Final Results
FOR IMMEDIATE RELEASE
30 November 2004
BETINTERNET.COM PLC
('the company' or 'betinternet')
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 MAY 2004
betinternet.com plc, the global on-line gaming group, today announces
preliminary results for the year ended 30 May 2004.
Highlights of the results are:
* Euro Off-Track, now wholly owned, increased turnover from £1.02m to £22.5m.
* Substantial cost saving programme implemented.
* Financing being put in place to allow positive growth.
* Customer accounts at period end 72,494 (2003: 57,037), an increase of
27.1%.
* Turnover (including share of joint venture) increased 17% to £68.0m (2003:
£58.1m).
* Euro Off-Track profit of £0.71m (2003: loss of £0.48m). Group share of
profit £0.35m (2003: share of loss £0.24).
* Group loss £1.89m after amortisation of £0.22m (2003: £0.13m loss after nil
amortisation).
* Basic and diluted loss per share 1.62p (2003: 0.12p).
Commenting on the results, Denham Eke, chairman of betinternet, said: 'The
period ended 30 May 2004 has been one of significant change at betinternet. The
company now has a clear strategy for profitable growth. Following the year-end,
we have acquired the 50% of Euro Off Track not previously owned and are
organising equity funding from Burnbrae Limited which will support the
anticipated rapid growth of this business'.
Update on Fundraising
The strategic review and fundraising announced on 19 October 2004 is nearing
completion and the Board anticipates that this will be finalised and details
set out in a circular to shareholders before the end of December 2004.
Consequently, the publication of the Company's Report & Accounts has been
delayed pending completion of this fundraising and the annual report will be
posted to shareholders before 31 December 2004.
ENDS
For further information:
betinternet.com plc Tel: 01624 629699
Paul Doona, Managing Director
Waughton Tel: 020 7796 9999
Robin Hepburn/Sorrel Davies
Notes to editors:
The following are attached:
* Chairman's statement
* Consolidated Profit & Loss Accounts
* Consolidated Balance Sheets
* Consolidated Cash Flow Statements
* Notes to the Accounts
N.B. Pari-mutuel (or `tote' wagering) refers to wagering into a `pool' where
dividends are paid to winners and the operator retains a percentage of the
`pool'.
PRELIMINARY RESULTS
CHAIRMAN'S STATEMENT
Introduction
The period ended 30 May 2004 has been one of significant change at betinternet.
The company now has a clear strategy for profitable growth. Following the
year-end, we have acquired the 50% of Euro Off Track not previously owned and
are organising equity funding from Burnbrae Limited which will support the
anticipated rapid growth of this business.
Euro Off-Track, the group's pari-mutuel business, improved its performance
greatly during the year. As a result of this, we have decided to focus more
financial and management resources on this business. The board believes that
this operation, which provides a risk-free return to us as the promoter, has
enormous potential and will provide a more stable form of earnings. I am
pleased to report that turnover has continued to grow rapidly in the current
financial year.
As previously reported, we took decisive action to address the adverse factors
which affected the sportsbook business. In particular, we reduced risk and
eliminated unprofitable markets. Costs have also been reduced to a level in
balance with underlying business. The impact of these measures will be more
fully seen in the current financial year.
In line with the above strategy, the telephone wagering business was scaled
further back during the year. The Internet now accounts for 92% of sportsbook
turnover.
Overview of Results
The performance of the pari-mutuel business, Euro Off-Track, was outstanding.
Turnover increased from £1 million to £22.5 million during the year and the
operation recorded its first net profit, £0.71m, of which the group's share was
£0.35m (2003: share of loss £0.24m).
As reported above this operation is now wholly owned by the group and will be
fully consolidated with effect from 30 June, 2004.
Following the remedial action referred to above, the margin from the sportsbook
business recovered to 5.36% for the period as a whole. Although this was less
than that achieved in the previous 52 weeks, 7.29%, it represented a margin of
6.8% in the second half which was in line with that achieved in the second half
of the previous period.
Nevertheless, the fall in turnover combined with the reduction in margin
resulted in a fall in gross profit to £2.44m (2003: £4.16m).
Action to reduce overheads by approximately £1m on an annualised basis was also
undertaken, however, much of the impact of this will be felt in the current
financial year. Accordingly, the group recorded a loss of £1.68m (2003: loss of
£0.13m) before amortisation charges of £0.21m (2003: nil), thus increasing the
overall loss to £1.89m (2003: loss of £0.13m).
Strategy
The board's announcement of 19 October, 2004 set out the results of the
strategic review undertaken during the summer. The encouraging performance of
Euro Off-Track has led the board to conclude that greater emphasis should be
placed on its pari-mutuel business, and Euro Off-Track has continued to perform
strongly since the acquisition of the outstanding 50% interest in June 2004.
The board believes that there are significant opportunities in exploiting its
Isle of Man based hub operations on an international basis. An example of this
is our link with Phumelela Gold Enterprises of South Africa and the formation
of a new joint venture company, Isle of Man Tote Limited. This company is
intended to provide an international hub service for South African thoroughbred
racing and, in due course, it is hoped will operate a totalisator and host pool
betting on a variety of tote activities.
We will continue to operate the sportsbook in a manner that minimises our risk
as much as possible and are seeking ways to make our offering more attractive
in a manner consistent with this aim. To this end, we recently announced the
imminent launch of an online casino in partnership with CasinoWebcam, the
market leader in video streaming gaming technology. We are also looking at new
initiatives to capitalise on our Far Eastern customer base.
Overall the strategy is now clearly focused on making betinernet a leading
technology solutions provider for the online gaming sector, maximising the
company's market-leading technology to develop risk-free income streams to
balance the unpredictable nature of fixed odds sports wagering.
Fundraising
To assist the strategic review referred to earlier, Mill Properties Limited and
Burnbrae Limited, vehicles for the Caldwell family and Mr J. Mellon, provided
additional funding by way of financial guarantees. These are intended to be
replaced by arrangements which subject to shareholder approval will lead to the
issue of 1m new ordinary shares in the company to Burnbrae Limited and which
will raise approximately £900,000 after expenses. Details of these arrangements
are explained more fully in a circular which is expected to be posted to
shareholders before the end of December 2004.
As a result, the company expects to have the necessary funding in place to
develop the Euro Off-Track business and to continue the sports book business on
its new strategic course. The directors are confident of the future prospects
that this provides for the business.
Board Changes
Since the end of the financial period there have been changes to the board. Mr
Jim Mellon has joined as a non-executive director. Mr Mellon, who is a
beneficiary of Burnbrae Limited, brings a wealth of commercial experience to
the board and is a most welcome addition. Mr William Mummery, Mr Mark Child and
Mr Harley Corkill have all resigned from the board, and I thank them for their
support. Mr Mummery continues to provide the company with technical consultancy
in relation to the pari-mutuel business.
Summary
The directors strongly believe that the new strategic direction that they have
set for the business provides major long-term opportunities for the business. I
wish to thank all shareholders for their continued support and also the staff
of betinternet for their endeavours on behalf of the business during the year.
Denham Eke
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
For the period to 30 May
2004
Before
Goodwill Goodwill 2004 2003
Notes £'000 £'000 £'000 £'000
Turnover including share of joint
venture
Betting stakes received
Internet 41,759 - 41,759 50,375
Telephone 3,735 - 3,735 6,688
Joint Venture 22,513 - 22,513 1,016
68,007 - 68,007 58,079
Less share of joint (22,513) - (22,513) (1,016)
venture turnover
Total group turnover 1 45,494 - 45,494 57,063
Cost of sales
Winnings paid and bets (43,004) - (43,004) (52,826)
laid off
Betting duty paid (53) - (53) (76)
Gross Profit 1 2,437 - 2,437 4,161
Administration expenses (4,467) (219) (4,686) (4,060)
Group operating loss/ (2,030) (219) (2,249) 101
(profit)
Share of operating profit/(loss) 354 - 354 (239)
in joint venture
Total operating loss including
share of
joint venture (1,676) (219) (1,895) (138)
Interest 1 - 1 8
Loss on ordinary activities
before and after
taxation and retained loss for (1,675) (219) (1,894) (130)
the period
Basic and diluted loss 2 (1.62) (0.12)
per share
CONSOLIDATED BALANCE SHEET
As at 30 May 2004
30 May 2004 1 Jun
2003
Fixed Assets £,000 £,000
Intangible Assets 219 437
Tangible Assets 620 841
839 1,278
Current Assets
Debtors 851 1,611
Cash at bank and in hand 444 1,852
1,295 3,463
Creditors
amounts falling due within one year (1,517) (1,876)
Net Current Assets (222) 1,587
Provision for liabilities and charges
Investment in joint venture
Share of gross assets 446 194
Share of gross liabilities (636) (738)
Share of net liabilities (190) (544)
Return on Investments and servicing of finance
Depreciation and amortisation
Net Assets 427 2,321
Capital and Reserves
Called up share capital 1,167 1,167
Share Premium 6,928 6,928
Profit and loss account (7,668) (5,774)
Equity Shareholders' Funds 427 2,321
CONSOLIDATED CASH FLOW STATEMENTS
For the period to 30 May 2004
2004 2003
£ £
Net cash outflow from operating activities (984) (995)
Returns on investments and servicing of finance 1 8
Capital expenditure and financial investment (345) (377)
Acquisition (including cash assumed) 77
-
Cash outflow before use of liquid resources and (1,328) (1,287)
financing
Financing - 1,218
Decrease in cash in the period (1,328) (69)
Reconciliation of net cash flow to movement in
net funds
2004 2003
£ £
Opening net funds 1,765 1,484
Decrease in cash in year (1,328) (69)
Cash outflow from movement in borrowings - 350
Closing net funds 437 1,765
NOTES TO THE ACCOUNTS
1. Segmental analysis
Period ended 30 May 2004 Telephone Internet Total
£ £ £
Betting Stakes Received 3,735 41,759 45,494
Winnings paid and bets laid off (3,571) (39,433) (43,004)
Betting duty paid (4) (49) (53)
Gross Profit 160 2,277 2,437
Margin 4.28% 5.45% 5.36%
Period ended 1 June 2003 Telephone Internet Total
£ £ £
Betting Stakes Received 6,688 50,375 57,063
Winnings paid and bets laid off (6,073) (46,753) (52,826)
Betting duty paid (3) (74) (77)
Gross Profit 612 3,548 4,160
Margin 9.15% 7.04% 7.29%
2. Loss per share
The basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares during
the year.
Calculation of loss per share is based on losses of £1,893,941 (2003: £130,555)
and the weighted average number of ordinary shares being the equivalent of
116,687,254 (2003:112,293,584) ordinary 1p shares.
The diluted loss per share is the same as the basic loss per share as the
adjustment to assume conversion of dilutive ordinary shares would decrease the
loss per share.
NOTES TO THE ACCOUNTS
Continued
3. Reconciliation of operating (loss)/profit to net cash outflow from operating
activities
2004 2003
£'000 £,000
Operating (loss)/profit (2,249) 101
Depreciation and amortisation charges 784 544
Reduction/(increase) in debtors 760 (788)
Reduction in creditors (279) (852)
Net cash outflow from operating activities (984) (995)
4. Analysis of cash flows for headings netted in the cash flow statement
2004 2003
£'000 £,000
(a) Financing
Issue of new shares including share - 1,568
premium
Repayment of borrowings - (350)
- 1,218
(b) Capital expenditure
2004 2003
£'000 £'000
Payments to acquire tangible fixed assets (345) (382)
Receipts from sale of tangible fixed - 5
assets
Net capital expenditure (345) (377)
5. Analysis of net funds
at 1 June Cash at 30 May
2003 Flow 2004
£ £ £
Cash in hand and at bank 1,852 (1,408) 444
Bank overdraft (87) 80 (7)
1,765 (1,328) 437
NOTES TO THE ACCOUNTS
Continued
6. Basis of preparation of the financial statements
(i)The results for the period ended 30 May 2004 are prepared in accordance with
applicable UK accounting standards, using the same accounting policies as set
out in the group accounts for the year end 1 June 2003. These preliminary
statements are unaudited, but have been reviewed, in accordance with Auditing
Practices Board guidance by the Auditors, KPMG Audit LLC, whose report will be
included in the report and accounts to be sent to shareholders.
(ii) The abridged accounts for the year to 30 May 2003 are an extract from the
full group accounts for that period on which an unqualified report was made by
the group's auditors and which have been delivered to the Registrar of
Companies.
(iii) In preparing these financial statements the Directors considered the
adequacy of the cash resources and working capital available to the Group for
the next 12 months.
The Directors noted that on 18 October 2004, the Company received the proceeds
of a convertible loan from Burnbrae Limited amounting to £200,000. The loan is
capable of converting to 5 million new Ordinary Shares. The Company has also
entered into arrangements for a placing of new Ordinary Shares with Burnbrae
Limited in order to raise further funding of £800,000. Both the conversion of
the outstanding loan note and the placing are subject to, and conditional upon,
the approval of the independent shareholders to the waiver of the requirements
of Rule 9 of the City Code. The Directors have concluded that, pending the
outcome of an extraordinary general meeting of independent shareholders to
consider the waiver of Rule 9, it is appropriate to prepare the Preliminary
Announcement for the year ended 30 May 2004 on a going concern basis.
7. Other information
i) All profits derive from continuing activities.
iii The preliminary statement was approved by the board on 30 November, 2004
iii) The report and accounts upon which KPMG Audit LLC will deliver their
report will be posted to shareholders during December 2004. Following posting,
copies will be available for inspection at the Company's Registered Office;
Viking House, Nelson Street, Douglas, Isle of Man IM1 2AH.
iv) The Company's nominated advisor and broker is Williams de Broe, PO Box 515,
6 Broadgate, London EC2M 2RP.
Latest directors dealings
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago Smurfit Westrock (DI)
- 1 day ago Menhaden Resource Efficiency
- 1 day ago BP