Tough week sees Sportech call off corporate sale

A grim week for London-listed betting and racing systems provider Sportech Plc has seen its share price halved, as corporate governance halts its planned enterprise sale.

On Wednesday, Sportech published a corporate update, confirming that it had uncovered a ‘series of accounting irregularities for 2017 trading’.

The unexpected event, sees Sportech governance anticipate 2017 corporate earnings to ‘fall below expectations’ to around £6.5 million.

Furthermore, Sportech will move to write-down £8 million in ‘exceptional items’ which include; payment of former senior executives, restructuring costs and further provisions from its ongoing strategic review.

Updating investors, Sportech governance announced that it had ended its ‘formal sales process’, which had begun in October 2017 under the firm’s strategic review process.

“Whilst the Board engaged in detailed discussions with interested parties during the course of the FSP, it has concluded that these discussions were unlikely to result in an offer for all or a material part of the Group that it would be able to recommend to shareholders.” Sportech detailed in its market update.

The response to the news by investors was stark, with Sportech shares halving from 72p to 35.5p on Wednesday’s trading (current price 42.5p).  

Ending its turbulent week, Sportech announced the appointment of Andrew Gaughan as new Group Chief Executive Officer, having previously served as President of Sportech Racing & Digital.

Gaughan will be based out of Toronto, and will lead the firm’s continued strategy of expanding its services for the North American market, in which Sportech has achieved a strong commercial pipeline.

Gaughan will be supported by a new Group CFO, who will be based in North America.

Richard McGuire, Non-Executive Chairman of Sportech, commented:

“The Board and senior management invested considerable time in diligently managing the Formal Sale Process.  Whilst a sale of the Company might have delivered an immediate further return to shareholders, in addition to the £75 million returned last year, I am confident that the Company has the potential to deliver significant long-term value to shareholders, especially if the US sports betting market is liberalised and also from further diversification strategies. We are focused on ensuring Sportech benefits fully from any changes in the US sports betting market and we anticipate announcing exciting new initiatives in due course.

“We have a strong balance sheet, professional management, dedicated staff and industry-leading products being delivered to support clients across 37 countries.  I welcome Andrew Gaughan to the role of Chief Executive Officer as part of a new leadership team to ensure we execute on our commitment to deliver tangible returns to shareholders.”

Sportech Plc will release its full-year 2017 Results on Tuesday, 24 April 2018.