Sportech’s share price has plummeted this morning following the announcement of plans to cease being a publicly listed company.
The group, which specializes in betting technology, said that the proposals were the result of an evaluation of the advantages and disadvantages of listing its company on the London Alternative Investment Market.
Sportech stated that the review recognized the significant financial burdens and non-financial obligations associated with the group’s status, given the size of its business. After a downsizing program that included Global Tote, the group’s revenues were just PS26.0m by 2022.
The board added: “For these reasons, the board has decided that cancellation and reregistration is in the best interest of the company and all its shareholders.”
Shareholders are now voting on a plan to delist Sportech and reregister it as a private company. The resolution must be approved by at least 75% votes of shareholders to pass.
Sportech’s shares were 52.00p at the time of publication – down more than 45% from Friday.
Sportech’s net return is negatively affected
Richard McGuire, executive chairman of the group, explained the decision during the trading update for the first half of 2023. Sportech’s gross profit increased by 7.2% during the quarter and its adjusted EBITDA was also significantly improved.
McGuire stated: “Despite the improving operational results that were announced today, our net returns are negatively affected by the significant financial costs associated with maintaining a publicly listed company, especially given the current size of the company, as well as the volatility in market valuation. We feel it is necessary to propose delisting today, a difficult but practical step.
The revenue for the six-month period ending 30 June 2023 stood at PS13.5m. This was flat in constant currency terms compared to H1 of 2022. Actual reported figures showed an 8.9% increase.
Earnings growth and positive momentum
Sportech’s strategic approach led to an increase of 7.2% in gross profit, and an improvement in adjusted EBITDA. It stated that its adjusted EBITDA showed positive momentum and reached PS900,000. This is compared to PS400,000 for H1 2022.
Sportech stated that “this improvement was fuelled primarily by a number of key factors including the growth in contributions coming from US gaming, and a continued focus on reducing operational and corporate costs.”
The group reported a loss of PS300,000. This is compared to a real loss of PS800,000. The group reported a loss before tax of PS300,000.
It was a gesture to the shareholders that it announced a capital restructuring, which allowed 3,600 smaller investors a cost-effective way out. The company also announced that it would return capital to its shareholders in the amount of PS3.5m by August 2023. The cumulative repayments of shareholders over the last two years amounted to approximately PS46m.
At the end August 2023, the group cash was PS3.6m.
