Interim Results
FOR IMMEDIATE RELEASE
4 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 interim
results 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 me
confidence that EBITDA profitability may shortly be achieved.
'The Company is now strongly placed to build upon the initial impressive growth
of its pari-mutuel business, European Wagering Services. In addition, the
recent successes of its casino and football game offerings are a blue-print for
future expansion within the sportsbook business.'
ENDS
For further information:
betinternet.com plc Tel: 01624 629699
Paul Doona, Managing Director
Williams de Broë plc Tel: 0113 243 1619
Joanne Lake
Waughton Tel: 020 7796 9999
Robin Hepburn/Sorrel Davies
Notes 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' where
dividends are paid to winners and the operator retains a percentage of the
`pool'.
INTERIM RESULTS
CHAIRMAN'S STATEMENT
Introduction
Following the recent strategic review of its operations, your Company has taken
appropriate steps to capitalise upon the opportunities available to it.
The board considers that European Wagering Services Limited, its newly
re-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 wagering
platform, multi-currency and technical services that the Company provides.
In addition, the Company continues to seek out further enhancements to the
offering it provides to its fixed-odds customers. The recent successes of its
newly introduced casino and football game offerings are a blue-print for future
business expansion.
Overview of Results
During 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 increase
of 32%.
The Company's pari-mutuel business traded well ahead of our expectations. The
activity was fully consolidated from June 30, 2004, the date on which we
acquired the outstanding 50% interest from US Off-Track. Turnover for the 26
week 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 period
to 30 May 2004.
Gross profit from the operation rose to £0.75m for the entire period compared
with £0.67m for the comparable period last year.
The sportsbook operation continued to reflect our more cautious approach
towards risk which characterised its performance in the second half of last
year. Turnover at £14.80m was considerably less than the comparable period (£
26.20m) and reflected a further reduction in telephone activity; a reduction in
unprofitable business lines and a stricter control of overhead, including
marketing spend.
As a result of these measures, the gross margin percentage, after duty, rose to
5.4% 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 results
therefore show a sharply improved performance at EBITDA level with the loss
reduced to £0.18m, compared to the previous period loss of £0.93m.
After depreciation, an increased goodwill charge, share of profit of joint
venture, and interest, the overall loss for the period was £0.72m, compared
with £1.17m for the previous period.
Prospects
Your board is clearly focused on developing betinernet to become a leading
technology solutions provider for the online gaming sector, maximising its
market-leading technology to develop risk-free income streams to balance the
unpredictable nature of fixed odds sports
wagering.
The Company is strongly placed to build upon the initial impressive growth of
its pari-mutuel business, European Wagering Services (formerly Euro Off-Track),
and, in doing so, will seek to emphasise its expertise as a hub operator, in
addition to its wagering operations.
The extensive range of host track contracts secured by the Company already
provides customers with unrivalled opportunities to wager on US thoroughbred
and greyhound content and therefore participate in the improved returns now
available due to the recent elimination of US withholding tax.
The board's aim is to increase the breadth of the wagering opportunities
available to its customers, particularly on an international scale. South
African horseracing is already proving to be an attractive component within our
wagering portfolio and negotiations are at an advanced stage with other
international content providers.
Key to our ability to attract content providers to allow wagering through our
totalisator, is their recognition that the Isle of Man is a well-regulated
jurisdiction with the technical infrastructure and skill sets to support global
wagering.
Following the period end, the Company has widened its sports book offering with
the launch of a live casino and football game. The initial results are
extremely encouraging. In its first five weeks of operation, the total level of
wagers placed in the Company's Play Live Casino was in excess of $6.2m. The
Play Football game launched at the same time has had a similarly positive
start. Similar opportunities involving sports gaming and gambling products are
being actively pursued.
The directors strongly believe that the new strategic direction of the business
provides major long-term opportunities and the Board remains confident that the
Company will achieve its goal of becoming one of the leading providers of
online gaming technology.
Denham Eke
Chairman
CONSOLIDATED 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 24 169 354
joint 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 1
of 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 566 335 785
charges
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 turnover
and operating profit for the period to 30 June 2004. Thereafter, the results of
the 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 set
out 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 directors
have 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.
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