2010-07-23 08:29:53 INTERIM REPORT Q2 2010
(NGM:BETT)
World Cup in focus
April - June
• Betting turnover: 2,040 SEK million (1,990)
• Net turnover after trading fees: 9.6 SEK million (9.5)
• Gross margin: 0.47% (0.48)
• Operating income: 3.6 SEK million (3.2)
• Operating margin: 38% (34)
• Net income: 4.0 SEK million (2.3)
• Profit per share: 0.42 SEK
Jan - June
• Betting turnover: 4,156 SEK million (4,257)
• Net turnover after trading fees: 17.6 SEK million (29.1)
• Gross margin: 0.42% (0.68)
• Operating income: 6.0 SEK million (17.3)
• Operating margin: 34% (59)
• Net income: 8.4 SEK million (15.7)
• Profit per share: 0.88 SEK
Managing Director comments
“During the quarter we have integrated two small sized customers to our bookmaker product. This is very pleasing and confirms that the product we offer is both attractive and competitive. Naturally the World Cup has dominated the public interest during Q2 and we are satisfied with the turnover and result of this specific event. The World Cup has also confirmed that our business model and trading system are very well suited to liquid markets”, says Johan Moazed, Managing Director of Betting Promotion.
Overview April - June 2010
Net Turnover for the second quarter was SEK 9.6 (9.5) million. The gross margin was 0.47% which is lower than what we expect over time. Live betting turnover has increased by 86% compared to the corresponding period in 2009. All trading activities are done in Euros and as a result comparative figures with previous periods can be misleading.
The World Cup has been the focus of the period and generated extra interest for the market as a whole. The turnover deriving from the World Cup during Q2, amounted to approximately SEK 511.1 million with a margin of approximately 1,06%. The largest game in terms of turnover was England - Algeria with a total turnover of SEK 16.4 million. The worst result was in the match Portugal – North Korea with a loss of SEK 558 thousand and the best result was achieved in the match Italy – New Zealand with a profit of SEK 764 thousand.
The company is in discussions with various gaming operators regarding the delivery of the bookmaker product. During the period we have integrated two small sized customers to the boomaker product. Although the turnover from these two bookmakers will have a minor impact on our overall turnover, it confirms that the product we offer is both attractive and competitive. It will give us the opportunity to test the product in a live environment and will help us to develop and enhance the service even further. The product consists in Betting Promotion delivering oddscompiling and risk management which will create risk free income for the bookmaker. We are also adjusting our offering to cover more sports and markets in order to meet the demands from these types of operators.
Betting Promotion has commercial agreements with a number of different betting exchanges. Some 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 4.2 million (3.4) as fees to betting exchanges. These fees are reflected in the gross margin and are itemized in the income statement.
Overview January - June 2010
Net Turnover for the first six months amounted to SEK 17.6 million (29.1). This means that the period show a gross margin of 0.42% (0.68).
The company's core business has shown growth over the period compared to the corresponding period last year, taking into account the currency effect. Betting turnover, in Euros, for the first six months grew by 8%. The margin for the period is lower than normally expected, however, variations between different periods are a natural part of the company's operations. Betting Promotion is continually working to further develop the trading system to achieve as high margins as possible.
The company's has during the period further developed both the technical and market-relevant part of the bookmaker service. The company has also met with and presented it’s service to a number of interested parties. Since many of these parties already have a functioning business, the sales process has proven to take longer than initially expected. Betting Promotion is convinced that the market will continue to become more efficient over time and therefore the service we offer will be sought after.
Products
An important part of Betting Promotion’s business concept is to deliver full market-making services even if some products 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. The company provides a breakdown of “Net Turnover after trading fees” and “Gross margin”, calculated as “Net Turnover after trading fees” as percent of “Betting Turnover” between various products.
Soccer
Soccer remains the core of Betting Promotion’s business and during the second quarter accounted for 55% of the total betting turnover, corresponding to SEK 1,125 million. The margin was 0.67%.
Live Betting
Live betting is presently offered in soccer and tennis. The margin for live betting was 0.26%. Betting turnover in Live increased by 86% compared to the same period in 2009.
Other
"Other" includes a number of different sports, e.g. tennis, ice hockey, rugby, basketball and American football. The bookmaker service has lead to an increased offering in this product group.
(For full report including tables, see attached file)
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INTERIM REPORT Q2 2010