The business moved to the Alterative Investment Market (AIM) in 2021 after downsizing by selling parts of the business including Global Tote, which was acquired by Betmakers in June 2021, and Bump 50:50, which Sportech agreed to sell to Canadian Banknote in February 2021.
As a result of these sales, Sportech’s executive chairman, Richard McGuire, said 2022 proved to be a year of “consolidation and progress” for the business as it moved to its new operating model.
This approach incidentally led to an increase in revenue and, while annual net loss widened, McGuire said the business is in a strong position to pursue further growth in 2023, with a number of “strategic options” being considered.
“2022 was a year of consolidation and progress and the team are excited about the potential in 2023,” McGuire said. “Our investment in the growth of US sports betting has started to deliver results. 2022 operational leverage was impressive, as modest revenue gains translated to impressive gross profit gains and a return to positive EBITDA during the year.
“We are reviewing various strategic options for the current business lines while evaluating online betting opportunities that leverage our brand, people and expertise. Cash position is strong and we will update the market regarding potential further shareholder capital returns ahead of the May AGM.”
Looking at Sportech’s financial performance in 2022, revenue for the year reached £26.0m (€29.5m/$32.3m), up 13.5% from £22.9m in the previous year, during which certain assets were sold as part of the reorganisation of operations.
Breaking this down, the Sportech Venues business, which operates across Connecticut offering legal betting, generated £24.5m of all revenue. Some £19.1m of this was attributed to wagering revenue, while £3.4m came from food and beverage and the remaining £2.0m sports betting commission.
Revenue from Sportech Digital amounted to £1.5m, all of which came from service activity. This business comprises the 123Bet.com US-facing B2C trading operation, previously a white label customer of the now-discontinued Racing and Digital business and a UK-based B2B operation serving markets with a proprietary platform for lottery management.
In total, service revenue stood at £20.6m, level year-on-year, while revenue from sports betting commission was 605.0% higher at £2.0m and food and beverage revenue jumped 61.9% to £3.4m.
Turning to spending, cost of sales edged up 2.6% to £11.8m, leaving £14.2m in gross profit, up 23.5% year-on-year.
Marketing and distribution expenses were 39.9% higher at £386,000 and, while operating costs were 5.7% lower at £14.8m, other income fell 97.1% to £120,000. Finance costs of £254,000 were almost entirely offset by £232,000 in finance income.
Despite revenue growth, pre-tax loss increased from £246,000 to £934,000. Sportech paid £79,000 in tax for its continuing operations, leaving a net loss from continuing operations of £1.0m, wider than £438,000 in the previous year. However, adjusted EBITDA improved from a loss of £1.8m to a positive figure of £1.6m.
When including discontinued operations, profit after tax attributable to owners of Sportech reached £170,000, compared to £34.6m in 2021.
Sportech’s year of transition also included a number of major comings and goings in terms of staff.
Chief executive Andrew Lindley announced in May that he would step down after just eight months in the role. McGuire was named executive chairman at the same time, shortly after Giles Vardey left his role as independent non-executive chairman in April.
Nicola Rowlands exited as chief financial officer in September, while Ben Warn stepped down as a non-executive director.