Sportech Plc, a U.K. sports-betting company, fell the most since November 2009 after saying Britain’s tax authority won permission to appeal a judgment requiring it to refund levies to the company.
Sportech declined 10.2 percent to 88 pence in London trading, the biggest fall since Nov. 23, 2009, after saying an appeal by Her Majesty’s Revenue & Customs will probably be heard in the early to middle part of next year. The company, with its operational base in Liverpool and registered office in Glasgow, Scotland, said in March that it had a won a claim that may result in the payment of more than 80 million pounds ($125 million) in overpaid tax and interest.
“It does remove any chance of an early settlement and that in itself is disappointing and frustrating,” Nick Batram, an analyst at Peel Hunt LLP, said in a telephone interview. “It’s a setback on a bad day in the market and that is why I think you have seen the shares hit as hard as they are.”
Sportech’s claim is that it overpaid sales tax on a betting game between 1979 and 1996. The company, which handled more than $13 billion in bets last year around the world, rose 19 percent on March 8 after saying a tax tribunal had found in its favor.
Batram cut his price target on the stock to 116 pence from 125 pence after the announcement. He kept his buy rating, saying he ultimately expects Sportech to win the claim.
About 118,400 shares traded in London, the equivalent of 80 percent of average daily trading over the past three months. The stock has climbed 25 percent this year, even after today’s fall, valuing the company at 175 million pounds.
“We are surprised by such a swift response,” analysts including Simon French at Panmure Gordon & Co., wrote in a report today. “Nevertheless, we maintain our view that the original decision will be upheld.”
Panmure reiterated its buy recommendation today saying that it expected good progress in the company’s U.S. business and “solid cash flow” in the U.K. when Sportech issues six- month results at the end of August.