19 May 2008 07:00
Date: 19 May 2007
On behalf of: NetPlay TV plc ("NetPlay TV", "the Company" or "the Group)
Embargoed until: 0700hrs
NetPlay TV plc
Preliminary Results for the year ended 31st December 2007
Trading Update
NetPlay TV plc, (AIM: NPT), the interactive gaming company, is pleased to give its shareholders a trading update on its business, as well as the financial results for the financial year ending December 31st 2007.
Highlights
Revenue for continuing operations increases 61% to £9.4m ( 2006:£5.8m)
Exceptional growth for "Live Roulette", gross bets increasing by over 400% to £17.3m for the month of December 07 (December 06: £3.4m)
Acquisition of Play Monday database, acquired 18 January 2007
Acquisition of Abstract Games, acquired 23 February 2007
Successful launch of "Big Box Bingo" in July 2007
Investments made in 2007 are now showing excellent results
Early trading in 2008 very positive, £843,000 EBITDA* in first four months
April 2008 EBITDA* exceeds £300,000
* EBITDA quoted is before exceptional items and share based payments
Post Balance Sheet Events:
Agreement with Parlay Entertainment, world's leading bingo software developer, to extend its bingo offering and develop 76 additional web-based games, on 22 January 2008
Acquisition of 7,600 mobile quiz subscribers from Rubberduck, on 10 March 2008
Acquisition of Bingos.com, on 17 March 2008
Acquisition of Sky Channel 848, on 6 May 2008
Appointment of Nichola Halverson as a Group Finance Director, in March 2008
Appointment of Dominic Mansour to the Board as a CEO of Bingos.com, in April 2008
Martin Higginson, Executive Chairman and Chief Executive Officer, said:
"It is extremely encouraging to see the strategic investment decisions we made in 2007 beginning to show excellent results in 2008. We firmly believe in the future commercial strengths of a converged gaming offering. Providing the customer with a trusted "live" interactive gaming experience helps build trust and loyalty in our gaming brands. This in turn helps secure a longer customer life time value and therefore greater profitability.
"This year we will continue to launch new formats to our audience, giving them an even greater choice of games in a trusted environment. The acquisition of Bingos.com will allow us to build more robust systems across all platforms as we strive to build the leading European interactive gaming business.
"I am extremely pleased with the progress the business has made and I look forward to the coming year with great confidence."
-Ends-
Enquiries:
NetPlay TV plc
Martin Higginson, Executive Chairman www.netplaytv.plc.uk
Via Redleaf
Redleaf Communications Tel: 020 7822 0200
Emma Kane / Sanna Sumner/Mike Ward netplay@redleafpr.com
Landsbanki Securities (UK) Limited
Sindre Ottesen Tel: 020 7426 9000
Chairman's Statement
2007 was a transformational year for the Group, during which we firmly established NetPlay as a serious operator in the gaming industry. NetPlay has made considerable progress since November 2006, when the Group dramatically changed its focus and strategy to build a converged interactive gaming business.
Financial Overview
During the year ended 31st December 2007, Group's turnover for the year was £9.4m (2006: £5.8m^) and EBITDA* showed a loss of £1.2m (2006: £0.1m^) for continuing operations. Total EBITDA* loss for the year was £1.4m. This was primarily due to significant investment and development of the Group.
2007 was a year of tremendous growth for our "Live Roulette" business. Bets on this service ended the year with monthly gross bets in December of £17.3m, compared to £3.4m for December in 2006. A year on year growth of over 400%.
Total cash balance as 31 December 2007 was £1.3m ( 2006: £4.2m)
* EBITDA quoted is before exceptional items and share based payments
^Restated under IFRS
Operating Overview
During 2007, we embarked on a major programme of new product development, as well as customer acquisition and retention initiatives. We acquired two businesses in the period, Abstract Games Limited and the Play Monday draw. Abstract Games Limited, the interactive print company is now focused on using traditional interactive print media to attract new customers for our bingo and mobile services. The Play Monday SuperDraw business was acquired from Chariot plc in January 2007. This £10m draw now forms a part of our live weekly bingo show. During this period, we also extended our reach on TV, adding both Virgin and Freeview to our Sky Channel 847, giving us access to over 24m TV homes throughout the UK.
2007 saw the launch of our interactive TV bingo show, "Big Box Bingo". To our knowledge this proprietary format is a world first, giving people the opportunity to play "live" bingo from the comfort of their own home. This show was launched in beta format in July of last year and now forms a key part of our fully integrated bingo business, offering the user the chance to play bingo, and its associated games on TV, Internet and Mobile.
On 22 January 2008, we entered into an agreement with Parlay Entertainment, the world's leading bingo software developer, to extend our "Big Box Bingo" offering. Together with Parlay, we will develop online solutions and incorporate 76 additional web-based games into the offering. A further development will include mobile phone integration, television streaming and the integration of Parlay's software to power the televised bingo game.
During March 2008, the Group acquired a mobile quiz game database of 7,600 subscribers from Rubberduck Consulting Limited, a provider of mobile content and services such as ringtones, logos, music and video downloads and trivia quizzes. The consideration for the database was £70,000 and was satisfied by NetPlay ordinary shares.
The Group completed the acquisition of Bingos.com, for a consideration of £6.25m on 16 April 2008. Bingos is an established pan-European online bingo operator with over one million registered players. The business, which is based in Majorca, currently operates in the UK, Spain, Italy and Poland. This landmark acquisition enhanced NetPlay's position in the growing interactive bingo market and its ability to offer a truly converged TV, Internet and Mobile platform to the consumer.
On 6 May 2008, the Group agreed to acquire the Sky Channel 848 from Hollywood TV Ltd for the sum of £475,000. The new channel, which sits next door to the Company's current Sky Channel 847, will be used for the launch of their new service "Live BlackJack". The new service, a first for UK gamers, will be launched before the end of May.
We have now moved into our new office and studio complex in Battersea London, giving us three purpose built TV studios from which to broadcast all of our live shows. We anticipate savings of in excess of £10,000 per month through consolidating all our operations in this one new location. The savings will come into effect from Q2 2008.
Board
The Board was pleased to welcome Nichola Halverson to the Board in March 2008 as our new Group Finance Director. It has also been a pleasure to welcome Dominic Mansour to the Board following the Bingos.com acquisition in April 2008.
Current Trading
We are pleased with trading in the first quarter of 2008, reporting an EBITDA* figure of £843,000 for the first four months and with April exceeding £300,000. Furthermore these figures exclude the recently acquired Bingos.com business.
Our "Live Roulette" service is showing particularly good results with gross bets now exceeding £24m per month. Today we have added to the casino gaming offering with the launch of our new unique "Live BlackJack" service. This will be broadcast live on the Internet at www.liveroulette.com and Sky Channel 848. Over the past 12 months, we have seen the number of players using the Internet increase significantly, growing from nothing when we acquired the business to a proportion now over 90%. Our development programme will continue throughout 2008 as we add further gaming formats.
Following the recent acquisition of Bingos.com, we are currently integrating our existing weekly TV show with their Internet format. We feel this along with our mobile quiz games, will make a compelling offering. As noted above current trading is very strong, especially on the mobile quiz gaming front. We expect this growth to continue over the coming year as we cross promote services to the Bingos.com database of over 1 million customers.
There will be costs as we integrate the two businesses, however, we believe this investment will reap significant returns within this financial year.
The Board is confident in the investment made by the Company in 2007 and is pleased to see that these now are starting to bear fruit. We have achieved a lot over the last 16 months, although there is still a tremendous amount to be done. We have firmly established NetPlay TV as a serious contender in the gaming industry.
Outlook
Following a period of heavy investment the Company is now well positioned to reap the benefits and build a sustainable business going forward.
Growth in our Live Roulette business has been exceptional. We anticipate this to continue as we add exciting new games to our casino portfolio. Over the coming weeks, we will expand the current offering and add instant play Internet games allowing people to play instant slot machines whilst gaming from the website.
Later this year, we will merge both the "Live Roulette" and "Live BlackJack" internet brands into our new brand, Supercasino.com: the domain name we acquired in November 2007. With the addition of live internet games as well as more "live" formats, we believe the Group is now well positioned to build Supercasino.com into a widely recognised and trusted interactive gaming brand.
The acquisition of Bingos.com will allow us to create a fully converged interactive bingo gaming business. We will be able to offer the user the excitement of a "live" television show plus the flexibility of 24/7 Internet bingo, as well as fun mobile quiz games.
Year 2008 will be about establishing solid brands in both the Casino and Bingo markets as we build strong loyalty through offering the consumer choice and simplicity in their gaming experience.
Investment in a new technical infrastructure will continue as we move all of our services onto one central operating platform. This will allow us to offer the user a seamless interactive gaming experience across TV, Internet and Mobile, as well as the ability to plug new games into our infrastructure on the fly.
We continue to explore moving our gaming licenses to an "offshore" jurisdiction. Our bingo business now operates offshore, although we believe it will be early 2009 before we can consider migrating our casino licence. We believe moving this license should have a significant positive impact on the profitability of the Company.
Over the coming year, our focus will be on growing the business through organic growth and, if appropriate, further acquisitions. We believe the right acquisition in the right area could accelerate the business considerably and allow us to take vertical single market businesses and extend them into three converged markets with the same product offering, In addition, the right acquisition will offer us the opportunity for significant synergies. Together these benefits will lead to a greater spend per customer, reduced costs and therefore increased profitability.
The Board believe the Group is well positioned to build on its current assets and is extremely positive about the year ahead.
Martin Higginson
Executive Chairman
19 May 2008
NetPlay TV plc
Consolidated income statement
for the year ended 31 December 2007
| Year | Year | ||
| ended 31 December 2007 | ended 31 December 2006 | ||
| Note | (Unaudited) | (Audited) | |
| £ 000's | £ 000's | ||
| 1 | Restated | ||
| Revenue | 9,411 | 5,837 | |
| Cost of sales | (7,788) | (3,677) | |
| Gross profit | 1,623 | 2,160 | |
| Administrative expenses | (3,128) | (2,488) | |
| Group operating loss from continuing operations | (1,505) | (328) | |
| Exceptional items - impairment of goodwill | 1 | (2,446) | - |
| Exceptional items - restructuring costs | (169) | - | |
| Finance Income | 133 | 171 | |
| Finance Costs | (21) | (7) | |
| (Loss) before taxation | (4,008) | (164) | |
| Income tax expense | (49) | 10 | |
| (Loss) from continuing operations | (4,057) | (154) | |
| (Loss)/profit from discontinued operations | (935) | 1,985 | |
| (Loss)/profit for the financial year | (4,992) | 1,831 | |
| (Loss)/earnings per share | 4 | ||
| Basic (p) (continuing operations) | (5.89) | (0.25) | |
| Diluted (p) (continuing operations) | (5.84) | (0.25) | |
| Basic (p) (total operations) | (7.25) | 3.00 | |
| Diluted (p) (total operations) | (7.19) | 2.95 |
NetPlay TV plc
Consolidated balance sheet
as at 31 December 2007
| Year | Year | ||
| ended 31 December 2007 | ended 31 December 2006 | ||
| Note | (Unaudited) | (Audited) | |
| £ 000's | £ 000's | ||
| 1 | Restated | ||
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 6,463 | 5,704 | |
| Property, plant and equipment | 384 | 185 | |
| Intangible assets | 251 | - | |
| Deferred tax assets | 25 | 85 | |
| Total non-current assets | 7,123 | 5,974 | |
| Current assets | |||
| Inventories | 158 | - | |
| Trade and other receivables | 2,798 | 1,652 | |
| Current tax recoverable | 123 | 86 | |
| Cash and cash equivalents | 1,313 | 4,217 | |
| Total current assets | 4,392 | 5,955 | |
| TOTAL ASSETS | 11,515 | 11,929 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 5 | 3,802 | 3,397 |
| Share premium | 6 | 3,593 | 2,798 |
| Merger reserve | 6 | 1,457 | 1,317 |
| Other reserves | 6 | 268 | 560 |
| Retained earnings | 6 | (3,045) | 1,532 |
| Total equity | 6,075 | 9,604 | |
| Non-current liabilities | |||
| Deferred tax liabilities | - | 9 | |
| Financial liabilities | 2,530 | - | |
| Total non-current liabilities | 2,530 | 9 | |
| Year | Year | ||
| ended 31 December 2007 | ended 31 December 2006 | ||
| Note | (Unaudited) | (Audited) | |
| £ 000's | £ 000's | ||
| 1 | Restated | ||
| Current liabilities | |||
| Financial liabilities | 970 | 1,013 | |
| Trade and other payables | 1,720 | 1,303 | |
| Bank overdraft | 220 | - | |
| Total current liabilities | 2,910 | 2,316 | |
| TOTAL EQUITY AND LIABILITIES | 11,515 | 11,929 | |
NetPlay TV plc
Consolidated cash flow statement
for the year ended 31 December 2007
| Year | Year | ||
| ended 31 December 2007 | ended 31 December 2006 | ||
| Note | (Unaudited) | (Audited) | |
| £ 000's | £ 000's | ||
| 1 | Restated | ||
| Cash flows from operating activities | |||
| Operating (loss) from continuing operations | (1,505) | (328) | |
| Operating (loss)/profit from discontinued operations | (167) | 724 | |
| Total operating losses | (1,672) | 396 | |
| Adjustments for: | |||
| Depreciation and amortization | 156 | 121 | |
| Share based payments and similar | 123 | 272 | |
| Exceptional items | (196) | - | |
| Loss on disposal of property, plant and equipment | 8 | - | |
| Exchange gains/losses | - | 5 | |
| (Increase)/decrease in inventories | (128) | - | |
| (Increase)/decrease in trade and other receivables | (186) | 671 | |
| (Decrease)/Increase in trade and other payables | (850) | 277 | |
| Cash generated from operations | (2,745) | 1,742 | |
| Interest paid | (21) | - | |
| Income taxes paid | 15 | (352) | |
| Net cash from operating activities | (2,751) | 1,390 | |
| Cash flows from investing activities | |||
| Acquisition of subsidiary undertakings | (229) | (1,430) | |
| Net cash balances acquired with subsidiary undertakings | 66 | 56 | |
| Purchase of property, plant and equipment (PPE) | (327) | (88) | |
| Proceeds from sale of PPE | 12 | - | |
| Purchase of intangible assets | (191) | - | |
| Proceeds from disposal of subsidiary undertaking | - | 1,368 | |
| Net cash balances disposed of with subsidiary undertaking | (12) | - | |
| Interest received | 133 | 180 | |
| Net cash used in investing activities | (548) | 86 | |
| Year | Year | ||
| ended 31 December 2007 | ended 31 December 2006 | ||
| Note | (Unaudited) | (Audited) | |
| £ 000's | £ 000's | ||
| 1 | Restated | ||
| Cash flows from financing activities | |||
| Proceeds from issuance of ordinary shares | 175 | 28 | |
| Dividends paid to company's shareholders | - | (485) | |
| Net cash used in financing activities | 175 | (457) | |
| Net (decrease)/increase in cash and cash equivalents | (3,124) | 1,019 | |
| Cash and cash equivalents at beginning of period | 4,217 | 3,198 | |
| Net cash at end of period | 1,093 | 4,217 | |
Consolidated statement of changes in equity
for the year ended 31 December 2007
| Year | Year | |
| ended 31 December 2007 | ended 31 December 2006 | |
| (Unaudited) | (Audited) | |
| £ 000's | £ 000's | |
| Restated | ||
| Opening equity shareholders' funds (as restated) | 9,604 | 6,508 |
| (Loss)/profit for financial period | (4,992) | 1,831 |
| Dividends | - | (485) |
| Share compensation expense | 119 | 272 |
| New share capital subscribed for cash | 1,140 | 28 |
| Nominal value of the shares issued for acquisition of subsidiaries | 60 | 362 |
| Share premium on shares issued for acquisition of subsidiaries | 140 | 1,088 |
| Movement in investment in own shares | 4 | - |
| Net movement in equity shareholders funds | (3,529) | 3,096 |
| Closing equity shareholders' funds | 6,075 | 9,604 |
Notes to the financial statements
1. Basis of preparation
The figures for the year ended 31 December 2007 are unaudited.
The figures for the years ended 31 December 2007 and 2006 do not constitute statutory accounts within the meaning of Section 240 (5) of the Companies Act 1985. The figures for the year ended 2006 are extracts from the full financial statements delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified and contained no statements under either Section 237 (2) or 237 (3) of the Companies Act 1985.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted for use in the EU. Consequently all comparative information has been restated to reflect the change in basis of preparation during the year. The principal change in the basis of accounting has been the removal of the requirements for goodwill amortisation for the current and prior year. This has been replaced with an annual impairment review. The prior year profit and loss account has therefore been restated, eliminating the charge of £307,000 for the year to 31 December 2006 with the consequent increase in opening shareholders' equity as at 1 January 2006. The result of the impairment review has been to reduce the goodwill in Mobileworkflow Ltd by £2,446,000, showing in the continuing operations, and reduced the goodwill in M Chex Ltd by £712,000, which is included in discontinued operations. The other major change relates to presentation and the income statement only represents continuing operations until after income tax expense.
The financial statements have been prepared on a historical cost basis except where IFRS requires an alternative treatment. The principle variations from the historical cost basis relate to certain financial instruments (IAS 32 and 39).
This statement was approved by the board of directors on 17 May 2008.
2. EBITDA analysis
| Year ended 31 December 2007 | Year ended 31 December 2006 | |||||
| Continuing operations £000's | Discontinued operations £000's | Total £000's | Continuing operations £000's | Discontinued operations £000's | Total £000's
| |
| Operating loss for the period (prior to exceptional items) | (1,505) | (167) | (1,672) | (328) | 724 | 396 |
| Add back: depreciation of tangible assets | 105 | 6 | 111 | 121 | - | 121 |
| Add back: amortisation of intangible assets | 45 | - | 45 | - | - | - |
| Add back : share based payments charge | 119 | - | 119 | 271 | - | 271 |
| (1,236) | (161) | (1397) | 64 | 724 | 788 | |
3. Segmental information
During the year, the Group operated two principal classes of business; interactive gaming & competitions, and mobile telephony services.
| Segmental analysis | UK | Rest of the world | Total | ||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||
| £ 000's | £ 000's | £ 000's | £ 000's | £ 000's | £ 000's | ||
| Restated | |||||||
| Turnover by origin and destination | |||||||
| Continuing operations: | Mobile telephony | 2,139 | 5,605 | 2 | 137 | 2,141 | 5,742 |
| Interactive gaming and competitions | 4,137 | 95 | - | - | 4,137 | 95 | |
| Acquisitions: | Interactive gaming and competitions | 3,133 | - | - | - | 3,133 | - |
| 9,409 | 5,700 | 2 | 137 | 9,411 | 5,837 | ||
| Discontinued operations: | Mobile telephony | 663 | - | - | - | 663 | - |
| Fixed line telephony | - | 6,611 | - | 176 | - | 6,787 | |
| 10,072 | 12,311 | 2 | 313 | 10,074 | 12,624 | ||
| Operating profit/(loss) | |||||||
| Continuing operations: | Mobile telephony | 555 | 302 | - | (189) | 555 | 113 |
| Interactive gaming and competitions | (1,286) | (51) | - | - | (1,286) | (51) | |
| Central costs | (1,304) | (390) | - | - | (1,304) | (390) | |
| Acquisitions: | Interactive gaming and competitions | 530 | - | - | - | 530 | - |
| (1,505) | (139) | - | (189) | (1,505) | (328) | ||
| Discontinued operations: | Mobile telephony | (167) | - | - | - | (167) | - |
| Fixed line telephony | 587 | - | 137 | - | 724 | ||
| (1,672) | 448 | - | (52) | (1,672) | 396 | ||
4. EPS
| Year | Year | |
| ended 31 December 2007 | Ended 31 December 2006 | |
| (Unaudited) | (Audited) | |
| £ 000's | £ 000's | |
| Restated | ||
| Profit/ (loss) attributable to shareholders | ||
| Continuing operations | (4,057) | (154) |
| Discontinued operations | (935) | 1,985 |
| (4,992) | 1,831 | |
| Number of shares | Number of shares | |
| Weighted average numbers of shares in issue | 68,869,873 | 61,066,661 |
| Dilution effects of share options | 391,905 | 858,818 |
| Dilution effect of employee share schemes | 131,025 | 193,205 |
| Diluted weighted average number of shares in issue | 69,392,803 | 62,118,684 |
| Pence per share | Pence per share | |
| Basic earnings per share | ||
| Continuing operations | (5.89) | (0.25) |
| Discontinued operations | (1.36) | 3.25 |
| (7.25) | 3.00 | |
| Pence per share | Pence per share | |
| Diluted earnings per share | ||
| Continuing operations | (5.84) | (0.25) |
| Discontinued operations | (1.35) | 3.20 |
| (7.19) | 2.95 |
5. Share capital
| 2007 | 2006 | |
| £ 000's | £ 000's | |
| Authorised | ||
| 200,000,000 ordinary shares of 5p each | 10,000 | 10,000 |
| Allotted, called up and fully paid | ||
| 76,039,958 (2006: 67,931,786) ordinary shares of 5p | 3,802 | 3,397 |
On 23 February 2007 the Company issued 1,196,172 ordinary shares of 5p each at a price of 16.72p per share as part consideration for the acquisition of Abstract Games Limited.
On 28 December 2007 the company issued 6,912,000 ordinary shares of 5p each at a price of 16.5p per share for cash consideration.
6. Movement of reserves
| Share premium account | Merger reserve | Profit and loss account | Other reserve | |
| £000's | £000's | £000's | £000's | |
| Balance at the beginning of the period (as restated - see note 1) | 2,798 | 1,317 | 1,532 | 560 |
| Issue of share capital | 795 | 140 | - | - |
| Loss for the period | - | - | (4,992) | - |
| Transfer between reserves* | - | - | 415 | (415) |
| Current period share based payment charge | - | - | - | 119 |
| Current period movement in investment in own shares | - | - | - | 4 |
| Balance at the end of the period | 3,593 | 1,457 | (3,045) | 268 |
*transfer between reserves represents share based payment charges for options that have lapsed
7. Taxation
| Tax on profit on ordinary activities | ||
| 2007 | 2006 | |
| £ 000's | £ 000's | |
| The taxation charge/(credit) for the year comprises: | ||
| Current tax | ||
| - UK corporation tax on profit for the year | (9) | 249 |
| - adjustment in respect of prior years | (43) | (93) |
| Total current tax | (52) | 156 |
| Deferred tax | 51 | 29 |
| Total tax charge for the group | (1) | 185 |
The total tax charge for the period relating to continuing operations equates to £49,000 (2006: (£10,000)) and (£50,000) (2006: £195,000) relates to discontinued operations.
| Factors affecting the tax charge for the year | ||
| The tax assessed in the period is lower (2006: lower) than the standard rate of corporation tax in the UK of 30% (2006: 30%). The differences are explained below: | ||
| 2007 | 2006 | |
| £ 000's | £ 000's | |
| Profit on ordinary activities before taxation | (4,993) | 2,016 |
| Current tax charge at 30% | (1,498) | 605 |
| Effects of: | ||
| Expenses not (chargeable)/deductible for tax purposes | (123) | 124 |
| Impairment of goodwill | 947 | - |
| Profit on sale of subsidiary not chargeable to tax | - | (436) |
| Timing differences | (62) | (22) |
| Utilisation of tax losses | 11 | (20) |
| Tax rate differences | (6) | (2) |
| Adjustment in respect of prior years | (43) | (93) |
| Unrelieved losses carried forward | 722 | - |
| Current tax charge for the year | (52) | 156 |