World Gaming announced its fourth quarter and full year results showing a reduction of $9.0m down to $3.5m in profit after tax for the fourth quarter and of $11.7m down to $5.7m for the full year ended 31 December 2005.
Turnover for the fourth quarter increased to $99.1m from $2.7m, compared to the same period last year. For the full year turnover increased to $106.5m compared to $16.3m in 2004. The increase in turnover is wholly attributable to the addition of the Sportsbetting.com& business, acquired for $81.8m in cash and shares effective 1 October 2005, to the traditional revenue stream made of royalties and fees charged to the group\’s licensees plus hosting fees charged to Sportingbet.
The royalty and fee income decreased by 40.5% to $1.6m for the fourth quarter and by 45%& to $9.0m for the full year. Of this decline, $0.7m was attributable to no longer receiving royalties from Sportsbetting.com and $7.5m was the full year effect of no longer receiving royalties from Sportingbet. Revenues from new and continuing licensees grew by $0.9m to $3.2m representing a 38.8% growth in like-for-like licensing revenue.
The Sportsbetting.com business is now considered the Group\’s operating division. Turnover from the operating division, representing gross sports and horse racing wagers and net casino and poker win, was $97.5m for both the quarter and year ended 31 December 2005. For comparative purposes, the proforma growth in turnover in the Sportsbetting business was 42.1% for the fourth quarter and 50.8% for the full year.
Gross profit increased $7.4m to $9.1m in the fourth quarter, while for the full year it remained unchanged at $14.4m, compared with 2004. The increase in gross profit from the operating division described above was offset by the effect of no longer receiving royalties from Sportingbet. For comparative purposes, the proforma gross profit contribution from the Sportsbetting business represented a 18.9% increase for the fourth quarter and a 55.1% increase for the 12 month period.
During 2005, World Gaming trsditional licensing division launched or white-labelled five new licensees. While the operating division added to its database 21,414 new customers in the fourth quarter and over 65,000 during the full year.
Active customer acquisition costs for the year were down to $101, compared to $108 in 2004.
The average loss per active customer, being the total margin divided by active customers over the quarter, was $240; across the year the average quarterly loss per active customer was $266. The average life of a customer as at 31 December 2005 was approximately 16 months compared to 15 months as at 31 December 2004. The average lifetime value of a customer at 31 December 2005 was therefore approximately $1,397.
Sports margins including horse racing in the quarter were 4.0% (2004: 5.8%) representing lower than expected margins on sports due to unusual results across the industry. For the full year, sports margins including horse racing were 6.9% (2004: 6.4%). Gaming margins in the fourth quarter were 2.2% (2004: 2.4%). The poker product, launched in the middle of 2005, continued to strengthen, yielding revenue before commissions of $1.4m for the quarter and $2.4m for the year. During the fourth quarter 37.4% (2004: 36.3%) of the group\’s sports betting players placed at a least one bet on a gaming product or poker.
“The Group began the year with a clear strategy of acquiring an industry leading brand in the internet gaming space. In addition to leveraging the Group\’s exceptional software and infrastructure resources, the acquisition of the SPORTSBETTING.COM business has increased the scale of the Group significantly and forms a solid base for continued organic and acquisitive growth. The Group enters 2006 with a resolve to continue in its strategy of maintaining and developing a global internet gaming Group,” commented Daniel Moran, Chief Executive of World Gaming.
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