Webis Regulatory News (WEB)

18 Feb 2008 07:00

Webis Holdings PLC18 February 2008 FOR IMMEDIATE RELEASE18 February 2008 WEBIS HOLDINGS PLC (or "the Company") INTERIM RESULTS FOR THE 26 WEEKS ENDED 25 NOVEMBER 2007 Webis Holdings Plc, the global on-line gaming group, today announces its interimresults for the 26 weeks ended 25 November 2007. Highlights of the results are: • Group turnover has increased by 22% to £53.0m (2006: £43.5m) • European Wagering Services (EWS) pari-mutuel business has continued to grow with turnover increasing by 19% • EBITDA profit of £43k (2006: £182k) • Sportsbook turnover has increased by 23% to £39.0m (2006: £31.7m) • Group overheads have reduced by 3.9% to £1.23m (2006: £1.28m) Commenting on the results, Denham Eke, Chairman of Webis Holdings Plc, said: "The results show that the Company recorded a profit at EBITDA level for theperiod. Activity levels increased within our casinos and fixed-odds games,especially the live dealer casino, and the sportsbook has increased its productoffering during the period with the introduction of UK horse racing. I ampleased to report that EWS has resolved its banking issue and this has enabledthe operation to return to previous levels of gross margin. Going forward, theboard will continue to ensure that both EWS and the sportsbook business areappropriately positioned to capitalise on the opportunities available in themarketplace for sustainable growth". ENDSFor further information: betinternet.com plc Tel: 01624 698141Garry Knowles, Managing Director Evolution Securities Tel: 0113 243 1619Joanne Lake Notes to editors: The following are attached: 1. Chairman's statement2. Consolidated Profit & Loss Accounts3. Consolidated Balance Sheets4. Consolidated Cash Flow Statements5. Notes to the Accounts N.B. Pari-mutuel (or "tote" wagering) refers to wagering into a 'pool' wheredividends are paid to winners and the operator retains a percentage of the 'pool'. Chairman's Statement Introduction This is my first Chairman's Statement following the change of the Company's namein November 2007 to Webis Holdings plc. The results for the six months ended 25 November 2007 show that the Companyrecorded a profit at EBITDA level for the period. This has been achieved despite the lack of a major summer football tournamentduring the period and therefore a reduction in the number of sportsbook bettingopportunities available. Activity levels increased within our casinos andfixed-odds games, especially the live dealer casino, which remains the preferredchoice of our customers in the Far East. The sportsbook has increased itsproduct offering during the period. In June, we soft-launched betting on UKhorse racing. This product was subsequently rolled out over the summer monthsand now includes all Irish and major European races. We have also added theopportunity to include Asian Handicaps in multiple bets, which has been wellreceived by our customers. Our sportsbook prices are now actively marketedthrough bestbetting.com, one of the main odds-comparison websites. As documented in previous announcements and in common with other industryparticipants, the Company's pari-mutuel operation, European Wagering Services(EWS), experienced issues with our banking partner relating to theinterpretation of the United States' UIGEA legislation, which led to a limitedreduction in revenue at the start of the period. Whilst EWS' turnover thenincreased during the period, it generated a lower overall gross margin. I ampleased to report that this issue has now been fully resolved through ourrecruitment of alternative payment providers and EWS returned to previous levelsof gross margin six weeks prior to the period end. During the period, the Company completed an internal re-organisation and goingforward, the betinternet.com sportsbook portal and EWS will operate as separatesubsidiaries of Webis Holdings plc. Overview of Results During the period under review, group turnover increased to £53.0m (2006:£43.5m) and gross profit was £1.27m (2006: £1.42m). EWS turnover increased to £14.0m (2006: £11.8m) however its gross margin wastemporarily affected whilst reputable replacement payment providers weresourced. The revenue from our casino and fixed-odds games products continues to grow andaccounted for 60% of the sportsbook's total revenue in the period. Through our increased use of technology, where possible, we have achieved afurther reduction in overheads of 3.9% to £1.23m (2006: £1.28m). In relation to the Company's investment in Global Coresports, the board took theview that, in the absence of further funding, Global Coresports had insufficientfunds to continue to trade. Accordingly, our investment was fully written down,resulting in a charge of £314,000, which is included in the results for thisperiod. Following the period end, in December 2007, the Company announced that it hadsecured a further £425,000 of funding from its largest shareholder, BurnbraeLtd. These funds will be used for working capital, further website developmentand marketing for both EWS and the sportsbook. Outlook The board's plans for the sportsbook for the second half of the year includeupdating our payment and fraud protection systems, integrating a new affiliates'management system and significantly increasing our 'In-Running' offering, aswell as to increase the level of our sports betting content. These enhancementswill continue to follow the board's strategy of increasing the use of technologyto increase the efficiency and reduce the labour-intensive aspects of theoperation. We have planned an increase in our marketing to enhance the brand and itsoffering throughout the Far East and Europe. In particular, we are keen topromote our new horse racing product within the UK and Ireland. Having resolved the payment issues which temporarily affected EWS, we nowcontinue our original plans for the growth of this operation, which are firstlyto enhance the user experience of our pari-mutuel website and secondly toincrease the level of horse and greyhound racing content that customers canaccess. By focusing on these objectives, we expect that our operation willbecome an increasingly attractive proposition for both existing and potentialcustomers. The control of content remains a contentious issue within theindustry, with some racetrack groups also running their own off-trackoperations. However we will continue to pursue these objectives, capitalising onour reputation as an experienced, reputable and licensed operator. By following the strategies outlined above, the board is hopeful of a strongersecond half performance, with the potential to enhance revenue streams from boththe sportsbook portal and pari-mutuel operations. Both businesses continue toprovide good opportunities for sustainable growth and the board will continue toensure that each operation remains appropriately focused to take advantage ofthese opportunities. Denham EkeChairman Webis Holdings PlcConsolidated Income Statementfor the 26 weeks ending 25 November 2007 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 £000 £000 £000 Note (unaudited) (unaudited) (audited) Turnover 2 53,027 43,500 86,903Cost of sales (51,743) (42,084) (84,157)Betting duty paid (12) (1) (17) ---------- ---------- ---------- Gross profit 1,272 1,415 2,729Administration expenses (1,229) (1,283) (2,617)Other operating income - 50 50 --------- ---------- ---------- Earnings before interest, tax and depreciation 43 182 162 Depreciation (77) (89) (166)Share based costs 3 (10) (16) (29) ---------- ---------- ---------- Total operating (loss) / profit (44) 77 (33)Investment written off 4 (314) - -Net finance (cost) / income 5 (30) 16 7 ---------- ---------- ---------- (Loss) / profit on ordinary activities before andafter taxation and retained (loss) / profit for theperiod (388) 93 (26) ---------- ---------- ---------- Basic (loss) / profit per share (pence) 7 (0.20) 0.05 (0.01) Diluted (loss) / profit per share (pence) 7 (0.20) 0.05 (0.01) Webis Holdings PlcConsolidated Balance SheetAs at 25 November 2007 25 November 26 November 27 May 2007 2006 2007 Note £000 £000 £000 (unaudited) (unaudited) (audited) Non-current assetsIntangible assets - Goodwill 43 43 43Intangible assets - Software and Website development 190 147 172Property, plant and equipment 91 122 112Investments 4 - 271 313 ---------- ---------- ---------- 324 583 640 ---------- ---------- ----------Current assetsReceivables and prepayments 935 688 812Cash and cash equivalents 765 409 455 ---------- ---------- ---------- 1,700 1,097 1,267 Total assets 2,024 1,680 1,907 Current liabilitiesBank overdraft (506) (151) (224) Trade and other payables (1,487) (1,365) (1,274) ---------- ---------- ---------- (1,993) (1,516) (1,498) ---------- ---------- ----------Non-current liabilitiesConvertible loan notes 8 (300) - (300) Total liabilities (2,293) (1,516) (1,798) ---------- ---------- ---------- Net (liabilities) / assets (269) 164 109 ---------- ---------- ---------- EquityCalled up share capital 1,970 1,969 1,970Share premium 9,600 9,550 9,600Share option reserve 39 16 29Profit and loss account (11,878) (11,371) (11,490) ---------- ---------- ---------- Total equity (269) 164 109 ---------- ---------- ---------- The previously reported UK GAAP figures have been restated to take account ofany presentational changes required by IFRS adoption, where for instance itemsare required to be shown on the face of the primary statements than in the notesand where existing items are now split or shown on different lines. Webis Holdings PlcStatement of Changes in Shareholders' Equityfor the 26 weeks ending 25 November 2007 Ordinary Share Share Retained Total share option premium earnings equity capital reserve £000 £000 £000 £000 £000 Balance as at 29 May 2006 (audited) 1,969 - 9,550 (11,464) 55Issue of ordinary shares - - - - -Share based payments - share options - 16 - - 16Profit for the period - - - 93 93 ---------- ---------- ---------- ---------- ----------Balance as at 26 November 2006 (unaudited) 1,969 16 9,550 (11,371) 164 Issue of ordinary shares 1 - - - 1Share based payments - share options - 13 - - 13Lapsed share warrants - - 50 - 50Loss for the period - - - (119) (119) ---------- ---------- ---------- ---------- ----------Balance as at 27 May 2007 (audited) 1,970 29 9,600 (11,490) 109 Issue of ordinary shares - - - - -Share based payments - share options - 10 - - 10Profit for the period - - - (388) (388) ---------- ---------- ---------- ---------- ----------Balance as at 25 November 2007 (unaudited) 1,970 39 9,600 (11,878) (269) ---------- ---------- ---------- ---------- ---------- Webis Holdings PlcConsolidated Statement of Cash Flowsfor the 26 weeks ending 25 November 2007 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 £000 £000 £000 Note (unaudited) (unaudited) (audited) Net cash inflow / (outflow) from operating activities 133 38 (197) Cash flows from investing activitiesInterest received 4 16 25Acquisition of investment - - (42)Purchase of intangible assets (73) (94) (180)Purchase of property, plant & equipment (2) (40) (46) ---------- ---------- ----------Net cash outflow from investing activities (71) (118) (243) Cash flows from financing activitiesIssue of equity shares - - 1Cancelled share warrants - - 50Issue of convertible loan note - - 300Interest paid (34) - (18) ---------- ---------- ----------Net cash (outflow) / inflow from financing activities (34) - 333 Net increase / (decrease) in cash and cash equivalents 28 (80) (107)Cash and cash equivalents at beginning of period 231 338 338 ---------- ---------- ---------- Net cash and cash equivalents at end of period 259 258 231 ---------- ---------- ----------Cash and cash equivalents compriseCash and deposits 765 409 455Bank overdraft (506) (151) (224) ---------- ---------- ---------- 259 258 231 ---------- ---------- ----------Cash generated from operations(Loss) / profit from operation (44) 77 (33) Adjusted for:Depreciation 77 89 166Share based payment charge 10 16 29Increase in debtors (123) (139) (263)Increase / (decrease) in creditors 213 (5) (96) ---------- ---------- ---------- 133 38 (197) ---------- ---------- ---------- Webis Holdings PlcNotes to the accountsfor the 26 weeks ending 25 November 2007 1 Accounting policies Webis Holdings Plc (formerly betinternet.com plc) is a company domiciled in the Isle of Man. The Group's consolidated financial statements consolidate those of the Company and its subsidiaries (together referred to as "the Group"). Statement of compliance The consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". These are the Group's first IFRS consolidated interim financial statements for part of the period covered by the first IFRS annual statements and IFRS 1 "First-time Adoption of International Reporting Standards" has been applied. The Group will prepare its first full set of IFRS financial statements for the year ended 25 May 2008. The date of transition to IFRS for the Group was 29 May 2006. A summary of the accounting policies applied in the preparation of the new financial statements is given below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The impact of the transition from UK GAAP to IFRS is explained in note 9 to the interim statement. Basis of preparation The 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. The preparation of interim financial statements in conformity with IAS 34 "Interim Financial Reporting" requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These consolidated interim financial statements have been prepared on the basis of IFRSs in issue that are effective or available for early adoption at the Group's first IFRS annual report date, 25 May 2008. Based on these IFRSs, the Board of Directors have made assumptions about the accounting policies expected to be adopted (accounting policies) when the first IFRS annual financial statements are prepared for the year ended 25 May 2008. The preparation of the consolidated interim financial statements in accordance with IAS 34 resulted in changes to the accounting policies as compared with the most recent annual financial statements prepared under previous UK GAAP. The accounting policies set out below have been applied consistently to all periods presented in these consolidated interim financial statements. They have also been applied in preparing an opening IFRS balance sheet as at 29 May 2006 for the purposes of the transition to IFRSs, as required by IFRS 1. The impact of the transition from previous UK GAAP to IFRSs is explained in note 9. Going concern Equity finance of £425k was received on 18 January 2008 which will enable the Group to meets its liabilities as they fall due. The directors have prepared projected cash flow information for the next 12 months and are satisfied that the Group has adequate resources to meets its obligations as they fall due. The directors consider that it is appropriate that these interim financial statements are prepared on the going concern basis. Basis of consolidation (i) The consolidated financial statements incorporate the results of Webis Holdings Plc and its subsidiaries. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue until the date that such control ceases. (ii) Intragroup balances and income and expenses arising from intragroup transactions, are eliminated in preparing the condensed consolidated interim financial statements. Foreign currency The Group's financial statements are presented in Pounds Sterling, which is the Company's functional and presentational currency. All subsidiaries of the Group have Pounds Sterling as their functional currency. Foreign currency transactions are translated into the functional currency using the approximate exchange rate prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at the period end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Revenue recognition and turnover Turnover represents the amounts staked in respect of bets placed by customers on events which occurred during the period. Cost of sales represents payouts to customers, together with Betting Duty payable and commissions and royalties payable to agents. Segmental reporting Segmental reporting is based on the business areas in accordance with the Group's internal reporting structure. Financing costs Interest payable on borrowings is calculated using the effective interest rate method. Deferred income tax Deferred taxation is provided in full, using the liability method, on timing differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax is realised. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Intangible assets - Goodwill Goodwill represents the excess of fair value consideration over the fair value of the identifiable assets and liabilities acquired, arising on the acquisition of subsidiaries. Goodwill is included in non-current assets. Goodwill is reviewed annually for impairment and is carried at costs less accumulated impairment losses. Goodwill arising on acquisitions before the transition date of 29 May 2006 has been retained at the previous UK GAAP value and is no longer amortised but is tested annually for impairment. Intangible assets - Other Other intangible assets comprise website design and development costs and software licences and are stated at acquisition cost less accumulated amortisation. Carrying amounts are reviewed at each balance sheet date for impairment. Costs that are directly attributable to the development of websites are recognised as intangible assets provided that the intangible asset will generate probable economic benefits and income streams through external use in line with SIC 32 "Intangible assets-website costs". Content development and operating costs are expensed as incurred. Careful judgement by the directors is applied when deciding whether recognition requirements for development costs have been met and whether the assets will generate probable future economic benefit. Amortisation is calculated using the straight line method, at annual rates estimated to write off the assets over their expected useful lives as follows: Website design & development 33.33% Software licences 33.33% Property, plant and equipment Items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below) and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Assets are depreciated over their expected useful lives as follows: Equipment 33.33% Fixtures & fittings 33.33% Impairment of assets Goodwill arising on acquisitions and other assets that have an indefinite useful life and are not subject to amortisation are reviewed at least annually for impairment. Other intangible assets, property, plant and equipment are reviewed for impairment whenever there is an indication that the carrying amount of the asset may not be recoverable. If the recoverable amount of an asset is less than its carrying amount, an impairment loss is recognised. Recoverable amount is the higher of fair value less costs to sell and value in use. If at the Balance Sheet date there is any indication that an impairment loss is recognised in prior periods for an asset other than goodwill that no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Share based payments For all the employee share options granted after 7 November 2002 and vesting on or after 29 May 2006, an expense is recognised in the income statement with a corresponding credit to equity. The equity share based payment is measured at fair value at the date of the grant. Fair value is determined by reference to option pricing models, principally the Black-Scholes model. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Leasing Payments made under operating leases are charged to the income statement on a straight line basis over the period of the lease. Financial instruments Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual terms of the instrument: Trade receivables Trade receivables do not carry any interest and are stated at their nominal amounts as reduced to equal the estimated present value of the future cash flows. Cash and cash equivalents Cash and cash equivalents defined as cash in hand and on demand deposits with an original maturity of less than three months. Bank borrowings Interest bearing bank borrowings and overdrafts are recorded at the proceeds received net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs are charged on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent they are not settled in the period in which they arise. Trade payables Trade payables are non-interest bearing and are stated at nominal value. Convertible loans Convertible loan notes are interest bearing and are stated at fair value. Equity instruments Equity instruments issued by the Group are recorded at proceeds received, net of direct costs. 2 Segmental Analysis 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Turnover Sportsbook 39,027 31,688 62,153 Pari-mutuel 14,000 11,812 24,750 ---------- ---------- ---------- 53,027 43,500 86,903 ---------- ---------- ---------- (Loss) / profit before tax Sportsbook (578) (115) (483) Pari-mutuel 190 208 457 ---------- ---------- ---------- (388) 93 (26) ---------- ---------- ---------- Net (liabilities) / assets Sportsbook (650) 222 (82) Pari-mutuel 381 (58) 191 ---------- ---------- ---------- (269) 164 109 ---------- ---------- ---------- 3 Share based costs 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Share options 10 16 29 ---------- ---------- ---------- 10 16 29 ---------- ---------- ---------- 4 Investment written off In November 2007 the Group wrote off its investment in Global Coresports Limited, an Isle of Man based gaming software developer. In the absence of further funding the company was unable to continue trading. 5 Net finance (costs) / income 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Bank interest receivable 3 22 25 ---------- ---------- ---------- 3 22 25 ---------- ---------- ---------- Bank interest payable (9) (6) (18) Loan interest payable (24) - - ---------- ---------- ---------- (33) (6) (18) ---------- ---------- ---------- Net finance (costs) / income (30) 16 7 ---------- ---------- ---------- 6 Tax on loss on ordinary activities No provision for taxation is required for either the current or previous period, due to the 0% tax rate. Unprovided deferred tax was £Nil (2006: £Nil) due to the introduction of a zero per cent corporate tax regime in the Isle of Man. 7 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 options. 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 (Loss) / profit for the period (388) 93 (26) ---------- ---------- ---------- No. No. No. Weighted average number of ordinary shares in 196,977,779 196,944,179 196,958,908 issue Diluted number of ordinary shares 196,977,779 200,866,238 196,958,908 ---------- ---------- ---------- Basic (loss) / earnings per share (0.20) 0.05 (0.01) Diluted (loss) / earnings per share (0.20) 0.05 (0.01) ---------- ---------- ---------- 8 Convertible loan note 26 weeks to 26 weeks to 52 weeks to 25 November 26 November 27 May 2007 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Convertible loan note 300 - 300 ---------- ---------- ---------- The Group issued a £300,000 secured convertible loan note to Burnbrae Limited on 23 February 2007. The loan note is secured over all the assets and undertakings of the Group and bears interest at the rate of LIBOR plus 4%. The loan note is repayable on 23 February 2009. 9 Transition to IFRS As stated in note 1 these are the Group's first IFRS interim financial statements for part of the period covered by the first IFRS annual consolidated financial statements, prepared in accordance with IFRS. The accounting policies have been consistently applied to all the periods presented. IFRS 1 requires full retrospective applications of all applicable accounting standards, but exemptions are permitted in specific areas. The Group has elected to avail itself of the exemptions pertaining to Business Combinations and Share Based Payment. The analysis below shows a reconciliation of the Group's results and equity reported under UK GAAP to that reported under IFRS for the 26 weeks to 26 November 2006 and the 52 weeks ended 27 May 2007. The transition does not change any cash flows. Reconciliation of net income and equity for the 26 weeks ended 26 November 2006 Income Statement UK GAAP Transition IFRS Adjustment £000 £000 £000 Amortisation of goodwill 43 (43) - Profit for the period after taxation 50 43 93 Balance sheet items UK GAAP Transition IFRS Adjustment £000 £000 £000 Intangible fixed assets - Goodwill - 43 43 Retained earnings (11,414) 43 (11,371) Total equity 121 43 164 Reconciliation of net income and equity for the 52 weeks ended 27 May 2007 Income Statement UK GAAP Transition IFRS Adjustment £000 £000 £000 Amortisation of goodwill 43 (43) - Loss for the period after taxation (69) 43 (26) Balance sheet items UK GAAP Transition IFRS Adjustment £000 £000 £000 Intangible fixed assets - Goodwill - 43 43 Retained earnings (11,533) 43 (11,490) Total equity 66 43 109 There were no equity adjustments at 28 May 2006. 10 Preparation of the interim statements The interim statements are unaudited, but have been reviewed in accordance with International Standards on Review Engagements 2410, by our independent auditors, KPMG Audit LLC. The comparatives for the 52 weeks ended 27 May 2007 are not the Group's full statutory accounts for that financial period. Those accounts have been reported on by the Group's auditors and delivered to the Companies Registry. The report of the auditors was unqualified. 11 Approval of interim statements The interim statements were approved by the board on 15 February 2008. The interim report is expected to be posted to shareholders on 21 February 2008 and will be available from that date at the Group's Registered Office: Viking House, Nelson Street, Douglas, Isle of Man IM1 2AH. The Group's nominated advisor and broker is Evolution Securities, Kings House, 1 Kings Street, Leeds LS1 2HH End This information is provided by RNS The company news service from the London Stock Exchange