Sportec shares get a kicking as sale falls flat

(c) Sky News 2018: <a href="">Sportec shares get a kicking as sale falls flat</a>

Sportech (Frankfurt: ROEA.F - news) shares lost more than 50% of their value on Wednesday morning after the pool betting firm issued a profit warning and revealed it is no longer up for sale.

The grim update came hours after Sky News reported that the company was to announce it had uncovered a series of accounting irregularities.

Sportech warned it now anticipates underlying annual earnings for 2017 will fall below expectations to about £6.5m - including write-downs of old stocks and bad debt.

The former owner of the Football Pools will also report £8m worth of exceptional items.

The company said these include the departure of former board members and other senior management, leading to a non-cash charge of £4.3m.

Ian Penrose, the former chief executive, and Mickey Kalifa, the finance director, both quit Sportech in September, having returned £21m from the sale of the Football Pools to investors.

"Restructuring costs and associated provisions arising from the strategic review are expected to be £2.5m and the sale of the NYX shares for cash consideration of £2.3m resulted in a book loss of £1.6m," the company added.

The profit warning comes six weeks before preliminary results for last year are announced.

The company also revealed that it is no longer up for sale. Sportech, which had a market value at the close of trading on Tuesday of about £125m, had put itself on the market last October after receiving a number of bid approaches.

"Whilst the board engaged in detailed discussions with interested parties during the course of the formal sales process, 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," the company said.

Sportech, which operates pool betting services and supplies technology to the global racing and betting industries, has a big presence in US sports venues.

It has more than 27,000 betting terminals in operation across 37 countries, processing roughly $11bn (£7.9bn) of bets each year.

Sportech also announced the appointment, with immediate effect, of Andrew Gaughan as it new chief executive, replacing Ian Penrose who left last autumn.

Mr Gaughan joined the firm in 2010 following the acquisition of Scientific Games Racing, and was appointed to the board in January 2017.