ukbetting plc (LSE: UKB), the digital wagering operator, today announces its maiden results for the period from its listing on the Alternative Investment Market on 7 August 2001 to 31 December 2001.
Highlights
Financial
Operations
Sir David Sieff, Non-Executive Chairman, commented ‘The synergies between the provision of digital sports content and betting services are working well and ukbetting has experienced continued revenue growth in January and February of 2002. With the cost base well under control, the Board believes that further progress will be made in 2002.’
Eric Semel, Chief Executive Officer, added ‘ukbetting has substantially increased its betting customers both through acquisition and subsequent strong organic growth within both its betting brands, namely ukbetting.com and Totalbet.com, for whom the Tote provide fixed odds and exclusive pool bets. With the purchase of PA Sporting Life Limited, we acquired a major on-line sports and betting content business with almost a million unique users, a large percentage of whom bet on a regular basis.
These have been successfully integrated into the Group and our IT systems have now been upgraded to bring additional channels to market. The result is that we have a growing business whose focus is very much on the bottom line.’
Chairman’s statement
The Board of ukbetting plc (‘ukbetting’ or ‘the Group’) is pleased to announce maiden results for the period ended 31 December 2001 following 5 months of significant corporate development.
ukbetting floated on the Alternative Investment Market on 7 August 2002, raising £5.7 million of new money for the Group. Simultaneously, ukbetting acquired ukbetting.com, the on-line bookmaker fixed odds betting company, from ENIC plc.
The acquisition of ukbetting.com formed the basis for the Group’s strategy to build a substantial digital wagering business and to attract customers in a cost effective way through branded sports content websites and a greater emphasis on customer service. The business model is proving to be successful: revenues, betting customer numbers and sports content users have all increased considerably in the period.
Progress has been made in the execution of this strategy. Our first completed acquisition was the business of PA SportingLife Limited (PASL) which brought with it the valuable and well-respected on-line sports content brand, sportinglife.com, and a 50% stake in Totalbet.com, an on-line fixed odds and pools betting operation for whom the Tote provides fixed odds and exclusive pool bets. Shortly thereafter, through the acquisition of SportsCard Group plc, we acquired a customer base of sports enthusiasts and some cash assets.
We further enhanced our sports content brands through the acquisition of the brand names and trademarks – sportal.com and sportal.co.uk – in November 2001 for a nominal sum.
Whilst the Board believed that these goals were achievable in the medium term, we are pleased by the speed with which the management team has put together a business with critical mass in both digital sports betting and sports content. The timing of these acquisitions was such that the relatively low prices paid have given the Group real competitive advantage.
ukbetting has reviewed the business models of its acquired businesses and re-based cost structures appropriately. New impetus has been brought to driving top-line performance with good results. Total registered betting customer numbers increased from 8,109 at listing on 7 August, to over 61,000 at year-end including those of Totalbet. Betting revenue, including the whole of Totalbet, in the final quarter has increased by 53% over the corresponding period for the acquired businesses in the previous year, with the monthly average stakes during the last three months of 2001 rising to almost £2.5 million a month. Furthermore, since the acquisition of PASL, advertising revenue has increased by 273% over the comparative period for the acquired businesses in 2000 and continued to grow even faster in the first two months of the current financial year.
We believe that the Group will continue to perform well in 2002. All the businesses have a well-controlled cost base and ukbetting.com’s technology infrastructure will shortly be moved onto the Orbis technology platform used by Totalbet, allowing for the provision of digital betting services through wireless channels such as PDAs, mobile telephones and digital television. Furthermore, we have been reviewing the various brands within our portfolio and recently re-launched sportal.com and bettingzone.co.uk. to broaden our betting, advertising and sponsorship revenue opportunities.
The synergies between the provision of digital sports content and betting services are working well and ukbetting has experienced continued revenue growth in January and February of 2002. With the cost base well under control, the Board believes that further progress will be made in 2002.
I conclude by thanking my Board colleagues and the team for all their hard work during this early and exciting phase of ukbetting’s development.
Sir David Sieff,Chairman
Chief Executive’s Statement<>
Introduction
As stated in our listing particulars in August 2001, ukbetting is seeking to become a successful UK-based digital wagering operator. ukbetting has spent the period since 7 August 2001 laying the foundations to achieve this goal, beginning with its flotation on AIM and thereafter completing a number of acquisitions.
ukbetting has substantially increased its betting customers both through acquisition and subsequent strong organic growth within both its betting brands, namely ukbetting.com and Totalbet.com. With the purchase of PA Sporting Life Limited, we acquired a major on-line sports and betting content business with almost a million unique users, a large percentage of whom bet on a regular basis.
Financial overview
Group turnover in the period amounted to £5.1 million excluding ukbetting’s share of turnover derived from Totalbet, which amounts to £2 million, with the business reporting a gross profit of £88,000. On 6 October 2001, the General Betting Duty levied at a rate of 6.75% on turnover, was replaced by a tax of 15% on gross profit, being defined as the difference between the stakes laid and winnings paid. This change in legislation will have a positive effect on profitability over the coming year.
Operating expenses of £2.8 million include one-time exceptional charges of £770,000 relating to the costs of integrating the acquired businesses into the Group.
Losses before tax and exceptional items amounted to £1.8 million (£2.6 million after exceptional items). Losses per share before exceptionals amounted to 12.84p (basic); 12.84p (diluted); 10.66p (before goodwill amortization). Losses per share after exceptionals amounted to 18.25p (basic); 18.25p (diluted); 16.07p (before goodwill amortization).
As at the year end, ukbetting’s balance sheet showed net assets of £9.7 million, the major components of which are £7.9 million of goodwill and £3.8 million in cash.
Operational review
ukbetting is concentrating on driving revenues both through on-line betting and sports content. On 12 October 2001, ukbetting established itself as a major provider of on-line sports content through the acquisition of PA SportingLife Limited. The content site, sportinglife.com, a joint venture between the Press Association and Trinity Mirror plc, brought with it over 700,000 unique users and 43.1 million page impressions (ABC: June 2001) and continued access to PA’s global network of 700 sports journalists. Included in this acquisition was Totalbet.com for whom the Tote provides fixed odds and exclusive pool bets in return for 50% of the revenue, which, together with ukbetting, gave a customer base at year end of over 61,000 registered betting customers.
The next acquisition was SportsCard Group plc, through an all share offer valued at £4.4 million. This acquisition brought with it 20,000 credit card customers, incentivisation assets such as sports debentures and cash on the balance sheet of £3.45 million.
ukbetting’s online sports content brands were augmented further in November 2001 with the acquisition of the brands and trademarks of one of the leading pan-European sports content networks, sportal.com and sportal.co.uk, for a nominal amount.
Since the start of 2002 the sportal sites have been re-launched to concentrate on interactive sports content and sportinglife.com has re-launched its betting area as bettingzone.co.uk with the intention of developing this as a major portal for specialised betting information.
Gaming activities
Organic growth from October to December 2001 saw monthly betting stakes, including the whole of Totalbet, average £2.5 million a month, an increase of 53% over the comparative period including 100% of Totalbet turnover, for the acquired businesses in 2000.
Betting customer numbers have shown strong growth since year end, as have betting revenues. Plans are now complete for the transfer of the ukbetting site to the Orbis software currently used by Totalbet and managed by the sportinglife in-house technology team.
Provision of content
Our online sports content services, which comprise the sportinglife.com and sportal brands, have also shown significant progress since acquisition. The total number of unique users as at 31 December 2001 amounted to 1.25 million and combined page impressions for the month ended 31 December 2001 amounted to 50 million.
Average monthly page impressions for sportinglife.com doubled from 20 million for the final quarter of 2000, to 41 million in the comparative period in 2001.
Consequently, we have seen growth in advertising revenues during the same periods increase by 273% in 2001 and have continued to see further significant increases in advertising sales during the first two months of 2002.
Regulatory developments
As highlighted earlier, in October 2001, the General Betting Duty of 6.75% on turnover was replaced by a 15% tax on gross margins, which is having a positive and continuing benefit to betting profit.
Currently both ukbetting and Totalbet.com generate the vast majority of their business from the UK. With the move to new technology it is planned to market to a world-wide audience in 2002 although neither brand takes bets from the United States. Processes are in place to prevent, as far as it is reasonably possible, American gamblers from using the Group’s gambling websites for online sports betting. As a result, ukbetting is in the position of having no exposure to the enforcement of the US Wire Act.
Strategy
ukbetting has identified an extremely cost-effective method of attracting wagering customers through its branded sports content websites. The Group has succeeded in acquiring operations with substantial customer numbers for relatively low cost. This strategy is working well and, having acquired these businesses, revenues and other key performance indicators have shown strong organic growth.
With the re-launch of sportal.com and bettingzone.co.uk we expect to attract even higher numbers of sports and betting enthusiasts, giving additional opportunities both to increase advertising and sponsorship revenues and to convert these to customers to our betting brands.
ukbetting has identified other digital channels, from telephony to digital television, which will provide further growth opportunities and has already invested in upgrading its digital betting platform. Currently we are finalising a number of strategic relationships in order to leverage our content and betting activities across these multiple digital channels.
Outlook
2001 was a busy year for the management team. A number of acquisitions were completed and successfully integrated into the Group. Our cost bases across the Group have been closely controlled with the result that we now have a growing business whose focus is very much on the bottom line.
Eric Semel,Chief Executive
For further information please contact:
ukbetting plc
Eric Semel
Peter Dubens
T: 020 7831 3113 (on the day)
Financial Dynamics
Edward Bridges
Juliet Clarke
T: 020 7831 3113
Jon Wayth
Senior Consultant
Firefly Communications
T: +44 (0) 20 7386 4840
E: jon.wayth@fireflycomms.com