365.L Regulatory News (365)

12 Sep 2006 07:03

ukbetting PLC12 September 2006 12 September 2006 ukbetting plc Interim Results ukbetting plc (LSE: UKB), the online sports content and gaming company, todayannounces its results for the six months to June 30 2006. Financial Highlights • Group turnover increased 12% to £62.4 million (H1 2005: £55.5 million) • Gross profit rose 16% to £13.2 million (H1 2005: £11.4 million) • EBITDA profit improved 76% to £1.6 million (H1 2005: £0.9 million) • Group operating profit of £0.1 million (H1 2005: loss of £0.3 million) • Adjusted profit on ordinary activities before goodwill, share options costs and tax up 64% to £0.9 million (H1 2005: £0.6 million) • Pre goodwill EPS rose 141% to 0.70p (H1 2005: 0.29p) • Strengthened balance sheet from £11 million placing and £5.5 million exercise of shareholder warrants • Cash of £13.0 million (December 2005 £0.7 million) and net funds of £12.0 million (December 2005 net debt of £2.4 million Operational Highlights • Advertising revenue grew 34% to £1.74 million of which consumer grew by 88% to £1.63 million • Affiliate revenue through Oddschecker grew 32% to £1.6 million (H1 2005: £1.2 million) • Gaming gross win increased to £7.1 million from £6.0 million in H1 2005 • Gaming gross win margin increased to 13% from 12.3% in H1 2005 • Poker and casino revenue grew by 35% • Content site monthly users rose to 9.3 million, viewing 433 million monthly page impressions (H1 2005: 8.5 million; 282 million) • New Gaming registrations in the period rose 20% to 53,000 (H1 2005: 44,000) • 62% of totalbet and ukbetting gaming customers were generated from the group network Post-period end activity • Signing of Playtech contract for new casino product enabling single wallet for all casino products • Roll out of Oddschecker marketing initiative • Relaunch of Football365 and Oddschecker Peter Dubens, Chairman of ukbetting plc said, "The first half of 2006 saw users across our online sports network exceed 9million, viewing over 400m pages per month. This network has validated ourfocus on content by driving record growth across all advertising, affiliate,content syndication and gaming revenue streams. Especially encouraging was thegrowth in advertising and affiliate revenues which will now benefit for thefirst time ever from a dedicated marketing campaign. In addition to theimproved margin in the fixed odds division, we are pleased that poker is nowintegrated into our single wallet and casino will follow before the year end.We will continue to follow a policy, as we have done from inception, of nottaking bets from the US." For more information, contact: ukbetting plc 020 7766 6909Peter Dubens, Chairman Financial Dynamics 020 7831 3113Edward Bridges / Juliet Clarke / Hannah Sloane Chairman's statement Overview I am pleased to report a strong performance across all areas of our businessduring the first half of 2006. Advertising and affiliate sales had recordrevenues and we saw a marked improvement in the fixed odds performance. ukbetting plc operates the largest network of online sports sites in Europedriving four distinct revenue streams, namely advertising, affiliate revenue,content syndication and gambling. During the first half we started acomprehensive site rebuild programme, which will be rolled out across all sitesduring the course of the year. This incorporates new advertising formats, videoand tv channels, plus the ability for fans to post their own content,capitalising on our strength as the largest online sports chat and message boardcommunity in the UK. The teamtalk.com site has been completed which has led to ahuge increase in the number of video clips shown, growing from 100,000 inJanuary 2006 to 8 million in June. New advertising formats contributed in partto the 34% increase in advertising sales during the first half to £1.74 million,with the all important consumer brand sector growing 88% to contribute £1.6million of this total. Affiliate revenues from the Oddschecker sports betting, casino and pokercomparison sites rose 32% to £1.6 million. Oddschecker's performance since itwas acquired in 2003 has trebled. Another key development during the period included the introduction of thesingle wallet for poker allowing sports book customers to play poker using thesame funds from a single registration. With sports betting, games and pokercompleted we are now actively working on the integration of casino, which is duefor completion in the fourth quarter. The first step in this process is themigration of ukbetting's casino brands to the Playtech software platform,announced in August 2006. From that point onward each gaming customer will havea single log-in for our complete range of gaming products. Operational review Group turnover increased by 12% to £62.4 million during the period and EBITDAincreased by 76% to £1.6 million. Turnover was affected by a more cautiousapproach to sports betting following the restructuring of the trade room at theend of January, designed to address sports betting profitability, with theresult that sports betting margins increased from 3.2% to 5%. The new controlsand increased automation of risk management saw a marked improvement in marginwith the result that we saw overall gaming margin rise 19% to £7.1 million from£6 million in the first half last year. Gaming registrations in the period were53,000 up from 44,000 in same period last year, with over 60% of the totalbetand ukbetting registrations generated from Group sites. Overseas, we purchasedan Italian bookmaker license to allow official promotion of Goldbet in thestrategically important Italian market. Users of our network of sites continued to grow and reached a record 9.3m usersa month across the period, viewing 433 million pages. The increase in pagesviewed, which was up 54% from 282 million, meant that users were spending moretime on the sites and this helped boost the advertising revenues to a record£1.74 million. This was achieved without the bulk of traditional bookmakerrevenue and consumer brands accounted for 93% of sales compared with just 66% inthe corresponding period last year. Oddschecker with its affiliate revenues from bookmakers, poker rooms and casinooperators saw traffic to its sites almost double to 375,000 monthly visitors,primarily as a result of promotion across the content sites. This helped boostrevenue to £1.6 million, up 32% against the first half last year. Otherdevelopments in the period included the launch of a mobile service and there-build of casino.oddschecker.com and poker.oddschecker.com. A new fasterversion of the main site was launched in the first week of September ahead of amajor marketing campaign for Oddschecker in London. Video is becoming an important element of our online offering and is now builtinto all site updates, including the new integrated poker sites for totalbet.comand ukbetting.com. Our Sportal brand is dedicated to video and includes a 'live'channel which combines a variety of programmes produced in-house together withrelevant packages of sports rights. It has recently launched a MySportal sectionwhich enables users to post their own video content with specific focus on sportand will build on our strength in the sports community sector. There has been adramatic increase in video traffic with almost 18 million video clips viewed inAugust. The Group's football365, teamtalk and rivals sites have always had astrong community presence, with its users able to communicate via very activemessage boards and forums and we are therefore well placed to take advantage ofthe increasing trend of 'social networking'. In mobile we saw the roll out of football365, planetF1, planetrugby, cricket365and golf365 across a number of mobile networks, whilst on the Internet we havecontinued to expand our sports content, form, audio and most recently videoproducts to major portals and the bulk of the bookmaking industry. In the mobile sector, the Group has previously provided a wide range of contentto the mobile networks' own services. However, over the last three months, theGroup's own brands are now being promoted in revenue share schemes with thenetwork operators and this is seen as an important strategic change, increasingthe Group's brand values and allowing greater flexibility to promote a widerrange of mobile products. Financial Review Group turnover in the period was £62.4 million (H1 2005: £55.5 million).Turnover in the Gaming Division was £54.9 million (H1 2005: £48.9 million) andin the Content Division turnover was £7.5 million (H1 2005: £6.6 million). As aresult of such growth in revenues gross profit has increased to £13.2 million(H1 2005: £11.4 million). Gross margins for the Group increased to 21.2% (H12005: 20.5%). The gaming division produced a gross profit (gross win less taxesand levies) of £6.8 million (H1 2005: £5.3 million) reflecting continued growthin the casino and poker products. The content division gross profit is £6.4million (H1 2005: £6.1 million) due to higher advertising revenues. Operating expenses incurred in the period are £13.1 million (H1 2005: £11.6million). The Gaming Division operating expenses are £6.5 million (H1 2005:£5.3 million) reflecting the increased software and customer retention costsassociated with the higher casino and poker revenues, infrastructure investmentin better hosting facilities and also £0.2m of exceptional costs from therestructuring of the fixed odds business. The Content Division operatingexpenses have been maintained at £5.8 million (H1 2005: £5.8 million). Centraloperating costs in the period are £0.8 million (H1 2005: £0.5 million). EBITDA profit in the six months was £1.6 million (H1 2005: £0.9 million). Theoperating profit is £0.1m (H1 2005: operating loss of £0.3 million). Thereported basic profit per share is 0.03p and with dilution is 0.02p (H1 2005:loss per share of 0.48p, basic and diluted). Before goodwill amortisation, aprofit per share of 0.70p was earned (H1 2005: 0.29p), this dilutes to 0.54p pershare (H1 2005: 0.21p) Cash inflow on the period is £14.2 million. A placing of 19,166,667 shares at60p was completed in January 2006 raising £11 million after costs and in June2006, 22,140,000 founder shareholder warrants and further subscription rightswere exercised raising a further £5.5 million. The major use of cash in theperiod has been the £1.2 million paid out in the period in respect of thedeferred consideration on the acquisition of Goldbet Sportwetten GmbH and £0.9million in capital expenditure. Cash held at 30 June 2006 was £13 million andthe term loan remains in place at £1 million resulting in net funds of £12million. In this period the company is required to report under FRS 20 for the firsttime. Under FRS 20, share-based incentives provided to employees are assessedby reference to fair value using an option pricing model which takes intoaccount expected future movement in the company's share price. This fair valueis then amortised through the profit and loss account over the estimated periodof the options. The half year charge of £0.1 million is based on the number ofunvested options on the 31 December 2005 and prior period comparatives have beenrestated to reflect the charge in £0.2 million charge in 2005. These charges donot represent a cash cost to the company. Outlook We are confident that our business model will continue to grow in strength andvalue going forward, in turn consolidating our position as the leading networkof sports brands from which we derive multiple revenue streams. Indeed thestrength of this online media business will lead us to seek shareholder approvalduring the second half of 2006 to change the name of the company from ukbettingplc to a new name to better reflect the core activities and value of the Group. In the second half we will see the true effect following the introduction of thesingle wallet for poker and will complete the integration of casino, which willallow gaming customers to access all betting and gaming products from a singlelog in. We will continue to reap the benefits of our re-build programme and are lookingto launch new versions of two of our biggest sites, sportinglife.com andrivals.net by the year-end. This will allow more opportunities for ouradvertising sales staff, recently re-structured into agency and client directteams, to sell across a larger inventory with far more advertising formats. With all our businesses operating almost exclusively to a UK audience, thebiggest opportunity lies with geographical expansion across three key areas ofrevenue, football content, affiliates and gaming and we look to producemultilingual versions of football365, oddschecker and totalbet by early 2007.Whilst we will continue to strictly enforce our policy of not taking US bets, webelieve that in Europe and Asia there is a great appetite in particular forPremiership football, odds comparison and gaming. With our mix of all threeproducts we are ideally placed to gain access to new and additional audience andrevenue streams. Peter DubensChairman12 September 2006 Summarised consolidated profit and loss accountfor the 6 months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 2006 30 June 2005 31 Dec 2005 Restated Restated Note £ '000 £ '000 £'000 Group turnover 2 62,403 55,486 118,758Cost of sales (49,168) (44,108) (96,374) _______ _______ _______ Gross profit 13,235 11,378 22,384 Administrative expenses (13,127) (11,634) (23,378) EBITDA* 1,614 915 1,351Goodwill amortisation and depreciation (1,208) (1,096) (2,194)Share option costs (64) (75) (151)Exceptional costs 3 (234) - - Group operating profit / (loss) 2 108 (256) (994) Profit / (loss) on ordinary activitiesbefore interest and taxation 108 (256) (994) Net interest receivable / (payable) 89 (149) (210) _______ _______ _______ Profit / (loss) on ordinary activities before taxation 197 (405) (1,204) Taxation 5 (162) (58) (106) _______ _______ _______ Retained profit / (loss) 35 (463) (1,310) _______ _______ _______ Profit / (loss) per share - basic 0.03p (0.48)p (1.37)pProfit / (loss) per share - diluted 4 0.02p (0.48)p (1.37)p- Before goodwill amortisation - basic 4 0.70p 0.29p 0.18p- Before goodwill amortisation - diluted 4 0.54p 0.21p 0.14p * Earnings before interest, tax, depreciation, amortisation, share option andexceptional costs. Summarised consolidated balance sheetat 30 June 2006 at 30 June at 30 June at 31 December 2006 2005 2005 £ '000 £ '000 £ '000 Fixed assets Intangible assets 10,432 12,321 10,878 Tangible assets 2,365 1,314 1,885 _______ _______ _______ 12,797 13,635 12,763 _______ _______ _______ Current assets Stock 2 11 - Debtors 5,307 4,611 4,058 Cash at bank and in hand 12,965 1,091 657 _______ _______ _______ 18,274 5,713 4,715Creditors: amounts falling due within one year (7,110) (10,538) (9,713) _______ _______ _______Net current liabilities 11,164 (4,825) (4,998) Total assets less current liabilities 23,961 8,810 7,765 Creditors: amounts falling due after morethan one year (675) (975) (825) _______ _______ _______Net assets 23,286 7,835 6,940 _______ _______ _______ Capital and reserves Called up share capital 1,374 959 961 Share premium account 36,784 20,520 20,627 Shares to be issued - 613 333 Other reserve 10,392 10,392 10,392 Profit and loss account (25,264) (24,649) (25,373) _______ _______ _______Equity shareholders' funds 23,286 7,835 6,940 _______ _______ _______ Summarised consolidated cash flow statementfor the 6 months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 Note £ '000 £ '000 £'000 Net cash (outflow) / inflow from operating activities 6 (59) (249) 930Returns on investments and servicing of finance 87 (115) (345)Taxation (210) (36) (66)Capital expenditure and financial investment (860) (383) (1,390)Acquisitions and disposals (1,172) (357) (583) _______ _______ _______ Net cash outflow before financing (2,214) (1,140) (1,454)Financing 16,420 19 53 _______ _______ _______Increase / (decrease) in cash for the period 14,206 (1,121) (1,401) _______ _______ _______ Reconciliation of net cash flow to movement in net debt 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 £ '000 £ '000 £'000 Increase / (decrease) in cash for the period 14,206 (1,121) (1,401)Decrease in debt 150 - 75 _______ _______ _______ Change in net (debt)/funds resultingfrom cash flows 14,356 (1,121) (1,326)Non cash movements (1) (36) (19) _______ _______ _______ Movement in net funds for the period 14,355 (1,157) (1,345)Net debt brought forward (2,365) (1,020) (1,020) _______ _______ _______Net funds / (debt) at end of period 11,990 (2,177) (2,365) _______ _______ _______ Consolidated reconciliation in shareholders' fundsfor the 6 months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 Dec 2006 2005 2005 Restated Restated £ '000 £ '000 £'000 Retained loss for the period 35 (463) (1,310)New shares issued 16,570 118 227Shares to be issued (333) (100) (380)Share option costs 64 75 151Exchange differences on retranslation offoreign subsidiaries 10 (29) 18 _______ _______ _______Net reduction in shareholders' funds 16,346 (399) (1,294)Opening shareholders' funds 6,940 8,234 8,234 _______ _______ _______Closing shareholders' funds 23,286 7,835 6,940 _______ _______ _______ Notes to the interim statements 1. Basis of preparation of interim financial information The financial information contained in this statement does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985.The unaudited consolidated financial information for the six months ended 30June 2006 has been prepared on a basis consistent with the accounts for theperiod ended 31 December 2005 with the exception of FRS 20 - share basedpayments, which has been adopted in the period under review. The fair value of share options granted is recognised as an employee expensewith corresponding increase in equity. Fair value has been determined using theBlack Scholes and Binomial models, taking into account the terms and conditionupon which the options were granted. Prior year comparatives are adjustedaccordingly. The financial information for the six months ended 30 June 2006 was approved bythe board on 11 September 2006 and will be posted to shareholders on 20September 2006. 2. Segmental analysis Geographical turnover has not been disclosed by origin, but arises 56% in theUK, 37% in Europe and 7% in the rest of the world. 54% of Gaming turnover isderived from clients resident in the UK, the balance derived from Europe andAsia. 80% of Content turnover is derived from clients resident in the UK, thebalance derived from clients resident in Europe and the USA. 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Restated RestatedTurnover £ '000 £ '000 £'000 Gaming Division 54,928 48,856 105,166Content Division 7,475 6,630 13,592 _______ _______ _______ 62,403 55,486 118,758 _______ _______ _______ 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Restated RestatedOperating (loss)/profit £ '000 £ '000 £'000 Gaming Division 278 183 (1,293)Content Division 622 74 1,330Common costs (incl non-recurring) (792) (513) (1,031) _______ _______ _______ 108 (256) (994) _______ _______ _______ 3. Exceptional costs This cost comprises the redundancy costs incurred in the restructuring of theSportsbook operations. 4. Loss per share The basic and diluted profit / (loss) per share is based on profit attributableto shareholders of £35,000 (H1 2005: loss of £463,000) and the weighted averagenumber of shares of 112,187,592 (H1 2005: 95,719,380) and fully diluted averagenumber of shares of 144,797,623 (H1 2005: 136,526,190). Profit per share beforegoodwill amortisation has been calculated on the profit before goodwillamortisation of £785,000 (H1 2005: £281,000). 5. Taxation The Group has incurred a tax charge reflecting the profits of the Europeanbusiness that are not sheltered by UK losses in the period. ukbetting has UK taxlosses brought forward of approximately £28.0 million. 6. Reconciliation of Group operating loss to operating cashflows 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Restated Restated £ '000 £ '000 £'000 Group operating loss 108 (256) (994)Depreciation 458 352 707Amortisation (incl impairment charge) 750 744 1,487Share option costs 64 75 151(Increase) / decrease in stock (2) 8 19(Increase) / decrease in debtors (1,251) (806) (253)(Decrease) / increase in creditors (186) (309) (130)(Decrease) / increase in provisions - (57) (57) _______ _______ _______ Net cash outflow from operating activities (59) (249) 930 _______ _______ _______ This information is provided by RNS The company news service from the London Stock Exchange