TIDM888
RNS Number : 0796Y
888 Holdings plc
27 August 2009
?
888 Holdings Public Limited Company
("888" or the "Company")
Half Yearly Report for the six months ended 30 June 2009
888, one of the world's most popular online gaming entertainment companies,
announces its half yearly report for the six months ended 30 June 2009.
Financial Summary|
+----------+----------+----------+----------+----------+----------+---------------------------+----------+
| US$ million | H1 2009 | | H1 2008 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Revenue | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| B2C | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Casino | 55.9 | | 69.8 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Poker | 26.2 | | 40.2 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Emerging | 11.4 | | 4.6 |
| Offerings | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| | 93.5 | | 114.6 |
+---------------------+---------------------+---------------------+--------------------------------------+
| | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| B2B | 24.3 | | 17.0 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Total Revenue | 117.9 | | 131.5 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Other Operating | - | | 3.8 |
| Income | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Total Operating | 117.9 | | 135.4 |
| Income | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Operating | 41.6 | | 38.5 |
| expenses1 | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Research and | 11.9 | | 14.0 |
| development | | | |
| expenses | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Selling and | 35.3 | | 43.5 |
| marketing expenses | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Administrative | 8.6 | | 11 |
| expenses2,3 | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| EBITDA 1,2,3 | 20.6 | | 28.3 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Finance Income | (1.7) | | 1.8 |
| exchange gains or | (3.9) | | (3.8) |
| losses and loss on | | | |
| sale of fixed | | | |
| assets | | | |
| Depreciation and | | | |
| Amortisation | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| | | | |
+---------------------+---------------------+---------------------+--------------------------------------+
| Profit Before Tax3 | 14.9 | | 26.3 |
+---------------------+---------------------+---------------------+--------------------------------------+
| Basic EPS3 (cents) | 2.3 | | 5.5 |
+----------+----------+----------+----------+----------+----------+---------------------------+----------+
| Totals may not sum due to rounding.
Financial Highlights
* Total Operating Income US$118m, 13% decline driven by foreign currency effect
and economic downturn
* Total Operating Income - B2C of US$94m, 21% decline
* Total Operating Income - B2B up 42% to US$24m
* Total Operating Income - B2C Emerging Offering up 151% to US$11m
* EBITDA1,2,3 of US$21m
* Cash as at 30 June at US$103m
* Interim dividend of 1c, plus a special dividend of 2.6c comprising a total
dividend of 3.6c
1Excluding depreciation of US$3.3 million (H1 2008: US$2.6 million) and
amortisation of US$0.6 million (H1 2008: US$1.3 million)
2 Excluding exchange loss of US$1.9 million (H1 2008: loss of US$0.1 million)
and capital gain/loss on sale of fixed assets of US$nil million (H1 2008: loss
of US$0.1 million)
3 Excluding share benefit charges of US$5.1 million (H1 2008: US$5.2 million)
Operational Highlights
* B2B division launched in its own right as "Dragonfish"
* Number of B2B deals signed including the UK's Racing Post, launched in record
time, also deals with:
- Phumelela Gold Enterprises in South Africa
- Loper Gate Ltd in the Balkans
- Probability Plc for global mobile lottery services
* New Bingo TV campaign launched in the UK
* Innovative televised poker tournament Poker Ashes tournament launched
* Two large scale poker leagues launched in the UK and Australia
* Live casino targeted at European customers launched
* Soft games/quick play games tab suite launched
* New Poker version launched incorporating 25 features and design changes
* Continued momentum with sports betting products, now offering a new in-play
betting application
Gigi Levy, Chief Executive Officer of 888, commented:
"The first six months of trading for 888 in 2009 have demonstrated the strength
of the combined business model that comprises a world class B2C operator and an
innovative and comprehensive B2B service provider. While consumer sentiment is
still weak and currencies remain volatile, we are trading solidly.
The B2C side to our business showed initial recovery in Q2, and we have reason
to believe that subject to no further significant economic deterioration, we
will see the typical seasonal patterns return, namely a broadly flat Q3 and
growth in Q4.
Our B2B business, Dragonfish, has grown revenues by 42% year-on-year, and we
have the structure in place to enable us to realise the division's full benefits
over the next 18 months and beyond.
We believe more than ever in our business model, and are given comfort in our
strategy that a number of competitors have begun to emulate this model offering
both B2B and B2C businesses. We believe it is key to growth in the online gaming
market in the coming years and that our first-mover advantage and innovative
approach have ensured we are well positioned to benefit and grow the business
further."
<ends>
Analyst and Investor Conference Call
Gigi Levy, Chief Executive Officer and Aviad Kobrine, Chief Financial Officer,
will be hosting an analyst and investor conference call at 9.30 am (BST) today.
Dial-in number: +44(0)20 7138 0823
Passcode: 9621496
Replay number: +44 (0)20 7111 1244 (available for 1 week)
Replay passcode: 7577874
Contacts and enquiries
+--------------------------------------------------+---------------------+
| 888 | |
+--------------------------------------------------+---------------------+
| Gigi Levy, Chief Executive Officer | +350 200 49800 |
+--------------------------------------------------+---------------------+
| Aviad Kobrine, Chief Financial Officer | +350 200 49800 |
+--------------------------------------------------+---------------------+
| | |
+--------------------------------------------------+---------------------+
| Bell Pottinger Corporate & Financial | |
+--------------------------------------------------+---------------------+
| Ann-marie Wilkinson/ Nick Lambert/ Andrew Benbow | +44 (0)20 7861 3232 |
| | |
+--------------------------------------------------+---------------------+
This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These statements contain the words "anticipate",
"believe", "intend", "estimate", "expect" and words of similar meaning. By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances. Forward-looking statements may and
often do differ materially from actual results. All statements, other than
statements of historical facts included in this announcement, including, without
limitation, those regarding 888's financial position, business strategy, plans
and objectives of management for future operations (including development plans
and objectives relating to 888's products and services) are forward-looking
statements that are based on current expectations. Such forward-looking
statements are based on numerous assumptions regarding 888's operating
performance, present and future business strategies, and the environment in
which 888 will operate in the future. Any forward-looking statements in this
announcement reflect 888's view with respect to future events as at the date of
this announcement. Save as required by law or by the Listing Rules of the UK
Listing Authority 888 expressly disclaims any obligation or undertaking, to
disseminate any updates or revisions to any forward-looking statements,
contained herein to reflect any change in its expectations, with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based. Past performance cannot be relied upon as a guide to future
performance.
Chief Executive Officer's Review
Introduction
The first six months of trading in 2009 have demonstrated the strength of 888's
combined business model that comprises both a world class B2C operator and an
innovative and comprehensive B2B service provider.
The first quarter of 2009 was a good example of the balance the two divisions of
our business are creating. B2C remained under pressure from the weak economic
environment and challenging exchange rates. By contrast, B2B continued to show
good growth with a number of new deals signed, including a strategic partnership
with the renowned Racing Post. Whilst the second quarter has seen good growth in
both divisions reflecting the ongoing investment and innovation in both B2C and
B2B, Total Operating Income was lower than expected at $118 million. This in
turn, coupled with flat overheads and broadly similar marketing to revenue cost
ratio impacted EBITDA*, 27% lower at $21 million.
Our financial position remains strong as ever and due to the continued cash
generative nature of the business, our cash position as at 30 June 2009 was
US$70 million net of customers' liabilities. We will therefore be paying an
interim dividend of 1.0 cent per share in accordance with our stated dividend
policy and an additional special dividend of 2.6 cents per share, comprising a
total dividend of 3.6 cents per share. We remain committed to further M&A
transactions as part of the ongoing industry consolidation and achieving our
strategic goals.
Delivering on our strategy
We have internally restructured our organisation to completely split the B2C and
B2B businesses with each division run as an independent business unit with its
own Managing Director. The separation of these divisions guarantees a clear and
consistent focus on each of the businesses and a credible proposition for our
current and future B2B clients.
B2C
The market has remained challenging but we have maintained our focus on
constantly innovating our B2C offering in all aspects: exciting visuals,
increased interactivity, more community focus and a new customer loyalty
programme.
Sensitive to our customers needs, we have introduced various 'recession
friendly' products and promotions which allow people to enjoy the same
'entertainment value' for less money, so while households' disposable incomes
are under pressure we have sought to remain the destination of choice for online
gamers, even if they spend less. We have also introduced new social networking
features which make the playing environment more customer friendly, such as chat
rooms and daily blogs. These efforts resulted in growth in our active casino and
poker customer figures in Q2, growing 7% in Q2 from the lowest point in Q1.
During H1 2009 a new Bingo TV campaign was launched in the UK to stimulate Bingo
growth. The innovative 'Poker Ashes' tournament was launched and televised both
in Australia and the UK featuring celebrities such as Shane Warne and Darren
Gough. Additionally, two large-scale poker leagues were launched in the UK and
Australia in hundreds of pubs. These and additional marketing activities have
fuelled the positive Q2 results.
* Excluding share benefit charges of $5.1 million (H1 2008: $5.2 million),
exchange loss of $1.9 million (H1 2008: $0.09 million).
Following the success of our Live Dealer offering in Asia Pacific, a Live casino
product targeted at European customers was launched during H1 2009. This product
includes the popular Roulette, Blackjack and Baccarat on a web based platform
which is fully integrated into 888's back office. A soft games/quick play games
tab suite was also launched, offering many casual games. A new Poker version was
launched incorporating 25 features and design changes. This poker version was
developed following extensive consultation with customers and business partners
including time bank, quick seat, hand history and money transfer between
accounts. We have also launched a new 'best of breed poker loyalty programme.
Sports betting, a relatively new product to the Group, continued growing and is
gaining momentum. With the recent introduction of a new in-play betting
application, we foresee further growth once the new football season begins. A
new Managing Director, Mrs Adi Soffer Teeni, was appointed to lead the B2C
division. The business unit is currently extremely focused on leveraging these
new products and marketing campaigns to deliver further growth.
B2B
Our fast-growing B2B business is now one of the leading providers in the
industry and a significant growth driver of our business. B2B now represents
more than 20% of our Total Operating Income for the first time ever and this
proves that our B2B strategy is a key to the future growth of the business.
In March, we reached an important milestone in the transformation of our B2B
business when we launched it under its own "Dragonfish" brand. This separate
brand recognises its separate function within 888 and differentiates
Dragonfish's B2B offering from our traditional B2C products. The new brand is
indicative of 888's intention to become a major player in the B2B market and
highlights the division's status as an independent entity.
'Total Gaming Services' is the strap line that underpins Dragonfish's unique
positioning and reflects the opportunity for clients to benefit not only from
888's decade of experience in technology, operations and E-payments but also to
utilise advanced marketing services, through the provision of offline/online
marketing, management of affiliates, SEO, CRM and business analytics.
New entrants to the online gaming market require a technology platform to work
with, expertise in setting up and maintaining their operations and, above all,
knowledge of how to leverage their assets to create a viable online gaming
business and to target new gaming consumers. 888's long experience through
operating its own successful B2C businesses makes it best positioned to partner
with these new entrants to mutual advantage - a unique proposition, not offered
by any other B2B provider in the market today.
Dragonfish has its own Managing Director, Mr Gabi Campos, who is responsible for
several departments focused entirely on B2B activities: Sales & Business
Development, Programmes & Integrations, Client Executive Unit, Client Marketing
& Operations, B2B Marketing and PR and B2B Finance.
A number of deals were signed during H1 2009 including the partnership to
provide the Racing Post with a comprehensive online gaming operation for casino
and poker services, including market-leading gaming and back-end software,
customer support and payments processing services.
Other deals during the period have opened up new territories for us: Phumelela
in South Africa where we are providing a comprehensive sportsbook offering;
poker and casino in the Balkans with Loper Gate; and with Probability to develop
and execute opportunities for mobile gaming and mobile Lottery services in a
number of territories including China, and South and Central America.
We also recently announced three new bingo partners, MoonBingo, BingoHollywood
and Costa Bingo, cementing our position as a global leader in the provision of
bingo services. These deals, coupled with a very healthy pipeline, including
some major industry players, mark an extremely successful H1 for our B2B
division, with 42% growth year on year.
Regulation and General Regulatory Developments
The regulatory framework of online gaming in different countries around the
world remains as dynamic and rapidly evolving as ever. While some jurisdictions
have moved to curtail the activities of online gaming sites, many others are
currently contemplating liberalisation and regulation of the industry and some
have already proceeded down this route. 888 remains committed to monitoring
closely and addressing regulatory changes as they occur and to fostering, so far
as possible, the trend towards liberalisation and regulation of online gaming
throughout the world.
EU
The European Commission is challenging the online gambling and betting
regulatory regimes of various European States, as the Commission holds that as
regards EU licensed companies such as 888, these regimes might infringe the
enshrined freedom to provide services, the freedom of establishment and the
concept of mutual recognition. This effort is reflected in, inter alia, the
infringement proceedings initiated against several EU States. Should these
Member States fail to supply adequate reasoning of their gambling legislation
and fail to rectify what is required from them by the EU Commission, the
Commission may refer the issue with each Member State to the European Court of
Justice. While these proceedings may, in the end, cause the EU Member States to
liberalize their gambling markets, it should be noted that it could be a very
long time before resolutions or judgments are reached (if at all). However, the
pressure exerted by the EU Commission has resulted in several EU Member States
contemplating and, in some cases advancing, a liberalised gaming sector: these
Member States include Spain, France, Sweden, Greece and Denmark. Other EU Member
States such as Ireland, Cyprus, Belgium, Estonia and the Czech Republic are also
considering (or are already in the process of) revising their gaming laws so as
to possibly regulate online gaming.
In France, a draft law is being reviewed by Parliament, which will authorize
issuing French online gambling licences, limited to the spheres of poker, sports
betting and horserace wagering. While the draft legislation is still being
structured, and several aspects of it are still being discussed with the EU
Commission, 888 is watching closely these developments so as to be in a position
which will allow it to apply for an online gambling licence in France. Another
draft law which will liberalize, inter alia, the online gambling market, is
being debated in the Belgian Parliament. However, the draft, as it is currently
structured, will allow issuance of online gambling licences only as an extension
of an existing terrestrial gambling licence; therefore, if approved in its
current form, pure online gambling operators may face difficulties in obtaining
online gambling licences in Belgium. In Denmark, the government announced that
it will introduce legislation which will regulate and license online gambling
activities in the spheres of casino, poker and sports betting. Finally in Italy,
where the
Company holds an online gambling license, current and future
legislation will expand the scope of the games allowed to be offered under the
license (e.g. casino games), and will also relax some of the requirements posed
to licensee (including, inter alia, the spheres of taxation and establishment in
Italy). It is envisioned that the judgment of European Court of Justice in the
Portugal-BWIN case (which is expected during September 2009) will further
clarify the interaction between EU laws and the Member States' gambling laws.
In addition to these infringement proceedings, the EU Commission is involved in
other instances in which the online gambling and betting regulatory regimes
appear to contravene rights and freedoms of online gambling and betting
operators (e.g. issuing detailed opinions against the enactment of prohibitive
legislation, and intervening in the WTO process described below).
US
In the USA, several bills have been introduced into the 111th Congress, which
focus on online gambling issues. One of these bills creates an online gambling
licensing regime that will allow for a Federal online gambling licence to be
issued (subject to various conditions, limitations and possible exclusions); the
bill has yet to be advanced in Congress. Another bill aims to delay the
implementation date of the UIGEA regulations to 1 December 2010. In parallel,
several US States (including California and Florida) are reviewing the
possibility to license some form of intra-state online gambling activities.
WTO
Following a complaint filed in 2007 by Remote Gaming Association, the European
Commission decided to open an investigation into whether the United States is in
breach of its WTO obligations in the sphere of gambling (in relation to the
period prior to the planned withdrawal of its commitment). In March 2009, the
investigation was concluded with a report issued by the EU Commission, which
stated that the US measures taken against EU based online gambling operators
breach the WTO commitments of the US. The EU commission stated that it will seek
to reach a settlement with the US in this respect; trade discussions between the
US and the EU have dealt with, inter alia, this issue but no decision has been
made as of yet.
Responsible Gaming
In line with our stated responsible gaming objective and continued investment in
promoting these values, we have also translated our market leading website
888responsible.com into three additional languages enabling French, German and
Spanish speakers to learn more about dealing with responsible gaming and
preventing under-age gambling. In the second half of the year we also plan to
launch the second phase of our successful Observer tool, which will enable us to
flag clients who might be at risk of becoming problem gamblers at an earlier
stage.
TRUSTe Web Privacy Seal
In March 2009, we were awarded the TRUSTe Privacy seal of approval for all our
websites. As a result of a rigorous audit we are the first online gaming company
to be awarded Web Privacy Seal, a clear indication of the importance we place on
being a highly trustworthy operator.
TRUSTe runs the world's largest privacy seal programme, with more than 2,000
organisations certified. It helps millions of consumers identify trustworthy
online organizations through its Web Privacy Seal, Email Privacy Seal and
Trusted Download Programmes. TRUSTe ensures online privacy and protects
confidential user information on more than 2,400 Websites and many of the most
highly trafficked, including Yahoo, AOL, Microsoft, Disney, eBay, Intuit, and
Facebook.
H2 2009 Focus
We will continue to invest in B2C to drive growth, building on the Q2
improvement over the low base position we experienced in Q1. H2 will see many
new products, new marketing campaigns and a new branding initiative which we
believe to be a material evolution for the business. We will also be
re-launching our second-brand Reef Club Casino, launching a new bingo brand
aimed at a different consumer segment and offering an innovative casino
opportunity to customers worldwide. In poker, we have seen our liquidity grow
and will focus on delivering further improvement in H2.
Our B2B business - under the new Dragonfish brand - will focus on its business
development strategy aimed at the three main sources of new B2B partners:
existing online gaming operators looking to strengthen their existing gaming
suite or service offering; media companies looking to monetise their brands; and
land-based casinos and Lottery companies seeking an experienced online gaming
partner, with a heritage of successful business delivery and strong responsible
gaming systems and capabilities, that can facilitate a smooth transition from
leadership in land-based gaming to a successful online gaming operation. The
second half of the year will see us focusing on securing additional major deals
as well as successfully delivering on all the recently signed partnerships.
Outlook
Whilst consumer sentiment is still weak and currencies remain volatile, we are
trading solidly. Our focus is on growth in both lines of our business and we
remain confident in that strategy. B2C showed initial recovery in Q2, and we
have reason to believe that ,subject to no further significant economic
deterioration, we will see the typical seasonal patterns return, namely a
broadly flat Q3 and growth in Q4.
We will continue to expand Dragonfish organically but will also seek to acquire
B2B technology enablers to accelerate the growth and expect to announce more
deals in the next six months. We are still to enjoy the full benefits from the
B2B business, as not all signed deals have yet to convert to revenue and the
business's set-up costs are still impacting its operating margin. We have made,
and continue to make, significant investment in infrastructure and technology
and more recently in implementation, all of which will serve to improve margins
in the coming years. The structure is now in place to enable us to realise the
benefits from Dragonfish over the next 18 months and beyond.
We believe more than ever in our business model and are given comfort in our
strategy as we see that a number of our competitors have begun to emulate this
model, offering both B2B and B2C businesses. We believe it is key to growth in
the online gaming market in the coming years and that our first-mover advantage
and innovative approach have ensured we are well positioned to benefit and
further grow our business.
Gigi Levy
Chief Executive Officer
27 August 2009
Condensed Consolidated Income Statement
For the period ended 30 June 2009
+-------------------------------------+------+-------------+-------------+-----------+
| | Note | Six | Six | Year |
| | | months | months | ended 31 |
| | | ended 30 | ended 30 | December |
| | | June | June | 2008 |
| | | 2009 | 2008 | US$'000 |
| | | US$'000 | US$'000 | (audited) |
| | | (unaudited) | (unaudited) | |
+-------------------------------------+------+-------------+-------------+-----------+
| Total revenue | 2 | 117,878 | 131,531 | 256,862 |
+-------------------------------------+------+-------------+-------------+-----------+
| Other operating income | 2 | - | 3,826 | 5,692 |
+-------------------------------------+------+-------------+-------------+-----------+
| Total operating income | | 117,878 | 135,357 | 262,554 |
+-------------------------------------+------+-------------+-------------+-----------+
| Operating expenses | | 45,531 | 42,312 | 84,637 |
+-------------------------------------+------+-------------+-------------+-----------+
| Research and development expenses | | 11,856 | 14,027 | 27,379 |
+-------------------------------------+------+-------------+-------------+-----------+
| Selling and marketing expenses | | 35,275 | 43,510 | 80,155 |
+-------------------------------------+------+-------------+-------------+-----------+
| Administrative expenses | | 15,611 | 16,368 | 33,069 |
+-------------------------------------+------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Operating profit before share | | 14,750 | 24,323 | 45,705 |
| benefit charges | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Share benefit charges | | 5,145 | 5,183 | 8,391 |
+-------------------------------------+------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Operating profit | | 9,605 | 19,140 | 37,314 |
+-------------------------------------+------+-------------+-------------+-----------+
| Finance income | | 153 | 1,977 | 2,928 |
+-------------------------------------+------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Profit before tax before share | | 14,903 | 26,300 | 48,633 |
| benefit charges | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Share benefit charges | | 5,145 | 5,183 | 8,391 |
+-------------------------------------+------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Profit before tax | | 9,758 | 21,117 | 40,242 |
+-------------------------------------+------+-------------+-------------+-----------+
| Taxation | | 1,697 | 2,243 | 3,057 |
+-------------------------------------+------+-------------+-------------+-----------+
| Profit after tax for the period | | 8,061 | 18,874 | 37,185 |
| attributable to equity holders of | | | | |
| parent | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+------+-------------+-------------+-----------+
| Earnings per share | | Six | Six | Year |
| | | months | months | ended 31 |
| | | ended 30 | ended 30 | December |
| | | June | June | 2008 |
| | | 2009 | 2008 | (audited) |
| | | (unaudited) | (unaudited) | |
+-------------------------------------+------+-------------+-------------+-----------+
| Basic | | 2.3c | 5.5c | 10.9c |
+-------------------------------------+------+-------------+-------------+-----------+
| Diluted | | 2.3c | 5.4c | 10.7c |
+-------------------------------------+------+-------------+-------------+-----------+
Condensed Consolidated Balance Sheet
At 30 June 2009
+-----------------------------------------+------+------+------+----------+------------+
| | 30 June | 30 June 2008 | 31 |
| | 2009 | US$'000 | December |
| | US$'000 | (unaudited) | 2008 |
| | (unaudited) | | US$'000 |
| | | | (audited) |
+-----------------------------------------+-------------+-----------------+------------+
| Assets | | | |
+------------------------------------------------+-------------+----------+------------+
| Non-current assets | | | |
+------------------------------------------------+-------------+----------+------------+
| Intangible assets | 46,529 | 42,211 | 44,812 |
+------------------------------------------------+-------------+----------+------------+
| Property, plant and equipment | 19,407 | 17,019 | 19,740 |
+------------------------------------------------+-------------+----------+------------+
| Financial assets | 490 | 344 | 223 |
+------------------------------------------------+-------------+----------+------------+
| Deferred taxes | 729 | 654 | 606 |
+------------------------------------------------+-------------+----------+------------+
| | 67,155 | 60,228 | 65,381 |
+------------------------------------------------+-------------+----------+------------+
| Current assets | | | |
+------------------------------------------------+-------------+----------+------------+
| Cash and cash equivalents | 102,906 | 87,931 | 98,444 |
+------------------------------------------------+-------------+----------+------------+
| Trade and other receivables | 18,337 | 22,840 | 18,673 |
+------------------------------------------------+-------------+----------+------------+
| | 121,243 | 110,771 | 117,117 |
+------------------------------------------------+-------------+----------+------------+
| Total assets | 188,398 | 170,999 | 182,498 |
+------------------------------------------------+-------------+----------+------------+
| Equity and liabilities | | | |
+------------------------------------------------+-------------+----------+------------+
| Equity attributable to equity holders of the | | | |
| parent | | | |
+------------------------------------------------+-------------+----------+------------+
| Share capital | 3,143 | 3,115 | 3,115 |
+------------------------------------------------+-------------+----------+------------+
| Share premium | 65 | 43 | 65 |
+------------------------------------------------+-------------+----------+------------+
| Available-for-sale reserve | (270) | (415) | (536) |
+------------------------------------------------+-------------+----------+------------+
| Retained earnings | 111,899 | 96,716 | 108,716 |
+------------------------------------------------+-------------+----------+------------+
| Total equity attributable to equity holders of | 114,837 | 99,459 | 111,360 |
| the parent | | | |
+------------------------------------------------+-------------+----------+------------+
| Liabilities | | | |
+------------------------------------------------+-------------+----------+------------+
| Current liabilities | | | |
+------------------------------------------------+-------------+----------+------------+
| Trade and other payables | 40,578 | 39,075 | 37,854 |
+------------------------------------------------+-------------+----------+------------+
| Customer deposits | 32,983 | 32,465 | 33,284 |
+------------------------------------------------+-------------+----------+------------+
| Total liabilities | 73,561 | 71,540 | 71,138 |
+------------------------------------------------+-------------+----------+------------+
| Total equity and liabilities | 188,398 | 170,999 | 182,498 |
+-----------------------------------------+------+------+------+----------+------------+
The financial statements below were approved and authorised for issue by the
Board of Directors on 27 August 2009.
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2009
+----------------------------------+---------+---------+--------------------+----------+----------+
| | Share | Share | Available-for-sale | Retained | Total |
| | capital | premium | reserve US$'000 | earnings | US$'000 |
| | US$'000 | US$'000 | | US$'000 | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Balance at 1 January 2008 | 3,097 | - | (105) | 89,735 | 92,727 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Dividend paid | - | - | - | (17,058) | (17,058) |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Issue of shares | 18 | - | - | (18) | - |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Exercise of market value options | - | 43 | - | - | 43 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Share benefit charges | - | - | - | 5,183 | 5,183 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Total comprehensive income for | - | - | (310) | 18,874 | 18,564 |
| the year | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Balance at 30 June 2008 | 3,115 | 43 | (415) | 96,716 | 99,459 |
| (unaudited) | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Dividend paid | - | - | - | (8,570) | (8,570) |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Exercise of market value options | - | 22 | - | - | 22 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Share benefit charges | - | - | - | 3,208 | 3,208 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Total comprehensive income for | - | - | (121) | 17,362 | 17,241 |
| the year | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Balance at 1 January 2009 | 3,115 | 65 | (536) | 108,716 | 111,360 |
| (audited) | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Dividend paid | - | - | - | (9,995) | (9,995) |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Share benefit charges | - | - | - | 5,145 | 5,145 |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Issue of shares | 28 | - | - | (28) | - |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Total comprehensive income for | - | - | 266 | 8,061 | 8,327 |
| the year | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
| Balance at 30 June 2009 | 3,143 | 65 | (270) | 111,899 | 114,837 |
| (unaudited) | | | | | |
+----------------------------------+---------+---------+--------------------+----------+----------+
The following describes the nature and purpose of each reserve within equity.
Share capital - represents the nominal value of shares allotted, called-up and
fully paid for.
Share premium - represents the amount subscribed for share capital in excess of
nominal value.
Available-for-sale reserve - represents the gain or loss arising from a change
in the fair value of an available-for-sale financial assets.
Retained earnings - represents the cumulative net gains and losses recognised in
the consolidated income statement.
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2009
+-------------------------------------------+-------------+-------------+-----------+
| | 30 June | 30 June | 31 |
| | 2009 | 2008 | December |
| | US$'000 | US$'000 | 2008 |
| | (unaudited) | (unaudited) | US$'000 |
| | | | (audited) |
+-------------------------------------------+-------------+-------------+-----------+
| Profit for the period | 8,061 | 18,874 | 37,185 |
+-------------------------------------------+-------------+-------------+-----------+
| Valuation gain (losses) of | 266 | (310) | (431) |
| available-for-sale investments | | | |
+-------------------------------------------+-------------+-------------+-----------+
| Actuarial losses on defined benefit | - | - | (949) |
| pension plan | | | |
+-------------------------------------------+-------------+-------------+-----------+
| Total comprehensive income for the period | 8,327 | 18,564 | 35,805 |
+-------------------------------------------+-------------+-------------+-----------+
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2009
+--------------------------------------------+-------------+-------------+------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2009 | 2008 | 2008 |
| | (unaudited) | (unaudited) | (audited) |
| | US$'000 | US$'000 | US$'000 |
+--------------------------------------------+-------------+-------------+------------+
| Cash flows from operating activities | | | |
+--------------------------------------------+-------------+-------------+------------+
| Profit before income tax | 9,758 | 21,117 | 40,242 |
+--------------------------------------------+-------------+-------------+------------+
| Adjustments for | | | |
+--------------------------------------------+-------------+-------------+------------+
| Depreciation | 3,344 | 2,556 | 5,504 |
+--------------------------------------------+-------------+-------------+------------+
| Loss on sale of property, plant and | - | 74 | 75 |
| equipment | | | |
+--------------------------------------------+-------------+-------------+------------+
| Amortisation | 600 | 1,252 | 1,826 |
+--------------------------------------------+-------------+-------------+------------+
| Interest received | (352) | (2,205) | (3,255) |
+--------------------------------------------+-------------+-------------+------------+
| Share benefit charges | 5,145 | 5,183 | 8,391 |
+--------------------------------------------+-------------+-------------+------------+
| | 18,495 | 27,977 | 52,783 |
+--------------------------------------------+-------------+-------------+------------+
| Decrease/(increase) in trade receivables | (1,451) | 2,278 | 4,404 |
+--------------------------------------------+-------------+-------------+------------+
| Decrease/(increase) in other accounts | 1,681 | (5,588) | (3,441) |
| receivables | | | |
+--------------------------------------------+-------------+-------------+------------+
| Increase in trade payables | 471 | 1,733 | 810 |
+--------------------------------------------+-------------+-------------+------------+
| (Decrease)/increase in member deposits | (301) | 6,051 | 6,870 |
+--------------------------------------------+-------------+-------------+------------+
| (Decrease)/increase in other accounts | 1,949 | (844) | (669) |
| payables | | | |
+--------------------------------------------+-------------+-------------+------------+
| Cash generated from operations | 20,844 | 31,607 | 60,757 |
+--------------------------------------------+-------------+-------------+------------+
| Income tax paid | (1,413) | (2,069) | (4,363) |
+--------------------------------------------+-------------+-------------+------------+
| Net cash generated from operating | 19,431 | 29,538 | 56,394 |
| activities | | | |
+--------------------------------------------+-------------+-------------+------------+
| Cash flows from investing activities | | | |
+--------------------------------------------+-------------+-------------+------------+
| Acquisition of assets comprising | - | (25,145) | (25,311) |
| the online bingo business of | | | |
| Globalcom Limited | | | |
+--------------------------------------------+-------------+-------------+------------+
| Purchase of property, plant and | (3,010) | (3,182) | (8,852) |
| equipment | | | |
+--------------------------------------------+-------------+-------------+------------+
| Proceeds from sale of property, plant | - | 29 | 29 |
| and equipment | | | |
+--------------------------------------------+-------------+-------------+------------+
| Interest received | 352 | 2,205 | 3,255 |
+--------------------------------------------+-------------+-------------+------------+
| Acquisition of intangible assets | - | - | (513) |
+--------------------------------------------+-------------+-------------+------------+
| Internally generated intangible assets | (2,316) | (2,807) | (5,303) |
+--------------------------------------------+-------------+-------------+------------+
| Net cash used in investing activities | (4,974) | (28,900) | (36,695) |
+--------------------------------------------+-------------+-------------+------------+
| Cash flows from financing activities | | | |
+--------------------------------------------+-------------+-------------+------------+
| Exercise of share options | - | 43 | 65 |
+--------------------------------------------+-------------+-------------+------------+
| Dividends paid | (9,995) | (17,058) | (25,628) |
+--------------------------------------------+-------------+-------------+------------+
| Net cash used in financing activities | (9,995) | (17,015) | (25,563) |
+--------------------------------------------+-------------+-------------+------------+
| Net increase/(decrease) in cash and cash | 4,462 | (16,377) | (5,864) |
| equivalents | | | |
+--------------------------------------------+-------------+-------------+------------+
| Cash and cash equivalents at the beginning | 98,444 | 104,308 | 104,308 |
| of the period | | | |
+--------------------------------------------+-------------+-------------+------------+
| Cash and cash equivalents at the end of | 102,906 | 87,931 | 98,444 |
| the period | | | |
+--------------------------------------------+-------------+-------------+------------+
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The condensed consolidated half-yearly financial information of the Group has
been prepared in accordance with International Financial Reporting Standards,
including International Accounting Standards ('IAS') and Interpretations
(collectively 'IFRS'), adopted by the International Accounting Standards Board
('IASB') and endorsed for use by companies listed on an EU regulated market. The
half-yearly report has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority.
These results have been prepared on the basis of accounting policies expected to
be adopted in the Group's full financial statements for the year ending 31
December 2009 which, except as disclosed below are not expected to be
significantly different to those set out in note 2 to the Group's audited
financial statements for the year ended 31 December 2008.
During the period the Group has adopted IAS 1 (amended) 'Presentation of
Financial Statements' and IFRS 8 'Operating Segments'. The effect of adopting
these standards is presentational and has no impact on the reported profit or
net assets of any period. The adoption of IAS 1 means that a statement of
comprehensive income has been included for the first time in this half-yearly
report. The adoption of IFRS 8 means the Group provides segmental information
using the same categories of information the Group's chief operating decision
maker utilizes.
The Group organizes the business segments by the following two distinct lines of
business:
* B2C (Business to Consumer) which focuses its activities on the individual end
customer through a wide range of product offering; and
* B2B (Business to Business) which offers Total Gaming Services under the
Dragonfish trading brand. Dragonfish offers to its business partners use of
technology, software, operations, E-payments and advanced marketing services,
through the provision of offline/online marketing, management of affiliates,
SEO, CRM and business analytics.
The Group complies with IAS 34 in the presentation of the half-yearly financial
statements.
The financial information is presented in thousands of US dollars (US$'000)
because that is the currency the Group primarily operates in.
The comparatives for the year ended 31 December 2008 are not the Group's full
statutory accounts for that year. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies in Gibraltar and is also
available from the Company's website. The auditors' report on those accounts was
unqualified but it referred to a matter concerning the regulatory position of
the Group to which the auditors drew attention by way of emphasis without
qualifying their report. The details concerning this matter are given in note 5.
The condensed consolidated set of financial statements included in this
half-yearly financial report is unaudited and does not constitute statutory
accounts.
The risks and uncertainties faced by the Group have not changed significantly
since the 2008 Annual Report was published and still continue to represent risk
during the remaining six months of the financial year.
2. Segment information
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+----------+
| | | Period ended | |
| | | 30 June | |
| | | 2009 | |
+--------------------+-------------+----------------------------------------------------------+--------------+
| | | B2C | | | B2B | Consolidated | |
+--------------------+-------------+---------------------------+-------------+--+-------------+--------------+----------+
| | Casino | Poker | Emerging | Total | | US$'000 | US$'000 |
| | US$'000 | US$'000 | Offerings | B2C | | (unaudited) | (unaudited) |
| | (unaudited) | (unaudited) | US$'000 | US$'000 | | | |
| | | | (unaudited) | (unaudited) | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Revenues | 55,880 | 26,246 | 11,432 | 93,558 | | 24,320 | 117,878 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Other operating | - | - | - | - | | - | - |
| income | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Total operating | 55,880 | 26,246 | 11,432 | 93,558 | | 24,320 | 117,878 |
| income | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Result | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Segment result | | | | 55,432 | | 14,406 | 69,838 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated | | | | | | | 60,233 |
| corporate | | | | | | | |
| expenses1 | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Operating profit | | | | | | | 9,605 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Finance income | | | | | | | 153 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Tax expense | | | | | | | (1,697) |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Profit for the | | | | | | | 8,061 |
| period | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Assets | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated | | | | | | | 188,398 |
| corporate assets | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Total assets | | | | | | | 188,398 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Liabilities | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Segment | | | | | | | 7,203 |
| liabilities - B2B | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Segment | | | | | | | 25,780 |
| liabilities - B2C | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated | | | | | | | 40,578 |
| corporate | | | | | | | |
| liabilities | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Total liabilities | | | | | | | 73,561 |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+----------+
1 Including share benefit charges of US$5,145,000.
Other than where amounts are allocated specifically to the Casino, Poker and
Emerging Offerings segments above, the expenses, assets and liabilities relate
jointly to all segments. Any allocation of these items would be arbitrary.
2. Segment information-continued
+--------------------+----+--------+-------------+-------------+-------------+--+-------------+--------------+
| | | Period ended | |
| | | 30 June | |
| | | 2008 | |
+-------------------------+--------+----------------------------------------------------------+--------------+
| | | B2C | | | B2B |Consolidated |
+-------------------------+--------+---------------------------+-------------+--+-------------+--------------+
| | Casino | Poker | Emerging | Total | | US$'000 | US$'000 |
| | US$'000 | US$'000 | Offerings | B2C | | (unaudited) | (unaudited) |
| | (unaudited) | (unaudited) | US$'000 | US$'000 | | | |
| | | | (unaudited) | (unaudited) | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+--------------+
| Revenues | 69,750 | 40,222 | 4,553 | 114,525 | | 17,006 | 131,531 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Other operating | 2,408 | 1,342 | - | 3,750 | | 76 | 3,826 |
| income | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Total operating | 72,158 | 41,564 | 4,553 | 118,275 | | 17,082 | 135,357 |
| income | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Result | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Segment result | | | | 70,713 | | 9,679 | 80,392 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated corporate | | | | | | | 61,252 |
| expenses1 | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Operating profit | | | | | | | 19,140 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Finance income | | | | | | | 1,977 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Tax expense | | | | | | | (2,243) |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Profit for the period | | | | | | | 18,874 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Assets | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated corporate | | | | | | | 170,999 |
| assets | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Total assets | | | | | | | 170,999 |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Liabilities | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Segment liabilities - | | | | | | | 1,980 |
| B2B | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Segment liabilities - | | | | | | | 30,485 |
| B2C | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Unallocated corporate | | | | | | | 39,075 |
| liabilities | | | | | | | |
+-------------------------+--------+-------------+-------------+-------------+--+-------------+--------------+
| Total liabilities | | | | | | | 71,540 |
+--------------------+----+--------+-------------+-------------+-------------+--+-------------+--------------+
1 Including share benefit charges of US$5,183,000.
2. Segment information-continued
+--------------------+-------------+-------------+-------------+-------------+--+---------+---+-------------+
| | | Period ended | |
| | | 31 December | |
| | | 2008 | |
+--------------------+-------------+------------------------------------------------------+-----------------+
| | | B2C | | | B2B | Consolidated |
+--------------------+-------------+---------------------------+-------------+--+---------+-----------------+
| | Casino | Poker | Emerging | Total | | US$'000 | US$'000 |
| | US$'000 | US$'000 | Offerings | B2C | | (unaudited) | (unaudited) |
| | (unaudited) | (unaudited) | US$'000 | US$'000 | | | |
| | | | (unaudited) | (unaudited) | | | |
+--------------------+-------------+-------------+-------------+-------------+--+-------------+-------------+
| Revenues | 133,083 | 71,565 | 13,790 | 218,438 | | 38,424 | 256,862 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Other operating | 3,571 | 1,955 | - | 5,526 | | 166 | 5,692 |
| income | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Total operating | 136,654 | 73,520 | 13,790 | 223,964 | | 38,590 | 262,554 |
| income | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Result | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Segment result | | | | 137,480 | | 21,844 | 159,324 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Unallocated | | | | | | | 122,010 |
| corporate | | | | | | | |
| expenses1 | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Operating profit | | | | | | | 37,314 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Finance income | | | | | | | 2,928 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Tax expense | | | | | | | (3,057) |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Profit for the | | | | | | | 37,185 |
| period | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Assets | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Unallocated | | | | | | | 182,498 |
| corporate assets | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Total assets | | | | | | | 182,498 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Liabilities | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Segment | | | | | | | 5,710 |
| liabilities - B2B | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Segment | | | | | | | 27,574 |
| liabilities - B2C | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Unallocated | | | | | | | 37,854 |
| corporate | | | | | | | |
| liabilities | | | | | | | |
+--------------------+-------------+-------------+-------------+-------------+--+---------+-----------------+
| Total liabilities | | | | | | | 71,138 |
+--------------------+-------------+-------------+-------------+-------------+--+---------+---+-------------+
1 Including share benefit charges of US$8,391,000.
Notes to the Condensed Consolidated Financial Statements
2. Segment information-continued
The Group's performance can also be reviewed by considering the geographical
markets and geographical locations within which the Group operates. This
information is outlined below:
Total operating income by geographical market 1
+----------------------------------------------+-------------+-------------+------------+
| | Total | Total | Total |
| | operating | operating | operating |
| | income | income | income |
| | Period | Period | Year ended |
| | ended | ended | |
| | 30 June | 30 June | 31 |
| | 2009 | 2008 | December |
| | US$'000 | US$'000 | 2008 |
| | (unaudited) | (unaudited) | US$'000 |
| | | | (audited) |
+----------------------------------------------+-------------+-------------+------------+
| UK | 42,676 | 49,427 | 97,127 |
+----------------------------------------------+-------------+-------------+------------+
| Europe | 53,429 | 63,766 | 121,943 |
+----------------------------------------------+-------------+-------------+------------+
| Americas (excluding USA) | 10,652 | 13,981 | 26,220 |
+----------------------------------------------+-------------+-------------+------------+
| Rest of World | 11,121 | 8,183 | 17,264 |
+----------------------------------------------+-------------+-------------+------------+
| Total operating income | 117,878 | 135,357 | 262,554 |
+----------------------------------------------+-------------+-------------+------------+
1 Allocation of geographical segments is based on Net Revenue Commission
received by the Group.
3. Operating profit
+----------------------------------------------+-------------+-------------+------------+
| | Period | Period | Year ended |
| | ended | ended | |
| | 30 June | 30 June | 31 |
| | 2009 | 2008 | December |
| | US$'000 | US$'000 | 2008 |
| | (unaudited) | (unaudited) | US$'000 |
| | | | (audited) |
+----------------------------------------------+-------------+-------------+------------+
| Operating profit is stated after charging: | | | |
+----------------------------------------------+-------------+-------------+------------+
| Staff costs | 36,008 | 38,366 | 74,695 |
+----------------------------------------------+-------------+-------------+------------+
| Audit fees | 116 | 247 | 381 |
+----------------------------------------------+-------------+-------------+------------+
| Other fees paid to auditors in respect of | 4 | 8 | 29 |
| taxation services | | | |
+----------------------------------------------+-------------+-------------+------------+
| Depreciation (within operating expenses) | 3,344 | 2,556 | 5,504 |
+----------------------------------------------+-------------+-------------+------------+
| Amortisation (within operating expenses) | 600 | 1,252 | 1,826 |
+----------------------------------------------+-------------+-------------+------------+
| Chargebacks and returned e-cheques | 3,087 | 2,251 | 4,816 |
+----------------------------------------------+-------------+-------------+------------+
| Exchange loss | 1,891 | 86 | 2,630 |
+----------------------------------------------+-------------+-------------+------------+
| Capital loss on sale of fixed assets | - | 74 | - |
+----------------------------------------------+-------------+-------------+------------+
| Payment service providers' commissions | 6,942 | 8,098 | 15,256 |
+----------------------------------------------+-------------+-------------+------------+
| Share benefit charges - all equity-settled | 5,145 | 5,183 | 8,391 |
+----------------------------------------------+-------------+-------------+------------+
4. Earnings per share
Basic earnings per share from continuing operations
Basic earnings per share have been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of shares
in issue during the period.
Diluted earnings per share
In accordance with IAS 33, 'Earnings per share', the weighted average number of
shares for diluted earnings per share takes into account all potentially
dilutive shares and share options granted, which are not included in the number
of shares for basic earnings per share. In addition, certain employee options
have also been excluded from the calculation of diluted EPS as their exercise
price is greater than the weighted averaged share price during the period and it
would not be advantageous for the holders to exercise the option. The number of
options excluded from the diluted EPS calculation is 5,063,067 (2008: Half year
- 4,270,906, Full year - 3,117,110).
+-----------------------------------------------------+-------------+-------------+-------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2009 | 2008 | 2008 |
| | US$'000 | US$'000 | US$'000 |
| | (unaudited) | (unaudited) | (audited) |
+-----------------------------------------------------+-------------+-------------+-------------+
| Profit from continuing operations attributable to | 8,061 | 18,874 | 37,185 |
| ordinary shareholders | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
| Weighted average number of Ordinary Shares in issue | 344,278,416 | 340,627,981 | 341,515,007 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Weighted average number of dilutive Ordinary Shares | 349,346,188 | 347,363,994 | 347,322,042 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Total | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
| Basic | 2.3c | 5.5c | 10.9c |
+-----------------------------------------------------+-------------+-------------+-------------+
| Diluted | 2.3c | 5.4c | 10.7c |
+-----------------------------------------------------+-------------+-------------+-------------+
Earnings per share excluding share benefit charges
Reconciliation of profit to profit excluding share benefit charges:
+-----------------------------------------------------+-------------+-------------+-------------+
| | Six | Six | Year |
| | months | months | ended |
| | ended | ended | 31 |
| | 30 June | 30 June | December |
| | 2009 | 2008 | 2008 |
| | US$'000 | US$'000 | US$'000 |
| | (unaudited) | (unaudited) | (audited) |
+-----------------------------------------------------+-------------+-------------+-------------+
| Profit from continuing operations attributable to | 8,061 | 18,874 | 37,185 |
| ordinary shareholders | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
| Share benefit charges | 5,145 | 5,183 | 8,391 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Profit excluding share benefit charges | 13,206 | 24,057 | 45,576 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Weighted average number of Ordinary Shares in issue | 344,278,416 | 340,627,981 | 341,515,007 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Weighted average number of dilutive Ordinary Shares | 349,346,188 | 347,363,994 | 347,322,042 |
+-----------------------------------------------------+-------------+-------------+-------------+
| Total | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
| Basic earnings per share excluding share benefit | 3.8c | 7.1c | 13.4c |
| charges | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
| Diluted earnings per share excluding share benefit | 3.8c | 6.9c | 13.1c |
| charges | | | |
+-----------------------------------------------------+-------------+-------------+-------------+
5. Contingent liabilities
From time to time the Group is subject to legal claims and actions against it.
The Group takes legal advice as to the likelihood of success of such claims and
actions.
Regulatory issues
As part of the Board's ongoing regulatory compliance and operational risk
assessment process, the Board continues to monitor legal and regulatory
developments, and their potential impact on the business, and continues to take
appropriate advice in respect of these developments.
Following the enactment of the UIGEA on 13 October 2006, the Group stopped
taking any deposits from customers in the US and barred such customers from
wagering real money on all of the Group's sites.
Notwithstanding this, there remains a residual risk of an adverse impact arising
from the Group having had customers in the US prior to the enactment of the
UIGEA. The Board is not able to identify reliably at this stage what if any
liability may arise and accordingly no provision has been made.
On 5 June 2007 the Group announced that it had initiated preliminary discussions
with the United States Attorney's Office for the Southern District of New York.
It is too early to assess any particular outcome of these discussions.
6. Related party transactions
During the period the Group paid US$123,939 (2008: Half year - US$155,000, Full
year - US$296,176) in respect of rent and office expenses to companies of which
Mr John Anderson is a Director. At 30 June 2009 the amount owed to those
companies was US$Nil (2008: Half year - US$27,000, Full year - US$Nil).
Remuneration paid to the Directors during the period totalled US$1,036,000
(2008: Half year - US$1,355,000, Full year - US$3,079,000). These figures
exclude provision for performance based bonuses which depend on full year
results.
Share benefit charge in respect of awards granted to the Directors totalled
US$1,640,366 (2008: Half year - US$1,247,000, Full year - US$1,699,587).
7. Dividends
+----------------------------------------------+-------------+-------------+------------+
| | Period | Period | Year ended |
| | ended | ended | |
| | 30 June | 30 June | 31 |
| | 2009 | 2008 | December |
| | US$'000 | US$'000 | 2008 |
| | (unaudited) | (unaudited) | US$'000 |
| | | | (audited) |
+----------------------------------------------+-------------+-------------+------------+
| Dividends paid | 9,995 | 17,058 | 25,626 |
+----------------------------------------------+-------------+-------------+------------+
The Board of Directors has declared a half-yearly dividend of 3.6 cents per
share payable on 8 October 2009.
Statement of Directors' Responsibilities
The Directors confirm, to the best of their knowledge, that this condensed set
of unaudited financial statements has been prepared in accordance with IAS 34 as
adopted by the European Union, and that the half-yearly management report
includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.
The Directors of 888 Holdings plc are listed in the Group's annual report and
accounts for the year ended 31 December 2008 on page 34.
Independent Review Report to 888 Holdings Public Limited Company
Introduction
We have been instructed by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009 which comprises the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Balance Sheet, the
Consolidated Statement of Changes in Equity, the Consolidated Cash Flow
Statement, and related explanatory notes 1 to 7.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been approved
by the Directors.
The Directors are responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Half-Yearly Financial reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements in respect to half-yearly
financial reporting in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority and for no other purpose. No
person is entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose of our terms
of engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Half-Yearly Financial Information
Preformed by the Independent Auditor of he Entity', issued by the Auditing
Practices Board for use in the United Kingdom. A review of half-early financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
aspects, in accordance with International Accounting Standard 34, as adopted by
the European Union, and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
Emphasis of matter - Regulatory issues
In forming our review conclusion, which is not qualified, we have considered the
adequacy of, and drawn attention to, the disclosures made in note 5 to the
condensed set of financial statements concerning the residual risk of adverse
action arising from the Group having had customers in the US prior to the
enactment of the Unlawful Internet Gambling Enforcement Act. Note 5 includes a
statement that the Group has not been able to quantify any potential impact of
the regulatory uncertainty on the financial information for the period ended 30
June 2009.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
United Kingdom
27 August 2009
This information is provided by RNS
The company news service from the London Stock Exchange
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