TIDMWEB
RNS Number : 3795Q
Webis Holdings PLC
29 February 2016
FOR IMMEDIATE RELEASE
29 February 2016
WEBIS HOLDINGS PLC
("Webis" or the "Group")
Interim results for the period ended 30 November 2015
Webis Holdings plc, the global gaming and racetrack operations
group, today announces its interim results for the period ended 30
November 2015, extracts from which are set out below.
The Accounts are expected to be available from 29 February 2015
on the Group's website www.webisholdingsplc.com and at the Group's
Registered Office: Viking House, Nelson Street, Douglas, Isle of
Man IM1 2AH.
ENDS
For further information:
Webis Holdings plc Tel: 01624 639396
Denham Eke
Beaumont Cornish Limited Tel: 020 7628 3396
Roland Cornish / James
Biddle
Chairman's Statement
Introduction
This period reflects the performance of our principal
subsidiary, WatchandWager.com Limited ("WatchandWager"), which is
engaged in fully licensed pari-mutuel and racetrack operations
within the USA. It should be noted that the same period last year
contained trading figures for our sportsbook, betinternet.com. This
operation was subsequently closed in March 2015 for previously
reported commercial reasons. As a result, comparisons versus prior
year are based on continuing operations only, namely that of
WatchandWager operations.
I am pleased to report further top-line growth for WatchandWager
compared to the same period in the previous financial year.
However, during the period, our United States operations in
particular have continued to experience an increasing cost base.
Also, a number of one-off expenditure items have impacted our
immediate performance, but are designed to increase the strength of
the operation on a long-term basis. These costs, combined with a
further tightening of our gross margin due to increased licensing,
track fees and regulatory costs, combined to result in a loss from
continuing operations of US$ 0.71 million (2014: loss of US$ 0.68
million).
Half Year Results Review
Group turnover increased by 38.7% to US $67.88 million (2014:
US$ 48.93 million) but Group gross profit declined by 15.4% to US$
1.43 million (2014: US$ 1.69 million).
Operating expenses, including one-off items, were US$ 2.12
million (2014: US $2.15 million) reflecting some significant
expenditure in the USA as we continue to expand our operational
base in Lexington, Kentucky. These included the recruitment of an
experienced Chief Operating Officer, plus the relocation of two
senior staff from our head office in the Isle of Man, and
recruitment of further Customer Services staff to Lexington.
Additionally, there were significant restructuring costs in setting
up the Lexington operation, plus expenditure on compliance and
licensing matters.
We incurred one-off reorganizational costs and non-recurring
costs of US$ 0.18 million over the period, primarily as a result of
the relocation and establishment of operations in the United
States.
In summary, whilst the operations have seen a welcome further
growth in turnover, we are experiencing a contraction in margin.
This is primarily due to increases in track host fees, source
market fees and the cost of being licensed in regulated states.
Additionally, there are pressures on margin as the high volume
wagering sector becomes more competitive. We are countering this by
adding yet more unique product for our players, as well as actively
recruiting new players. This is of course the major focus for the
second half year and beyond.
In respect of the Condensed Consolidated Statement of Financial
Position, our net assets have decreased to US$ 2.46 million (year
end 31 May 2015: US$ 3.17 million). Cash stands at US$ 7.9 million
(year end 31 May 2015: US$ 6.1 million).
WatchandWager ADW
WatchandWager ("WAW") grew its Advanced Deposit Wagering ("ADW")
turnover by 56.9% to US$ 59.27 million (2014: US$ 37.78 million)
during the period, primarily once again due to an increase in
high-roller wagering into international jurisdictions. This
increase has largely come from wagering activity into Hong Kong
Jockey Club ("HKJC") pools; despite no racing taking place during
the mid season break of mid July to mid September. In addition, we
have seen promising increases in wagering activity into selected
USA domestic pools, plus international activity on Australian,
French, UK and Irish pools. Our commitment to providing the widest
range of betting content of any ADW operation in the world appears
to be having a positive impact with the recruitment of several new
high volume bettors to our service over the period.
As previously reported, we took the decision to refocus
marketing activity through the WatchandWager.com website and mobile
product during the period. The sales and marketing team are
concentrating on enhancing the website and mobile offering, and
offering an attractive sales promotion strategy and hands-on
customer service. Encouragingly, initial results are positive, and
this area of the business is a significant part of our growth
strategy for the future.
We integrated two important payment processing options for the
website/mobile, namely Paynearme and Neteller. These have seen a
good take up from USA based players and have greatly increased our
payments-in processing ability for USA based players, something
that has been difficult in the past.
During the period WAW was awarded with a licence to accept
wagers within Washington State. WAW also successfully renewed its
North Dakota Racing Commission multi-jurisdictional licence for
2016, and its California Horse Racing Board Hub Agreements and
Labor Agreements in order to ensure its ADW license remains current
for 2016. WAW also continues to be in good standing in relation to
its non-USA domestic license with the Isle of Man Gambling
Supervision Commission.
During the period, WAW invested in various compliance items
considered vital to conduct business in USA regulated markets.
These included a Systems Audit by a leading Auditor in Nevada and a
fully updated Federal and State by State legal opinion into our
operations within the USA. In both cases WAW was found to be fully
compliant in its operations in the USA, and these pieces of work
will be assets to future growth.
Cal Expo
In October, WAW re-commenced harness racing at the Cal Expo
racetrack in Sacramento for the fourth successive season. Our
position as the operator of this 'bricks and mortar' facility
continues to provide us with meaningful leverage in the wider
gambling sector both within and outside of the US. Expected one-off
costs relating to preparing the racetrack for the upcoming meeting
have resulted in racetrack operations reporting a small loss during
the period. Once again we expect stronger performance in the second
half of the year.
Summary and Outlook
It is clear that the first half of the year has been challenging
for WAW, with tightened margins and many exceptional costs during
the period impacting on the overall Group results.
More positively the Board is pleased to report that the start of
the second period of the year (December 2015/January 2016) has seen
a gradual improvement in performance. Over both months we have seen
record levels of turnover (based on continuing operations), and
improvements in margin and cost reductions. We are expecting this
trend to continue to the year end.
Specifically, the Board remains positive over its three core
areas of the business, namely:
Business to Business High volume wagering - as recently
announced, WAW has now signed an extended three-year contract with
the HKJC. Since this announcement we have seen an increase in
betting activity into this channel. The reputational importance of
this contract should not be underestimated, and we have recently
seen increased activity into other of our betting markets, notably
the USA, Australia, France, UK and Ireland. We have a good sales
pipeline in this area both in terms of content and players and are
projecting further growth in this area. We are focusing on growing
betting activity in this area, whilst mindful of the need to
improve our margins.
WAW website/mobile/call centre betting - following the review of
operations, WAW is pleased with the implementation of its new
Operations Centre in Lexington. This already appears to be paying
dividends with an approximate 25% increase in player numbers on the
website and mobile in the early part of the second half of the
year. In addition, we have now opened a fully operational telephone
betting operation in Lexington. This has been in soft launch stage
but we expect revenue to increase in this area during 2016. As a
result of these positive signs - the Board has recently agreed to
increase its marketing spend in this area over a six-month period
from March 2016 to August 2016, with the anticipation of further
growth.
Cal Expo - racing operations have continued successfully over
the first half of the year. Credit is due to the track team in
continuing to facilitate race operations during the recent El Nino
storms. We remain confident of a small profit from operations at
year end.
WAW continues to monitor developments in both the US racetrack
and gaming market, and the progress on federal and state online
gaming legislation insofar as it may impact our current or future
operations. It should be noted that WAW has recently publicly
supported the recent GRAY bill regarding online poker in
California, but is realistic to its prospects of success during an
election year. Due to much publicised legal complications, WAW has
deliberately avoided entering the Daily Fantasy Sports (DFS)
market, and this currently appears to be a decision well made.
The Board is very aware that consolidation and the increasing
benefits of economies of scale have become paramount success
factors for online gambling operators worldwide, given current
market and regulatory conditions. As a result, the Board continues
to assess all strategic opportunities for the Group's future for
the benefit of shareholders.
Denham Eke, Non-executive Chairman
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Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 November 2015
Restated
(see
notes
1 and
5) Period
Period to 30
to 30 November
November 2014
2015 (unaudited) (unaudited)
Note US$000 US$000
-------------------------------------------- ----- ------------------ --------------
Continuing operations
Turnover 2 67,877 48,930
Cost of sales (66,312) (47,169)
Betting duty paid (136) (71)
-------------------------------------------- ----- ------------------ --------------
Gross profit 1,429 1,690
-------------------------------------------- ----- ------------------ --------------
Operating costs (1,948) (2,134)
Operating loss (519) (444)
-------------------------------------------- ----- ------------------ --------------
Other gains/(losses) - net 3 (195)
Re-organisational costs, impairments
and one-off costs (175) (18)
Finance income - 5
Finance costs (23) (31)
-------------------------------------------- ----- ------------------ --------------
Finance income/(costs) - net 3 (23) (26)
-------------------------------------------- ----- ------------------ --------------
Loss before income tax (714) (683)
-------------------------------------------- ----- ------------------ --------------
Income tax expense 4 - -
-------------------------------------------- ----- ------------------ --------------
Loss from continuing operations (714) (683)
-------------------------------------------- ----- ------------------ --------------
Discontinued operations
(Loss)/profit from discontinued operations 5 (1) 384
-------------------------------------------- ----- ------------------ --------------
Loss for the period (715) (299)
-------------------------------------------- ----- ------------------ --------------
Other comprehensive income:
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences on
translation of foreign subsidiaries - 11
Other comprehensive income for the period - 11
-------------------------------------------- ----- ------------------ --------------
Total comprehensive income for the period (715) (288)
-------------------------------------------- ----- ------------------ --------------
Basic and diluted earnings per share
for loss attributable to the equity
holders of the Company during the period
(cents) - all operations 6 (0.18) (0.08)
-------------------------------------------- ----- ------------------ --------------
Basic and diluted earnings per share
for loss attributable to the equity
holders of the Company during the period
(cents) - continuing operations 6 (0.18) (0.17)
-------------------------------------------- ----- ------------------ --------------
Condensed Consolidated Statement of Financial Position
As at 30 November 2015
As at As at
30 November 31 May
2015 2015
(unaudited) (audited)
Note US$000 US$000
----------------------------- ----- -------------- ------------
Non-current assets
Intangible assets 7 132 170
Property, equipment
and motor vehicles 204 118
Bonds and deposits 106 204
----------------------------- ----- -------------- ------------
Total non-current
assets 442 492
----------------------------- ----- -------------- ------------
Current assets
Bonds and deposits 2,501 2,441
Trade and other receivables 2,935 2,579
Cash and cash equivalents 8 7,866 6,103
----------------------------- ----- -------------- ------------
Total current assets 13,302 11,123
----------------------------- ----- -------------- ------------
Total assets 13,744 11,615
----------------------------- ----- -------------- ------------
Equity
Called up share capital 6,334 6,334
Retained losses (3,875) (3,160)
----------------------------- ----- -------------- ------------
Total equity 2,459 3,174
----------------------------- ----- -------------- ------------
Current liabilities
Trade and other payables 11,285 8,441
----------------------------- ----- -------------- ------------
Total current liabilities 11,285 8,441
----------------------------- ----- -------------- ------------
Total liabilities 11,285 8,441
----------------------------- ----- -------------- ------------
Total equity and liabilities 13,744 11,615
----------------------------- ----- -------------- ------------
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 November 2015
Foreign
Called Share currency
up share Share option translation Retained Total
capital premium reserve reserve earnings equity
US$000 US$000 US$000 US$000 US$000 US$000
Balance as at 31
May 2014 (audited) 6,334 16,978 156 (4) (18,295) 5,169
Total comprehensive
income for the period:
Loss for the period - - - - (299) (299)
Other comprehensive
income - - - 11 - 11
Balance as at 30
November 2014 (unaudited) 6,334 16,978 156 7 (18,594) 4,881
--------------------------- ---------- --------- --------- ------------ ---------- --------
Balance as at 31
May 2015 (audited) 6,334 ---(3,160) 3,174
Total comprehensive
income for the period:
Loss for the period - --- (715) (715)
Balance as at 30
November 2015 (unaudited) 6,334 ---(3,875) 2,459
--------------------------- ----- ------- -----
Condensed Consolidated Statement of Cash Flows
For the period ended 30 November 2015
Period Period
to to
30 November 30 November
2015 2014
(unaudited) (unaudited)
US$000 US$000
----------------------------------------------------- ------------- ---------------
Cash flows from operating activities
Loss before income tax (715) (299)
Adjustments for:
* Depreciation of property, equipment and motor
vehicles 29 47
* Amortisation of intangible assets 57 78
* Finance (income)/costs - net 23 38
* Foreign exchange losses on revaluation 12 230
Changes in working capital:
* (Increase)/decrease in receivables (356) 1,191
* Increase/(decrease) in payables 2,844 (1,685)
----------------------------------------------------- ------------- -------------
Cash flows from/(used in) operations 1,894 (400)
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Finance income - 10
Bonds and deposits utilised in the course
of operations 38 403
Net cash generated from operating activities 1,932 13
----------------------------------------------------- ------------- ---------------
Cash flows from investing activities
Purchase of intangible assets (19) (60)
Purchase of property, equipment and motor
vehicles (115) (3)
Net cash used in investing activities (134) (63)
----------------------------------------------------- ------------- ---------------
Cash flows from financing activities
Interest and charges paid (23) (48)
Loans repaid - (11)
Net cash used in financing activities (23) (59)
----------------------------------------------------- ------------- ---------------
Net increase/(decrease) in cash and cash
equivalents 1,775 (109)
Cash and cash equivalents at beginning
of year 6,103 8,402
Exchange losses on cash and cash equivalents (12) (201)
----------------------------------------------------- ------------- ---------------
Cash and cash equivalents at end of period 7,866 8,092
----------------------------------------------------- ------------- ---------------
Notes to the Condensed Consolidated Interim Financial
Statements
For the period ended 30 November 2015
1 Significant accounting policies
The accounting policies applied by the Group in these
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements as at
and for the year ended 31 May 2015.
Functional and presentational currency
These financial statements are presented in US Dollars which is
the Group's primary functional currency and its presentational
currency. Financial information presented in US Dollars has been
rounded to the nearest thousand. All continued operations of the
Group have US Dollars as their functional currency.
Discontinued operation
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic
area of operations; and
-- is part of a single co-ordinated plan to dispose, or
discontinue, a separate major line of business or geographic area
of operations.
Classification as a discontinued operation occurs at the earlier
of disposal, permanent cessation of activities or when the
operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative period.
Going Concern
As noted within the Chairman's Statement, the Group has
experienced a tightening of margins and an increase in costs during
the period, which has resulted in continued losses being incurred.
Achieving economies of scale and controlling costs are key
priorities for the Group in achieving its goal of profitability and
maintaining adequate liquidity in order to continue its operations.
The Directors continue to assess all strategic options in this
regard, albeit that the ultimate success of strategies adopted is
difficult to predict. Notwithstanding the losses incurred, the
Directors have prepared projected cash flow information for the
next 12 months and believe that the Group has adequate resources to
meet its obligations as they fall due. Accordingly, the Directors
consider that it is appropriate that the financial statements are
prepared on a going concern basis.
2 Segmental analysis
Period Period
to to
30 November 30 November
2015 2014
(unaudited) (unaudited)
US$000 US$000
---------------------------------------- ------------- ------------ ------------
Turnover
United
Pari-mutuel and Racetrack Operations States 45,476 36,274
Asia Pacific 18,913 6,042
Europe 2,665 1,689
British
Isles 758 4,925
Rest of
the World 65 -
67,877 48,930
------------------------------------------------------ ------------ ------------
Total comprehensive income - continuing
operations
Pari-mutuel and Racetrack Operations (625) (564)
Group (89) (119)
------------------------------------------------------- ------------ ------------
(714) (683)
------------------------------------------------------ ------------ ------------
Note: Period to 30 November 2014 is restated (see Notes 1 and
5)
30 November 31 May
2015 2015
(unaudited) (audited)
US$000 US$000
Net assets
Pari-mutuel and Racetrack Operations 1,290 1,915
Group 1,169 1,259
------------------------------------------ ------------- ---------------
2,459 3,174
--- ------------- ---------------
3 Finance income/(costs) - net
Period Period
to to
30 November 30 November
2015 2014
(unaudited) (unaudited)
US$000 US$000
------------------------- ------------ ------------
Bank interest receivable - 5
------------------------- ------------ ------------
Finance income - 5
------------------------- ------------ ------------
Bank interest payable - -
Bank charges payable (23) (31)
----------------------------- ---- ----
Finance costs (23) (31)
----------------------------- ---- ----
Finance income/(costs) - net (23) (26)
----------------------------- ---- ----
Note: Period to 30 November 2014 is restated (see Notes 1 and
5)
4 Income tax expense
Period to Period
to
30 November 30 November
2015 2014
(unaudited) (unaudited)
US$000 US$000
-------------------------------------------- ------------ ------------
Losses before tax (715) (299)
Tax charge at IOM standard rate (0%) - -
Adjusted for:
Tax credit for US tax losses (at 15%) (112) (84)
Add back deferred tax losses not recognised 112 84
-------------------------------------------- ------------ ------------
Tax charge for the period - -
-------------------------------------------- ------------ ------------
5 Discontinued operation
In March 2015, the Group ceased its Sportsbook and Casino
operations due to regulatory changes in its primary geographical
market that would have affected its ability to remain competitive
and profitable.
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