2009-07-24 08:07:00 INTERIM REPORT Q2 2009
New growth opportunities
April – June
• Betting turnover: SEK 1,990 million (2,534)
• Net turnover after fees: SEK 9.5 million (6.9)
• Gross margin: 0.48% (0.27)
• Operating income: SEK 3.2 million (2.1)
• Operating margin: 34% (30)
• Net income: SEK 2.3 million (1.7)
• Profit per share: SEK 0.01
January – June
• Betting turnover: SEK 4,257 million (6,160)
• Net turnover after fees: SEK 29.1 million (17.8)
• Gross margin: 0.68.% (0.29)
• Operating income: SEK 17.3 million (6.9)
• Operating margin: 59% (39)
• Net income: SEK 15.7 million (5.2)
• Profit per share: SEK 0.08
Managing Director comments
“The possibility of supplying odds to bookmakers presents an excellent opportunity for growth. We have plans to use our existing technology in new ways in order to increase turnover”, says Johan Moazed, Managing Director of Betting Promotion.
Overview April – June 2009
The gross margin for the quarter was lower than expected. This is partly explained by the second quarter usually being a period of high volatility. When analyzing the year following the changes implemented in the trading models it is satisfying to note that on a rolling yearly basis the company achieved a net turnover after fees of SEK 69.8 million leading to a gross margin of 0.81%
During the period we have commenced trading on live tennis. Tennis is well suited for live betting as the odds fluctuate dramatically during matches. There are good opportunities for increasing turnover on live tennis as previously the company has only traded on a small number of available matches. The trading has generated positive revenue.
Betting Promotion has also commenced negotiations which mark a new area of co-operation for the company. This will involve using our existing platform to deliver odds and risk management to bookmakers on a commercial basis. The majority of turnover on sports betting is transacted through bookmakers. By joining forces Betting Promotion will have access to this part of the market as well as our traditional betting exchange market.
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 Q2 Betting Promotion paid SEK 3.4 million as fees to betting exchanges. These fees are reflected in the gross margin and will be itemized 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 to 19% after the sale. The buyer of the shares is Key-Quest Ltd and the purchase price is SEK 12.9 million. The sale was ratified at an extraordinary general meeting (EGM) on 24 April 2009. As at 30 June 2009 Betting Promotion has a receivable of SEK 9.7 million due from Key-Quest. SEK 6.5 million is reflected under Financial Assets and the remaining SEK 3.2 million is reported under short-term receivable. During the period Key-Quest has paid SEK 3.2 million as per the agreement.
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.
Reduction of the statutory reserve
The decision of the extraordinary general meeting (EGM) to reduce the statutory reserve is expected to be registered in August 2009. Reimbursement to shareholders of an amount equivalent to SEK 0.05 per share will be done in connection to the registration. Repurchase of own shares can commence after the registration.
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 second quarter
accounted for 70% of the total betting turnover.
Live Betting
Live betting is presently offered in soccer and tennis. Turnover on tennis has mainly come from the major tournaments. There are good opportunities to increase turnover on in this sector.
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 table 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:
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 July 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
Hampus Hägglöf Helena Levander
Member of the board 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