10th Sep 2007 07:02
888 Holdings plc10 September 2007 10 September 2007 888 Holdings Public Limited Company Interim Results for the six months ended 30 June 2007 888, one of the world's most popular online gaming entertainment companies, announces its interim results for the six months ended 30 June 2007. Financial Highlights (continuing business) • Net Gaming Revenue (NGR) up 24% to $97m (H1 2006: $78m)• Profit before tax* up 298% to $19m (H1 2006: $5m)• Profit before tax* margin widened to 19% (H1 2006: 6%)• Casino NGR of $54m - 22% growth from H1 2006 to H1 2007• Poker NGR of $41m - 19% growth from H1 2006 to H1 2007• Operating expenses as a percentage of NGR - down to 28%(H1 2006: 31%)• Basic EPS* of 5.2c (H1 2006: 1.0c)• Interim dividend of 1.8c per share (H1 2006: 4.5c) Operational Highlights • Continued growth in all games and major territories• First strategic partnerships signed: - Rileys Snooker Halls - UK - Tower Torneos - Latin America• First ever acquisition completed - the Bingo business of Globalcom Limited• Sports betting licence in Italy obtained• Introduction of backgammon and bingo products• New casino games launched in all 12 supported languages • Launch and upgrade of new 3D Poker software• Unified client introduced enabling users for the first time to access casino, poker, backgammon and bingo games using the same software - enabling better cross-selling • Intense marketing campaign - 888 achieving the highest brand awareness of all gaming and betting websites in the UK** < ends > Gigi Levy, Chief Executive Officer of 888, said: "I am pleased to report that we have delivered strong interim results with 24% NGR growth and 298% PBT* growth in our continuing business. These results prove clearly that in spite of the signing into law of the Unlawful Internet Gaming Enforcement Act in October last year, which saw the business lose the majority of our 26 million registered customers and 55% of our revenues, the turnaround we had begun to achieve at the full year has been successful. We have maintained our track record of profitability, have achieved a record performance in our continuing business and continue paying dividend in line with our policy. H2 has started strongly with record turnover in July 2007 which is a very strong result in traditionally one of the seasonally weakest months of the year. This start to the second half, the continuous growth in Bingo, our strategic partnership deals, current trading and our clear business strategy makes us confident of delivering further growth in 2007." * Excluding share benefit charges of US$4.1 million (H1 2006: $3.9 million)** 2007 - Marketing, brand and sector review - Millward Brown Enquiries 888Gigi Levy, Chief Executive Officer +350 49800Aviad Kobrine, Chief Financial Officer +350 49800 Bell Pottinger Corporate & FinancialAnn-marie Wilkinson / Nick Lambert / Chris Hamilton +44 (0) 20 7861 3232 Chief Executive Officer's Review I am pleased to report that we have delivered strong Interim results for the six months to 30 June 2007. This proves clearly that in spite of the signing into law of the Unlawful Internet Gaming Enforcement Act (UIGEA) in October last year, which saw the business lose the majority of our 26 million registered customers and 55% of our revenues, the turnaround we had begun to achieve at the full year has been successful and we have maintained our track record of profitability. While our overall numbers clearly suffered when we ceased all activity in the US market, these results show a record performance of our continuing business: Profit before tax* in H1 2007 was $19 million (H1 2006: $5 million), an increase of 298% over H1 2006. Net Gaming Revenue ("NGR") was also up substantially at $97 million (H1 2006: $78 million), an increase of 24% and our basic earnings per share* was 5.2 cents (H1 2006: 1.0 cents). These are excellent results and in accordance with the policy set out at the time of flotation we will be paying an interim dividend of 1.8 cents per share. Delivering on our strategyOur success in the first half of 2007 was based on the same strategic principles that have made us successful in the past: our focus will always be on acquiring and retaining customers by delivering a compelling, localised, innovative, unique and entertaining customer experience while being mindful of the complex regulatory environment in which we operate and the necessary social responsibilities that come with our industry. In the first half of 2007 we continued to pursue the strategic elements which are the cornerstones of our strategy. We continued our investment in our Enhanced and Innovative Offering - and offered for the first time in the industry a single software client encompassing all casino games, poker, backgammon and bingo, enabling us to easily cross sell between our different products and expand the customer segments we serve. We continued delivering on our commitment for at least one new game each month with our video slots, our recent introduction of backgammon and our bingo product, based on the integration of the Bingo acquisition into our offering. We upgraded and launched our innovative 3D Poker client with avatars, chat tools and its unique 'rotating table' feature, which became an immediate hit with customers. We secured the award of a sports betting license in Italy and will continue working towards launching sports betting in additional markets. Our integrated offering is already best in class today and the addition of a sports betting product will give us a full, unrivalled proposition. Our marketing refocus in the first half of 2007 was invaluable in our efforts to turn the company around, based on our focus of delivering State of the art Integrated Marketing. We have activated more marketing campaigns outside the US than ever before, with a strategic focus on key local target markets. These include the extremely successful brand-building Sevilla and World Snooker Championship sponsorships. The success of these sponsorship activities is demonstrated in a recent survey showing 888.com with the highest level of brand awareness of any gaming and betting web sites in the UK**, which continues to be the industry's most important market. The first half of 2007 has seen a concerted drive to test and evaluate many new and innovative marketing campaigns including blogs, viral marketing and user generated content resulting in a broader approach to new segments. We continue to leverage our unique propositions to leading affiliates and have enhanced our extensive broadcasting of 888 TV content in various markets. This is all complemented with great rankings in search engine results for key words around the world. The most significant strategic advance in the period is our move into white-labelling with a select group of strategic partnerships. The first, announced in February, with Riley's snooker halls in the UK where we partnered to create in-hall live poker tournaments and on-line, powering www.rileyspoker.com. We have followed this recently with Tower Torneos, one of the leading gaming operators in Latin America. These marketing achievements and innovative activities helped us grow in the first half of 2007 and will continue pushing us forward in future. Our withdrawal from the US, meant that our principle of Thinking Global while Acting Local became more important than ever. With customers all around the world and a need to grow in a number of markets simultaneously, we had to enhance our local focus quickly. Through the first half of the year we introduced new casino games in all of the 12 languages we support and completed our new language infrastructure which will enable us to launch all future casino and poker versions concurrently in 12 languages. We have also implemented a module in our payments system which allows quick introduction of new payment methods and real time optimisation for a localised deposit and cash-out experience as well as optimal deposit approval rates. With several partnerships in place to introduce local games as an integral part of our offering, the first half of the year sets a new standard in terms of our ability to act locally in our target markets. Throughout the period we kept providing our Market-Leading customer service. While the reduced headcount stretched our abilities, we were able to maintain our unique service level and received better than ever results in customer satisfaction surveys. This is a great achievement given the need to expand support in non-English languages. Ensuring our commitment to Customer Intimacy, we have continued our practice of meeting our customers in the first half of 2007 as well as conducting extensive market research. With our new Data Warehouse and analytical tools in place, we continue to analyse customer behaviours and needs, providing us the insight required to make the right marketing and customer retention decisions. These capabilities continue to be pivotal to our success. To meet our targets, our 2007 budget called for us to continue being a Focused, Efficient and Effective Organization. We have continued our cost reduction plans and enhanced our budget control, both aimed to ensure we can maintain high profitability levels. Last but not least, we continue being thankful to our employees for delivering on our commitments and turning the company around and remain committed to our Employer of Choice philosophy. The great employees who remained with us through this difficult crisis as well as the top talent we recruited in the past few months prove the success of this philosophy. Bingo acquisitionOur first ever acquisition was completed in May and we are glad to report that the acquired assets were successfully integrated into the 888 group. With NGR of US$2 million during the six weeks ended 30 June 2007 the bingo business we acquired is doing phenomenally well and coupled with the immediate successful introduction of our own bingo proposition this is proving to be a very lucrative acquisition for us. The current outlook is for the acquired business to continue delivering above our expectations also in the second half of 2007, as we plan to extend Bingo offering to additional markets. Our H2 focusAiming to be a global multi-channel entertainment and community destination, in H2 we will continue developing new and innovative elements to our offering. H2 plans include additional games with a focus on local games, a content delivery platform which will provide our active customers with premium content free of charge and at least one additional channel to market on top of Internet, Mobile and Airplane-entertainment (for non-real-money games) which we have already launched. We will improve our localization with Casino and Poker upgraded versions in all languages and introduce our first non-English Bingo offering. We are confident in the success of our Italian sports betting product and continue working on the introduction of sports betting in additional markets. Marketing wise, Q4 will also see a new marketing campaign across Europe in accordance with our strategic direction and we intend to continue expanding our strategic partnership business. RegulationWhile the regulatory landscape remains unstable in some regions, the first six months of 2007 saw some positive developments from the regulatory perspective. In Europe, the Placanica ruling restated the importance of EU regulations to our industry; coupled with the recent infringement warnings and position letters from the EC this marks a very positive turn in the ability of EU licensed operators like us to work openly in the EU. Outside of Europe we see initial signs of positive regulation both in Asia Pacific and Latin America, where the newly formed regulation in some jurisdictions could permit us to work in a properly-licensed environment. These are all positive developments, as we witness the formation of a regulatory framework as the most sensible evolution for this highly popular form of online entertainment. We will continue monitoring the regulatory landscape and look for opportunities to operate in regulated markets. On 5 June 2007 the Group announced that it has initiated preliminary discussions with the United States Attorney's Office for the Southern District of New York. It is too early to assess any particular outcome of these discussions. OutlookH2 has started strongly with record turnover in July 2007. This strong result, for what is traditionally one of the seasonally weakest months of the year, leads us to believe that we will see additional growth in H2. While the conversion of players is far from over, the recently introduced second strategic partnership deal with Tower Torneos, a major player in the Latin American poker market, is already contributing to our poker liquidity. We expect our strategic partnership business to continue growing in the coming months. As stated earlier this year, we are on track to introduce our first sports betting proposition in Italy and continue working on introducing sports betting in additional markets. Finally, as previously mentioned, our acquired Bingo business has been growing rapidly based both on the growth in the core acquired business and on the growth of the 888 Bingo product. Given the good start to Q3, the continuous growth in Bingo, our strategic partnership deals, current trading and our clear business strategy, we remain confident of delivering further growth in 2007. Gigi LevyChief Executive Officer Consolidated Income Statementfor the period ended 30 June 2007 Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Note (unaudited) (unaudited) (unaudited)Continuing operationsNet Gaming Revenue 2 96,816 78,206 157,000Operating expenses 27,110 24,212 49,448Research and developmentexpenses 11,498 9,165 19,381Selling and marketingexpenses 34,290 27,519 51,037Administrative expenses 11,800 18,079 28,653 -------- -------- ---------Operating profit before sharebenefit charges 16,264 3,112 17,310 -------- -------- ---------Share benefit charges 4,146 3,881 8,829 -------- -------- ---------Operating profit (loss) 3 12,118 (769) 8,481Finance income 2,600 1,622 4,883 -------- -------- ---------Profit before tax 14,718 853 13,364Taxation 1,337 1,431 3,117 -------- -------- ---------Profit (loss) from continuingoperations 13,381 (578) 10,247 -------- -------- ---------Profit from discontinuedoperations 4 152 43,280 64,254 -------- -------- ---------Profit after tax for theperiod attributable to equityholders of parent 13,533 42,702 74,501 -------- -------- --------- Earnings per share fromcontinuing operations 5Basic 4.0c (0.1)c 3.0cDiluted 3.9c (0.1)c 3.0c -------- -------- ---------Earnings per share fromdiscontinued operationsBasic 0.0c 12.8c 19.1cDiluted 0.0c 12.6c 18.8c -------- -------- ---------Total earnings per share 5Basic 4.0c 12.7c 22.1cDiluted 3.9c 12.5c 21.8c -------- -------- --------- The notes on pages 9 to 16 form part of this report. Consolidated Balance Sheetat 30 June 2007 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Note (unaudited) (unaudited) (unaudited)AssetsNon-current assetsIntangible assets 41,746 - -Property, plant and equipment 15,526 9,449 13,033Deferred taxes 672 461 546 -------- -------- --------- 57,944 9,910 13,579 Current assetsCash and cash equivalents 87,285 11,874 114,356Trade and other receivables 12,847 11,746 9,669 -------- -------- --------- 100,132 128,620 124,025 -------- -------- --------- Total assets 158,076 138,530 137,604 -------- -------- ---------Equity and liabilitiesEquity attributable to equityholders of the parentShare capital 3,084 3,068 3,073Share benefit reserve 9,191 6,028 9,332Retained earnings 62,324 69,817 74,597 -------- -------- ---------Total equity attributable toequity holders of the parent 74,599 78,913 87,002 -------- -------- ---------LiabilitiesCurrent liabilitiesTrade and other payables 60,584 29,589 27,931Member deposits 22,893 30,028 22,671Total liabilities 83,477 59,617 50,602 -------- -------- ---------Total equity and liabilities 158,076 138,530 137,604 -------- -------- --------- Approved by the Board and authorised for issue on 10 September 2007. Gigi Levy Aviad KobrineChief Executive Officer Chief Financial Officer The notes on pages 9 to 16 form part of this report. Consolidated Statement of Changes in Equityfor the period ended 30 June 2007 Share Share benefit Retained Capital Reserve Earnings Total US$'000 US$'000 US$'000 US$'000Balance at 1 January 2005 3,066 - 27,113 30,179Profit for the year - - 48,015 48,015Dividend paid - - (63,100) (63,100)Redemption of preference share capital (1) - - (1)Share benefit charge - 17,234 - 17,234Transfer of shares granted on IPO - (15,087) 15,087 -Redenomination translation 3 - - 3effect --------- --------- -------- --------Balance at 1 January 2006 3,068 2,147 27,115 32,330 --------- --------- -------- --------Profit for the year - - 74,501 74,501Dividend paid - - (28,658) (28,658)Issue of shares 5 (5) - -Lapsed share benefit charge - (1,639) 1,639 -Share benefit charge - 8,829 - 8,829 --------- --------- -------- --------Balance at 31 December 2006 3,073 9,332 74,597 87,002 --------- --------- -------- --------Profit for the period - - 13,533 13,533Dividend paid - - (30,082) (30,082)Issue of shares 11 (11) - -Lapsed share benefit charge - (4,276) 4,276 -Share benefit charge - 4,146 - 4,146 --------- --------- -------- --------Balance at 30 June 2007 3,084 9,191 62,324 74,599 --------- --------- -------- -------- The notes on pages 9 to 16 form part of this report. Consolidated Statement of Cash Flowsfor the period ended 30 June 2007 Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (unaudited) Cash flows from operatingactivitiesProfit before tax 14,870 44,133 77,618Adjustments forDepreciation 1,864 1,883 3,801Loss on sale of property, plant andequipment - - 29Interest received (2,959) (1,551) (4,879)Share benefit charges 4,146 3,881 8,829 --------- --------- --------- 17,921 48,346 85,398 (Increase) decrease in tradereceivables (1,669) 5,144 6,346Decrease in related party balances - 1,331 1,331Increase in other accountsreceivable (1,509) (1,877) (1,002)Increase(decrease) in trade 1,508 7,172 (1,439)payablesIncrease(decrease) in memberdeposits 222 703 (6,654)Increase (decrease) in otheraccounts payable 464 (2,903) 3,527 --------- --------- ---------Cash generated from operations 16,937 57,916 87,507Tax paid (1,424) (1,804) (3,052) --------- --------- ---------Net cash generated from operatingactivities 15,513 56,112 84,455Cash flows from investingactivitiesPurchase of intangibles on businessacquisition (11,104) - -Purchase of property, plant andequipment (4,357) (2,991) (8,621)Proceeds from sale of property,plant and equipment - - 99Interest received 2,959 1,551 4,879 --------- --------- ---------Net cash used in investingactivities (12,502) (1,440) (3,643)Cash flows from financingactivitiesDividends paid (30,082) - (28,658) --------- --------- ---------Net cash used in financingactivities (30,082) - (28,658)Net (decrease) increase in cash andcash equivalents (27,071) 54,672 52,154Cash and cash equivalents at thebeginning of the period 114,356 62,202 62,202 --------- --------- ---------Cash and cash equivalents at theend of the period 87,285 116,874 114,356 --------- --------- --------- The notes on pages 9 to 16 form part of this report. Notes to the Consolidated Financial Statements 1 Basis of preparation The consolidated interim financial information of the Group has been prepared inaccordance with International Financial Reporting Standards, includingInternational Accounting Standards ('IAS') and Interpretations (collectively'IFRS'), adopted by the International Accounting Standards Board ('IASB') andendorsed for use by companies listed on an EU regulated market. These results have been prepared on the basis of accounting policies expected tobe adopted in the Group's full financial statements for the year ended 31December 2007 which are not expected to be significantly different to those setout in note 2 to the Group's audited financial statements for the year ended 31December 2006 with the exception of the following matters: • Emerging games is a new segment added during the period which comprises mainly of 888's Backgammon offering and the newly acquired Bingo business; • Net Gaming Revenue from Emerging games is defined as the commission charged from winnings or entry fees charged for participation in a tournament. In the case of White label activity, Revenue is the net commission charged. The Group has not adopted IAS 34 in the preparation of the interimfinancial statements. The financial information is presented in thousands of US dollars(US$'000) because that is the currency the Group primarily operates in. The comparatives for the year ended 31 December 2006 are not the Group'sfull statutory accounts for that year. A copy of the statutory accountsfor that year has been delivered to the Registrar of Companies inGibraltar and is also available from the company's website. Theauditors' report on those accounts was unqualified but it referred to amatter concerning the regulatory position of the Group to which theauditors' drew attention by way of emphasis without qualifying theirreport. The details concerning this matter are given in note 7. The financial information contained in this interim announcement is unaudited and does not constitute statutory accounts. Presentation of continuing and discontinued operations As a result of enactment of the Unlawful Internet Gambling Enforcement Act("UIGEA") in October 2006, the Group withdrew from offering real-money activityto the US facing market. Although the Group did not operate the US facing business as a separatebusiness, it was a separate geographical segment of the Group's business and inaccordance with IFRS 5 - "Non-Current Assets Held for Sale and DiscontinuedOperations" the income statement and related notes are required to showcontinued and discontinued operations separately. Net Gaming Revenue and certain direct costs associated with the discontinuedoperations, which are of distinct nature, were allocated accordingly. Othercosts (such as R&D expenses, IT expenses, Share benefit charges, office rent andassociated cost, depreciation of fixed assets, gaming duty, Directors andOfficers insurance, Directors' fees and tax), which are not distinguishable,were all allocated to the continuing operations and not to the discontinuedbusiness. In allocating the rest of the costs of the Group between the twooperations, management has applied reasonable estimates in accordance withapplicable accounting standards. However, as estimates have necessarily beenused in disclosing a geographical segment as a discontinued operations, theresults do not necessarily reflect the financial performance which would havebeen achieved had the discontinued operations been managed as a stand-alonebusiness. 2 Segment information Business segments - continuing operations Six months ended 30 June 2007 Emerging games Casino Poker Consolidated US$'000 US$'000 US$'000 US$'000 (unaudited) (unaudited) (unaudited) (unaudited)Net Gaming Revenue 2,156 53,852 40,808 96,816 ---------- --------- --------- ---------ResultSegment result 1,494 33,051 21,547 56,092 ---------- --------- ---------Unallocatedcorporate expenses1 43,974 ---------- --------- --------- ---------Operating profit 12,118Finance income 2,600Tax expense (1,337) ---------- --------- --------- ---------Profit for theperiod- continuing operations 13,381Profit for theperiod- discontinued operations 152 ---------- --------- --------- ---------Profit for the period 13,533 ---------- --------- --------- ---------AssetsUnallocatedcorporate assets 158,076 ---------- --------- --------- ---------Total assets 158,076 ---------- --------- --------- ---------LiabilitiesSegment liabilities Poker 16,608Segment liabilities Casino 6,215Segment liabilities Emerging Games 70Unallocatedcorporate liabilities 60,584Total liabilities 83,477 ---------- --------- --------- --------- 1 Including share benefit charges of US$4,146,000. Six months ended 30 June 2006 Casino Poker Consolidated US$'000 US$'000 US$'000 (unaudited) (unaudited) (unaudited)Net Gaming Revenue 44,027 34,179 78,206 --------- --------- ---------ResultSegment result 24,387 20,331 44,718 --------- ---------Unallocated corporate expenses1 45,487 --------- --------- ---------Operating loss (769)Finance income 1,622Tax expense (1,431) --------- --------- ---------Loss for the period - continuingoperations (578)Profit for the period -discontinued operations 43,280 --------- --------- ---------Profit for the period 42,702 --------- --------- ---------AssetsUnallocated corporate assets 138,530 --------- --------- ---------Total assets 138,530 --------- --------- --------- LiabilitiesSegment liabilities - Poker 20,432Segment liabilities - Casino 9,596Unallocated corporate liabilities 29,589 --------- --------- ---------Total liabilities 59,617 --------- --------- --------- 1 Including share benefit charges of US$3,881,000 Year ended 31 December 2006 Casino Poker Consolidated US$'000 US$'000 US$'000 (unaudited) (unaudited) (unaudited)Net Gaming Revenue 88,760 68,240 157,000 --------- --------- ---------ResultSegment result 52,101 41,374 93,475 --------- ---------Unallocated corporate expenses1 84,994 --------- --------- ---------Operating profit 8,481Finance income 4,883Tax expense (3,117) --------- --------- ---------Profit for the period - continuingoperations 10,247Profit for the period -discontinued operations 64,254 --------- --------- ---------Profit for the period 74,501 --------- --------- ---------AssetsUnallocated corporate assets 137,604 --------- --------- ---------Total assets 137,604 --------- --------- --------- LiabilitiesSegment liabilities - Poker 15,445Segment liabilities - Casino 7,226Unallocated corporate liabilities 27,931 --------- --------- ---------Total liabilities 50,602 --------- --------- --------- 1 Including share benefit charges of US$8,829,000 Other than where amounts are allocated specifically to the Casino, Poker andemerging games segments above, the expenses, assets and liabilities relate toall segments. Any allocation of these items would be arbitrary. Geographical segments The Group's performance can also be reviewed by considering the geographicalmarkets and geographical locations within which the Group operates. Thisinformation is outlined below: Revenue by geographical market Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited)UK 41,199 36,593 70,562Europe (excluding UK) 40,062 27,093 57,056Americas (excluding US) 8,100 9,328 17,601Rest of World 7,455 5,192 11,781 ---------- ---------- ---------Net Gaming Revenue - Continuingoperations 96,816 78,206 157,000Net Gaming Revenue - Discontinuedoperations (US) - 85,305 132,907 ---------- ---------- ---------Net Gaming Revenue 96,816 163,511 289,907 ---------- ---------- --------- 3 Operating profit (loss) from continuing operations Six months Six months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited)Operating profit (loss) is statedafter charging:Staff costs 28,307 27,195 52,131Depreciation 1,864 1,883 3,801Chargebacks and returnede-cheques 998 1,275 2,507Exchange gains (741) (14) (4,742)Payment service providers'commissions 5,737 4,440 9,140Share benefit charges - allequity settled 4,146 3,881 8,829 -------- -------- --------- 4 Discontinued operations Consolidated Income Statement Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) ---------- ---------- ---------Net Gaming Revenue - 85,305 132,907Operating expenses - 17,605 28,086Selling and marketing expenses - 21,489 33,283Administrative expenses (income) (152) 2,931 7,284 ---------- ---------- ---------Operating profit before reorganisationcosts 152 43,280 68,287 ---------- ---------- ---------Charges in respect of reorganisationcosts - - 4,033 ---------- ---------- ---------Profit before tax 152 43,280 64,254Taxation - - - ---------- ---------- ---------Profit from discontinued operations 152 43,280 64,254 ---------- ---------- --------- 5 Earnings per share Basic earnings per share from continuing operations Basic earnings per share have been calculated by dividing the profit (loss)attributable to ordinary shareholders by the weighted average number of sharesin issue during the period. Diluted earnings per share In accordance with IAS 33, "Earnings per share", the weighted average number ofshares for diluted earnings per share takes into account all potentiallydilutive shares and share options granted, which are not included in the numberof shares for basic earnings per share. In addition, certain employee optionshave also been excluded from the calculation of diluted EPS as their exerciseprice is greater than the weighted averaged share price during the period andtherefore are anti - dilutive. Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited)Profit (loss) from continuingoperations attributable to ordinaryshareholders 13,381 (578) 10,247Weighted average number of OrdinaryShares in issue 338,097,734 337,096,320 337,223,724Weighted average number of dilutiveOrdinary Shares 344,209,550 342,886,703 341,834,214 ---------- --------- ---------Continuing operationsBasic 4.0c (0.1)c 3.0cDiluted 3.9c (0.1)c 3.0c ---------- --------- ---------Discontinued operationsBasic 0.0c 12.8c 19.1cDiluted 0.0c 12.6c 18.8c ---------- --------- ---------TotalBasic 4.0c 12.7c 22.1cDiluted 3.9c 12.5c 21.8c ---------- --------- --------- Earnings per share excluding share benefit charges Six months Six months Year Ended Ended Ended 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited)Profit (loss) from continuingoperations attributable to ordinaryshareholders 13,381 (578) 10,247Share benefit charges 4,146 3,881 8,829 ---------- --------- ---------Profit excluding share benefitcharges 17,527 3,303 19,076Weighted average number of OrdinaryShares in issue 338,097,734 337,096,320 337,223,724Weighted average number of dilutiveOrdinary Shares 344,209,550 342,886,703 341,834,214 ---------- --------- ---------Continuing operationsBasic earnings per share excluding share benefit charges 5.2c 1.0c 5.7cDiluted earnings per share excluding share benefit charges 5.1c 1.0c 5.6c ---------- --------- ---------Discontinued operationsBasic earnings per share excluding share benefit charges 0.0c 12.8c 19.1cDiluted earnings per share excluding share benefit charges 0.0c 12.6c 18.8c ---------- --------- --------- TotalBasic earnings per share excluding share benefit charges 5.2c 13.8c 24.8cDiluted earnings per share excluding share benefit charges 5.1c 13.6c 24.4c ---------- --------- --------- 6 Acquisitions made during the period Online Bingo business of Globalcom Limited On 16 May 2007 the Group acquired the online Bingo business of Globalcom Limitedby way of assets acquisition for an all cash consideration. In calculating the goodwill arising on acquisition, the fair value of the netassets of the online Bingo business of Globalcom Limited has been recognised inaccordance with IFRS 3 and adjustments from book value have been made wherenecessary. These adjustments are summarised as follows: Book value Fair value On acquisition Adjustments Fair value US$'000 US$'000Tangible assets 81 - 81Intangible assets 200 4,114 4,314 --------- --------- --------Net assets 281 4,114 4,395 --------- --------- -------- The fair value adjustments relate to the recognition of customer lists, royaltyagreements, licensing agreements and other intangible assets acquired as part ofthe acquisition. These intangibles are being amortised over their estimateduseful economic lives of between one month and four years. US$'000Fair value of net assets acquired 4,395Goodwill 37,432 -----------Fair value of consideration including expenses 41,827 ----------- Which is represented by:Cash consideration to Globalcom Limited 10,723Deferred cash consideration to Globalcom Limited (included withother payables) 21,593Potential earn-out payment (included with other payables) 1 9,050Expenses 461 -----------Total cash consideration 41,827 1 A further earn-out payment of up to US$11.05 million may be payable in cash 12months from completion on the basis of actual performance during financial year2007, of which $9.05million has been recognised at 30 June 2007. 7 Contingent liabilities From time to time the Group is subject to legal claims and actions against it.The Group takes legal advice as to the likelihood of success of such claims andactions. Regulatory issues As part of the Board's ongoing regulatory compliance and operational riskassessment process, the Board continues to monitor legal and regulatorydevelopments, and their potential impact on the business, and continues to takeappropriate advice in respect of these developments. Following the enactment of the UIGEA on 13 October 2006, the Group stoppedtaking any deposits from customers in the US and barred such customers fromwagering real-money on all of the Group's sites. Notwithstanding this, there remains a residual risk of an adverse impact arisingfrom the Group having had customers in the US prior to the enactment of theUIGEA. The Board is not able to identify reliably at this stage what if anyliability may arise and accordingly no provision has been made. On 5 June 2007 the Group announced that it has initiated preliminary discussionswith the United States Attorney's Office for the Southern District of New York.It is too early to assess any particular outcome of these discussions. 8 Interim dividend The directors have declared an interim dividend of 1.8c per share payable on 31October 2007 to shareholders on the registrar at 12 October 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
888.L