2009-04-24 08:44:01 INTERIM REPORT Q1 2009
(NGM: BETT)
Margins remain high
January – March
• Betting turnover: SEK 2,267 million (3,626)
• Net turnover after fees: SEK 19.6 million (10.9)
• Gross margin: 0.87% (0.30)
• Operating income: SEK 14.1 million (4.8)
• Operating margin: 72% (44)
• Net income: SEK 13.4 million (3.6)
• Profit per share: SEK 0.07
Managing Director comments
“Betting revenue for the quarter was SEK 19.6 million, which makes it one of our best quarters. The contribution from live betting was much lower than I expect to see in the long term and I see great potential for increasing the profits as the margins on live betting improve”, says Johan Moazed, Managing Director of Betting Promotion.
Overview January – March 2009
The first quarter once again showed that the changes implemented during the second half of 2008 have had the desired effect. Betting revenue for the period increased by 80% to SEK 19.6 million (10.9) compared to the corresponding period in 2008. Betting turnover decreased by 37% to SEK 2,267 million (3,626) compared to the corresponding period in 2008. The decrease in turnover was due to the changes implemented during 2008 and is therefore not directly comparable to the corresponding period. The changes have had the effect of reducing the part of the turnover which increases the risk without necessarily increasing the revenue.
Gross Margin including trading fees
Betting Promotion has commercial agreements with a number of different betting exchanges. Most are based on commission-free trading but on exchanges with higher turnover a trading fee is paid by Betting Promotion. During Q1 Betting Promotion paid SEK 3.1 million as fees to betting exchanges. These fees are reflected in the gross margin and will be itemised in the income statement.
GameVillage
The board of Betting Promotion entered into an agreement on 9 December 2008 to sell a 33% stake in GameVillage reducing the company’s holding from 52% to 19% after the sale. The buyer of the shares is Key-Quest Ltd and the purchase price is SEK 12.9 million. As Key-Quest is the largest shareholder in Betting Promotion, the sale will be subject to ratification from an extraordinary general meeting (EGM) on 24 April 2009. As at 31 March 2009 Betting Promotion has a receivable of SEK 12.9 million due from Key-Quest. SEK 6.45 million is reflected under Financial Assets and the remaining SEK 6.45 million is reported under short-term receivable.
Betting Promotion plans to continue looking for a buyer for its remaining shares in
GameVillage as this is not part of the company’s core business.
Buy Back of own shares
On 15 May 2008 the AGM decided to give the board the mandate to buy-back up to 10% of the company’s own shares either on NGM Equity or through an offer to shareholders.
The buy-back program has been done partly through NGM Equity during the period 24 July 2008 to 3 December 2008 and partly through an offer to shareholders presented on 21 January 2009.
A total of 6,175,947 shares was registered for sale in the buy-back program. The rights that were not used have been purchased and used by shareholders in the Company. The compensation for non used rights will be SEK 0.05 per 25 rights as previously announced. This means that all the rights in the offer have been used and that Betting Promotion has bought a total of 7,933,388 of its own shares for SEK 13,090,090.20.
Betting Promotion now owns a total of 9,434,388 shares which amounts to 4.7% of equity and votes.
Reduction of the statutory reserve and reimbursement to shareholders
The Board of Betting Promotion has proposed to an EGM on 24 April 2009 to reduce the existing statutory reserve according to the following preliminary allocation:
• SEK 9.5 million for reimbursement to shareholders of an amount equivalent to SEK 0.05 per share, (the company's repurchased shares are to be excluded from this reimbursement);
• SEK 40 million to be transferred to non-restricted reserves for the repurchase of own shares;
• SEK 87 million to be transferred to non-restricted reserves to be used in accordance with future resolutions made at general meetings of shareholders.
The decision is conditional on permission for a reduction in the statutory reserve being granted the Swedish Companies Registration Office or, in the event of dispute, by a court of law. It is estimated that permission from the Swedish Companies Registration Office will be received at the start of July 2009 and the record date for the reimbursement is expected in connection with this.
The proposed resolution for the reduction and the allocation presented are a part of the Board's work to restructure the company's capital. Upon completion of the reduction, the statutory reserve will be dissolved in full.
The reduction in the statutory reserve detailed above for the reimbursement to shareholders of SEK 0.05 per share replaces the company's usual share dividend.
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 remains the core of Betting Promotion’s business and during the fourth quarter
accounted for 68% of the total betting turnover.
Live Betting
Live betting is presently offered in soccer only. During the fourth quarter, live betting accounted for 21% of the total turnover from soccer. The margin for the live betting sector was 0.32% which is below expectations. We continue to put effort into raising the 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 on these markets.
(for tables see attached file)
Accounting policy
Betting Promotion´s consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS). This interim report was prepared for the group in accordance with the IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting and calculation principles used in the interim report for the group are identical to those used in the most recent annual report.
For the parent company the interim report was prepared in accordance with RFR 2.1 “Accounting for legal entity” and the Swedish Annual Accounts Act. The accounting and calculation principles used in the interim report for the Parent Company are identical to those used in the most recent annual report.
New accounting policies in 2009
Amendments to “IAS 1 Presentation of Financial Statements: A Revised Presentation”, in which the presentation of the financial statements are changed in some respects and new non-mandatory changes are proposed to the titles of financial statements. This revised IAS 1 standard has been applied for the group from 1 January 2009 with additional information regarding comprehensive income specified as a separate section in the Consolidated Income Statement and the Statement of Changes in Shareholders’ Equity. Betting Promotion has decided to retain the old headings for financial statements. This change has been applied retroactively from 31 December 2007.
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 2009:
Annual General Meeting 15 May 2009
Interim report Q2 2009 24 July 2009
Interim report Q3 2009 25 November 2009
End of year report 25 February 2010
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 24 April 2009
Betting Promotion Sweden AB (publ)
Org. nr. 556466-8860
Mats Hultin Johan Moazed
Chairman Member of the board and Managing director
Peder Keiller Alberoth John Hodgson
Member of the board 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
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INTERIM REPORT Q2 2010