Four month trading update from Sportech

Sportech plc has issued a four-month trading update covering the period 1 January 2015 to 11 May 2015, and reporting good progress on its strategic objectives.

Highlights include:

* The achievement of a licence in New Jersey’s online gambling market, where the group operates in partnership with Resorts Casino Hotel and NYX Gaming;

* The negotiation of material improvements to an inherited onerous gaming contract in the State of Connecticut, and involvement in a debate regarding the potential for additional “satellite” casinos in Connecticut;

* New professional sports teams relationships for the group’s Bump 50/50 electronic in-stadia raffle business in North America as the company diversifies; Bump has signed up new customers in the period, including the Montreal Canadiens and Quebec Remparts;

* The group has rejected an undervalued acquisition approach for its The Football Pools subsidiary from an unidentified potential buyer. Trading in the Football Pools is in line with expectations;

* In the direct business channel, Football Pools new subscription player recruitment is continuing with 8,400 new players to date in 2015, which is 10 percent higher than last year; online acquisitions are driving the growth and now making up around 60 percent of all new acquisitions. Online customers are being acquired at a much lower cost and represent a far greater cross sell opportunity than telephone acquired customers.

* The increase in weekly revenues per customer is currently exceeding the overall reduction in player numbers.

* The company has continued the roll-out of new game content on the footballpools.com website, and envisages a further 30 games in the near future;

* In the US, Sportech’s Racing and Digital division is on track to deliver and complete the major sale of tote betting systems for horseracing in the UK to Betfred. The division has also secured important contract wins and renewals but has experienced contract losses in the period;

* Trading in the Venues division in Connecticut has been impacted by the severe winter freeze affecting site openings, race meeting cancellations (especially in New York) and by a reduction in amounts wagered across the industry as a whole; betting volumes have declined against last year by 9 percent;

* Cost saving actions are being taken across the group to position the business for the future;

* The company’s US racing business has successfully renewed contracts with key customers including Mountaineer Gaming, Emerald Downs and Parx Racing and is making progress with several proposals to potential new customers.

* US thoroughbred racing industry data shows that amounts wagered in the four months to the end of April are down 3 percent on 2014;

* The company is on track to go live with the supply of its core Quantum tote system to Betfred’s Totepool business. Successful initial trials of the system have already taken place at certain UK race meetings, with a full roll-out to follow over the summer;

* The Digital business has suffered the loss of two significant and profitable customers, including Colonial Downs in Virginia, which ceased all racing operations in April;

* Internet handle on MyWinners.com has grown 71 percent y-o-y from a low base as the company enters the second year of online wagering in Connecticut. Sportech expects to continue to improve its technology and product offering during the year to support further growth in this channel.

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