TIDMSPO
RNS Number : 2080U
Sportech PLC
01 April 2021
For immediate release 01 April 2021
SPORTECH PLC
('Sportech', the 'Group' or the 'Company')
Final Results
Sportech, an international betting technology business, is
pleased to announce its final results for the year ended 31
December 2020.
Continuing Discontinued Total Continuing Discontinued Total
2020 2020 2020 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------- --------- ----------- ------------- ---------
Revenue 19,966 25,755 45,721 33,571 31,212 64,783
----------- ------------- --------- ----------- ------------- ---------
Gross Profit 10,534 23,531 34,065 18,343 28,544 46,887
----------- ------------- --------- ----------- ------------- ---------
Adjusted(1)
EBITDA pre
sports betting
investment (2,037) 4,632 2,595 3,422 5,891 9,313
----------- ------------- --------- ----------- ------------- ---------
Adjusted(1)
EBITDA (2,298) 4,632 2,334 1,649 5,891 7,540
----------- ------------- --------- ----------- ------------- ---------
Adjusted(1)
(loss)/profit
before tax (5,177) (810) (5,987) (2,040) 1,235 (805)
----------- ------------- --------- ----------- ------------- ---------
(Loss)/profit
before tax (10,567) (2,034) (12,601) (9,661) 1,231 (8,430)
----------- ------------- --------- ----------- ------------- ---------
(Loss)/profit
for the
year (10,270) (2,562) (12,832) (15,454) 990 (14,464)
----------- ------------- --------- ----------- ------------- ---------
1. Adjusted profit measures exclude the effects of expenditure
Management believes should be added back (separately disclosed
items) and share option charges; see note D of this
announcement.
Financial Overview
Continuing operations:
-- Revenues fell 41% to GBP20.0 million due to COVID-19 restrictions on trading.
-- Adjusted EBITDA loss of GBP2.3 million (2019: profit of
GBP1.6 million), management having taken action to mitigate
COVID-19 impact.
-- Adjusted loss before tax increased to GBP5.2 million (2019: GBP2.0 million).
Discontinued operations:
-- Revenues fell 17% to GBP25.8 million due to COVID-19 restrictions on trading.
-- Adjusted EBITDA fell to GBP4.6 million (2019: GBP5.9
million); management having taken action to mitigate COVID-19
impact.
-- Adjusted loss before tax was GBP0.8 million (2019: profit of GBP1.2 million).
Group:
-- Statutory loss for the year was GBP12.8 million (2019: GBP14.5 million).
-- Cash net of customer balances and including cash held by
assets held for sale was GBP16.8 million (2019: GBP13.0 million).
This includes the GBP6.2 million deposit from BetMakers Technology
Group Ltd.
-- Capex related to continuing operations was GBP0.4 million
(2019: GBP0.4 million) and discontinued operations was GBP2.0
million (2019: GBP3.4 million).
Group Developments
-- Corporate: Executed agreements to sell (a) Global Tote
Business with proposed transaction to BetMakers Technology Group
Ltd; (b) Bump 50:50, and (c) to dispose of a freehold property in
New Haven, Connecticut. In aggregate providing estimated net cash
of GBP36.1 million upon completion from these transactions, all
three expected to complete in H1 2021.
-- Tote: Delivered further growth within international Tote pool
commingling, and executed contract extensions with key
international partners. Completed an integration with Lottery
providers to facilitate betting on racing through Lottery points of
sale and successfully launched new terminal software to deliver
cost and capital efficiencies. Completed delivery of a new digital
platform to UK Tote Group and launched a new mobile betting option.
All of this ultimately supported the proposed sale of the business
in December 2020 .
-- Bump 50:50: Continued record-setting client acquisition, with
emphasis on online raffles and non-sports charities, ultimately
resulting in a sale of the business, announced February 2021.
-- Venues: COVID-19 severely impacted the business resulting in
a 28% decline in total retail betting handle versus 2019, mitigated
to an extent by a 72% growth in online handle. The required focus
on cost management continued. The Group is engaging with the
Governor's office following statements that appear to deny Sportech
equal rights to a Connecticut State Sports Betting licence. Legal
opinions have been sought and provided to the Connecticut
Administration. The Board will appraise shareholders as events
develop .
-- Lottery: Working with core partner to deliver online growth opportunity.
-- Other: Reduced Group capex by 37% and materially reduced separately disclosed items.
Strategic objectives for 2021 include:
1. Deliver significant capital return(s) to shareholders.
2. Strategically position to play our part in the State of
Connecticut's expanded gaming initiative.
3. Evaluate and execute further corporate opportunities, delivering tangible investor returns.
4. Materially reduce the corporate cost base.
5. Assess organic and complimentary growth opportunities that deliver superior returns.
Richard McGuire, Chief Executive Officer of Sportech, said:
"COVID-19 created unprecedented challenging conditions for our
businesses and the industries we serve. We continue to take the
necessary actions to safeguard the Group and to progress our
strategic agenda. In line with this, the Group took steps to
generate tangible investor returns by exiting certain businesses
and assets, advancing the sale of the Racing and Digital division's
Global Tote Business to BetMakers, the sale of the Bump 50:50
raffle business to Canadian Bank Note, and the disposal of a
freehold property in Connecticut.
"Despite the challenging global environment, our performance in
2020 was better than initially forecast in March 2020, with
Sportech delivering on key 2020 performance metrics, namely cash
generation from operational activities, effective capex management,
and delivery of a more efficient lower operational cost base going
forward, resulting in only a modest cash outflow since the outbreak
of COVID-19.
"We continue to evaluate further investment prospects within the
Connecticut Venues business to support potential expanded gaming
opportunities. Management and personnel in our US headquarters in
Connecticut remain fully motivated to be part of that state's
expanded gaming solution.
"I am encouraged by the resilience shown by the business in
facing the challenges of 2020. My gratitude goes to those dedicated
professionals who will be transferring to new owners in 2021 and my
thoughts remain with the families of those colleagues we lost to
this pandemic."
Analyst briefing:
Based on understandable guidance surrounding COVID-19, the
analyst presentation will be available on the Company website
https://www.sportechplc.com/investors/results/ . Management is
available as required for analyst and investor meetings; requests
should be made via Buchanan or Peel Hunt.
Contacts:
Sportech PLC Tel: +44 (0) 117 902 9000
Richard McGuire, Chief Executive Officer
Tom Hearne, Chief Financial Officer
Peel Hunt (Corporate Broker to Sportech) Tel: +44 (0) 20 741 8 8900
George Sellar / Andrew Cl ark / Will
Bell
Buchanan (Financial PR adviser to Sportech) Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham / Mark Court sportech@buchanan.uk.com
/ Jamie Hooper
Forward-looking statements This document contains certain
statements that are forward-looking statements. They appear in a
number of places throughout this document and include statements
regarding our intentions, beliefs or current expectations and those
of our officers, directors and employees concerning, amongst other
things, results of our operations, financial condition, liquidity,
prospects, growth, strategies and the business we operate. These
forward-looking statements include all matters that are not
historical facts. By their nature, these statements involve risks
and uncertainties since future events and circumstances can cause
results and developments to differ materially from those
anticipated. Any such forward-looking statements reflect knowledge
and information available at the date of preparation of this
document. Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation
(596/2014), the Listing Rules, the Disclosure Guidance and
Transparency Rules and the Prospectus Rules), the Company
undertakes no obligation to update or revise any such
forward-looking statements. Nothing in this document should be
construed as a profit forecast. The Company and its directors
accept no liability to third parties in respect of this document
save as would arise under English law.
Notes to Editors:
About Sportech
Sportech PLC, an international betting technology business,
delivers solutions and services in highly regulated markets
worldwide for some of the world's best-known gaming companies,
sports teams, racetracks, casinos and lottery clients as well as
owning and operating its own gaming venues in Connecticut under
exclusive licences.
2020 Operating Review
2020 was a year of challenge and change as Sportech collectively
sought to navigate the well documented issues the pandemic brought.
In 2019, the Group initiated a focus on accountability and
relocated investment capital to digital opportunities across all
business lines; this strategy supported the Group during 2020.
COVID-19 restrictions had a material impact on performance due
to the Group's reliance on sporting events to generate revenue. The
Group was, in prior years, seriously exposed to sporting events
occurring, sporting stadia, bars and restaurants being open, and
personnel and customers enjoying travel freedom. As we all know,
that changed dramatically in early 2020 and the Board took
immediate action to protect all stakeholder interests.
The Group structure was tested, and decisive steps were taken to
ensure continued commitment to our clients and the safety of our
personnel, and to protect the Group's asset base. A focus on
operational efficiency, cash generation and online growth across
all business units during the period resulted in the Group's
adjusted cash (i.e. excluding customer cash) increasing from
GBP13.0 million at 31 December 2019 to GBP16.8 million at 31
December 2020. This includes the BetMakers' non-refundable initial
deposit (GBP6.2 million). It also includes adjusted cash (i.e.
excluding customer cash) of GBP5.5 million held within discontinued
operations which will remain within the Group following completion
of the disposals, subject to adjustments for debt-like items and
working capital.
The Group's 2020 strategy included the evaluation and execution
of material corporate opportunities, delivering tangible investor
returns. During 2020 and into 2021, in line with strategy, the
Group agreed certain sales to generate tangible investor returns,
whilst continuing to evaluate further investment prospects within
the Connecticut Venues business to support potential expanded
gaming opportunities. Progress with the sale of Racing and
Digital's Global Tote Business to BetMakers is progressing as is
the transition of the Bump 50:50 business to Canadian Bank Note
Limited.
These two transactions and the sale of the Group's New Haven
property are expected to close in H1 2021. The estimated aggregate
net cash from corporate transactions is GBP36.1 million and the
Board will continue to engage with shareholders to assess the
optimal use of capital.
During 2020, the Board received unsolicited interest from a
potential suitor to acquire the entire Group. The Board shared
certain information with the party as part of a focused due
diligence exercise. However, having considered the full terms and
conditions of their final proposal, the Board concluded that it did
not adequately value the businesses and prospects of Sportech, in
the light of both the execution risk attached and the Group's
strategy to deliver tangible shareholder value.
It is notable that the dedication and successes delivered by
management and personnel within the Global Tote Business and Bump
50:50 in driving their respective businesses attracted the
attention of numerous suitors during 2020, resulting in acceptable
valuations for each and positioning the Group well to deliver on
its strategic objectives during 2021.
During 2020, capital and net cash position became more crucial
metrics than EBITDA. The Group continued to focus on core
performance metrics, including a 37% capex reduction and a 77%
reduction in separately disclosed items (excluding those related to
agreed disposals), and repositioned itself to create a significant
liquidity base to take advantage of growth opportunities within
existing and complimentary business lines, whilst delivering the
clear prospect of returning capital to investors.
As the Group transitions into 2021, opportunity conversion,
profitability and capital repatriation will continue to be key
metrics. It is difficult to provide meaningful guidance on the
future outlook given uncertainty around the timing of when sporting
events will return in full and the potential impact of further
lockdowns. However, management remain confident in the quality of
the Group's products, our services and our strategy, and in the
strength of the Company balance sheet to help deliver in the medium
term.
During 2020 the Group delivered the following notable
achievements:
-- Delivered significant business contract growth during the
period.
-- Reduced Group capex by 37%.
-- Materially reduced separately disclosed items.
-- Delivered 43% growth from Connecticut online retail
initiative.
-- Delivered 26% growth from International commingling Tote
handle.
In 2020, Sportech had two operating divisions: (1) Racing and
Digital (including Lotteries and Bump 50:50) and (2) Venues. In
recent months the Group has agreed sales for the Global Tote and
Bump 50:50 parts of Racing and Digital. This has made way for a new
division, Sportech Lotteries, which remains in the continuing
Group. We will highlight below some of the achievements from those
businesses held for sale before we delve a little deeper into
Venues and the Lotteries business.
Racing and Digital - Global Tote
Sportech's 'Racing and Digital - Global Tote' is a leading
supplier of technology and services to the global horseracing
betting industry, with systems that processed an estimated US$9
billion in 2020 betting handle for clients across 35 countries.
Developments during the year:
-- Introduced new digital terminal software suite for teller
ePOS, self-service, mobile and roaming teller, supporting a more
flexible hardware strategy to deliver cost efficiencies and
reduction in capital intensive investment. The division also
progressed its terminal project, identifying and demonstrating an
impressive new terminal hardware line that will not only streamline
capex and improve efficiency, but will also provide an innovative
and engaging end user experience.
-- The Tote Superpool combined the betting pools on Royal Ascot
races generated by UK Tote Group with Tote betting from global
outlets and the Royal Ascot pools hosted by the Hong Kong Jockey
Club. Despite no on-track contribution to the pools as a result of
COVID-19 restrictions, the 2020 Tote Superpool generated GBP137
million in handle, up from GBP92 million in 2019. This year,
Sportech facilitated the expansion of Superpools to all 36
races.
-- Extended commingling and core Tote services agreements with UK Tote Group.
-- Completed a key integration project for Danske Spil,
providing expansion of horseracing wagers via their network of SG
lottery terminals, leading to further wagering footprint
expansion.
-- Extended contract and deployed Tote Service Layer for Finnish
client Veikkaus who will utilize Sportech's platform to offer
horseracing wagering alongside Sports Betting and Lottery from
4,500 points of sale, a significant increase of 3,500 over the
current level of 1,000.
-- Joined the World Tote Association.
-- Successfully launched Tote betting services for live races
held at the historic Central Moscow Hippodrome for client Pari
Engineering Rus. Prior to launching Tote for live racing, Sportech
provided services to Pari Engineering Rus for the operation of
their OTB locations and for commingling into international
pools.
-- Brought the popular French Quinté+ pool to Denmark through
Danske Spil's DanToto off-track betting venues, web and mobile
channels.
BUMP 50:50
Bump 50:50's electronic raffle technology and service solution
helps foundations maximise their charitable fundraising efforts
with 50:50 and progressive jackpot raffles offered in-stadia and
online that result in jackpots that are divided equally between the
foundation and the drawing winner. Bump 50:50 clients include
foundations associated with some of the biggest brands in
professional and collegiate sports, entertainment special events,
and philanthropic organisations.
Developments during the year:
In 2020, Bump 50:50 built on previous successes and further
expanded into non-sports markets, with new raffle variations and
the introduction of online potential across several states, which
continued to deliver growth opportunities and future revenue
diversification.
The leadership team was further strengthened, and Bump 50:50
assembled an unmatched group of specialists who, combined, bring
decades of direct experience in the sports, raffle and non-profit
fundraising sectors. This team has been pivotal to the growth of
Bump 50:50; its dedication to client service and product innovation
aligned with the highest level of integrity continues to deliver
impressive results and stronger client relationships.
Digital progress continued with the deployment of new
contactless payment technology; Paysafe and Bump 50:50 brought to
market the charitable raffle space's first fully integrated
contactless payments solution. As fans return to stadiums, Bump
50:50's partners will enable the safe in-person purchase of raffle
tickets using card tap-and-pay technology.
Significant client growth, core new licences and initial success
with online progressive jackpots resulted in various parties
approaching the Group to acquire the unit, resulting in the
announced sale in Q1 2021.
SPORTECH VENUES
Sportech Venues offers legal betting on horseracing, greyhound
racing and jai alai through both online and venue-based operations
across the State of Connecticut under an exclusive and perpetual
licence.
Constant
GBP'000 currency
2020 2019
-------- ----------
Wagering revenue 15,596 24,217
Food and beverage revenue 1,472 4,348
-------- ----------
Total revenue 17,068 28,565
-------- ----------
Contribution 8,133 13,858
Contribution margin 47.7% 48.5%
Adjusted operating expenses (9,218) (11,631)
-------- ----------
Adjusted EBITDA (1,085) 2,227
-------- ----------
Capex 29 199
-------- ----------
Developments during the year:
COVID-19 shuttered most racing and sporting events, and the
Division's retail properties, for almost six months. Sportech
Venues sustained pared back operations and continued to offer
limited content through digital platforms. To protect employees and
customers, the business voluntarily closed in-person betting at the
Connecticut venues; this was followed immediately by a
State-mandated closure.
Management diverted full attention to digital and online
services, deploying new digital marketing and CRM tools which
increased Connecticut retail online handle by 43%, but could not
compensate sufficiently for venue closures. Including
non-Connecticut retail clients, online retail handle increased 72%,
with online representing 33% of total retail handle in 2020.
Restaurants and in-person venues remain capacity limited and some
venues in smaller locations were permanently closed as result of
the impact of COVID-19 on the business and coinciding lease
maturities.
During the shortened 2020 legislative session in Connecticut,
management campaigned vigorously in support of expanded gaming
legalisation and for Sportech to be part of the solution to offer
online and retail Sports Betting in the State. The Division
undertook a multi-level campaign of lobbying, advertising, and
targeted public relations. Management and employees also attended
public hearings and delivered testimony to relevant General
Assembly committees.
Despite our efforts and those of other licensed Connecticut
gaming operators, the State did not enact expanded gaming
legislation in the abbreviated 2020 legislative session, due
primarily to disputed claims of exclusivity under prior agreements
by the two recognised Tribal entities.
Given the importance of Sports Betting licensing to our Venues
business and the Group, we continue to be proactively engaged in
seeking a solution during the 2021 legislative session which
adjourns on 9 June 2021. Our online campaign can be found at
www.sportsbettingforct.com . The Group is engaging with the
Governor's office following statements that appear to deny Sportech
equal rights to a Connecticut State Sports Betting licence. Legal
opinions have been sought and provided to the Administration and
the Board will appraise shareholders as events develop.
The business entered into an agreement to sell a freehold
property in New Haven, Connecticut. When concluded, the proceeds
will create further investment capital for the Connecticut
business, specifically for pursuing Group strategy in appropriate
positioning of Sportech interests within the Governor's announced
expanded gaming initiative and will also further strengthen Group
liquidity. The Company has commenced a search for an appropriate
new location for the New Haven retail branch and North American HQ
offices.
Looking forward
Managing a physical retail operation is clearly challenging in
this environment. The Group remains focused on managing the fixed
cost base and are assessing options to enhance profitability via a
combination of lower product costs and improved licence revenues in
2021.
Sportech's position on the expansion of Gaming in Connecticut
and our credentials as a viable partner to deliver legal Sports
Betting in the State, were well established through our lobbying
and communication efforts in recent years. The Group intensified
these efforts during the Connecticut General Assembly's 2021
legislative session, which commenced in January, as expanded gaming
in the State is being developed. The Group continues to work with
the State's legislators and established licensed gaming operators
to seek a solution to deliver a comprehensive legal and regulatory
framework for expanded gaming initiatives in 2021 and beyond.
Being part of the Connecticut gaming expansion initiative
remains a key priority in 2021. It remains a complex situation,
however we are fully engaged in working with all parties to seek an
appropriate solution and have prepared investment capital to
protect our position and play our role in Connecticut State gaming
expansion.
SPORTECH LOTTERIES
Sportech has been providing draw-based Lottery platforms and
services for over 24 years. In 2019, the Group acquired Lot.to
Systems Limited, which had an iLottery, CRM, and games management
platform, to complement our successful draw based games. The Group
is pursuing opportunities with private and national lotteries,
drawing on the Sportech brand and legacy along with our new range
of products and digital expertise to offer enhanced Lottery
capabilities.
Constant
GBP'000 currency
2020 2019
Services revenue 2,898 4,745
Contribution 2,082 3,520
Contribution margin 71.8% 74.2%
Adjusted operating expenses (1,107) (825)
-------- ----------
Adjusted EBITDA 975 2,695
-------- ----------
Capex 351 130
-------- ----------
Developments during the year
It was a challenging year for the unit as the current core
Lottery revenue stream is predominantly sales via physical retail
outlets, the vast majority of which closed for several months
during 2020 due to the COVID-19 outbreak. Revenues declined 39%
versus 2019, however a return to some semblance of normality in Q4
saw revenues versus Q4-2019 only 5% lower.
The Group joined the North American Association of State and
Provincial Lotteries, 'NASPL'.
The Board will continue to evaluate further investment in
partnership opportunities, build on our core foundations, and
further enhance our product suite through collaboration and digital
innovation.
GROUP OUTLOOK
There is little doubt that the pandemic tested our organisation,
however Sportech employees are professionals who work with
incredible passion and purpose and the Board continues to be
inspired by their dedication to improve in every area.
Providing a long-term projection with any degree of certainty in
this environment is challenging and unrealistic, however having
negotiated several corporate transactions during the last 12
months, when completed, the Group will have reduced investors' risk
and simplified the structure and the opportunities ahead.
During 2019 and 2020, Sportech enhanced its global credentials
and expanded the reach of Quantum(TM) System, providing seamless
connectivity between our diverse clients and partner racecourses
around the world as never before. We invested time during the year
assessing our entire product range and user experience and
commenced development of a digital software platform that changed
the way we approached terminal hardware and capital investment
going forward. This strategic map ultimately resulted in certain
businesses becoming attractive acquisitions for others and, in line
with our strategy of delivering tangible returns to shareholders,
we progressed that interest to the deals announced.
The Group continues to make significant strides in challenging
cultural behaviours and business practices that perhaps focused on
previous financial metrics rather than promoting an entrepreneurial
ownership ethos; this shift ultimately resulted in some of the
benefits noted at the start of this section.
The 2021 management team will reduce in number as we complete
corporate transactions, however an emphasis on accountability and
ownership culture will prevail.
A summary of our strategic objectives for 2021 includes:
1. Deliver significant capital return(s) to shareholders.
2. Strategically position to play our part in the State of
Connecticut's expanded gaming initiative.
3. Evaluate and execute further corporate opportunities, delivering tangible investor returns.
4. Materially reduce the corporate cost base.
5. Assess organic and complimentary growth opportunities that deliver superior returns.
I am encouraged by the resilience shown by the business in
facing the challenges of 2020. My gratitude goes to those dedicated
professionals who will be transferring to new owners in 2021 and my
thoughts remain with the families of those colleagues we lost to
this pandemic.
The Board and management remain fully engaged and focused on
protecting shareholder value and managing opportunity effectively
and responsibly through these turbulent times.
Richard McGuire
Chief Executive Officer
31 March 2021
Financial Review
Income Statement - Detailed View
Restated Constant
Reported(2) Currency
GBP'000 2020 2019 2019
Service revenue 18,494 29,176 28,962
F&B revenue 1,472 4,395 4,348
Total revenues 19,966 33,571 33,310
Cost of sales (9,432) (15,228) (15,108)
--------- ------------- ----------
Gross profits 10,534 18,343 18,202
Marketing and distribution costs (319) (839) (824)
--------- ------------- ----------
Contribution 10,215 17,504 17,378
Contribution margin % 51.2% 52.1% 52.2%
Adjusted operating expenses (net)(3) (12,513) (15,855) (15,734)
Impact of FX on reported earnings - - 5
--------- ------------- ----------
Adjusted EBITDA (2,298) 1,649 1,649
----------
Separately disclosed items (net) (229) (1,003)
Non-cash items:
Share option charges - normal (347) (676)
Share option charges - accelerated - (746)
Depreciation net of profit on sale (1,793) (2,413)
Impairment of property, plant and equipment
and right-of-use asset (4,349) (5,020)
Amortisation (485) (250)
Amortisation of acquired intangibles (509) (467)
Total - non-cash items (7,483) (9,572)
--------- -------------
LBIT (10,010) (8,926)
Net finance charges (557) (735)
--------- -------------
LBT (10,567) (9,661)
Taxation 297 (5,793)
--------- -------------
Result after taxation - continuing operations (10,270) (15,454)
Result after taxation - discontinued operations (2,562) 990
--------- -------------
Loss for the year (12,832) (14,464)
--------- -------------
Adjusted loss before tax for the year from
continuing operations(1) (5,177) (2,040)
--------- -------------
1. Adjusted loss before tax for the year from continuing
operations is the aggregate of adjusted EBITDA, normal share option
charges, depreciation, amortisation (excluding amortisation of
acquired intangibles), and normal finance charges (see note D for
reconciliation).
2. The 2019 reported results are restated to exclude
discontinued operations, the results of which are aggregated and
shown as discontinued operations below result after taxation -
continuing operations.
3. Adjusted operating expenses exclude depreciation,
amortisation, impairments, share option charges and separately
disclosed items.
Revenues
Restated Constant
Reported Currency
GBP'000 2020 2019 2019
Lotteries service revenue 2,898 4,745 4,745
Total Sportech Lotteries 2,898 4,745 4,745
------- ---------- ----------
Venues wagering revenue 15,596 24,431 24,217
Venues F&B revenue 1,472 4,395 4,348
------- ---------- ----------
Total Sportech Venues 17,068 28,826 28,565
------- ---------- ----------
Total revenues 19,966 33,571 33,310
------- ---------- ----------
Revenue from continuing operations was down 40% on a constant
currency basis. In Sportech Lotteries, our customer in the
Dominican Republic did not run draws during April, May or June 2020
due to restrictions on opening hours of shops and kiosks, and
experienced curfew restrictions in other times of the year. In
Venues, our land-based operation was shuttered for over three
months and following reopening had venue capacity restrictions
imposed, causing revenue reductions. Our online offering remained
open throughout 2020 and customers migrated from in person to
online wagering, bolstering revenue slightly. Recovery commenced in
H2 2020 but with supressed trading conditions.
Adjusted EBITDA
Restated Constant
reported currency
GBP'000 2020 2019 2019
Sportech Lotteries 975 2,695 2,695
Sportech Venues (1,085) 2,228 2,227
Central costs (1,927) (1,501) (1,522)
-------- ---------- ----------
Adjusted EBITDA before sports betting investment (2,037) 3,422 3,400
Sports betting investment (261) (1,773) (1,756)
Adjusted EBITDA (2,298) 1,649 1,644
-------- ---------- ----------
Revenue reductions impacted EBITDA although mitigating actions
were taken, such as use of furlough schemes, rent abatement
requests and general freeze on operating expenses to the extent
possible. During the COVID-19 lockdowns, the Group did maintain
employee health benefits for furloughed staff. The increase in
central costs was a result of the change in focus of staff away
from Sports Betting to COVID-19 operations management, and
increased legal costs related to agreements with staff and
landlords.
Sports Betting investment represents the time and cost the Group
has incurred seeking to secure a Sports Betting licence in the
State of Connecticut and also in seeking partnerships across the
rest of the US in Sports Betting. In 2020, it includes lobbying in
Connecticut and other external costs only. In 2019 these costs were
lobbying costs, additional staff costs, travel and consultants, and
also included an allocation of senior management time; GBP699k
external, GBP1,074k internal, being payroll and travel, of which
GBP482k was in respect of Executive Directors.
Discontinued operations
On 24 December 2020 Sportech PLC shareholders approved the
disposal of the Global Tote Business, being the Group's B2B Racing
and Digital division, excluding its Bump 50:50 business, Lottery
operations and retail racing website for a purchase price of
GBP30.9 million. An initial payment of GBP6.18 million was received
from the acquirer, BetMakers Technology Group Ltd ("BetMakers"), on
29 December 2020. This receipt is unconditional and
non-refundable.
In January 2021, the Group signed a purchase and sale agreement
to sell the Bump 50:50 business after completing months of
negotiations with the buyer, Canadian Bank Note Company
Limited.
In accordance with IFRS 5, these businesses have been treated as
assets held for sale. As at the balance sheet date, the sales were
deemed to be highly probable, and the disposals signal a departure
from major business lines in which the Group previously operated.
Accordingly, they have also been treated as discontinued operations
in these financial statements.
Completion of the disposal of the Tote business is conditional
upon (a) BetMakers having received regulatory approval or waivers
in a form acceptable to the purchaser (acting reasonably) in
respect of each of the licences, authorisations, approvals and
permits held by the Disposal Group, which are necessary for the
continued operation of the business; and (b) no material adverse
change having occurred in the period between the date of the
agreement and the earlier of (a) completion, and (b) 30 April
2021.
Completion of the Bump 50:50 sale is the earlier of the buyer
receiving regulatory approval or waivers in a form acceptable to
the purchaser (acting reasonably) in respect of each of the
licences, authorisations, approvals and permits held by Bump or 31
July 2021, whichever comes first.
The table below shows the results of the discontinued
operations.
Global Global
Tote Group Bump 50:50 Total Tote Group Bump 50:50 Total
2020 2020 2020 2019 2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ ----------- --------- ------------ ----------- ---------
Revenue 25,052 703 25,755 29,210 2,002 31,212
Costs (19,525) (1,598) (21,123) (23,618) (1,703) (25,321)
------------------------------- ------------ ----------- --------- ------------ ----------- ---------
Adjusted EBITDA 5,527 (895) 4,632 5,592 299 5,891
Depreciation and amortisation (5,083) (291) (5,374) (4,323) (241) (4,564)
Profit on disposal of
assets - - - 1 - 1
Separately disclosed
items (1,159) (65) (1,224) (137) - (137)
Finance costs (113) 45 (68) 16 24 40
-------------------------------
Loss before tax (828) (1,206) (2,034) 1,149 82 1,231
Taxation (528) - (528) (241) - (241)
------------------------------- ------------ ----------- --------- ------------ ----------- ---------
Loss after tax (1,356) (1,206) (2,562) 908 82 990
------------------------------- ------------ ----------- --------- ------------ ----------- ---------
Revenue performance was down on 2019 due to forced closure of
many racetracks and OTB's in the early months of the COVID-19
pandemic. Our racing customers were not required to pay our monthly
service fees and our variable revenue was severely hit. During this
time the Group furloughed a significant number of its Racing
employees to reduce the potential impact of COVID-19. Our digital
offerings, however, did well as a few tracks remained open during
the pandemic and continued to grow. Once racing had resumed, our
Global Tote Business recovered and maintained a reduced cost base,
improving EBITDA performance. Bump 50:50 was unable to generate
in-stadia revenues from ticket sales due to crowds being banned
from attending sporting events across North America. Bump 50:50
continues to be impacted but is maintaining some revenues via
online 50:50, the introduction of a new online-only progressive
jackpot raffle product, and significant gains in non-profit charity
clients that do not rely on sporting events.
In addition to the discontinued operations above, the Board
agreed final terms for the disposal of our New Haven freehold
property in Connecticut, USA for consideration of circa GBP4.4
million (US$6.0 million). The sale and purchase agreement includes
a leaseback clause, whereby Sportech shall lease back the property
for a period not to exceed 18 months from the date of closing. The
lease will have a monthly rental of circa GBP37k (US$50k) per
month.
As such, the net book value of the land and buildings at the
property of GBP1.2 million has been classified as held for sale and
separately disclosed outside of property, plant and equipment
within assets held for sale.
Separately disclosed items
Restated
GBP'000 Reported
Continuing operations 2020 2019
Included in operating costs:
Restructuring and redundancy costs - 87
Onerous contract provisions and other losses resulting
from exit from Californian operations - (184)
Losses from Striders Sports Bar (S&S JV) - 249
UK defined pension scheme buy-out 2 570
Acquisition costs - Lot.to Systems Limited - 51
Costs in relation to Spot the Ball VAT refund (note
b) 44 15
Costs in relation to legacy tax disputes (net of
provision release) - (152)
One off start-up costs of new ventures, including
new venue builds and joint ventures - 266
Corporate activity costs (note a) 118 81
Costs in relation to exiting the Group's interests
in India (note c) 65 20
------- ----------
229 1,003
------- ----------
Discontinued operations
Included in operating costs (note d) 1,224 137
Included in finance costs
Interest accrued on corporate tax potentially due
and unpaid at the balance sheet date on STB refund
received in 2016 and interest paid on VAT settlement 233 151
------- ----------
1,686 1,291
------- ----------
The Group continues to focus on resolving legacy issues and
reducing ongoing separately disclosed items. The majority of
separately disclosed items in 2020 have related to the corporate
activity including the ultimate agreed disposals of the Global Tote
Business, Bump 50:50, and our New Haven freehold property.
Corporate activity costs (note a)
Costs incurred during the year in relation to the approach by
Standard General LLP to acquire the entire equity of Sportech PLC
and other corporate activity.
Costs in relation to the STB refund (note b)
Advice continues to be received in relation to the corporate tax
filings in relation to the Spot the Ball VAT refund in 2016.
Costs in relation to the Group's interests in India (note c)
The Group has been required to defend a claim for costs from the
joint venture partner in India and is also incurring costs in
relation to dissolving the holding company of the joint venture in
Mauritius, the issue is ongoing.
Costs within discontinued operations (note d)
Mainly legal, accounting and tax advice plus other costs
directly incurred in relation to the disposal of the Global Tote
Business and the disposal of Bump 50:50. Costs exclude bonuses for
Group employees amounting to approximately GBP1.1m, which are
conditional and payable on completion of the transaction. Any costs
for work to be undertaken by advisors in 2021 are also
excluded.
Taxation
The current tax credit for the year was GBP719k being mainly a
prior year adjustment for overpaid tax in the UK in relation to the
tax paid on the Football Pools trade and assets disposed of in 2017
net of withholding taxes paid in the US from overseas contracts.
The deferred tax charge for the year was GBP950k; relating to the
reversal of timing differences being offset by a write down of the
deferred tax asset in the US following a review of prospects of
recoverability. The Group has a recognised deferred tax asset of
GBP4k and unrecognised gross timing differences of GBP35,745k,
being tax losses carried forward. The Board expects the losses to
be utilised against profits on disposal of the discontinued
operations in the US, however accounting prevents the anticipation
of such utilisation in the recognition of deferred tax assets
unless there is sufficient certainty over the availability of
future suitable taxable profits.
Tax paid in the year of GBP686k in continuing operations is
mainly withholding taxes in the US, a further GBP343k was paid by
discontinued operations.
The Group's current tax liability includes a provision for
uncertain tax liabilities of GBP4.6 million in relation to
corporation tax on the 2016 VAT refund. The Group is working with
HMRC to resolve the issue. The Group had a current tax receivable
balance of GBP1.4 million as at 31 December 2020 in relation to an
overpayment from prior years. The refund was received in February
2021.
The Group's deferred tax asset of GBP4k represents timing
differences expected to reverse within five years. The Group has a
deferred tax liability of GBP94k at 31 December 2020 which is
deferred tax recorded against intangibles recognised on the
acquisition of Lot.to Systems Limited in 2019.
Cash flow
The Group's cash flow for the year is as follows (including
discontinued operations):
2020 2019
GBP000 GBP000
Adjusted EBITDA - continuing operations (2,298) 1,649
Adjusted EBITDA - discontinued operations 4,632 5,891
-------- --------
Total Adjusted EBITDA 2,334 7,540
Payment of lease liabilities including interest (1,655) (1,879)
-------- --------
EBITDA after lease payments 679 5,661
Add: Sportech Racing BV Sale - 236
Initial payment from BetMakers Group 6,180 -
Other Acquisition, disposal, and
Less: JV items (500) (913)
Capitalised software (1,650) (2,648)
Property plant and equipment (net
of proceeds from sales) (753) (1,168)
Separately disclosed items (net) (484) (1,731)
Working capital and other 1,552 545
Tax paid and interest, net (1,100) (1,318)
FX impact (72) (407)
-------- --------
Net cash flows
in year 3,852 (1,743)
Opening cash, excluding customer balances 12,985 14,728
-------- --------
Closing cash, excluding customer
balances 16,837 12,985
-------- --------
Cash inflow, excluding movement in customer balances in the year
was GBP3,852k. An initial, unconditional, non-refundable payment
from BetMakers Technology Group Ltd was received on 29 December
2020 turning the cash outflow for the year into a cash inflow.
Cash outflow for the year of GBP2,328k (excluding BetMakers'
Initial payment) was similar to prior year despite the COVID-19
pandemic and restricted trading conditions, due to tight cost
control, use of Government employment support facilities and
effective working capital management.
Thomas Hearne
Chief Financial Officer
31 March 2021
Consolidated Income Statement
f o r t he y ear end ed 31 De c e m ber 2020
Restated
2020 2019
Note GBP000 GBP000
Revenue E 19,966 33,571
Cost of sales E (9,432) (15,228)
--------- ---------
Gross profit E 10,534 18,343
Marketing and distribution costs E (319) (839)
--------- ---------
Contribution E 10,215 17,504
Operating costs D (20,225) (26,430)
Operating loss (10,010) (8,926)
Finance costs G (568) (787)
Finance income G 11 52
Loss before tax from continuing operations (10,567) (9,661)
Tax - continuing operations H 297 (5,793)
--------- ---------
Loss for the year - continuing operations (10,270) (15,454)
(Loss)/profit after tax from discontinued operations (2,562) 990
--------- ---------
Loss for the year (12,832) (14,464)
--------- ---------
Attributable to:
Owners of the Company (12,832) (14,464)
Basic (loss)/earnings per share attributable to
owners of the Company
From continuing operations J (5.4)p (8.2)p
From discontinued operations J (1.4)p 0.5p
--------- ---------
Total J (6.8)p (7.7)p
--------- ---------
Diluted (loss)/earnings per share attributable
to owners of the Company
From continuing operations J (5.4)p (8.2)p
From discontinued operations J (1.4)p 0.5p
--------- ---------
Total J (6.8)p (7.7)p
--------- ---------
Adjusted loss per share attributable to owners
of the Company
Basic J (2.2)p (0.9)p
Diluted J (2.2)p (0.9)p
See note D for a reconciliation of the above statutory income
statement to the adjusted performance measures used by the Board of
Directors to assess divisional performance.
Prior year comparatives have been adjusted for discontinued
operations.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
2020 2019
GBP000 GBP000
Loss for the year (12,832) (14,464)
Other comprehensive (expense)/income:
Items that will not be reclassified to profit
and loss
Actuarial loss on retirement benefit liability (344) (399)
Deferred tax on movement on retirement benefit
liability 88 117
--------- ---------
(256) (282)
Items that may be subsequently reclassified to
profit and loss
Currency translation differences (77) (1,682)
Total other comprehensive expense for the year,
net of tax (333) (1,964)
Total comprehensive expense for the year (13,165) (16,428)
--------- ---------
Attributable to:
Owners of the Company (13,165) (16,428)
--------- ---------
Consolidated Balance Sheet
As at 31 December 2020
2020 2019
Note GBP000 GBP000
ASSETS
Non-current assets
Goodwill K 604 604
Intangible fixed assets L 7,343 14,935
Property, plant and equipment M 5,077 17,676
Right-of-use assets N 1,133 6,312
Trade and other receivables O 156 499
Deferred tax assets P 4 990
--------- ---------
Total non-current assets 14,317 41,016
--------- ---------
Current assets
Trade and other receivables O 1,517 7,603
Inventories Q 120 2,616
Current tax receivable H 1,442 -
Cash and cash equivalents R 11,821 15,565
--------- ---------
14,900 25,784
Assets classified as held for sale I 27,671 -
--------- ---------
Total current assets 42,571 25,784
--------- ---------
TOTAL ASSETS 56,888 66,800
--------- ---------
LIABILITIES
Current liabilities
Trade and other payables S (14,104) (12,853)
Provisions T (321) (579)
Lease liabilities U (823) (843)
Financial liabilities - (500)
Current tax liabilities H (4,700) (4,880)
Deferred tax liabilities P (94) (89)
--------- ---------
(20,042) (19,744)
Liabilities directly associated with assets classified
as held for sale I (7,507) -
--------- ---------
Total current liabilities (27,549) (19,744)
--------- ---------
Net current assets 15,022 6,040
--------- ---------
Non-current liabilities
Retirement benefit liability - (1,079)
Lease liabilities U (3,059) (6,881)
Deferred tax liabilities P - (93)
Provisions T (1,121) (1,026)
--------- ---------
Total non-current liabilities (4,180) (9,079)
--------- ---------
TOTAL LIABILITIES (31,729) (28,823)
--------- ---------
NET ASSETS 25,159 37,977
--------- ---------
EQUITY
Ordinary shares V 37,750 37,750
Other reserves 16,539 16,872
Retained earnings (29,130) (16,645)
--------- ---------
TOTAL EQUITY 25,159 37,977
--------- ---------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Other reserves
Capital Foreign
Ordinary redemption Other exchange Retained
shares reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2020 37,750 10,312 (382) 6,942 (16,645) 37,977
Comprehensive (expense)/income
Loss for the year - - - - (12,832) (12,832)
Other comprehensive items
Actuarial loss on defined benefit
pension liability* - - (256) - - (256)
Currency translation differences - - - (77) - (77)
--------- ------------ --------- ---------- ---------- ---------
Total other comprehensive items - - (256) (77) - (333)
--------- ------------ --------- ---------- ---------- ---------
Total comprehensive items - - (256) (77) (12,832) (13,165)
--------- ------------ --------- ---------- ---------- ---------
Transactions with owners
Share option charge - - - - 347 347
Total transactions with owners - - - - 347 347
--------- ------------ --------- ---------- ---------- ---------
Total changes in equity - - (256) (77) (12,485) (12,818)
--------- ------------ --------- ---------- ---------- ---------
At 31 December 2020 37,750 10,312 (638) 6,865 (29,130) 25,159
--------- ------------ --------- ---------- ---------- ---------
* Net of deferred tax.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2019
Other reserves
Capital Foreign
Ordinary redemption Other exchange Retained
shares reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2019 37,350 10,312 (414) 8,537 (3,636) 52,149
Adjustment for adoption of
IFRIC 23 - - - - 1,562 1,562
Adjustment for adoption of
IFRS 16 Leases net
of tax - - - - (1,442) (1,442)
--------- ------------ --------- ---------- ---------- ---------
Restated at 1 January 2019 37,350 10,312 (414) 8,537 (3,516) 52,269
Comprehensive (expense)/income
Loss for the year - - - - (14,464) (14,464)
Other comprehensive items
Actuarial loss on defined benefit
pension liability* - - (282) - - (282)
Reserve transfer - - - 87 (87) -
Currency translation differences - - - (1,682) - (1,682)
--------- ------------ --------- ---------- ---------- ---------
Total other comprehensive items - - (282) (1,595) (87) (1,964)
--------- ------------ --------- ---------- ---------- ---------
Total comprehensive items - - (282) (1,595) (14,551) (16,428)
--------- ------------ --------- ---------- ---------- ---------
Transactions with owners
Share option charge - - - - 1,422 1,422
Shares issued in relation to
the acquisition of
Lot.to Systems Limited (see
note V) 400 - 314 - - 714
--------- ------------ --------- ---------- ---------- ---------
Total transactions with owners 400 - 314 - 1,422 2,136
--------- ------------ --------- ---------- ---------- ---------
Total changes in equity 400 - 32 (1,595) (13,129) (14,292)
--------- ------------ --------- ---------- ---------- ---------
At 31 December 2019 37,750 10,312 (382) 6,942 (16,645) 37,977
--------- ------------ --------- ---------- ---------- ---------
* Net of deferred tax.
Consolidated Statement of cash flows
for the year ended 31 December 2020
2020 2019
Note GBP000 GBP000
Cash flows from operating activities
Cash generated from operations, before separately
disclosed items W 3,928 7,478
Interest received 13 62
Interest paid (84) (24)
Tax paid H (1,029) (1,356)
-------- --------
Net cash generated from operating activities
before separately disclosed items 2,828 6,160
Cash inflows - separately disclosed items - 90
Cash outflows - separately disclosed items F (484) (1,821)
-------- --------
Cash generated from operations 2,344 4,429
-------- --------
Cash flows from investing activities
Investment in joint ventures and associates - (184)
Disposal of Sportech Racing BV (net of transaction
costs) - 236
Consideration paid for Lot.to Systems Limited,
net of cash acquired (500) (729)
Receipt of Initial Payment for disposal of Global
Tote Business 6,180 -
Proceeds from sale of property, plant and equipment M - 1
Investment in intangible fixed assets L (1,650) (2,648)
Purchase of property, plant and equipment M (753) (1,169)
Net cash generated from/(used in) investing
activities 3,277 (4,493)
Cash flows used in financing activities
Principal paid on lease liabilities U (1,316) (1,399)
Interest paid on lease liabilities (339) (480)
Cash used in financing activities (1,655) (1,879)
-------- --------
Net increase/(decrease) in cash and cash equivalents 3,966 (1,943)
Effect of foreign exchange on cash and cash
equivalents (72) (407)
Cash and cash equivalents at the beginning of
the year R 15,565 17,915
-------- --------
Cash and cash equivalents at the end of the
year R 19,459 15,565
Less cash held by assets held for sale (7,638) -
-------- --------
Group cash and cash equivalents at the end of
the year 11,821 15,565
Represented by:
Cash and cash equivalents R 11,821 15,565
Less customer funds - continuing operations R (465) (2,580)
-------- --------
Adjusted net cash at the end of the year R 11,356 12,985
-------- --------
Notes to the Final Statement
For the year ended 31 December 2020
All accounting policies applied in this Preliminary Statement
are consistent with those in the full financial statements which
have yet to be published. The preliminary results for the year
ended 31 December 2020 were approved by the Board of Directors on
31 March 2021. The financial information set out in this
announcement does not constitute statutory financial statements for
the years ended 31 December 2020 and 2019 within the meaning of
Section 435 of the Companies Act 2006, but is extracted from those
financial statements. The auditors have reported on those financial
statements and have given an unqualified report which does not
contain a statement under Section 498 of the Companies Act
2006.
A. Reporting entity
Sportech PLC (the 'Company') is a company domiciled in the UK
and listed on the London Stock Exchange. The Company's registered
office is Collins House, Rutland Square, Edinburgh, Midlothian,
Scotland EH1 2AA. The consolidated financial statements of the
Company as at and for the year ended 31 December 2020 comprise the
Company, its subsidiaries, joint ventures and associates (together
referred to as the 'Group'). The principal activities of the Group
are the provision of pari-mutuel betting (B2C) and the supply of
wagering technology solutions (B2B). On 2 December 2020 the Group
agreed the disposal of its supply of wagering technology solutions
group, the "Global Tote Business" and on 31 January 2021 agreed the
disposal of its Bump 50:50 operation (see note I).
B. Going concern
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 financial
statements. Following the completion of agreed disposals in 2021,
the Group will realise significant cash, the Board will continue to
engage with shareholders to assess the optimal use of capital.
C. Basis of reporting
a. The accounting policies used in preparation of this
preliminary announcement have remained unchanged from those set out
in the Group's 2019 financial statements.
b. As noted above, the consolidated financial statements have
been extracted from the statutory financial statements which have
been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and
in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union. The financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of certain financial assets and financial
liabilities.
c. The preparation of consolidated 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. Details of the critical
judgements applied in the preparation of these financial statements
are included in the full statutory financial statements.
D. 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). 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. This is considered
the most reliable indicator as it is the closest approximation to
cash generated by underlying trade, excluding the impact of
separately disclosed 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
2020 2019
Note GBP000 GBP000
Operating costs per income statement (20,225) (26,430)
Add back:
Sports betting investment 261 1,773
Depreciation M,N 1,793 2,413
Amortisation, excluding acquired intangible
assets L 485 250
Amortisation of acquired intangible assets L 509 467
Impairment of property, plant and equipment
and right-of-use assets 4,349 5,020
Share option charge, excluding acceleration
of charge for departing management 347 676
Accelerated IFRS 2 charge for departing
management - 746
Separately disclosed items F 229 1,003
--------- ---------
Adjusted operating costs, pre sports betting
investment (12,252) (14,082)
--------- ---------
Adjusted EBITDA is calculated as below.
Restated
2020 2019
GBP000 GBP000
Revenue 19,966 33,571
Cost of sales (9,432) (15,228)
--------- ---------
Gross profit 10,534 18,343
Marketing and distribution costs (319) (839)
--------- ---------
Contribution 10,215 17,504
Adjusted operating income and costs (pre sports
betting investment) (12,252) (14,082)
--------- ---------
Adjusted EBITDA pre sports betting investment (2,037) 3,422
Sports betting investment (261) (1,773)
--------- ---------
Adjusted EBITDA (2,298) 1,649
--------- ---------
Sports Betting investment represents the time and cost the Group
has incurred on seeking to secure a Sports Betting licence in the
State of Connecticut and also in seeking partnerships across the
rest of the US in Sports Betting. It includes lobbying costs and
consultants, and also in prior year, included an allocation of
senior management time and travel. Of these costs, GBP261k (2019:
GBP699k) were external costs and GBPnil (2019: GBP1,074k) were
internal (payroll and travel, of which GBPnil was in respect of
Executive Directors (2019: GBP482k)).
Adjusted profit is also an adjusted performance measure used by
the Group. This uses adjusted EBITDA, 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
2020 2019
From continuing operations: GBP000 GBP000
Adjusted EBITDA (2,298) 1,649
Share option charge , excluding acceleration of charge
for departing management (347) (676)
Depreciation (1,793) (2,413)
Amortisation (excluding amortisation of acquired
intangibles) (485) (250)
Net finance costs (excluding certain finance costs
- note G) (254) (350)
-------- ---------
Adjusted loss before tax (5,177) (2,040)
Tax at 20.2% (2019: 19.9%) 1,045 405
-------- ---------
Adjusted loss after tax (4,132) (1,635)
-------- ---------
Adjusted loss before tax from continuing operations prior to
Sports Betting investment of GBP261k (2019: GBP1,773k) is GBP4,916k
(2019: GBP267k).
2020 2019
From discontinued operations: GBP000 GBP000
Adjusted EBITDA 4,632 5,891
Depreciation (1,998) (2,184)
Amortisation (3,376) (2,380)
Net finance costs (excluding certain finance costs) (68) (92)
-------- --------
Adjusted (loss)/profit before tax (810) 1,235
Tax at 71.3% (2019: 19.5%) 577 (241)
-------- --------
Adjusted (loss)/profit after tax (233) 994
-------- --------
E. Segmental reporting
2020
Sportech Sportech Corporate
Lotteries Venues costs Group
GBP000 GBP000 GBP000 GBP000
Revenue from food and beverage sales - 1,472 - 1,472
Revenue from rendering of services 2,898 15,596 - 18,494
----------- ----------- ------------ ---------
Total revenue 2,898 17,068 - 19,966
Cost of sales (808) (8,624) - (9,432)
----------- ----------- ------------ ---------
Gross profit 2,090 8,444 - 10,534
Marketing and distribution costs (8) (311) - (319)
----------- ----------- ------------ ---------
Contribution 2,082 8,133 - 10,215
Adjusted net operating costs (note D) (1,107) (9,218) (1,927) (12,252)
----------- ----------- ------------ ---------
Adjusted EBITDA (pre sports betting investment) 975 (1,085) (1,927) (2,037)
Sports betting investment - (261) - (261)
----------- ----------- ------------ ---------
Adjusted EBITDA 975 (1,346) (1,927) (2,298)
Share option charge - - (347) (347)
Depreciation (182) (1,595) (16) (1,793)
Amortisation (excluding amortisation of
acquired intangible assets) (235) - (250) (485)
----------- ----------- ------------ ---------
Segment result before amortisation of
acquired intangibles 558 (2,941) (2,540) (4,923)
Amortisation of acquired intangibles (509) - - (509)
Impairment of property, plant and equipment
and right-of-use assets - (4,349) - (4,349)
Separately disclosed items - (18) (211) (229)
----------- ----------- ------------ ---------
Operating profit/(loss) 49 (7,308) (2,751) (10,010)
Net finance costs (557)
---------
Loss before taxation from continuing operations (10,567)
Taxation 297
---------
Loss for the year from continuing operations (10,270)
Loss after tax from discontinued operations (2,562)
---------
Loss for the year (12,832)
---------
Discontinued operations were within the Sportech Racing and
Digital division which existed in prior years and to 31 December
2020 prior to classification as discontinued. The remaining
businesses in the former Racing and Digital division now form a new
division "Sportech Lotteries".
Assets
Sportech Sportech Corporate held
Lotteries Venues costs for sale Group
GBP000 GBP000 GBP000 GBP000 GBP000
Segment assets (excluding investments
and intercompany balances) 2,943 13,681 12,593 27,671 56,888
Segment liabilities (excluding intercompany
balances) (472) (8,659) (15,091) (7,507) (31,729)
----------- ----------- ------------ ---------- ---------
Other segment items - capital expenditure
Intangible assets (continuing operations) 230 - - - 230
Intangible assets (discontinued
operations) - - - 1,420 1,420
Property, plant and equipment (continuing
operations) 121 29 - - 150
Property, plant and equipment (discontinued
operations) - - - 603 603
----------- ----------- ------------ ---------- ---------
2019
Sportech Sportech Corporate
Lotteries Venues costs Group
Restated GBP000 GBP000 GBP000 GBP000
Revenue from food and beverage sales - 4,395 - 4,395
Revenue from rendering of services 4,745 24,431 - 29,176
----------- ----------- ------------ ---------
Total revenue 4,745 28,826 - 33,571
Cost of sales (1,210) (14,018) - (15,228)
----------- ----------- ------------ ---------
Gross profit 3,535 14,808 - 18,343
Marketing and distribution costs (15) (824) - (839)
----------- ----------- ------------ ---------
Contribution 3,520 13,984 - 17,504
Adjusted net operating costs (note D) (825) (11,756) (1,501) (14,082)
----------- ----------- ------------ ---------
Adjusted EBITDA (pre sports betting investment) 2,695 2,228 (1,501) 3,422
Sports betting investment - (1,773) - (1,773)
----------- ----------- ------------ ---------
Adjusted EBITDA 2,695 455 (1,501) 1,649
Share option charge, excluding acceleration
of charge for departing management - - (676) (676)
Depreciation (212) (2,169) (32) (2,413)
Amortisation (excluding amortisation of acquired
intangible assets) (8) - (242) (250)
----------- ----------- ------------ ---------
Segment result before amortisation of acquired
intangibles 2,475 (1,714) (2,451) (1,690)
Acceleration of IFRS 2 charge for departing
management - - (746) (746)
Amortisation of acquired intangibles (467) - - (467)
Impairment of property, plant and equipment - (5,020) - (5,020)
Separately disclosed items (net) - (342) (661) (1,003)
----------- ----------- ------------ ---------
Operating profit/(loss) 2,008 (7,076) (3,858) (8,926)
Net finance costs (735)
---------
Loss before taxation (9,661)
Taxation (5,793)
---------
Loss for the year - continuing operations (15,454)
Net profit from discontinued operations 990
---------
Loss for the year (14,464)
---------
Sportech
Racing Sportech Corporate
and Digital Venues costs Group
GBP000 GBP000 GBP000 GBP000
Segment assets (excluding investments and
intercompany balances) 35,187 22,991 8,622 66,800
Segment liabilities (excluding intercompany
balances) (7,892) (11,909) (9,022) (28,823)
------------- ----------- ------------ ---------
Other segment items
Capital expenditure - Intangible assets:
Continuing operations 130 - 46 176
Discontinued operations 2,472 - - 2,472
Capital expenditure - Property, plant and
equipment:
Continuing operations - 198 - 198
Discontinued operations 971 - - 971
------------- ----------- ------------ ---------
F. Separately disclosed items
Restated
2020 2019
Continuing operations Note GBP000 GBP000
Included in operating costs:
Redundancy and restructuring costs in respect
of the rationalisation and modernisation of
the business - 87
Onerous contract provisions and other losses
resulting from exit from Californian operations - (184)
Losses from Striders Sports Bar (S&S JV) - 249
Corporate activity costs (a) 118 81
Costs in relation to the Spot the Ball VAT refund (b) 44 15
Costs in relation to legacy tax disputes (net
of provision release) - (152)
Lot.to Systems Limited acquisition costs - 51
One off start-up costs of new ventures, including
new venue builds and joint ventures - 266
Costs in relation to exiting the Group's interests
in India (c) 65 20
UK defined benefit pension scheme buy-out 2 570
229 1,003
------- ---------
Discontinued operations
Included in operating costs I 1,224 137
Total included in operating costs 1,453 1,140
------- ---------
Included in finance costs:
Interest accrued on corporate tax potentially
due and unpaid at the balance sheet date on
STB refund received in 2017 150 151
Interest paid on VAT settlement reached in 2019 83 -
------- ---------
G 233 151
------- ---------
Net separately disclosed items 1,686 1,291
------- ---------
(a) Corporate activity costs
Costs incurred during the year in relation to the approach by
Standard General LLP to acquire the entire equity of Sportech PLC
and other corporate activity.
(b) Costs in relation to the Sport the Ball refund
Advice continues to be received in relation to the corporate tax
filings in relation to the Spot the Ball VAT refund in 2016.
(c) Costs in relation to exiting the Group's interests in India
The Group has been required to defend a claim for costs from the
joint venture partner in India and is also incurring costs in
relation to dissolving the holding company of the joint venture in
Mauritius, the issue is ongoing.
Below is a summary of exceptional cash outflows from separately
disclosed items:
Restated
2020 2019
GBP000 GBP000
-------------------------------------------------------- -------- ----------
Continuing operations - cash outflows from separately
disclosed items:
Redundancy and restructuring costs in respect of
the rationalisation and
modernisation of the business (18) (661)
Expenses in relation to the UK defined benefit
pension scheme "buy-out" (2) (336)
UK defined benefit pension scheme "buy-in" insurance
contract purchased - (234)
Acquisition costs in relation to Lot.to Systems
Limited - (51)
Costs in relation to the Spot the Ball VAT refund - (60)
Costs in relation to corporate activity (127) -
Costs in relation to legacy tax disputes (17) (68)
Transaction costs - disposal of Global Tote Business (16) -
One off start-up costs of new ventures, including
new venue builds and joint ventures (224) -
Costs in relation to the Group's lease in Norco,
California - (70)
Costs in relation to exiting the Group's interests
in India (65) (20)
-------------------------------------------------------- -------- ----------
(469) (1,500)
Cash outflows from separately disclosed items -
discontinued operations (net) (15) (231)
-------------------------------------------------------- -------- ----------
(484) (1,731)
-------------------------------------------------------- -------- ----------
G. Net finance costs
Restated
2020 2019
Continuing operations GBP000 GBP000
Finance costs:
Interest accrued and paid on tax liabilities (233) (151)
Interest on lease obligations (note U) (265) (402)
Foreign exchange loss on financial assets and liabilities
denominated in foreign currency (70) (210)
Unwinding of interest on discounted provisions (note
T) - (24)
------- ---------
Total finance costs (568) (787)
------- ---------
Finance income:
Interest received on bank deposits 11 49
Interest on defined benefit pension obligation - 3
------- ---------
Total finance income 11 52
------- ---------
Discontinued operations (note I) (68) 40
Net finance costs (625) (695)
------- ---------
Of the above amounts the following have been excluded for the
purposes of deriving the alternative performance measures in note
D.
Restated
2020 2019
GBP000 GBP000
Foreign exchange loss on financial assets and liabilities
denominated in foreign currency (70) (210)
Interest accrued and paid tax liabilities (233) (151)
Unwinding of interest on discounted provisions (note
T) - (24)
(303) (385)
------- ---------
H. Taxation
The Group's tax charge from continuing and discontinuing
operations comprises:
2020 2019
GBP000 GBP000
Current tax:
Current tax on loss for the year 1,176 1,115
Adjustments in respect of prior years (1,895) 136
-------- --------
Total current tax (719) 1,251
-------- --------
Deferred tax:
Origination and reversal of temporary differences 169 (1,509)
Change in rates (1) 1
Adjustments in respect of prior years (204) 104
Derecognition of previously recognised deferred tax
assets 986 6,187
-------- --------
Total deferred tax 950 4,783
-------- --------
Total tax charge 231 6,034
-------- --------
2020 2019
GBP000 GBP000
Total tax (credit)/charge in continuing operations (297) 5,793
Total tax charge in discontinued operations 528 241
------- -------
Total tax charge 231 6,034
------- -------
The taxation on the Group's loss before taxation differs from
the theoretical amount that would arise using the weighted average
tax rate applicable to profits and losses of the consolidated
entities as follows:
2020 2019
GBP000 GBP000
Loss for the year (12,832) (14,464)
Total tax charge 231 6,034
--------- ---------
Loss before tax (12,601) (8,430)
--------- ---------
Tax calculated at domestic tax rates applicable to
(losses)/profits in the respective countries (2,669) (1,762)
Tax effects of:
- expenses not deductible for tax purposes net of
income not taxable 449 1,382
- foreign taxes paid not provided for 835 -
- adjustments in respect of prior years - current
tax (1,895) 136
- adjustments in respect of prior years - deferred
tax (204) 104
- effect of change in rates (1) 1
- deferred tax not recognised during the year 2,730 -
- deferred tax not previously provided - (14)
- derecognition of previously recognised deferred
tax assets 986 6,187
--------- ---------
Total tax charge 231 6,034
--------- ---------
US deferred tax assets were revalued downwards by GBP986k in
2020 (2019: GBP6,187k, predominantly foreign taxes paid in the
Dominican Republic), following a review of recoverability. Group
cash flow forecasts were used and any assets not showing as
recoverable within five years were considered not recoverable and a
valuation allowance was charged to the income statement.
These financial statements account for the change in the UK
Corporation Tax rate from 17% to 19% based on enacted legislation.
Deferred tax in the UK is provided at 19%. There are no changes
expected in the US federal income tax rate from the current rate of
21%.
Included within the Group's current tax liabilities is a
provision of GBP4.6m for an uncertain tax position in relation to
the treatment of the gain included in the 2016 financial statements
for the Spot the Ball VAT refund. Included in current tax
receivable is GBP1.4m in relation to a refund, which was
subsequently received in February 2021, for overpaid tax in
relation to the disposal of The Football Pools trade and assets in
June 2017.
An analysis of the current tax liabilities is as follows:
2020 2019
Note GBP000 GBP000
At 1 January 4,880 6,563
Release of provision - transition to IFRIC 23 - (1,562)
-------- --------
4,880 5,001
Charged to the income statement - continuing operations (1,012) 1,073
Charged to the income statement - discontinued
operations 293 178
Paid during the year - continuing operations (686) (1,232)
Paid during the year - discontinued operations (343) (124)
Acquired with subsidiary - 3
Transferred to liabilities associated with assets 117 -
held for sale I
Foreign exchange movements 9 (19)
At 31 December 3,258 4,880
-------- --------
Included in:
Current assets (1,442) -
Current liabilities 4,700 4,880
-------- --------
3,258 4,880
-------- --------
I. Discontinued operations and assets held for sale
The net assets at 31 December 2020 of the identified disposal
groups and asset held for sale, which have been presented on the
Group balance sheet as assets held for sale in current assets and
liabilities directly associated with assets held for sale in
current liabilities, are as follows:
Global Tote Bump (Worldwide) Sports Haven
Group Inc. property
Note Ia Note Ib Note Ic Total
Note GBP000 GBP000 GBP000 GBP000
------------------------------- ------ ------------ ----------------- ------------- --------
Intangible fixed assets L 4,309 235 - 4,544
Property, plant and equipment M 6,675 207 1,166 8,048
Right-of-use assets N 833 - - 833
Deferred tax assets P 27 - - 27
Trade and other receivables 3,718 71 - 3,789
Inventories 2,675 - - 2,675
Income tax receivable H 117 - - 117
Cash and cash equivalents 7,514 124 - 7,638
--------------------------------------- ------------ ----------------- ------------- --------
Total assets held for
sale 25,868 637 1,166 27,671
--------------------------------------- ------------ ----------------- ------------- --------
Trade and other payables (5,186) (87) - (5,273)
Provisions T (7) - - (7)
Lease liabilities U (998) - - (998)
Retirement benefit liability (1,229) - - (1,229)
--------------------------------------- ------------ ----------------- ------------- --------
Total liabilities directly
associated with assets
held for sale (7,420) (87) - (7,507)
--------------------------------------- ------------ ----------------- ------------- --------
Ia) Global Tote Group
At 31 December 2020, the Board were of the view that the most
probable route of realising future economic benefit through its
Global Tote Business was through a sale rather than continuing to
operate it as part of the Sportech Group.
On 1 December 2020, a sale and purchase agreement was signed,
and Sportech PLC shareholders approved the disposal of the Global
Tote Business, being the Group's B2B Racing and Digital division,
excluding its Lottery operations and 123 Racing website, on 24
December 2020 for a total consideration of GBP30.9m (excluding debt
and working capital adjustments). An initial payment of GBP6,180k
was received from the acquirer, BetMakers Technology Group Ltd
("BetMakers"), on 29 December 2020, this receipt is unconditional
and non-refundable.
In accordance with IFRS 5, this business has been treated as an
asset held for sale. As at the balance sheet date, the sale was
deemed to be highly probable, and the disposal will signal a
departure from a major business line in which the Group previously
operated. Accordingly, it has also been treated as a discontinued
operation in these financial statements.
Completion of the disposal is conditional upon (a) BetMakers
having received regulatory approval or waivers in a form acceptable
to the Purchaser (acting reasonably) in respect of each of the
licences, authorisations, approvals and permits held by the
Disposal Group (including the Relevant US Licences), which are
necessary for the continued operation of the Business; and (b) no
material adverse change having occurred in the period between the
date of this Agreement and the earlier of (a) Completion, and (b)
30 April 2021. As at the date of approval of these financial
statements there have been no material adverse matters and
regulatory approvals or waivers have progressed such that the Board
consider the completion of the transaction to be virtually certain.
The disposal group was previously included within the Racing and
Digital segment.
A reconciliation of the net loss of discontinued operations is
shown below.
2020 2019
Global Tote Group: GBP000 GBP000
----------------------------------------------------- --------- ---------
Revenue 25,052 29,210
Cost of sales, marketing and distribution and
adjusted operating expenses (19,525) (23,618)
----------------------------------------------------- --------- ---------
Adjusted EBITDA 5,527 5,592
Depreciation and amortisation (5,083) (4,323)
Profit on disposal of property, plant and equipment - 1
Separately disclosed items (1,159) (137)
Finance (costs)/income (113) 16
-----------------------------------------------------
(Loss)/profit before tax (828) 1,149
Tax, excluding tax arising on disposal (528) (241)
----------------------------------------------------- --------- ---------
(Loss)/profit after tax (1,356) 908
----------------------------------------------------- --------- ---------
Net cash flow from operating activities 6,099 3,963
Net cash flow from investing activities (1,905) (3,141)
Net cash flow from financing activities (436) (457)
----------------------------------------------------- --------- ---------
Net increase in cash generated by the disposal
group 3,758 365
----------------------------------------------------- --------- ---------
Separately disclosed items incurred in the period were
redundancy and restructuring costs in respect of a rationalisation
of this business including a provision for dilapidation costs on an
expiring lease (GBP155k) and disposal costs of GBP1,004k (2019:
redundancy and restructuring, GBP227k and settlement from IP claim
net of costs of GBP90k). Completion is expected during H1 2021.
Ib) Bump (Worldwide) Inc. ("Bump")
At 31 December 2020, the Board were of the view that the most
probable route of realising future economic benefit through its
Bump business was through a sale rather than continuing to operate
it as part of the Sportech Group.
The Group had advanced discussions with a potential buyer
through 2020 and the Board was committed to disposing of Bump
within 12 months. On 31 January 2021, a sale and purchase agreement
was signed with Canada Bank Note Company, Limited ("CBN") for
consideration of CAD$10.0m (c.GBP5.7m), which includes a contingent
CAD$2.0m (c.GBP1.1m) earn out which is payable if 2022 revenues are
CAD$6.5m or greater.
In accordance with IFRS 5, this business has been treated as an
asset held for sale. As at the balance sheet date, the sale was
deemed to be highly probable, and the disposal will signal a
departure from a major business line in which the Group previously
operated. Accordingly, it has also been treated as a discontinued
operation in these financial statements.
Completion of the disposal will occur on the earlier of CBN
being satisfied that Bump has received the requisite waivers, new
licences, consents for change in ownership of the company, or
transfer (as applicable) with respect to the Gaming Licences
designated as "required" in the SPA or 31 July 2021. The disposal
group was previously included within the Racing and Digital
segment.
A reconciliation of the net loss of discontinued operations is
shown below.
2020 2019
Bump (Worldwide) Inc.: GBP000 GBP000
------------------------------------------------ -------- --------
Revenue 703 2,002
Cost of sales, marketing and distribution and
adjusted operating expenses (1,598) (1,703)
------------------------------------------------ -------- --------
Adjusted EBITDA (895) 299
Depreciation and amortisation (291) (241)
Separately disclosed items (65) -
Finance income 45 24
------------------------------------------------ -------- --------
(Loss)/profit before tax (1,206) 82
Tax, excluding tax arising on disposal - -
------------------------------------------------ -------- --------
(Loss)/profit after tax (1,206) 82
------------------------------------------------ -------- --------
Net cash flow from operating activities (801) 21
Net cash flow from investing activities (118) (302)
------------------------------------------------ -------- --------
Net decrease in cash generated by the disposal
group (919) (281)
------------------------------------------------ -------- --------
Completion is expected during H1 2021 and at the latest 31 July
2021.
Ic) Sports Haven land and building
At 31 December 2020, the Board were of the view that the most
probable route of realising future economic benefit from its
freehold property at 600 Long Wharf Drive, Connecticut, USA was
through a sale rather than continuing to occupy it as part of the
Venues Operating Segment.
An offer was received in H2 2020 and an SPA was signed between
the parties on 13 November 2020 for Sportech to sell the property.
Final terms were agreed in early 2021, for consideration of GBP4.4m
($6.0m).
The SPA includes a leaseback clause, whereby Sportech shall
lease back the property for a period not to exceed 18 months from
the date of Closing. The lease will be triple net and have a
monthly rental of $50k per month.
The Board consider that the requirements of IFRS 5 have been met
as at 31 December 2020, in particular that management are committed
to a plan to sell, the asset is available for immediate sale, an
active programme to locate a buyer is initiated, the sale is highly
probable to complete within 12 months, the sale price is reasonable
and actions required to complete the sale indicate it is unlikely
the plan will significantly change or be withdrawn. As such, the
land and buildings at 600 Long Wharf Drive, with net book value as
at this date of GBP1,166k have been classified as Held for Sale and
separately disclosed outside of property, plant and equipment
within Assets held for sale. The asset had previously been included
in the Sportech Venues segment.
J. (Loss)/earnings per share
(a) Basic
Basic (loss)/earnings per share is calculated by dividing the
(loss)/profit attributable to equity holders of the Parent Company
by the weighted average number of ordinary shares in issue during
the year.
2020 2019
------------------------------------- -------------------------------------
Continuing Discontinued Total Continuing Discontinued Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
(Loss)/profit attributable
to the owners of the
Company (10,270) (2,562) (12,832) (15,454) 990 (14,464)
Weighted average number
of ordinary shares
in issue ('000) 188,751 188,751 188,751 188,543 188,543 188,543
----------- ------------- --------- ----------- ------------- ---------
Basic (loss)/earnings
per share (5.4)p (1.4)p (6.8)p (8.2)p 0.5p (7.7)p
----------- ------------- --------- ----------- ------------- ---------
(b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. Where there
is a loss attributable to owners of the Company, the earnings per
share is not diluted.
2020 2019
------------------------------------- -------------------------------------
Continuing Discontinued Total Continuing Discontinued Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
(Loss)/profit attributable
to the owners of the
Company (10,270) (2,562) (12,832) (15,454) 990 (14,464)
Weighted average number
of ordinary shares
in issue ('000) 188,751 188,751 188,751 188,543 188,543 188,543
Dilutive potential N/A N/A N/A N/A N/A N/A
ordinary shares
----------- ------------- --------- ----------- ------------- ---------
Total potential ordinary
shares 188,751 188,751 188,751 188,543 188,543 188,543
----------- ------------- --------- ----------- ------------- ---------
Basic (loss)/earnings
per share (5.4)p (1.4)p (6.8)p (8.2)p 0.5p (7.7)p
----------- ------------- --------- ----------- ------------- ---------
The number of potentially dilutive shares not taken into account
in respect of the VCP is unlimited.
( c ) Adjusted
Adjusted EPS is calculated by dividing the adjusted loss after
tax (as defined in note D) attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the
year.
2020 2019
---------------------------------------- --------------------------------------
Weighted Weighted
Adjusted average Adjusted average
loss after number loss number
tax of shares Per share after of shares Per share
amount tax amount
Continuing operations GBP000 GBP000 Pence GBP000 GBP000 Pence
Basic adjusted EPS (4,132) 188,751 (2.2)p (1,635) 188,543 (0.9)p
Diluted adjusted EPS (4,132) 188,751 (2.2)p (1,635) 188,543 (0.9)p
K. Goodwill
Goodwill cost brought forward arose on two acquisitions i) eBet
Online, Inc. in December 2012 of GBP5.5m "eBet" and ii) Lot.to
Systems Limited in February 2019 "Lot.to". The eBet goodwill was
impaired in full in 2016 following an impairment review. This fully
impaired goodwill is in the Sportech Racing and Digital division
and as at 31 December 2020 was transferred to assets held for sale.
The Lot.to goodwill is in the Sportech Lotteries division within
continuing operations and is attributable to the knowledge and
expertise of the workforce.
Movements in the Group's goodwill are shown below:
2020 2019
--------------------------- ---------------------------
eBet Lot.to Total eBet Lot.to Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 5,548 604 6,152 5,548 - 5,548
Addition - Lot.to Systems
Limited - - - - 604 604
Transferred to held for
sale (5,548) - (5,548) - - -
-------- ------- -------- -------- ------- --------
At 31 December 2020 - 604 604 5,548 604 6,152
-------- ------- -------- -------- ------- --------
Accumulated impairment charges
At 1 January (5,548) - (5,548) (5,548) - (5,548)
Transferred to held for
sale 5,548 - 5,548 - - -
-------- ------- -------- -------- ------- --------
At 31 December 2020 - - - (5,548) - (5,548)
-------- ------- -------- -------- ------- --------
Closing net book value - 604 604 - 604 604
-------- ------- -------- -------- ------- --------
L. Intangible fixed assets
Customer
2020 contracts
and relationships Software Licences Other Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2020 862 37,558 17,024 2,960 58,404
Additions - continuing operations - 230 - - 230
Additions - discontinued
operations - 1,366 - 54 1,420
Transferred to held for sale (862) (33,801) (11,328) (3,014) (49,005)
At 31 December 2020 - 5,353 5,696 - 11,049
------------------- ----------- ----------- -------- ---------
Accumulated amortisation
At 1 January 2020 862 29,938 13,178 3,715 47,693
Charge for year - continuing
operations - 944 50 - 994
Charge for year - discontinued
operations - 3,376 - - 3,376
Transferred to held for sale (862) (30,664) (12,349) (3,715) (47,590)
At 31 December 2020 - 3,594 879 - 4,473
------------------- ----------- ----------- -------- ---------
Exchange differences at 1
January 2020 - 1,158 1,989 1,077 4,224
Movement in the year - (74) (201) (53) (328)
Transferred to held for sale - (1,084) (1,021) (1,024) (3,129)
------------------- ----------- ----------- -------- ---------
Exchange differences at 31
December 2020 - - 767 - 767
------------------- ----------- ----------- -------- ---------
Net book amount at 31 December
2020 - 1,759 5,584 - 7,343
------------------- ----------- ----------- -------- ---------
Of the amounts capitalised in the year in continuing operations,
GBP230k arose from capitalising staff costs for development
expenditure (2019: GBP130k). Of the amounts capitalised in the year
in discontinued operations, GBP1,420k arose from capitalising staff
costs for development expenditure (2019: GBP1,904k). Amortisation
has been included within operating costs.
Impairment - Licences
The Group holds a licence in perpetuity to offer pari-mutuel
off-track betting in the State of Connecticut in the US for its
Venues division. This asset has a book value in USD at the
reporting date, prior to any impairment that may be considered
necessary, of GBP5,545k ($7,569k, 2019: GBP5,730k, $7,569k). Given
this licence is in perpetuity, the book value of the asset is not
amortised and the useful economic life allocated to the asset is
indefinite.
As required by IAS 36, an impairment test has been carried out
as at 31 December 2020. In testing for impairment, other assets
used solely to generate cash flows in the Venues CGU are also
included, totalling GBP9,876k, $13,479k (2019: GBP8,756k,
$11,567k).
The recoverable amount of the asset has been determined based on
a value-in-use calculation. The key base case assumptions made in
calculating the value-in-use were:
- EBITDA forecasts assume year-on-year handle decline in the
core operating business of 5% in 2021 and 1% per annum thereafter
and 1% decline into perpetuity;
- 3% increase in online handle in 2021, 5% in 2022, 2% in 2023 and 2024 and 2% into perpetuity;
- 61% increase in handle at our Stamford venue in 2021, 5% in
2022 and handle is assumed to remain flat thereafter and into
perpetuity (handle is assumed to be transferrable to other nearby
venues or to online when the lease expires in May 2025);
- a 90% increase in core F&B revenues, which excludes the
Stamford venue, in 2021 reflecting recovery from COVID-19
restrictions, a 5% increase in 2022 and thereafter stable revenues
into perpetuity;
- F&B revenues at the Stamford venue are forecasted to
increase by 93% in 2021, again reflecting recovery from COVID-19
restrictions, to increase a further 50% in 2022 and 32% in 2023 and
remain flat thereafter to the expiry of the lease in May 2025;
- capital expenditure was included in the cash flows at
management's best estimate of industry norm for reinvestment in
retail outlets of the kind under review; and
- a post-tax discount rate of 10.5% (2019: 9.5%) was used
representing a market-based weighted average cost of capital
appropriate for the Sportech Venues CGU. The pre-tax discount rate
was 14.7% (2019: 13.3%).
The above assumptions are together considered by management to
be the most likely trading performance outcome for the CGU, having
taken into account past experience and knowledge of the future
trading environment.
Following the impairment review, the recoverable amount of those
assets was deemed to be GBP10,967k and accordingly no impairment
was identified (2019: no impairment).
The below assumptions represent a reasonable downside case for
sensitivity purposes. This would reduce the carrying value of the
trading assets in the business to GBPnil, being an impairment of
GBP787k. The perpetual licence's net realisable value is considered
to be in excess of its carrying value of GBP5,545k and therefore no
impairment arises. The net realisable value of the freehold
property in Bradley, Connecticut is also considered to be in excess
of its carrying value of GBP3,543k and therefore similarly no
impairment arises.
- In 2021, extra income from enforcement of online exclusivity
in Connecticut is only realised at 2020 levels;
- Opex savings in the plan are not achieved and restructuring savings not achieved;
- Stamford's handle remains at 2019 levels;
- Online handle growth reduced to 1% per annum and into perpetuity; and
- Stamford food and beverage achieves breakeven margin only through to the end of the lease.
For information, if a 2% increase in the post-tax discount rate
to 12.5% was used in the Base Case model this would lead to an
impairment of GBP170k.
Customer
2019 contracts
and relationships Software Licences Other Total
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2019 862 32,870 16,874 2,792 53,398
Additions - continuing operations - 176 - - 176
Additions - discontinued
operations - 2,304 - 168 2,472
Acquired with subsidiary - 1,377 150 - 1,527
Transferred from property,
plant and equipment - 831 - - 831
At 31 December 2019 862 37,558 17,024 2,960 58,404
------------------- ----------- ----------- -------- --------
Accumulated amortisation
At 1 January 2019 862 26,992 13,133 3,609 44,596
Charge for year - continuing
operations - 672 45 - 717
Charge for year - discontinued
operations - 2,274 - 106 2,380
At 31 December 2019 862 29,938 13,178 3,715 47,693
------------------- ----------- ----------- -------- --------
Exchange differences at 1
January 2019 - 1,447 2,225 1,077 4,749
Movement in the year - (289) (236) - (525)
------------------- ----------- ----------- -------- --------
Exchange differences at 31
December 2019 - 1,158 1,989 1,077 4,224
------------------- ----------- ----------- -------- --------
Net book amount at 31 December
2019 - 8,778 5,835 322 14,935
------------------- ----------- ----------- -------- --------
M. Property, plant and equipment
Long leasehold
2020 Short leasehold and owned Assets in
land and land and Plant and Fixtures the course
buildings buildings machinery and fittings of construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2020 299 16,274 11,785 5,423 74 33,855
Additions - continuing
operations - - 121 - 29 150
Additions - discontinued
operations - - 589 - 14 603
T r a ns f e rred to held
for sale (215) (7,965) (9,473) (1,870) (86) (19,609)
--------------- -------------- ----------- -------------- ----------------- --------
At 31 December 2020 84 8,309 3,022 3,553 31 14,999
--------------- -------------- ----------- -------------- ----------------- --------
Accumulated depreciation
At 1 January 2020 162 11,158 4,260 4,225 - 19,805
Charge for year -
continuing
operations - 401 203 382 - 986
Charge for year -
discontinued
operations 1 39 1,570 8 - 1,618
T r a ns f e rred to held
for sale (79) (8,790) (4,520) (1,974) - (15,363)
Impairment - 1,888 - 633 - 2,521
--------------- -------------- ----------- -------------- ----------------- --------
A t 31 D e c e m b er
2020 84 4,696 1,513 3,274 - 9,567
--------------- -------------- ----------- -------------- ----------------- --------
Exchange differences at
1 January 2020 29 1,974 1,198 425 - 3,626
Movement in the year - (27) (24) (126) (2) (179)
T r a ns f e rred to held
for sale (29) (1,825) (1,846) (104) 2 (3,802)
--------------- -------------- ----------- -------------- ----------------- --------
Exchange differences at
31 December - 122 (672) 195 - (355)
--------------- -------------- ----------- -------------- ----------------- --------
N e t b o ok am o u nt
at 31 D e c e m b er 2020 - 3,735 837 474 31 5,077
--------------- -------------- ----------- -------------- ----------------- --------
Depreciation charges have been included in operating costs.
Impairment
Management considered that indicators of impairment of assets at
the Stamford sports bar venue in Connecticut, USA had arisen during
the six months to 30 June 2020 based on its trading performance,
the likely recovery from forced closure during the COVID-19
pandemic and also changes to strategy in relation to closure of
nearby venues. As a result, an impairment test was carried out to
determine the value-in-use of the assets at the venue. The carrying
value of the assets at 30 June 2020, prior to any impairment, was
GBP2,521k. The following key assumptions were made in the
value-in-use calculation:
- The break clause will be activated to end the lease in June
2025 and the trade at the venue will terminate;
- Handle was assumed to remain flat through the period at 2019 levels to June 2025;
- F&B revenues are forecasted to remain flat through to June
2025 at management's expected "post-pandemic" levels;
- There will be no capital expenditure; and
- A post-tax discount rate of 9.5% (2019: 9.5%) was used
representing a market-based weighted average cost of capital
appropriate for the Sportech Venues CGU.
Following the impairment review, the recoverable amount of those
assets was deemed to be GBPnil and accordingly an impairment of
GBP2,521k was identified and has been charged to the income
statement within operating costs.
No further indicators of impairment of property, plant and
equipment arose in the second half of the year.
Long leasehold
2019 Short leasehold and owned Assets in
land and land and Plant and Fixtures the course
buildings buildings machinery and fittings of construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2019 246 16,249 10,952 5,323 1,016 33,786
Additions - continuing
operations - - - 198 - 198
Additions - discontinued
operations - - 931 2 38 971
Acquired with subsidiary - - - 1 - 1
Disposal - - (29) - (709) (738)
T r a ns f e r 53 25 (69) (101) (271) (363)
--------------- -------------- ----------- -------------- ----------------- --------
At 31 December 2019 299 16,274 11,785 5,423 74 33,855
--------------- -------------- ----------- -------------- ----------------- --------
Accumulated depreciation
At 1 January 2019 139 5,517 2,231 3,788 709 12,384
Charge for year -
continuing
operations 2 549 255 565 - 1,371
Charge for year -
discontinued
operations 21 - 1,803 10 - 1,834
Disposal - - (29) - (709) (738)
Transfer - 72 - (138) - (66)
Impairment - 5,020 - - - 5,020
--------------- -------------- ----------- -------------- ----------------- --------
A t 31 D e c e m b er 2019 162 11,158 4,260 4,225 - 19,805
--------------- -------------- ----------- -------------- ----------------- --------
Exchange differences at 1
January 2019 36 2,326 1,470 494 609 4,935
Movement in the year (7) (352) (272) (69) (609) (1,309)
--------------- -------------- ----------- -------------- ----------------- --------
Exchange differences at 31
December 2019 29 1,974 1,198 425 - 3,626
--------------- -------------- ----------- -------------- ----------------- --------
N e t b o ok am o u nt at
31 D e c e m b er 2019 166 7,090 8,723 1,623 74 17,676
--------------- -------------- ----------- -------------- ----------------- --------
The Group undertook a review of its asset registers during the
year and concluded that certain transfers between asset categories
was required in order to correctly define the nature of each asset
and the associated accumulated depreciation.
The impairment in 2019 arose on assets are the Stamford Sports
bar in Connecticut, USA, based on its trading performance. The
carrying value of the assets following an impairment being charged
to the income statement of GBP5,020k was GBP2,582k.
N. Right-of-use assets
2020 Short leasehold Long leasehold
land and land and Plant & Fixtures
buildings buildings Vehicles machinery and fittings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2020 2,711 4,987 237 - 40 7,975
Additions - continuing operations 304 - 29 - 13 346
Additions - discontinued operations 73 - 30 205 - 308
Transferred to held for sale (504) (630) (267) (205) - (1,606)
At 31 December 2020 2,584 4,357 29 - 53 7,023
--------------- -------------- ---------- ---------- ------------- --------
Accumulated depreciation
At 1 January 2020 941 341 97 - 13 1,392
Charge for year - continuing
operations 658 133 2 - 14 807
Charge for year - discontinued
operations 151 74 97 58 - 380
Reassessment of lease term - 2,231 - - - 2,231
Impairment - 1,828 - - - 1,828
Transferred to held for sale (329) (150) (194) (58) - (731)
A t 31 D e c e m b er 2020 1,421 4,457 2 - 27 5,907
--------------- -------------- ---------- ---------- ------------- --------
Exchange differences at 1 January
2020 (74) (189) (6) - (2) (271)
Movement in the year (18) 268 (1) (3) - 246
Transferred to held or sale 12 21 6 3 - 42
--------------- -------------- ---------- ---------- ------------- --------
Exchange differences at 31
December 2020 (80) 100 (1) - (2) 17
--------------- -------------- ---------- ---------- ------------- --------
N e t b o ok am o u nt at
31 D e c e m b er 2020 1,083 - 26 - 24 1,133
--------------- -------------- ---------- ---------- ------------- --------
Depreciation charges have been included in operating costs.
Reassessment of lease assumption - break clause
Management had previously assumed that the break clause in the
lease of the Stamford sports bar venue in Connecticut, USA would
not be exercised, and that the venue would be occupied until the
expiry of the lease in May 2035. On 30 June 2020, management took
the decision that the most likely scenario was that the break
clause would be exercised, and the lease terminated in June 2025.
As a result, the lease liability has been remeasured resulting in a
reduction in the liability (see note U) and a corresponding
reduction in the right-of-use asset.
Impairment
Management considered that indicators of impairment of the
right-of-use assets of the Stamford sports bar lease in
Connecticut, USA had arisen during the period to 30 June 2020,
based on its trading performance, the likely recovery from forced
closure during the COVID-19 pandemic and also changes to strategy
in relation to closure of nearby venues. As a result, an impairment
test was carried out to determine the value-in-use of the
right-of-use asset in relation to the lease at the venue. The
carrying value of the asset at 30 June 2020, prior to any
impairment, was GBP1,827k. The following same key assumptions were
made in the value-in-use calculation as were used in the impairment
test of the property, plant and equipment at the venue (note
M).
Following the impairment review, the recoverable amount of those
assets was deemed to be GBPnil and accordingly an impairment of
GBP1,828k was identified and has been charged to the income
statement within operating costs.
Short leasehold
land and Long leasehold Fixtures
buildings land and buildings Vehicles and fittings Total
2019 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2019 - on transition
to IFRS 16 2,685 4,987 237 26 7,935
Additions - continuing operations 26 - - 14 40
At 31 December 2019 2,711 4,987 237 40 7,975
--------------- ------------------- ---------- ------------- --------
Accumulated depreciation
Charge for year - continuing
operations 763 266 - 13 1,042
Charge for year - discontinued
operations 178 75 97 - 350
A t 31 D e c e m b er 2019 941 341 97 13 1,392
--------------- ------------------- ---------- ------------- --------
E x c hang e d i f f e r e n
c es arising during the year (74) (189) (6) (2) (271)
--------------- ------------------- ---------- ------------- --------
N e t b o ok am o u nt at 31
D e c e m b er 2019 1,696 4,457 134 25 6,312
--------------- ------------------- ---------- ------------- --------
O. Trade and other receivables
2020 2019
GBP000 GBP000
N o n -cur r e nt
Trade receivables - 877
L e s s p ro vis i on f or i mp air m e nt of r e c
e i v a bl es - (566)
------------- -------
T r ad e r e c e i v a bl es - n et - 311
Other receivables 156 188
N o n -cur r e nt t r ade and o t h er r e c e i v
a bl es 156 499
------------- -------
C ur r e n t
T r ad e r e c e i v a bl es 778 5,712
L e s s p ro vis i on f or i mp air m e nt of r e c
e i v a bl es (111) (309)
------------- -------
T r ad e r e c e i v a bl es - n et 667 5,403
O t h e r r e c e i v a bl es 62 834
A c c ru e d i n c ome 292 363
P r e p a y m e n t s 496 1,003
------------- -------
C ur r e n t t r ade and o t h er r e c e i v a bl
es 1,517 7,603
------------- -------
T o t a l t r ade and o t h er r e c e i v a bl es 1,673 8,102
------------- -------
The fair value of trade and other receivables is not considered
to be different from the carrying value recorded above.
P. Deferred tax
T h e m ov e m e nt on t he n et d ef e r r ed tax ba l an ce is
as f o l l o w s:
Asset Liability Net
2020 2020 2020 2019
Note GBP000 GBP000 GBP000 GBP000
N e t d ef e r r ed tax ass et at
1 Janua ry 990 (182) 808 5,979
Transition to IFRS 16 - - - (146)
Income statement (charge)/credit -
continuing operations H (803) 88 (715) (4,720)
Income statement charge - discontinued
operations (235) - (235) (63)
Business combination - - - (271)
T a x c r edi t ed di r ectly to other
c omp r ehensi ve in c ome 88 - 88 117
Deferred tax transferred to assets
held for sale I (27) - (27) -
E x c hang e d i f f e r e n c es (9) - (9) (88)
-------- ----------- -------- ---------
N e t d ef e r r ed tax ass et at
31 De c e mb er 4 (94) (90) 808
-------- ----------- -------- ---------
Included in:
Non-current assets 4 - 4 990
Current liabilities - (94) (94) (89)
Non-current liabilities - - - (93)
-------- ----------- -------- ---------
4 (94) (90) 808
-------- ----------- -------- ---------
D eferre d tax a ss e ts
Losses Other
Capital and foreign temporary
Pension allowances tax credits differences Total
GBP000 GBP000 GBP000 GBP000 GBP000
A t 1 Janua ry 2019 226 829 3,311 1,613 5,979
Transition to IFRS 16 - - - (146) (146)
In c om e s t a t e m e nt charge
- continuing operations (277) (809) (3,236) (487) (4,809)
In c om e s t a t e m e nt charge
- discontinued operations (64) 1 - - (63)
T a x credi t ed di r ectly to
other c omp r ehensi ve in c
ome 117 - - - 117
C ur r e nc y t r a n s l a t
i on d i f f e r e n c es (2) 12 (75) (23) (88)
--------- ------------ ---------------- ------------ ---------
A t 31 De c ember 2019 - 33 - 957 990
In c om e s t a t e m e nt charge
- continuing operations - 4 - (807) (803)
In c om e s t a t e m e nt charge
- discontinued operations (88) (5) - (142) (235)
T a x credi t ed di r ectly to
other c omp r ehensi ve in c
ome 88 - - - 88
Transferred to assets held for
sale - (27) - - (27)
C ur r e nc y t r a n s l a t
i on d i f f e r e n c es - (1) - (8) (9)
--------- ------------ ---------------- ------------ ---------
A t 31 D e c e m b er 2020 - 4 - - 4
--------- ------------ ---------------- ------------ ---------
In addition to the deferred tax asset which has been recognised,
the Group has not recognised further deferred tax assets on gross
timing differences in continuing operations of: GBP21,637k (2019:
GBP26,143k) arising from unutilised trading losses and carried
forward foreign tax credits; GBP6,123k (2019: GBP6,230k) from
capital tax allowances versus accounting charges; and GBP7,985k
(2019: GBP3,019k) from other short term timing differences. The
Directors reviewed the recoverability of the deferred tax assets in
the US during the year and did not consider there is sufficient
certainty of future profits against which these losses/credits
which could be offset due to expected future profit generation
levels in this particular business units. The increase in the
deferred tax assets not recognised is due to this derecognition.
The Directors expect a significant proportion of the tax losses
unprovided for to be utilised against profits on disposal of the
discontinued operations in the US, however accounting prevents the
anticipation of such utilisation in the recognition of deferred tax
assets. D ef e r r e d tax ass e ts a re r e c o gn i s ed w h en
it is p r oba ble t h at f ut u re ta x a ble p r o f i ts w ill be
g e n e r a t ed ag ain st w hich assets c an be u t ili s e d. All
deferred tax is expected to unwind in more than one year's
time.
D eferre d tax liabilities
Other
temporary
differences Total
GBP000 GBP000
A t 1 Janua ry 2019 - -
Business combination (271) (271)
In c om e s t a t e m e nt credit
- continuing operations 89 89
------------ ------------
A t 1 January 2020 (182) (182)
In c om e s t a t e m e nt credit-
continuing operations 88 88
A t 31 De c ember 2020 (94) (94)
The deferred tax liability was recognised on the acquisition of
Lot.to Systems Limited, in relation to intangible assets
identified. All of the deferred tax liability is recorded in
non-current liabilities.
Q. Inventories
2020 2019
GBP000 GBP 000
W o r k in p r o g r e ss - 70
Spa r e parts and raw materials including food and
beverage - 2,329
F in i s h e d goo ds 120 217
120 2,616
R. Cash and cash equivalents
2020 2019
GBP000 GBP000
Cash and short-term deposits 11,356 12,985
Customer funds 465 2,580
11,821 15,565
S. Trade and other payables
2020 2019
GBP000 GBP 000
T r ad e p a y a bl es 3,581 6,083
O t h e r ta x es and s o c i al s e cur i ty co s
ts 141 327
A c c rua l s 3,737 3,519
D ef e r r e d i n c ome 6,180 344
Pl ay e r l i a b il i ty 465 2,580
14,104 12,853
Deferred income in 2020 is consideration received in advance not
yet recorded in income related to an Initial Payment received from
BetMakers Technology Group Ltd for the potential acquisition of
certain parts of the Racing and Digital division. The amount is
unconditional and non-refundable and will be recognised in income
on completion of the disposal.
T. Provisions
Onerous Other
contracts Provisions Total
GBP000 GBP000 GBP000
A t 1 Janua ry 2019 2,292 119 2,411
Derecognition on transition to IFRS 16 (214) - (214)
Utilised during the year (247) - (247)
Credit to the income statement - share of
loss of JV (184) - (184)
Release to the income statement - discontinued
operations - (109) (109)
Expense discount interest to the income statement 24 - 24
Cur r enc y dif f e r en c es (74) (2) (76)
A t 1 January 2020 1,597 8 1,605
Utilised during the year (105) - (105)
Transferred to liabilities associated with
assets held for sale - (7) (7)
Cur r enc y dif f e r en c es (50) (1) (51)
A t 31 D e c e m b er 2020 1,442 - 1,442
Of which:
Current provisions 321 - 321
Non-current provisions 1,121 - 1,121
1,442 - 1,442
P ro vis i o n s h ave b een r e c o gn i s ed w h e re t he G r
o up h as c o n t r ac t ual o b li g a t i o ns to p ro v i de s e
r v i c es w h e re t he es t i m a t ed u n av oi da ble co s ts
to c a r ry o ut t he o b li g a t i on e x c eed t he e x p e c t
ed f ut u re e c ono mic b e n e f i ts to be r e c e i v e d.
The Group has a number of committed financial obligations
arising from leases associated with its joint venture in
California. The amounts provided for represent management's best
estimate based on scenario analysis of what the Group is expecting
to pay to settle the liabilities. Management has estimated the
expected liability for each site which is likely to be incurred.
Actual liabilities could differ from management's expectations. The
probability based scenario analysis showed a range of expected
liability from GBP1.2 million to GBP2.0 million. On transition to
IFRS 16, provisions for onerous leases were derecognised and
replaced by lease liabilities .
U. Lease liabilities
2020 2019
Maturity analysis - contractual undiscounted GBP000 GBP000
cash flows
Less than one year 1,085 1,685
Between 2 and 5 years 3,241 3,715
More than 5 years - 5,423
Total 4,326 10,823
The weighted average incremental borrowing rate applied to the
lease liabilities was 5.75%, lowest rate being 2.75% and highest
rate of 8.45%.
2020 2019
Lease liabilities included in the balance sheet GBP000 GBP000
Current 823 843
Non-current 3,059 6,881
Total 3,882 7,724
Movement on lease liability during the year 2020 2019
GBP000 GBP000
At 1 January (2019 - on transition to IFRS
16) 7,724 9,445
New leases entered into 654 -
Reassessment of lease term (2,231) -
Interest charged to the income statement -
continuing operations 265 402
Interest charged to the income statement -
discontinued operations 74 78
Lease rentals paid - continuing operations (1,219) (1,422)
Lease rentals paid - discontinued operations (436) (457)
Transferred to held for sale (998) -
Movement as a result of foreign exchange 49 (322)
At 31 December 3,882 7,724
V. Ordinary shares
2020 2019
Authorised, issued and fully paid ordinary '000 GBP 000 '000 GBP 000
shares of 20p each
At 1 January 188,751 37,750 186,751 37,350
New shares issued to satisfy acquisition
of Lot.to Systems Limited - - 2,000 400
At 31 December 188,751 37,750 188,751 37,750
W. C a s h gene r a t ed f r om o pe r a t i o ns
R e c on c ilia t i o n of loss b ef o re ta x a t i on to cash
g e n e r ated f r om op e r a t i ons, b ef o re separately
disclosed items:
2020 2019
Note GBP 000 GBP 000
Loss before tax - continuing operations (10,567) (9,661)
(Loss)/profit before tax - discontinued operations I (2,034) 1,231
Total loss before tax (12,601) (8,430)
Adjustments for:
Separately disclosed items (included in operating
costs) F 1,453 1,140
Depreciation and amortisation L,M,N 8,161 7,694
Profit on sale of property, plant and equipment M - (1)
Impairment of assets M,N 4,349 5,020
Net finance costs G 625 695
Share option expense 347 1,422
Changes in working capital:
Decrease in trade and other receivables 2,791 734
Increase in inventories (179) (40)
Decrease in trade and other payables (1,060) (149)
Increase/(decrease) in customer funds 42 (607)
Cash generated from operating activities, before
separately disclosed items 3,928 7,478
- Ends -
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