15th Apr 2005 07:00
ukbetting PLC15 April 2005 15 April 2005 ukbetting plc Final Results ukbetting plc (LSE: UKB), the online sports content and gaming company, todayannounces its results for the full year to 31 December 2004. Highlights • Group turnover up 57% to £85.6m (2003: £54.5m) • Gross profit rose 109% to £19.0m (2003: £9.1m) • EBITDA* profit of £0.1m (2003: loss of £3.2m) • Losses before tax of £6.9m (2003: £5.7m) following an impairment charge to goodwill of £2.3m and non-recurring costs of £1.6m relating to the integration of Rivals • Gross win in the gaming division increased to 11.1% (2003: 6.7%) due to the impact of casino, poker and games • Gaming registrations rose 43% to 264,000 (2003: 185,000) with 58% of the increase generated from our own network of sites • Poker revenue increased by 376% • Advertising revenue up 120% to £3.3m (2003: £1.5m) • Monthly content site users rose by 25% to 7.1m users, viewing 217m page impressions (2003: 5.7m and 154m respectively) Post-Period End Activity (First Quarter to 31 March 2005) • Total turnover up 23% to £27.1m (Q1 2004: £22.0m) • Poker, casino and games turnover up 138% on the same period last year • Gaming gross win up to 11.9% (Q1 2004: 9.7%) • Gaming registrations up 21% at 23,000 (Q1 2004: 19,000) • Monthly content site users increased 32% to 8.3m (Q1 2004: 6.3m), generating 260m page impressions (Q1 2004: 213m) • Poker checker and casino checker launched by Oddschecker • Customer database reaches one million names Peter Dubens, Chairman of ukbetting plc said, "I am delighted that after three and a half years of acquisition andintegration, ukbetting has reached EBITDA* profitability: a key inflection pointin its development. The growth of broadband connectivity is transforming theface of online gaming, shifting the balance of gross win away from horseracingand football towards more visual, player-involving, skill-based poker, casinoand games. In this environment, where customer acquisition becomes more costly,ukbetting's dominant position in online content, with over 8 million monthlyusers and 58% of gaming revenues coming from the ukbetting content network,becomes ever more important. "Our content site traffic continues to grow, with over 8 million monthly usersin the first quarter of 2005, and as we restrict the number of other bookmakersadvertising on the sites, so our own gaming registrations will continue toimprove. This coupled with the fact that we now have a complete range of gamingproducts, shortly to be enhanced with 'instant play' casino and download-ablebackgammon, will continue to improve gross win. This combination of low costcustomer acquisition and expansion in both geographical territories and newproduct applications will leave us very well placed for 2005." *on continuing operations before exceptional items and non-recurring costs For more information, contact: ukbetting plc 020 7766 6909 Peter Dubens, Chairman Financial Dynamics 020 7831 3113 Edward Bridges / Juliet Clarke Chairman's Statement Overview I am pleased to report significant progress for ukbetting during 2004 in a yearwhere we achieved record sales of £85.6 million and reached our first EBITDAprofit before exceptional costs and non-recurring items. Following three and ahalf years of acquisition and integration of predominantly loss making companiesin both the online sports content and gaming sectors, ukbetting is now in astrong position for future growth. The growth of broadband connectivity is transforming the face of online gaming,shifting the balance of gross win away from horseracing and football towardsmore visual, player-involving, skill-based poker, casino and games. In thisenvironment, where customer acquisition becomes more costly, ukbetting'sdominant position in online content becomes ever more important. In 2004, 58%of the 79,000 gaming registrations came from within our own network. Gaming Division The gaming division saw strong growth in 2004 with registered users up 43% to264,000 and turnover up 53% to £71.7 million. This growth was largely driven byonline gaming, namely poker and casino, which contributed over 50% of gaminggross win and poker revenues in particular increased by 376%. This growth washelped by the redesign and re-launch of www.ukbetting.com, www.totalbet.com andwww.goldbet.com, incorporating the full offering of sports betting, casino,poker and games. Gross win margin improved from 6.7% to 11.1% as a result ofthe increased popularity of these new products. This range of products will be further enhanced by the introduction of an 'instant play' casino and a new backgammon game which will be available to allthe betting sites by mid year. We will also be launching multi-lingual versionsof totalbet.com and ukbetting.com ahead of the next football season and overseasexpansion on the gaming customer base will be key, ahead of the 2006 World Cup. There is now a much closer relationship between our content and our gamingdivisions, where we now produce specific content to drive interest in our gamingproducts. A good example would be our poker news site that sits withinsportinglife.com and offers quality poker information to a growing user-base,some of whom may convert to our online poker offering. Content Division The content division grew strongly, with revenues up 81% to £13.9 million, with£3.3 million generated from advertising up from £1.5 million in 2003 an increaseof 120%. Traffic on the network of sites increased substantially with usersgrowing by 25% to 7.1 million and page views increasing by 41% to 217 million. With the rapid growth of broadband the sites saw their video and broadbandcapabilities improve with the acquisition of In The Box Media, a specialistonline video production company, in July 2004. Video is now used alongside textand audio and is a central platform for sites such as www.conferencefootball.tvthat features every goal and match from the Nationwide Conference league. In addition we have launched two new sites from Oddschecker, namelywww.casino-checker.com and www.poker-checker.com, to cater for the growingnumber of people seeking the latest tournament and jackpot news online. Thesework on an affiliate revenue model from leading gaming operators. We have alsoseen the launch of our first branded mobile 3G portal, with football365 on theHutchison 3 network offering a complete range of revenue generating sports ringtones, wallpapers, games and quizzes. Operational performance Group turnover in the year was £85.6 million (2003: £54.5 million). The gamingdivision turnover was £71.7 million (2003: £46.8 million) and the contentdivision produced turnover of £13.9 million (2003: £7.7 million). Operational performance reflects both organic growth, full year contributionsfrom the acquisitions of Rivals and Oddschecker made during 2003 and theacquisitions in 2004 of Goldbet, In The Box Media and Campbells. The gross profit generated by the Group has increased by 5.5 percentage pointsto 22.2% or £19.0 million (2003: £9.1 million) reflecting the contribution fromhigher margin gaming products like poker and casino and the growth ofadvertising sales across the content sites. The effect of the increase in grossprofit resulted in the first EBITDA profit for ukbetting plc, before exceptionalitems and non-recurring costs associated with the integration of the Rivalsacquisition. Management team Trevor Beaumont left during 2004 to join the Tote as Chief Executive, we wishhim every success in that role and thank him for his contribution in thedevelopment of the gaming division. Chief Executive Eric Semel has taken onTrevor's role as Head of Gaming, where his extensive experience of poker andcasinos has proved invaluable. Financing During the year the Company has not raised further equity capital (2003: £16.1million after costs), but has obtained banking facilities of £3.2 million fromBank Of Scotland. These facilities are available as a term facility used toacquire Campbells (£1.2 million) and a working capital facility of up to £2million. Outlook The strong growth of gaming, driven by poker and casino and helped by the rapidexpansion of broadband, has coincided with a tightening of online advertisingopportunities and a significant increase in customer acquisition costs. As such,our unique model, where we generate the majority of our gaming customers fromour own network, becomes even more valuable. Our content site traffic continues to grow, with over 8 million monthly users inthe first quarter of 2005, and as we restrict the number of other bookmakersadvertising on the sites, so our own gaming registrations should continue toimprove. This coupled with the fact that we now have a complete range of gamingproducts, shortly to be enhanced with 'instant play' casino and download-ablebackgammon, should continue to improve gross win. This combination of low cost customer acquisition and expansion in bothgeographical territories and new product applications will leave us very wellplaced for 2005. Peter DubensChairman15 April 2005 Consolidated profit and loss accountfor the year ended 31 December 2004 2004 2003 Continuing operations Total Discontinued Continuing Total Operations operations Acquisitions Non-recurring Continuing operations £000 £000 £000 £000 £000 £000 £000 Group turnover 19,392 - 66,165 85,557 44 54,475 54,519 Cost of sales (18,203) - (48,378) (66,581) (88) (45,340) (45,428) Gross profit/(loss) 1,189 - 17,787 18,976 (44) 9,135 9,091Administrative expenses(including (661) (1,461) (23,547) (25,669) (16) (14,333) (14,349)operating exceptional items) EBITDA before exceptional items 568 (1,338) (498) (1,268) (23) (3,156) (3,179) Exceptional items - (123) (2,636) (2,759) (37) (467) (504) EBITDA after exceptional items 568 (1,461) (3,134) (4,027) (60) (3,623) (3,683) Depreciation and amortisation (40) - (2,626) (2,666) - (1,575) (1,575) Group operating profit / (loss) 528 (1,461) (5,760) (6,693) (60) (5,198) (5,258) Loss on termination of - (141) - (141) - - -operations Profit / (loss) on ordinaryactivities before interestand taxation 528 (1,602) (5,760) (6,834) (60) (5,198) (5,258) Interest receivable 5 - 237 242 - 7 7 Interest payable and similar charges - - (276) (276) - (489) (489) Profit / (loss) on ordinaryactivities before taxation 533 (1,602) (5,799) (6,868) (60) (5,680) (5,740) Tax on profit onordinary activities (145) - - (145) - - - Profit / (loss) for thefinancial year attributableto members of theparent undertaking 388 (1,602) (5,799) (7,013) (60) (5,680) (5,740) Loss per share - pence Basic and diluted (7.66) (10.02)Adjusted Loss per share - pence Basic and diluted (1.24) (8.37) Adjusted loss per share has been calculated to provide a better understanding ofthe underlying performance of the Group. Adjusted loss is before amortisationof goodwill, impairment charges and non-recurring costs. There is no material difference between historical cost profits and thosereported in the profit and loss account. Consolidated statement of total recognised gains and lossesfor the year ended 31 December 2004 2004 2003 £000 £000 Retained loss of the financial period (7,013) (5,740)Exchange adjustments offset in reserves (39) (16) _______ _______Total recognised losses since last annual report (7,052) (5,756) _______ _______ Reconciliation of shareholders' fundsfor the year ended 31 December 2004 Group 2004 2003 £000 £000 Shareholders' funds at 1 January 15,101 3,011Total recognised losses (7,052) (5,756)New shares issued 2,455 16,363Shares to be issued (2,270) 1,483 _______ _______Shareholders' funds at 31 December 8,234 15,101 _______ _______ Consolidated balance sheetat 31 December 2004 2004 2003 £000 £000Fixed assetsIntangible assets 13,065 13,822Tangible assets 1,185 1,087 _______ _______ 14,250 14,909 _______ _______Current assetsStock 19 57Debtors 3,805 3,433Cash at bank and in hand 1,271 4,581 _______ _______ 5,095 8,071Creditors: amounts falling due within one year (8,725) (6,748) _______ _______Net current (liabilities)/ assets (3,630) 1,323 _______ _______Total assets less current liabilities 10,620 16,232 _______ _______ Creditors: amounts falling due after more than one year (2,329) (911) Provisions for liabilities and chargesOther provisions (57) (220) _______ _______ 8,234 15,101 _______ _______ Capital and reservesCalled up share capital 956 903Share premium account 20,503 20,479Shares to be issued 713 2,983Other reserve 10,294 7,916Profit and loss account (24,232) (17,180) _______ _______Equity shareholders' funds 8,234 15,101 _______ _______ Consolidated statement of cash flowsfor the year ended 31 December 2004 2004 2003 Notes £000 £000 Cash outflow from operating activities 1 (1,371) (4,508) Returns on investments and servicing of finance 2 (94) (369) Taxation paid (187) - Capital expenditure and financial investment 2 (716) (186) Acquisitions and disposals 2 (3,180) (3,641) ______ ______Net cash outflow before financing (5,548) (8,704) Financing 2 1,200 10,356 ______ ______(Decrease) / Increase in cash in the year (4,348) 1,652 ______ ______ Reconciliation of net cash flow to movement in net debtfor the year ended 31 December 2004 2004 2003 Notes £000 £000 (Decrease)/increase in cash for the year (4,348) 1,652(Increase)/decrease in debt 2 (1,200) 5,007 ______ ______Change in net (debt)/funds resulting from cash flows (5,548) 6,659 Non-cash movements (53) (45) ______ ______Change in net (debt)/funds resulting from cash (5,601) 6,614flows and non-cash movements ______ ______Movement in net (debt)/(funds) for the year (5,601) 6,614Net funds/(debt) at start of the year 4,581 (2,033) ______ ______Net (debt)/funds at end of the year (1,020) 4,581 ______ ______ Notes to the consolidated statements of cash flowsfor the year ended 31 December 2004 1. Reconciliation of loss on ordinary activities to operating cash flows 2004 2003 £000 £000Operating loss (6,693) (5,258)Depreciation, amortisation and impairment of goodwill 4,988 1,575(Increase)/decrease in debtors (46) 224Decrease in stock 38 33Increase/(decrease) in creditors 505 (1,099)(Decrease)/increase in provisions (163) 17 ______ ______Net cash outflow from operating activities (1,371) (4,508) ______ ______ 2. Analysis of cash flows for headings netted in the cash flow statement Returns on investment and servicing of finance 2004 2003 £000 £000Interest received 82 7Interest paid (10) (376)Charges on raising of facilities (166) - ______ ______Net cash outflow from returns on investments and servicing of finance (94) (369) ______ ______Capital expenditure and financial investmentAcquisition of tangible fixed assets (716) (496)Disposal of tangible fixed assets - 310 ______ ______Net cash outflow from capital expenditure and financial investment (716) (186) ______ ______Acquisitions and disposalsPurchase of subsidiary undertakings net of cash acquired of £109,000 (2003: £299,000) (3,111) (3,641)Closure of businesses (69) - ______ ______Net cash outflow from acquisitions and disposals (3,180) (3,641) ______ ______FinancingProceeds from shares issued by parent undertaking - 16,050Cost of share issues - (687)Bank finance/term loan 1,200 (5,000)Repayment of finance leases - (7) ______ ______Net cash inflow from financing 1,200 10,356 ______ ______ Financial information The financial information set out above does not constitute the Company'sstatutory financial statements for the year ended 31st December 2004, but isderived from those statements. Statutory financial statements for 2004 will bedelivered to the Registrar of Companies following the Annual General Meeting.The auditors have reported on the financial statements to 31 December 2004.Their report was unqualified and did not contain statements under section 237(2)of the Companies Act 1985. 1. Annual Report and financial statements The Annual Report will be posted to shareholders shortly. The Annual GeneralMeeting will be held on 8 June 2005. Copies of the Annual Report and of thisannouncement will be available at the Company's registered address: ApsleyHouse, 78 Wellington Street, Leeds LS1 2EQ. 2. Segmental analysis Group turnover, profit / (loss) on ordinary activities before tax and net assetsare analysed as follows. Segmental Analysis Gaming Content Total Gaming Content Credit TotalArea of Activity 2004 Card 2003 Marketing £000 £000 £000 £000 £000 £000 £000Group turnoverDiscontinued - - - - - 44 44Continuing - Acquisitions 19,353 39 19,392 - - - - - Continuing 52,367 13,798 66,165 46,795 7,680 - 54,475 ______ ______ _____ ______ ______ ______ ______ 71,720 13,837 85,557 46,795 7,680 44 54,519 ______ ______ _____ ______ ______ ______ ______ Group operating loss before exceptionalitems and common costsDiscontinued - - - - - (45) (45)Continuing - Acquisitions 180 (29) 151 - - - - - Continuing (excluding non- recurring) (4,720) 522 (4,198) (1,984) (1,503) - (3,487) ______ ______ _____ ______ ______ ______ ______ (4,540) 493 (4,047) (1,984) (1,503) (45) (3,532) ______ ______ ______ ______ ______Common costs including non-recurring costs (2,646) (1,726) _____ ______Group operating loss (6,693) (5,258)Net interest and income from (34) (482)investmentsLoss on termination of operations (141) - _____ ______Loss on ordinary activities before taxation (6,868) (5,740) _____ ______Net assets/(liabilities)Discontinued - - - - - 1,947 1,947Continuing - Acquisitions 1,898 446 2,344 - - - - - Continuing (4,905) 12,290 7,385 (944) 11,479 - 10,535 ______ ______ _____ ______ ______ ______ ______ (3,007) 12,736 9,729 (944) 11,479 1,947 12,482 ______ ______ ______ ______ ______Unallocated net assets / (liabilities) (1,495) 2,619 _____ ______Total net assets 8,234 15,101 _____ ______Unallocated net assets/(liabilities)comprise:Cash (998) 3,443Other debtors 198 228Other creditors (695) (1,052) _____ ______ (1,495) 2,619 _____ ______ 3. Exceptional items and non-recurring costs Exceptional items comprises £437,000 in relation to the redundancy costs andcontract termination payments incurred in the integration of the Rivals and animpairment charge of £2,322,000 charge against the goodwill arising on theoriginal acquisition of the ukbetting.com Limited business. Non-recurring costs of £1,338,000 disclosed in the profit and loss accountcomprise those operating costs incurred during the post Rivals acquisitionperiod until the completion of integration and reorganisation procedures, afterwhich they do not recur. Costs arising directly from the integration andreorganisation, comprising principally redundancy and termination payments, wereincluded as exceptional non-recurring costs. 4. Acquisitions (a) Acquisition of Goldbet Sportwetten GmbH ("Goldbet") On 19 March 2004 the Group acquired 51% of the issued share capital of Goldbet.The Group is contractually bound to acquire the remaining 49% of the sharecapital of Goldbet in March 2006. The total consideration of £3,261,000including expenses was satisfied by cash of £1,082,000, share issues of £63,000and includes a deferred contingent amount of £2,116,000 payable in cash andshares. The deferred contingent consideration is payable on achieving certainEBITDA performance criteria in 2004 and 2005. The Group controlled Goldbet from 1 January 2004 and under FRS 2 has thereforeconsolidated its results from that date. The Group has used acquisition accounting to account for the purchase and theresulting goodwill of £3,290,000 has been capitalised and is being amortisedover 10 years. Provisional Book fair value Provisional value adjustments fair valueNet assets acquired £000 £000 £000Tangible fixed assets 19 - 19Debtors 342 (162) 180Cash 77 - 77Creditors (305) - (305) ______ ______ ______Net assets 133 (162) (29) ______ ______ ______Goodwill 3,290Consideration 3,261 ______ £000Satisfied by:Cash 2,485Shares 776 ______ 3,261 ______ The adjustment represents revisions to book values of existing assets andliabilities under FRS 7, 'Fair values in acquisition accounting' and is anadjustment for a non-recoverable debt. The summarised un-audited profit and loss accounts of Goldbet for the periodsimmediately prior to the acquisition by the Group are: 31December 31 December 2003 2002 £000 £000Turnover 6,070 3,699Operating profit 80 112Profit before taxation 81 107Taxation (28) (23) ______ ______Profit after taxation 53 84 ______ ______ (b) Acquisition of In The Box Media Limited ("ITB") On 28 July 2004 the Group acquired the entire issued share capital of ITB. Thetotal consideration of £475,000 including expenses, was satisfied with cash of£175,000 and the issue of £300,000 of shares. The Group has used acquisitionaccounting to account for the purchase and the resulting goodwill of £433,000has been capitalised and is being amortised over 10 years. Book value and provisional fair value £000 Net assets acquiredTangible fixed assets 13Debtors 127Cash 51Creditors (149) ______ 42 ______Goodwill 433 ______Consideration 475 ______ £000Satisfied by:Cash 175Shares 300 ______ 475 ______ The summarised un-audited profit and loss accounts of ITB for the periodsimmediately prior to the acquisition by the Group are: 31December 31December 2003 2002 £000 £000Turnover 363 33Operating profit 56 -Profit before taxation 56 -Taxation (13) - ______ ______Retained profit 43 - ______ ______ (c) Acquisition of Campbells (Bookmakers) Limited ("Campbells") On 12 October 2004 the Group acquired the entire issued share capital ofCampbells. The total consideration of £1,236,000 including expenses, wassatisfied in cash of £1,236,000 utilising a term loan facility of £1,200,000.The Group has used acquisition accounting to account for the purchase and theresulting goodwill of £1,290,000 has been capitalised and is being amortisedover 10 years. Provisional Book fair value Provisional value adjustments fair valueNet assets acquired £000 £000 £000Tangible fixed assets 7 (7) -Debtors 19 - 19Cash - - -Creditors (73) - (73) ______ ______ ______ (47) (7) (54) ______Goodwill 1,290 ______Consideration 1,236 ______ £000Satisfied by:Cash 1,236 ______ The summarised audited profit and loss accounts of Campbells for the periodsimmediately prior to the acquisition by the Group are: 3 December 4 December 2003 2002 £000 £000Turnover 7,684 7,561Operating profit (52) 20Profit before taxation (49) 21Taxation 4 (4) ______ ______Retained loss (45) 17 ______ ______ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
365.L