365.L Regulatory News (365)

28 Mar 2006 07:02

ukbetting PLC28 March 2006 28 March 2006 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 2005. Financial Highlights • Group turnover up 39% to £119m (2004: £86m) • Gross profit rose 18% to £22.4m (2004: £19.0m) • EBITDA profit up to £1.4m (2004: £0.1m before exceptional items and non-recurring costs) • Profit before tax and goodwill of £0.4m (2004: loss of £2.6m) • Fully diluted adjusted earnings per share of 0.26p* (2004: loss of 1.24p) * Adjusted earnings per share is before goodwill costs, exceptional items andnon-recurring costs Operational Highlights • New Gaming registrations rose 90,000 (34%) to 354,000 (2004: 264,000), with 60% of the increase generated from the Group's network of sites • Advertising revenue maintained at £3.2m (2004: £3.3m) with consumer revenues up 20%, despite strategic decision to remove competitor bookmaker advertising • Monthly content site users up 20% to 8.5m (2004: 7.1m) • Page impressions up 39% to 302m (2004: 217m) • Poker revenues up 78% • Casino revenues up 66% • Customer database up 26% to 1.26m (2004: 1m) Post-Period End Activity • 2006 has started strongly • Non-bookmaker advertising up 20% • Gaming gross win at 12.5% • Restructure of trading room at the end of January, implementation of automated trading tools and reduction of fixed odds cost base • Page impressions up 46% at 380m (2004: 260m) • Video traffic up 70% • Relaunch of TEAMtalk.com in March as the first of a content site rebuild programme that will be completed by end of summer 2006 • Launch of Oddschecker mobile service and multi-lingual site planned for World Cup • Click-throughs to gaming sites up 18% to 200,000 a month Peter Dubens, Chairman of ukbetting plc, said: "Despite a difficult second half in sports betting in 2005, ukbetting has metmarket expectations and we are pleased with the Company's trading so far in2006. This is, in part, due to the fact that we have, since the beginning of2006, restructured the sports betting division with a view to improving itsprofitability through a combination of margin improvement and reduced costs.Equally, we are reassured by the continuing popularity of the ukbetting onlinesports content network, which includes brands such as, football365.com,teamtalk.com and sportinglife.com and reaches 8.5m users per month, driving over60% of our gaming brand's customers. This business model will increase in valueas we continue the rebuild of our main content sites incorporating moreadvertising formats including video and as the world market in broadband growthcontinues to flourish. "During 2006 we will launch content into territories outside the UK and will belaunching Oddschecker.com in a multilingual version prior to the World Cup.Furthermore, by the end of the second half we will have a single wallet for allour gambling products which will lead to improved conversion between our sportsbetting, casino and poker customers." For more information, contact: ukbetting plc 020 7766 6909Peter Dubens, ChairmanEric Semel, Chief Executive Officer Financial Dynamics 020 7831 3113Edward Bridges / Juliet Clarke / Hannah Sloane Chairman's Statement Overview I am pleased to report another year of record turnover which reached £119million, up 39% on the previous year and EBITDA profits of £1.4 million.ukbetting's content network, which generates significant revenues fromadvertising, content sales and affiliate revenues, performed well, despiteremoving competitor bookmaker advertising in November 2005. Oddschecker had anexcellent year helped by the introduction of poker checker and casino checker. During 2005, casino and poker performed well, contributing 65% of gaming grosswin with revenues up 72% on 2004. However, sports betting was once againdisappointing, contributing only the same level of gross win as in 2004, despitesignificantly increased turnover. Operations Gaming turnover grew by 47% to £105 million with gross win up 45% to £11.5million. 2005 saw 90,000 new gaming registrations of which 60% came from theGroup's network of sites. Casino and poker revenue grew by 68% and 78%respectively despite requiring a different registration and money depositprocess from the sports betting operations. However, by the summer of 2006 asingle wallet to cover all gaming and betting products will be in place, whichis expected to lead to a much-improved conversion of customers to a wider rangeof products. Currently the instant play casino, which is already integrated,delivers a 70% higher conversion from sports book than the full downloadversion. During the year the Group had 92,000 active betting and gaming customers up from67,000 last year. Not only do the majority of these customers originate from thecontent network but, as they return to obtain information on the latest scoresand tips, we see a better retention rate and higher propensity to bet from thesecustomers. As a result of the disappointing performance of sports betting, an internallydeveloped automated risk management system was built in the second half of 2005.This allowed for the restructure of the trading room at the end of January 2006and the implementation of automated trading tools. These factors, plus areduction in the cost base, are already creating an improvement in theprofitability of the fixed odds business. Since third party bookmaker advertising was removed from the content sites inNovember last year, the click-throughs to betting and gaming have increased to200,000 clicks per month. This gives ukbetting a uniquely low cost model foracquiring gaming customers and with the cost of customer acquisition continuingto rise, it puts the group in a unique position for 2006 ahead of the World Cup. The single wallet for poker is scheduled for June and the downloadable casinosingle wallet will then follow. Once a single wallet is available for all thebetting and gaming products there will be a significant opportunity to exploitour growing content customer database, via direct marketing, to introducecustomers to the complete gaming product range. Content sales performed well in 2005 with consumer advertising sales up £0.4million, 20% ahead of 2004. There was also an excellent performance fromOddschecker with sales up by 15% despite the previous year having the benefit ofEuro 2004. Oddschecker will further benefit from its soon to be re-built casinoand poker comparison sites, its new mobile offering and a multilingual versionplanned ahead of the World Cup. Traffic for video through sportal.com grew substantially in the final quarter ofthe year and clips viewed have increased a further 70% since year end. The groupwill look to exploit this demand by acquiring cost effective rights packages aswell as building on our sports community strength with fan based shows andclips. These will be implemented within the site build programme, commencingwith teamtalk.tv in April 2006. Web, audio and mobile content sales to thirdparties performed well. Encouragingly, towards the end of 2005, we saw thelaunch on mobile of our branded sites such as football365 in association withleading mobile network operators. These will become a more important andvaluable revenue stream on 3G, GPRS and iMode in 2006. The network generated 8.5 million monthly users and 302m page impressions viewsa month, the number of pages benefiting from an improvement in IT infrastructureduring the final quarter allowing faster access during peak sporting occasions.The sites will further benefit from a major rebuild programme, which started inJanuary 2006, which adds a host of new features, advertising formats and on-sitebroadband TV as well as audio. The programme commenced with the launch ofTEAMtalk.com in March and all sites will be re-built by the end of the summer.We also plan multilingual versions of Oddschecker ahead of the World Cup and amultilingual football site by the end of the year. Financial overview Group turnover in the year was £118.8 million (2004: £85.6 million). The gamingdivision turnover was £105.2 million (2004: £71.7 million) and the contentdivision produced turnover of £13.6 million (2004: £13.9 million). The turnover growth is detailed in the operations section above and is mainlyorganic growth with £9.0 million of the £33.2 million increase arising from fullyear contributions from the acquisition of In The Box Media and Campbells in2004. The gross profit generated within the divisions has increased to £22.4 million(2004: £19.0 million). The gaming division produced a gross profit (gross winless taxes and levies) of £10.7 million (2004: £7.3 million) reflectingcontinued growth in the casino and poker products introduced in 2003. Thecontent division gross profit has been maintained at £11.7 million (2004: £11.7million) despite the sacrifice of some third party bookmaker advertisingrevenues. Operating expenses incurred during the year are £23.2 million (2004: £25.7million). The content division operating expenses fell to £10.5 million (2004:£11.7 million) reflecting the cost efficiencies achieved from the integration ofthe Rivals business. The gaming division operating expenses are £10.3 million(2004: £8.5 million), reflecting the continued growth in casino and poker and afull year of the costs of Campbells. Goodwill amortisation costs have reduced to£1.5 million (2004: £4.3 million) as a consequence of the 2004 impairment chargeto goodwill arising on the original acquisition of ukbetting.com Limited in2001. Central costs are £0.9 million (2004: £1.2 million). EBITDA profit is £1.4 million (2004: £0.1 million before exceptional items andnon-recurring costs). Group operating losses are £0.8 million (2004: loss of£6.7 million). The loss for the financial year is £1.2 million (2004: loss of£7.0 million). Taxation payable results from the profits of GoldBet that are generated outsideof the UK tax losses. Losses per share amounted to 1.21p basic and diluted (2004: loss of 7.66p).Adjusted profit per share was 0.34p (2004: loss of 1.24p), fully dilutedadjusted profit per share was 0.26p (2004: loss of 1.24p). At the end of the year, the consolidated balance sheet shows net assets of £6.9million (2004: £8.2 million). During the year the Company issued further equitycapital of £0.1 million (2004: £nil) through the exercise of employee shareoptions. The total banking facilities available to Group from Bank of Scotlandare £4.1 million. These facilities are available as a term facility that wasused to acquire Campbells (now £1.1 million), and a working capital facility ofup to £3.0 million of which £1.9 million was drawn at the year-end. At the year end cash held was £0.7 million (2003: £1.3 million) and the net debtwas £2.4 million (2004: net debt £1.0 million). Post the year end the Company completed an £11.5 million placing (£11.0 millionnet of costs). The banking facilities remain in place with the working capitalfacility not utilised. Outlook 2006 has started well with consumer advertising up 20% on last year's firstquarter and gaming margin has risen to 12.5% compared to 11.9% of last year.Historically sports betting in the UK has been considerably loss-making whichhas overshadowed the true profits of the Group. The management believes thatthe new structure it has put in place will neutralise this problem, allowing theprofits from the rest of the Group to be clearly visible. The focus of the Group is to improve the profitability of the sports bettingbusiness, to maximise gaming revenue opportunities offered by the single wallet,to complete the content site build programme with new advertising formats and toenter new territories with multilingual versions of selected sites. Peter DubensChairman28 March 2006 Consolidated profit and loss accountfor the year ended 31 December 2005 Non- Total Continuing recurring Total 2005 2004 2004 2004 £000 £000 £000 £000 Group turnover 118,758 85,557 - 85,557 Cost of sales (96,374) (66,581) - (66,581) Gross profit 22,384 18,976 - 18,976 Administrative expenses (including operating exceptional (23,227) (24,208) (1,461) (25,669)items) EBITDA before exceptional items 1,351 70 (1,338) (1,268) Exceptional items - (2,636) (123) (2,759) EBITDA after exceptional items 1,351 (2,566) (1,461) (4,027) Depreciation and amortisation (2,194) (2,666) - (2,666) Group operating loss (843) (5,232) (1,461) (6,693) Loss on termination of operations - - (141) (141) Loss on ordinary activities before interest and taxation (843) (5,232) (1,602) (6,834) Interest receivable 56 369 - 369 Interest payable and similar charges (266) (403) - (403) Loss on ordinary activitiesbefore taxation (1,053) (5,266) (1,602) (6,868) Tax on loss on ordinary activities (106) (145) - (145) Loss for the financial yearattributable to members of theparent undertaking (1,159) (5,411) (1,602) (7,013) Loss per share - pence Basic and diluted (1.21) (7.66) Adjusted profit / (loss) per share - pence Basic 0.34 (1.24) Diluted 0.26 (1.24) Adjusted profit/(loss) per share has been calculated to provide a betterunderstanding of the underlying performance of the Group. Adjusted profit/(loss) is before amortisation of goodwill, impairment charges and non-recurringcosts. 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 2005 2005 2004 £000 £000 Retained loss of the financial period (1,159) (7,013)Exchange adjustments offset in reserves 18 (39) _______ _______Total recognised losses since last annual report (1,141) (7,052) _______ _______ Reconciliation of shareholders' fundsfor the year ended 31 December 2005 Group 2005 2004 £000 £000 Shareholders' funds at 1 January 8,234 15,101Total recognised losses (1,141) (7,052)New shares issued 227 2,455Shares to be issued (380) (2,270) _______ _______Shareholders' funds at 31 December 6,940 8,234 _______ _______ Consolidated balance sheetat 31 December 2005 2005 2004 £000 £000Fixed assetsIntangible assets 10,878 13,065Tangible assets 1,885 1,185 _______ _______ 12,763 14,250 _______ _______Current assetsStock - 19Debtors 4,058 3,805Cash at bank and in hand 657 1,271 _______ _______ 4,715 5,095Creditors: amounts falling due within one year (9,713) (8,725) _______ _______Net current liabilities (4,998) (3,630) _______ _______Total assets less current liabilities 7,765 10,620 Creditors: amounts falling due after more than one year (825) (2,329) Provisions for liabilities and charges - (57) _______ _______ 6,940 8,234 _______ _______ Capital and reservesCalled up share capital 961 956Share premium account 20,627 20,503Shares to be issued 333 713Other reserve 10,392 10,294Profit and loss account (25,373) (24,232) _______ _______Equity shareholders' funds 6,940 8,234 _______ _______ Consolidated statement of cash flowsfor the year ended 31 December 2005 2005 2004 Notes £000 £000 Cash inflow/(outflow) from operating activities 1 930 (1,371) Returns on investments and servicing of finance 2 (345) (94) Taxation paid (66) (187) Capital expenditure 2 (1,390) (716) Acquisitions and disposals 2 (583) (3,180) ______ ______Net cash outflow before financing (1,454) (5,548) Financing 2 53 1,200 ______ ______Decrease in cash in the year (1,401) (4,348) ______ ______ Reconciliation of net cash flow to movement in net debtfor the year ended 31 December 2005 2005 2004 Notes £000 £000 Decrease in cash for the year (1,401) (4,348)Decrease/increase in debt 3 75 (1,200) ______ ______Change in net debt resulting from cash flows (1,326) (5,548)Non-cash movements (19) (53) ______ ______Change in net debt resulting from cash flows and non-cash movements (1,345) (5,601) ______ ______Movement in net debt for the year (1,345) (5,601)Net (debt)/funds at start of the year (1,020) 4,581 ______ ______Net debt at end of the year 3 (2,365) (1,020) ______ ______ Notes to the consolidated statements of cash flowsfor the year ended 31 December 2005 1. Reconciliation of operating loss to operating cash flows 2005 2004 £000 £000 Operating loss (843) (6,693)Depreciation, amortisation and impairment of goodwill 2,194 4,988Increase in debtors (253) (46)Decrease in stock 19 38(Decrease)/increase in creditors (130) 505Decrease in provisions (57) (163) ______ ______Net cash inflow/(outflow) from operating activities 930 (1,371) ______ ______ 2. Analysis of cash flows for headings netted in the cash flowstatement Returns on investment and servicing of finance 2005 2004 £000 £000 Interest received 18 82Interest paid (214) (10)Charges on raising of facilities (149) (166) ______ ______Net cash outflow from returns on investments and servicing of finance (345) (94) ______ ______Capital expenditureAcquisition of tangible fixed assets (1,403) (716)Disposal of tangible fixed assets 13 - ______ ______Net cash outflow from capital expenditure (1,390) (716) ______ ______Acquisitions and disposalsAmount paid on the purchase of subsidiary undertakings netof cash acquired of £nil (2004: £109,000) (583) (3,111)Closure of businesses - (69) ______ ______Net cash outflow from acquisitions and disposals (583) (3,180) ______ ______FinancingProceeds from shares issued by parent undertaking 128 -Cost of share issues - -Bank finance/term loan (75) 1,200 ______ ______Net cash inflow from financing 53 1,200 ______ ______ 3. Analysis of net debt At 31 Other At 31 December non-cash December 2004 Cash flow changes 2005 £000 £000 £000 £000 Cash at bank and in hand 1,271 (595) (19) 657Overdrafts (1,091) (806) - (1,897) ______ ______ _____ ______ 180 (1,401) (19) (1,240)Term loan (1,200) 75 - (1,125) ______ ______ _____ ______Net debt (1,020) (1,326) (19) (2,365) ______ ______ _____ ______ Financial information The financial information set out above does not constitute the Company'sstatutory financial statements for the year ended 31st December 2005, but isderived from those statements. Statutory financial statements for 2005 will bedelivered to the Registrar of Companies following the Annual General Meeting.The auditors have reported on the financial statements to 31 December 2005.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 7 June 2006. 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. Gaming Content Total Gaming Content TotalArea of Activity 2005 2004 £000 £000 £000 £000 £000 £000 Group turnover 105,166 13,592 118,758 71,720 13,837 85,557 ______ ______ _____ ______ ______ _____ Group operating profit/(loss) before exceptionalitems and common costs (1,293) 1,330 37 (4,540) 493 (4,047) ______ ______ ______ ______Common costs including non-recurring costs (880) (2,646) _____ _____Group operating loss (843) (6,693)Loss on termination of operations - (141) _____ _____Loss on ordinary activities before interestand taxation (843) (6,834) _____ _____ Net assets/(liabilities) (4,406) 14,066 9,660 (3,007) 12,736 9,729 ______ ______ ______ ______Unallocated net liabilities (2,720) (1,495) _____ _____Total net assets 6,940 8,234 _____ _____Unallocated net liabilities comprise:Cash (2,445) (998)Other debtors 122 198Other creditors (397) (695) _____ _____ (2,720) (1,495) _____ _____ 3. Exceptional items and non-recurring costs In 2004 the exceptional items comprised £437,000 in relation to the redundancycosts and contract termination payments incurred in the integration of theRivals and an impairment charge of £2,322,000 charge against the goodwillarising on the original acquisition of the ukbetting.com Limited business in2001. Non-recurring costs of £1,338,000 disclosed in the profit and loss account in2004 comprised 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. Profit/(loss) per share Basic loss per share is calculated by dividing the loss attributable to ordinaryshareholders by the weighted average number of ordinary shares in issue duringthe financial period. Reconciliation of the loss and weighted average number of shares used in thecalculations are set out below: 2005 2004 Weighted Weighted average Per average Per Loss number Share Loss number share £000 of shares (pence) £000 of shares (pence)Basic losses per shareLoss attributable to shareholders (1,159) 95,882,016 (1.21) (7,013) 91,495,774 (7.66) ______ ___________ ______ ______ ___________ ______ Diluted loss per share is the same as the basic loss per share as the exerciseof share options and warrants would reduce the loss per share, and are thereforenot dilutive under FRS 22. Adjusted profit / (loss) per share has been calculated to provide a betterunderstanding of the underlying performance of the Group as follows: 2005 2004 Profit/ Per share Profit/ Per share (loss) Amount ( loss) amount £000 (pence) £000 (pence)Basic losses per shareLoss attributable to shareholders (1,159) (1.21) (7,013) (7.66)Amortisation of goodwill 1,487 1.55 1,950 2.13Impairment of goodwill - - 2,322 2.54 Non-recurring costs - - 1,602 1.75 ______ ______ ______ ______Adjusted profit/(loss) 328 0.34 (1,139) (1.24) ______ ______ ______ ______ Diluted profit per share has been calculated as the exercise of share optionsand warrants would reduce the profit per share. The weighted average fullydiluted number of shares, warrants and options is 127,480,963. 2005 2004 Profit/ Per share Profit/ Per share (loss) Amount ( loss) amount £000 (pence) £000 (pence)Fully diluted profit/(loss) per shareLoss attributable to shareholders (1,159) (0.91) (7,013) (7.66)Amortisation of goodwill 1,487 1.17 1,950 2.13Impairment of goodwill - - 2,322 2.54 Non-recurring costs - - 1,602 1.75 ______ ______ ______ ______Adjusted profit/(loss) 328 0.26 (1,139) (1.24) ______ ______ ______ ______ This information is provided by RNS The company news service from the London Stock Exchange