Interim Results
betinternet.com PLC
01 February 2007
FOR IMMEDIATE RELEASE
1 February 2007
BETINTERNET.COM PLC
('the Company' or 'betinternet.com')
INTERIM RESULTS FOR THE 26 WEEKS ENDED 26 NOVEMBER 2006
betinternet.com plc, the global on-line gaming group, today announces its
interim results for the 26 weeks ended 26 November 2006.
Highlights of the results are:
• Group turnover has increased by 53% to £43.6m (2005: £28.5m)
• European Wagering Services (EWS) pari-mutuel business has continued to grow
with turnover increasing by 247%
• EBITDA profit of £182k (2005: loss of £599k)
• Sportsbook turnover has increased by 27% to £31.8m (2005: £25.1m)
• Sportsbook margin has increased by 19% to 2.5% (2005: 2.1%)
• Group overheads have reduced by 17% to £1.39m (2005: £1.67m)
Commenting on the results, Denham Eke, chairman of betinternet, said:
'These results show that the business has moved to profitability at EBITDA
level, with a particularly strong performance from European Wagering Services ('
EWS'), the group's pari-mutuel operation, and growing revenues from the
sportsbook business. This is a significant improvement on the same period last
year and shows that the strategies put in place by the new management team are
working well.'
ENDS
For further information:
betinternet.com plc Tel: 01624 698141
Garry Knowles, Managing Director
Evolution Securities Tel: 0113 243 1619
Joanne Lake
Britton Financial PR Tel: 0207 251 2544
Tim Blackstone
Notes to editors:
The following are attached:
1. Chairman's statement
2. Consolidated Profit & Loss Accounts
3. Consolidated Balance Sheets
4. Consolidated Cash Flow Statements
5. 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'.
Chairman's Statement
Introduction
The first half of the Company's financial year, which ended on 26th November
2006, has seen the business move to profitability at EBITDA level, with a
particularly strong performance from European Wagering Services ('EWS'), the
group's pari-mutuel operation, and growing revenues from the sportsbook
business.
This is a significant improvement on the same period last year and shows that
the strategies put in place by the new management team are working well.
Unlike many internet gaming companies, betinternet.com has little exposure to
the US and the passing of the Unlawful Internet Gambling Enforcement Act (UIGEA)
of 2006 has had no impact on our revenues. As a result, the board believes
betinternet.com to be uniquely placed to actively pursue opportunities to
acquire non-US business from those companies adversely affected by this
legislation. We believe that we are well positioned to take full advantage of
such opportunities.
Overview of Results
During the period under review, group turnover was £43.6m (2005: £28.5m) and
gross profit was £1.52m (2005: £1.07m).
EWS has performed particularly well, with turnover for the 26 week period at
£11.8m (2005:£3.4m). The operation has a good balance of income from its
website, link2bet.com, as well as through its telephone call centre.
Revenues from the sportsbook business have also improved, with the introduction
of additional income streams from 24 fixed odds games and download and instant
casino games being added during the period. As a result, the sportsbook has
moved further towards our stated aim of providing a one-stop gaming and
entertainment portal. The gross margin from the games and casino channels
continues to outstrip that made from sports betting where increased competition
in the Far East has a continued impact. However, the directors understand that
it is betting on sports events that drives customers to the portal and for this
reason it is the board's intention to continue to add a variety of new content
to this portal.
Overheads have been reduced by 17% to £1.39m (2005: £1.67m) for the period. This
reduction has been achieved by better controls and by increasing the use of
technology to replace manual processes throughout the whole business. It is
expected that this process will continue into the second half of the year.
Board and executive changes
In September 2006, we appointed Damon Waddington as Finance Director. Damon
joined the Company as Financial Controller in February 2006.
We have also recently announced the appointment of Ed Comins to the position of
chief operating officer of EWS with effect from 6th February 2007. Ed has
considerable commercial experience within the gaming sector, having previously
been the business development director of Totepool, the UK Tote's horseracing
pool betting brand.
Future Prospects
EWS' growth has been achieved by offering the excellent levels of service,
connectivity and technical solutions that our customers require. We have created
bespoke wagering solutions for individual customers as well as for other gaming
businesses and anticipate that this is an area that will continue to be in
demand. We plan to enhance the link2bet.com website to improve navigation and
make placing wagers more efficient.
We believe that Ed Comins' industry-experience will enable him to assist
considerably with the continued growth of our pari-mutuel business. There remain
many opportunities in this market, especially given the restrictions to
fixed-odds wagering brought about by the UIGEA. In addition, the US Thoroughbred
Protective Bureau has published its report on our business. We have now sent
this report to many of the racetracks in the US as a reference tool and as a
result of this, are optimistic that we will be able to gain access to additional
content for our customers.
Enhancements to the sportsbook portal are ongoing, with additional gaming
content and improved customer functionality being worked on constantly. We also
continue to look at additional payment solutions specific to the regions in
which we operate. Having a dedicated development and design team is a
considerable advantage to us in making these enhancements to our website in a
timely manner.
Approximately two-thirds of our sportsbook's customers are resident in the Far
East where the market continues to grow as payment solutions improve and
internet connectivity increases. European football, especially the English
Premiership, remains the preferred wagering product for these customers, where
live pictures are readily available by satellite and now increasingly, through
internet streaming.
The board expects that the Company will start to see revenue from the provision
of a white-label sportsbook service to third parties in the current financial
year. We expect to launch our first white-label website shortly and are keen to
attract other companies to take up this service.
The directors are confident that betinternet.com can build on the substantial
improvements made over the last six months and that both our pari-mutuel and
sportsbook businesses are now well positioned for further growth.
Denham Eke
Chairman
Consolidated Profit and Loss Account
for the 26 weeks ending 26 November 2006
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
26 November 27 November 28 May
2006 2005 2006
Note £000 £000 £000
Turnover
betting stakes received
Sportsbook 31,791 25,092 57,496
Pari-mutuel 11,812 3,407 10,073
---------- ---------- ----------
Total group turnover 1 43,603 28,499 67,569
Cost of sales
Winnings paid and bets laid off 1 (42,084) (27,411) (65,246)
Net betting duty paid 1 (1) (15) (58)
---------- ---------- ----------
Gross profit 1 1,518 1,073 2,265
Administration expenses (1,386) (1,672) (3,320)
Other operating income 2 50 - -
---------- ---------- ----------
Earnings before interest,tax,depreciation
and amortisation 182 (599) (1,055)
Depreciation (89) (146) (268)
Share based costs (16) - -
Amortisation of goodwill (43) (250) (498)
---------- ---------- ----------
Total operating profit / (loss) 34 (995) (1,821)
Interest 16 2 (83)
---------- ---------- ----------
Profit / (loss) on ordinary activities before and
after taxation and retained profit / (loss) for
the year 50 (993) (1,904)
---------- ---------- ----------
Basic profit / (loss) per share (pence) 4 0.02 (0.66) (1.18)
Diluted profit / (loss) per share (pence) 4 0.02 (0.66) (1.18)
Consolidated Balance Sheet
for the 26 weeks ending 26 November 2006
Unaudited Unaudited Audited
26 November 27 November 28 May
2006 2005 2006
Note £000 £000 £000
Fixed assets
Intangible assets - 291 43
Tangible assets 269 400 224
Investments 271 145 271
---------- ---------- ----------
540 836 538
---------- ---------- ----------
Current assets
Debtors 688 443 549
Cash at bank and in hand 6 409 849 458
---------- ---------- ----------
1,097 1,292 1,007
Creditors
Amounts falling due within one year (1,516) (2,864) (1,490)
---------- ---------- ----------
Net current liabilities (419) (1,572) (483)
---------- ---------- ----------
Total assets less current liabilities 121 (736) 55
Creditors
Amounts falling due after more than one year - (99) -
---------- ---------- ----------
Net assets / (liabilities) 121 (835) 55
---------- ---------- ----------
Capital and reserves
Called up share capital 1,969 1,505 1,969
Share premium 9,550 8,213 9,550
Profit and loss account (11,398) (10,553) (11,464)
---------- ---------- ----------
Equity shareholders' funds 121 (835) 55
---------- ---------- ----------
Consolidated Cash Flow Statement
for the 26 weeks ending 26 November 2006
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
26 November 27 November 28 May
2006 2005 2006
Note £000 £000 £000
Net cash inflow / (outflow) from operating 5 38 93 (1,467)
activities
Returns on investments and servicing of finance 16 2 (83)
Acquisition of tangible fixed assets (134) (195) (141)
Acquisition of investments - (63) (188)
---------- ---------- ----------
Cash outflow before use of liquid resources and (80) (163) (1,879)
financing
---------- ---------- ---------
Financing
Issue of convertible loan - 36 -
Share issue - - 1,738
---------- ---------- ----------
Decrease in cash during the period 6 (80) (127) (141)
---------- ---------- ----------
Reconciliation of net cash flow to movement in net 26 November 27 November 28 May
funds 2006 2005 2006
£000 £000 £000
Operating net funds 338 479 479
Decrease in cash during the period (80) (127) (141)
---------- ---------- ---------
Closing net funds 6 258 352 338
---------- ---------- ----------
Notes to the Accounts
for the 26 weeks ending 26 November 2006
1 Segmental Analysis
Sportsbook Pari-mutuel Total
26 weeks to 26 November 2006 £000 £000 £000
Betting stakes received 31,791 11,812 43,603
Winnings paid and bets laid off (31,021) (11,063) (42,084)
Net Betting duty paid 10 (11) (1)
---------- ---------- ----------
Gross profit 780 738 1,518
---------- ---------- ----------
Margin 2.5% 6.2% 3.5%
Sportsbook Pari-Mutuel Total
26 weeks to 27 November 2005 £000 £000 £000
Betting stakes received 25,092 3,407 28,499
Winning paid and bets laid off (24,546) (2,865) (27,411)
Betting duty paid (14) (1) (15)
---------- ---------- ----------
Gross profit 532 541 1,073
---------- ---------- ----------
Margin 2.1% 15.9% 3.8%
2 Other operating income
Other operating income has arisen on the disposal of a 25% interest in Isle of Man Tote Limited, a
pari-mutuel operation and consists of a dividend of £25k prior to the sale and £25k on the disposal
of shares.
3 Taxation
No provision for taxation is required as the company is subject to a 0% Isle of Man income tax
charge on its gaming activities.
4 Profit per share
The basic and diluted earnings per share calculation is based on the profit for the period after
taxation of £50,157 (2005 loss of £992,529) and the weighted average number of shares in issue
throughout the period of 196,944,179 (2005: 150,461,402) ordinary 1p shares and fully diluted
average number of shares of 200,866,238 (2005 : 150,461,402) ordinary 1p shares.
5 Reconciliation of operating profit to net Unaudited Unaudited Audited
cash inflow / (outflow) from operating 26 weeks to 26 weeks to 52 weeks to
activities 26 November 27 November 28 May
2006 2005 2006
£000 £000 £000
Operating profit / (loss) 34 (995) (1,821)
Share based costs 16 - -
Depreciation and amortisation charges 132 396 766
Increase in debtors (139) (236) (342)
(Decrease) / increase in creditors (5) 928 (70)
---------- ---------- ----------
Net cash inflow from operating activities 38 93 (1,467)
---------- ---------- ----------
6 Analysis of net funds Unaudited
Audited At 26
At 28 May November
2006 Cash Flow 2006
£000 £000 £000
Cash in hand and at bank 458 (49) 409
Bank overdraft (120) (31) (151)
---------- ---------- ----------
338 (80) 258
---------- ---------- ----------
7 Basis of preparation of the financial statements
The results for the period ended 26 November 2006 are prepared in accordance with applicable
accounting standards, using the same accounting policies as set out in the group accounts for the
year ended 28 May 2006 with the exception of FRS 20 - share based payments, which has been adopted
in the period under review.
The fair value of share options granted is recognised as an employee expense with corresponding
increase in equity. Fair value has been determined using the Black Scholes model. There is no charge
to the prior year.
The interim statements are unaudited, but have been reviewed in accordance with Auditing Practices
Board guidance by the Auditors, KPMG Audit LLC.
The directors have considered the adequacy of the cash resources and working capital available to
the group for the next twelve months and are satisfied that the group has adequate resources to meet
its obligations as they fall due. On this basis the directors have concluded that it is appropriate
to prepare the financial statements on a going concern basis.
8 Other information
(i) The comparatives for the 52 weeks ended 28 May 2006 are not the Company's statutory accounts for
that financial period. Those accounts have been reported on by the Company's auditors and delivered
to the Companies Registry. The report of the auditors was unqualified.
(ii) All profits derive from continuing activities.
(iii) The interim statement was approved by the board on 1st February 2007.
(iv) The interim report is expected to be posted to shareholders on 16 February 2007 and will be
available from that date, free of charge, for one month at the Company's Registered Office; Viking
House, Nelson Street, Douglas, Isle of Man IM1 2AH.
(v) The Company's nominated advisor and broker is Evolution Securities, Kings House, 1 King Street,
Leeds LS1 2HH
This information is provided by RNS
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