Last checked at 15 Sep 2011 07:00
FOR IMMEDIATE RELEASE
15 September 2011
WEBIS HOLDINGS PLC
("Webis" or "the Group")
PRELIMINARY RESULTS FOR THE 52 WEEK PERIOD ENDED 29 MAY 2011
Webis Holdings plc, the global on-line gaming group, today announces its preliminary results for the period.
Summary:
·; | Loss for the period of £110,000 (2010: loss of £337,000)
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·; | EBITDA profit of £149,000 (2010: loss of £37,000)
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·; | Group gross profit increased by 17% to £3.04 million (2010: £2.6 million)
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·; | Group turnover of £105.6 million (2010: £114.2 million)
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Commenting on the results, Denham Eke, Chairman of Webis Holdings plc, said: "Although conditions in the market remain challenging, the Board believes that, after a much improved performance from betinternet, this business has the opportunity to further grow its market presence during the forthcoming year. There are now also signs that EWS is again beginning to trade in line with the Board's previous expectations".
ENDS
For further information:
| |
Webis Holdings plc | Tel: 01624 698141 |
Garry Knowles, Managing Director | |
Damon Waddington, Finance Director | |
Evolution Securities | Tel: 0113 2431619 |
Joanne Lake/Peter Steel
|
Notes to editors:
The following are attached:
Chairman's Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Statement of Changes in Shareholders' Equity
Consolidated Statement of Cash Flows
Notes to the Accounts
Chairman's Statement
Introduction
The performance of the Group's sportsbook operation, betinternet.com (IOM) Limited ("betinternet"), improved during the financial year ended 29 May 2011. The consolidated results for the period, however, were affected by a difficult year for the Group's pari-mutuel platform, European Wagering Services Limited ("EWS"). The Group's turnover for the year was £106 million (2010: £114 million). The Group recorded a diminished operating loss of £108,000 (2010: loss of £315,000) and generated positive EBITDA of £149,000 (2010: loss of £37,000).
EWS
In August 2010, EWS acquired a United States pari-mutuel hub, WatchandWager.com LLC, licenced with the North Dakota Racing Commission. In line with our US expansion strategy, we also established a permanent sales and marketing operation in the San Francisco Bay area during the year.
EWS encountered difficulties during the second half of the year in establishing a long-term payment solution for its online and telephone operations. This hindered our ability to accept and return customer funds via our link2bet.com website. Most payment processors and banks have been cautious with regard to the provision of services and the few that have done so have proven to be inconsistent and expensive.
This issue particularly affected the betting turnover of our higher margin 'leisure players'. As a result, whilst turnover only fell slightly by 3% to £34 million (2010: £35 million), gross profit reduced to £1,179,000 (2010: £1,446,000). Our reported performance was also impacted by an adverse movement in the US Dollar during the year and, together with additional customer payment and receipt processing costs, the business recorded an operating loss of £102,000 (2010: profit of £464,000).
EWS acted quickly to implement temporary payment solutions for our clients and a number of these are now in place. The Board anticipates the establishment of a permanent more robust solution in the coming weeks.
betinternet
betinternet's fixed odds business continued our positive trading performance during the first half into the second half of the year. The 'In-Play' product offering was further enhanced during the year and this, along with last summer's World Cup finals, was key to generating increased turnover at a much improved margin for this area of our business.
Better bonus control and the improved fixed-odds margin impacted on our casino and games activities during the second half. As a result, casino and games' annual turnover fell, the primary reason for generating lower turnover of £71.427 million (2010: £79.202 million). Despite this decrease, gross profit increased to £1,861,000 (2010: £1,171,000) following the improved performance of the fixed odds business. The business recorded a pre-tax profit of £1,000 (2010: loss of £778,000).
To address the lower activity in casino and games, we have refreshed our casino offering with an improved turnkey solution from a well-established games provider. During the final quarter of the financial year, we also launched a new games suite.
The sportsbook business has shown encouraging signs of progress. In particular, the Board believes that there are further growth opportunities for the fixed odds business, especially from 'In-Play' betting, where we implemented additional website enhancements to improve the user experience prior to the start of the current European football season.
Overview of Group Results
Group turnover for the full period to 29 May 2011 was £106 million (2010: £114 million) and gross profit increased by 16% to £3.04 million (2010: £2.62 million). Gross margin improved to 2.9% (2010: 2.3%).
The Group recorded a profit before interest, tax, depreciation and amortisation of £149,000 (2010: loss of £37,000) and an operating loss of £108,000 (2010: loss of £315,000).
Operating expenses increased by 9% compared with last year to £2,891,000 (2010: £2,655,000), primarily due to increased operating costs on the EWS operation as a result of the exchange loss, payment processing costs and costs of establishing a presence in the United States. betinternet's operating costs reduced during the year.
Funding
In February 2011, the Group's largest shareholder, Burnbrae Limited, exercised an option to convert its loan note of £300,000 together with interest thereon into 23,344,977 new ordinary shares of 1 penny each.
In July 2011, in order to comply with new legislation introduced in the Isle of Man requiring gaming companies to hold sufficient funds to cover all potential customer liabilities, the Group deposited £1,130,000 in designated client accounts, funded via a short term overdraft facility from Burnbrae Limited on normal commercial terms.
Strategy, current trading and outlook
Our EWS US development plan commenced with the outsourced migration of its Hub operations from the Isle of Man to a contracted service provider in Maryland, a project which was completed in June 2011. This move is likely to result in greater access to international content for our player base at reduced cost. The Board has also commissioned the Thoroughbred Racing Protective Bureau (TRPB) in the US to update its report on EWS, with particular emphasis on its US operations. Compliance with the TRPB is now a requirement of most US thoroughbred tracks and track groups. This report is due to be issued to member tracks by the end of this year at the latest. Concurrent with these developments, the Board also expects to further progress its web development and marketing plans in the US over the coming months.
The Board is of the opinion that, once a robust cost-effective payment processing solution has been established, EWS will be suitably positioned to develop our aggressive sales and marketing strategy and increase the level of racing content. In this respect, our business plan for EWS remains unchanged going into the new financial year. There are now also signs that EWS is again beginning to trade in line with the Board's previous expectations.
betinternet has continued to trade in line with the Board's expectations through the first quarter of the new financial year. The increase in fixed odds turnover achieved during the latter part of the last financial year has been sustained into the summer. We have benefited from the addition of new content, as we continue to utilise and integrate third party data feeds without the need for additional personnel. The casino and games turnover and margin has also improved steadily during the first quarter, with the live dealer casino product in particular showing strong revenue over the summer months.
Although conditions in the market remain challenging, the Board believes that, after a much improved performance from betinternet, this business has the opportunity to further grow its market presence during the forthcoming year.
Denham Eke
Chairman
Webis Holdings plc
Consolidated Statement of Comprehensive Income
for the Period ended 29 May 2011
Note | 2011 | 2010 | |||
£000
| £000
| ||||
Turnover | 2 | 105,546 | 114,167 | ||
Cost of sales | (102,470) | (111,519) | |||
Betting duty paid | (36) | (30) | |||
----------
| ---------- | ||||
Gross Profit | 3,040
| 2,618 | |||
Administration expenses | (2,891) | (2,655) | |||
---------- | ----------
| ||||
Earnings before interest, tax, depreciation and amortisation | 149 | (37) | |||
Depreciation and amortisation | (248) | (255) | |||
Share-based payment costs | 3 | (9) | (23) | ||
---------- | ---------- | ||||
Total operating loss | (108)
| (315) | |||
Net finance costs | 4 | (2) | (22) | ||
Taxation | 5 | - | - | ||
---------- | ---------- | ||||
Total comprehensive loss for the period attributable to owners | (110) | (337) | |||
---------- | ---------- | ||||
Basic and diluted loss per share (pence) | (0.05) | (0.16) | |||
---------- | ---------- | ||||
Webis Holdings plc
Consolidated Statement of Financial Position
As at 29 May 2011
Note | 2011 | 2010 | |||
£000 | £000 | ||||
Non-current assets | |||||
Intangible assets - goodwill | 7 | 111 | 43 | ||
Intangible assets - other | 8 | 231 | 311 | ||
Property and equipment | 9 | 34 | 75 | ||
---------- | ---------- | ||||
Total non-current assets | 376
| 429
| |||
Current assets | |||||
Trade and other receivables | 838 | 834 | |||
Cash and cash equivalents | 1,470 | 999 | |||
---------- | ---------- | ||||
Total current assets | 2,308
| 1,833
| |||
Current liabilities | |||||
Bank overdraft | - | (295) | |||
Trade and other payables | (2,049) | (1,287) | |||
Convertible loan notes | - | (300) | |||
---------- | ---------- | ||||
Total current liabilities | (2,049)
| (1,882)
| |||
----------
| ----------
| ||||
Net assets | 635 | 380 | |||
----------
| ----------
| ||||
Shareholders' equity | |||||
Called up share capital | 2,302 | 2,068 | |||
Share premium account | 10,049 | 9,927 | |||
Share option reserve | 116 | 107 | |||
Profit and loss account | (11,832)
| (11,722)
| |||
---------- | ---------- | ||||
Total shareholders' equity | 635 | 380 | |||
---------- | ---------- |
Webis Holdings plc
Statement of Changes in Shareholders' Equity
for the Period ended 29 May 2011
Called up share capital |
Share premium |
Share option reserve |
Retained earnings |
Total shareholders' equity | |
£000
| £000
| £000
| £000
| £000
| |
Balance as at 31 May 2009 | 2,068 | 9,927 | 84 | (11,385) | 694 |
Total Comprehensive loss for the period | - | - | - | (337) | (337) |
Transactions with owners | |||||
Share-based payment expense | - | - | 23 | - | 23 |
---------- | ---------- | ---------- | ---------- | ---------- | |
Balance as at 30 May 2010 | 2,068 | 9,927 | 107 | (11,722) | 380
|
Total Comprehensive loss for the period | - | - | - | (110) | (110) |
Transactions with owners | |||||
Arising on shares issued in the year | 234 | 122 | - | - | 356 |
Share-based payment expense | - | - | 9 | - | 9 |
---------- | ---------- | ---------- | ---------- | ---------- | |
Balance as at 29 May 2011 | 2,302 | 10,049 | 116 | (11,832) | 635 |
---------- | ---------- | ---------- | ---------- | ---------- |
Webis Holdings plc
Consolidated Statement of Cash Flows
for the Period ended 29 May 2011
2011 | 2010 | |||
£000
| £000
| |||
Net cash inflow (outflow) from operating activities
| 607 | (335) | ||
Cash flows from investing activities | ||||
Interest received | - | - | ||
Purchase of intangible assets | (183) | (211) | ||
Purchase of property, plant and equipment | (12) | (25) | ||
---------- | ---------- | |||
Net cash outflow from investing activities | (195)
| (236)
| ||
Cash flows from financing activities | ||||
Interest paid | (2) | (22) | ||
Issue of equity shares | 356 | - | ||
---------- | ---------- | |||
Net cash inflow (outflow) from financing activities | 354 | (22) | ||
Net increase / (decrease) in cash and cash equivalents | 766 | (593) | ||
Cash and cash equivalents at beginning of period | 704 | 1,297 | ||
---------- | ---------- | |||
Net cash and cash equivalents at end of period | 1,470 | 704 | ||
---------- | ---------- | |||
Cash and cash equivalents comprise | ||||
Cash and deposits | 1,470 | 999 | ||
Bank overdraft | - | (295) | ||
---------- | ---------- | |||
1,470 | 704 | |||
---------- | ---------- | |||
Cash generated from operations | ||||
Loss from operations | (108) | (315) | ||
Adjusted for: | ||||
Depreciation and amortisation | 248 | 255 | ||
Share-based payment cost | 9 | 23 | ||
Increase in receivables | (4) | (121) | ||
Increase / (decrease) in payables | 462 | (177) | ||
---------- | ---------- | |||
Net cash inflow / (outflow) from operating activities | 607 | (335) | ||
---------- | ---------- | |||
Webis Holdings plc
Notes to the Consolidated Financial Statements
For the Period ended 29 May 2011
1 | Reporting entity
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Webis Holdings plc is a company domiciled in the Isle of Man. The address of the Company's registered office is Viking House, Nelson Street, Douglas, Isle of Man, IM1 2AH.
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The Group's consolidated financial statements as at and for the period ended 29 May 2011 consolidate those of the Company and its subsidiaries (together referred to as "the Group").
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The preliminary announcement does not constitute the Group's statutory financial statements. It is an extract from the financial statements for the period ended 29 May 2011 which have not yet been filed.
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1.1 | Basis of preparation
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(a) | Statement of compliance |
The financial information included in this announcement has been extracted from the Group's consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB").
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(b) | Basis of measurement and functional currency |
The Group consolidated financial statements are presented in Pounds Sterling, rounded to the nearest thousand. They are prepared under the historical cost convention except where assets and liabilities are required to be stated at their fair value.
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(c) | Use of estimates and judgement |
The preparation of Group financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these estimates are based on management's best knowledge and experience of current events and expected economic conditions, actual results may differ from these estimates.
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The directors believe the assumptions used in the model to calculate the fair value of the share based payments are the most appropriate for the Group.
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The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
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2 | Segmental Analysis Period ended 29 May 2011 | |||||||
2011 | 2010 | |||||||
£000 | £000 | |||||||
Turnover | ||||||||
Sportsbook | Asia Pacific | 57,863 | 54,476 | |||||
UK & Ireland | 8,692 | 13,656 | ||||||
Europe | 4,070 | 9,738 | ||||||
Rest of the World | 802 | 1,332 | ||||||
Pari-mutuel | United States | 17,694 | 18,788 | |||||
Caribbean | 13,912 | 16,177 | ||||||
Australia | 2,513 | - | ||||||
---------- | ---------- | |||||||
105,546 | 114,167 | |||||||
---------- | ----------
| |||||||
Profit / (loss) before tax | ||||||||
Sportsbook | 1 | (778) | ||||||
Pari-mutuel | (102) | 464 | ||||||
Group | (9) | (23) | ||||||
---------- | ---------- | |||||||
(110) | (337) | |||||||
---------- | ----------
| |||||||
Net assets | ||||||||
Sportsbook | (756) | (757) | ||||||
Pari-mutuel | 1,477 | 1,579 | ||||||
Group | (86) | (442) | ||||||
---------- | ---------- | |||||||
635 | 380 | |||||||
---------- | ----------
| |||||||
3 | Share-based payment costs
| |||||||
2011 £000
| 2010 £000
| |||||||
Share options | 9 | 23 | ||||||
---------- | ---------- | |||||||
9 | 23 | |||||||
---------- | ----------
| |||||||
| ||||||||
4 | Net finance costs
| |||||||
2011 | 2010 | |||||||
£000
| £000
| |||||||
Bank interest receivable | - | - | ||||||
---------- | ---------- | |||||||
- | - | |||||||
---------- | ---------- | |||||||
Bank interest payable | (5) | (4) | ||||||
Loan interest payable | 3 | (18) | ||||||
---------- | ---------- | |||||||
(2) | (22) | |||||||
---------- | ---------- | |||||||
Net finance costs | (2) | (22) | ||||||
----------
| ----------
| |||||||
5 | Taxation
| |||||||
No provision for taxation is required for either the current or previous periods, due to the zero per cent corporate tax regime in the Isle of Man. Unprovided deferred tax was £Nil (2010: £Nil).
| ||||||||
6 | Earnings per ordinary share
| |||||||
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.
The calculation of the diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares, on the assumed conversion of all dilutive share options.
An adjustment for the dilutive effect of share options and convertible debt in the previous period has not been reflected in the calculation of the diluted loss per share, as the effect would have been anti-dilutive.
| ||||||||
2011 | 2010 | |||||||
£000
| £000
| |||||||
Loss for the period | (110) | (337) | ||||||
----------
| ---------- | |||||||
No. | No.
| |||||||
Weighted average number of ordinary shares in issue | 212,902,757 | 206,826,667 | ||||||
Diluted number of ordinary shares | 230,171,644 | 226,498,798
| ||||||
Basic loss per share (pence) | (0.05) | (0.16) | ||||||
Diluted loss per share (pence) | (0.05) | (0.16)
| ||||||
7 | Intangible assets - Goodwill
| |||||||
Goodwill | ||||||||
£000 | ||||||||
Cost | ||||||||
Balance at 30 May 2010 | 43 | |||||||
Additions during the period | 68 | |||||||
---------- | ||||||||
Balance at 29 May 2011 | 111 | |||||||
---------- | ||||||||
Amortisation and impairment | ||||||||
At 30 May 2010 | - | |||||||
Amortisation for the period | - | |||||||
---------- | ||||||||
At 29 May 2011 | - | |||||||
Net Book Value | ---------- | |||||||
At 29 May 2011 | 111 | |||||||
---------- | ||||||||
At 30 May 2010 | 43 | |||||||
----------
| ||||||||
The addition during the period relates to goodwill arising on the acquisition on 1 August 2010 of WatchandWager.com LLC, a US registered entity and licenced for pari-mutuel wagering in North Dakota.
| ||||||||
8 | Intangible assets - Other
| ||||
Software & Development Costs | |||||
£000 | |||||
Cost | |||||
Balance at 30 May 2010 | 2,517 | ||||
Additions during the period | 115 | ||||
---------- | |||||
Balance at 29 May 2011 | 2,632 | ||||
---------- | |||||
Amortisation and impairment | |||||
At 30 May 2010 | 2,206 | ||||
Amortisation for the period | 195 | ||||
---------- | |||||
At 29 May 2011 | 2,401
| ||||
Net Book Value | ---------- | ||||
At 29 May 2011 | 231 | ||||
---------- | |||||
At 30 May 2010 | 311 | ||||
----------
| |||||
9 | Property and equipment
| ||||
Computer equipment | Fixtures & fittings |
Total | |||
£000 | £000 | £000 | |||
Cost | |||||
At 30 May 2010 | 1,241 | 281 | 1,522 | ||
Additions | 12 | - | 12 | ||
---------- | ---------- | ---------- | |||
At 29 May 2011 | 1,253 | 281 | 1,534 | ||
---------- | ---------- | ---------- | |||
Depreciation | |||||
At 30 May 2010 | 1,179 | 268 | 1,447 | ||
Charge for the period | 42 | 11 | 53 | ||
---------- | ---------- | ---------- | |||
At 29 May 2011 | 1,221 | 279 | 1,500 | ||
---------- | ---------- | ---------- | |||
Net Book Value | |||||
At 29 May 2011 | 32 | 2 | 34 | ||
---------- | ---------- | ---------- | |||
At 30 May 2010 | 62 | 13 | 75 | ||
---------- | ---------- | ----------
| |||
10 | Approval of financial statements
| ||||
The financial statements were approved by the Board on 14 September 2011. The Annual Report is expected to be posted to shareholders on 20 September 2011 and will be available from that date at the Group's Registered Office: Viking House, Nelson Street, Douglas, Isle of Man IM1 2AH. A copy of the Annual Report will also be made available on the Group's website www.webisholdingsplc.com.
| |||||
The Group's nominated advisor and broker is: Evolution Securities, Kings House, 1 Kings Street, Leeds LS1 2HH. | |||||