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euro adhoc: betbull - The European Betting Exchange Plc.
or Semiannual Financial Statements
Betbull announces 2004
Preliminary Results and Development of Strategy
--------------------------------------------------------------------- Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement. ---------------------------------------------------------------------
- Achievements 2004: Start-up, Product launch, and IPO - Cash position end of 2004 at 12.9 million Euros (2.9 Euros per share) - Consolidated net loss of 3.5 million Euros - significantly below market expectations - Continental European market for consumer business ("B2C") too immature - Product further improved
- Focus on partnerships with bookmakers and racing associations ("B2B") - First step with co-operative on German horse racing taken - Roll out to the rest of Europe (including sports betting) - Expansion of product offering planned with strategic partnerships - Acquisition of complementary businesses under investigation - Organization and structure being adapted to meet new strategic requirements
Announcement of audited management accounts on or by 31st of March 2005
Preliminary results for the year 2004
Significant achievements in the year ending 31st December 2004, were the establishing of betbull - The European Betting Exchange PLC in February, the product launch of the exchange betting platform www.betbull.com in September and the successful completion of an Initial Public Offering on the Viennese Stock Exchange in October
Betbull raised in the course of the IPO under the lead management of Erste Bank a net amount of 13.0 million Euros. Betbull began the year 2005 with a total of 12.9 million Euros of short term liquid assets corresponding to 2.9 Euros per share. In relation to the Austrian Depositary Certificates issued during the IPO ("ADC") the cash coverage was 6.1 Euros per ADC compared to the net proceeds of IPO of 6.2 Euros per ADC. Günter Schmid, CEO: "We still have the full financial flexibility that the IPO gave us to develop our business."
The consolidated net loss of betbull amounted to 3.5 million Euros which was significantly below market expectations. 1.9 million Euros or 55% of that was accounted for by fund raising related activities, including IPO. The remaining 1.6 million Euros were spent on preparing and launching the business and marketing, further improving the scalability of the IT platform, as well as market research activities.
Overall betbull remained significantly below budgeted expenses and costs. The principal reason for this being that first marketing measures resulted in customer acquisition costs above the industry average and resultant customer activity below company expectations. This was notably also the case for the target segment of experienced bettors. Results from tests and analyses conducted by the company in Continental Europe suggest that the target customer base is too immature to fully adapt to the current betting exchange format. In addition, betbull has initially focused on a sports betting offering without horse racing, which has proved to lack the frequency of events necessary to provide sufficient betting opportunities. Also, the odds volatility on sport betting markets is not ideal for the trading techniques employed by experienced bettors. Amongst other categories of bettors there is a desire to see a simplified user interface, with the option to later on graduate towards a more complex trading environment. Simon Bold, COO: "A substantial segment of bettors are not ready to fully migrate to a betting exchange. Although they understand the advantages, the superior odds and the opportunity to trade, they shy away from learning to use the standard user interfaces. We believe however, that within the next 18 to 24 months a level of maturity comparable to the UK may be reached."
Thus betbull has drastically reduced direct marketing spend and has focused on striking partnerships with bookmakers and racing associations wishing to expand their existing offering with a betting exchange product. Correspondingly low are the number of active customers (700), the customer accounts cash balance (29,000 Euro), and the gross commission (2,300 Euro).
Meanwhile betbull has substantially improved the user interfaces and has started an ongoing continuous improvement process. The stability of the IT-platform may be emphasized - there were no down times outside the scheduled maintenance windows. The liquidity on the betting exchange was satisfactory. A team of experienced liquidity managers accounted for the major fraction of available liquidity. Bettors could place bets at odds that were clearly superior to bookmaker offerings.
For the future betbull will focus on partnering with bookmakers, racing associations and other sporting bodies: "betbull - the co-operative exchange".
The underlying model of a co-operative exchange is comparable to that of the stock exchanges. The participating bookmakers pool liquidity and commissions on the platform and receive a share of the profits. The exchange betting offering will be fully integrated into the current bookmaker offerings. Bettors would place their bets on the co-operative betting exchange using their existing bookmaker accounts. The advantages for betbull as operator of the co-operative betting exchange are: high liquidity, low customer acquisition cost, and high fraction of repeat business. Participating bookmakers profit from stopping the erosion of their customer base towards independent and competitive betting exchanges. In particular, the rapidly growing sector of live betting is highly vulnerable to the competing betting exchanges. Günter Schmid, CEO: "Propagating the co-operating model sets us clearly apart from competitors who traditionally antagonize bookmakers, racing associations, and other sporting bodies."
Initially betbull will focus on the German market. A clear and defendable unique selling proposition can be built there by occupying the horse racing market. In addition, the overall market potential in Germany is very high and still largely untapped. The first major success in this endeavor is the completion of agreements with the International Club in Baden Baden and the Münchener Rennverein that are among the leading operators of horse racing in Germany. The agreements cover the joint and exclusive promotion of a co-operative betting exchange. Betbull is currently negotiating to incorporate leading German bookmakers into the agreements. Starting with a national horse racing offering betbull intends to expand to international horse racing and launch the co-operative betting exchange under the www.betbull.de brand and site.
In a second step betbull will expand the co-operative model to European online-bookmakers. betbull has entered into corresponding talks.
In addition to sports and horse betting betbull plans to expand into other related online gaming markets and products. betbull has entered talks and negotiations with strategically identified key partners that may be completed soon. Apart from that betbull currently looks into the expansion of the exchange betting business in other complementary business fields through M&A. Of particular interest are other person to person applications and other forms of gaming. betbull is currently considering some interesting candidates.
betbull is currently re-organizing its operations toward a team based organization. The organization will be adapted to the needs of the currently pursued strategy.
Günter Schmid, CEO: "Betbull will continue to develop its business in a concentrated fashion. This, of course, does not exclude us from exploiting opportunities that fit into the overall picture. Considering the strong cash position, the early success in partnering, the product improvement and the existing cost structure, the outlook for betbull is promising. It will take time until the strategy and the progress find their way into the balance sheet.
Simon Bold, COO: "The long term prospects remain excellent and the team is committed to succeeding in an ever changing competitive environment."
betbull will announce the audited management accounts in accordance with Vienna Stock Exchange regulations on or by the 31st of March 2005.
END OF NOTICE
About betbull betbull has the goal to become one of the leading betting exchanges.
Exchange betting enables person to person betting over the Internet. Exchange betting offers the following advantages over placing bets with a bookmaker: Better odds, no limits, and betting for or against an outcome. Licensed in Gibraltar, the betbull betting exchange was launched in September 2004 under www.betbull.com.
betbulls vision is to become the "bookmakers exchange". Bettors would enter the exchange through existing accounts via a fully integrated exchange betting offering. Midterm a major fraction of the single- and live bets will be traded, cleared, and settled through betbulls exchange. The high caliber management team (Günter Schmid, CEO and Simon Bold, COO) can resort not only to state of the art bookmaking and operating know how but also relevant M&A expertise and track record.
Betbull was started in 2004 as a joint venture of betandwin.com Interactive Entertainment AG (stock quoted on the Viennese stock exchange) and Fun Technologies Plc (formerly traded as CES-Software Plc, stock quoted on the Alternative Investment Market in London) and is stock quoted since October 2004 on the Viennese stock exchange ("BETB", "BETB.VI").
For further details please refer to the company website www.betbullplc.com.
This communication contains statements about the future (prognoses). Those statements are based on the Directorss opinion, assumptions made by the Directors, and information available to the Directors. One or several factors that the Directors cannot foresee with certainty could result in outcomes and events that deviate from the prognoses. All prognoses are valid only on the date of their announcement. betbull has no intentions to and is not obliged to update prognoses or to adapt prognoses to future events or developments.
This communication can be downloaded from the website www.betbullplc.com.
end of announcement euro adhoc 10.02.2005 09:02:00
Further inquiry note: Alex Mackey, Catullus Consulting (+44 7773 787 458) Catriona MacNiven, Investor Relations Günter Schmid, CEO (upon request) Simon Bold, COO (upon request)
Fon +35 052561 Fax +35 044554 betbull - The European Betting Exchange Plc ("betbull") 1 London Wall London EC2Y5EB
Branche: Casinos & Gambling
Börsen: Wiener Börse AG / Regulated free trade