Sportech hopes to hear on £97.3m appeal decision soon

Sportech hopes to hear on £97.3m appeal decision soon

Thursday, November 10, 2016 Posted by Andy McCarron
Supreme Court deciding on whether HMRC can appeal

Global operator Sportech is waiting on a final green light from the UK Supreme Court as to whether it can keep the £97m it claimed from the government, or whether it will face another day in the appeal courts.

Sportech’s Football Pools business has successfully argued over seven years across many courts that it unnecessarily paid VAT on its Sport the Ball product between the 1970s and 1990s, eventually securing a rebate with interest from HMRC earlier this year.

However HMRC is still fighting to get the money back and has asked the Supreme Court for permission to appeal the latest ruling in favour of Sportech in May this year.

A sit stands Sportech’s balance sheet sits at a net cash level of £37m, but that will drop to a deficit of £60m should HMRC be allowed to appeal and win.

The balance sheet would have been even healthier has the company’s agreed sale of the Football Pools gone through. Sportech had agreed a fee of £97m with Burlywood Capital for the business, which would have allowed Sportech to concentrate on its US operations. However the unstable economic situation caused by the Brexit vote appears to have frustrated Burlywood’s attempt to raise the funds,

Sportech seems in no rush to divest the business now. It said The Football Pools continues to trade in line with management expectations, and is demonstrating the move to stability that we have been striving for in 2016. It added: “Core revenues remain broadly in line with prior year, driven by an increase in spend per head, whilst both revenues and player numbers continue to grow in the digital channel.”

Sportech continued a strategic diversification of its gaming technology division into Europe and Asia, with the successful implementation of betting systems into the Macau Jockey Club in September.

Bump 50:50, which extends Sportech’s activities to include the provision of electronic lottery/raffle systems to professional sports teams in North America, also continued its strong growth by deploying systems with market leading brands including the Dallas Cowboys, San Francisco 49ers, LA Clippers.

Sportech’s strategy is to build a leading position in the developing US and global betting industry. This includes the building of a flagship 20,000 square feet betting venue, sports bar and restaurant in Stamford. Construction remains on-budget, and is scheduled to be completed by April 2017.

Totally Gaming says: Sportech has outgrown the Football Pools business from which it began and it has looked an odd part of the portfolio ever since CEO Ian Penrose struck a transformational deal to buy Scientific Games’ racing interests in the States. However it is still a decent business in its own right, which is why it has been the subject of more than one acquisition bid this year.

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