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 -

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

FR DFLFXFXLFBBD

(END) Dow Jones Newswires

April 01, 2021 02:00 ET (06:00 GMT)

Sportech (LSE:SPO)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Sportech Charts.
Sportech (LSE:SPO)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Sportech Charts.