Antigua 29 April 2005 The Manager Company Announcements Australian Stock Exchange Limited Exchange Centre Level 6, 20 Bridge Street Sydney NSW 2000 9 pages
Dear Sir/Madam, 2005 Q1 UNAUDITED RESULTS & APPENDIX 4C RELEASE The Directors of Betcorp Limited (“Betcorp”) are pleased to announce the Company’s unaudited results for the first quarter of 2005 (“2005 Q1”) and present the attached Appendix 4C which details the Company’s consolidated cash flows for 2005 Q1. The Company will, from 2005 onwards, report in US dollars rather than Australian dollars. Basis of Preparation The results contained within this report are based on unaudited consolidated management accounts of Betcorp and its subsidiaries (“the Group”) for the 13 week period ended 3 April 2005. The consolidated accounts include the results of Sinsational Intertainment Inc (“Sinsational”) from 22 January 2005, the date on which the Company assumed effective control of this company. The agreement for the acquisition of Sinsational provides that Betcorp is entitled to the profits of Sinsational from 27 December 2004. During the period from 27 December 2004 to 3 April 2005, Sinsational produced EBITDA of US$884,000, of which US$362,000 related to the period prior to 22 January. Accordingly, whilst the benefit of these earnings has been realised by the Group in the form of an increase in the asset value of the acquired company, they have been treated as pre-acquisition earnings and excluded from the consolidated results of the Group for 2005 Q1.
2 Unaudited Consolidated Results for 2005 Q1
Tasman Gaming Inc 2005 Q1 2004 Q1 USD'000 USD'000 Betcorp Group 2005 Q1 Tasman Sinsational Betcorp USD'000 USD'000 USD'000 (10 Weeks) 142,591 5,153
3.61%
Total USD'000
Wagering Turnover Gross Margin
Gross Margin Rate
142,591 5,153
3.61%
193,392 4,568
2.36%
38,608 1,807
4.68%
181,199 6,960
3.84%
Direct (Variable) Costs
Direct (Variable) Costs Rate
(1,684)
1.18%
(2,114)
1.09%
(1,684)
1.18%
(365)
0.95%
(2,049)
1.13%
Net Margin Operating Expenses EBITDA Net Profit/(Loss)
3,469 (2,036) 1,433 1,346
2,454 (2,985) (531) (531)
3,469 (2,036) 1,433 1,346
1,442 (920) 522 413 (290) (290) (270)
4,911 (3,246) 1,665 1,489
Overview The Group has performed creditably in the first quarter of 2005 and has achieved a considerable improvement in net profitability over the first quarter of 2004. Costs have been well controlled and there has been a significant improvement in the gross margin percentage. The Group now comprises two core trading businesses in Antigua, Tasman Gaming Inc, whose main website is www.BetWWTS.com and Sinsational Intertainment Inc, whose main website is www.cybersportsbook.com.
Tasman USD'000 Sports Betting Telephone Internet Total Sports Betting Casino Poker Total Margin 1,310 2,902 4,212 697 244 5,153
25% 56% 82% 14% 5% 100%
Gross Margin 2005 Q1 Sinsational USD'000 (10 Weeks) 92 5% 1,156 64% 1,248 69% 559 31% 0 0% 1,807 100%
Total USD'000 1,402 4,058 5,460 1,256 244 6,960
20% 58% 78% 18% 4% 100%
3 Trading Highlights The Group has recorded a net profit in the quarter of US$1.489 million and EBITDA of US$1.665 million. With the exception of Tasman Gaming Inc, comparable data for the first quarter of 2004 is not available as the Company did not report quarterly in the first half of 2004. Holding company costs of US$270,000 reflect a much reduced level of corporate activity in Australia following the closure of the Sydney head office and significant reduction in headcount. Tasman Gaming Inc Tasman achieved a net profit in Q1 of US$1.346 million compared to a net loss in the first quarter of 2004 of US$531,000, an improvement year on year of US$1.877 million. EBITDA in 2005 Q1 was US$1.433 million, an improvement of US$1.964 million over the equivalent period in 2004. The gross margin percentage in 2005 Q1 improved to 3.61% (2.36% 2004 Q1), and the gross margin generated was 13% higher at US$5.153 million (US$4.568 million 2004 Q1). Direct costs fell by 20% to US$1.684 million (US$2.114 million 2004). Significant reductions in customer bonuses were partially offset by the higher costs of more effective payment processing. The latter contributed to an increase to 44% (36% 2004 Q1) of registered clients successfully funding their accounts. Operating expenses reduced by 31%to US$2.036 million (US$2.985 million 2004 Q1). The improved profit generation was at the expense of a reduction in betting turnover of 26% reflecting active policies of more restrictive client selection and bet acceptance in both the Sportsbook and the Casino. As a result, the average stake per sports bet fell in the quarter to US$152 (US$189 2004 Q1) in line with our efforts to reduce exposure to higher staking and low margin “wise” activity. The poker contribution grew 23% in 2005 Q1 over Q4 2004.
4 Sinsational Intertainment Inc Sinsational performed well in 2005 Q1 and a contribution of US$522,000 is included in the Group EBITDA. Net profit for the period was US$413,000 after charging depreciation and US$60,000 interest payable on debt that has since been repaid from the proceeds of the capital raising. All major performance indicators for Sinsational were positive in 2005 Q1 The gross margin percentage for Sinsational was 4.68%. The Board is confident that it will prove to have been an excellent acquisition. Outlook The improvements in operational efficiency and cost controls put in place over the last six months have created a stable and lower cost operating environment which will be of particular value during the second quarter which is traditionally the quietest trading quarter of the year. Whilst appropriate resources will be applied to the Company’s marketing activity, the Board’s main priority in the coming months will be the successful integration of the Sinsational business and the migration of the BetWWTS database to the Sinsational operating platform. Other initiatives will include the launch of Games of Skill to the clients of both companies, and the extension of the BetWWTS poker product to the clients of Sinsational. The Board remains positive that the company is on track for a profitable year.
Colin Walker Chief Executive Officer colinw@betcorp.com.au Antigua 29 April 2005
Appendix 4C Quarterly report for entities admitted on the basis of commitments
Rule 4.7B
Appendix 4C
Quarterly report for entities admitted on the basis of commitments
Introduced 31/3/2000. Amended 30/9/2001
Name of entity
BETCORP LIMITED
ABN Quarter ended (“current quarter”)
69 081 765 531
3 APRIL 2005
Consolidated statement of cash flows
Cash flows related to operating activities 1.1 1.2 Receipts from customers Payments for (a) (b) (c) (d) staff costs advertising and marketing research and development leased assets (e) other working Current quarter $US ’000 181,268 (1,624) (702) Year to date (..3 months) $US’000 181,268 (1,624) (702)
capital (6,588) 1.3 1.4 1.5 1.6 1.7 Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other (payments to players) Net operating cash flows (6,588)
30 (60) (174,239) (1,915)
30 (60) (174,239) (1,915)
+ See chapter 19 for defined terms. 30/9/2001 Appendix 4C Page 1
Appendix 4C Quarterly report for entities admitted on the basis of commitments
Current quarter $US’000 1.8 Net operating cash flows (carried forward) Cash flows related to investing activities Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical noncurrent assets (e) other non-current assets Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical noncurrent assets (e) other non-current assets Loans to other entities Loans repaid by other entities Other (provide details if material) 650 Net investing cash flows 1.14 Total operating and investing cash flows Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material) Net financing cash flows Net increase (decrease) in cash held 1.21 1.22 1.23 Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 Cash at end of quarter (1,265) (1,915)
Year to date (.3 months) $US’000 (1,915)
1.9
671
671
(21)
(21)
1.10
1.11 1.12 1.13
650 (1,265)
1.15 1.16 1.17 1.18 1.19 1.20
117
117
117 (1,148) 7,110 167 6,129
117 (1,148) 7,110 167 6,129
+ See chapter 19 for defined terms. Appendix 4C Page 2 30/9/2001
Appendix 4C Quarterly report for entities admitted on the basis of commitments
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
Current quarter $US'000 1.24 1.25 1.26 Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11 Explanation necessary for an understanding of the transactions Directors included in 1.24 Colin Walker Bill Graham Stuart Doyle Payment $US’000 84 23 34 141 -
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows The consolidated cash flow statement shown above incorporates the results of Tarter Sauce Investments Limited and its subsidiary companies with effect from 22 January 2005, the date that Betcorp Limited assumed effective control of this company, in accordance with Australian equivalents to IFRS, but does not reflect the cash flows relating to the acquisition as completion took place after the period to which this cash flow statement relates, on 22 April 2005.
2.2
Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest
Financing facilities available
Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).
3.1 3.2
Loan facilities Credit standby arrangements
Amount available $US’000 -
Amount used $US’000 -
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Appendix 4C Quarterly report for entities admitted on the basis of commitments
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 4.1 4.2 4.3 4.4 Cash on hand and at bank Deposits at call Bank overdraft Other (provide details) Total: cash at end of quarter (item 1.22) 6,129 7,110 Current quarter $US’000 6,129 Previous quarter $US’000 7,110
Acquisitions and disposals of business entities
Acquisitions (Item 1.9(a)) 5.1 Name of entity Tarter Sauce Investments Limited (ultimate holding company of Sinsational Investments Inc.) 5.2 5.3 Place of incorporation or registration Consideration for acquisition or disposal Antigua US$6.139m (estimated Disposals (Item 1.10(a))
consideration prior to agreement of Completion Accounts) 5.4 Total net assets Fair value of net assets acquired has not yet been evaluated under AIFRS 5.5 Nature of business On-line sports betting and gaming
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX. This statement does give a true and fair view of the matters disclosed.
2
+ See chapter 19 for defined terms. Appendix 4C Page 4 30/9/2001
Appendix 4C Quarterly report for entities admitted on the basis of commitments
Sign here:
............................................................ (Director/Company secretary) .........................................................
Date: ............................
Print name:
Notes
1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below. • • • • • • 3. - reconciliation of cash flows arising from operating activities to operating profit or loss 9.2 - itemised disclosure relating to acquisitions 9.4 - itemised disclosure relating to disposals 12.1(a) - policy for classification of cash items 12.3 - disclosure of restrictions on use of cash 13.1 - comparative information 6.2
2.
Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
+ See chapter 19 for defined terms. 30/9/2001 Appendix 4C Page 5