p (2011: 5.7p)

• Net bank debt reduced to £57.1 million (2011: £59.2 million)

• Acquired eBet for initial cash consideration of £5.7 million

• New £75 million multi-bank revolving credit facility acquired to facilitate growth initiatives

Digital highlights for the year were:

• Acquisition in December 2012, for up to $12.6 million, of eBet Online Inc., a provider of internet and mobile betting services for horseracing in North America

• Regulatory approval obtained to provide exclusive online betting on horseracing in Connecticut, for launch in Spring 2013

• New online platform to be launched in Spring 2013, to initially drive online horseracing activity in USA

• e-Gaming platform in UK now powered by Playtech, following migrations from multiple providers

Retail highlights were:

• Good performance from the group's US venues and telephone betting business with gross betting revenues of $185 million and EBITDA of $7.1 million, reversing previous years of decline.

• Betting services business in the USA, trading as Sportech Racing, posted its first increase in EBITDA for several years, processing over $13 billion in bets globally.

• UK Football Pools and e-Gaming business with EBITDA of £20 million in line with last year, the first time in many years that there has not been a significant decline in EBITDA.

• The company signed an agreement last week with UK Tote, owned by Betfred, to sell and install 1,000 new terminals. The terminals are initially expected to be used at the Royal Ascot meeting in June 2013.

• Sportech hopes to recoup some VAT payments from UK Customs and Excise after a First-Tier Tax Tribunal hearing in October last year, the findings of which are still awaited.

Commenting on the results Sportech CEO Ian Penrose said: "We have devoted considerable management time and resources in North America in order to develop a stronger business. Our investment policy helped us win approval to provide online betting on horseracing in Connecticut later this Spring, on an exclusive basis."

"Furthermore, we strengthened our position as one of the largest operators and providers of online and mobile betting technologies and services, by acquiring eBet Online Inc. in December 2012."

"Whilst economic conditions remain challenging in our two principal markets of the UK and USA, we have started 2013 trading in line with management's expectations."