5th Sep 2005 07:03
Gaming VC Holdings S.A.05 September 2005 Gaming VC Holdings S.A Maiden Interim Results for the Half-Year Ended 30th June 2005 Gaming VC Holdings S.A., a leading online casino games operator, is pleased toannounce maiden interim audited results for the half year ended 30th June 2005. Gaming VC went public in December 2004 with the largest Internet casino andmedia company flotation ever on London's Alternative Investment Market (AIM),successfully raising £81m. These funds were used to purchase the assets ofCasinos International NV (Casino-Club), the dominant online casino inGerman-speaking markets, and to establish Gaming VC as a new force in the onlinegaming marketplace. FINANCIAL HIGHLIGHTS * Handle EUR 880 million * Net Revenue EUR 21.3 million * Profit Before Tax EUR 11.1 million * Cash generated from operations of EUR 11.9 million * Basic earnings per share EUR 0.36 * Dividend declared of 21p per share OPERATIONAL HIGHLIGHTS * 8,115 new depositing customers * Conversion rate after first registration of 62% * New developments in the period: + Soft launch of Spanish site + Planned launch of new Poker site * Two magazines published as per plan Commenting on the first half results Steve Barlow, CEO said: "Being a new company, our first six months has been about getting the financialsystems and key personnel required to position Gaming VC for growth as well asmaintaining the existing business. "We had an excellent first quarter supported by some initial marketing inGermany including the distributions of our magazine. During the second quarterwe didn't spend as much as we had originally planned on marketing, whichimpacted our revenue figures. We have a major marketing initiative under way inthe second half which we anticipate will kick start revenue growth." For further information contact: Steve Barlow, CEO 020 7554 1400Robert Willis, CFO 020 7554 1400Ken Cronin, Gavin Anderson & Company 020 7554 1400Robert Speed, Gavin Anderson & Company 020 7554 1400 Note to Editors Gaming VC Holdings SA (AIM: GMHq.L) is a leading online casino games operatorwith an annualized handle in excess of EUR 1.5 billion. The majority of itsexisting customers come from German speaking countries. The company listed onthe Alternative Investment Market in December 2004. Gaming VC Holdings also ownstwo magazines, Casino Club and Roulette. Through these unique marketing andinformation magazines it is able to attract and retain casino games players. STRATEGY Casino-Club has a leading position in the German speaking gaming market that hasallowed it to become the leading online casino brand in Germany. The Group'sstrategy is to improve profitability of these operations through more effectivemanagement and marketing. In addition, the Group intends to develop theCasino-Club brand throughout Europe, initially targeting Spain with Italy andRussia on the near horizon. The Company intends to target these markets usingthe customer acquisition and retention techniques used to develop the existingbusiness coupled with database mining, affiliate programs and other internet andtraditional marketing efforts. In parallel to the current gaming offering, the Company intends to introduce newproducts, the first of which is poker. OPERATIONAL AND MARKETING REVIEW The first six months have been very active in terms of establishing the buildingblocks of a quoted Company. Key finance and marketing roles have been filled tobring specialized expertise, knowledge, and experience to the organization. For our existing customers, two Casino-Club magazine editions have beenpublished in Germany in the first six months, in addition to a customizedSpanish-language version to introduce Casino-Club to Spain. The first issue wassent out in late March (c70k copies) and the second issue mid June (c90k copies). Customer databases and other tools necessary to track customers and ensurecustomer longevity have also been established. The Company is working to expand the geographic areas it serves to encompassSpain in the second half of 2005. With the move to new regions, the focus willbe on customizing the gaming experience to match the language and unique needsof each geographic region - bringing the winning Casino-Club approach to newmarkets. The groundwork for expanding products in late 2005 has been laid by establishingthe marketing and technological plan for offering a best-of-breed online pokeroffering on Casino-Club later this year. While Roulette and Black Jack remainthe Company's most popular games, leveraging the current popularity and highvisibility of online poker is desirable. German Marketing Casino Club's quarterly player magazine mailed twice during the period. Strongrevenues subsequent to each posting continue to make management believe thatthis method continues to be effective in engaging customers to play more andmore often at Casino Club. Casino Club also recently started monthly electronicnewsletters to players who have opted-in for email communication. Management iscurrently testing new segmentation targeting methods. Player acquisition efforts were restarted in Germany with a large direct mailtest campaign. Over fifty lists and four different offers were tested. A newcampaign tracking system was implemented to measure results. Preliminarycampaign results to date suggest direct mail will continue to be an economicacquisition channel at the targeted level of €250 per new paid player. The Company has engaged an external gaming-focused agency to help in theimplementation of various paid media channels to acquire more German-speakingplayers. Included in this will be search engine optimization, affiliatemarketing and rich media (banner/button) campaigns. Spanish marketing Following an initial exploratory intelligence gathering email and mail campaigninto Spain to test messages and medium, the company has developed its plan morefully and is now ready for a simultaneous launch of poker and casino inSeptember. Research in Spain shows a primary target audience of 4.7 million potentialcustomers that matches the demographics of the Company's German customer base.Quantitative research shows 40% of this target audience are early adopters whohave already an affinity for online gaming. Poker Casino Club's on-line poker room completed a soft-launch in August, andunderwent beta-level testing during the European holiday. Substantive marketingefforts promoting this new product set are scheduled to launch in earlySeptember with Casino Club magazine and to new prospects by mid-to-late Sept viadirect marketing mail campaigns. The launch in Spain will be educational as research shows that Europeans wantmore information on how to play the game. In Spain newspaper, radio and onlinemedia will be used, backed up by a company-sponsored celebrity, Juan CarlosMortensen, appearing at the Barcelona Open (Sept 13-18th ). In due course aGaming VC poker tournament will be held and an e-zine will be published.The poker launch in Germany will be similar, promoting an educational .netaddress. A combination of direct mail and e-marketing will be used. TheCasino-Club Magazine will include a poker section. The Company will also runtournaments, giving prizes and trips. Dividends The Board has decided to pay an interim dividend of 21p (c• 0.302) per share on30 September 2005 to shareholders on the register at close of business on 16September 2005. This will consume a total of 6,538,511 GBP (c9.6 million Euros)in cash. MANAGEMENT In addition to the recent key marketing hires, the Company is recruiting a ChiefMarketing Officer. As a result of the recent appointment of Marie Stevens as Chairman of 888.com,the Company has reluctantly accepted her offer of resignation. OUTLOOK The second half of 2005 promises to be very exciting. We will see the results ofthe first marketing campaign into Germany, the full launch of products intoSpain and the launch of Poker. Visibility of the performance of the marketing campaigns as well as impact ontrading will become much clearer into the fourth quarter. The Group is wellpositioned to take full advantage of a number of new opportunities includinggrowth from its current market place. FINANCIAL REVIEW Gross Wagering Activity and Turnover Strong turnover was experienced during the first quarter due to seasonal factorsas well as novelty increases associated with the introduction of new,high-margin, online slot machine games. Despite 8,115 new depositing customers,revenue in the second quarter softened due to the normal decay rate of thecustomer base combined with minimal deployment of marketing resources. The total gross wagering activity was • 880 million, with a house drop of • 22.8million and net revenue of €21.3 million. Gross wagering and gross house dropinclude the effect of bonuses, which are inducements to wager offered by theGroup to customers. Roulette is still the most popular game accounting forapproximately 70% of all wagers placed Gross Profit The Group achieved gross profits of • 16.5 million. The primary costs of goodssold for the group are the turn-key on-line casino services provided by BossMedia and its subsidiaries. Operating Profit The major general and administrative costs of the Group are personnel-related,including travel, legal and financial providers, and marketing. In addition, theGroup operates online slot-machine games with associated "progressive" jackpots.These jackpots provide the opportunity to customers to win an aggregated jackpotamount which, until won, progressively increase with time. For the reporting period, the Group had total personnel salary and benefit costsof • 1.0 million . The total Group headcount at the end of the reporting periodwas 14. The Group expects modest increases in these costs in the second half of2005. The Group makes use of best-of-breed financial and legal service providers. Thisoutsource model is necessary and efficient because of the disparate physical andlegal structure of the Group. In the reporting period, the Group had outsourcedfinance service provider costs of • 0.1 million and outsourced legal serviceprovider costs of • 0.4 million The Group expects that these costs will remainapproximately the same for the second half of 2005. The Group's marketing expenditures of • 0.9 million in the reporting period aresubstantially lower than the expected run-rate to be deployed in the future. Thelevel of future resource commitments in the marketing function of the Group willbe based on the success of new marketing initiatives currently beingimplemented. The Group had no substantial jackpot winners in the reporting period. Thejackpot balance at 30 June 2005 was approximately • 1.3 million and represents afuture potential source of operating profit volatility. The total operating costs of the Group in the reporting period were • 5.3million The Group therefore realized an operating profit of • 11.2 million. Taxes The Group has been structured to provide maximum earnings efficiency through theuse of advantageous tax treaties between countries where the Group hasestablished legal entities. The result of this structuring is a total tax chargeof • 0.01 million for the reporting period. The Group periodically reviews allof the relevant and controlling tax regulations to sustain this benefit. Cash Flow Because of the low effective tax rate of the Group and the lack of leverage inuse, the Group delivered 107.6% of profit for period. Additionally, the Grouphas minimal capital expenditures of • 0.1 million, primarily relating tocomputer equipment and software, in the period ending 30 June 2005. In thereporting period, the Group generated • 11.9 million of cash from operatingactivities. Dividends The Board has decided to pay an interim dividend of 21p (c• 0.302) per share on30 September 2005 to shareholders on the register at close of business on 16September 2005. This will consume a total of 6,538,511 GBP (c9.6 million Euros)in cash. The consolidated income statement, balance sheet, cash flow and statement ofrecognized income included in this press release have been extracted from theaudited interim financial statements of Gaming VC Holdings S.A., which will beavailable on the company's web site by the end of September. Consolidated income statement AuditedFor the period ended 30 June 2005 6 month 1 month Period ended Period ended 30 June 31 December 2005 2004In thousands of euro Revenue 21,269 670Cost of sales (4,794) (137) ------------------------------Gross profit 16,475 533 Distribution expenses (859) -Administrative expenses (4,437) (161) ------------------------------Operating profit before financing costs 11,179 372 Financial income 16 7Financial expenses (138) - ------------------------------Net financing costs (122) - ------------------------------Profit before tax 11,057 379 Income tax expense (13) (5) ------------------------------Profit for the period 11,044 374 ------------------------------Basic earnings per share (euro) 0.36 0.02Diluted earnings per share (euro) 0.35 0.02 Consolidated statement of recognised income and expense AuditedFor the period ended 30 June 2005 6 month 1 monthIn thousands of euro Period ended Period ended 30 June 31 December 2005 2004Profit and total recognised income and expense for the 11,044 374period Consolidated Balance sheetAs at 30 June 2005In thousands of euro AssetsProperty, plant and equipment 55 -Intangible assets 104,159 105,479 Total non-current assets 104,214 105,479 ----------------------------------Trade and other receivables 3,192 752Cash and cash equivalents 12,058 1,270 ----------------------------------Total current assets 15,250 2,022 ----------------------------------Total assets 119,464 107,501 ----------------------------------EquityIssued capital 38,608 38,608Share premium 67,522 67,522 Retained earnings 11,582 383 ----------------------------------Total equity attributable to equity holders of the parent 117,712 106,513 ----------------------------------LiabilitiesTrade and other payables 1,752 988Total current liabilities 1,752 988 ----------------------------------Total liabilities 1,752 988 ----------------------------------Total equity and liabilities 119,464 107,501 ---------------------------------- Consolidated statement of cash flows AuditedFor the period ended 30 June 2005 6 month 1 month Period ended Period ended 30 June 31 DecemberIn thousands of euro 2005 2004 Cash flows from operating activitiesCash receipts from customers 19,828 50Cash paid to suppliers and employees (7,950) (268) -------------------------------- Net cash from operating activities 11,878 (218) --------------------------------Cash flows from investing activitiesInterest received 15 -Acquisition of business - (105,516)Acquisition of property, plant and equipment (65) -Acquisition of intellectual property (75) - --------------------------------Net cash from investing activities (125) (105,516) --------------------------------Cash flows from financing activitiesProceeds from the issue of share capital - 117,562Payment of transaction costs (849) (10,565)Net cash from financing activities (849) 106,997 --------------------------------Net increase in cash and cash equivalents 10,904 1,263Cash and cash equivalents at 1 January 1,270 -Effect of exchange rate fluctuations on cash held (116) 7 --------------------------------Cash and cash equivalents at 30 June 12,058 1,270 -------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GVC.L