NPT.L Regulatory News (NPT)

26 Sep 2007 07:02

Netplay TV PLC26 September 2007 Date: 26 September 2007On behalf of: NetPlay TV plc ("NetPlay TV" or "the Company")Embargoed for: 0700hrs NetPlay TV plc Interim Results 2007 NetPlay TV plc (AIM: NPT), the interactive gaming company, announces its resultsfor the six months ended 30 June 2007. Highlights • Live Roulette now trading profitably, gross bets exceeded £15m in August 2007; 440% increase since acquisition (December 2006 gross bets were £3.4m) • Acquisition of Play Monday database 18 January 2007, relaunched as fixed odds game 11 June 2007, sales doubled since acquisition • Abstract Games Limited acquired 23 February 2007, quiz members grown from 5,000 to 21,000 and trading profitably • Successful launch of BigBoxBingo in Beta test format 3 July 2007 • Exit of loss making MChex business Martin Higginson, Executive Chairman and CEO, said: "I am extremely pleased with the progress the Company has made in the first sixmonths of the year. We've seen tremendous growth in all areas especially "LiveRoulette" which is now trading profitably with gross bets showing a 440%increase since acquisition." "We will continue our customer acquisition programme, enhancing the experienceon both Internet and TV. Furthermore, the recent development of "Telepay" nowallows us to offer a complete gaming solution to a much wider audience. This,linked with new product innovation will enable us to continue to grow thebusiness and be a leader in the converged Internet and TV gaming sector." "We look forward, with real confidence, to the opportunities that lie ahead." Enquiries: NetPlay TV plc Martin Higginson, Executive Chairman www.netplaytv.plc.ukPat Greene, Finance Director Via Redleaf Redleaf CommunicationsEmma Kane/Sanna Lehtinen/Susan Quigley Tel: 020 7822 0200 Landsbanki Securities (UK) LimitedSindre Ottesen Tel: 020 7426 9000 Chairman's Statement Introduction In December 2006, NetPlay TV plc embarked on a journey to transform an ailingtelecoms business into a forerunner in the world of Internet and TV gaming. Wehave invested heavily in building a robust customer experience, initiallyfocusing on Live Roulette and latterly taking the knowledge we've gained fromthis channel into new product launches. We believe that, over the coming years, Internet and TV technologies will beginto merge and as such investment in our hybrid model will show good returns.Today, the Internet provides the flexibility demanded by consumers, whilst TVprovides the trust element; a vital ingredient in allowing us to build aconsumer base with real longevity. The investment we've made into both customer retention and acquisition hasclearly paid dividends over the first six months with Live Roulette gross betsshowing a 440% increase since that business was acquired in December 2006. Overthe coming months, we will move to dedicated TV studios for all our channels,and invest in "open source" architecture for all platforms permitting truescalability of additional games. We will also continue to improve the consumerexperience and acquisition of new customers. It is our intention to maximize our first mover advantage in the field ofinteractive TV and Internet gaming in the belief that the Internet and TV will,over time, merge and allow the user complete flexibility in his interaction withthese services. Interim Results Gross bets for the period were £36.9m, compared with £8m for the full year 2006. As I stated at the time of the 2006 preliminary results, 2007 is a transitionalperiod requiring heavy investment as we move the Group away from its stagnantpast into the faster growing, more exciting business areas of Internet and TVgaming. The changes in the businesses have and will, impact on turnover andprofitability in the short term, making comparisons with past performance lessrelevant. Group turnover in the six months was £2.6m (2006: £6.1m) reflecting the changein the nature of the business. Trading loss* for the period was £0.85m (2006:profit £0.66m) with the loss before tax amounting to £1.6m (2006: profit £0.5m). The Group has implemented reporting under International Financial ReportingStandards for the first time. This removes the requirement to amortise goodwilland therefore the 2006 comparatives have been restated on this basis. Theimpact of this policy is detailed in note 1. The basic loss per share amounted to 2.40p per share (2006: earnings 0.54prestated). \* Trading loss is calculated as the loss before tax adjusted for exceptionalitems and the share based payment credit. Operating Review Live Roulette Gross bets - 6 months to June 2007 - £36.9m I am very pleased to report that Live Roulette is now trading profitably, havingmade a profit contribution for the month of August of £100,000 after customeracquisition costs of £165,000. This, compared to a loss of £55,000 in Januarywith no customer acquisition costs, shows the progress we have made during theperiod. We have seen tremendous growth in this business, with bets increasingsteadily month on month and August reporting gross bets in excess of £15m, a440% increase since acquisition. We are working on the addition of more games which, in time, will increase ourmargins. Since acquiring the Live Roulette business back in December 2006, we haveembarked on a structured growth programme, firstly focusing on consumerretention, and then on new customer acquisition. Improvements have been made tothe website, customer welcome packs, call centre interfaces as well asimprovements to the gaming experience allowing customers to both place bets andcollect winnings in a much simpler fashion. This has resulted in churn reducingsignificantly and it has therefore allowed us to move to the second stage in ourplan, this being customer acquisition. Over the past few months we have invested heavily in our customer acquisitionprogramme and it is our intention to scale this investment over the comingmonths as well as introducing new games for our customers. This will be linkedto investment in new TV studios and enhanced software architecture, leading tothe creation of the UK's first Internet and TV super casino. BigBoxBingo On July 3rd we successfully launched our Beta version of BigBoxBingo - a uniqueprogramme format combining the realism of physical bingo cards, theinteractivity of the Internet and the convenience of TV. The Beta testing phase has enabled us to prove that interactive live bingo ispossible. For the first time, viewers can mark off a "real" bingo card in thecomfort of their own home, whilst watching a live TV broadcast. This liveinteraction with the viewer enables us to build genuine trust and differentiatethe programme from recently discredited "Call TV" shows. Since launch, we have been making improvements to our systems and will continuethis development programme pending the launch of our dedicated BigBoxBingo TVchannel from our own studio later this year. The investment required will begreater than the £300,000 originally anticipated; we expect this to be nearerc£1m. We feel it is important that we have a robust and scaleable system ableto cope with mass demand. We are extremely pleased with the progress made to date and continue to explorepartner opportunities with a number of broadcasters. This opportunity comes ata short term cost to the business which will be reflected in increased costsduring H2 2007. Play Monday & Abstract Games Our experience with BigBoxBingo has taught us that consumers like the liveinteractive gaming format. With this in mind, we have decided to merge theinteractive print media business of Abstract Games with the Play Monday Internetand TV operation. This will allow us to distribute interactive gamecards toreaders of national newspapers and magazines allowing live participation withboth the Play Monday TV show and its website. Since launching the Play Monday SuperDraw in June, we have seen ticket salesmore than double. We now need to grow this base with new players and believethe way to do this is via interactive print media. Abstract Games has grown itshighly profitable weekly quiz players from 6,000 to 21,000 during our period ofownership clearly demonstrating the power of this medium. Abstract Games is an expert in this field boasting a database of over 550,000interactive print media customers. This, combined with the 280,000 Play Mondaydatabase and their direct marketing skills, gives us a real opportunity toincrease both ticket sales and profitability. Over the coming months we willintroduce a number of new games giving our customers more choice and more waysto play. Having developed "Telepay" for BigBoxBingo we now have the mechanism for this towork in a secure and scalable manner, allowing us to offer fixed odds games withpayment being made using this approved telephone payment system. This paymentmechanism increases our addressable audience considerably. Over 1/3rd of the UKpopulation does not own a credit or debit card. Outlook We see the remainder of 2007 as being a period of further investment in systems,people, new TV studios, the customer experience and continued customeracquisition. We believe this will form the foundations for solid profitablegrowth in 2008. We now have three channels to market offering gaming solutions to alldemographic segments of the UK population. We believe we are well positioned to expand the business significantly toestablish us as the leader in the converged Internet and TV gaming sector. Martin HigginsonExecutive Chairman26 September 2007 Consolidated profit and loss accountfor the six months ended 30 June 2007 Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Note (Unaudited) (Unaudited) (Audited) £000 £000 £000 Restated* Restated* Turnover 2,622 6,143 12,624Cost of sales (1,960) (3,430) (7,720)Gross profit 662 2,713 4,904Administrative expenses (2,338) (2,265) (3,056)Operating (loss) / profit (1,676) 448 1,848 Analysed as:Operating (loss) / profit before exceptional items (672) - 396Exceptional items 4 (1,004) - 1,452Operating (loss) / profit (1,676) 448 1,848Interest receivable 85 73 175Interest payable (14) - (7)(Loss) / profit on ordinary activities before (1,605) 521 2,016taxationTax on (loss) / profit on ordinary activities 5 (45) (192) (185)(Loss) / profit on ordinary activities after taxation (1,650) 329 1,831 (Loss) / earnings per share 6Basic (2.40p) 0.54p 3.07pDiluted (2.40p) 0.47p 2.81p Consolidated balance sheetas at 30 June 2007 As at As at As at 30 June 30 June 31 December 2007 2006 2006 Note (Unaudited) (Unaudited) (Audited) £000 £000 £000AssetsNon-current assetsGoodwill 6,398 7,129 5,704Tangible assets 217 232 185Deferred tax assets 31 115 85 6,646 7,476 5,974 Current assetsTrade and other receivables 1,851 2,630 1,652Current tax recoverable 102 42 86Cash at bank and in hand 2,158 3,736 4,217 4,111 6,408 5,955 LiabilitiesCurrent liabilitiesFinancial liabilities (471) - (457)Deferred purchase consideration (750) (5,225) (556)Trade and other payables (1,630) (1,894) (1,303)Current tax liabilities - (249) - (2,851) (7,368) (2,316)Net current assets / (liabilities) 1,260 (960) 3,639Total assets less current liabilities 7,906 6,516 9,613 Non-current liabilitiesDeferred tax liabilities - - (9)Net assets 7,906 6,516 9,604 Capital and reservesCalled up share capital 8 3,457 3,034 3,397Share premium account 9 2,798 2,798 2,798Merger reserve 9 1,457 (925) 1,317Other reserve 9 310 128 560Profit and loss account 9 (116) 1,481 1,532Equity shareholders' funds 10 7,906 6,516 9,604 Consolidated cash flow statementfor the six months ended 30 June 2007 Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Note (Unaudited) (Unaudited) (Audited) £000 £000 £000 Net cash (outflow) / inflow from operating activities 11 (1,165) 1,177 1,742 Returns on investments and servicing of finance 11 85 59 180 Taxation paid (16) (151) (352) Capital expenditure and financial investment 11 (271) (58) (88) Acquisitions and disposals 11 (692) (32) (6) Equity dividends paid - (485) (485) Net cash flow before financing (2,059) 510 991 Financing 11 - 28 28 (Decrease) / increase in cash in the period (2,059) 538 1,019 Reconciliation of net cash to movement in net funds Movement in net funds in the period (2,059) 538 1,019 Net funds at the start of the period 4,217 3,198 3,198 Net funds at the end of the period 2,158 3,736 4,217 Reconciliation of movements in equity shareholders' fundsfor the six months ended 30 June 2007 Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Restated Restated Opening equity shareholders' funds As previously reported 9,297 6,508 6,508 Restatement on implementation of IFRS (Goodwill amortisation) 307 - - As restated 9,604 6,508 6,508 (Loss) / profit for financial period (1,650) 329 1,831Dividends 2 (486) (485)Share compensation (credit) / expense (250) 137 272New share capital subscribed for cash - 28 28Nominal value of shares issued for acquisition of subsidiaries 60 - 362Share premium on shares issued for acquisition of subsidiaries 140 - 1,088Net movement in equity shareholders' funds (1,698) 8 3,096 Closing equity shareholders' funds 7,906 6,516 9,604 Notes to the interim report 1 Basis of preparation This interim report, which has been neither audited nor reviewed by theCompany's auditors, was approved by the board of directors on 25 September 2007and has been prepared under International Financial Reporting Standards (IFRS)for the first time. The accounting policies are consistent with those used inthe Annual Financial Statements, except where noted below. The presentation ofthe Interim Financial Statements is consistent with the Annual FinancialStatements, except where noted below. Where necessary, the comparatives havebeen reclassified or extended from the previously reported Interim FinancialStatements to take into account any presentational changes made in the AnnualFinancial Statements or in these Interim Financial Statements. The principal change in the basis of accounting has been the removal of therequirement for Goodwill amortisation for the current and prior year. The prioryear profit and loss account has therefore been restated, eliminating the chargeof £278,000 for the six months to 30 June 2006 and £307,000 for the year to 31December 2006 with the consequent increase in the opening shareholders' equityas at 1 January 2006 see note 10). The 2006 annual report and accounts receivedan unqualified auditors' report and has been filed with the Registrar ofCompanies. 2 Segmental reporting Six months ended 30 June 2007Turnover Roulette PlayMonday Mobile Abstract Bingo PLC Total operations Games £000 £000 £000 £000 £000 £000 £000 Gross bets 36,884 173 - - - - 37,057Player winnings (36,013) (42) - - - - (36,055) Net margin 871 131 - - 1,002Other revenues 25 95 1,140 360 - - 1,620 896 226 1,140 360 - - 2,622 Operating (loss) / profit (172) (109) 34 81 (179) (327) (672)before exceptional itemsExceptional items - - (1,004) - - - (1,004)Operating (loss) / profit (172) (109) (970) 81 (179) (327) (1,676) Six months ended 30 June 2006 Fixed line Mobile PLC Total telephony operations £000 £000 £000 £000 Turnover 3,105 3,038 - 6,143 Operating (loss) / profit (restated) 581 598 (731) 448 3 Acquisitions On 18 January 2007, the Group acquired the assets of 'PlayMonday', from Chariot(UK) plc for a cash consideration of £165,000. On 23 February 2007, the Company acquired the whole of the share capital ofAbstract Games Limited for an initial consideration of £127,000, settlement ofdebt of £173,000 and 1,196,172 shares in the Company at a nominal value of£60,000. 4 Exceptional items Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Rationalisation of mobile operations (251) - -Goodwill write off in respect of MChex Limited (712) - -(Loss) / profit on sale of subsidiaries (41) - 1,452 (1,004) - 1,452 5 Taxation Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Current taxation - 171 156Deferred tax charge 45 21 29 45 192 185 The tax assessed in the period is higher (2006:higher) than the standard rate ofcorporation tax in the UK of 30% (2006:30%) due to the disallowance of certainexpenditure for tax purposes and non recognition of tax losses. A deferred tax asset estimated at £31,000 (2006: £115,000) arising from excesscapital allowances has been recognised. The directors consider that there issufficient certainty regarding the timing of suitable future taxable profitsagainst which these allowances will be claimed. There are unutilised losses of£1,242,000 against which no deferred tax asset has been recognised. 6 Dividends The directors do not recommend the payment of an interim dividend. Thedirectors consider it prudent to preserve the cash resources of the Company toinvest in existing products and the development of new products. 7 Earnings per share Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Restated Restated (Loss) / profit attributable to shareholders (1,650) 329 1,831 Number Number Number Weighted average number of shares in issue 68,622,534 60,402,995 59,586,149Dilution effects of contingent consideration - 6,687,168 2,960,885Dilution effects of share options 3,202,289 3,113,439 2,329,427Dilution effects of employee share schemes 148,555 242,876 198,941Diluted weighted average number of shares in issue 71,973,378 70,446,478 65,075,402 Basic (loss) / earnings per share (2.40p) 0.54p 3.07pDiluted (loss) / earnings per share (2.40p) 0.47p 2.81p Basic (loss) / earnings per share is calculated on the results attributable toordinary shareholders divided by the weighted average number of shares in issueduring the period excluding those held by NetPlay TV Trustees Limited which aretreated as cancelled. Diluted (loss) / earnings per share calculations reflect the dilutive effect ofemployee share schemes, share option schemes and deferred consideration payablein shares. 8 Share capital Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Balance at beginning of period 3,397 3,013 3,013Issue of shares 60 21 384Balance at end of period 3,457 3,034 3,397 9 Reserves Share Profit premium Merger and loss Other account reserve account Reserve £000 £000 £000 £000 Balance at beginning of period As previously reported 2,798 1,317 1,225 560 Restatement on implementation of IFRS - - 307 -(Goodwill) As restated 2,798 1,317 1,532 560Shares issued to acquire Abstract Games - 140 - -Loss for the period - - (1,650) -Dividends - - 2 -Share compensation expense - - - (250)Balance at end of period 2,798 1,457 (116) 310 10 Impact of changes in accounting principles In adopting IFRS as its accounting principles, NetPlay TV plc has prepared thesefinancial statements as if IFRS had been historically applied. In each case,balance sheet items are restated by adjusting the opening value at 1 January2006 and taking the difference in the corresponding item to equity. Consolidated equity as at 1 January 2006, 30 June 2006 and 31 December 2006changed as follows as a result of adopting IFRS: 31/12/2006 30/06/2006 01/01/2006 £000 £000 £000Consolidated equity as stated in the Annual / Interim Reportprepared in accordance with United Kingdom GAAP 9,297 6,238 6,508Adjusted (restated) items:Goodwill amortisation 307 278 -Consolidated equity (restated) in accordance with IFRS 9,604 6,516 6,508 Operating profit changed as follows as a result of adopting IFRS: 31/12/2006 30/06/2006 £000 £000Consolidated operating profit as stated in the Annual Report prepared in accordance with United Kingdom GAAP 1,541 170Adjusted (restated) items:Goodwill amortisation 307 278Operating profit (restated) in accordance with IFRS 1,848 448 11 Cash flows Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000Net cash flow from operating activitiesOperating (loss) / profit (923) 448 396Depreciation of tangible fixed assets 57 65 121Loss on disposal of fixed assets - -Share compensation expense (250) 137 272Foreign exchange - - 5(Increase) / decrease in debtors (90) 408 671Increase in creditors 41 119 277 (1,165) 1,177 1,742Returns on investments and servicing of financeInterest received 85 59 180 Capital expenditure and financial investmentPurchase of tangible fixed assets (283) (58) (88)Disposal of fixed assets 12 - - (271) (58) (88) AcquisitionsPurchase of subsidiary undertakings (182) (32) (1,430)Less: cash acquired with subsidiaries 86 - 56Payment of deferred consideration on acquisitions from prior (556) - -yearsProceeds of sale of subsidiary (net of costs and cash (40) - 1,368transferred) (692) (32) (6) FinancingIssue of ordinary shares - 28 28 12 Interim statement A copy of this statement will be sent to shareholders. Additional copies areavailable on request from the Company's registered office: 25 James Street,London W1U 1DU and on the Company's website: www.netplaytv.plc.uk This information is provided by RNS The company news service from the London Stock Exchange