Interim Results
FOR IMMEDIATE RELEASE
3February 2003
BETINTERNET.COM PLC
('the Company' or 'betinternet')
INTERIM RESULTS FOR THE 26 WEEKS ENDED
1 DECEMBER 2002
betinternet.com plc, the global on-line gaming group, today announces interim
results for the 26 weeks ended 1 December 2002.
Highlights of the results are:
* Group operating profit £9,000 (2001: £399,000 loss)
* Gross profit £1.92m (2001: £1.55m) - an increase of 23.9%.
* Internet betting turnover £20.75m (2001: £14.01m) - an increase of 48.1%.
* Internet betting margin, after duty, 7.0% (2001: 7.1%)
* Customer accounts at period end 33,944 (2001: 14,989) - an increase of
126.5%.
* Basic and diluted loss per share 0.12p (2001: 0.76p)
* Period-end cash £1.64m.
Commenting on the results Jim Mellon, chairman of betinternet, said: 'The
Company is now cash flow positive in its core business for the first time in
its history and all the key ratios are promising.
'I am hopeful that for the full year to May 2003 we will make our first net
profit as a Company and be very positively positioned for the following period.
As a result I have every confidence that we will go from strength to strength.'
ENDS
For further information:
betinternet.com plc Tel: 01624 629699
Paul Doona, Finance Director
Waughton Tel: 020 7796 9999
Robin Hepburn/Sorrel Davies
Notes to editors:
The following are attached:
* Interim report
* 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'.
INTERIM REPORT
CHAIRMAN'S STATEMENT
It is good to be able to make my first comments as Chairman with positive news.
The Company is now cash flow positive in its core business for the first time
in its history and all the key ratios are promising. Internet betting continues
to grow strongly and the mix and depth of our business is improving
satisfactorily. The sportsbook, the core of the business, is tightly managed
and customer volumes are strong. Cash balances have risen and are very
comfortable.
The Company is now in a position to make acquisitions and I intend to champion
this process actively. The substantial investment in Euro Off-Track, both in
time and in money, may, at last, be about to bear fruit, with many prospective
pari- mutuel deals in the pipeline.
As we have always erred on the side of caution, we are not burdened by US
regulatory issues as are some of our competitors. I am hopeful that for the
full year to May 2003 we will make our first net profit as a Company and be
very positively positioned for the following period. As a result I have every
confidence that we will go from strength to strength.
OPERATING REVIEW
Overview of the results
During the last six months betinternet has passed a significant milestone with
the accomplishment of its first profit from its core sportsbook operation.
Turnover of £24.44m, including the group's share of joint ventures, showed
continued growth compared to the previous year (£22.68m). The internet betting
and pari-mutuel operations now account for 85% of turnover, following the
strategic switch away from telephone betting that has taken place during the
last year.
betinternet's customer numbers have continued to grow, giving rise to total
customer accounts of 33,944 at the period end.
Gross profit has risen from £1.55m in 2001 to £1.92m in the latest period.
Furthermore, betinternet has continued to benefit from stable transaction costs
as a result of its excellent banking relationships and monitoring procedures.
It has also actively continued to control administrative costs enabling the
increase in turnover to achieve the business' first operational profit.
Regulation
Although regulatory uncertainty continues in a number of markets, including
parts of Asia, betinternet has been largely unaffected by this and the
Company's largest individual market continues to be the Far East. Indeed,
substantial increases in customers in Singapore mean that the Far East region
continues to be the fastest area of growth.
Review of Operations
* Fixed Odds
a. Internet
The continuing growth of the internet wagering operation has given rise to a
small, but nonetheless most welcome profit. Having seen customer numbers rise
quite steeply during the World Cup in June 2002, betinternet has successfully
managed to retain many of these customers as regular account users. The
continuing and significant investment in IT infrastructure has resulted in the
Company's ability to readily handle several times the existing average daily
volume of bets and is part of building for the future of the business.
(b) Telephone
The Company's strategy of continuing to provide a `first-class' service to a
selected number of customers continues to reap benefits, with a more than
satisfactory margin of 12.7% during the period (2001: 6.3%). Accordingly,
betinternet intends to continue to run this operation at its current level of
activity.
* Pari-Mutuel
During the period of these results the partnership with US Off-Track Inc. (Euro
Off-Track), although continuing to absorb cash, has developed further,
providing a number of potential opportunities which are actively being pursued.
These include initiatives to develop pool wagering by way of commingling on a
global basis. The Board is currently considering a number of joint venture
opportunities and, although these discussions are still at an early stage, the
Board is cautiously optimistic of its ability to achieve profitability in the
short-term. Indeed, the Company anticipates that it will shortly start to
receive contributions from at least two B2B relationships.
Subsequent to the period end, the Company has re-negotiated its Joint-Venture
agreement with its partner, US Off-Track Inc., to provide that the costs of
this `start-up' operation will in future be shared equally. Operating costs
have also been reduced by securing contributions to the broadcast costs from
the Irish Greyhound Board and Gaming Insight Plc. In addition, a `soft launch'
of the Irish greyhound content into the USA has been undertaken. The results of
this have been encouraging and a full launch is planned for late February/early
March.
The number of tracks into which we are able to commingle wagers has grown from
54 when we last reported in November 2002 to 74 now.
The Future
In addition to the organic growth that has delivered profitability for its
sportsbook, the Company is also considering several options that would enable
it to expand by way of acquisition.
Since the announcement of the preliminary results in November 2002, and as
previously signalled, the Board has separated the roles of Chairman and
Managing Director, and accordingly Jim Mellon was appointed Chairman with
effect from 1 January 2003. This is part of the Board's continuing desire to
ensure it has the widest range of skills available to enable it to successfully
grow the business.
The Company's ambition, to establish itself as a respected, integrated, global
e-gaming company, is undiminished and the Board is pleased with the continuing
solid progress that betinternet is making.
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
26 weeks Year Six months
to ended to
01-Dec-02 31-May-02 31/11/2001
£000 £000 £000
Notes Unaudited Audited Unaudited
Turnover including share of joint 1
venture
Betting stakes received
Internet 20,751 38,673 14,005
Telephone 3,690 13,953 8,671
Pari-Mutuel 314 385 10
24,755 53,011 22,686
Less share of joint venture turnover (314) (385) (10)
Total group turnover 1 24,441 52,626 22,676
Cost of sales
Winnings paid and bets laid off (22,487) (49,627) (21,037)
Betting duty paid (32) (131) (88)
Gross profit 1 1,922 2,868 1,551
Administration expenses (1,913) (4,560) (1,950)
Group operating profit/(loss) 9 (1,692) (399)
Share of operating loss in joint (148) (306) (43)
venture
Total operating loss including share (139) (1,998) (442)
of joint venture
Interest receivable and similar 4 17 9
income
Interest payable and similar charges - (3) (163)
Loss on ordinary activities before (135) (1,984) (596)
and after taxation and retained loss
for the period
Basic and diluted loss per share (p) 2 (0.12) (2.33) (0.76)
CONSOLIDATED BALANCE SHEETS
1 December 31 May 30 November
2002 2002 2001
£000 £000 £000
Unaudited Audited Unaudited
Fixed Assets
Intangible Assets 389 498 476
Tangible Assets 428 480 244
Investment in joint venture
- share of gross assets - - 269
- share of gross liabilities - - (312)
Investments in associates - - 112
817 978 789
Current Assets
Debtors 1,042 823 978
Cash at bank and in hand 1,645 1,850 973
2,687 2,673 1,951
Current Liabilities
amounts falling due within one year (1,506) (2,463) (2,594)
Net Current Assets/ (Liabilities) 1,181 210 (643)
Provision for Liabilities and Charges
Investment in joint venture
- share of gross assets 86 86 -
- share of gross liabilities (539) (391) -
Net Assets 1,545 883 146
Capital and Reserves
Share Capital 1,087 1,007 783
Share Premium 6,237 5,520 3,618
Profit and loss account (5,779) (5,644) (4,255)
Equity Shareholders' Funds 1,545 883 146
CONSOLIDATED CASH FLOW STATEMENTS
26 weeks Year Ended Six months
to to
1 December 31 May 30 November
2002 2002 2001
£000 £000 £000
Notes Unaudited Audited Unaudited
Net cash outflow from operating 3 (513) ( 811) (155)
activities
Returns on investments and servicing 4 4 15 (154)
of finance
Capital expenditure and financial 4 (127) (771) (287)
investment
Cash outflow before use of liquid (636) (1,567) (596)
resources and financing
Financing 4 447 2,476 521
(Decrease)/ Increase in cash in the (189) 909 (75)
period
Reconciliation of net cash flow to
movement in
net funds
Opening net funds 1,484 925 925
(Decrease)/ Increase in cash in the (189) 909 (75)
period
Movement in borrowings 350 (350) -
Closing net funds 1,645 1,484 850
NOTES TO THE ACCOUNTS
1. SEGMENTAL ANALYSIS
Telephone Internet Total
26 weeks to 1 December 2002 £000 £000 £000
Betting stakes received 3,690 20,751 24,441
Winnings paid and bets laid off (3,213) (19,274) (22,487)
Betting duty paid (8) (24) (32)
Gross profit 469 1,453 1,922
Margin 12.7% 7.0% 7.9%
Telephone Internet Total
Six months to 30 November 2001 £'000s £'000s £'000s
Betting stakes received 8,671 14,005 22,676
Winnings paid and bets laid off (8,098) (12,939) (21,037)
Betting duty paid (27) (61) (88)
Gross profit 546 1,005 1,551
Margin 6.3% 7.1% 6.8%
2. LOSS PER SHARE
The earnings per share calculation is based upon the loss for the period after
taxation and the weighted average number of shares in issue throughout the
period.
Calculation of loss per share is based on losses of £135,000 (2001: £596,000)
and the weighted average number of ordinary shares being the equivalent of
108,295,723 (2001: 78,702,702) 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 (Cont.d)
3. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
26 weeks to Year Ended Six months to
1 December 31 May 30 November
2002 2002 2001
£000 £000 £000
Unaudited Audited Unaudited
Operating profit/(loss) 9 (1,692) (399)
Depreciation and amortisation 287 397 172
charges
Write (back)/down of associate - (47) 6
(Increase)/decrease in debtors (219) 11 (144)
(Increase)/decrease in creditors (590) 520 210
Net cash outflow from operating (513) (811) (155)
activities
4. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
26 weeks to Year Ended Six months to
1 December 31 May 30 November
2002 2002 2001
£000 £000 £000
Unaudited Audited Unaudited
Returns on investments and servicing of
finance
Interest received 4 18 9
Interest paid - (3) (163)
4 15 (154)
Capital expenditure and
financial investment
Payments to acquire tangible (80) (409) (77)
fixed assets
Payments on development (47) (362) (210)
expenditure
(127) (771) (287)
Financing
Issue of shares including share 797 2,126 -
premium
Movement in borrowings (350) 350 521
447 2,476 521
NOTES TO THE ACCOUNTS (Cont.d)
5. ANALYSIS OF NET FUNDS
At 1 June Cash At 1 December
2002 Flow 2002
£000 £000 £000
Cash in hand and at bank 1,851 (206) 1,645
Bank Overdraft (17) 17 -
Other loans (350) 350 -
1,484 (161) 1,645
6. POST BALANCE SHEET EVENT
On 10 December 2002, under the terms of a subscription and shareholders'
agreement dated 10 December 2001, a final tranche of 8,000,000 new ordinary 1p
shares was issued for a total consideration of £800,000. In addition, 2,000,000
warrants were issued to subscribe for one ordinary share at 12p per share.
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