Sportech hails progress of cost control strategy
Sportech executive chairman Richard McGuire has confirmed that the technology provider will continue to focus on controlling costs in the year ahead, with the strategy having led to encouraging progress for the business following a challenging 2018.
Speaking ahead of the company's annual general meeting today (May 22), McGuire said that Sportech had made progress so far this year in implementing a strategy to drive longer term profitability, with trading now in line with the board’s expectations.
As revealed in its annual financial results in March, Sportech suffered a 3.9% fall in turnover in 2018, although cost control measures, prompted by a strategic review last year, helped to mitigate the impact of what McGuire described at the time as a “challenging” 12-month period.
The chairman highlighted continued operational progress across a number of key divisions, in particular its focus on developing its digital racing capabilities and controlling costs.
He noted that Sportech's Tote Services division had continued to secure new clients, as well as extending existing contracts, while enhancing the core product.
“Sportech's Quantum Tote software recorded a successful Kentucky Derby day when processing almost 100 million betting transactions via more than 13,000 points of sale across the US and recording a 14% growth in Sportech's own retail internet volume," he said. “The global horse racing Tote market is showing signs of stabilisation and management continues to focus on driving further efficiencies, specifically managing the cost base whilst developing innovative new products and strengthening our digital capabilities to deliver a relevant, exciting and comprehensive product suite to the market.
"The fixed cost base of certain properties remains an area of focus and management has formulated plans to improve profitability and drive efficiency across the division in the short to medium term.”
McGuire also highlighted the importance of sports betting legislation in Sportech’s main US state of Connecticut, saying that it “remains a core objective for the group”, although in a note reacting to McGuire's AGM statement, Regulus Partners warned that such a law is unlikely to become reality for at least another year.
With regard to sports betting, McGuire noted that bettors were being attracted away from betting on horse racing to the sports betting offerings in neighbouring states such as New Jersey, Pennsylvania and Rhode Island.
Regulus Partners pointed out that US horseracing was “especially vulnerable to mass-market sports betting”, but could address this by being an early mover as soon as Connecticut passes wagering legislation.
“From a Sportech perspective, turning the potential threat of sportsbetting to US horseracing into an opportunity is still possible from both a B2B and B2C perspective," Regulus expained. "However, it will require the Connecticut impasse to be broken somehow for the latter, and a considerably more dynamic operational and lobbying front for the former than anything seen hitherto.
"Conversely, if US racing sees sports betting simply with vague hope, indifference or weak defensiveness, then signs of stabilisation could be short lived, in our view.”
McGuire also said that Sportech’s lottery division had enjoyed a solid start to the year, with revenues growing at about 10% year-on-year, in line with expectations.
Sportech will report its results for the six months ended June 30, 2019 on August 22.