ukbetting PLC
07 September 2005
7 September 2005
ukbetting plc
Interim Results
ukbetting plc (LSE: UKB), online sports content and gaming company, today
announces its results for the six months to June 30 2005.
Financial
• Group turnover of £55.5 million, up 30% (H1 2004: £43.1 million)
• Gross profit rose 21% to £11.4 million (H1 2004: £9.4 million)
• EBITDA profit on continuing operations before exceptional items
improved 369% to £0.9 million (H1 2004: loss of £0.3 million)
• Profit on ordinary activities before goodwill and tax of £0.4 million,
improved from a loss of £0.8 million in H1 2004
• First pre-goodwill profit before tax of £0.5m, up 156% (H1 2004: loss
of £0.9m)
• Pre goodwill EPS rose 127% to 0.26p (H1 2004: loss of 0.96p)
Operations
• Gaming gross win margin increased to 12.3% from 9.9% in H1 2004 due to
greater contribution from poker and casino
• Poker and casino revenue grew by 106%
• Gaming registered users rose 37% to 308,000 from 225,559
• 7,300 average monthly gaming registrations, up from 5,900
• Content site monthly users rose by 44% to 8.5 million, viewing 282 million
page impressions (H1 2004: 5.9 million; 208 million)
• 60% gaming customers originating from content network
• Affiliate revenue strengthened through casino and poker checker launch
Post Period-end
• 'Click throughs' to own gambling sites have increased by 140% since period
end
• Like for like customer registrations from our own network up 10% per month
• Monstermob joint venture signed to sell mobile products to our content
customers
Peter Dubens, Chairman of ukbetting plc said,
'As the cost of gaming customer acquisition and retention continues to rise,
ukbetting's position of originating its own customers from its sports content
network becomes more and more valuable. We have seen a significant increase in '
click-throughs' to our own gaming sites as we have taken competitors off, as
well as an increase in average spend per user.
'The content network delivers 60% of our gaming customers who spend twice as
much as those customers that come from outside the network as they use our sites
to obtain information they use for gaming, namely, scores, editorial, video,
teach ins, live audio commentary, form and tips. We are now generating over
7,300 registrations per month to our gaming sites and with the broadband growing
throughout our customer base the amount wagered on our poker, casino and games
products now represents 64% of gross win, leading to an increase in margin from
9.9% to 12.3%. In order to maximise the potential of the content network we
will remain focused on growing our substantial user base that now reaches 8.5
million per month.'
For more information, contact:
ukbetting plc 020 7766 6909
Peter Dubens, Chairman
Eric Semel, Chief Executive Officer
Andrew Galvin, Finance Director
Financial Dynamics 020 7831 3113
Edward Bridges / Juliet Clarke / Hannah Sloane
Chairman's statement
Overview
I am pleased to report trading for the first half 2005 has been strong across
all areas of our business, and we are starting to see the benefits of taking
over more advertising space on our content network for the Group's own gaming
brands.
The period saw a further improvement in turnover and profitability, with
particular growth in gaming gross win as a result of increased contribution from
higher yield non-sports products, namely, poker, casino and fixed odds games.
The combination of strong growth in the number of visitors to our content
network and the reduction of our competitors' advertising has produced a marked
increase in the number of directly referred customers to our betting sites. As
a result, the cost of customer acquisition has been reduced further and the
average spend per customer has increased in the beginning of the second half,
further reinforcing the evidence that customers from our network have a higher
propensity to bet more with us.
These benefits flowed from our management decision to fully integrate what had
previously been two divisions, gaming and content, so that all areas of the
business are working together.
Operational review
Total sales have increased 30% to £55.5m (H1 2004: £43.1m). Users of the content
sites during this period grew 44% to 8.5m from 5.9m in the corresponding period,
viewing 282m pages against 208m this time last year, growth of 36%.
Total gambling registrations increased 37% to 308,000 at the end of June 2005
(H1 2004: 225,559). Average gaming customer growth for the period was 7,300
customers per month, an increase of 24% on the corresponding period last year
(H1 2004: 5,900). This increase is due to higher user numbers on the content
sites and a reduction in gaming competitors advertising on the sites, down from
9 to 4. This combined with increased presence for our own gaming brands has led
to higher gaming conversions and an increased average spend per new customer.
With the increasing growth in broadband among the customer base, making the
gaming products faster and easier to use, the contribution from products such as
poker, casino and fixed odds games increased to 60% of gross win, and gross win
margin improved to £6.0m (12.3%) up from £3.6m (9.9%) in H1 2004.
We continue to strengthen our gaming product offering with the introduction of
backgammon and 'instant play' casino, which have been integrated into our single
wallet currently used by the sports betting customers. Currently our casino and
poker customers have to re-register and deposit funds to play these games.
Consequently, the integration of our downloadable casino and poker into this
single wallet remains a key priority for the second half of the year.
Advertising revenue declined in comparison to H1 2004 due in part to strong
advertising around Euro 2004 and to the conscious decision to reduce competitors
from our sites. This has resulted in the percentage of bookmaker revenue in the
first half reducing from 36% in H1 2004 to 28% of total advertising revenues in
this period, and post period end, this is now down to 18%. Encouragingly, we
have experienced growth in FMCG advertising revenues and see this continuing as
the general online advertising market strengthens. Affiliate revenues through
our oddschecker brand were strong, helped by the launch of comparison sites
CasinoChecker and PokerChecker. We anticipate further strengthening of the
Oddschecker site following the allocation of more space on our content sites.
We began actively promoting our brands on mobile networks, successfully
launching football365 on the Hutchison 3 network as well as concluding (post
period end) a deal with Monstermob to offer a range of mobile sports content for
our customers. In addition, the content network was strengthened with the
availability of video footage of the BBC's Match of the Day and Football Focus
footage, free of charge and on a non-exclusive basis.
Financial Review
Group turnover in the period was £55.5 million (H1 2004: £43.1 million).
Turnover in the Gaming Division was £48.9 million (H1 2004: £36.0 million) and
Content Division turnover was £6.6 million (H1 2004: £7.1 million). The growth
in turnover has increased gross profit to £11.4 million (H1 2004: £9.4 million).
Gross margins for the Group were 20.5% (H1 2004: 21.9%) due to the growth in
the lower margin gaming revenue altering the mix.
Operating expenses incurred in the period are £11.6 million (H1 2004: £11.1
million). The Gaming Division operating expenses are £5.3 million (H1 2004:
£4.2 million) reflecting the operating costs of Campbells (Bookmakers) Ltd
(acquired October 2004) and the software and marketing costs of the increase
revenues of casino and poker. The Content Division operating expenses are £5.8
million (H1 2004: £6.4 million) reflecting the extra costs of In The Box
(acquired in July 2004) offset by the £1.3 million of annualised costs removed
following the integration of the Rivals business late last year. Central
operating costs in the period are £0.5 million (H1 2004: £0.5 million).
EBITDA profit in the six months was £0.9 million (H1 2004: EBITDA losses of £0.3
million). Total operating losses were reduced sharply to £0.2 million (H1 2004:
operating loss of £1.7 million). The reported loss per share fell to 0.40p,
basic and diluted, (H1 2004: loss per share of 2.00p, basic and diluted). Before
goodwill amortisation, a profit per share of 0.37p was earned (H1 2004: loss per
share of 0.96p), this dilutes to 0.26p per share (H1 2004: loss per share 0.96p)
Cash outflow on the period is £1.1 million. This cash was utilised in deferred
consideration payment on GoldBet of £0.4 million, capital expenditure of £0.4
million, interest paid of £0.1 million and outflow from trading operations of
£0.2 million. Net debt at the end of the period was £2.2 million, representing
the term loan of £1.2m and £1m utilisation of the £3m working capital facility.
Outlook
With the ever increasing cost of customer acquisition and the more competitive
environment, the Group will continue to focus on growing revenues and maximising
return per customer from within our own content network.
We intend to build and retain our gaming customer base with new products, easier
systems, such as a single wallet, as well as greater geographical presence.
As we enter the second half of the year, we are already seeing an increase in
gaming customers coming from the content network. We generated 60% of gaming
customers from Group sites in the first half and post period end this percentage
has continued to grow. We expect this to continue for the remainder of the
year, adding to the growth we are seeing as a result of the spread of consumer
broadband use. Our progress in the first half gives us confidence of further
development in the second half of the year, notwithstanding our second half
performance remaining dependent on favourable sports results.
Peter Dubens
Chairman
Summarised consolidated profit and loss account
for the 6 months ended 30 June 2005
6 months to 6 months to 12 months to
30 June 30 June 31 December
2005 2004 2004
Note £ '000 £ '000 £'000
Group turnover 2 55,486 43,054 85,557
Cost of sales (44,108) (33,623) (66,581)
_______ _______ _______
Gross profit 11,378 9,431 18,976
Administrative expenses (11,559) (11,121) (25,669)
EBITDA* 915 (340) (1,268)
Goodwill amortisation and depreciation (1,096) (1,319) (2,666)
Exceptional costs - (31) (2,759)
Group operating profit / (loss) 2 (181) (1,690) (6,693)
Loss on termination of operations - - (141)
Profit / (loss) on ordinary activities
before interest and taxation (181) (1,690) (6,834)
Net interest receivable / (payable) (149) (27) (34)
_______ _______ _______
Loss on ordinary activities before taxation (330) (1,717) (6,868)
Taxation 4 (58) (92) (145)
_______ _______ _______
Retained profit / (loss) (388) (1,809) (7,013)
_______ _______ _______
(Loss) / profit per share
- Basic and diluted 3 (0.40)p (2.00)p (7.66)p
- Before goodwill amortisation
- basic 3 0.37p (0.96)p (1.24)p
- Before goodwill amortisation
- diluted 3 0.26p (0.96)p (1.24)p
* Earnings before interest, tax, depreciation, amortisation and exceptional
costs.
Summarised consolidated balance sheet
at 30 June 2005
at 30 June at 30 June at 31 December
2005 2004 2004
£ '000 £ '000 £ '000
Fixed assets
Intangible assets 12,321 16,184 13,065
Tangible assets 1,314 982 1,185
_______ _______ _______
13,635 17,166 14,250
_______ _______ _______
Current assets
Stock 11 27 19
Debtors 4,611 4,243 3,805
Cash at bank and in hand 1,091 2,094 1,271
_______ _______ _______
5,713 6,364 5,095
Creditors: amounts falling due within one year (10,538) (6,927) (8,725)
_______ _______ _______
Net current liabilities (4,825) (563) (3,630)
Total assets less current liabilities 8,810 16,603 10,620
Creditors: amounts falling due after more
than one year (975) (2,325) (2,329)
Provisions for liabilities and charges
Other provisions - (85) (57)
_______ _______ _______
Net assets 7,835 14,193 8,234
_______ _______ _______
Capital and reserves
Called up share capital 959 904 956
Share premium account 20,520 20,495 20,503
Shares to be issued 613 3,759 713
Other reserve 10,392 7,916 10,294
Profit and loss account (24,649) (18,881) (24,232)
_______ _______ _______
Equity shareholders' funds 7,835 14,193 8,234
_______ _______ _______
Summarised consolidated cash flow statement
for the 6 months ended 30 June 2005
6 months to 6 months to 12 months to
30 June 30 June 31 December
2005 2004 2004
Note £ '000 £ '000 £'000
Net cash outflow from operating activities 5 (249) (614) (1,371)
Returns on investments and servicing
of finance (115) 48 (94)
Taxation (36) (168) (187)
Capital expenditure and financial investment (383) (319) (716)
Acquisitions and disposals (357) (1,566) (3,180)
_______ _______ _______
Net cash outflow before financing (1,140) (2,619) (5,548)
Financing 19 17 1,200
_______ _______ _______
Decrease in cash for the period (1,121) (2,602) (4,348)
_______ _______ _______
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
2005 2004 2004
£ '000 £ '000 £'000
Decrease in cash for the period (1,121) (2,602) (4,348)
(Increase)/decrease in debt - - (1,200)
_______ _______ _______
Change in net (debt)/funds resulting
from cash flows (1,121) (2,602) (5,548)
Non cash movements (36) 115 (53)
_______ _______ _______
Movement in net funds for the period (1,157) (2,487) (5,601)
Net funds brought forward (1,020) 4,581 4,581
_______ _______ _______
(Net debt) / funds at end of period (2,177) 2,094 (1,020)
_______ _______ _______
Consolidated reconciliation in shareholders' funds
for the 6 months ended 30 June 2005
6 months to 6 months to 12 months to
30 June 30 June 31 December
2005 2004 2004
£ '000 £ '000 £'000
Retained loss for the period (388) (1,809) (7,013)
New shares issued 118 17 2,455
Shares to be issued (100) 776 (2,270)
Exchange differences on retranslation of
foreign subsidiaries (29) 108 (39)
_______ _______ _______
Net reduction in shareholders' funds (399) (908) (6,867)
Opening shareholders' funds 8,234 15,101 15,101
_______ _______ _______
Closing shareholders' funds 7,835 14,193 8,234
_______ _______ _______
Notes to the interim statements
1. Basis of preparation of interim financial information
The financial information contained in this statement does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The unaudited consolidated financial information for the six months ended 30
June 2005 has been prepared on a basis consistent with the accounts for the
period ended 31 December 2004. The June 2004 comparatives have been restated to
reflect the treatment adopted in the accounts for the period ending 31 December
2004 in relation to the acquisition of Goldbet Sportwetten GmbH. The financial
information for the six months ended 30 June 2005 was approved by the board on
6th September 2005 and will be posted to shareholders on 15th September 2005.
2. Segmental analysis
Geographical turnover has not been disclosed by origin, but arises 71% in the
UK, 24% in Europe and 5% in the rest of the world. 66% of Gaming turnover is
derived from clients resident in the UK, the balance derived from Europe and
Asia. 80% of Content turnover is derived from clients resident in the UK, the
balance derived from clients resident in Europe and the USA.
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Turnover
£ '000 £ '000 £'000
Gaming Division 48,856 35,988 71,720
Content Division 6,630 7,066 13,837
Discontinued Activities - - -
_______ _______ _______
55,486 43,054 85,557
_______ _______ _______
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Operating (loss)/profit
£ '000 £ '000 £'000
Gaming Division 183 (947) (4,540)
Content Division 74 (242) 493
Discontinued Activities - 22 -
Common costs (incl non-recurring) (438) (523) (2,646)
_______ _______ _______
(181) (1,690) (6,693)
_______ _______ _______
3. Loss per share
The basic and diluted loss per share is based on losses attributable to
shareholders of £388,000 (H1 2004: £ 1,809,000) and weighted average number of
shares of 95,719,380 (H1 2004: 90,338,282). Profit per share before goodwill
amortisation has been calculated on the profit before goodwill amortisation of
£356,000 (H1 2004: loss of £863,000). The diluted basic loss per share is the
same as basic loss per share as the exercise of share options and warrants would
reduce the loss per share and are therefore not dilutive. Profit per share
before goodwill is diluted by the potential exercise of share options and
warrants and the fully diluted average number of shares of 136,526,190.
4. Taxation
The Group has incurred a tax charge reflecting the profits of the European
business that are not sheltered by UK losses in the period. ukbetting has UK tax
losses brought forward of approximately £25.0 million.
5. Reconciliation of Group operating loss to operating cash flows
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
£ '000 £ '000 £'000
Group operating loss (181) (1,690) (6,693)
Depreciation 352 373 716
Amortisation (incl impairment charge) 744 946 4,272
Decrease in stock 8 30 38
(Increase) / decrease in debtors (806) (651) (46)
(Decrease) / increase in creditors (309) 378 505
(Decrease) / increase in provisions (57) - (163)
_______ _______ _______
Net cash outflow from operating activities (249) (614) (1,371)
_______ _______ _______
This information is provided by RNS
The company news service from the London Stock Exchange
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