Shares in online gambling firm Sportech (SPO) have plummeted over 50% to 36.3p after terminating talks to sell the business and revealing a profit warning.
The company put itself up for sale in October, but ended discussions with interested parties as they were unlikely to result in an offer it would be able to recommend to shareholders.
This implies that Sportech did not receive any offers that provided full value for the business.
Adjusted earnings before interest, tax, depreciation and amortisation are now anticipated to be below expectations at approximately £6.5m thanks to a series of write-offs and restated profit.
This is significantly lower than broker Peel Hunt’s £10.1m earnings forecast and Investec’s £8.8m estimate.
In a further bit of bad news, trading in the first ten weeks of 2018 has been challenging due to ‘weather-related softness' in the Connecticut-based venues division.
Investors should note Sportech’s financial review is not yet complete and the downgraded guidance could change. They will have to wait until full year results on 24 April to find out.
Sportech also revealed £8m in exceptional costs to cover the departure of former board members and senior management plus the restructuring and strategic review.
Despite several setbacks, the company says the strategic review highlights it has ‘significant potential for long-term value creation.’
It hopes to achieve this by growing its core businesses and taking advantage of the potential liberalisation of sports betting in select US states.
In an internal appointment Andrew Gaughan becomes chief executive officer and non-executive director Richard Copper will provide financial oversight for Sportech as it searches for a new chief financial officer.
