REGISTERED NUMBER: SC069140 (Scotland, United Kingdom)
SPORTECH LIMITED
(FORMERLY SPORTECH PLC)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SPORTECH LIMITED
Contents of the Financial Statements
for the Year Ended 31 December 2023
Company Information
Strategic Report
Report of the Directors
Independent Auditors’ Report to the Members of
Sportech Limited
Consolidated Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Consolidated Cashflow Statement
Notes to the Financial Statements
Page
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23
SPORTECH LIMITED
Annual Report and Financial Statements
for the Year Ended 31 December 2023
DIRECTORS:
R McGuire
C Whiley
P Humphreys
COMPANY SECRETARY:
SGH Company Secretaries Limited
REGISTERED OFFICE:
Collins House
Rutland Square,
Edinburgh,
EH1 2AA
REGISTERED NUMBER:
SC069140 (Scotland, United Kingdom)
INDEPENDENT AUDITORS:
Sumer Auditco Limited,
Chartered Accountants & Statutory Auditors
14th Floor,
33 Cavendish Square,
London,
W1G 0PW
Cautionary statement
Sections of this annual report, including but not limited to the Strategic Report and the Directors’ Report may
contain forward-looking statements with respect to certain of the plans and current goals and expectations
relating to the future financial condition, business performance and results of the Company. These have been
made by the Directors in good faith using information available up to the date on which they approved this
report. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future
events and circumstances that are beyond the control of the Company and depend upon circumstances that
may or may not occur in the future. There are a number of factors that could cause actual future financial
conditions, business performance, results or developments of the Company to differ materially from the plans,
goals and expectations expressed or implied by these forward-looking statements and forecasts. Nothing in
this document should be construed as a profit forecast.
1
SPORTECH LIMITED
Strategic Report
for the Year Ended 31 December 2023
The Director presents the Strategic Report of the Company for the financial year ended 31 December 2023.
REVIEW OF BUSINESS
Sportech operates in the gaming market and has two main businesses. Firstly, it runs Sports Bars and other
betting venues in Connecticut, USA, where it has an exclusive license to offer pari-mutuel wagering, it also
has a distribution agreement with the Connecticut Lottery Corporation to provide retail sports betting across
retail locations. Secondly, Sportech provides online gaming through two separate lines of business.
Mywinners.com operates under an exclusive license to offer pari-mutuel betting online in Connecticut, while
123bet.com offers pari-mutuel betting online across the wider USA.
FINANCIAL OVERVIEW (Figures combine continuing and discontinued operations)
£26.5m
Revenue
Gross Profit £14.1m
Adjusted EBITDA1
£1.6m
Loss before Tax £(0.8)m
Cash2
£3.8m
(2022 £26.3m (restated))
(2022 £14.2m (restated))
(2022 £ 1.6m )
(2022 £(0.9)m)
(2022 £ 7.4m )
1Adjusted EBITDA includes exceptional items
2 Excludes customer balances
Following the year end, the Company was approached by an independent third party who has expressed an
interest in acquiring the major operating assets of the Group. However, should a binding offer be presented it
is likely to be a combination of cash and deferred, non-contingent cash consideration. Further updates in
relation to this proposed acquisition of core assets will be provided to shareholders at the earliest appropriate
time. The process is at an advanced stage, although there is no certainty that a binding offer will be presented,
nor on the terms on which any offer might be made. The Company will release updates on its website and the
JP Jenkins trading platform. www.sportechplc.com www.jpjenkins.com/company/sportech
Therefore, the basis of preparation of the 2023 financial statements is to reflect the current position and makes
the assumption that those identified assets are held for sale. This is particularly relevant when reviewing the
Consolidated Income Statement and Consolidated Balance Sheets, which reflect the impact of those identified
assets being considered discontinued operations. A useful reconciliation is provided in Note 27 to the accounts.
The Group performed well during 2023, despite inflationary headwinds and consumer challenges. Revenue
improved marginally following the sale of small non core assets and a modest decline in pari-mutuel wagering
handle was offset by growth in sports betting contributions and other income.
Gross Betting handle recorded in the Groups Connecticut Venues business was stable at US$201.5 million
with 50.6% of this handle from the recently introduced Sports Betting agreement and the balance from the
Groups long term core Tote retail betting. The average annual betting handle per retail location remains an
impressive c $20 million.
Numerous corporate initiatives were evaluated and executed during the year including a share consolidation
ultimately providing liquidity to smaller investors and a return of capital to shareholders, in aggregate a further
£3.9 million was returned to shareholders in 2023, taking the total returned to £46.4 million since 2021. The
corporate actions executed that will significantly reduce costs going forward and the small decline in pari-
mutuel betting were notable factors impacting the reported 2023 Adjusted EBITDA1.
Group cash was stable at year end at £3.8 million, following £3.9 million being returned to shareholders in
2023 via the fractional small shareholder buyback and a subsequent 35p per share capital distribution.
The Group anticipates returning further capital to shareholders in 2024, updating shareholders at earliest
opportunity.
2
BUSINESS MODEL
Sportech is an international betting business that owns and operates restaurant/bars and retail gaming venues
in the State of Connecticut, USA, and online across the US.
The Group seeks to achieve long-term shareholder value by leveraging Sportech’s gaming licences,
technologies and expertise as well as its brand heritage and relationships.
Where appropriate, this includes investments and trading opportunities that deliver immediate value to the
asset base and divestments that can generate both tangible investor returns and/or proceeds that can be used
to deliver growth.
In 2021, the Group exited a number of legacy business lines, in doing so, the business as a whole and its
shareholders’ positions were de-risked leaving a streamlined and efficient base for growth.
Venues
Having progressed a Group restructuring, the Group now has a clear focus on its Connecticut interests which
have benefitted during the year from the legalisation of sports betting in the State, which took effect from
October 2021. This provides additional product to support those provided under its exclusive pari-mutuel
licence and liquor / restaurant licences in the State.
The US has few examples of sports bars which incorporate betting and Sportech’s unique position as a chain
owner of what is, with the inclusion of sports betting, a novel business with a new demographic of customer,
provides a demonstrable opportunity for growth.
Given this positioning, Sportech can become a beacon example of what will undoubtedly become ubiquitous
business in the US as the race for online settles and the retail opportunity comes into focus, adding further
opportunity for the future.
Online
Sportech Venues operates MyWinners.com online across the State of Connecticut as a complementary
business to the retail locations, offering online pari-mutuel betting. The focus remains creating innovative
products and services to differentiate from competitors and meet the evolving needs of customers.
Sportech also owns and operates 123Bet.com a pan-USA pari-mutuel online retail platform (where State local
laws allow). Following management improvements to the model, revenue has grown significantly from c$2.7m
handle in 2019 to $10.3m handle in 2023.
Management are progressing plans to combine these online operations in 2024, providing growth potential
and efficient cost management.
Strategy
The Group delisted from AIM, successfully negotiated the exit of various international legacy agreements and
executed several effective cost reductions that will benefit the Group in 2024 and beyond. Management remain
acutely focused on addressing the challenges presented by a physical retail consumer business, creating
positive operational cashflow and delivering tangible returns to shareholders
Under the sports betting agreement in Connecticut with the Connecticut Lottery Corporation (CLC), the sports
book provider was changed in December 2023 to Fanatics Sportsbook and post year end the Group managed
a successful transition of its pari-mutuel betting provider and entered into new commercial arrangements with
leading US betting operators.
The Group will continue to explore initiatives that drive valuation growth, ultimately seeking to deliver further
tangible capital returns to shareholders. The Group anticipates updating shareholders with details of next stage
capital returns in August 2024.
The Group’s strategic aims for 2024 remain:
Execute further corporate opportunities
Effectively manage corporate cost base
1.
2.
3. Maximise further growth opportunities and partnerships across gaming sector
4.
Deliver further shareholder returns
3
GROUP DEVELOPMENTS
Disposals: Following significant consolidation in 2022, the Group sold small non-core assets for £500,000,
plus a potential earnout. Further small non-core asset sales will continue in 2024.
Corporate: The Group delisted from the AIM market in 2023. A share consolidation reduced the number of
shareholders from around 4,000 to approximately 100 and provided a £500,000 liquidity exit sought by smaller
investors. In addition a further £3.4 million was subsequently returned to shareholders during the year. The
costs savings from delisting will benefit net performance and cash flow in 2024 and beyond.
Venues: The Group’s core business line delivered strong performance, with traditional Pari-Mutuel handle
declining only 5.7% on a like-for-like basis despite the introduction of additional competing betting products
including iLottery, iCasino, and Sports Betting. Throughout the year, the Group focused on investing in building
a solid foundation to expand opportunities for delivering Sports Betting to retail customers
Sports Betting: During 2023 the Group negotiated an updated agreement of the August 2021 terms when
Sportech agreed to become a distributor for the Connecticut Lottery Corporation’s (CLC) sports betting product
across the state. Through Sportech Venues, the gross retail sports betting handle during the year was an
impressive $102 million (2022 $98.7m), from which Sportech received a percentage of the 10.03% net hold.
Digital: In recent years the Company has advanced two online pool betting sites in the US, both of which
delivered revenue growth in the year. The 2024 initiative is to bring these separate business under single
management creating further opportunities and efficient cost management.
Sportech Limited Board: The Board continues to provide valuable support and guidance to the management
team as the Company’s evaluates and executes its core strategy.
CHAIRMAN STATEMENT
2023 was a year of consolidation across the Group, redefining the structure of the Group from a listed entity
to a private company while extending various partnerships with leading US betting and lottery operators.
Positive progress, enabled the Group to return a further £3.9 million to shareholders by means of buyback and
a capital distribution, taking shareholder repayments to £121.2 million since 2017. The Group continues to
operate with no material financial debt, a positive net cash position and intends to make further capital returns
in 2024.
Significant operating business disposals in 2021 had a major impact on the size of the Company’s business
activities resulting in the fixed costs of being a listed entity unfeasible for the new smaller Group, resulting in
the 2023 delisting from AIM, generating associated cost savings going forward.
As we progress through 2024, the Company’s focus remains on executing core strategies, creating further
growth within our operating businesses and in executing further capital opportunities to make tangible returns
to shareholders.
I would like to thank all of our employees and Board colleagues for their continued hard work through a period
of change within the Company, and to our shareholders and stakeholders who continue to support the Group’s
objectives. The Board will continue to evaluate the third party interest in certain assets of the Group and will
update shareholders at earliest opportunity. I would stress however, there is no certainty any transaction will
conclude at this stage.
Finally, I want to thank our customers, who are the lifeblood of any business, as we seek to improve our
offerings and services to them in the coming months and years.
4
GROUP OUTLOOK
Your Company was one of the few retail consumer operators who navigated the global challenges in recent
years to emerge without issuing additional equity or increasing debt while emerging to deliver superior products
to our customers.
Sportech employees are professionals who work with incredible passion and purpose and the Board
continues to be inspired by their dedication to improve wherever possible. This pride and ownership culture
across the business enabled the Group to consolidate during 2023 and redefine growth opportunities from
non core operations and assets. The Group performs within an attractive market segment, with valuable long
term exclusive licenses and continues to build commercial partnerships in 2024.
As noted previously the Group is engaged in discussions that may lead to a sale of significant assets and the
Company will update stakeholders at appropriate time. However, I would caution readers, that there is no
certainty that binding proposal(s) will be tabled, nor on the terms on which any proposals might be made.
The Board and management remain fully engaged and focused on enhancing shareholder value and
effectively managing opportunities that generate tangible value growth for shareholders.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Company's strategy are subject to a number of
risks. The principal risks that the Company faces relate to the value of its investments. This value is at risk
from the principal risks that affect those subsidiaries. Those risks are:
-
Industry competition - this is mitigated through maintaining good customer relationships with current
and potential customers, providing a first-class service to our customers, and developing new and
innovative products to differentiate the Company from the competition.
- Third party technology - the Company mitigates the risk of dependency on third parties for technology
provision through having punitive clauses in service agreements and also having the option to novate
provisions at the end of contract terms if needed.
- Regulation – the Company mitigates the risk by ensuring compliance with the requirement of licences
and to oversee regulatory and legal compliance and the Company engages third-party specialist legal
counsel to provide specialist local advice. Regular updates and training are provided to employees
and policies and procedures are in place to which staff are required to adhere.
5
SPORTECH LIMITED
Strategic Report (continued)
for the Year Ended 31 December 2023
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
− Product – the Company mitigates the risk by investing significant amounts in developing new and
innovative products and constructing new Venues with diverse product offerings.
−
Foreign exchange – the Group considers hedging to mitigate significant fluctuations.
− Political marginalisation in Connecticut – the Group retains lobbying resources in Connecticut.
Directors' statement of compliance with duty to promote the success of the Group
Section 172(1) statement
The board of directors of Sportech Limited consider, both individually and together, that they have acted in the
way they consider, in good faith, would be most likely to promote the success of the company for the benefit
of its members as a whole (having regard to the stakeholders and matters set out in s172(1) Companies Act
2006.
The Board regularly reviews the Group’s principal stakeholders and how it engages with them. This is achieved
through information provided by management and by direct engagement by all of the Group’s Directors with
stakeholders themselves.
The Board continuously enhances its methods of engagement with the workforce. In that regard, the Executive
Chairman of the Board regularly meets with staff and actively encourages dialogue and feedback. The Chair
and Senior Independent Non-Executive Director has and will continue to visit operations during 2023, meeting
business partners, customers and employees in field operations, and human resources. This helps the Board
open direct lines of communication.
We aim to work responsibly with our stakeholders, including suppliers, and the anti-corruption and anti-bribery,
equal opportunities and whistleblowing policies are reviewed annually and updated where required.
ON BEHALF OF THE BOARD:
..........................................................
R McGuire
Director
Date: 02 July 2024
6
SPORTECH LIMITED
Report of the Directors
for the Year Ended 31 December 2023
The directors present their report and the financial statements for the year ended 31 December 2023
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic report, Director's report and annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors are required to prepare the group and company financial statements in accordance with UK adopted
International Financial Reporting Standards (IFRS). Under company law the directors must not approve the
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the
group and company and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with UK adopted IFRS subject to any material
departures disclosed and explained in the financial statements; and
• prepare the Group and parent's financial statements on the going concern basis unless it is
inappropriate to presume that the Group or parent company will continue in business.
• assess the group and Parent company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of
the parent company and enable them to ensure that the financial statements comply with the requirements of
the Companies Act 2006. They are also responsible for safeguarding the assets of the group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company's website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair,
balanced, and understandable and provides the information necessary for shareholders to assess the group’s
performance, business model and strategy.
Principal activity
The principal activity of the Group is the operation of betting venues in the state of Connecticut, USA and a
website for online wagering from Connecticut residents under an exclusive and perpetual licence. Revenues
are derived from handle (betting stakes) net of return to bettors for wagering on horse and greyhound racing
and jai alai and customer incentives and is recognised on the day the event takes place. In addition, the group
receives income from sub licensing agreements.
Going Concern
The Directors have prepared detailed financial forecasts with a supporting business plan covering the medium-
term future. These forecasts capture both a base plan and downside scenarios which take into account macro-
economic potential indirect impacts to the business.
Both the base plan and downside scenario forecasts led the Directors to have a reasonable expectation that
the Company and the Group have adequate resources to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
7
Results and dividends
The loss for the year, after taxation and minority interests, amounted to £(812k) (2022 – profit £170k).
Directors
The directors who served during the year were:
R McGuire
C Whiley
P Humphreys
Insurance
Throughout the period the Group maintained insurance to provide protection to clients against losses arising
from any negligent or dishonesty of the Company's employees.
The Group also maintained, throughout the period, liability insurance for its Directors and officers as permitted
by section 233 of the Companies Act 2006.
Disclosure of information to auditors
The director at the time when this Director's report is approved has confirmed that:
•
•
so far as the Director's are aware, there is no relevant audit information of which the Group's
auditors are unaware, and
he has taken all the steps that ought to have been taken as a director in order to be aware of any
relevant audit information and to establish that the Group's auditors are aware of that information
Auditors
The auditors, Sumer Auditco Limited, were appointed during the year and will be reappointed for the ensuing
year in accordance with section 485 of the Companies Act 2006.
ON BEHALF OF THE BOARD:
..........................................................
R McGuire
Director
Date: 02 July 2024
8
SPORTECH LIMITED
Independent Auditors’ report to the Members of
Sportech Limited
Opinion
We have audited the financial statements of Sportech Limited (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2023 which comprise the Group Income Statement, Group Statement
of Comprehensive Income, Group and Company Balance Sheet, Group and Company Statement of Changes
in Equity, Group Statement of Cash Flows and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom
and, as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 31 December 2023 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by
the United Kingdom;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice (UK GAAP); and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
The financial reporting framework that has been applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the group in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusion relating going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
the accounting preparation of the financial statements is appropriate,
Based on the work we have performed, we have not identified any material uncertainties relating to the event
or conditions that, individually or collectively, may cat significant doubt on the Group’s or the parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
9
or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our
•
audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 6 the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the Group or
the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
In order to identify and assess the risks of material misstatements, including fraud and non-compliance with
laws and regulations that could be expected to have a material impact on the financial statements, we have
considered:
•
the results of our enquiries of management and those charged with governance of their assessment
of the risks of fraud and irregularities;
10
•
the nature of the group including its management structure and control systems (including the
opportunity for management to override such controls); and
• management’s incentives and opportunities for fraudulent manipulation of the financial statements
including the company’s group’s remuneration and bonus policies and performance targets; and
the industry and environment in which it operates.
•
We also considered UK tax and pension legislation and laws and regulations relating to employment and the
preparation and presentation of the financial statements such as the Companies Act 2006.
Based on this understanding we identified the following matters as being of significance to the group:
•
•
•
•
•
the details of the accounting policies applied during the year are set out in the Basis of accounting
section of the financial statements;
laws and regulations considered to have a direct effect on the financial statements including UK
financial
reporting standards, Company Law, tax and pension legislation and distributable profits legislation;
the timing of the recognition of commercial income;
compliance with legislation relating to GDPR, health and safety, local employment law, food safety,
operating licenses and alcohol licenses;
Impairment of investments (parent company only);
Impairment of intangible and tangible fixed assets;
inappropriate journal entries;
• management bias in selecting accounting policies and determining estimates;
•
•
•
• manipulation of specific performance measures to meet remuneration targets; and
•
recoverability of debtors.
We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and
how fraud may occur in the entity, to all engagement team members.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud
and non-compliance with laws and regulations) comprised:
• we developed an understanding of the key revenue processes from inception to disclosure in the
financial statements and assessed the design and implementation of the controls over the revenue
cycle on betting revenue in Venues;
inquiries of management and those charged with governance as to whether the entity complies with
such laws and regulations;
•
• assessing impairment of land and buildings and investments and challenging assumptions made by
management;
• enquiries with the same concerning any actual or potential litigation or claims;
• discussion with the same regarding any known or suspected instances of non-compliance with laws
and regulation and fraud;
• assessment of matters reported to management and the result of the subsequent investigation;
• obtaining an understanding of the policies and controls over the recognition of income and testing their
implementation during the year;
identifying and testing journal entries;
•
• accessing the recovery of debtors in the period since the balance sheet date and challenging
assumptions made by management regarding the recovery of balances which remain outstanding;
reviewing the financial statements for compliance with the relevant disclosure requirements;
•
• performing analytical procedures to identify any unusual or unexpected relationships or unexpected
movement in account balances which may be indicative of fraud;
reviewing the minutes of Board meetings; and
•
• evaluating the underlying business reasons for any unusual transactions.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities,
including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s
controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from
fraud might be inherently more difficult to detect than irregularities that result from error. As explained above,
there is an unavoidable risk that material misstatements may not be detected, even though the audit has been
planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
11
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Atulya Mehta FCCA (Senior Statutory Auditor)
For and on behalf of Sumer Auditco Limited
Chartered Accountants
14th Floor
33 Cavendish Square
London
12
SPORTECH LIMITED
Consolidated Income Statement
for the Year Ended 31 December 2023
Revenue
Cost of sales
Gross profit
Marketing and distribution costs
Contribution
Operating costs
Other income
Operating loss
Finance costs
Finance income
Loss before tax from continuing operations
Tax – continuing operations
Loss for the year – continuing operations
Restated
2023
£000
2022
£000
51
93
(116)
(114)
(65)
(21)
-
-
(65)
(21)
(2,446)
(2,462)
-
-
(2,511)
(2,483)
(11)
42
-
280
(2,480)
(2,203)
-
167
(2,480)
(2,036)
Note
4
5
5
5
10
10
11
Profit after taxation from discontinued operations
29
1,668
2,206
(Loss) / Profit for the year
Attributable to:
Owners of the Company
(812)
170
(812)
170
13
SPORTECH LIMITED
Consolidated Statement of Comprehensive Income
for the Year Ended 31 December 2023
(Loss) / Profit for the year
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to profit and loss
Currency translation differences
2023
2022
Note
£000
£000
(812)
170
(438)
1,047
(1,250)
1,047
Total other comprehensive (expense)/income for the year, net of tax
(1,250)
1,217
Total comprehensive (expense)/income for the year
(1,250)
1,217
Attributable to:
Owners of the Company
(1,250)
1,217
14
SPORTECH LIMITED
Consolidated Balance Sheet
As at 31 December 2023
Restated
2022
£’000
2023
£’000
Note
ASSETS
Non-current assets
Goodwill
Intangible fixed assets
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Inventories
Current tax receivable
Contingent consideration (gross receivable)
Cash and cash equivalents
Assets classified as held for sale
Total current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Contingent consideration (bonuses payable)
Lease liabilities
Current tax liabilities
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Net current assets
Non-current liabilities
Lease liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
15
11
12
13
14
17
17
16
18
19
15
15
-
113
-
-
-
15
128
87
6,939
4,522
5,042
177
15
16,782
206
3,324
-
-
-
1,527
21,754
146
228
1,229
7,811
-
23,487
12,738
23,615
29,520
(1,360)
(7,910)
-
-
-
(14)
(13,343)
-
(216)
(1,155)
-
-
(14,717)
(9,281)
8,770
3,457
-
-
(6,200)
(6,200)
(14,718)
(15,481)
8,897
14,039
EQUITY
Ordinary shares
Other reserves
Retained earnings
TOTAL EQUITY
23
971
4,165
3,761
1,000
4,574
8,465
8,897
14,039
These financial statements on pages 9 to 16 were approved by the Board of Directors 02 July 2024 and
were signed on its behalf by:
..........................................................
R McGuire
Director
02 July 2024
Company Registration Number: SC069140
16
SPORTECH LIMITED
Company Balance Sheet
As at 31 December 2023
ASSETS
Non-current assets
Intangible fixed assets
Investment in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Current tax payable
Net current (liabilities)/assets
NET ASSETS
EQUITY
Ordinary shares
Other reserves
Retained earnings carried forward
TOTAL EQUITY
Note
2023
£000
2022
£000
12
17
19
23
109
15,860
15,969
203
1,106
1,309
17,278
(2,709)
(6)
(2,715)
(1,406)
14,563
971
1,231
12,361
14,563
189
17,999
18,188
161
4,307
4,468
22,656
(1,406)
-
(1,406)
3,062
21,250
1,000
1,202
19,048
21,250
The (Loss)/Profit after tax for the Company for the year was (£2,795k) (2022: £952k)
The Company financial statements on pages were approved and authorised for issue by the Board of
Directors on 02 July 2024 and were signed on its behalf by:
R McGuire
Director
Company Registration Number: SC069140
17
SPORTECH LIMITED
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2023
Other reserves
Ordinary
shares
Capital
redemption
reserve
Other
reserve
Foreign
exchange
reserve
Retained
earnings
Total
£000
£000
£000
£000
£000
£000
At 1 January 2023
1,000
888
314
3,372
8,465 14,039
Comprehensive income
Loss for the year
Other comprehensive items
Currency translation differences arising in year
Total other comprehensive items
Transactions with owners
Capital Distribution paid
Share buy back
Total transactions with owners
Total changes in equity
At 31 December 2023
-
-
-
(29)
(29)
(29)
971
-
-
-
29
29
29
-
-
-
-
-
-
-
(812)
(812)
(438)
-
(438)
(438)
(812)
(1,250)
(3,399)
(3,399)
(493)
(493)
(3,892)
(3,892)
-
-
(438)
(4,704)
(5,141)
917
314
2,934
3,761
8,897
Other reserves
Ordinary
shares
Capital
redemptio
n reserve
Other
reserve
Foreign
exchange
reserve
Retained
earnings
Total
£000
£000
£000
£000
£000
£000
At 1 January 2022
1,000
888
314
2,325
15,295 19,822
Comprehensive income
Profit for the year
Other comprehensive items
Currency translation diffs arising in the year
Total other comprehensive items
Total comprehensive items
-
-
-
-
18
-
-
-
-
-
-
-
-
-
-
170
170
1,047
1,047
1,047
-
-
1,047
1,047
170
1,217
Transactions with owners
Distributions paid
Total transactions with owners
Total changes in equity
At 31 December 2022
-
-
-
-
-
-
-
-
-
-
-
(7,000)
(7,000)
(7,000)
(7,000)
1,047
(6,830)
(5,783)
1,000
888
314
3,372
8,465 14,039
19
SPORTECH LIMITED
Company Statement of Changes in Equity
for the Year Ended 31 December 2023
At 31 December 2021
Comprehensive expense
Profit for the year
Transaction with owners
Distribution
At 31 December 2022
Comprehensive expense
Profit for the year
Transaction with owners
Share buy back
Distribution
At 31 December 2023
Other reserves
Capital
redemption
reserve
£000
Other
reserve
£000
Retained
earnings
£000
Total
£000
888
314
25,096
27,298
Ordinary
shares
£000
1,000
-
-
-
952
952
-
1,000
-
888
-
314
(7,000)
19,048
(7,000)
21,250
-
(29)
971
-
29
-
-
917
314
(2,795)
(2,795)
(493)
(3,399)
12,361
(493)
(3,399)
14,563
20
SPORTECH LIMITED
Consolidated Statement of Cashflows
for the Year Ended 31 December 2023
Cash flows from operating activities
Cash generated/(used in) from operations, before separately disclosed items
Tax refund received
Tax paid
2023
2022
Note
£000
£000
902
150
(681)
-
(42)
(5,083)
10
10
Net cash (used in)/generated from operating activities before separately disclosed items
1010
(5,764)
Cash outflows - separately disclosed items
Cash generated/(used in) from operations
Cash flows from investing activities
Disposal of Lotto
Contingent consideration from disposal of Bump 50:50
Investment in intangible fixed assets
Purchase of property, plant and equipment
Net cash generated from/(used in) investing activities
Cash flows used in financing activities
Principal paid on lease liabilities
Interest paid on lease liabilities
Share buy-back
Dividend paid
Interest received
Cash used in financing activities
Net decrease in cash and cash equivalents
Effect of foreign exchange on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
5
(364)
(657)
646
(6,421)
1,012
500
-
-
-
(196)
(290)
(147)
1,222
(343)
12
13
(1,201)
(1,127)
(278)
(230)
(493)
-
(3,399)
(7,000)
42
-
(5,329)
(8,357)
(3,461)
(15,121)
(155)
565
7,812
22,367
Group cash and cash equivalents at the end of the year
18
4,196
7,811
Represented by:
Cash and cash equivalents
Less customer funds
Adjusted net cash at the end of the year
21
18
18
18
4,196
7,811
(367)
(391)
3,829
7,420
SPORTECH LIMITED
Company Statement of Cashflows
for the Year Ended 31 December 2023
Cash flows from operating activities
Cash generated from operations, before separately disclosed
1,029
5,056
Note
2023
£000
2022
£000
items
Interest paid
Interest received
Tax payments / (refunds received)
Net cash generated from operating activities before separately
disclosed items
Cash outflows from separately disclosed items
Net cash generated from operating activities
Cash flows from investing activities
Net cash from investing activities
Cash flows from financing activities
Shareholder distribution
Net cash used in financing activities
Net decrease in cash and cash equivalents
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the end of the year
-
42
-
1071
(364)
708
22
-
(99)
4,979
(441)
4,538
-
-
(3,892)
(7,000)
(3,892)
(7,000)
(3,184)
(2,462)
4,291
1,106
6,769
4,307
22
SPORTECH LIMITED
Notes to the Financial Statements
for the Year Ended 31 December 2023
1. GENERAL INFORMATION
The company is a private limited company, limited by shares and is incorporated in Scotland. The address of
its registered office is Collins House, Rutland Square, Edinburgh, Midlothian, Scotland EH1 2AA
2. CRITICAL JUDGEMENTS AND ESTIMATES
Critical judgements and estimates have been made in the following areas:
Assets held for sale and discontinued operations
The Board is required to consider the requirements of IFRS 5 Non-current Assets Held for sale and
Discontinued Operations as to whether the assets of any disposal group or asset which is potentially going to
be disposed of, should be classified as Held for Sale. In general, the following conditions must be met for an
asset (or 'disposal group') to be classified as held for sale:
• management is committed to a plan to sell;
• the asset is available for immediate sale;
• an active programme to locate a buyer is initiated;
• the sale is highly probable, within 12 months of classification as held for sale (subject to limited
exceptions);
• the asset is being actively marketed for sale at a sales price reasonable in relation to its fair value; and
• actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or
withdrawn.
In addition, a discontinued operation is a component of the Group that either has been disposed of, or is
classified as held for sale, and
(a) represents a separate major line of business or geographical area of operations;
(b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical
area of operations; or
is a subsidiary acquired exclusively with a view to resale.
(c)
Carrying value of Sportech Venues tangible and intangible assets
To determine whether an impairment of the tangible or intangible assets held by the Sportech Venues division
has occurred, the Group considered in isolation the assets and leasehold improvements at its sports bar venue
in Stamford, Connecticut and then the assets (tangible and intangible) of the cash generating unit (“CGU”) as
a whole. The key assumptions used in estimating future cash flows for value-in-use measures, for both the
stand-alone venue and the CGU as a whole were:
Stamford alone:
- handle and food and beverage (“F&B”) earnings achieved since the venue’s opening in June 2017 and
the likely growth achievable in the next four years;
- costs of sale percentages and overhead cost levels achievable;
- sports betting commission likely to be earned at the venue; and
-
the length of the lease during which the venue would be operated.
CGU as a whole:
-
-
rates of industry handle growth/decline impacting the retail and online product;
the enforcement by the State of Connecticut of the Company’s exclusive rights to operate online
wagering and the CGU’s ability to drive value from its exclusivity in the State; and
- discount rate, which appropriately reflect the risks associated with the CGU.
23
These assumptions, and the judgements of management that are based on them, are subject to change as
new information becomes available. Economic conditions and government policy changes can also impact on
the assumptions and discount rates applied, which are reviewed annually. Further details are disclosed within
notes 13 and 14 of the Annual Report. Critical judgements and estimates have been made in the carrying
value of investments and in the recoverability of the intercompany receivable. To determine whether an
impairment exists in any of the investments or intercompany receivables held by the Company, management
estimate the recoverable value of each of those items. Estimating the recoverable value is subject to a number
of key assumptions in forecasting future cash flows for value-in-use. Those key assumptions applied are:
-
Industry handle rates;
- F&B revenues achieved;
-
commissions achieved from sports betting;
the retention of the agency agreement to provide sports betting past the end of the current contract
term;
levels of capital expenditure required; and discount rates, which appropriately reflect the risks
associated with specific cash generating units.
-
Those assumptions, and the judgements of management that are based on them, are subject to change as
new information becomes available. Economic conditions and government policy changes can also impact on
the discount rates applied, which are reviewed annually.
3. ACCOUNTING POLICIES
3.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards, International Accounting Standards and Interpretations as adopted by the UK
(collectively IFRSs).
Details of the Company's accounting policies, including changes during the year, are included in note 3.2.
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006
and elected not to present its own Profit and loss account or Statement of comprehensive income in these
consolidated financial statements.
In preparing these consolidated financial statements, management has made judgments, estimates and
assumptions that affect the application of the Company accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
The areas where judgments and estimates have been made in preparing the consolidated financial statements
and their effects are disclosed in note 2
3.1.1 Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis.
3.1.2 Changes in accounting policies
i) New standards, interpretations and amendments effective from 1 January 2023
The company has applied the following standards and amendments for the first time for their annual reporting
period commencing 1 January 2023.
▪ Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
▪ Definition of Accounting Estimates – Amendments to IAS 8
▪ Deferred Tax related to Assets and Liabilities arising from a Single Transaction– Amendments to IAS 12
24
ii) New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments, which are not yet effective and have not been
adopted early in these consolidated financial statements, will or may have an effect on the Company's future
consolidated financial statements:
Standards with effective date from May 2023
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12
Standards with effective date from 1 January 2024
Non-current Liabilities with Covenants – Amendments to IAS 1 and Classification of Liabilities as Current or
Non current – Amendments to IAS 1
▪ Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
▪ Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
▪
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS
S2Climate-related Disclosures
Standards with effective date from 1 January 2025
Lack of Exchangeability – Amendments to IAS 21
The director anticipates that the adoption of these Standards in future periods may have an impact on the
results and net assets of the Company, however, it is too early to quantify this.
The director anticipates that the adoption of other Standards and interpretations that are not yet effective in
future periods will only have an impact on the presentation in the consolidated financial statements of the
Company.
3.2 Accounting policies
A summary of more important Group accounting policies follows. These policies have been applied
consistently to all the years presented.
(a) Subsidiaries
Subsidiaries are all entities over which the Group has control. Control of an entity is deemed to exist when the
Group is exposed to, or has rights to, variable returns through its power over that entity. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The
consideration transferred for the acquisition of a subsidiary is the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Contingent consideration is recognised at fair value at the acquisition date and remeasured at each balance
sheet date until settlement. The revaluation amount is debited/credited to the income statement in the period
in which the estimated fair value is increased/decreased. Acquisition related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair
value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised
directly in the income statement.
25
Transactions between subsidiaries are performed on an arm’s-length basis. Inter-company transactions,
balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses
are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.
(b) Revenue
The Group generally recognises revenue at a point in time when it transfers control over a product or
delivers a service to a customer. The following is a description of principal activities (separated by reportable
segment), from which the Group generates its revenues.
Sportech Venues:
This division operates betting venues in the state of Connecticut, USA and a website for online wagering from
Connecticut residents under an exclusive and perpetual licence. Its revenues are derived from handle (betting
stakes) net of return to bettors for wagering on horse and greyhound racing and jai alai and customer incentives
and is recognised on the day the event takes place. Betting stakes for future events that have not taken place
at the balance sheet date are deferred. It also generates revenue from:
Other revenue type
- Providing a full turn-key service for the operation of racebooks at casinos
- Food and beverage sales in venue
- Programme sales
- Rental of space in venues for parties/events
- Sale of lottery tickets on behalf of the state lottery
- ATM transaction fees
- Source market fees
- Parking lot rental for events e.g. carnival, rodeo
- Sports Betting revenue share
Sports Betting - Principal versus Agent:
The Group evaluates the principal versus agent considerations, in determining whether it is appropriate to
record the gross amount of revenues and related costs, or the net amount earned as commissions. If the Group
were the principal in a transaction and controlled the specific good or service before it is transferred to the
customer, revenue would be recorded gross; however, in the arrangement with CLC, revenue is recorded on
a net basis as this is not the case. For retail sports services, the Group does not control the promised goods
or services and, therefore, records the net amount of revenue earned as a commission. Evidence for the agent
conclusion comprises amongst other indicators;
i. The terminals used in the retail venues for sports betting are not the property or responsibility of
Sportech and were not purchased or rented by Sportech;
ii. The risk on transactions is not Sportech’s and Sportech does not manage the sportsbook risk;
iii. Sportech does not set the sportsbook prices;
iv. Sportech is not responsible for credit risk (chargebacks);
v. The Connecticut Lottery Corporation is the licence holder and the customer contracts with CLC not
Sportech; and
vi. If a loss is made on the sportsbook, that loss is carried forward until covered
Sportech Digital:
123Bet.com Revenue
The Group owns the brand 123Bet.com and operates a pari-mutuel betting site taking bets on horse and dog
racing from customers through its affiliate provider eBet Technologies Inc. Wagers net of customer winnings
and loyalty awards is recognised as revenue with associated costs included in cost of sales.
26
Lottery software supply
The Group’s subsidiary Lot.to Systems Limited provided online lottery software to clients. The service fees are
either fixed monthly fees, percentages of handle through the software or a combination of both and most
contracts can have fixed monthly “minimums”. Revenue was recognised as the obligations under the contract
are met. This remains of this unit was sold in early 2023.
(c) Deferred income
Deferred income includes the value of stakes placed prior to the end of the financial period in respect of
competitions and sporting events held subsequent to the end of the financial period and income received in
advance of a service or product being delivered.
(d) Taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and establishes provisions, where appropriate, on the basis
of amounts expected to be paid to the tax authorities.
Tax is recognised in the income statement, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the time of the transaction, affects neither accounting
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the balance sheet date and are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income
taxes levied by the same taxation authority, on either the same or different taxable entities, where there is an
intention to settle the balances on a net basis.
The Group applies IFRIC 23 Uncertainty over Income tax treatments. IFRIC 23 provides guidance on the
accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty
over income tax treatments. The interpretation requires; the group to determine whether uncertain tax
treatments should be considered separately, or together as a group, based on which approach provides better
predictions of the resolution; the group to determine if it is probable that the tax authorities will accept the
uncertain tax treatment; and if it is not probable that the uncertain tax treatment will be accepted, measure the
tax uncertainty based on the most likely amount or expected value, depending on whichever method better
predicts the resolution of the uncertainty. This measurement is required to be based on the assumption that
each of the tax authorities will examine amounts they have a right to examine and have full knowledge of all
related information when making those examinations.
(e) Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
27
the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated
financial statements are presented in Sterling (£), which is the Company’s functional currency and the Group’s
presentation currency.
Transactions and balances
Transactions in foreign currencies are translated into the functional currency at the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of
exchange ruling at the balance sheet date. Foreign exchange gains and losses, resulting from the settlement
of such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies, are recognised in the income statement, except where deferred in other
comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in
the income statement within finance income or costs. All other foreign exchange gains and losses are
presented in the income statement within operating profit.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
– assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
– income and expenses for each income statement are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
– all resulting exchange differences are recognised in other comprehensive income.
(f) Property, plant and equipment
Property, plant and equipment are carried at historical cost less accumulated depreciation and any impairment.
Cost includes the original purchase price of the asset and the costs attributable in bringing the asset to its
working condition for its intended use and any associated borrowing costs. Assets in the course of construction
are not depreciated until the asset is completed. Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within administrative expenses in the income statement.
Assets in the course of construction are capitalised when first brought into use and depreciated from this date.
(g) Depreciation
Depreciation is provided on a straight-line basis to write off the cost of property, plant and equipment down to
residual value over their anticipated useful lives as following period:
Owned land and buildings
Leasehold Improvements
Plant and machinery
Fixtures and fittings
Not depreciated
Over the period of the lease or 25 years whichever is shorter
Between 3 and 12 years
Between 3 and 12 years
Assets in the course of construction are not depreciated until they are ready for use.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet
date.
28
(h) Right-of-use assets and lease liabilities
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognised where the group is contractually required to dismantle,
remove or restore the leased asset (typically leasehold dilapidations).
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
(taking into account the lease term being considered) in the jurisdiction in which the asset resides as the
discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made. It is remeasured when there is a change in the future lease payments arising from a change
in an index or rate, a change in the estimate of the amount expected to be payable under a residual value
guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is
reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee
that include renewal options and break clauses. The assessment of whether the Group is reasonably certain
to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and
right-of-use assets recognised.
(i) Goodwill
Goodwill arising on consolidation represents the excess of the fair value of consideration given over the fair
value of the separately identifiable net assets acquired. Goodwill arising on acquisitions before the date of
transition to IFRSs (4 January 2005) has been frozen at the previous UK GAAP net book value at the date of
transition, subject to being tested for impairment annually at the year end date. There is potential contingent
consideration receivable of up to a further £500k which has been fair valued at £nil. The receipt of further
amounts are contingent on certain activities being transacted through digital channels within a time period
which the Directors believe are unlikely to be met.
Goodwill is allocated to specific CGUs for the purpose of impairment testing. The allocation is made to the
CGU that is expected to benefit from the business combination in which the goodwill arose.
Goodwill is carried at cost less accumulated impairment losses.
(j) Intangible fixed assets
Intangible fixed assets are held at cost less accumulated amortisation and impairment. Amortisation is charged
on a straight-line basis over the estimated useful life of the intangible fixed asset.
Software
Externally acquired computer software licences are capitalised on the basis of the costs incurred to acquire
and bring to use the specific software. These costs are amortised over their estimated useful lives or
contractual period if shorter (five to ten years).
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the Group are recognised as intangible assets when the following criteria are met:
o
it is technically feasible to complete the software product so that it will be available for use;
o management intends to complete the software product;
29
o
it can be demonstrated how the software product will generate probable future economic benefits;
o adequate technical, financial and other resources to complete the development and to use or sell the
software product are available; and
o
the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development
employee costs and an appropriate proportion of relevant overhead. Other development expenditure that does
not meet these criteria are recognised as an expense as incurred. Development costs previously recognised
as an expense are not recognised as an asset in a subsequent period.
Software development costs are amortised over their estimated useful lives, which do not exceed 12 years.
Licences
Licences acquired in a business combination are recognised at fair value at the acquisition date. Licences that
have a finite useful life are carried at cost less accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate cost of licences over their estimated useful lives of 15 to 20 years. Licences
with an infinite life (licences granted in perpetuity) are held at cost or fair value at acquisition date and tested
annually for impairment.
(k) Investments in subsidiaries
Investments in subsidiaries are carried at historic cost less any impairment. Annual impairment reviews are
performed.
(l) Impairment reviews
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible
assets with indefinite lives are subject to an annual review for impairment in accordance with IAS 36
‘Impairment of Assets’. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value-in-use. For the purpose of assessing impairments, assets are grouped at the lowest levels at which there
are separately identifiable cash flows. Any impairment losses are recognised in the income statement in the
year in which they occur. Any impairment loss recognised on goodwill is not reversed.
All other individual assets are tested for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. With the exception of goodwill, all assets are subsequently
reassessed for indications that an impairment loss previously recognised may no longer exist at each reporting
date.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately
in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in
prior years. Any increase in excess of this amount is treated as a revaluation increase.
(m) Pension obligation
The Group operates various pension schemes, depending on employee geographical location.
The Group now only has defined contribution plans. A defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans
define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation.
30
For defined contribution plans, the Group pays contributions to privately administered pension insurance plans
on a mandatory, contractual or voluntary basis.
The Group has no further payment obligations once the contributions have been paid. The contributions are
recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in future payments is available.
(n) Financial instruments
(i) Recognition
Trade receivable and debt securities issued are initially recognised when they are originated. All other financial
assets and liabilities are initially recognised when the Group becomes a party to the contractual provisions of
the instruments.
Financial assets:
(ii) Classification
The Group classifies its financial assets in the following measurement categories:
-
-
those to be measured subsequently at fair value (either through OCI or through profit or loss), and
those to be measured at amortised cost.
The classification depends on the Group's business model for managing the financial assets and the
contractual terms of the cash flows.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its
business model for managing financial assets, in which case all affected financial assets are classified on the
first day of the first reporting period following the change in business model.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
Changes in the fair value of financial assets at FVTPL are recognised in the statement of comprehensive
income.
Financial assets measured at amortised cost arise principally through the provision of services to customers
(e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially
recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are
subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. They are generally due for settlement within 365 days and are therefore all classified as current,
those due after a longer period are classified in non-current assets. Trade receivables are recognised initially
at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective
to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the
effective interest method. Due to the short-term nature of the current receivables, their carrying amount is
considered to be the same as their fair value.
Other receivables consist of amounts generally arising from transactions outside the usual operating activities
of the Group such as the proceeds from disposal of investment. Due to the short-term nature of the other
current receivables, their carrying amount is considered to be the same as their fair value. For the majority of
the non-current receivables, the fair values are also not significantly different to their carrying amounts.
(iv) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all
of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither
transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the
financial asset.
31
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position,
but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the
transferred assets are not derecognised.
(v) Impairment
The Group assesses all types of financial assets that are subject to the expected credit loss model:
trade receivables
▪
▪ debt investments carried at amortised cost
▪
cash and cash equivalents
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. Trade receivables are grouped based on their days past
due.
The historical credit losses assessed are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables.
Financial liabilities
(vi) Classification and measurement
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as
at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest
expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised
cost using the effective interest method. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
(vii) Derecognition
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or
expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial liability based on the modified terms
is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or
loss.
(viii) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(o) Share-based payments
The fair value of employee options awarded under the Value Creation Plan is calculated using the Black-
Scholes model. The fair value of employee PSP awards is valued using a stochastic (Monte Carlo) valuation
model. In accordance with IFRS 2 ‘Share-based Payment’, the resulting cost is charged to the income
statement over the vesting period of the options/awards. The total amount to be expensed is determined by
reference to the fair value of the options/awards granted including any market performance conditions, which
are those that are based on Sportech PLC’s share price, and excluding the impact of any service and non-
market performance vesting conditions, being profitability and the individual remaining an employee over a
specified time period. At each balance sheet date, the Company revises its estimates of the number of options
that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
32
The charge in relation to employees who provide services to subsidiary companies is recharged to those
subsidiaries. Where the charge is not required to be settled in cash, the Company’s investment in that
subsidiary is increased by the value of the charge and a corresponding increase in equity is recognised in the
subsidiary.
(p) Cash and cash equivalents
Cash and cash equivalents shown on the balance sheet represent cash in hand, cash in vaults and cash held
in current accounts, both owned by the Group and held on behalf of customers. Any bank overdrafts used by
the Group are shown within trade and other payables. Positive cash balances and overdrafts are only offset
within cash and cash equivalents to the extent that they form part of a cash-pooling arrangement implemented
by the Group where the balances will be settled on a net basis.
(q) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest
method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least twelve months
after the balance sheet date.
(r) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment, being the difference between the assets’ carrying
amounts and the present value of the estimated future cash flows, discounted at the original effective interest
rate. Individually significant receivables are considered for impairment when they are past due or when other
objective evidence is received that a specific customer will default or delinquency in payment will arise. Any
subsequent recovery of amounts written off is credited to the income statement.
(s) Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
(t) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first in, first
out method. Net realisable value is the estimated selling price in the ordinary course of business.
(u) Provisions
Provisions for onerous contracts, legal claims and dilapidations are recognised when the Group has: a present
legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised
for future operating losses where the Group has no contractual obligation to deliver the service or product.
Provisions payable over a period greater than 12 months are discounted using an appropriate market risk-free
discount rate.
(v) Leases exempt from IFRS 16
The Group excludes leases with low-value assets (<£4,000 asset values) and leases with terms of less than
12 months from IFRS 16 requirements to capitalise the lease and hold a corresponding liability on the balance
sheet. Instead, payments made under these leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the period of the lease.
(w) Separately disclosed items
The Group defines separately disclosed items as those items which, by their nature or size, if not separately
identified, would distort the comparability of the Group’s results from year to year.
33
(x) Government grants
Grants for revenue expenditure are shown gross in the income statement in other income. Where retention of
a government grant is dependent on the Group satisfying certain criteria, it is initially recognised as deferred
income. When the criteria for retention have been satisfied, the deferred income balance is released to the
income statement.
(y) Share capital and reserves
Ordinary shares are classed as equity. Incremental costs directly attributable to the value of new shares or
options are shown in equity as a deduction from the proceeds in the share premium account where the shares
were issued at a premium or, where issued at par or where the issue costs exceed the premium on the issue,
to retained earnings.
The capital redemption reserve represents the nominal value of shares cancelled.
Other reserve includes the cumulative actuarial gains and losses charged/credited to this reserve inrelation to
defined benefit pension schemes and also merger relief.
Foreign exchange includes gains/losses arising on retranslating the net assets of overseas operations
Retained earnings includes cumulative net gains and losses recognised in the consolidated statement of
comprehensive income.
(z) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use and a sale is considered highly
probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for
assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment
property that are carried at fair value and contractual rights under insurance contracts, which are specifically
exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to
fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell
of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A
gain or loss not previously recognised by the date of the sale of the noncurrent asset (or disposal group) is
recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while
they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the
assets of a disposal group classified as held for sale are presented separately from the other assets in the
balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other
liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale
and that represents a separate major line of business or geographical area of operations, is part of a single
co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately in the
statement of profit or loss.
34
4.
TURNOVER
By type
Full turn key Take-out
Commission Revenue (including Sports Betting)
Note
SM Fee Revenue
F&B Revenue
Other Revenue
Revenue
By geographic segment
US (discontinued operations)
UK (continuing operations)
Total
5.
SEPARATELY DISCLOSED ITEMS
Continuing operations
Note
Included in operating costs:
Onerous contract provisions and other losses resulting
from exit from Californian operations
Redundancy and restructuring costs1
Corporate activity costs
Costs in relation to the Spot the Ball VAT refund
Settlement of a contract
Costs in relation to exiting the Group’s interests in India
Costs in relation to delisting from London Stock Exchange
35
Restated
2023
£000
2022
£000
17,608
18,646
2,627
1,993
3,478
799
2,418
571
3,455
1,193
26,505
26,283
26,454
26,190
51
93
26,505
26,283
2023
£000
-
-
54
-
-
13
297
364
2022
£000
(120)
414
57
-
304
2
-
657
Below is a summary of cash outflows from separately disclosed items:
Continuing operations – cash outflows from separately disclosed
items:
Onerous contract provisions and other losses resulting from exit from
Californian operations
Settlement of a contract
Redundancy and restructuring costs
Costs in relation to corporate activity
Costs in relation to delisting from London Stock Exchange
Costs in relation to exiting the Group’s interests in India
Cash outflows from separately disclosed items –continuing operations (net)
Cash outflows from separately disclosed items – discontinued operations
(net)
2023
£000
2022
£000
-
-
-
(54)
(297)
(13)
(364)
51
(304)
(414)
(49)
-
(2)
(718)
-
Cash outflows from separately disclosed items - total
(364)
(718)
6. Auditor remuneration
Fees paid to the Auditors of the consolidated financial statements during the period comprise:
Audit fees (continuing and discontinued operations)
Total fees
7. Employment costs
2023
2022
£000
£000
100
100
288
288
Average number of monthly employees (full-time equivalents) including Executive Directors comprised:
Continuing and discontinued operations
Sales and marketing
Operations and distribution
Administration and management
Total employees
Total
2023
Total
2022
Number
Number
5
141
16
162
5
140
12
157
36
Aggregate Employee remuneration comprised:
Wages and Salaries
Social security costs
Pension costs – defined contribution scheme (note 20)
2023
2022
£000
£000
5,711
5,545
513
62
530
75
Employee remuneration, excluding share option charges
6,286
6,151
Share option expense
Total remuneration
8. Directors remuneration
Continuing operations
Short-term employee benefits
Pay in lieu of notice
Total remuneration
9. Net finance costs
Interest accrued and paid on tax liabilities
Interest on lease obligations (note 15) (discontinued
operations)
Foreign exchange loss on financial assets and liabilities
denominated in foreign currency (continuing operations)
Total finance costs
Finance income (continuing operations):
Interest received on bank deposits
Foreign exchange gain on financial assets and liabilities
denominated in foreign currency
Total finance income
-
334
6,286
6,484
2023 2022
£000 £000
396
365
-
266
396
631
£000
£000
-
(24)
(278)
(230)
(11)
-
(289)
(254)
42
-
42
-
232
232
Net finance (costs)/income
(247)
(22)
37
10. Taxation
The Group’s tax charge comprises:
Current tax:
Current tax on profit for the year
Adjustments in respect of prior years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Change in rates
Adjustments in respect of prior years
Derecognition of previously recognised deferred tax assets
Total deferred tax
Total tax charge
11. Goodwill
2023
2022
£000
£000
-
-
-
-
-
-
-
-
-
287
(150)
137
(43)
-
(15)
-
(58)
79
Goodwill cost brought forward arose on the acquisition of Lot.to Systems Limited (which is now subsumed into
Sportech Digital) in February 2019. The goodwill is attributable to the knowledge and expertise of the workforce.
Movements in the Group’s goodwill are shown below:
Continuing operations
Cost
At 1 January
Disposal
At 31 December
Accumulated impairment charges
At 1 January
Impairment charge
Disposal
At 31 December
Closing net book value
2023
2022
£000
£000
604
604
(604)
-
-
604
-
517
517
517
87
517
-
(517)
-
-
38
12. Intangible fixed assets (continuing and discontinued operations)
2023
Cost
Software
Licences
£000
£000
Total
£000
At 1 January 2023
4,770
5,696
10,466
Additions – continuing operations
Disposals - continuing operations
-
(6)
-
-
-
(6)
Transfer to asset held for sale
(4,047)
(5,696)
(9,743)
At 31 December 2023
Accumulated amortisation
At 1 January 2023
Charge for year
Disposal
717
-
717
3,871
918
4,789
95
385
-
-
95
385
Transfer to asset held for sale
(3,747)
(918)
(4,665)
At 31 December 2023
Exchange differences at 1 January 2023
Movement in the year
604
(247)
3
-
1,509
(288)
Transfer to asset held for sale
244
(1,221)
Exchange differences at 31 December 2023
Net book amount at 31 December 2023
-
113
-
-
604
1,262
(289)
(973)
-
113
2022
Cost
At 1 January 2022
Additions – continuing operations
Disposals - continuing operations
Software
Licences
£000
£000
Total
£000
4,576
5,696
10,272
196
(2)
-
-
196
(2)
At 31 December 2022
4,770
5,696
10,466
39
3,592
914
4,506
277
2
3,871
(247)
0
(247)
652
4
-
918
838
671
1,509
6,287
281
2
4,789
591
671
1,262
6,939
Software
£000
Total
£000
717
717
528
80
608
109
717
717
528
80
608
109
Software
£000
Total
£000
717
717
441
87
528
189
717
717
441
87
528
189
Accumulated amortisation
At 1 January 2022
Charge for year – continuing operations
Disposal – continuing operations
At 31 December 2022
Exchange differences at 1 January 2022
Movement in the year
Exchange differences at 31 December 2022
Net book amount at 31 December 2022
Intangible fixed assets (Company)
2023
Cost
At 1 January 2023
Disposals
At 31 December 2023
Accumulated amortisation
At 1 January 2023
Charged during the year
Disposals
At 31 December 2023
Net book amount at 31 December 2023
2022
Cost
At 1 January 2022
Disposals
At 31 December 2022
Accumulated amortisation
At 1 January 2022
Charged during the year
Disposals
At 31 December 2022
Net book amount at 31 December 2022
40
13. Property, plant and equipment (discontinued operations)
2023
Cost
At 1 January 2023
Additions
Leasehold
improvements
and owned
land and
buildings
£000
Plant and
machinery
£000
Fixtures
and
fittings
£000
Assets in the
course of
construction
£000
8,200
505
3,333
-
10
284
Transfer to asset held for sale
(8,200)
(515)
(3,617)
At 31 December 2023
Accumulated depreciation
At 1 January 2023
Charge for year
Reversal of impairment
-
4,562
440
(190)
-
22
12
-
-
3,375
211
-
Transfer to asset held for sale
(4,812)
(34)
(3,586)
At 31 December 2023
Exchange differences at 1 January
2023
Movement in the year
Disposals
Transfer to asset held for sale
Exchange differences at 31 December
2023
Net book amt at 31 December 2023
-
495
(180)
-
-
-
-
(470)
-
-
-
-
-
379
(19)
-
-
-
Total
£000
12,075
290
(12,365)
-
7,959
663
(190)
(8,432)
-
406
(197)
-
-
-
36
(4)
(32)
-
-
-
-
-
-
1
2
-
-
-
Depreciation charges and the loss on disposal of PPE have been included in operating costs.
Reversal of impairment
The assets at the Stamford sports bar venue in Connecticut, USA were fully impaired in prior periods. Given
the new arrangement for sports betting in the venue which came into force in late October 2021, management
have considered whether any of the previous impairment of assets should be reversed based on the venue’s
trading performance. Modelling was undertaken to calculate the value-in-use of the assets at the venue. The
following key assumptions were made in the value-in-use calculation:
-
-
-
-
The break clause in May 2025 will not be automatically activated to end the lease in June 2026 and
the trade at the venue will continue into perpetuity (this a reversal of the assumption taken in June
2020 that the break would be taken). Management have agreed new lease terms with the Landlord
post year end.
All operating assumptions driving revenues and costs were considered in the same way as the overall
venues business
Capital expenditure will average at $60k per annum
a post-tax discount rate of 13.9% (2022: 13.9%) was used representing a market-based weighted
average cost of capital appropriate for the Sportech Venues CGU.
As part of the discounted cashflow exercise with the above assumptions the recoverable amount of those
assets was deemed to be £3,707k. Accordingly a reversal of impairment of £190k was identified and has been
credited to the income statement within operating costs.
41
2022
£’0000
Cost
At 1 January 2022
Additions – continuing operations
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2022
Charge for year – continuing
operations
Reversal of impairment
Disposals
At 31 December 2022
Exchange differences at 1 January
2022
Movement in the year
Disposals
Exchange differences at 31
December 2022
Net book amount at 31 December
2022
Leasehold
improvements
and owned
land and
buildings
£000
8,393
-
(193)
8,200
4,640
231
(190)
(119)
4,562
54
441
-
495
4,133
14. Right-of-use assets (discontinued operations)
2023
£’000
Cost
At 1 January 2023
Additions
Transfer to asset held for sale
At 31 December 2023
Accumulated depreciation
At 1 January 2023
Charge for year
Disposals
Transfer to asset held for sale
At 31 December 2023
Exchange differences at 1 January 2023
Movement in the year
Transfer to asset held for sale
Exchange differences at 31 December 2023
Net book amount at 31 December 2023
Plant and
machinery
Fixtures
and fittings
Assets in the
course of
construction
502
3
-
505
1
21
-
-
22
(472)
3
-
(469)
14
3,598
109
(374)
3,333
3,508
182
-
(315)
3,375
333
47
-
380
337
Total
12,494
147
(567)
12,074
8,149
434
(190)
(434)
7,959
(84)
491
-
407
1
35
-
36
-
-
-
-
-
1
-
-
1
37
4,522
Land and
buildings
Vehicles
Fixtures
and
fittings
Total
9,431
217
(9,648)
-
4,897
1,206
-
(6,103)
-
478
(218)
(260)
-
-
29
-
(29)
-
12
-
-
53
-
9,513
217
(53)
(9,730)
-
49
-
-
-
4,958
1,206
-
(12)
(49)
(6,164)
-
3
(1)
(2)
-
-
-
6
-
(6)
-
-
-
487
(219)
(268)
-
-
The additions in year relate to the extension of the existing leases at the Norwalk and Milford venues.
42
2022
Cost
At 1 January 2022
Additions
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2022
Charge for year
Disposals
At 31 December 2022
Exchange differences at 1 January 2022
Movement in the year
Exchange differences at 31 December 2022
Net book amount at 31 December 2022
Depreciation charges have been included in operating costs.
15. Lease liabilities (discontinued operations)
Maturity analysis – contractual undiscounted cash flows
Less than one year
Between 2 and 5 years
More than 5 years
Total
Land and
buildings
£000
Vehicles
£000
8,881
652
(102)
9,431
4,217
765
(85)
4,897
(42)
520
478
5,012
29
-
-
29
7
5
-
12
(1)
4
3
20
Fixtures
and
fittings
£000
53
-
-
Total
£000
8,963
652
(102)
53
9,513
37
12
-
49
(2)
8
6
4,261
782
(85)
4,958
(45)
532
487
10
5,042
2023
2022
£000
£000
-
-
-
-
1,435
2,955
4,783
9,173
The weighted average incremental borrowing rate applied to the lease liabilities was 4.16%, lowest rate being 4.00%
and highest rate of 5.75%.
Lease liabilities included in the balance sheet
Current
Non-current
Total
43
2023
2022
£000
£000
-
-
-
1,155
6,200
7,355
Movement in lease liability during the year
2023
2022
Note
£000
£000
At 1 January
New leases entered into
Interest charged to the income statement
9
Lease rentals paid
Movement as a result of foreign exchange
Transfer to asset held for sale
At 31 December
16. Inventories (discontinued operations)
Finished goods
7,356
7,014
217
278
652
230
(1,479)
(1,357)
(327)
816
(6,045)
-
-
7,356
2023
£000
-
-
2022
£000
146
146
The cost of inventories (food and beverage inventory) recognised as an expense and included in cost of sales
amounted to £1,100k (2022: £1,147k). Food and beverage inventory is included in finished goods. There was
no provision for obsolescence held against inventories at 31 December 2023 (2022: £nil).
17. Trade and other receivables (continuing and discontinued operations)
Non-current
Other receivables
Non-current trade and other receivables
Current
Trade receivables -net
Other receivables
Accrued income
Prepayments
Current trade and other receivables
Total trade and other receivables
44
Restated
2022
£000
177
177
1,112
1,837
231
144
3,324
3,501
2023
£000
-
-
-
3
-
203
206
206
The fair value of trade and other receivables is not considered to be different from the carrying value recorded
above.
The carrying amounts of trade and other receivables are denominated in the following currencies:
Sterling
US Dollar
Total
2023
£000
206
-
206
2022
£000
104
3,397
3,501
Trade receivables that are not more than three months past due are not considered impaired. As at 31
December 2023, £nil (2022: £48k) of trade receivables were more than three months past due and not
impaired. Management also considers that these receivables are recoverable in full.
Trade and other receivables (Company only)
Non-current
Amounts owed by Group companies
Current
Amounts owed by Group companies
Other receivables
Prepayments
Current trade and other receivables
Total
18. Cash and cash equivalents (continuing operations)
Cash and short-term deposits
Customer funds
2023
£000
2022
£000
-
-
-
203
203
203
Note
19
2023
£000
1,160
367
1,527
-
-
70
91
161
161
2022
£000
7,421
391
7,811
The fair value of cash and cash equivalents is not considered to be different from the carrying value recorded
in the financial statements.
Cash balances of £367k (2022: £391k) are held on behalf of customers in respect of certain online and
telephone betting activities (amounts deposited by telephone betting customers in Connecticut, USA are held
in separate accounts). The corresponding liability is included within trade and other payables (see note 20).
45
19. Trade and other payables (continuing and discontinued operations)
Trade payables
Other taxes and social security costs
Accruals
Player liability
Restated
2022
£000
4,588
1,195
1,736
391
7,910
Note
18
2023
£000
137
9
847
367
1,360
There is no difference between book values and fair values of trade and other payables. All amounts are due
within one year.
Trade and other payables (Company only)
Trade payables
Amounts owed to Group companies
Social security and other taxes
Accruals
Total
2023
£000
144
1,734
9
822
2,709
2022
£000
60
387
29
930
1,406
Amounts due to Group companies are repayable on demand and carry interest charges of Bank of England
base rate plus 3%
20. Pension schemes (continuing and discontinued operations)
The Group now solely operates a single defined contribution scheme in the UK. Prior to their transfer in
February 2023, Lot.to employees contributed to a separate defined contribution scheme to that of Sportech
PLC employees. In previous years, the Group operated a funded defined benefit scheme and two defined
contribution schemes in the US.
Summary of pension contributions paid:
Defined contribution scheme contributions
2023
£000
62
2022
£000
75
Defined contribution schemes
In the UK, employer contributions for Sportech are set at a maximum of 8% of pensionable salaries.
Pension risks
The Group is no longer subject to risks associated with defined benefit pension schemes having transferred
the US scheme with the disposal entities to Betmakers Technology Group Limited.
46
21. Financial instruments (continuing and discontinued operations)
Financial risk management policies and objectives
The key financial risks borne by the Group, and the policy of managing those risks, are outlined below:
Liquidity risk
The Group is exposed to liquidity risk and has to manage its cash requirements. In managing short term
divisional liquidity risks, cash flow forecasting is performed on a weekly basis in the operating entities and is
aggregated by Group finance. This weekly forecasting recognises committed short-term payables of the Group
which are monitored and managed through regular discussions with suppliers. Group Finance monitors rolling
forecasts of the Group’s liquidity requirements to ensure each operating entity has sufficient cash to meet
operational needs. Cash surpluses are managed centrally by Group finance and cash swept up/pushed down
as cash surpluses/requirements arise.
Credit risk
The Group’s main exposure to credit risk is in accounts receivable and is influenced mainly by the individual
characteristics of each customer. However, management also considers the factors that may influence the
credit risk of its customer base, including the default risk associated with the industry, country in which
customers operate. Credit risk is managed locally by assessing the creditworthiness of each new customer
before agreeing payment and delivery terms.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates
are based on annual revenue and the corresponding historical credit losses experienced over the past five
years as annual percentages. On that basis, no loss allowance as at 31 December 2023 (2022: £nil) was
determined other than specific provisions for bad debts in trade receivables.
The Group does not hold significant amounts of deposits with banks and financial institutions and the cash
which is deposited is spread over a few of financial institutions with Moody’s ratings of A or above (defined as
upper-medium grade and subject to low credit risk). Amounts held in cash for the Sportech Venues division
are held in highly secure environments.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US Dollar. Foreign exchange risk arises from transactions undertaken
in foreign currencies, the translation of foreign currency monetary assets and liabilities and from the translation
into Sterling of the results and net assets of overseas operations.
The Group continually monitors the foreign currency risks and takes steps, where practical, to ensure that the
net exposure is kept to an acceptable level. In doing so, the Group considers whether use of foreign exchange
forward contracts would be appropriate in fixing the economic impact of forecasted profitability. As at 31
December 2023, there were no outstanding commitments on foreign exchange forward contracts (2022: none).
The Group did not enter into any forward contracts during the year (2022: the Group did not enter into any
forward contracts).
The functional currencies of the individual entities in the Group is kept under review.
The average rate for the US Dollar in both the current and previous reporting period are as outlined below.
US Dollars
1.25
1.26
1.23
1.2
2023
2022
Average Closing
Average Closing
47
If the exchange rates in 2023 were comparable to those in 2022, profit after tax would have been £670k and
the net assets would have been £10,442k at 31 December 2023.
If exchange rates had be 1% higher/lower in 2022 than the prevailing rates during the year, profit for the year
would have been £26k higher/lower and net assets as at 31 December 2023 would have been £290k
higher/lower.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders, benefits for other stakeholders and to achieve an efficient
capital structure to minimise the cost of capital.
Financial assets and liabilities
At each reporting date, the Group had the following categories of financial assets and liabilities:
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
2023
£000
1,733
5,061
2022
£000
9,755
13,309
Maturity of financial liabilities
Except for lease obligations (see note 16) all non-derivative financial liabilities are all payable within twelve
months.
22. Contingencies and commitments (continuing and discontinued operations)
Capital commitments
The Group had no contracts placed for capital expenditure that were not provided for in the financial statements
at the current or prior year end dates.
Operating lease commitments
The Group includes all leases on balance sheet as Right-of-use assets with a corresponding lease liability,
other than leases which are short leases (terms of 12 months or less) or low value leases, being leases with
asset value of less than £4,000 ($5,000). Leases that qualify for these exemptions are included within the
disclosures below.
The expenditure charged to the income statement was £27k (2022: £158k).
The future aggregate minimum lease payments under non-cancellable leases not accounted for elsewhere
under IFRS 16, are as follows:
No later than one year
Later than one year and no later than five years
Total
48
2023
£000
4
-
4
2022
£000
13
-
13
Contingent items
Tax
The Group’s only remaining open case is in relation to the treatment of the £4.6m gain included in the 2016
financial statements for the Spot the Ball VAT refund. The £4.6m potential tax was paid to HMRC to eliminate
further interest accruing. There remains a cash liability of c £650,000 should the Company accept HMRC’s
position or challenge and ultimately lose. The directors continue to evaluate the previous position taken and
have engaged counsel to provide opinion, whereupon they will consider if further actions are appropriate.
Certain contingent items exist at the reporting date with respect to tax liabilities as outlined below.
Other contingent items
M&A activity
Both the 2017 sale of the Football Pools division and the 2018 sale of the Group’s Venues business in The
Netherlands have customary seller tax warranties under the terms of the Sale and Purchase Agreements. The
possibility of material claims being made under the seller tax warranties in either deal is considered by
management to be remote. In addition, the 2021 sales of the Bump 50:50, the Global Tote business and
Sportech Lotteries, LLC have customary seller warranties under the terms of the Sale and Purchase
Agreements. Those warranties have been provided in good faith by management in light of the probability of
certain events occurring. The possibility of material claims being made under the seller warranties in either
deal is considered by management to be remote.
Legal
The Group is engaged in certain disputes in the ordinary course of business which could potentially lead to
outflows greater than those provided for on the balance sheet. The maximum possible exposure considered
to exist, in view of advice received from the Group’s professional advisors, is up to £0.1m (2022: £0.1m).
Management is of the view that the risk of those outflows arising is not probable and accordingly they are
considered contingent items.
23. Ordinary shares
Authorised, issued and fully paid ordinary shares of 1p
At 1 January
Buy-back and cancellation
At 31 December
Post Share Consolidation 9,710,000 shares in Issue
24. Related party transactions
2023
‘000
£000
2022
‘000
100,000
1,000
100,000
(2,900)
97,100
(29)
-
971
100,000
1,000
£000
1,000
-
The extent of transactions with related parties of Sportech PLC and the nature of the relationships with them
are summarised below:
- Directors compensation is disclosed in note 8.
- No cash was invested in and there were no trading transactions between the Group and any of its joint
ventures during the year or prior year, and no amounts outstanding at the reporting date (2022: £nil).
49
25. Related undertakings
Subsidiaries,
excluding
dormant
companies
Sportech
Group
Holdings
Limited
Lot.to
Systems
Limited
Sportech
Holdco 2
Limited
Sportech,
Inc.
Sportech
Venues, Inc.
Sportech
Retail, Inc.
Country of
incorporation
Registered address
Class of
shares held
Shareholding
England &
Wales
England &
Wales
England &
Wales
United States
United States
United States
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
600 Long Wharf Drive, New
Haven, CT 06511
600 Long Wharf Drive, New
Haven, CT 06511
601 Long Wharf Drive, New
Haven, CT 06511
Ordinary
85%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
200%
During the year, the Group held investments in related
undertakings as follows:
Joint
ventures
and
associates
Sportshub
Private
Limited
DraftDay
Gaming
Group, Inc
Country of
incorporation
Registered address
Class of
shares held
Shareholding
India
United States
Arias, Fabrega & Fabrega,
Plaza 2000 Building, 50th
Street, Panama
Trident Chambers, POB 146,
Road Town, Tortola, British
Virgin Islands
Ordinary
50%
Ordinary
30%
Dormant
companies
Country of
incorporation
Registered address
Class of
shares held
Shareholding
Sportech
Gaming
Limited
Sportech
Pools
Limited
Sportech
Pools
Competitions
Company
Limited
Pools
Promotions
Limited
Sportech
Mauritius
Limited
England &
Wales
England &
Wales
England &
Wales
England &
Wales
Mauritius
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
Intercontinental Trust Limited,
Level 3, Alexander House, 35
Cybercity, Ebene, Mauritius
50
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Sportech
Pools
Games
Limited
Bet 247
Limited
Sportech
Racing
Limited
Sportech
Games
Holdco, LLC
England &
Wales
England &
Wales
British Virgin
Islands
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
6th Floor 60 Gracechurch
Street, London, United
Kingdom, EC3V 0HR
CSC North America Inc., 45
O’Connor Street, Suite 1600,
Ottawa, Ontario K1P 1A4
Ordinary
100%
Ordinary
100%
Ordinary
100%
United States
600 Long Wharf Drive, New
Haven, CT 06511
Ordinary
100%
26. Investments in subsidiaries (Company)
A full list of the Company’s subsidiaries and other related undertakings is included in note 25 of the Group
Consolidated Financial Statements.
At 31 December 2023 the Company held direct investments in the following entities:
Company
Nature of business
Sportech Group Holdings Limited (“SGHL”)
Holds investments in Group companies
Lot.to Systems Limited
Lottery software supplier
Sportech Management Limited was dissolved on 1 March 2022.
Movement in the book value of the Company's investments is shown below:
At 1 January
Impairment
At 31 December
2023
£000
17,999
(2,139)
15,860
2022
£000
26,257
(8,258)
17,999
The Directors considered the carrying value of the investments for impairment during the year. It was
concluded that as at 31 December 2023 the enterprise value of the subsidiaries of SGHL amounted to
£15,792k and the enterprise value of the Company’s Lot.to Systems Limited subsidiary was £68k. As a result,
an impairment of £2,139k was charged to operating costs in the income statement. Following the impairment,
the Directors consider the carrying value of £15,792k to be supported by the underlying net assets and
cashflows of the Group including those forecasts outlined in note 13 of the consolidated financial statements.
Significant judgement is involved in forecasting the cashflows of the Group and if these forecasts are not
achieved impairment to the investment in SGHL would result. Principal risks of the Group are identified in the
Risk Management section of the Consolidated Financial Statements.
51
27. Reconciliation of EBITDA
The Board of Directors assesses the performance of the business based on a measure of adjusted EBITDA
which excludes the effects of expenditure that management believe should be added back (separately
disclosed items) and other income. This measure provides the most reliable indicator of underlying
performance of the business as it is the closest approximation to cash generated by underlying trade, excluding
the impact of separately disclosed items and working capital movements.
Adjusted EBITDA is not an IFRS measure, nevertheless although it may not be comparable to adjusted figures
used elsewhere, it is widely used by both the analyst community to compare with other gaming companies and
by management to assess underlying performance.
A reconciliation of the adjusted operating expenses used for statutory reporting and the adjusted performance
measures is shown below:
Operating costs per income statement
Add back:
Depreciation
Amortisation, excluding acquired intangible assets
Amortisation of acquired intangible assets
Impairment of goodwill
(Profit)/Loss on sale of intangible assets
(Profit)/Loss on sale of property, plant and equipment
Reversal of impairment of property, plant and equipment
Separately disclosed items (net)
Adjusted operating costs
Note
13,14
12
12
11
12
13
13
6
2023
£000
(14,344)
2022
£000
(14,803)
1,868
95
-
88
(109)
-
(190)
364
(12,228)
1,216
252
29
517
-
150
(190)
657
(12,172)
Adjusted EBITDA is calculated as below:
Continuing and discontinued operations
Revenue
Cost of sales
Gross profit
Marketing and distribution costs
Contribution
Adjusted operating income and costs
Adjusted EBITDA
28. Prior year adjustments
Restated
2022
£000
26,283
(12,126)
14,157
(386)
13,771
(12,172)
1,599
2023
£000
26,505
(12,398)
14,107
(328)
13,779
(12,228)
1,550
The consolidated income statement and consolidated balance sheet for the comparative period, the year
ended 31 December 2022, were adjusted in relation to the treatment of amounts received and paid in respect
of source market fees. The revised income statement shows the gross revenue and gross costs rather than
the net revenue that was disclosed in last year’s statements. The restated balance sheet shows the receivable
and payable values that were not previously disclosed. The overall impact is zero on Total Assets and the
Profit for the Year.
52
The following adjustments were made in the financial statements:
Consolidated Balance Sheet
Original Adjustment
Restated
2022
2022
2022
Trade and other receivables
Trade and other payables
Note
18
20
£000
1,978
£000
1,346
£000
3,324
(6,564)
(1,346)
(7,910)
Consolidated Income Statement
Revenue
Cost of sales
Original Adjustment
Restated
2022
£000
2022
£000
2022
£000
26,004
279
26,283
(11,847)
(279)
(12,126)
Note
4
5
29. Discontinued operations and assets held for sale
The net assets at 31 December 2023 of the identified disposal entities and asset held for sale, which have
been presented on the Group balance sheet as assets held for sale in current assets and liabilities directly
associated with assets held for sale in current liabilities, are as follows:
Sportech Inc
Intangible fixed assets
Property, plant and equipment
Right-of-use assets
Trade and other receivables - LT
Trade and other receivables
Inventories
Income tax receivable
Cash and cash equivalents
Total assets held for sale
Trade and other payables
Lease liabilities
Total liabilities directly associated with assets held for sale
53
2023
£’000
6,017
4,176
3,834
169
4,645
133
111
2,669
21,754
7,298
6,045
13,343
Sportech Inc
Revenue
Cost of sales, marketing and distribution and adjusted operating
expenses
Adjusted EBITDA
Depreciation and amortisation
Reversal of impairment
Disposal of property, plant & equipment
Separately disclosed items
Finance costs
Profit before tax
Tax, excluding tax arising on disposal
Profit after tax
Net cash flow from/(used in) operating activities
Net cash flow used in investing activities
Net cash flow used in financing activities
Net cash outflow
2023
£000
2022
£000
26,454
26,190
(23,016)
(22,860)
3,438
3,330
(1,682)
(1,198)
190
-
-
(278)
1,668
-
190
(133)
(642)
(279)
1,268
(245)
1,668
1,0231
1297
(290)
(296)
(167)
(1479)
(1,342)
(472)
(1,805)
1
Note that the £1,023k profit in Sportech Inc is part of the overall profit from discontinued operations in 2022
of £2,206k. The other £1,183k relates to profits realised in 2022 from other discontinued operations, Bump
Worldwide Inc and Global Tote Inc that were disposed in 2021.
54