The board of Webis Holdings plc ("Webis" or "the Group"), the global on-line gaming group, provides the following trading update in relation to the Group’s performance for the financial year ended 30 May 2010 and the subsequent period, including the FIFA World Cup to 11 July 2010.
Financial year ended 30 May 2010
The Group’s pari-mutuel operation, European Wagering Services ("EWS"), achieved a further increase in turnover, although increased competition in B2B business has led to a slight reduction in the overall margin percentage. The largest area of growth came from the further development of the website, www.link2bet.com, and the recruitment of new lower volume, higher margin customers. This has helped to considerably improve the overall business mix and, as a result, the directors expect a similar gross profit to the previous year.
The Group’s sportsbook operation, betinternet.com ("betinternet"), experienced a significant fall in turnover during the year. This fall was primarily as a result of the previously notified reduction in casino play, where the ‘high-roller’ business that the operation had previously benefited from dropped away. The fixed-odds part of the sportsbook, although achieving an increase in turnover, was impacted by unfavourable results throughout the football season, particularly in the early part as previously notified, as well as a challenging trading environment for horse racing which contributed to a reduced gross margin. In addition, the margin generated from customers introduced through our affiliate scheme was minimal, resulting in a loss after fees – a situation which we have now reversed with changes to the scheme rules agreed with our affiliate partners. The above factors resulted in the sportsbook recording a substantial operating loss for the financial year.
Thus on a consolidated basis, trading for the full year will be significantly below the directors’ previous expectations.
World Cup, current trading and strategy
betinternet achieved a significantly higher than expected turnover for the World Cup with very favourable margins, particularly during the early group stages. Its performance since the year-end, combined with continued strong trading from EWS, has meant that the overall Group results during the early period of the new financial year have had a positive benefit on the Group’s cash position.
EWS is actively pursuing acquisition and licensing opportunities in the United States to facilitate an increase in the level of horse racing content and, ultimately, to establish a physical presence in the US pari-mutuel betting market. The board anticipates making an announcement on further developments in this area in due course.
Following the conclusion of the World Cup, the board is presently reviewing its strategy for the sportsbook as a whole, taking into account factors such as the impact of increased competition and regulation within certain of its global markets. The board anticipates making a further announcement regarding its strategy for the sportsbook once this review has been concluded.