INTERIM RESULTS FOR THE 26 WEEKS ENDED 1 DECEMBER 2002
betinternet.com plc, the global on-line gaming group, today announces interim results for the 26 weeks ended 1 December 2002.
Highlights of the results are:-
- Group operating profit £9,000 (2001: £399,000 loss)
- Gross profit £1.92m (2001: £1.55m) – an increase of 23.9%.
- Internet betting turnover £20.75m (2001: £14.01m) – an increase of 48.1%.
- Internet betting margin, after duty, 7.0% (2001: 7.1%)
- Customer accounts at period end 33,944 (2001: 14,989) – an increase of 126.5%.
- Basic and diluted loss per share 0.12p (2001: 0.76p)
- Period-end cash £1.64m.
Commenting on the results Jim Mellon, chairman of betinternet, said: “The Company is now cash flow positive in its core business for the first time in its history and all the key ratios are promising.
“I am hopeful that for the full year to May 2003 we will make our first net profit as a Company and be very positively positioned for the following period. As a result I have every confidence that we will go from strength to strength.”
Notes to editors:
The following are attached:-
- Interim report
- 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’.
It is good to be able to make my first comments as Chairman with positive news.
The Company is now cash flow positive in its core business for the first time in its history and all the key ratios are promising. Internet betting continues to grow strongly and the mix and depth of our business is improving satisfactorily. The sportsbook, the core of the business, is tightly managed and customer volumes are strong. Cash balances have risen and are very comfortable.
The Company is now in a position to make acquisitions and I intend to champion this process actively. The substantial investment in Euro Off-Track, both in time and in money, may, at last, be about to bear fruit, with many prospective pari- mutuel deals in the pipeline.
As we have always erred on the side of caution, we are not burdened by US regulatory issues as are some of our competitors. I am hopeful that for the full year to May 2003 we will make our first net profit as a Company and be very positively positioned for the following period. As a result I have every confidence that we will go from strength to strength.
Overview of the results
- During the last six months betinternet has passed a significant milestone with the accomplishment of its first profit from its core sportsbook operation.
- Turnover of £24.44m, including the group’s share of joint ventures, showed continued growth compared to the previous year (£22.68m). The internet betting and pari-mutuel operations now account for 85% of turnover, following the strategic switch away from telephone betting that has taken place during the last year.
- betinternet’s customer numbers have continued to grow, giving rise to total customer accounts of 33,944 at the period end.
- Gross profit has risen from £1.55m in 2001 to £1.92m in the latest period. Furthermore, betinternet has continued to benefit from stable transaction costs as a result of its excellent banking relationships and monitoring procedures. It has also actively continued to control administrative costs enabling the increase in turnover to achieve the business’ first operational profit.
Although regulatory uncertainty continues in a number of markets, including parts of Asia, betinternet has been largely unaffected by this and the Company’s largest individual market continues to be the Far East. Indeed, substantial increases in customers in Singapore mean that the Far East region continues to be the fastest area of growth.
Review of Operations
Internet – The continuing growth of the internet wagering operation has given rise to a small, but nonetheless most welcome profit. Having seen customer numbers rise quite steeply during the World Cup in June 2002, betinternet has successfully managed to retain many of these customers as regular account users. The continuing and significant investment in IT infrastructure has resulted in the Company’s ability to readily handle several times the existing average daily volume of bets and is part of building for the future of the business.
Telephone – The Company’s strategy of continuing to provide a ‘first-class’ service to a selected number of customers continues to reap benefits, with a more than satisfactory margin of 12.7% during the period (2001: 6.3%). Accordingly, betinternet intends to continue to run this operation at its current level of activity.
During the period of these results the partnership with US Off-Track Inc. (Euro Off-Track), although continuing to absorb cash, has developed further, providing a number of potential opportunities which are actively being pursued.
These include initiatives to develop pool wagering by way of commingling on a global basis. The Board is currently considering a number of joint venture opportunities and, although these discussions are still at an early stage, the Board is cautiously optimistic of its ability to achieve profitability in the short-term. Indeed, the Company anticipates that it will shortly start to receive contributions from at least two B2B relationships.
Subsequent to the period end, the Company has re-negotiated its Joint-Venture agreement with its partner, US Off-Track Inc., to provide that the costs of this ‘start-up’ operation will in future be shared equally. Operating costs have also been reduced by securing contributions to the broadcast costs from the Irish Greyhound Board and Gaming Insight Plc. In addition, a ‘soft launch’ of the Irish greyhound content into the USA has been undertaken. The results of this have been encouraging and a full launch is planned for late February/early March.
The number of tracks into which we are able to commingle wagers has grown from 54 when we last reported in November 2002 to 74 now.
In addition to the organic growth that has delivered profitability for its sportsbook, the Company is also considering several options that would enable it to expand by way of acquisition.
Since the announcement of the preliminary results in November 2002, and as previously signalled, the Board has separated the roles of Chairman and Managing Director, and accordingly Jim Mellon was appointed Chairman with effect from 1 January 2003. This is part of the Board’s continuing desire to ensure it has the widest range of skills available to enable it to successfully grow the business.
The Company’s ambition, to establish itself as a respected, integrated, global e-gaming company, is undiminished and the Board is pleased with the continuing solid progress that betinternet is making.
|26 weeks to||Year ended||Six months to|
|Turnover including share of joint venture||1|
|Betting stakes received|
|Less share of joint venture turnover||(314)||(385)||(10)|
|Total group turnover||1||24,441||52,626||22,676|
|Cost of sales|
|Winnings paid and bets laid off||(22,487)||(49,627)||(21,037)|
|Betting duty paid||(32)||(131)||(88)|
|Group operating profit/(loss)||9||(1,692)||(399)|
|Share of operating loss in joint venture||(148)||(306)||(43)|
|Total operating loss including share of joint venture||(139)||(1,998)||(442)|
|Interest receivable and similar income||4||17||9|
|Interest payable and similar charges||–||(3)||(163)|
|Loss on ordinary activities before and after taxation and retained loss for the period||(135)||(1,984)||(596)|
|Basic and diluted loss per share (p)||2||(0.12)||(2.33)||(0.76)|
|1 December||31 May||30 November|
|Investment in joint venture|
|– share of gross assets||–||–||269|
|– share of gross liabilities||–||–||(312)|
|Investments in associates||–||–||112|
|Cash at bank and in hand||1,645||1,850||973|
|amounts falling due within one year||(1,506)||(2,463)||(2,594)|
|Net Current Assets/ (Liabilities)||1,181||210||(643)|
|Provision for Liabilities and Charges|
|Investment in joint venture|
|– share of gross assets||86||86||–|
|– share of gross liabilities||(539)||(391)||–|
|Capital and Reserves|
|Profit and loss account||(5,779)||(5,644)||(4,255)|
|Equity Shareholders’ Funds||1,545||883||146|
|26 weeks to||Year Ended||Six months to|
|1 December||31 May||30 November|
|Net cash outflow from operating activities 3||(513)||( 811)|