Final Results

RNS Number : 9579F

Webis Holdings PLC

16 October 2008

 



FOR IMMEDIATE RELEASE

16 October 2008 

WEBIS HOLDINGS PLC

('the Company' or 'Webis')

PRELIMINARY RESULTS FOR THE 52 WEEK PERIOD ENDED 25 MAY 2008 ('the Period')

Webis Holdings plc, the global on-line gaming group, today announces its preliminary results for the Period.

Highlights are:

• Earnings at EBITDA level for the Period of £215,000 (2007: £162,000)

• Group turnover increased to £117.2m (2007: £86.9m) 

• betinternet.com sportsbook turnover rose by 40% to £86.8m (2007: £62.1m)

• European Wagering Services pari-mutuel turnover grew by 23% to £30.4m (2007: £24.8m)

• Administration expenses reduced by 2.8% on a 'like for like' basis

Commenting on the results, Denham Eke, Chairman of Webis Holdings plc, said: 'the improved trading performance for the Period is a direct result of the Board's strategy for the Company in a number of different areas including marketing activity, IT systems, capital expenditure and the ongoing identification of cost-savings. The Board continues to focus on these and other areas, all with the ultimate aim of enhancing the experience of new and existing customers alike. Trading for the first quarter of the current financial year was ahead of the Board's expectations and I look forward to reporting further progress in due course'.

ENDS

For further information:
Webis Holdings plc	Tel: [phone]
Garry Knowles, Managing Director
Damon Waddington, Finance Director
Evolution Securities	Tel: [phone]
Joanne Lake/Peter Steel

Notes to editors:

The following are attached:

Chairman's Statement

Operational Review

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Notes to the Accounts

Chairman's Statement

Introduction

I am pleased to report that the Company has achieved a 33% growth in earnings at EBITDA level and an operating profit of £34,000 (2007: £33,000 loss) for the Period. As anticipated in my Interim Statement, the second half proved considerably stronger and both European Wagering Services ('EWS') and our sportsbook portal betinternet.com ('betinternet') have seen an improved trading performance for the Period as a whole, with both EWS and betinternet achieving strong turnover growth of 23% and 40% respectively compared with 2007.

betinternet

betinternet (www.betinternet.com) has seen a positive effect on revenues from the increased spend on marketing the website within Europe. The Company sponsored horse races at Newmarket and Ascot racecourses during April and May 2008, some of which received live coverage on terrestrial TV in the UK. As a brandbuilding exercise, the Board believes this initial marketing activity has successfully promoted betinternet to its target audience and given it great exposure to a clientele that previously would have been unfamiliar with our offering. The Board is committed to continuing with similar types of sponsorship during the new financial year. 

Notwithstanding this, the Company remains fully committed to serving new and existing customers in the Far East by ongoing enhancement of its football related product offering. The Company has, for example, expanded the number of leagues covered as well as increasing the level of 'in-running' content that customers can access.

The marketing spend has also had a positive impact on the revenues achieved by our two on-line casinos and fixed-odds games. These products accounted for 66% of the sportsbook's total revenues for the Period and continue to show strong growth. The Board anticipates adding further similar products to the portal during the forthcoming year.

Technology continues to play an ever-increasing role within our sportsbook business, both for the creation of new content and as a risk management tool. As a direct result, we have again been able to reduce our sportsbook operating costs and it is these savings which we have re-invested in marketing spend. We also committed to upgrading our sportsbook hardware environment and the relocation of this at a cost of £80,000 to a purpose-built, third-party, hosting facility on the Isle of Man. I am pleased to report that this project was completed in July 2008 and will further enhance the security and resilience of our sportsbook portal as well as generate further cost-savings.

European Wagering Services

EWS has shown the anticipated improvement in turnover in the second half of the Period, following the resolution in November 2007 of the previously notified banking issue. For the Period, whilst turnover increased, our net margin reduced as the impact of this issue had a greater effect on the betting turnover of the higher margin 'leisure players' rather than the lower margin 'high rollers'. In addition, at a limited number of racetracks, we also experienced an increase in the 'host track fee' (a percentage of turnover that we pay the racetrack) and this has also had a small impact on our net margin.

The Board is pleased to report that the re-designed link2bet.com website, which covers a variety of events in the USA including horse and greyhound racing, was launched in September 2008. We are also committed to making our racetrack settlement process more cost effective and I am pleased to report that we entered into a contract with a new settlement agent during the first half of the current financial year. The cost savings generated will provide us with the opportunity to increase our marketing spend, with an expectation of a higher return on our investment. We would also expect that this marketing will attract more 'leisure players' and this will help address the imbalance of player demographics as mentioned above. During the Period, in co-operation with one of our industry partners, we also completed the development of and received regulatory approval for a white-label website at www.totebet.com, which has now gone live. 

One of our other current areas of focus is to increase the amount of quality content that our customers can wager on. This process takes considerable time and requires a commitment to ongoing relationship-building at a high level within the pari-mutuel industry. We remain in negotiations with a view to achieving this. 

Overview of Results

The results for the Period show group turnover was £117m (2007: £87m) and gross profit was £2.7m (2007: £2.7m). 

Earnings at EBITDA level increased to £215,000 (2007: £162,000), of which £171,000 was achieved in the second half. The Company recorded an operating profit of £34,000 (2007: £33,000 loss).

Consolidation of roles and the further introduction of new IT systems helped reduce administration expenses by 3.1% to £2.54m (2007: £2.62m). It is anticipated that similar operational reductions will be achieved during the current financial year, although in view of our commitment to the long-term development of the Company, we expect to use a proportion of these cost-savings to fund further increases in our overall marketing spend.

Further analysis of the results is presented in the Operational Review.

Fund Raising

In January 2008, the Company raised £425,000 before costs by placing 9,848,888 Ordinary Shares of 1 pence each with our main shareholder, Burnbrae Limited. These funds have been allocated to investment in the ongoing development of the Company's websites, marketing initiatives and working capital.

Regulatory Changes

The regulatory environment governing gaming companies in the Isle of Man was streamlined during the Period and as a result, both betinternet and EWS now each operate under a licence issued by the Isle of Man Gambling Supervision Commission pursuant to the Online Gaming Regulation Act 2001. The Company complies with all aspects of the updated regulatory environment, which includes the requirement for Client funds to be fully protected against default.

Company Reorganisation

During the Period, the Company completed its change of name from betinternet.com plc to Webis Holdings plc and reorganised its internal structure, with betinternet and EWS now operating as separate subsidiaries of Webis Holdings plc.

Summary

The progress made during the Period is pleasing to report. The performance has given the executive a new opportunity to instigate projects that had previously been limited by the Company's restricted cash position. Importantly, the increase in our marketing spend has helped build the betinternet brand in previously unpenetrated geographical markets such as the UK, Ireland and mainland Europe. It is expected that an increase in marketing for EWS' newly redesigned link2bet.com website will yield similar positive benefits.

Denham Eke

Chairman

Operational Review

The Period proved to be encouraging for the Company. The revenues of both betinternet and European Wagering Services increased significantly. The much improved results in the second half of the Period are a good indicator that the strategies previously established by the management team are having a sustained positive effect on the Company's performance.

As a result of the improved performance, the Company has now been able to commit to a significant increase in marketing expenditure. This has initially been focused on betinternet, where we have sponsored a number of horse races at Newmarket and Ascot and this promotional activity has continued into the current financial year with further race sponsorship at Chepstow, Newmarket and Sandown Park. Association with the leading racetracks has proved to be a cost-effective way of building our brand in the UK and Irish markets, where customer awareness of our product has historically been relatively low. 

This promotion has helped generate an increase in turnover through betinternet's fixed odds sportsbook as well as within our casino and games products. Outside the UK, our Live Dealer Casino continues to attract a growing number of players based in the Far East and we are now also generating good levels of play through our Real Time Gaming Casino, mostly from European based customers.

Online fixed-odds sports betting remains highly competitive. We continue to be innovative with our in-house trading systems, which we design to ensure that the content and prices available at betinternet are always competitive. Importantly, these systems also keep our traders in touch in 'real-time' with global market changes, especially on the more volatile Asian Handicap football markets and we have experienced a reduction in arbitrage play as a result.

Asian Handicaps remain our most popular type of bet and we have again increased the number of football leagues that we cover. The theoretical profit margin on this type of bet is lower than most of the other products that we offer, but the fact that we provide such a wide coverage enables us to maximise the number of wagers placed and build up a volume business.

During the latter part of the Period, our IT technical team concentrated on the preparation of our sportsbook hardware environment for its upgrade and relocation to a purpose-built hosting facility and this project was completed in July 2008. We plan to carry out a similar upgrade and relocation of EWS' totalisator hub and the associated hardware systems that run our pari-mutuel operation and expect to complete this during the current financial year. These projects reduce the amount of office space required and, once completed, we anticipate that we will be able to generate further significant cost savings in this area in addition to those already made following the relocation of the sportsbook hardware environment.

EWS' turnover increased steadily in the second half of the Period as we made good progress in increasing the availability of payment systems to our customers. However, the net margin has reduced as a limited number of racetracks have increased their percentage-based fees. We anticipate that the ongoing impact of this will remain at a low level and expect that further cost-savings planned for the early part of the current financial year, especially regarding our race track settlement processes, will exceed any impact from these margin reductions.

Looking forward, our ability to grow the scale of this operation will be significantly enhanced with the launch in September 2008 of the new link2bet.com website. This new website will provide the platform to support an increased level of trading and we now intend to increase our marketing spend to drive new business to this site. 

Results

The results show a 32.7% increase in profit at EBITDA level against last year, buoyed by a much improved performance in the second half of the Period.

The group operating profit was £34,000 (2007: loss of £33,000). 

As previously announced, during the Period, we wrote off our investment of £321,000 in Global Coresports. 

Current trading and outlook

As mentioned above, there are a number of key projects that we are currently working on within both betinternet and EWS. The Board is confident that the implementation of these projects will continue to generate increased revenues and further cost savings, similar to those which we realised during the Period.

The current financial year has seen a further increase in group turnover, with the sportsbook portal in particular showing sustained growth. Both of our on-line casinos have continued to deliver a strong revenue stream, particularly during the summer months when, aside from the European Championship, the level of football content was reduced. 

The European Championship finals proved a successful tournament for the Company and we realised an overall net margin of 4.3% on business from the tournament.

Going forward, our plans for EWS are to take advantage of the opportunities that now present themselves with our updated website. As mentioned above, we have scheduled an upgrade to the hardware that operates our totalisator hub and its related components and this will enable us to integrate our payment systems into the new website, as well as offering an improved level of service for our B2B customers. 

It has been a very encouraging start to the new financial year for the Company, with the first quarter results significantly ahead of the Board's expectations. We have developed and followed clear strategies and objectives for both betinternet and EWS and it is this discipline that is now providing the platform for the considerably improved performance of the Company. The Board anticipates that the remainder of the new financial year will continue to show advances across a number of business areas, the majority of which will be focused on further enhancing our customers' experience and growing revenues.

Garry Knowles

Managing Director

Webis Holdings Plc

Consolidated Income Statement

for the Period ended 25 May 2008

	Note			2008	2007
				£000	£000
Turnover	2			117,185	86,903
Cost of sales				(114,402)	(84,157)
Betting duty paid				(25)	(17)
				----------	----------
Gross Profit				2,758	2,729
Administration expenses				(2,543)	(2,617)
Other operating income				-	50
				----------	----------
Earnings before interest, tax and depreciation				215	162
Depreciation				(161)	(166)
Share based costs				(20)	(29)
				----------	----------
Total operating profit/(loss)				34	(33)
Investments written off	4			(321)	-
Net finance (cost)/income	5			(60)	7
Tax				-	-
				----------	----------
Loss for the Period				(347)	(26)
				----------	----------
Basic and diluted loss per share (pence)				(0.17)	(0.01)
				----------	----------

Consolidated Balance Sheet

As at 25 May 2008

	Note			2008	2007
				£000	£000
Non-current assets
Intangible assets - goodwill	8			43	43
Intangible assets - other	9			231	170
Property and equipment	10			119	114
Investments				-	313
				----------	----------
				393	640
Current assets
Trade and other receivables				647	812
Cash and cash equivalents				1,018	455
				----------	----------
Total assets				1,665	1,267
Current liabilities
Bank overdraft				(59)	(224)
Trade and other payables				(1,492)	(1,274)
Convertible loan notes				(300)	-
				----------	----------
				(1,851)	(1,498)
Non-current liabilities
Convertible loan notes				-	(300)
				----------	----------
Total liabilities				(1,851)	(1,798)
				----------	----------
Net assets				207	109
				----------	----------
Shareholders' equity
Called up share capital				2,068	1,970
Share premium account				9,927	9,600
Share option reserve				49	29
Profit and loss account				(11,837)	(11,490)
				----------	----------
Total shareholders' equity				207	109
				----------	----------

Statement of Changes in Shareholders' Equity

for the Period ended 25 May 2008

	Called up share capital	Share premium	Share Option reserve	Retained earnings	Total shareholders' equity
	£000	£000	£000	£000	£000
Balance as at 28 May 2006	1,969	9,550	-	(11,464)	55
Issue of ordinary shares	1	-	-	-	1
Share based payments - share options	-	-	29	-	29
Lapsed share warrants	-	50	-	-	50
Loss for the Period	-	-	-	(26)	(26)
	----------	----------	----------	----------	----------
Balance as at 27 May 2007	1,970	9,600	29	(11,490)	109
Issue of ordinary shares	98	327	-	-	425
Share based payments - share options	-	-	20	-	20
Loss for the Period	-	-	-	(347)	(347)
	----------	----------	----------	----------	----------
Balance as at 25 May 2008	2,068	9,927	49	(11,837)	207
	----------	----------	----------	----------	----------

Consolidated Statement of Cash Flows

for the Period ended 25 May 2008

			2008	2007
			£000	£000
Net cash inflow/(outflow) from operating activities			598	(197)
Cash flows from investing activities
Interest received			5	25
Acquisition of investment			(8)	(42)
Purchase of intangible assets			(163)	(180)
Purchase of property, plant & equipment			(64)	(46)
			----------	----------
Net cash outflow from investing activities			(230)	(243)
Cash flows from financing activities
Issue of equity shares			425	1
Cancelled share warrants			-	50
Issue of convertible loan note			-	300
Interest paid			(65)	(18)
			----------	----------
Net cash inflow from financing activities			360	333
Net increase/(decrease) in cash and cash equivalents			728	(107)
Cash and cash equivalents at beginning of Period			231	338
			----------	----------
Net cash and cash equivalents at end of Period			959	231
			----------	----------
Cash and cash equivalents comprise
Cash and deposits			1,018	455
Bank overdraft			(59)	(224)
			----------	----------
			959	231
			----------	----------
Cash generated from operations
Profit/(loss) from operations			34	(33)
Adjusted for:
Depreciation			161	166
Share based payment charge			20	29
Decrease/(increase) in receivables			165	(263)
Increase/(decrease) in payables			218	(96)
			----------	----------
Net cash inflow (outflow) from operating activities			598	(197)
			----------	----------

Notes to the Consolidated Financial Statements

For the Period ended 25 May 2008

1		Reporting entity
		Webis Holdings plc (formerly betinternet.com plc) is a company domiciled in the Isle of Man. The address of the Company's registered office is Viking House, Nelson Street, Douglas, Isle of Man, IM1 2AH.
		The Group's consolidated financial statements as at and for the Period ended 25 May 2008 consolidate those of the Company and its subsidiaries (together referred to as 'the Group').
		The preliminary announcement does not constitute the Group's statutory financial statements. It is an extract from the financial statements for the Period ended 25 May 2008 which have not yet been filed.
1.1		Basis of preparation
(a)		Statement of compliance
		The financial information included in this announcement has been extracted from the Group's consolidated financial statements prepared in accordance with International Financial Reporting Standards ('IFRS') and its interpretations adopted by the International Accounting Standards Board ('IASB').
		These are the Group's first financial statements prepared under IFRS and IFRS 1 'First-time Adoption of International Reporting Standards' has been applied. The last financial statements under UK Generally Accepted Accounting Principles ('UK GAAP') were prepared for the Period ended 27 May 2007.
		The date of transition to IFRS for the Group was 29 May 2006. The impact of the transition from UK GAAP to IFRS is explained in note 11. This note includes reconciliation of equity and profit or loss for the comparative period reported under UK GAAP to those reported under IFRS.
(b)		Basis of measurement and functional currency
		The Group consolidated financial statements are presented in Pounds Sterling, rounded to the nearest thousand. They are prepared under the historical cost convention except where assets and liabilities are required to be stated at their fair value.
(c)		Use of estimates and judgement
		The preparation of Group financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these estimates are based on management's best knowledge and experience of current events and expected economic conditions, actual results may differ from these estimates.
		The directors believe the assumptions used in the model to calculate the calculate the fair value of the share based payments are the most appropriate for the Group.
		The accounting policies set out below have been applied consistently to all periods presented in these financial statements. They have also been applied in preparing an opening IFRS balance sheet for the purposes of the transition to IFRSs, as required by IFRS 1.
		Certain comparative amounts have been reclassified to conform with the current year's presentation.
2		Segmental Analysis Period ended 25 May 2008
								2008		2007
								£000		£000
		Turnover
		Sportsbook			Far East			66,714		42,292
					UK & Ireland			9,253		7,094
					Europe			8,319		10,220
					Rest of the World			2,476		2,547
		Pari-mutuel			United States			30,423		24,750
								----------		----------
								117,185		86,903
								----------		----------
		(Loss)/profit before tax
		Sportsbook						(740)		(483)
		Pari-mutuel						393		457
								----------		----------
								(347)		(26)
								----------		----------
		Net assets
		Sportsbook						(379)		(82)
		Pari-mutuel						586		191
								----------		----------
								207		109
								----------		----------
3		Share based costs
								2008                    £000		2007        £000
		Share options						20		29
								----------		----------
								20		29
								----------		----------
4		Investment written off
		In November 2007 the Group wrote off its investment in Global Coresports Limited, an Isle of Man based gaming software developer. In the absence of further funding the company was unable to continue trading.
5		Net finance (costs)/income
								2008		2007
								£000		£000
		Bank interest receivable						5		25
								----------		----------
								5		25
								----------		----------
		Bank interest payable						(24)		(18)
		Loan interest payable						(41)		-
								----------		----------
								(65)		(18)
								----------		----------
		Net finance (costs)/income						(60)		7
								----------		----------
6	Tax on loss on ordinary activities
	No provision for taxation is required for either the current or previous periods, due to the zero per cent corporate tax regime in the Isle of Man. Unprovided deferred tax was £nil (2007: £nil).
7	Earnings per ordinary share
	The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the Period. The calculation of the diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares, on the assumed conversion of all dilutive options. An adjustment for the dilutive effect of share options and convertible debt in the Period has not been reflected in the calculation of the diluted loss per share, as the effect would have been anti-dilutive.
						2008			2007
						£000			£000
	Loss for the Period					(347)			(26)
						----------			----------
						No.			No.
	Weighted average number of ordinary shares in issue					200,674,485			196,958,908
	Diluted number of ordinary shares					200,674,485			196,958,908
	Basic loss per share					(0.17)			(0.01)
	Diluted loss per share					(0.17)			(0.01)
8	Intangible assets - Goodwill
									Goodwill
									£000
	Cost
	Balance at 28 May 2007								1,435
	Reclassified from amortisation								(1,392)
									----------
	Balance at 25 May 2008								43
									----------
	Amortisation and impairment
	At 28 May 2007 (as previously stated)								1,435
	Adjustment to goodwill on adoption of IFRS (note 11)								(43)
									----------
	At 28 May 2007 (restated)								1,392
	Reclassified to cost								(1,392)
									----------
	At 25 May 2008								-
									----------
	Net Book Value
	At 28 May 2007 and 25 May 2008								43
									----------
9	Intangible assets - Other
									Software & Development Costs
									£000
	Cost
	Balance at 28 May 2007								1,907
	Additions during the Period								163
									----------
	Balance at 25 May 2008								2,070
									----------
	Amortisation and impairment
	At 28 May 2007								1,737
	Amortisation for the Period								102
									----------
	At 25 May 2008								1,839
	Net Book Value
	At 25 May 2008								231
									----------
	At 28 May 2007								170
									----------
10	Property and equipment
					Computer equipment	Fixtures & fittings			Total
					£000	£000			£000
	Cost
	At 28 May 2007				1,117	250			1,367
	Additions				54	10			64
					----------	----------			----------
	At 25 May 2008				1,171	260			1,431
					----------	----------			----------
	Depreciation
	At 28 May 2007				1,019	234			1,253
	Charge for the Period				51	8			59
					----------	----------			----------
	At 25 May 2008				1,070	242			1,312
					----------	----------			----------
	Net Book Value
	At 25 May 2008				101	18			119
					----------	----------			----------
	At 28 May 2007				98	16			114
					----------	----------			----------
11	Transition to IFRS
	The Group previously reported its financial statements under UK GAAP up until the period ended 27 May 2007. The analysis below shows a reconciliation of the Group's results and equity reported under UK GAAP to that reported under IFRS for the period to 27 May 2007. The transition does not change any cash flows.
	Reconciliation of net income and equity for period ended 27 May 2007
	Income Statement				UK GAAP		Transition Adjustment		IFRS
					£000		£000		£000
	Amortisation of goodwill				43		(43)		-
	Loss for the period after taxation				(43)		43		(43)
	Balance sheet items				UK GAAP		Transition Adjustment		IFRS
					£000		£000		£000
	Intangible fixed assets - Goodwill				-		43		43
	Profit and loss account				(11,533)		43		(11,490)
	Total equity				66		43		109
12	Approval of financial statements
	The financial statements were approved by the Board on 15 October 2008. The Annual Report is expected to be posted to shareholders on 28 October 2008 and will be available from that date at the Group's Registered Office: Viking House, Nelson Street, Douglas, Isle of Man IM1 2AH.
	The Group's nominated advisor and broker is Evolution Securities, Kings House, 1 Kings Street, Leeds LS1 2HH.

 

END

 

 

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