Division sales boost downsized Sportech to profitability in 2021

Sportech recorded revenue of £22.9m in 2021, a year in which it sold off many business divisions, with these sales powering the business to a £34.5m profit.

All of Sportech’s revenue, expense and income figures for 2021 and its comparison figures for 2020 removed parts of the business which were sold, before counting these as discontinued operations. These included the Global Tote business, which was acquired by Betmakers in June 2021, and Bump 50:50, which Sportech agreed to sell to Canadian Banknote in February 2021.

This downsizing led to Sportech removing its shares from the London Stock Exchange and moving to the Alternative Investment Market, after which CEO Richard McGuire and chief financial officer Tom Hearne stepped down from their roles.

As a result, the revenue figure of £22.9m was up 32.1% from the restated figure given for 2020.

Sportech chief executive Andrew Lindley said that while the business was now small for a publicly traded company, he believed it was the right size for its operations.

“2021 was a transitional year for the business with the completion of a significant amount of M&A and corporate actions to reduce the size of the business and de-risk our shareholders’ investments,” he said. “The business, although now small in the context of a plc, is tidy and fit for growth. The two divisions are right-sized for their operations and 2022 brings with it an attendant opportunity to garner new value for the group and its shareholders.”

Wagering made up almost all of Sportech’s revenue, with £19.5m, up 25.0% from the amount the same business segments brought in in 2020. Sports betting commission brought in an additional £280,000, while food and beverage revenue from Sportech’s venues came to £2.1m, up 46.8%.

As a result, total revenue from the Sportech Venues business – which operates racetracks and jai alai in Connecticut – was £21.9m, up 28.0%

In addition, Sportech digital brought in £1.0m, which was more than three times the total from 2020.

The business paid £11.5m in costs of sales, leading to a gross profit of £11.5m, up 32.4% from 2020. Sportech venues contributed £11.0m of this and Sportech Digital £484,000.

After marketing and distribution costs of £276,000, the business was left with a contribution of £11.2m, up 34.0%

The business then paid £15.7m in operating costs, but also made £4.1m in other income.

As a result, it was left with an operating loss of £402,000. This was much smaller than the £11.4m operating loss recorded in 2020.

Finance-related costs came to £305,000, while finance-related income was £461,000.

This meant Sportech made a pre-tax loss from continuing operations of £246,000, compared to an £11.9m loss the year before.

After paying £192,000 in tax, the business was left with a £438,000 loss from continuing operations, less than 5% of the £10.9m loss it made in 2020.

However, discontinued operations made a £35.0m profit for Sportech during 2021. This was mostly related to the sales of divisions including the Global Tote business and Bump 50:50.  These businesses had made a £2.0m loss in 2020.

As a result, Sportech’s final profit was £34.6m in 2021, after having lost £12.8m in 2020.

Author: Raymond Fleming