Interim Results
Sportech PLC ('Sportech', 'the Company' or 'the Group')
Interim Results for the six months ended 30 June 2008
Financial Highlights
-
Adjusted profit before tax* from continuing operations increased by 50% to £7.8m (2007: £5.2m)
-
Adjusted earnings per share from continuing operations of 5.5p (2007: 6.1p, adjusted following share consolidation)
-
Net debt reduced by £3.2m to £83.3m (31 December 2007: £86.5m)
-
Gross win revenues increased by £8.1m (28%) to £36.6m
Operational Highlights
-
Integration of Vernons is ahead of schedule and the business is trading well, delivering operational and financial synergies which have exceeded management's initial forecasts
-
Global marketing and distribution agreement signed with 888 Holdings Plc ('888') to promote Sportech's football pools business and other e-Gaming businesses to the UK and worldwide customer base of both companies
-
Launch of The New Football Pools brand with full-scale relaunch of the football pools business on schedule for the new football season this month
-
New and enhanced products being launched, including Premier 10, Footy 15, online Spot the Ball, private leagues and a community based, online football predictor website
-
Technology and distribution partnerships with Scientific Games and Orbis are delivering significant benefits and the upgrade and integration of the technology suite is on schedule to be initially introduced in August
-
Appointment of Will Muirhead as Managing Director of footballpools.com
-
Media and online deals with the Daily Mirror, FootyMad, FourFourTwo and enhancements to Paypoint contract to significantly extend the potential customer numbers through new distribution channels. Further media deals are expected shortly
*Adjusted profit before tax is profit before taxation, amortisation of acquired intangibles, exceptional costs and other non cash finance costs
Ian Penrose, Chief Executive of Sportech, said today: 'The Board's strategy continues to be focused upon the revitalisation of our core football pools business so that we can use it as the platform to develop a market leading sport, leisure and gaming business with international reach. We have made very good progress during the period. The rebranding initiative for The New Football Pools is on schedule and we have developed new products and enhanced existing products. Importantly, having signed a deal with 888, we have the opportunity to deliver global marketing and distribution opportunities for both our football pools businesses as well as our other e-Gaming businesses.'
-ends-
Enquiries:
Sportech PLC
Ian Penrose, Chief Executive 020 7268 2400
Steve Cunliffe, Finance Director
Bell Pottinger Corporate & Financial
David Rydell/Emma Kent/Rosanne Perry 020 7861 3232
Business Review
Overview
The Board has made considerable progress in implementing the changes required to deliver a growth business. A key objective has been to position our unique product, the football pools, at the heart of our business. Having invested in new products, technology and modern distribution routes, the start of the new football season this month marks the relaunch of our football pools business which will enable us to target a new and younger customer base. The Company is well positioned to achieve its strategic objectives.
Summary Financial Performance
The financial results reflect the continuing improvements made to the Company as a result of the turnaround strategy which the Board has embarked upon. For the six months to 30 June 2008 gross win revenues have increased by £8.1m (28%) to £36.6m (2007: £28.5m). Adjusted profit before tax has increased by £2.6m (50%) to £7.8m (2007: £5.2m). Net debt has reduced by £3.2m to £83.3m (31 December 2007: £86.5m). Total shareholders' equity and the Group's net assets have increased to £101.3m at 30 June 2008 (30 June 2007: £49.5m before the Vernons acquisition and associated fundraising in December 2007). Adjusted earnings per share were 5.5p (2007: 6.1p, adjusted following share consolidation).
Relaunch of The New Football Pools
In order to get the Group into a position of being able to relaunch the football pools business and deliver growth, it was imperative to develop additional engaging games and new ways to play the pools, to appeal to a new and younger customer base. We are delighted that in addition to the existing Pools Panel of Gordon Banks, Roger Hunt and Tony Green, we have established a 'Pools Pundits' team for The New Football Pools, having secured the services of Alan Hansen, Tony Cascarino, John Barnes and Graham Poll.
Products, Technology and Distribution
Products, technology and distribution have been the three key areas that we have improved and which act as the cornerstone of our turnaround strategy.
Enhanced Product Range
The product range has been enhanced with the addition of Premier 10, Footy 15, a new digital Spot the Ball game and a host of supplementary football based products to complement the classic football pool game. Top prizes will range from £20,000 up to £3 million, with a whole host of smaller, regular prizes. The greater the number of players, the greater the potential for prize funds to grow. Additional games will be introduced during the season.
Technology
The Group's technological infrastructure has been fundamentally overhauled by our technology partners, Scientific Games and Orbis. The development of an 'open architecture' system allows the processing of customer entries from a variety of sources, including paper coupons, postal entries, direct debit customers, internet entries and white-label partners, mobile, handheld machine entries, retail, EPOS and international. As a consequence, the ability for customers to play the new, engaging games in a simple and accessible manner, is greatly enhanced.
Distribution
The new technology backbone has facilitated a significant expansion in our distribution channels.
We have introduced an innovative website at www.footballpools.com, which combines the enhanced range of football prediction games with comprehensive content aimed at both the football fan and the wider general public. In addition to the current streaming of breaking football headlines, we have introduced a host of features to enable the customer to predict the match outcomes, ranging from match previews and reviews, to recent head-to-head match results. To improve the enjoyment and interactivity of the site, we have introduced a community focused fans forum, private league functionality and unique content.
We are delighted to have secured distribution deals for The New Football Pools with the following media partners: Daily Mirror, FourFourTwo and FootyMad, who will make the games available to their online readers and customers. We are in advance discussions with two further leading national media groups, and expect to conclude these discussions shortly.
The initial contractual arrangement entered into with Paypoint has been significantly enhanced, so that Paypoint customers can select their entries for Premier 10 and Footy 15 at over 19,800 retail outlets throughout the UK.
Distribution to the Ladbrokes betting shop estate is due to go live at the end of September.
Strategic Marketing, Distribution and Technology Partnership with 888
On 24 June 2008, we signed a strategic distribution and marketing agreement with 888.
The groundbreaking contract will allow the promotion of The New Football Pools across 888's entire gaming database of 4.9m registered customers, one of the largest in the world. Importantly, 888 will actively assist in the marketing of all of Sportech's products to both companies' existing and new customers in the UK and overseas. Additionally, 888 will provide a turnkey online gaming operation, creating the technology platform required to power all aspects of our principal online gaming operations - notably, LittlewoodsCasino.com, LittlewoodsPoker.com, as well as instant win games and international sports betting opportunities - provided and managed by 888 under our brands.
The improved service includes the creation of a common platform and e-wallet, enabling the seamless cross-promotion of our suite of gaming products. 888 replaces Cryptologic as our software supplier, with effect from September 2008. Detailed planning for the migration process is underway.
Integration of Vernons
We are pleased to report that considerable progress has been made with the integration of the Vernons business into Sportech's existing football pools business. One year ahead of schedule we have relocated the entire business from Fortune House (which remains with the vendors, Ladbrokes) into Walton House, Liverpool, the operations centre for Sportech. The synergies that have been derived from this integration process have benefited from the accelerated timetable and we are on schedule to exceed our initial expected level of synergies for 2008.
Financial review by Division
Football Gaming
We are pleased to report that for the first time in recent years, the Group is able to report an increase in underlying gross win revenue and a further slowing in the rate of underlying customer attrition.
Gross win revenues in the six months to 30 June 2008 amounted to £30.3m (2007: £22.0m) an increase of £8.3m. The acquisition of Vernons Pools contributed £8.1m to this increase and the balance being the underlying increase from the Littlewoods and Zetters businesses.
Customer numbers at 30 June 2008 amounted to 631,000, which adjusting for the acquisition of Vernons and the one-off loss of customers caused by the repositioning of the Littlewoods product in the second half of 2007, represents a reduction in customers of 8% (2007: 10%). Average spend per customer, incorporating the acquisition of Vernons, has increased by 12% to £1.82 per week.
Operating profit for the six months to 30 June 2008 has increased by £2.4m to £9.4m (2007: £7.0m). This increase is attributable to the acquisition of Vernons of £2.7m (2007: £nil), realisation of integration synergies of £0.6m (2007: £nil) and an increase in costs of £0.9m associated with gearing up for the football pools relaunch, primarily marketing, people and product development costs in establishing the new footballpools.com website.
e-Gaming
The strategic initiative to consolidate many of our e-Gaming activities onto the 888 technological platform, creating a common platform and e-wallet to enable a seamless cross-promotion of Sportech's suite of gaming products, combined with the marketing support from 888, is expected to provide the strong foundation from which significant growth will be delivered.
Overall operating profit remained stable at £1.4m (2007: £1.4m). Casino contributed the majority of this operating profit at £1.2m, with bingo and instant win games each contributing £0.1m and poker breaking even. Overall gross win reduced slightly to £6.3m (2007: £6.5m).
Our casino business continues to perform well with active customer numbers up by 12% to 10,400. However, we were impacted by high roller activity from two players, which accounted for a £0.5m adverse swing compared to last year. We have also seen a further reduction in poker revenues with customer numbers and revenues per player down by 7% and 17% respectively, a trend which we expect to reverse as we transfer to 888.
We have seen a 100% increase in our bingo revenues to £0.6m (2007: £0.3m) following continued investment in player recruitment including a very successful television advertising campaign. Active player numbers are 26% ahead of last year at 10,300 (2007: 8,200). We anticipate seeing the benefits of the marketing campaigns undertaken in the first half to continue into the second half of the year.
Exceptional Costs
Exceptional costs of £1.4m (2007: £nil) have been incurred in the period, with redundancy costs of £0.6m following the acquisition of Vernons and a further £0.8m relating to the rebranding and relaunch of The New Football Pools.
Bank Debt
The Group entered into new bank facilities in the final quarter of 2007 and has a ten year committed debt facility with repayments and covenants in line with the Group's cash generation forecast. Further details are provided in the Group's 2007 Annual Report.
Net bank debt has reduced by £3.2m to £83.3m (31 December 2007: £86.5m). The Group is cash generative and debt reduction remains a key priority for the Board.
The Group has implemented its strategy on interest rate hedging having entered into a number of swap agreements on a total of £60m of term debt at average rates (before the lending margin of HBOS) of 4.82%. These agreements, for periods ranging between three and eight years, are structured in line with the Group's intentions to repay long term debt. In accordance with accounting standards, these agreements are accounted for as hedges with a value of £2.2m at 30 June 2008.
Principal Risks and Uncertainties for the Remainder of the Year
The principal risks and uncertainties for the Group remain the same as those detailed in the 2007 Sportech PLC Annual Report on pages 24 and 55. The risks that are most applicable in the short term are in the areas of:
-
the level of retention of customers;
-
our ability to recruit new customers with the relaunch of The New Football Pools; and
-
the general economic environment in the United Kingdom.
Related Party Transactions
Related party transactions are detailed in note 14 of the interim financial information.
International Expansion
The Board has stated previously that it believes its unique business model has international appeal and the Company continues to explore opportunities in appropriate overseas markets. Substantial progress has been made regarding the opportunity to expand into Asia and the Company is hopeful that it can reach a conclusion shortly.
Branding
The 'Littlewoods' name is used under a ten year licence agreement which expires in September 2010. The Company has been evaluating its branding options and has concluded that the three football pools brands, Littlewoods, Vernons and Zetters, together with the new football pool games, should be rebranded The New Football Pools. This new brand will come into effect immediately for the football gaming business.
In respect of the wider e-Gaming business, comprising online casino, poker and bingo, we shall continue to use the Littlewoods brand in the short term, prior to embarking on a rebranding strategy early next year.
Board and Employees
A combination of the rapid changes to the business and the challenges arising from the successful integration of the Littlewoods and Vernons businesses has placed significant pressures on the Board and employees. We would like to express our thanks to those who have contributed during this challenging period.
In line with the growing opportunities in our online business, we have strengthened the Executive team by appointing Will Muirhead as Managing Director of the online football business, footballpools.com. Will joined us at the end of July 2008.
Potential Acquisitions
As previously reported, the Board has expressed its interest to the Government and its Advisers with regard to the potential sale of the UK Tote (The Horserace Totalisator Board). We believe that this could represent an opportunity to combine the pool betting activities on two of the largest sports in the world, British football and horseracing. We await developments with interest.
Outlook
We have made significant strategic, operational and financial progress during the first half of 2008. The rebranding and relaunch of The New Football Pools is on schedule. Although there is still change to be delivered, we look forward to continuing the transition of the Company into a growth orientated sports, leisure and gaming business with international reach. We approach the second half of 2008 with optimism.
Piers Pottinger
Chairman
Ian R Penrose
Chief Executive
5 August 2008
Consolidated Income Statement
for the six months ended 30 June 2008
|
|
|
Six months to |
Six months to |
Six months to |
|
|
|
30 June |
30 June |
31 December |
|
|
|
2008 |
2007 |
2007 |
|
Continuing operations |
Note |
£m |
£m |
£m |
|
|
|
|
|
|
|
Stakes placed* |
|
205.0 |
179.4 |
356.3 |
|
Gross win revenue |
4 |
36.6 |
28.5 |
59.6 |
|
Cost of sales |
|
(9.2) |
(8.0) |
(15.9) |
|
Gross profit |
|
27.4 |
20.5 |
43.7 |
|
Distribution costs |
|
(0.4) |
(0.4) |
(0.9) |
|
Administrative expenses |
|
(18.9) |
(11.7) |
(24.5) |
|
Operating profit before amortisation of acquired intangibles and exceptional costs |
|
10.8 |
8.4 |
18.8 |
|
Amortisation of acquired intangibles |
|
(1.3) |
- |
(0.2) |
|
Exceptional costs |
5 |
(1.4) |
- |
(0.3) |
|
Operating profit |
4 |
8.1 |
8.4 |
18.3 |
|
Finance costs |
6 |
(3.4) |
(3.2) |
(6.8) |
|
Finance income |
6 |
0.4 |
- |
0.1 |
|
Other finance costs |
6 |
(0.2) |
- |
- |
|
Adjusted profit before taxation** |
|
7.8 |
5.2 |
12.1 |
|
Profit before taxation |
|
4.9 |
5.2 |
11.6 |
|
Taxation |
7 |
(1.4) |
(1.5) |
(3.5) |
|
Profit for the period from continuing operations attributable to equity shareholders |
|
3.5 |
3.7 |
8.1 |
|
Continuing earnings per share |
|
|
|
|
|
Basic and diluted |
8 |
3.4p |
6.1p |
12.8p |
|
Adjusted earnings per share |
|
|
|
|
|
Basic and diluted |
8 |
5.5p |
6.1p |
13.4p |
* Stakes placed does not represent a statutory number and is given for information purposes only.
** Adjusted profit before taxation is profit before taxation, amortisation of acquired intangibles, exceptional costs and other finance costs, the latter being non cash interest in respect of deferred consideration payable on the acquisition of Vernons.
Consolidated Statement of Recognised Income and Expense
for the six months ended 30 June 2008
|
|
Six months to |
Six months to |
Six months to |
|
|
30 June |
30 June |
31 December |
|
|
2008 |
2008 |
2007 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
£m |
£m |
£m |
|
Profit for the financial period |
3.5 |
3.7 |
8.1 |
|
Total recognised income for the period |
3.5 |
3.7 |
8.1 |
Consolidated Balance Sheet
as at 30 June 2008
|
|
|
As at |
As at |
As at |
|
|
|
30 June |
30 June |
31 December |
|
|
|
2008 |
2007 |
2007 |
|
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
Note |
£m |
£m |
£m |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Goodwill |
|
165.5 |
145.2 |
165.5 |
|
Other intangible assets |
9 |
35.6 |
0.9 |
36.2 |
|
Property, plant and equipment |
9 |
2.6 |
2.0 |
2.0 |
|
Retirement benefit assets |
|
0.3 |
0.3 |
0.3 |
|
Deferred tax assets |
|
0.5 |
1.0 |
0.5 |
|
|
|
204.5 |
149.4 |
204.5 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
|
3.9 |
2.2 |
2.8 |
|
Financial instruments |
|
2.2 |
- |
- |
|
Current tax receivable |
|
- |
- |
0.7 |
|
Cash and cash equivalents |
10 |
3.5 |
1.6 |
7.9 |
|
|
|
9.6 |
3.8 |
11.4 |
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Financial liabilities |
11 |
(9.4) |
(22.0) |
(8.9) |
|
Trade and other payables |
|
(18.5) |
(13.6) |
(18.1) |
|
Current tax liabilities |
|
(1.9) |
(1.7) |
(2.2) |
|
|
|
(29.8) |
(37.3) |
(29.2) |
|
Net current liabilities |
|
(20.2) |
(33.5) |
(17.8) |
|
Non-current liabilities |
|
|
|
|
|
Financial liabilities |
11 |
(82.3) |
(66.1) |
(90.6) |
|
Deferred tax liabilities |
|
(0.7) |
(0.3) |
(0.7) |
|
|
|
(83.0) |
(66.4) |
(91.3) |
|
NET ASSETS |
|
101.3 |
49.5 |
95.4 |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
Ordinary shares |
|
50.3 |
29.6 |
50.3 |
|
Share premium |
|
20.7 |
- |
20.7 |
|
Financial instrument reserve |
|
2.2 |
- |
- |
|
Other reserves |
|
0.8 |
0.3 |
0.6 |
|
Retained earnings |
|
27.3 |
19.6 |
23.8 |
|
TOTAL SHAREHOLDERS' EQUITY |
12 |
101.3 |
49.5 |
95.4 |
Consolidated Cash Flow Statement
For the six months ended 30 June 2008
|
|
Note |
Six months to |
Six months to |
Six months to |
|
|
|
30 June |
30 June |
31 December |
|
|
|
2008 |
2007 |
2007 |
|
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
£m |
£m |
£m |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
13 |
8.8 |
8.5 |
19.3 |
|
Interest received |
|
0.2 |
- |
0.1 |
|
Interest paid |
|
(2.6) |
(3.2) |
(6.8) |
|
Tax paid |
|
(1.0) |
(1.3) |
(2.9) |
|
Net cash generated from operating activities |
|
5.4 |
4.0 |
9.7 |
|
Net cash from operating activities before movement in unavailable cash balances |
|
5.0 |
3.9 |
9.7 |
|
Movement in unavailable cash balances |
10 |
0.4 |
0.1 |
- |
|
Net cash generated from operating activities |
|
5.4 |
4.0 |
9.7 |
|
Cash flows from investing activities |
|
|
|
|
|
Acquisition of Vernons, net of cash acquired |
|
- |
- |
(45.7) |
|
Purchase of intangible fixed assets |
9 |
(0.8) |
(0.8) |
(1.4) |
|
Purchase of property, plant and equipment |
9 |
(1.0) |
(0.2) |
(0.6) |
|
Net cash used in investing activities |
|
(1.8) |
(1.0) |
(47.7) |
|
Cash flows from financing activities |
|
|
|
|
|
Finance lease principal payments |
|
- |
- |
(0.1) |
|
Proceeds from issue of new shares |
|
- |
- |
41.4 |
|
Proceeds from borrowings |
|
- |
- |
94.0 |
|
Repayment of borrowings |
11 |
(8.0) |
- |
(88.0) |
|
Net cash (used in) / generated by financing activities |
|
(8.0) |
- |
47.3 |
|
Net (decrease) / increase in cash, cash equivalents and bank overdrafts |
|
(4.4) |
3.0 |
9.3 |
|
Cash, cash equivalents and bank overdrafts at start of period |
|
7.9 |
(1.4) |
(1.4) |
|
Cash, cash equivalents and bank overdrafts at end of period |
|
3.5 |
1.6 |
7.9 |
|
Cash and cash equivalents consists of: |
|
|
|
|
|
Cash and cash equivalents |
|
3.5 |
1.6 |
7.9 |
|
Bank overdrafts |
|
- |
- |
- |
|
|
|
3.5 |
1.6 |
7.9 |
|
Reconciliation of net debt |
|
|
|
|
|
(Decrease) / Increase in cash in period |
|
(4.4) |
3.0 |
9.3 |
|
Movement in unavailable cash balances |
10 |
(0.4) |
(0.1) |
- |
|
Change in net debt resulting from cash flows |
|
(4.8) |
2.9 |
9.3 |
|
Cash outflow from repayment of loans |
11 |
8.0 |
- |
88.0 |
|
Cash inflow from loans taken |
|
- |
- |
(94.0) |
|
Cash outflow from repayment of finance lease agreements |
|
- |
- |
0.1 |
|
Movement in net debt for the period |
|
3.2 |
2.9 |
3.4 |
|
At start of period |
|
(86.5) |
(89.9) |
(89.9) |
|
At end of period |
|
(83.3) |
(87.0) |
(86.5) |
|
Net debt comprises: |
|
|
|
|
|
Cash, cash equivalents and bank overdrafts including cash balances unavailable to the Group |
|
3.5 |
1.6 |
7.9 |
|
Less cash balances unavailable to the Group |
|
(0.8) |
(0.5) |
(0.4) |
|
Available cash, cash equivalents and bank overdrafts |
|
2.7 |
1.1 |
7.5 |
|
Loans repayable within one year |
|
(6.5) |
(22.0) |
(6.0) |
|
Loans repayable after one year |
|
(79.5) |
(66.1) |
(88.0) |
|
At the end of the period |
|
(83.3) |
(87.0) |
(86.5) |
Notes to the condensed consolidated half yearly financial information
1. General Information
Sportech PLC (the Company) and its subsidiaries (together the Group) operate football pools and associated games through various distribution channels including direct mail and telephone, agent based collection and via the internet. The Group also operates a portfolio of online casino, poker, bingo and fixed odds games businesses through its e-Gaming division.
The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled within the UK. The address of the registered office is 249 West George Street, Glasgow, G2 4RB.
This condensed consolidated interim financial information was approved for issue on 5th August 2008.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2007 were approved by the Board of Directors on 18 March 2008 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 237 of the Companies Act 1985.
2. Basis of preparation
This condensed consolidated interim financial information for the six months ended 30 June 2008 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2007, which have been prepared in accordance with IFRSs as adopted by the European Union. This condensed consolidated interim financial information has not been reviewed nor audited.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those annual financial statements
The following standards, amendments and interpretations to existing standards have been published and are mandatory for the first time for the financial year ending 31 December 2008:
-
IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions';
-
IFRIC 12 'Service Concession Arrangements'; and
-
IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction'.
The Group has made an assessment of the impact of these new standards. IFRIC 11 and IFRIC 14 do not have any impact on the Group's financial statements. IFRIC 12 is not relevant to the Group or Company.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year ended 31 December 2008 and have not been early adopted:
-
IFRS 8 'Operating Segments';
-
IAS 23 (amendment) 'Borrowing Costs';
-
IFRS 2 (amendment) 'Share - based payments'
-
IFRS 3 (amendment) 'Business Combinations' and consequential amendments to IAS 27 'Consolidated and separate financial statements', IAS 28 'Investments in associates' and IAS 31 'Interest in joint ventures'
-
IAS 1 (amendment) 'Presentation of financial statements'
-
IAS 32 (amendment) 'Financial instruments: presentation' and consequential amendments to IAS 1 'Presentation of financial statements'; and
-
IFRIC 13 'Customer Loyalty Programmes'.
4. Segmental reporting
|
|
Six months to 30 June 2008 (Unaudited) |
||
|
|
Football gaming |
e-Gaming |
Group |
|
Continuing operations |
£m |
£m |
£m |
|
Gross win revenue |
30.3 |
6.3 |
36.6 |
|
Segment result before amortisation of acquired intangibles and exceptional costs |
9.4 |
1.4 |
10.8 |
|
Amortisation of acquired intangibles |
(1.3) |
- |
(1.3) |
|
Exceptional Costs |
(1.4) |
- |
(1.4) |
|
Operating profit |
6.7 |
1.4 |
8.1 |
|
|
Six months to 30 June 2007 (Unaudited) |
||
|
|
Football gaming |
e-Gaming |
Group |
|
Continuing operations |
£m |
£m |
£m |
|
|
|
|
|
|
Gross win revenue |
22.0 |
6.5 |
28.5 |
|
Operating profit |
7.0 |
1.4 |
8.4 |
|
|
Year to 31 December 2007 (Audited) |
||
|
|
Football gaming |
e-Gaming |
Group |
|
Continuing operations |
£m |
£m |
£m |
|
|
|
|
|
|
Gross win revenue |
47.4 |
12.2 |
59.6 |
|
Segment result before amortisation of acquired intangibles and exceptional costs |
15.6 |
3.2 |
18.8 |
|
Amortisation of acquired intangibles |
(0.2) |
- |
(0.2) |
|
Exceptional Costs |
(0.3) |
- |
(0.3) |
|
Operating profit |
15.1 |
3.2 |
18.3 |
Following a review of operating segments, the Group has amended the definition of its e-Gaming segment to be those activities which the Group out-sources software and supply to a third party. The principal impact of this is to move those revenues and costs associated with the Group's own online products, namely those generated from footballpools.com (previously Game On) from the e-Gaming segment to the Football Gaming segment. There is no overall impact on the gross win revenue or profits of the Group but the impact of this on segmental information from previously reported numbers is as follows:
|
|
Six months to 30 June 2007 (Unaudited) |
||
|
|
Football Gaming |
e-Gaming |
Group |
|
Continuing operations |
£m |
£m |
£m |
|
|
|
|
|
|
Gross win revenue - as previously reported |
21.9 |
6.6 |
28.5 |
|
Gross win revenue - amended |
22.0 |
6.5 |
28.5 |
|
Operating profit from continuing operations - as previously reported |
7.3 |
1.1 |
8.4 |
|
Operating profit from continuing operations - amended |
7.0 |
1.4 |
8.4 |
|
|
Year to 31 December 2007 (Audited) |
||
|
|
Football Gaming |
e-Gaming |
Group |
|
Continuing operations |
£m |
£m |
£m |
|
|
|
|
|
|
Gross win revenue - as previously reported |
47.2 |
12.4 |
59.6 |
|
Gross win revenue - amended |
47.4 |
12.2 |
59.6 |
|
Operating profit from continuing operations - as previously reported |
15.7 |
2.6 |
18.3 |
|
Operating profit from continuing operations - amended |
15.1 |
3.2 |
18.3 |
For the 6 months ended 30th June 2008, gross win revenue generated from footballpools.com was £0.1m with operating losses of £0.6m.
5. Exceptional costs
All exceptional costs for continuing operations are included within administrative costs within the income statement.
|
|
Six months to |
Six months to |
Year to |
|
|
30 June 2008 (Unaudited) |
30 June 2007 (Unaudited) |
31 December 2007 (Audited) |
|
Continuing operations |
£m |
£m |
£m |
|
Exceptional costs - Football Gaming |
(1.4) |
- |
(0.3) |
Exceptional costs in the current period of £1.4m relate to redundancy costs in respect of the continuing rationalisation of the business following the acquisition of Vernons in December 2007 of £0.6m, initial seeding costs in respect of new games of £0.1m, and costs associated with the re-branding and re-launch of the football gaming business of £0.7m. Exceptional costs incurred in the previous year of £0.3m relate to redundancy costs of £0.5m and initial new game seeding costs of £0.2m, offset by £0.4m being the release of amounts accrued in previous years in respect of building costs following the surrender of a lease in the previous year for an amount lower than that accrued.
6. Finance (expense) / income
|
|
Six months to |
Six months to |
Year to |
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
£m |
£m |
£m |
|
Interest payable on bank loans and overdrafts |
(3.4) |
(3.2) |
(6.8) |
|
Interest receivable on cash at bank |
0.2 |
- |
0.1 |
|
Interest receivable on swap agreements |
0.2 |
- |
- |
|
Non cash interest charged on deferred consideration |
(0.2) |
- |
- |
|
Net interest payable and similar items |
(3.2) |
(3.2) |
(6.7) |
7. Taxation
Taxation is provided based on management's best estimate of the weighted average annual taxation rate expected for the full year. The estimated average annual tax rate used for the year to 31 December 2008 is 28.5% (2007: 30%).
8. Earnings per share
The calculation of continuing earnings per share is based on the continuing net profit attributable to ordinary shareholders of £3.5m (six months to 30 June 2007: £3.7m; year to 31 December 2007: £8.1m) divided by the weighted average number of shares in issue during the period of 100.7m (six months to 30 June 2007: 59.2m, adjusted for share consolidation; year to 31 December 2007: 63.0m, adjusted for share consolidation). There is no difference between basic and diluted earnings per share.
The calculation of adjusted earnings per share is based on the adjusted profit after taxation attributable to ordinary shareholders of £5.6m (six months to 30 June 2007: £3.7m; year to 31 December 2007: £8.5m) divided by the weighted average number of shares in issue during the period of 100.7m (six months to 30 June 2007: 59.2m adjusted for share consolidation; year to 31 December 2007: 63.0m, adjusted for share consolidation). There is no difference between basic and diluted earnings per share. Adjusted profit after taxation is defined as profit before taxation, amortisation of acquired intangibles, exceptional costs and other finance costs less taxation based on management's best estimate of the weighted average annual taxation rate for the year.
9. Capital Expenditure
|
|
Property, plant and equipment and other intangible assets |
||
|
|
Six months to |
Six months to |
Year to |
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
£m |
£m |
£m |
|
Opening net book amount at start of period |
38.2 |
2.3 |
2.3 |
|
Additions |
1.8 |
1.0 |
37.0 |
|
Depreciation and amortisation |
(1.8) |
(0.4) |
(1.1) |
|
Closing net book amount at the end of the period |
38.2 |
2.9 |
38.2 |
10. Cash
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
£m |
£m |
£m |
|
Cash balances unavailable to the Group |
0.8 |
0.5 |
0.4 |
|
Other cash balances |
2.7 |
1.1 |
7.5 |
|
|
3.5 |
1.6 |
7.9 |
Cash balances unavailable to the Group are a combination of amounts held on behalf of registered charities relating to the sale of charity lottery products and amounts held in Trust on behalf of customers in respect of certain e-Gaming activities. These cash balances are excluded when calculating the net debt of the Group.
11. Financial Liabilities
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
£m |
£m |
£m |
|
Current |
|
|
|
|
Bank loans due within one year |
6.5 |
22.0 |
6.0 |
|
Deferred consideration due within one year |
2.9 |
- |
2.9 |
|
|
9.4 |
22.0 |
8.9 |
|
Non-current |
|
|
|
|
Bank loans due after one year |
79.5 |
66.0 |
88.0 |
|
Deferred consideration due after one year |
2.8 |
- |
2.6 |
|
Finance lease obligations due after one year |
- |
0.1 |
- |
|
|
82.3 |
66.1 |
90.6 |
The movement in financial liabilities in the period is £7.8m. This comprises of £8.0m of bank loan repayments, £3.0m of which were scheduled repayments, and the remaining £5.0m was a voluntary prepayment to minimise interest costs to the Group. This was offset by a £0.2m movement in respect of interest costs on the deferred consideration payable on the acquisition of Vernons.
12. Statement of changes in equity
|
|
Share Capital |
Share Premium |
Financial Instrument reserve |
Share option reserve |
Pension reserve |
Retained earnings |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
At 1 January 2008 |
50.3 |
20.7 |
- |
0.4 |
0.2 |
23.8 |
95.4 |
|
Profit for the period |
- |
- |
- |
- |
- |
3.5 |
3.5 |
|
Share option credit |
- |
- |
- |
0.2 |
- |
- |
0.2 |
|
Fair value gains on financial instruments |
- |
- |
2.2 |
- |
- |
- |
2.2 |
|
At 30 June 2008 |
50.3 |
20.7 |
2.2 |
0.6 |
0.2 |
27.3 |
101.3 |
|
|
Share Capital |
Share Premium |
Financial Instrument reserve |
Share option reserve |
Pension reserve |
Retained earnings |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
At 1 January 2007 |
29.6 |
- |
- |
0.2 |
0.2 |
15.7 |
45.7 |
|
Profit for the period |
- |
- |
- |
- |
- |
3.7 |
3.7 |
|
Share option credit |
- |
- |
- |
0.1 |
- |
- |
0.1 |
|
At 30 June 2007 |
29.6 |
- |
- |
0.3 |
0.2 |
19.4 |
49.5 |
|
|
Share Capital
|
Share Premium
|
Financial Instrument reserve
|
Share option reserve
|
Pension reserve
|
Retained earnings
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
At 1 January 2007
|
29.6
|
—
|
—
|
0.2
|
0.2
|
15.7
|
45.7
|
|
Profit for the period
|
—
|
—
|
—
|
—
|
—
|
8.1
|
8.1
|
|
Share option credit
|
—
|
—
|
—
|
0.2
|
—
|
—
|
0.2
|
|
Issue of new shares
|
20.7
|
20.7
|
—
|
—
|
—
|
—
|
41.4
|
|
At 31 December 2007
|
50.3
|
20.7
|
—
|
0.4
|
0.2
|
23.8
|
95.4
|
13. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities
|
|
Six months to |
Six months to |
Year to |
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
£m |
£m |
£m |
|
Net profit |
3.5 |
3.7 |
8.1 |
|
Adjustments for: |
|
|
|
|
Taxation |
1.4 |
1.5 |
3.5 |
|
Depreciation |
0.4 |
0.3 |
0.7 |
|
Amortisation of intangibles acquired with Vernons |
1.3 |
- |
0.2 |
|
Amortisation of other intangibles |
0.1 |
0.1 |
0.2 |
|
Net interest expense |
3.2 |
3.2 |
6.7 |
|
Share option charge |
0.2 |
0.1 |
0.2 |
|
Changes in working capital: |
|
|
|
|
(Decrease) / increase in trade and other receivables |
(1.1) |
- |
1.3 |
|
Decrease in trade and other payables |
(0.2) |
(0.4) |
(1.6) |
|
Cash generated from continuing operations |
8.8 |
8.5 |
19.3 |
14. Related party transactions
The extent of transaction with related parties of Sportech PLC and the nature of the relationship with them during the period are summarised below:
c. Key management compensation is shown below:
|
|
Six months to
|
Six months to
|
Year |
|
|
30 June 2008
|
30 June 2007
|
31 December 2007
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£m
|
£m
|
£m
|
|
Salaries and other short term employee benefits
|
0.6
|
0.6
|
1.4
|
|
Termination benefits
|
0.1
|
—
|
—
|
|
Post-employment benefits
|
0.1
|
0.1
|
0.1
|
|
Share-based payments
|
0.2
|
0.1
|
0.2
|
|
|
1.0
|
0.8
|
1.7
|
Shareholder Information and Access to our Products
Statement of Directors' responsibilities
The Directors' confirm that this condensed interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:
-
an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-
material related-party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report and Accounts.
The Directors of Sportech PLC are listed in the Sportech PLC Annual Report and Accounts for the year ended 31 December 2007 and there have been no changes in the period. A list of current Directors is maintained on the Sportech PLC website: www.sportechplc.com
By order of the Board
Ian R Penrose Steve Cunliffe
Chief Executive Finance Director
5 August 2008 5 August 2008
This information is provided by RNS
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