RNS Number:8263T
Betbrokers PLC
07 May 2008
Press Release 7 May 2008
Betbrokers plc
("Betbrokers", "the Group" or "the Company")
Announcement of Audited Results
For the period ended 31 December 2007
Betbrokers plc (AIM: BETB), the UK's first retail and wholesale brokerage and
clearing house for the sports betting industry, today announces its audited
financial results for the period 10 July 2006 to 31 December 2007.
These are the maiden audited results for Betbrokers plc since listing on AIM,
the previous audited results were for the Group's principal trading entity,
Betbrokers Limited. Therefore Betbrokers is required to report for the period
10 July 2006 to 31 December 2007. In the commentary below comparative figures
for 2006 are those for Betbrokers Limited.
Highlights
* Revenue for the period 10 July 2006 to 31 December 2007 was #3.1 million
and for the 12 months to 31 December 2007 was #2.8m (2006: #0.8 million)
* Gross profit for the period 10 July 2006 to 31 December 2007 was
#1.4 million and for the 12 months to 31 December 2007 was #1.2m
(2006: #0.6 million)
* EBITDA for the 12 months to 31 December 2007 Loss #2.5 million
(2006: Loss # 2.4 million)
* Retail clients increased by 159% to 1,345 (2006: 519)
* Wholesale clients up 205% to 317 (2006: 104)
* Web site hits over 1 million for the first time, an increase of 138% from 2006
Operational highlights
* Successful Launch of Sport Risk Management service
* Acquired Winning Edge USA in September 2007 which provides analytical and
predictive data as well as a handicapping and tipping service
* Acquired the exclusive rights to distribute 'The Gold Sheet', an American
handicapping information service, in all territories outside of North America
* Successful defence of Winning Edge's patent and copyright in the US
Commenting on the results, Wayne Lochner, Chief Executive and Chairman of
Betbrokers, said: "I am pleased with the progress the Group has made during the
period. We have further strengthened our position in our core voice brokerage
service, and expanded into a number of other exciting areas including the
creation of the Sport Risk Management platform and the acquisition of Winning
Edge. We look forward to continuing our innovation, and to expanding the
services that we can offer our clients."
The financial information reported in this announcement is not the Group's full
statutory financial statements. The Group's full statutory financial statements
will be published and sent to shareholders before the end of May 2008.
Electronic copies will also be available on the Company's website:
www.betbrokers.com.
- Ends -
For further information, please contact:
Betbrokers plc
Wayne Lochner, Chairman and Chief Executive Tel: +44 (0) 20 7127 9815
wlochner@betbrokers.com www.betbrokers.com
Daniel Stewart & Company plc
Simon Leathers / Katie Shelton Tel: +44(0) 20 7776 6550
Media enquiries:
Abchurch
Chris Lane / Nick Probert Tel: +44 (0) 20 7398 7715
nick.probert@abchurch-group.com www.abchurch-group.com
Chief Executive and Chairman's Statement
The 2007 period has been a busy and productive time for Betbrokers. In
September the Group widened our International reach with the acquisition of
Winning Edge USA which materially contributes to the Group's revenues.
Betbrokers also set up a new subsidiary, Sport Risk Management (hedging
financial risk) adding to the number of services already offered by the Group.
In addition to broadening the Group, we have concentrated on future proofing the
business and as a result have been through an in-depth cost cutting exercise
which the Board is pleased to report has substantially reduced the cost base.
Operational review
In 2007, Betbrokers saw it voice brokerage business grow.
FY 2007 FY 2006 % change
Average deal size #1,106 #952 16%
Number of client transactions 52,353 29,969 75%
Traded volumes #53.6 million #28.5 million 88%
Retail clients 1,345 519 159%
Wholesale clients 317 104 205%
In September 2007, Betbrokers bought Winning Edge USA. In financial market
terminology Winning Edge provides historical, analytical and predictive data
much like an equity advisory service would. In sports betting terminology it
provides a handicapping and tipping service. Whilst online gambling is
prohibited in the USA, betting on horseracing is legal and the provision of a
handicapping and tipping service on all sports is also legal. Not only does
this provide Betbrokers with an excellent value added service that it offers its
customers in and outside the USA on American sport, it also offers a very
important ''hedge'' of its own for when the USA changes its legislation and
legalises sports betting. Since the acquisition on 26 September 2007, Winning
Edge contributed turnover of US$ 2.3 million (UK#1.2 million) and operating
profits of US$21,000 (UK#14,165).
Betbrokers also acquired the exclusive rights to distribute 'The Gold Sheet' in
September 2007, an American handicapping information service, in all territories
outside of North America. The Gold Sheet has been established for over 50 years
and draws on a wide range of established connections, experts, and handicappers
on US sports. Available to both Betbrokers' wholesale and retail clients, the
Gold Sheet is accessible every Tuesday through the Group's website
www.betbrokers.com or by email at a charge of #5 per week, giving customers
access to this highly regarded information service across US sports such as NFL,
NBA and NHL. Soon, this will also include MLS and USPGA Golf.
In November 2007, Betbrokers formed a wholly owned subsidiary called Sport Risk
Management which deals directly with corporate clients looking to hedge their
financial risk. This business requires the focus of dedicated resources as it
brings an old concept to a new market - as Betbrokers has with its voice
brokerage business. The subsidiary commenced trading in early 2008. We do not
expect significant returns in the immediate future, but as the acceptance of the
need to hedge the financial risk of Sporting results grows, we believe Sport
Risk Management will see a substantial demand for its services.
With the combined services of Betbrokers, Winning Edge and Sport Risk
Management, we have the resources to offer our clients information, execution
and clearing across all sports trading and hedging.
The number of hits to the website www.betbrokers.com grew by 138% between 2006
and 2007 to over 1 million hits for the first time. The website was
successfully relaunched in September 2007 and this made an immediate impact for
our customers. The first two months of the current financial year as compared
to the same period in 2007 shows an even further increase of 143% in hits which
reflects the increasing number of services available.
Financial Review
This is the first full period to be reported since the Group listed on AIM in
November 2006. The Group was incorporated in July 2006 and in October 2006
acquired the entire share capital of Betbroker Limited, the trading entity
through which the UK business is conducted. These results are therefore for the
Group for the period 10 July 2006 to 31 December 2007 and comparisons with the
prior period are therefore not like-for-like. In order to enable some
comparison, figures for the full year to 31 December 2006 for Betbroker Limited,
which were also reported under IFRS, have been outlined below.
Unaudited Betbroker Limited
Group 12 months 12 months to 31
to 31 December 2007 December 2006
#000 #000
Revenue 2,808 821
Gross Profit 1,189 584
Operating Loss (2,758) (2,467)
EBITDA (2,491) (2,399)
Loss for the period (2,742) (2,428)
Revenues for the period 10 July 2006 to 31 December 2007 were #3.1 million with
a Gross Profit of #1.4 million. The operating loss for the same period was
#21.5 million following an exceptional write off of #17.5 million of goodwill
relating largely to the purchase of Betbrokers Limited.
In order for Betbrokers to meet the market's expectations for 2008 and 2009 the
Group has addressed the fundamentals of cost and revenue. During the second
half of 2007 Betbrokers embarked on a programme of cost reduction, the effects
of which are now being realised. Since the year end, this has resulted in
reducing the monthly operating costs by some 40% compared with the first half of
2007.
Industry and market review
As 2006 ended with the changes in American Laws governing online gambling
causing consternation and chaos in the industry, 2007 ended with predictions
that a new American government in 2008 would herald another series of changes in
favour of on and off line gambling. Throughout the world, governments are
slowly coming to terms with the fact that on line gambling such as Poker and
Casino are hobbies and in some cases professions that are enjoyed by millions of
people throughout the world. Positive legislation that promotes the sensible and
safe use of these services is in the best interests of the user and the
government in the form of delivering taxation revenues.
Sports wagering has evolved further into a financial market meeting the
significant needs for financial hedging of commercial enterprises and the
requirements of the professional traders and gamblers. We estimate the turnover
in Sports wagering - or more properly termed Sports Trading - in the UK alone
was in the order of #1.5 billion in 2007 up from an estimated #1 billion in
2006. The rest of the world will have seen similar growth patterns. Betbrokers
meets the needs of the professional traders, gamblers and bookmakers who wish to
hedge their financial risk.
Developments since the year end
Binary Betting is probably the most exciting derivative product the market has
seen for some time and Betbrokers' newly launched Betbrokersbinaries.com allows
the client to build their own bet using three cursors to determine length of
bet, size of bet and execution price. The site offers the widest range of bet
types of any UK financial betting company. Another unique feature of the site
is that it empowers clients to build their own bets which are a significant
deviation from the traditional betting model where the bookie offers bets to the
punter - now the punter can tell the bookie what he wants and is guaranteed a
fair price as the whole pricing system is automated.
Betbrokers launched Binary Betting in April 2008 offering the opportunity to
expand into financial fixed odds betting for our clients who trade both sport
and financial instruments.
Aside from this new product development in 2008 Betbrokers will focus on
delivering its core products of information, execution and clearing in what is
proving to be the most dynamic and fast growing financial market in the world.
Current trading
Betbrokers
The first quarter of the calendar year is traditionally quieter than the rest of
the year for both Betbrokers and Winning Edge as the majority of sport is easily
affected by the weather, The American Football Season ends in early February and
the first major horse race meet in the UK is not until the Cheltenham Festival
in mid March.
The change in the Cheltenham programme due to weather did cause some of the
professional traders and gamblers to hold back, however overall Cheltenham was a
successful launch to the horse racing season, followed a few weeks later by an
equally successful Aintree Festival and especially the Grand National.
A #495,000 Loan Note which was put in place in the middle of March 2008 to add
capital and liquidity to our Clearing House has significantly increased
Betbrokers ability to broker and clear larger bets.
The reduction in costs, the additional liquidity and the start to the season
gives the directors confidence that Betbrokers can meet the market's
expectations for 2008.
Winning Edge
Winning Edge continues to meet trading expectations and add revenue value to
Betbrokers through attracting more American Sport Trading in the UK.
Of particular interest are the recent legal successes that Winning Edge has
achieved through the suing of a number of competitors for their breaches of
copyright and patent issues of Winning Edge's Data and its provision thereof.
They have successfully won four cases in the past few weeks with more currently
underway. All of these have been pursued on a ''no win no fee'' basis which
means there has been no financial risk of legal fees to the company if the law
suits were unsuccessful.
The cases that have been won so far have resulted in circa US$500,000 (before
costs) in compensation being awarded to the company in 2008 and the next cases
could result in even greater awards. Whilst the financial awards are of benefit
to the business, the real benefit is that Winning Edge has proved it has a
legally enforceable patent on its data and provision of services in a very
lucrative industry.
I would like to take this opportunity to thank our team for their hard work and
commitment throughout the period. It has been an exciting and challenging first
period and the excellent foundation we have built would not have been possible
without the support of our employees, ambassadors, customers and shareholders.
Wayne Lochner
Chairman & CEO
6 May 2008
Consolidated Income Statement
For the Period Ended 31 December 2007
# Audited Group Unaudited Unaudited
10 July 2006 to Group Group
31 12 months to 31 10 July 2006 to
December 2007 December 2007 31 December 2006
# # #
Turnover 3,081,918 2,808,058 273,860
Cost of sales (1,667,806) (1,619,466) (48,340)
Gross profit 1,414,112 1,188,592 225,520
Goodwill amortisation1 17,524,021
Other administrative expenses 5,302,124
Administrative expenses (5,352,124) (3,947,016) (1,405,108)
Exceptional write off of (17,524,021) - (17,524,021)
goodwill
Operating loss (21,462,033) (2,758,424) (18,703,609)
Investment income 37,438 27,599 9,839
Finance costs (11,373) (11,373) -
Loss for the period (21,435,968) (2,742,198) (18,693,770)
Basic earnings per share (11p) (1p) (18p)
The income statement has been prepared on the basis that all operations were
acquired during the period and are continuing operations.
1 Representing impairment of the goodwill calculated in accordance with IFRS3
that arose as a result of the acquisition of Betbroker Limited by Betbrokers
plc, calculated upon the 15p placing price. All this impairment was announced in
the half year results for the period ended 30 June 2007, reported in September
2007.
Consolidated Balance Sheet
at 31 December 2007
Audited Unaudited
31 December 2007 31 December 2006
# # # #
ASSETS
Non-current assets
Intangible assets 11,706,916 8,638,868
Property, plant and equipment 169,780 157,727
11,876,696 8,796,595
Current assets
Trade and other receivables 2,620,871 1,435,300
Cash and cash equivalents 93,799 2,194,048
2,714,670 3,629,348
Total assets 14,591,366 12,425,943
EQUITY AND LIABILITIES
Equity capital and reserves
attributable to equity holders
Share capital 770,994 527,716
Share premium 34,324,992 30,063,983
Equity reserve - -
Foreign exchange 47,525 -
Retained earnings (21,373,354) (18,693,770)
13,770,157 11,897,929
Non-current liabilities
Hire purchase agreements 11,208 -
Current liabilities
Borrowings 196,009 39,204
Trade and other payables 613,992 488,810
810,001 528,014
Total equity and liabilities 14,591,366 12,425,943
Consolidated Statement of Changes in Equity
For the Period Ended 31 December 2007
Foreign
Share Share exchange Retained Total
capital premium reserve earnings equity
# # # # #
Balance at 10 July
2006 brought
forward - - - - -
Exchange
differences on
translation of
foreign operations 47,525 - 47,525
Net income
recognised directly
in equity - - 47,525 - 47,525
Net loss for the
period recognised
in income statement - - - (21,435,968) (21,435,968)
Total recognised
income and expense
for the period - - 47,525 (21,435,968) (21,388,443)
Issue of shares 770,994 35,505,338 36,276,332
Cost of issuing
shares - (1,180,346) - - (1,180,346)
Equity share
options issued - - - 62,612 62,612
At 31 December 2007
carried forward 770,994 34,324,992 47,525 (21,373,356) 13,770,155
Of the total equity, #35,095,986 is not available for distribution.
Consolidated Cash Flow Statement
For the Period Ended 31 December 2007
Audited Unaudited Unaudited
Period 10 July Group Group
2006 to 31 December 12 months to 31 10 July 2006 to 31
2007 December 2007 December 2006
# # #
Net cash from operating activities (4,525,417) (3,195,393) (1,330,024)
Investing activities
Interest received 37,438 27,599 9,839
Purchases of property, plant and
equipment and software (323,112) (228,442) (94,670)
Purchase of intangible assets (7,476) (7,476) -
Net cash used in investing
activities (293,150) (208,319) (84,831)
Financing activities
New borrowings received 217,883 217,883 -
Borrowings repaid (62,189) (62,189) -
Cash received in respect of the
issue of ordinary share capital 3,610,000 1,170,000 2,440,000
Costs paid in connection with the
issue of shares (1,106,089) (34,849) (1,071,240)
Net cash inflow from financing
activities 2,659,605 1,290,845 1,368,760
Net decrease in cash and cash
equivalents (2,158,962) (2,112,867) (46,095)
Cash and cash equivalents at the
beginning of the period - 2,154,844 -
Cash and cash equivalents acquired
on the purchase of subsidiaries 2,201,238 299 2,200,939
Cash and cash equivalents at end of
period 42,276 42,276 2,154,844
This information is provided by RNS
The company news service from the London Stock Exchange
END
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