Sportech earnings to reach £19.7m
CEO calls 2010 "transformational year" - egaming division to migrate bingo, casino and poker to Playtech platform by Q4 this year.
Sportech’s pre-tax profits for 2010 are expected to be in line with expectations, the pools and tote suppliers announced in a trading update this morning.
The owners of the football pools and Scientific Games Racing, now known as Sportech Racing, said it expects its group EBITDA to be “in the region” of £19.7m for the year ahead of its preliminary results for the year ended 31 December 2010, which will be announced on 24 March this year.
It said that trading across its football products, Sportech Racing and egaming divisions in the second half of last year performed “as anticipated” and that it continues to generate “strong trading cash flows” enabling a reduction of almost 10% in net bank debt during the year to approximately £72.3m.
Ian Penrose, chief executive of Sportech, called 2010 a “transformational year” for the business. In a statement the company called 2010 “a year of transition” for its egaming division and that it was planning for, and embarking upon, a migration of its bingo, casino and poker activities to Playtech by the fourth quarter of this year. Playtech owns 10% of Sportech. Shmuel Weiss, chief operating officer of Playtech is a non-executive director on the Sportech board.
It added that the integration of SGR was at an “advanced stage” and that Sportech Racing had also extended its B2B distribution with a new agreement signed in Chile for the provision of pari-mutuel wagering systems, terminals, interactive wagering platforms and services at the Hipodromo Chile and Club Hipico de Santiago. The agreement spans racetracks, phone betting, teletracks centres and 201 off track betting locations. It also expects to announce further distribution deals for its football pools business later this year.
The company also said it is continuing to pursue HM Revenues & Custom (HMRC) for a claim of £40m for the repayment of VAT allegedly overpaid in respect of its Spot the Ball game between 1979 and 1996. It said that if interest was added the principal sum would double. The claim was recently been rejected by HMRC. Sportech lodged an appeal to the independent First Tier Tax Tribunal.
No update on the company’s bid for the UK government-owned Tote was given, however it is understood that Sportech is one of around 10 companies and consortia to have placed first round bids for the business.
Fresh from acquiring SGR in October last year Penrose at the time said: “Tote and pools is what we do and clearly the UK Tote would be an ideal fit. We think the Tote has great potential and that the returns to racing could be significantly enhanced along the way. That’s the reason we would look at it very closely, good returns to shareholders and to racing.”
The UK Tote is estimated to be worth between £200m to £400m, has more than 3,500 staff, 500 shops and is a major presence in all of Britain’s 60 racecourses. It also operates online and has telephone betting facilities. Investment bank Lazard is advising on the sale of the state-owned betting operation.