The betting technology business said the previously announced conditional sale of the group’s property in New Haven, Connecticut for US$6.75mln has been renegotiated; the new selling price is US$6mln.
The company said in its pre-close trading statement covering 2020 that adjusted full-year underlying earnings (EBITDA) are expected to be in line with the board’s expectations. The group’s cash position at the end of 2020 was a bit better than expected at around GBP10.2mln.
Sportech continues to advance the Global Tote transaction with BetMakers and is also progressing the transition of the Bump 50:50 business to Canadian Bank Note Limited. Both transactions are expected to close in the first half of this year and along with the sale of the Connecticut property should raise GBP36.1mln for the company.
“The group was historically dependent on live spectator attendance at sporting events which were obviously heavily impacted by the global pandemic and we, therefore, took the necessary actions over the period to safeguard the group. Sportech has delivered on key 2020 performance metrics – namely cash generation from operational activities, capex reductions and delivery of a lower operational cost base going forward – resulting in only a modest cash outflow since the outbreak of COVID-19,2 revealed Richard McGuire, the chief executive officer of Sportech in the statement.
“Following corporate activity announced in recent months, the group structure and business will adjust during FY 2021. We remain focused on our US headquarters in Connecticut where management and personnel remain fully motivated to be part of the States’ expanded gaming solution alongside our Connecticut gaming neighbours,” he added.
Broker Peel Hunt reiterated its ‘buy’ recommendation following Sportech’s update, with a target price of 40p.
In a previous note, it had noted that once it has offloaded various businesses that are up for sale, it will have cash on the balance sheet equivalent to 24p a share.
Sportech shares currently trade at 30p, down 7.1%.
“Management is engaging with shareholders to ‘assess the optimal use of capital’. Adding the potential to return of capital to shareholders to the option value of the Connecticut sports betting opportunity supports our reiteration of our Buy recommendation and 40p target price,” it said.
— updates share price reaction and adds broker comment —