18th Sep 2008 07:00
RNS Number : 6813D
Gaming VC Holdings S.A.
18 September 2008
|
Press Release |
18 September 2008 |
Gaming VC Holdings S.A.
(“Gaming VC” or “the Company“)
Interim Results
Gaming VC Holdings S.A., a leading European online gaming company, today announces its interim results for the six months ended 30 June 2008.
Interim Highlights
|
•
|
Revenue increased 20% to €26.3 million (H1 2007: €22.0 million)
|
|
•
|
Gross margin improved to 80% (H1 2007: 74%)
|
|
•
|
Operating profit up 19% to €10.6 million (H1 2007: €8.9 million)
|
|
•
|
EBITDA up by 7% to €10.6 million (H1 2007: €10.0 million)
|
|
•
|
Basic earnings per share €0.33(H1 2007: €0.27)
|
|
•
|
Interim dividend of €0.20 (c£0.16) (H1 2007: €0.20 (c£0.13)) to be paid on 31 October 2008
|
Commenting on the results, Kenneth Alexander, Chief Executive of Gaming VC, said: “I am pleased with the performance of the Group in the first six months of the year. These results are testament to our successful strategy of strengthening the level of expertise within the Group. Our German casino business remained resilient and we have diversified into new product and markets.
“I am confident that with the team we now have in place, we can continue our growth and diversification”
- Ends -
For further information:
|
Gaming VC Holdings S.A.
|
|
|
Kenneth Alexander, Chief Executive Officer
|
Tel: +44 (0) 20 7398 7700
|
|
|
www.gamingvc.com
|
|
Arbuthnot Securities Limited
|
Tel: +44 (0) 20 7012 2000
|
|
James Steel / Paul Vanstone, Corporate Finance
|
www.arbuthnotsecurities.co.uk
|
Media enquiries:
|
Abchurch
|
|
|
Chris Lane / Stephanie Cuthbert / Nick Probert
|
Tel: +44 (0) 20 7398 7715
|
|
www.abchurch-group.com
|
Operating and Financial Review
The first half of 2008 has seen Gaming VC continue its strong progression, following the strategic and operational changes that were made during 2007.
In the six month period to 30 June 2008, gross profit increased by 30% to €21.1 million (H1 2007: €16.3 million), EBITDA increased by 7% to €10.6 million (H1 2007: €10.0 million), resulting in profit before tax up 23% to €10.5 million (H1 2007: €8.5 million).
The core German casino/poker business remains resilient with volumes maintained due to the Group’s online affiliate marketing and continuous focus on Customer Relationship Management (“CRM”). Our CRM hub is now fully operational and all customer service and contact is being done in-house, improving the Group’s overall performance by reducing attrition levels and maintaining lifetime values.
At least two new casino brands will be launched in the second half of the year. This will enable our affiliate team to market and cross sell a diverse range of products to existing and lapsed customers, help with recruitment, and continue to increase our online presence. These new brands will primarily be targeted at customers outside of Germany.
The Italian sportsbook business continues to show impressive growth and has generated €3.2 million of gross margin from a handle of €22.5 million, representing a margin of 14.2%, during the first six months. In the second half of the year, TV and press marketing campaigns will be launched in Italy to facilitate the continued growth of our sportsbook business. We will also be launching our sportsbook in additional languages, with four new Eastern European partnership agreements signed, where there is increasing demand for online sports betting.
Our dedicated bingo brand, www.winzingo.com, which focuses on the Spanish market, is live and an increased marketing drive will take place in the second half of the year.
KPI Table
|
Daily Revenue €’000
|
H1 2008
|
H1 2007
|
change
|
H2 2007
|
change
|
|
|
|
|
|
|
|
|
Casino
|
108
|
115
|
(6)%
|
97
|
12%
|
|
Poker
|
15
|
8
|
87%
|
10
|
50%
|
|
Sports
|
19
|
-
|
n/a
|
9
|
117%
|
|
|
|
|
|
|
|
|
Total
|
142
|
123
|
15%
|
116
|
23%
|
|
|
|
|
|
|
|
|
New Funded players
|
134
|
119
|
13%
|
128
|
5%
|
Legislative Review
The German Interstate Treaty was passed in January 2008. Gaming VC reiterates the belief that the Treaty contradicts EU law. Gaming VC operates its German business under a valid EU licence from Malta and continues to conform to EU law.
Financial performance
For the six months ended 30 June 2008, the Group increased gross profit by 30% to €21.1 million (H1 2007: €16.3 million) with the margin increasing slightly to 80%. Group EBITDA increased 7% to €10.6 million (H1 2007: €10.0 million) resulting in profit before tax up 23% to €10.6 million (H1 2007: €8.5 million).
The improved financial performance over the first six months of 2008 has primarily been achieved through the additional revenue from our sportsbook, which was launched in the second half of 2007, and a shift in the Group’s focus to customer retention from marketing for new customer growth through direct mail which continued until May 2007.
In the six months to 30 June 2008, there were no significant one-off jackpot winners in the Group’s slot machine games with associated ‘progressive’ jackpots. The total of the available jackpots at the end of June 2008 was €3.8 million (30 June 2007: €3.1 million) with the largest individual jackpot being €1.7 million (30 June 2007: €1.6 million).
The Group’s operating profit for the six months to 30 June 2008 was €10.3 million (H1 2007: €8.5 million) after the deduction of distribution and administrative expenses.
Distribution costs of €5.7 million (H1 2007: €3.2 million) represent the third party marketing costs incurred by the Group to recruit active customers. The majority of costs in 2008 have been incurred through the increased use of affiliate networks rather than direct mail campaigns, which represented about €2.1 million of the 2007 costs but were stopped in May 2007. In 2008, approximately €2.8 million of the distribution costs related to the sportsbook, €2.0 million to casino and €0.8 million to poker.
The major items within the administrative expenses incurred (excluding amortisation) during the first half of 2008 are detailed below:
|
|
6 month period ended
30 June 2008
|
6 month period ended
30 June 2007
|
|
|
€’000
|
€’000
|
|
Direct employment costs
|
2,634
|
958
|
|
Share options charge
|
275
|
431
|
|
Legal, accounting and tax
|
892
|
1,068
|
|
All other Costs
|
994
|
660
|
|
|
|
|
|
Total administrative expense
|
4,795
|
3,117
|
The increase in employment costs represents the change from contracted direct mail to affiliate management, additional staffing of the sportsbook operation and the strengthening of the back room compliance services in Malta. The overall administration costs are expected to increase slightly in the second half of the year with the opening of an in-house customer service centre for Casino Club in July 2008. However, there will be some benefits experienced in reduced outsource fees in the cost of sales. Overall, moving the function in-house is expected to improve the customer retention levels over the next year.
The amortisation of intangible assets in the six month period was €0.17 million (H1 2007: €1.4 million). The economic value of the majority of amortisable intangible assets acquired on the purchase of the Casino Club business in December 2004 has now been depleted and the ongoing charge is expected to be at a similar level to the first six months of 2008.
In the reporting period, the Group generated cash of €10.6 million (H1 2007: €9.3 million) from operating activities. After payment of the 2007 final dividend of €6.1 million during the period, the Group’s closing cash balance at 30 June 2008 was €18.6 million (2006: €12.7 million).
Dividend
The core business continues to be cash generative and the policy continues that capital which cannot be effectively redeployed within the Group will be returned to shareholders. The Board has today declared an interim dividend of €0.20 per share (H1 2007: €0.20) payable on 31 October 2008 to shareholders on the Register at the close of business on 10 October 2008.
Outlook
Trading volumes and margins in the third quarter continue to be in line with market expectations. With the experienced management team we now have in place, we are confident the Group can continue to deliver growth in terms of profitability and expansion of the business outside of our core German casino business.
|
Kenneth Alexander
|
Lee Feldman
|
|
Chief Executive
|
Chairman
|
18 September 2008
Condensed consolidated interim income statement
For the period ended 30 June 2008
|
|
6 month
period ended
30 June 2008
(Unaudited)
|
6 month
period ended
30 June 2007
(Unaudited)
|
Year
ended
31 December 2007
(Audited)
|
|
In thousands of euro
|
|
|
|
|
|
|
|
|
|
Revenue
|
26,315
|
22,001
|
42,707
|
|
Cost of Sales
|
(5,214)
|
(5,707)
|
(10,538)
|
|
Gross profit
|
21,101
|
16,294
|
32,169
|
|
|
|
|
|
|
Net operating expenses ( including share option charges)
|
(10,770)
|
(7,811)
|
(15,665)
|
|
|
|
|
|
|
Operating profit before share option charge
|
10,607
|
8,913
|
17,319
|
|
Share option charge
|
(276)
|
(430)
|
(815)
|
|
|
|
|
|
|
Operating profit before financing
|
10,331
|
8,483
|
16,504
|
|
|
|
|
|
|
EBITDA
|
10,639
|
9,970
|
19,480
|
|
Depreciation
|
(136)
|
(17)
|
(57)
|
|
Amortisation
|
(172)
|
(1,470)
|
(2,919)
|
|
|
|
|
|
|
Financial income
|
261
|
200
|
459
|
|
Financial expense
|
(55)
|
(139)
|
(332)
|
|
Net financing income
|
206
|
61
|
127
|
|
|
|
|
|
|
Profit before Tax
|
10,537
|
8,544
|
16,631
|
|
Income tax expense
|
(218)
|
-
|
11
|
|
Profit for the period/year
|
10,319
|
8,544
|
16,642
|
|
|
|
|
|
|
Profit per ordinary share
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (euro)
|
0.33
|
0.27
|
0.534
|
|
Diluted earnings per share (euro)
|
0.32
|
0.27
|
0.534
|
Condensed consolidated interim statement of recognised income and expense
For the period ended 30 June 2008
|
|
6 month
period ended
30 June 2008
|
6 month
period ended
30 June 2007
|
Year ended
31 December 2007
|
|
In thousands of euro
|
|
|
|
|
|
|
|
|
|
Profit and total recognised income and expense for the period/year
|
10,319
|
8,544
|
16,642
|
Condensed consolidated interim balance sheet
As at 30 June
|
|
6 month
period ended 30 June 2008 (Unaudited)
|
6 month
period ended 30 June 2007 (Unaudited)
|
Year
ended
31 December 2007
(Audited)
|
|
In thousands of euro
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Property, plant and equipment
|
1,469
|
-
|
521
|
|
Intangible assets
|
56,370
|
57,078
|
55,724
|
|
Deferred tax asset
|
11
|
-
|
11
|
|
Total non-current assets
|
57,850
|
57,078
|
56,256
|
|
|
|
|
|
|
Trade receivables
|
3,630
|
2,746
|
3,021
|
|
Other receivables and prepayments
|
2,034
|
336
|
1,274
|
|
Cash and cash equivalents
|
18,610
|
12,658
|
15,859
|
|
Total current assets
|
24,274
|
15,740
|
20,154
|
|
Total assets
|
82,124
|
72,818
|
76,410
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Issued share capital
|
38,608
|
38,608
|
38,608
|
|
Share premium
|
13,832
|
51,977
|
51,977
|
|
Retained earnings
|
23,890
|
(20,878)
|
(18,623)
|
|
Total equity attributable to equity holders of the parent
|
76,330
|
69,707
|
71,962
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Income tax payable
|
236
|
18
|
18
|
|
Trade and other payables
|
2,125
|
776
|
1,538
|
|
Accrued expenses
|
3,433
|
1,345
|
2,892
|
|
Withholding tax on dividends
|
-
|
972
|
-
|
|
Total current liabilities
|
5,794
|
3,111
|
4,448
|
|
Total liabilities
|
5,794
|
3,111
|
4,448
|
|
Total equity and liabilities
|
82,124
|
72,818
|
76,410
|
|
|
|
|
|
Condensed consolidated interim statement of cashflows
For the period ended 30 June 2008
|
|
6 month period ended 30 June 2008
(Unaudited)
|
6 month period ended 30 June 2007 (Unaudited)
|
Year
ended
31 December 2007
(Audited)
|
|
In thousands of euro
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
Cash receipts from customers
|
26,333
|
21,109
|
41,578
|
|
Cash paid to suppliers and employees
|
(15,779)
|
(11,789)
|
(22,545)
|
|
Net cash from operating activities
|
10,554
|
9,320
|
19,033
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Interest received
|
261
|
200
|
459
|
|
Disposal of equipment
|
-
|
-
|
40
|
|
Acquisition of property, plant and equipment
|
(1,085)
|
-
|
(562)
|
|
Acquisition of intellectual property
|
(818)
|
-
|
(95)
|
|
Net cash from investing activities
|
(1,642)
|
200
|
(158)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Dividend paid
|
(6,147)
|
(6,179)
|
(12,176)
|
|
Net cash from financing activities
|
(6,147)
|
(6,179)
|
(12,176)
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
2,765
|
3,341
|
6,699
|
|
Cash and cash equivalents at beginning of the period/year
|
15,859
|
9,407
|
9,407
|
|
Effect of exchange rate fluctuations on cash held
|
(14)
|
(90)
|
(247)
|
|
Cash and cash equivalents at end of the period/year
|
18,610
|
12,658
|
15,859
|
Notes to the condensed consolidated interim financial information
Significant accounting policies
Gaming VC Holdings S.A. (the “Company”) is a company registered in Luxembourg. These interim consolidated financial statements are presented in accordance with the requirements of IAS 34 Interim Financial Reporting. The Accounting polices used in the preparation of the interim financial statements comply with the International Financial Reporting Standards (“IFRS”) as adopted by the European Union. They are consistent with those used in the annual financial statements for the year ended 31 December 2007.
The interim report contains the unaudited financial information of the Company and its subsidiaries (together referred to as the “Group”) for the 6 months ended 30 June 2008.
The condensed consolidated interim financial information was authorised for issue by the Directors on 17 September 2008.
These interim financial statements should be read in conjunction with the 2007 consolidated financial statements.
1 Segment reporting
Segment information is presented in respect of the Group’s business and geographical segments.
Business segments
Based on risks and returns and transacting with customers, the management considers that the Group’s primary reporting format is by following three business segments:
|
·;
|
Casino;
|
|
·;
|
Poker;
|
|
·;
|
Sports Betting;
|
Following the acquisition of new operating licences in the second half year 2007 and the expectation of additional licences being acquired in 2008 the management reporting now places more emphasis on vertical product groups and majority of distribution costs being allocated on an activity basis to each business segment. The 2007 data has been restated on a consistent basis.
Unallocated corporate expenses, assets and liabilities relate to the entity as a whole and cannot be allocated to individual segments.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year.
|
Period ended 30 June 2008
in thousands of euro
|
Casino
|
Poker
|
Sports Betting
|
Unallocated Corporate
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue
|
19,884
|
3,109
|
3,322
|
-
|
26,315
|
|
Gross Profit
|
15,970
|
2,039
|
3,092
|
-
|
21,101
|
|
Distribution Costs
|
2,024
|
804
|
2,838
|
-
|
5,666
|
|
Administrative expenses
|
-
|
-
|
304
|
4,491
|
4,795
|
|
Profit Before Tax
|
13,946
|
1,235
|
(50)
|
(4,594)
|
10,537
|
|
|
|
|
|
|
|
|
Segmental assets
|
58,219
|
211
|
3,084
|
20,610
|
82,124
|
|
Capital Expenditure
|
728
|
16
|
708
|
451
|
1,903
|
|
Period ended 30 June 2007
in thousands of euro’s
|
Casino
|
Poker
|
Sports Betting
|
Unallocated Corporate
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue
|
20,480
|
1,521
|
-
|
-
|
22,001
|
|
Gross Profit
|
15,280
|
1,014
|
-
|
-
|
16,294
|
|
Distribution costs
|
2,757
|
383
|
-
|
67
|
3,207
|
|
Administrative expenses
|
-
|
-
|
-
|
3,117
|
3,117
|
|
Profit Before Tax
|
12,523
|
631
|
-
|
(4,610)
|
8,544
|
|
Segmental assets
|
59,670
|
177
|
-
|
12,971
|
72,818
|
|
Capital Expenditure
|
-
|
-
|
-
|
-
|
-
|
Geographical analysis of net revenue based on location of customer
|
Period ended
|
30 June 08
€’000
|
|
30 June 07
€’000
|
|
|
|
|
|
|
|
|
Germany
|
15,902
|
60.4%
|
17,381
|
79%
|
|
Italy
|
6,683
|
25.4%
|
0
|
0.0%
|
|
Austria
|
2,249
|
8.6%
|
3,256
|
14.8%
|
|
Other
|
1,481
|
5.6%
|
1,364
|
6.2%
|
|
Total Revenue
|
26,315
|
100%
|
22,001
|
100%
|
Non current assets within Luxembourg total €nil (2008: €Nil) and non-current assets in other locations total €57.8 million (June 2007: €57 million).
All segments are continuing operations.
2 Taxation
The group has been structured to provide maximum earnings efficiency through the use of advantageous tax treaties between countries where the Group has established legal entities. The result of this structuring is a tax charge of €218,000 in H1 2008 and €Nil in H1 2007. The Group periodically reviews all of the relevant and controlling tax regulations to optimise the available benefits. A Group effective tax charge of less than 10% of net profit is envisaged to continue for the foreseeable future.
3 Dividends
The total dividend for the year 2007 amounts to €0.40, €0.20 was already declared and paid as an interim dividend as at 31 December 2007. The final dividend in respect of the financial year 2007 of €0.20 per share was declared by the Annual General Meeting held on 20 May 2008 and paid on 30 May 2008.
4 Earnings per share
The calculation of basic earnings per share at 30 June 2008 was based on the profit attributable to ordinary shareholders of €10,319,000 (2007 interim: profit of €8,544,000; full year: profit of €16,641,810) and on a weighted average number of ordinary shares in issue during the period, which totalled 31,135,762 (2007 interim: 31,135,762; full year: 31,135,762).
The calculation of diluted earnings per share at 30 June 2008 was based on the profit attributable to ordinary shareholders of €10,319,000 (2007 interim: profit of €8,544,000; full year: profit of €16,641,810) and on a weighted average number of ordinary shares in issue during the period, which totalled 31,912,744 (2007 interim: 31,135,762; full year: 31,135,762).
5 Capital and reserves
Reconciliation of movement in capital and reserves
Attributable to equity holders of the parent
|
|
Share Capital
|
Share premium
|
Retained
earnings
|
Total
|
|
In thousands of euro
|
|
|
|
|
|
Balance at 1 January 2007
|
38,608
|
57,926
|
(29,853)
|
66,681
|
|
Equity settled transactions net of tax
|
-
|
-
|
431
|
431
|
|
Dividend paid in period
|
-
|
(5,949)
|
-
|
(5,949)
|
|
Total recognised income and expense
|
-
|
-
|
8,544
|
8,544
|
|
Balance as at 30 June 2007
|
38,608
|
51,977
|
(20,878)
|
69,707
|
|
|
|
|
|
|
|
Balance at 1 July 2007
|
38,608
|
51,977
|
(20,878)
|
69,707
|
|
Equity settled transactions net of tax
|
-
|
-
|
384
|
384
|
|
Dividend paid in period
|
-
|
-
|
(6,227)
|
(6,227)
|
|
Total recognised income and expense
|
-
|
-
|
8,098
|
8,098
|
|
Balance at 31 December 2007
|
38,608
|
51,977
|
(18,623)
|
71,962
|
|
|
|
|
|
|
|
Balance at 1 January 2008
|
38,608
|
51,977
|
(18,623)
|
71,962
|
|
Equity settled transactions net of tax
|
-
|
-
|
276
|
276
|
|
Losses carried forward set-off to share premium
|
-
|
(38,145)
|
38,145
|
-
|
|
Dividend paid in period
|
-
|
-
|
(6,227)
|
(6,227)
|
|
Total recognised income and expense
|
-
|
-
|
10,319
|
10,319
|
|
Balance at 30 June 2008
|
38,608
|
13,832
|
23,890
|
76,330
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At the AGM held on 20 May 2008 in Luxembourg, shareholders agreed to write down the share premium reserve down by an equal amount to the historic retained losses.
6 Subsequent events
There have been no subsequent events between 30 June 2008 and the date of the signing of these accounts that merit inclusion.
This information is provided by RNS
The company news service from the London Stock Exchange
Related Shares:
GVC.L