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Betting operator Sportech expects to report full-year 2022 adjusted EBITDA ahead of market consensus, according to a pre-close trading update published today (24 January).

Sportech operates both physical and online pari-mutuel betting channels across 10 venues in Connecticut, and is also licensed by the Connecticut Lottery Corporation to offer sports betting under the PlaySugarHouse brand.

Shares in the business are trading some 7% higher today after it announced it had delivered “solid growth” in the second half of 2022. 

The firm said that GGR, including from sports betting, continued to perform strongly, while food and beverage (F&B) revenue also delivered solid growth.

Alongside its growing revenues, the London-listed business has also been able to “significantly” reduce its group operational costs, it added.

Net cash as of the end of the year was deemed “healthy” by the operator, which it said gives the potential to return further capital to shareholders in H1 2023.

In 2022, 7p per share was returned to shareholders in cash.

“The group continues to evolve and deliver new growth opportunities,” said Sportech executive chairman Richard McGuire.

“We are strengthening relationships with our betting partners and aggressively reshaping non-operational costs to align with group scale. 

“The outlook for 2023 and beyond is very positive. We will continue to discuss the future business structure with key shareholders to ensure alignment with the board on objectives and direction for the divisions and group,” McGuire concluded.

In response to the update, London-based investment bank Peel Hunt has upgraded its full-year EBITDA forecast for Sportech from £0.7m to £1m, but admitted the actual figure could be higher.

Peel Hunt also estimated that the firm ended 2022 with around £8m of surplus cash – equivalent to 8p per share in the business.

The update “should provide a supportive backdrop for exploring new opportunities,” Peel Hunt added, while reiterating its previously issued Buy recommendation for the stock and 43p per share target price.

Sportech’s latest financial report was published in September 2022 and covered the first half of the year.

Revenue to 30 June totalled £12.6m, delivering gross profit of £6.5m and adjusted EBITDA of £0.3m.

For comparison, in 2021 full-year revenue came to £22.9m, while adjusted EBITDA came in at a £1.8m loss.

The business has streamlined this year, disposing of non-core assets and focusing its resources on covering a few key areas, namely sports betting and digital lottery operations in Connecticut.