4th Mar 2015 08:51
LONDON (Alliance News) - Online gaming and entertainment company Sportech PLC Wednesday said it swung to a pretax loss in 2014, partly due to a fall in revenue, but primarily due to a hefty goodwill impairment on its Football Pools division, while the group also highlighted weakness in its Venues business.
The company reported a pretax loss of GBP21.3 million, compared with a pretax profit of GBP5.3 million in 2013, as it booked a GBP28.1 million impairment on its Football Pools business, and saw revenue fall 5.6% to GBP104.1 million during the year, from GBP110.3 million the year before.
Sportech said the impairment of GBP28.1 million was recorded to reduce the carrying value of the Football Pools goodwill to GBP119.5 million.
"This is as a result of revisions to the underlying cash flow assumptions to reflect the division achieving ongoing earnings stability," the company said in a statement.
Stripping out the impairment charge, and other exceptional costs, the group's profit was GBP14.4 million, flat on last year's figure. It said that if currency exchange rates had stayed the same, its profit growth would have been 2.8%.
"We are pleased that we finished the year ahead of our internal expectations. Investment in our core technology and people has delivered a strong performance in our US-based betting technology business and The Football Pools has had a good year. Our Venues division had a challenging year, but continues to lay foundations for long term growth," said Chief Executive Ian Penrose in a statement.
The group comprises of three divisions - Racing and Digital, Venues, and Football Pools - all of which focus on horseracing and football markets.
During 2014, Sportech said growth in Racing and Digital was tempered by adverse foreign exchange movements and also by declines in Football Pools and Sportech Venues.
Sportech said its Racing and Digital business showed earnings growth in 2014, driven by improved margins, while profits at its Venues and Football Pools businesses both fell. Although it said its Football Pools unit is moving towards revenue and earnings stability, the group said its Venues business, which was hit by poor weather conditions in the US and market changes during the year, remains "challenging".
"Racing and Digital and Football Pools are trading in line with expectations. Trading in our Venues business remains challenging, with amounts wagered below prior year levels, as a result of a lack of racing due to the cold weather in North East USA," the company said.
Sportech said it remains confident in its prospects for the full year ahead.
"Regulatory and tax changes are presenting opportunities for those focused on highly regulated markets. Sportech continues to make progress in line with our strategy of developing a leading international position, with a particular focus on the US," said Penrose.
Last month, Sportech said the hearing date for its appeal against a VAT repayment claim on its "Spot the Ball" game had been set for November 2. The VAT repayment claim is part of an ongoing battle the company is having with UK tax authorities over a claim worth more than GBP90 million.
Sportech shares were trading 4.4% lower Wednesday morning, at 66.18 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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