2008-07-23 07:54:36 INTERIM REPORT JANUARY - JUNE 2008
Betting turnover remains strong despite weaker outcome than expected from Euro 2008.
April – June
• Betting turnover: SEK 2,534 million (2,558)
• Net turnover after fees: SEK 6.9 million (12.4)
• Gross margin: 0.27% (0.48)
• Operating income: SEK 2.1 million (8.4)
• Operating margin: 30% (68)
• Net income: SEK 1.7 million (6.3)
• Profit per share: SEK 0.01
January – June
• Betting turnover: SEK 6,160 million (5,213)
• Net turnover after fees: SEK 17.8 million (34.7)
• Gross margin: 0.29% (0.67)
• Operating income: SEK 6.9 million (26.2)
• Operating margin: 39% (76)
• Net income: SEK 5.2 million (23.3)
• Profit per share: SEK 0.03
Managing Director comments
“The increased turnover for the first 6 months was good even though the turnover from the European Championships in June did not meet our expectations. During the corresponding period in 2007 the turnover also included horseracing, a market sector we no longer support. We are focusing on improving revenues from the live betting and we do expect future improvements”, says Johan Moazed, Managing Director of Betting Promotion.
Overview April – June 2008
Gaming turnover in the industry was dominated by the European Championships. The turnover for the European Championships did not meet expectations, partly due to the fact that no team from Britain qualified for the main event. Our margin was lower than expected, but the theoretical margin, calculated internally by our trading system, was fine. This proves the system is working well. Furthermore, we had large turnover on very few games which does increase volatility. The margin from our live trading was once again lower than expected. We are working to raise profits from this sector.
The betting turnover for the second quarter was MSEK 2,534 (2,558). During the corresponding period in 2007 the turnover also included horseracing with MSEK 280, a market sector we no longer support.
Gross Margin including trading fees
Betting Promotion has separate agreements with different Betting Exchanges. Some of these agreements stipulate a trading fee to be paid by Betting Promotion. During Q2 Betting Promotion paid MSEK 2.1 to the Betting Exchanges. These fees are reflected in the gross margin and will be itemised in the income statement.
Buy Back of own shares
At the annual general shareholders meeting in May 2008, it was decided that the company would be allowed to buy back shares on the stock market. The authorization of this buyback program will be valid until the next ordinary annual general shareholders meeting. Betting Promotion does not own any shares at the moment and is authorized to buy up to 10 % of the outstanding shares. The lowest price that will be paid for a share is 1 SEK and the highest is 1.8 SEK. Betting Promotion consider its shares to be undervalued and therefore a good investment. This program will be put into effect on the 24 July 2008.
GameVillage
GameVillage is a soft gaming company of which Betting Promotion owns 50%. During Q2 2008 Betting Promotion extended an additional MSEK 1,7 to GameVillage. The aggregated total investment, as per the 30 June 2008 amounts to 18 MSEK. Betting Promotion has also extended a loan of 5,3 MSEK.
In the second quarter, GameVillage reached break even and showed a positive P/L for both May and June. The need for further investment in GameVillage is minor. It is believed that GameVillage will show positive numbers in 2008.
The Betting Promotion board has previously stated that the GameVillage holding is for sale.
During this period, negotiations have been held with several different parties.
Market Sectors
Betting Promotion provides a breakdown of results between various market sectors. An important part of Betting Promotion’s business concept is to deliver full market-making services even if some market sectors offer better margins than others. Market making is the core of Betting Promotion’s business and is comparable to businesses that guarantee liquidity for different sorts of financial instruments.
Soccer
Soccer is the foundation of Betting Promotion’s business and during the quarter represented 60% of the total betting turnover, this equals 1,514 MSEK. Soccer showed a margin of 0,30%, which is lower than our historical average. The theoretical margin as calculated by our internal system, indicates this margin to be higher.
Live Betting
Live betting is presently offered in soccer only. During the quarter, the turnover from live betting was 34% of the total turnover from soccer, this equals 765 MSEK. The margin for the live betting sector was 0,15%, lower than anticipated. Betting Promotion is prioritising the improvement of these margins.
Other
"Other" includes a number of different sports, e.g. tennis, ice hockey, rugby, basketball and American football. Betting Promotion continuously tries to develop and improve the gaming models in order to raise the margins on these markets. Turnover for this sector was 255 MSEK in Q2. The Gross Margin was 0,49%.
European Championship Tournament 2008
Turnover for the “EURO 2008” was lower than expected. One of the reasons for this was the absence of any team from Britain. Despite very good trading, yielding high theoretical margins, the outcome was lower than anticipated. This is related to the increased volatility when trading with very high volumes on a reduced number of events. Turnover was 232 MSEK and the gross margin 0,18%.
European Championship Tournament 2008 LIVE
Turnover in this sector was in line with expectations and confirmed that live betting in general is a betting form that attracts a wide interest. The gross margin was 0,40%, higher than other live betting and approaching the anticipated, long term margin. Turnover was 149 MSEK
Accounting principles
This interim report has been prepared in accordance with IAS 34.
Assessment of risk environment
Betting Promotion is in the gaming business. Results are affected by the outcome of individual sporting events. Central to Betting Promotion’s business is the technology which manages this risk. In the short term margins can vary without affecting the long term development of the Company.
Financial information 2008:
Interim report Q3 2008 22 October 2008
Board assurance
The Board of Directors and the managing director certify that the yearly financial report gives a fair review of the performance of the business, position and profit or loss of the Company and the Group, and describes the principal risks and uncertainties that the Company and the companies in the Group face.
Stockholm 23 July 2008
Betting Promotion Sweden AB (publ)
Org. nr. 556466-8860
Mats Hultin
Chairman
Johan Moazed
Member of the board and Managing director
Peder Keiller Alberoth
Member of the board
John Hodgson
Member of the board
Emmeline Matthews
Member of the board
This report has not been reviewed by the auditors.
For further information please contact:
Johan Moazed, Managing director of Betting Promotion Sweden AB.
Telephone +46 40 611 84 94
(For complete interim report see attached file)
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