Interim Results
World Gaming PLC
25 July 2006
WORLD GAMING PLC
(TIDM:WGP)
RESULTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2006
The Board of World Gaming plc ('World Gaming'), whose subsidiary companies (the
'Group) operate internet gaming sites and license software and services to third
party operators, is pleased to announce the Group's second quarter and first
half year results for the three and six months ended 30 June 2006.
HIGHLIGHTS - SIX MONTHS ENDED 30 JUNE 2006
• Operating profit before goodwill amortisation for the first half of 2006
of $8.9m compared to $1.0m for the first half of 2005.
• Growth in proforma* net win after bonus deductions from operations of
39.3% to $17.4m.
• 31,288 new customers added in the six months representing a 24% increase
in new customers compared to the first half of 2005*.
• Two new licensees signed and expected to launch in August 2006.
• Strong cross-sell with 35.6% of sports bettors expanding their play to
casino gaming and poker products in the period.
HIGHLIGHTS - THREE MONTHS ENDED 30 JUNE 2006
• Operating profit before goodwill amortisation for the quarter of $1.9m
compared to $0.2m for the second quarter of 2005.
• Growth in proforma* net win after bonus deductions from operations of
40.0% to $6.9m.
• Growth in new customers over 3 times the rate of growth in the second
quarter of 2005* partially supported by growth from the World Cup.
• Average yield per unique active player of $1,540 at 30 June 2006 up from
$1,472 at 30 June 2005.
World Gaming plc CEO, Daniel Moran said: 'Similar to our first quarter, growth
rates from the SPORTSBETTING.COM business have continued at or near 40% across
all key performance indicators. The Group has recorded strong growth in its
seasonally slowest April - June trading quarter, complemented by the World Cup.
The growth in revenues has been preserved through a scalable business model that
has invariably delivered strong earnings growth. We look to maintain organic
growth levels in addition to continuing to seek further acquisition
opportunities both strategic in terms of geography or product and scalable as
complementary to our existing strong operating business. The Group continues to
closely monitor recent events in the United States.'
* Assuming that the SPORTSBETTING.COM business had been owned throughout 2005
for comparative purposes.
25 July 2006
Enquiries:
WORLD GAMING PLC Tel: +1 888 883 0833
Daniel Moran, Chief Executive
COLLEGE HILL Tel: 020 7457 2000
Matthew Smallwood
Jamie Ramsay
DANIEL STEWART & COMPANY PLC Tel: 020 7776 6550
Ruari McGirr
The Company's Ordinary Shares have not been and will not be registered under the
U.S. Securities Act of 1933 (the 'Securities Act') and may not be offered or
sold in the United States or to a U.S. person (as such term is defined in
Regulations S under the Securities Act) absent registration or an applicable
exemption from registration under the Securities Act.
CHIEF EXECUTIVE'S STATEMENT
Introduction
A successful second quarter of 2006 has rounded off an excellent first half year
for the Group. Strength in key performance indicators and sports margins that
were experienced in the first quarter of 2006 have continued into the second
quarter of 2006 and this has delivered strong earnings growth for the Group.
Underpinning the robust growth has been a consistent pattern of strength in
player activity, deposit volumes, wagering volumes and net win, the combination
of which validates the stability in revenue. Consistent with the Group's
scalable business model, operating profit margins on gross profit of 47% were
maintained through the first half.
As at the end of the first half, the Group had paid down $9.0m of its $40m
Barclays loan facility and continued to maintain an unutilised $5m revolving
facility.
During the first half, the Group signed two new licensees that are expected to
launch in the third quarter of 2006.
The Group has concentrated efforts in the second quarter on implementing robust
software and hardware upgrades. These efforts will continue through July and are
building greater system speed and capacity in support of future growth.
The third and fourth quarters are seasonally the busiest periods in player
activity and we are eager to continue converting this activity into strong
growth in earnings.
Financial Results
Currency amounts set forth in this Statement are in U.S. dollars.
Three and six months ending 30 June 2006
Turnover for the quarter ended 30 June 2006 increased by $55.7m to $57.9m
compared to $2.2m for the same period last year. Turnover for the six months
ended 30 June 2006 increased by $130.4m to $135.2m compared to $4.8m for the
same period last year. The increase in turnover is wholly attributable to the
Sportsbetting Transaction effective 1 October 2005 at which time the Group
acquired all of the business and assets of its then largest licensee whose
leading brand is SPORTSBETTING.COM (hereinafter referred to the 'Operating
division').
The Group's two key revenue streams are:
1. Operations, representing revenue derived from its wholly-owned internet
gaming sites; and
2. Royalties and fees which includes royalties charged to the Group's
continuing licensees plus hosting fees charged to Sportingbet plc
('Sportingbet') for hosting services provided from its wholly-owned hosting
infrastructure.
Turnover from operations, representing gross sports and horse racing wagers and
net casino and poker win was $57.2m before netting of customer bonuses of $0.7m
for the quarter ended 30 June 2006, compared to $nil for the same period in
2005. For the six months ended 30 June 2006, turnover from operations was
$133.2m before netting of customer bonuses of $1.1m compared to $nil for the
same period last year. For comparative purposes, the proforma growth in turnover
in the Operating division was 39.2% to $57.2m from before netting of customer
bonuses of $0.7m for the quarter ended 30 June 2005 and 36.3% to $133.2m before
netting of customer bonuses of $1.1m for the six months ended 30 June 2006.
Turnover from new and continuing licensees on a like-for-like basis grew by
$0.1m to $0.7m representing a 12.4% growth in licensing revenue for the quarter
ended 30 June 2006. For the six months ended 30 June 2006, like-for-like
licensing revenue grew $0.5m to $1.8m representing a 36.0% growth in licensing
revenue for the year to date. Overall turnover from royalties and fee income
decreased by 36.4% or $0.8m to $1.4m for the quarter ended 30 June 2006 and
35.7% or $1.7m to $3.1m for the six months ended 30 June 2006. The reduction is
attributable to the Group no longer receiving software royalties from the
SPORTSBETTING.COM business as a result of the acquisition.
Gross profit increased $6.0m to $7.5m for the quarter ended 30 June 2006
compared to $1.5m for the same quarter last year. For the six months ended 30
June 2006, gross profit increased $15.5m to $18.9m compared to $3.4m for the
same period last year.
On a proforma basis gross profit from the Operating division grew 40.0% to $6.9m
in the quarter after deducting $0.7m of customer bonuses and jackpot transfers.
For comparative purposes, the proforma gross profit contribution from the
Operating division for the quarter ended 30 June 2005 was $4.9m after deducting
$0.4m in customer bonuses and jackpot transfers. For the six months ended 30
June 2006, proforma gross profit grew 39.3% to $17.4m after deducting $1.3m in
customer bonuses and jackpot transfers.
The total gross margin percentage for the quarter ended 30 June 2006 was 12.7%
compared to 68.7% for the same period last year. Gross margin percentage for the
six months ended 30 June 2006 was 14.0% compared to 70.0% for the same period
last year.
The considerable change resulted from the significant change in revenue mix as a
result of the acquisition of SPORTSBETTING.COM.
On a proforma basis the gross margin percentage for the Operating division for
the quarter ended 30 June 2006 was 12.2% compared to 12.1% for the quarter ended
30 June 2005. The proforma gross margin percentage for the six months ended 30
June 2006 was 13.2% compared to 12.9% for the comparative period of 2005. The
increase is attributable to strong win margins on sports throughout the quarter
and six months and the contribution of net poker rake for the quarter and six
months ended 30 June 2006 of $0.8m and $1.8m respectively compared to $nil in
both corresponding periods of 2005.
Operating expenses before goodwill amortisation increased by $3.5m to $4.7m
during the quarter ended 30 June 2006 compared to $1.2m for the same period last
year. For the six months ended 30 June 2006 operating expenses before goodwill
amortisation increased by $7.7m to $10.1m. The increase is wholly attributable
to Operating division costs not included in the comparative period. Costs
associated with operations, primarily consisting of transaction processing,
customer service and marketing, contributed $3.2m of total operating expenses in
the quarter and $7.2m to total operating expenses for the year to date.
Operating profit before goodwill amortisation for the quarter ended 30 June 2006
increased by $2.6m to $2.8m compared to $0.2m for the comparative period in
2005. For the six months ended 30 June 2006, operating profit before goodwill
amortisation increased $7.9m to $8.9m compared to $1.0m for the comparative
period in 2005. The increase is attributable to the profit contribution from the
Operating division as well as increase in like-for-like royalty and fee revenue.
Goodwill amortisation for the quarter and six months ended 30 June 2006 was
$0.9m and $1.8m respectively, compared to $nil for the comparative periods in
2005. Finance costs, representing net interest and loan cost amortisation, was
$0.7m for the quarter and $1.4m for the six months ended 30 June 2006 compared
to income of $0.1m in each of the comparative periods of 2005.
Other income of $0.5m in the quarter ended 30 June 2006 represents a gain on
sale in respect of certain redundant Oracle licenses held by the Group. These
funds are in the process of being reinvested in the Group's hosting facility.
Profit after tax for the quarter ended 30 June 2006 increased $1.3m to $1.6m
from $0.3m for the quarter ended 30 June 2005. Profit after tax for the six
months ended 30 June 2006 increased $4.9m to $6.1m from $1.2m for the six months
ended 30 June 2005.
Basic earnings per share before goodwill amortisation per participating ordinary
share for the quarter ended 30 June 2006 was 4.6 cents (3.0 cents after goodwill
amortisation) compared to 1.3 cents (1.3 cents after goodwill amortisation and
exceptional items) for the same quarter in 2005. Participating ordinary shares
include those shares that have voting and economic rights and exclude those
shares held by Sportingbet in accordance with the transaction effective 1
October 2004.
For the six months ended 30 June 2006, basic earnings per share before goodwill
amortisation per participating ordinary share was 14.6 cents (11.3 cents after
goodwill amortisation) compared to 3.4 cents (3.4 cents after goodwill
amortisation and exceptional items) for the comparative period in 2005.
On a fully diluted basis earnings per share before goodwill amortisation per
participating ordinary share for the quarter ended 30 June 2006 was 4.2 cents
(2.7 cents after goodwill amortisation) compared to 1.1 cents (1.1 cents after
goodwill amortisation) for the same quarter in 2005.
For the six months ended 30 June 2006, fully diluted earnings per share before
goodwill amortisation per participating ordinary share was 13.2 cents (10.2
cents after goodwill amortisation) compared to 3.0 cents (3.0 cents after
goodwill amortisation) for the comparative period in 2005.
At the end of the second quarter of 2006, the Group paid down a further $3.0m of
its loan facilities in addition to the $6m paid down in the first quarter of
2006. The Group's $5m revolving credit facility remains unutilised. A further
$10m is scheduled to be repaid throughout the third and fourth quarters of 2006.
Review of Operations
Operating Division (SPORTSBETTING.COM)
The Operating division added 31,288 new customers in the first half of 2006;
19,360 new customers in the first quarter and 11,928 in the seasonally slower
second quarter of 2006. The customer number increases for the year to date
represent 24% increase in new customer sign-ups compared to 25,222 new customers
for the six months to 30 June 2005. The Group expects that sign up rates will
increase again as we enter the seasonally busier second half of the year. Of
these new customers 48% were converted to new active betting customers compared
to 46% for the six months ended 30 June 2005.
New customer sign up rates for the second quarter of 2006 grew over 3 times
faster than growth rate of 2005. The addition of players signing up for World
Cup betting boosted these growth rates in the quarter.
The Group is compliant with the KPI harmonisation definitions released on 6 July
2006, see 'KPI Harmonisation' below.
New player cost per acquisition, excluding retention bonuses to existing players
for the six months to 30 June 2006 were $101 compared to $100 in 2005. Inclusive
of retention bonuses and rebates to existing players, new active customer
acquisition costs were $164 in the six months to 30 June 2006 compared to $146
in 2005. The increase in customer acquisition costs inclusive of existing player
retention bonuses is the result of growth in player activity driving higher
loyalty bonuses in the period.
The Group has successfully integrated the majority of the marketing function of
the SPORTSBETTING.COM acquisition while maintaining highly efficient customer
acquisition costs. The Board believes that the strength of the SPORTSBETTING.COM
brand together with maintaining its established marketing relationships will
continue to drive its efficient customer acquisition costs.
The average yield per unique active player on a rolling annual basis was $263 as
at 30 June 2006 compared to $266 as at 30 June 2005. The average life of a
customer as at 30 June 2006 was approximately 527 days compared to 498 days as
at 30 June 2005. The average lifetime value of a customer at 30 June 2006 on a
rolling twelve month basis was approximately $1,540.
Sports margins including horse racing in the second quarter ended 30 June 2006
were 7.0% (2005: 7.0%) and for the six months ended 30 June 2006 were 8.3%
(2005: 8.2%).
Gaming margins in the second quarter ended 30 June 2006 were 2.1% (2005: 2.2%)
and for the six months ended 30 June 2006 were 2.1% (2005: 2.2%).
SPORTSBETTING.COM's poker product, launched in the middle of 2005, yielded
revenue before commissions of $1.4m (2005: $nil) for the quarter ended 30 June
2006 bringing total poker revenue before commissions for the year to date to
$2.7m (2005: $nil). Continued growth in poker has been derived primarily from
cross-selling the sports betting product.
The Operating division continued to deliver strong cross-sell from sports
betting players with an average 35.6% (2005: 35.3%) of players in the six months
to 30 June 2006 placing a sports wager going on to place a bet on a gaming
product or poker. This yielded $5.5m (2005: $4.8m) of gaming revenue and $1.5m
(2005: $0.1m) of poker revenue for the Group in the period. The cross-sell of
products within the database is enhanced by the Group's single player account
status across all products. Growth in the Group's 3-card poker product that was
launched in March 2006 has been encouraging.
KPI Harmonisation
Consistent with the recently issued KPI harmonisation definitions released by
its industry peers, the Group confirms that all references to key performance
indicators for the current and future reporting periods are compliant with these
definitions. As a result of adopting these definitions there is only one change
required to the Group's cost per acquisition key performance indicator. All
bonus costs, whether new player bonuses or player retention bonuses are now
included in the cost per acquisition key performance indicator. In prior
periods, it should be noted that, consistent with several industry peers, and
the Group's accounting treatment to net such costs against revenue, these were
excluded from customer acquisition costs.
The Group has set out in the table below restated active customer acquisition
costs for all periods it has reported. In restating the customer acquisition
costs it should be noted that of the bonus amounts included in the cost per
acquisition, approximately 84% of total bonus amounts relate to customer
retention throughout the reported periods. For the purposes of KPI
harmonisation, all of these retention bonuses from programs such as 'casino
comp's' that are only available to existing customers, are now applied entirely
against new customers.
Q4 2005 Q1 2006 H1 2006
Reported Restated(2) Reported Restated(2) Reported(1) Restated(2)
Current $101 $146 $76 $119 $89 $164
Comparative $108 $147 $79 $141 $91 $146
(1) proforma for comparative purposes.
(2) Inclusive of all retention bonuses/rebates representing 84% of total
bonuses.
Licensing Division
During the first half, the Group added two new licensees. These licensees are
expected to launch in August 2006. No immediate material revenue is expected
from these new licensees.
Growth in the European white-label site launched in the first six months of 2006
has been encouraging. The Group continues to monitor further licensing and
white-label opportunities.
Consistent with the Board's strategy, the Group expects to continue to sign an
average of one quality licensee per quarter, thus further leveraging its highly
scalable software and infrastructure resources.
Regulatory Developments
Over the past several years, authorities in certain jurisdictions, such as the
United States, have taken steps to restrict online gaming by seeking to prevent
or deter banks, payment processors, media providers and other suppliers from
transacting with and providing services to online gaming operators, even though
many of these online gaming operators are legally licensed in the jurisdiction
in which they operate. The application or enforcement (or threat of enforcement)
of restrictive laws or regulations, or a change in sentiment by regulatory
authorities or the enactment of new legislation prohibiting or restricting
online gaming or services used by online gaming businesses or the taking of
certain indirect steps, may severely and adversely impact the business and
financial position of online gaming companies such as the Group's.
Recently, two separate pieces of proposed legislation (one authored by
Congressman Leach and the other by Congressman Goodlatte) were merged into one
piece of proposed legislation. The merged legislation took the number and title
of Congressman Leach's original bill and is now known as H.R. 4411, the Unlawful
Internet Gambling Enforcement Act of 2006 (the 'Bill'). During the week of July
10, 2006 in the United States, the proposed Bill was introduced for
consideration and vote to the full House of Representatives where it was debated
for over three and a half hours with much of discussion concerning certain
'carve-outs' to certain US domestic groups that undertake US domestic gaming
activities (horseracing and lotteries) and some of the impracticalities of
enforcement. Eventually, a vote was held where the Bill was approved by 317-93.
The Bill having passed the House of Representatives now moves over to the US
Senate for consideration, where it will have to follow a process similar to that
of the House of Representatives. Once the Bill has been introduced in the
Senate, it is referred to various committees/sub-committees, where it will be
considered and possibly amended. The Bill, with any amendments, if it were to
be reported out by the appropriate committee(s) would then be sent to the Senate
floor where it would be debated and voted upon. If a bill were to pass the
Senate, assuming there are differences in the two versions of the Bill, (one
from the House of Representatives and one from the Senate), are then sent to a
conference committee, resulting in a compromise bill which is sent back to each
chamber for final approval. Once approved, the President would be asked to sign
the final version into law. Obviously, we will continue to monitor developments
closely.
In November 2004, the World Trade Organisation ('WTO') held that the US was in
violation of its commitments under international trade laws by not allowing
operators of Internet Gaming services licensed in Antigua and Barbuda to access
US markets. The decision was appealed and the WTO ruled that the US had shown
that its laws prohibiting gambling are 'necessary to protect public morals or
maintain public order' but had failed to demonstrate, in light of its laws in
respect of on-line gambling on horseracing, that such prohibitions are applied
equally to both foreign and domestic providers of on-line gambling services for
horseracing. Consequently, the WTO recommended that the US bring its laws into
conformity with its obligations under international trade rules. Pursuant to
the report of the arbitrator circulated in August 2005, the US was given until 3
April 2006 to clarify its policies on Internet gambling and the purported
extraterritorial application of its laws. This date has now passed and the US
has not taken action to change the US domestic laws that the WTO panel
identified as in violation of the US's GATS commitments. It remains to be seen
what effect, if any, will result from this inaction on Internet Gambling policy
in the US and whether the 'Carveouts' in H.R. 4411, that are seen by some to
further enhance the protection of the Horse Racing Industry and their acceptance
of wagers on the Internet, will be considered by the Senate during its debates
on Internet Gambling policy later this year.
Trading Outlook
The first three weeks of the third quarter of 2006 have continued to demonstrate
growth in all key performance indicators broadly in-line with the year to date.
July is historically the quietest trading month in the year and the Group
continues to utilise this time to carry out software and infrastructure upgrades
to its operating platform.
Trading throughout the first half of 2006 has been underpinned by strong key
performance indicators. Provided these same robust indicators are maintained
through the second half of 2006, it is likely that full year results will exceed
management's expectations.
The Group continues to closely monitor developments in respect of the passage of
the Bill described above and, more recently, actions taken by U.S. authorities
in respect of BetonSports. Any material developments will be communicated
immediately.
The Group expects to report its results for the third quarter and nine months
ended 30 September 2006 on 25 October 2006.
Daniel Moran
Chief Executive
World Gaming plc
Unaudited Consolidated Profit and Loss Account
Three and six months ended 30 June 2006 and 2005
(Currency amounts in U.S. dollars)
Note 3 months 3 months 6 months 6 months
30 June 30 June 30 June 30 June
2006 2005 2006 2005
$'000 $'000 $'000 $'000
TURNOVER 2 57,896 2,165 135,158 4,800
Cost of sales (50,359) (678) (116,209) (1,439)
GROSS PROFIT 7,537 1,487 18,949 3,361
Goodwill amortisation (905) - (1,786) -
Other administration expenses (4,711) (1,240) (10,056) (2,326)
Total administration expenses (5,616) (1,240) (11,842) (2,326)
Operating profit before goodwill 2,826 247 8,893 1,035
amortisation
Goodwill amortisation (905) - (1,786) -
Operating profit before finance costs and
extraordinary items 1,921 247 7,107 1,035
Other income 458 - 458 -
Finance costs 5 (734) 81 (1,428) 128
Profit before tax 1,645 328 6,137 1,163
Taxation - - - -
Profit for the financial period 1,645 328 6,137 1,163
Earnings per ordinary share (cents) 3
Basic 3.0 1.3 11.3 3.4
Diluted 2.7 1.1 10.2 3.0
Earnings per share adjusted (cents) 3
Basic 4.6 1.3 14.6 3.4
Diluted 4.2 1.1 13.2 3.0
World Gaming plc
Consolidated Balance Sheets
As at 30 June 2006 and 31 December 2005
(Currency amounts in U.S. dollars)
30 June 31 December
2006 2005
Note (unaudited)
$'000 $'000
FIXED ASSETS
Intangible assets - goodwill 84,036 85,662
Tangible assets 1,386 1,231
85,422 86,893
CURRENT ASSETS
Debtors 6,877 9,601
Prepayments and accrued income 830 989
Consideration recoverable - 3,481
Cash at bank and in hand 7,140 7,605
14,847 21,676
CREDITORS: Amounts falling due within one year
Bank loans 5 19,506 14,711
Other creditors and accruals 7,299 9,659
Deferred consideration - 3,600
26,805 27,970
NET CURRENT (LIABILITIES)/ASSETS (11,958) (6,294)
TOTAL ASSETS LESS CURRENT LIABILITIES 73,464 80,599
CREDITORS: Amounts falling due after more than one year
Bank loans 5 10,609 24,396
PROVISION FOR LIABILITIES AND CHARGES - -
NET ASSETS 62,855 56,203
CAPITAL AND RESERVES
Called up share capital 214 197
Share premium account 36,739 27,793
Shares to be issued - 8,440
Deferred compensation reserve 567 567
Merger reserve 23,528 23,528
Profit and loss account 1,807 (4,322)
SHAREHOLDERS' FUNDS 62,855 56,203
World Gaming plc
Unaudited Consolidated Cash Flow statement
Six months to 30 June 2006 and 2005
(Currency amounts in U.S. dollars)
6 months ended 6 months ended
30 June 30 June
2006 2005
$'000 $'000
Net cash inflow from operating activities 10,399 1,259
Returns on investment and servicing of finance (1,307) 128
Acquisitions (554) -
Capital expenditure (601) (125)
Consideration received - Sportingbet - 3,000
CASH INFLOW/(OUTFLOW) BEFORE FINANCING 7,937 4,262
Financing (9,045) (14)
Issue of shares 517 4,325
Net (DECREASE)/INCREASE IN CASH IN THE PERIOD (591) 8,573
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS
(Decrease)/Increase in cash in the period (591) 8,573
Cash (inflow)/outflow from (increase)/decrease in debt 9,045 14
MOVEMENT IN NET FUNDS RESULTING FROM CASH FLOWS IN PERIOD
8,454 8,587
Currency translation differences (44) 10
Non-cash movements - -
Movement in net funds in period 8,410 8,597
Net funds/(debt) at start of period (31,502) 7,930
NET (DEBT)/ FUNDS AT END OF PERIOD (23,092) 16,527
1. Consolidated statement of total recognised gains and losses
3 months 3 months 6 months 6 months
30 June 30 June 30 June 30 June
2006 2005 2006 2005
$'000 $'000 $'000 $'000
Profit for the financial period 1,645 328 6,137 1,163
Currency translation difference on foreign
currency net investment - 10 (8) (3)
Total recognised gains relating to the year 1,645 338 6,129 1,160
2. Analysis of turnover
3 months 3 months 6 months 6 months
30 June 30 June 30 June 30 June
2006 2005 2006 2005
$'000 $'000 $'000 $'000
Analysis of revenue by activity:
Sports betting & racing 52,702 - 123,608 -
Casino and gaming 3,116 - 6,673 -
Poker rake 1,368 - 2,916 -
Customer bonuses (667) - (1,126) -
Royalty and fee income 1,377 2,165 3,087 4,800
57,896 2,165 135,158 4,800
Turnover represents the amount staked in respect of bets placed on sporting and
horse racing events and net win in respect of bets placed on casino games and
rake for poker games that have concluded in the period. Turnover from royalty
and fee income represents royalties charged to licensees of the Group's software
and fees charged for usage of the Group's infrastructure.
3. Earnings per share
The calculation of basic earnings per share for the quarter and six months ended
30 June 2006 is based on the profit after tax at 30 June 2006 of $1.6m and $6.1m
respectively (2005: $0.3m and $1.2m respectively) and on the weighted average
number of ordinary shares in issue of 55,170,747 and 54,355,196 respectively
(2005: 34,173,534 in each period).
The calculation of diluted earnings per share for the quarter and six months
ended 30 June 2006 is based on the profit after tax at 30 June 2006 of $1.6m and
$6.1m respectively (2005: $0.3m and $1.2m respectively) and on the weighted
average number of ordinary shares in issue adjusted to assume the exercise of
options over shares and the dilutive effect of shares to be issued in respect of
the acquisition in the period of 60,947,002 and 60,131,452 respectively (2005:
40,188,905 in each period).
Adjusted basic and diluted earnings per share before goodwill excludes
amortisation of goodwill of $0.9m for the quarter and $1.8m for the six months
ended 30 June 2006 (2005: $nil).
Earnings per share excludes shares with no voting or economic rights in respect
of the 13,506,204 shares held by Sportingbet PLC and its affiliates that have
been set aside as a result of the Transaction with Sportingbet PLC and may be
repurchased by the Company for an aggregate $1 when the Company has retained
earnings to do so.
4. Basis of preparation
There have been no material changes to the accounting policies of the Group as
set out in audited 31 December 2005 consolidated financial statements.
5. Finance costs
3 months 3 months 6 months 6 months
30 June 30 June 30 June 30 June
2006 2005 2006 2005
$'000 $'000 $'000 $'000
Interest receivable 56 81 184 128
Interest payable (667) - (1,365) -
Amortisation of loan agreement fees (123) - (247) -
(734) 81 (1,428) 128
Deferred finance costs of $839,455 as at 30 June 2006, netted against the loan
balances outstanding at 30 June 2006 are being amortised over the period of the
loan agreement.
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