4th Feb 2005 07:00
FOR IMMEDIATE RELEASE4 February 2005 BETINTERNET.COM PLC ("the company" or "betinternet") INTERIM RESULTS FOR THE 26 WEEKS ENDED 28 NOVEMBER 2004 betinternet.com plc, the global on-line gaming group, today announces interimresults for the 26 weeks ended 28 November 2004.Highlights of the results are: * Group turnover increased by 80% to ‚£47.06m for the 26 week period (2003: ‚£ 26.20m); * Pari-mutuel activities, re-branded as European Wagering Services, reported turnover of ‚£32.26m and gross profit of ‚£0.68m for the 5 months of full ownership. * Financing in place for future growth. ‚£0.8m (gross) received after date. * Gross profit up 32% at ‚£1.48m (2003: ‚£1.12m) * EBITDA loss reduced to ‚£0.18m (2003: loss of ‚£0.93m) * Net funds pre December 2004 fund raising ‚£0.54m; an increase of ‚£0.14m in the period. Commenting on the results, Denham Eke, chairman of betinternet, said:"These results show a sharply improved performance at EBITDA level and give meconfidence that EBITDA profitability may shortly be achieved."The Company is now strongly placed to build upon the initial impressive growthof its pari-mutuel business, European Wagering Services. In addition, therecent successes of its casino and football game offerings are a blue-print forfuture expansion within the sportsbook business." ENDS For further information:betinternet.com plc Tel: 01624 629699Paul Doona, Managing DirectorWilliams de Broƒ« plc Tel: 0113 243 1619Joanne LakeWaughton Tel: 020 7796 9999Robin Hepburn/Sorrel DaviesNotes 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' wheredividends are paid to winners and the operator retains a percentage of the`pool'. INTERIM RESULTS CHAIRMAN'S STATEMENTIntroductionFollowing the recent strategic review of its operations, your Company has takenappropriate steps to capitalise upon the opportunities available to it.The board considers that European Wagering Services Limited, its newlyre-branded pari-mutuel business, and owner of the Isle of Man totalisator hub,is uniquely placed to provide a global link between major track operators,content providers and customers who wish to wager, making use of the wageringplatform, multi-currency and technical services that the Company provides.In addition, the Company continues to seek out further enhancements to theoffering it provides to its fixed-odds customers. The recent successes of itsnewly introduced casino and football game offerings are a blue-print for futurebusiness expansion.Overview of ResultsDuring the period under review, group turnover showed an 80% increase to ‚£47.06m (2003: ‚£26.20m) and gross profit rose from ‚£1.12m to ‚£1.48m, an increaseof 32%.The Company's pari-mutuel business traded well ahead of our expectations. Theactivity was fully consolidated from June 30, 2004, the date on which weacquired the outstanding 50% interest from US Off-Track. Turnover for the 26week period, including the 4 week period when it was not consolidated, was ‚£35.07m, which compares with turnover of ‚£45.03m for the entire 52 week periodto 30 May 2004.Gross profit from the operation rose to ‚£0.75m for the entire period comparedwith ‚£0.67m for the comparable period last year.The sportsbook operation continued to reflect our more cautious approachtowards risk which characterised its performance in the second half of lastyear. Turnover at ‚£14.80m was considerably less than the comparable period (‚£26.20m) and reflected a further reduction in telephone activity; a reduction inunprofitable business lines and a stricter control of overhead, includingmarketing spend.As a result of these measures, the gross margin percentage, after duty, rose to5.4% compared with 4.3% in the previous period, resulting in a gross profit of‚£0.80m (2003: ‚£1.12m).Following a reduction in overheads of 19% to ‚£1.66m (2003: ‚£2.05m), the resultstherefore show a sharply improved performance at EBITDA level with the lossreduced to ‚£0.18m, compared to the previous period loss of ‚£0.93m.After depreciation, an increased goodwill charge, share of profit of jointventure, and interest, the overall loss for the period was ‚£0.72m, comparedwith ‚£1.17m for the previous period.ProspectsYour board is clearly focused on developing betinernet to become a leadingtechnology solutions provider for the online gaming sector, maximising itsmarket-leading technology to develop risk-free income streams to balance theunpredictable nature of fixed odds sportswagering.The Company is strongly placed to build upon the initial impressive growth ofits pari-mutuel business, European Wagering Services (formerly Euro Off-Track),and, in doing so, will seek to emphasise its expertise as a hub operator, inaddition to its wagering operations.The extensive range of host track contracts secured by the Company alreadyprovides customers with unrivalled opportunities to wager on US thoroughbredand greyhound content and therefore participate in the improved returns nowavailable due to the recent elimination of US withholding tax.The board's aim is to increase the breadth of the wagering opportunitiesavailable to its customers, particularly on an international scale. SouthAfrican horseracing is already proving to be an attractive component within ourwagering portfolio and negotiations are at an advanced stage with otherinternational content providers.Key to our ability to attract content providers to allow wagering through ourtotalisator, is their recognition that the Isle of Man is a well-regulatedjurisdiction with the technical infrastructure and skill sets to support globalwagering.Following the period end, the Company has widened its sports book offering withthe launch of a live casino and football game. The initial results areextremely encouraging. In its first five weeks of operation, the total level ofwagers placed in the Company's Play Live Casino was in excess of $6.2m. ThePlay Football game launched at the same time has had a similarly positivestart. Similar opportunities involving sports gaming and gambling products arebeing actively pursued.The directors strongly believe that the new strategic direction of the businessprovides major long-term opportunities and the Board remains confident that theCompany will achieve its goal of becoming one of the leading providers ofonline gaming technology.Denham EkeChairmanCONSOLIDATED PROFIT AND LOSS ACCOUNT For the 26 weeks ended 28 November 2004 Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 28 November 30 November 30 May 2004 2003 2004 Notes ‚£000 ‚£000 ‚£000 Turnover including share of joint venture Betting stakes received Pari-mutuel 6 32,264 - - Sports betting 14,800 26,196 45,494 Joint venture 6 1,402 14,566 22,513 48,466 40,762 68,007 Less share of joint (1,402) (14,566) (22,513) venture turnover Total group turnover 1 47,064 26,196 45,494 Cost of sales Winnings paid and bets (45,558) (25,054) (43,004)laid off Betting duty paid (29) (23) (53) Gross Profit 1 1,477 1,119 2,437 Administration expenses (1,656) (2,049) (3,901) Earnings before interest, tax, depreciation and (179) (930) (1,464)amortisation Depreciation (250) (300) (566) Amortisation of goodwill (316) (109) (219) Gross operating loss (745) (1,339) (2,249) Share of operating profit in 24 169 354joint venture Total operating loss including share of joint venture (721) (1,170) (1,895) Interest 1 3 1 Loss on ordinary activities before and after taxation and retained loss for (720) (1,167) (1,894)the period Basic and diluted loss 3 (0.57) (1.00) (1.62)per share (pence) CONSOLIDATED BALANCE SHEET As at 28 November 2004 Unaudited Unaudited Audited 28 November 30 November 30 May 2004 2003 2004 ‚£000 ‚£000 ‚£000 Fixed assets Intangible assets 899 328 219 Tangible assets 482 743 620 1,381 1,071 839 Current assets Debtors 619 1,161 851 Cash at bank and in hand 583 781 444 1,202 1,942 1,295 Creditors: (2,176) (1,484) (1,517) Amounts falling due within one year Net current assets (974) 458 (222) Provision for liabilities and charges Investment in joint venture Share of gross assets - 390 446 Share of gross liabilities - (765) (636) Share of net liabilities - (375) (190) Net assets 407 1,154 427 Capital and reserves Called up share capital 1,254 1,167 1,167 Share premium account 7,541 6,928 6,928 Profit and loss account (8,388) (6,941) (7,668) Equity shareholders' funds 407 1,154 427 CONSOLIDATED CASH FLOW STATEMENT For the 26 weeks ending 28 November 2004 Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 28 November 30 November 30 May 2004 2003 2004 Note ‚£000 ‚£000 ‚£000 Net cash outflow from operating 4 (466) (900) (984)activities Returns on investment and servicing 1 3 1of finance - - Acquisition of tangible fixed assets (10) (128) (345) Cash assumed on acquisition of joint 414 - -venture Cash outflow before use of liquid resources (61) (1,025) (1,328)and financing Financing Issue of convertible loan 200 - - Increase/(decrease) in cash for the 5 139 (1,025) (1,328)period Reconciliation of net cash flow to movement in net funds 28 November 30 November 30 May 2004 2003 2004 Note ‚£000 ‚£000 ‚£000 Opening net funds 437 1,765 1,765 Increase/(decrease) in cash for the 139 (1,025) (1,328)period Closing net funds 5 576 740 437 NOTES TO THE ACCOUNTS For the 26 weeks ending 28 November 2004 1 Segmental analysis Sports Pari-mutuel Total betting 26 weeks to 28 November 2004 ‚£000 ‚£000 ‚£000 Betting stakes received 14,800 32,264 47,064 Winnings paid and bets laid off (13,990) (31,568) (45,558) Betting duty paid (9) (20) (29) Gross profit 801 676 1,477 Margin 5.4% 2.1% 3.1% Sports Pari-mutuel Total betting 26 weeks to 30 November 2003 ‚£000 ‚£000 ‚£000 Betting stakes received 26,196 - 26,196 Winnings paid and bets laid off (25,054) - (25,054) Betting duty paid (23) - (23) Gross profit 1,119 - 1,119 Margin 4.3% - 4.3% In the 26 week period to 30 November 2003, the pari-mutuel activity was undertaken in joint venture. 2 Taxation No provision is required due to the availability of losses brought forward. 3 Loss per share The earnings per share calculation is based on the loss for the period after taxation and the weighted average number of shares in issue throughout the period. Calculations of loss per share is based on losses of ‚£720,000 (2003: ‚£ 1,167,000) and the weighted average number of ordinary being the equivalent of 125,448,127 (2003: 116,687,027) 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. 4 Reconciliation of operating loss to net cash outflow from operating activities Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 28 November 30 November 30 May 2004 2003 2004 ‚£000 ‚£000 ‚£000 Operating loss (745) (1,339) (2,249) Non cash impact of acquisition of (787) - -joint venture Depreciation and amortisation 566 335 785charges Decrease in debtors 232 450 760 Increase/(decrease) in creditors 268 (346) (280) Net cash outflow from operating (466) (900) (984)activities NOTES TO THE ACCOUNTS Continued For the 26 weeks ending 28 November 2004 5 Analysis of net funds At 28 At 31 May November 2004 Cash flow 2004 ‚£000 ‚£000 ‚£000 Cash in hand and at bank 444 139 583 Bank overdraft (7) - (7) 437 139 576 6 Acquisition The 50% of European Wagering Services Limited (previously trading as Euro Off-Track) not previously owned was acquired on 30 June 2004 and was accounted for as follows: Book value on acquisition ‚£000 Tangible fixed assets 99 Debtors 517 Cash 414 Creditors (1,621) Net Assets acquired (591) Share in joint venture (50%) (296) Goodwill 997 Issue of shares (88) Share premium (613) Consideration - The consolidated profit and loss account includes the group's share of turnoverand operating profit for the period to 30 June 2004. Thereafter, the results ofthe operation are fully consolidated. NOTES TO THE ACCOUNTS Continued For the 26 weeks ending 28 November 2004 7 Basis of preparation of the financial statements The results for the period ended 28 November 2004 are prepared in accordance with applicable accounting standards, using the same accounting policies as setout in the group accounts for the year ended 30 May 2004. 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, having also taken cognisance of the impact of the share placement in December 2004, which raised ‚£800k (before expenses), are satisfied that the group has adequate resources to meet its obligations as they fall due. On this basis the directorshave concluded that it is appropriate to prepare the financial statements on a going concern basis. 8 Other information i. The comparative figures for the 52 weeks ended 30 May 2004 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 4 February 2005. iv. The interim report is expected to be posted to shareholders on 17 February 2005 and will be available from that date 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 Williams de Broe, PO Box 515, 6 Broadgate, London EC2M 2RP. ENDRelated Shares:
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