INTERIM REPORT Q3 2013

Transcription

1 INTERIM REPORT Q July - September 2013 Betting turnover: 132,779 KEUR (159,829) Net turnover after trading fees: -173 KEUR (802) Gross margin: -0.13% (0.50) 1 Operating income: -1,105 KEUR (-34) Operating margin: n/a (-4) 2 Net Income: -1,124 KEUR (-2) Earnings per share: EUR (0.00) January - September 2013 Betting turnover: 415,430 KEUR (505,597) Net turnover after trading fees: 603 KEUR (1,923) Gross margin: 0.15% (0.38) 1 Operating income: -1,916 KEUR (-607) Operating margin: -318% (-32) 2 Net income: -2,071 KEUR (-580) Earnings per share: EUR (-0.06) Significant events after the period A conditional agreement was signed 21 October for the acquisition of Tain AB. The transaction must be approved by the Extraordinary General Meeting 25 November Comments from the CEO "I can confirm that the third quarter with a loss of 1,124 KEUR, mainly due to poor margins in trading, is one of the company's worst quarter from a historical perspective. This is a powerful signal that Betting Promotion must take quick action to return to profitability that is in line with expectations. 1 Net Turnover after trading fees as percent of Betting Turnover 2 Operating Income as percent of Net Turnover after trading fees INTERIM REPORT 2013 BETTING PROMOTION 1

2 For this reason, which can t be overstated, it is important to find an operational structure that can help to achieve this. Therefore, I note with satisfaction that the acquisition of Tain AB goes according to plan. says Betting Promotion s CEO Jonas Ornstein. Overview July - September 2013 Net Turnover after trading fees for the third quarter amounted to -173 KEUR (802). Betting Turnover for the third quarter amounted to 132,779 KEUR (159,829). This means that the third quarter shows a gross margin of -0.13% (0.50). Trading Trading refers to the turnover which is traded directly on Betting Exchanges with very small margins. Net Turnover from Trading for the third quarter amounted to -330 KEUR (743). Betting Turnover for the third quarter amounted to 123,962 KEUR (153,625). This means that Trading for the third quarter shows a gross margin of -0.27% (0.48). The lower Turnover is due to the fewer number of games events in 2013 and the regulation of gaming inter alia Greece, Spain, Germany and Cyprus. During the year no major championships take place. The regulation of the gaming market in Europe is forcing betting exchanges to close down its operations before receiving a license to operate and it affects Trading adversely by reduced turnover. Turnover were also affected by the fees we pay to trade. Fees do that we can not be in the best buying or selling position and thus have fewer trades and reduced turnover as a result. During the period we also see that this increases our risk. Wider margins can lead to an unbalanced book and unfavorable positions. The net revenue for Trading contains trading fees of 327 KEUR. Over a longer period the expected trading margin is between 0.3% and 0.6%. From our routine analysis of the applied trading models and betting patterns, we have concluded that the quarter s low margins are within the expected volatility. Bookmaker Bookmaker refers to the business where the company supplies odds to operators who in turn offer these prices to end consumers. Net Turnover for the third quarter amounted to 157 KEUR (59). Betting Turnover for the third quarter amounted to 8,817 KEUR (6,204). This leads to a gross margin of 1.79% (0.95). The product is continued in the investment phase. Bookmaking shows good margins that are well in line with major sportsbook operators and is a competitive alternative for operators who do not want to self-manage their odds and risk management. INTERIM REPORT 2013 BETTING PROMOTION 2

3 Overview January September 2013 Net Turnover after trading fees for the first nine months amounted to 603 KEUR (1,923). Betting Turnover amounted to 415,430 KEUR (505,597). This means that the period shows a gross margin of 0.15% (0.38). Trading Net Turnover from Trading in the first nine months amounted to 164 KEUR (1,683). Betting Turnover amounted to 389,506 KEUR (487,864). This means that trading in the first nine months shows a gross margin of 0.04% (0.34). The lower Turnover is due to the fewer number of games events in 2013 and the regulation of gaming inter alia Greece, Spain, Germany and Cyprus. During the year no major championships take place. The regulation of the gaming market in Europe is forcing betting exchanges to close down its operations before receiving a license to operate and it affects Trading adversely by reduced turnover. Turnover were also affected by the fees we pay to trade. Fees do that we can not be in the best buying or selling position and thus have fewer trades and reduced turnover as a result. During the period we also see that this increases our risk. Wider margins can lead to an unbalanced book and unfavorable positions. The net revenue for Trading contains trading fees of 327 KEUR. Historically approximately 60% of annual revenues for football is generated between the months of September and November. Over a longer period the expected trading margin is between 0.3% and 0.6%. From our routine analysis of the applied trading models and betting patterns, we have concluded that the quarter s low margins are within the expected volatility. Bookmaker Net Turnover from Bookmaker product for the period amounted to 439 KEUR (240). Betting Turnover amounted to 25,924 KEUR (17,733). This means that the bookmaker for the period shows a gross margin of 1.69% (1.35). The product is continued in the investment phase. Bookmaking shows good margins that are well in line with major sportsbook operators and is a competitive alternative for operators who do not want to self-manage their odds and risk management. INTERIM REPORT 2013 BETTING PROMOTION 3

4 PRODUCT DISTRIBUTION FOR Q3 Betting turnover (KEUR) Net turnover after fees (KEUR) Gross margin (%) Trading 123, Bookmaker 8, Total 132, PRODUCT DISTRIBUTION FOR 2013 Betting turnover (KEUR) Net turnover after fees (KEUR) Gross margin (%) Trading 389, Bookmaker 25, Total 415, BETTING TURNOVER, KEUR Q1 229, , ,786 Q2 159, , ,865 Q3 160, , ,779 Q4 195, ,854 Total 745, , ,430 NET TURNOVER AFTER FEES, KEUR Q Q Q Q4 1,171 1,654 Total 1,936 3, OPERATING INCOME, KEUR Q1-1, Q Q ,105 Q Total -1, ,916 INTERIM REPORT 2013 BETTING PROMOTION 4

5 Significant events during the period GameVillage As at 31st March 2013, Betting Promotion had a receivable of 717 KEUR arising from the sale of GameVillage of which 180 KEUR was due within one year. During the quarter Betting Promotion has renegotiated the terms of the receivable. The company has agreed to waive off 17 KEUR and to accept a down payment of 350 KEUR. The 350 KEUR down payment is held in escrow and will be received upon finalisation of all legal due diligence and the release of pledge on GameVillage shares. The outstanding balance is subject to 4% interest and to be repaid over 35 monthly instalments. The company still holds a security in the form of property to guarantee the performance of the receivable. The down payment of 350 KEUR has been payed during the period and the pledge on GameVillage shares is released. Significant events after the period Acquisition Tain AB In board meeting held 22 August the Board Chairman and CEO where instructed to negotiate an acquisition agreement of Tain AB. Financial and legal due diligence was done on Tain AB in October. A conditional agreement was signed 21 October for the acquisition of Tain AB. For the deal to be completed requires a majority vote of 2/3 of the votes cast at a Extra General Meeting. An Extraordinary General Meeting will be held on November 25. Outlook for 2013 Betting Promotion s policy is not to issue earnings forecasts. Equity The group s equity as at the end of the quarter 2013 was 6,241 KEUR (7,853), which is equivalent to 0.66 EUR (0.82) per share. Cash and Cash flow Cash and Cash equivalents at the end of the period amounted to 3,866 KEUR (5,020). Cash flow for the period amounted to -1,675 KEUR (-557). Operating cash flow amounted to - 1,613 KEUR (-484). Cash held with licensed customers amounted to 3,145 KEUR (4,612). Parent Company Betting Promotion Sweden AB acts as a holding company and provides managerial services to the rest of the group. The main income of the Betting Promotion Sweden AB is dividends received from fully owned subsidiaries. Betting Promotions Sweden AB also receives Management Fees from fully owned subsidiaries. Revenue from Management Fees for the period amounted to 360 KEUR (360). INTERIM REPORT 2013 BETTING PROMOTION 5

6 Transactions with Related Parties Parent Company 30 Sep 31 Dec Short Term Receivable Betting Promotion Teknik Malmo AB Betting Promotion Holdings Ltd Betting Promotion Ltd - 3 Group During the period, except for ordinary remuneration to senior executives, there have been no material transactions with related parties and at end of the period there are no receivables and liabilities to related parties. 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 Annual Report for None of the new and changed standards from IFRS, applicable from 1st of January 2013, has had any effect on the Financial Statements as at 30 th September For the parent company the interim report was prepared in accordance with RFR 2 Accounting for legal entity and the Swedish Annual Accounts Act. The interim report has been prepared in accordance with the same accounting principles as in Assessment of risk environment There have been no significant changes regarding the risks and uncertainties to which Betting Promotion is exposed since the publication of the previous report and Annual Report. 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. A description of other risks and uncertainties can be found in the Annual Report Financial information 2013: End of year report Feb 2014 Certified Adviser Mangold Fondkommission AB is Certified Adviser. Mangold Fondkommission AB can be contacted by or by phone INTERIM REPORT 2013 BETTING PROMOTION 6

7 Board assurance The Board of Directors and CEO ensure that the interim report provides a true and fair overview of the Parent Company and the Group operations, position and earnings and describes the material risks faced by the Parent Company and the Group. Malmö 25 October 2013 Betting Promotion Sweden AB (publ) Org. nr Peter Åström Chairman Jonas Ornstein Member of the board and CEO Niklas Braathen Member of the board Greg Dingizian Member of the board Christer Fahlsted Member of the board This report has not been reviewed by the auditors. This Interim Report is published in Swedish and English. In the event of any difference between the English version and the Swedish original, the Swedish version shall prevail. For further information please contact: Jonas Ornstein, CEO of Betting Promotion Sweden AB. Telephone INTERIM REPORT 2013 BETTING PROMOTION 7

8 Appendix GROUP INCOME STATEMENT (KEUR) Note Jul-Sep Jul-Sep Jan-Sep Jan-Sep Net turnover 154 1,094 1,604 2,938 Work performed by the company for its own use and capitalized Trading fees ,001-1,015 Other external expenses , Staff expenses ,323-1,544 Depreciation Operating income -1, , Financial net Income after financial items -1, , Income taxes Income for the period -1, , Attributed to: Equity Holders of the Parent Company -1, , Gross margin (%) Operating margin (%) n/a Earnings per share before & after dilution (EUR) Average number of shares, (thousand) 9,520 9,520 9,520 9,520 Number of shares outstanding, (thousand) 9,520 9,520 9,520 9,520 Note 1 Financial net includes a write off relating to GameVillage and Key Quest of 17 KEUR and 106 KEUR respectively. STATEMENT OF COMPREHENSIVE INCOME (KEUR) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Income for the period -1, , Recalculation difference Total other comprehensive income for the period -1, , Attributed to: Equity Holders of the Parent Company -1, , INTERIM REPORT 2013 BETTING PROMOTION 8

9 GROUP BALANCE SHEET (KEUR) Assets Note 30 Sep 30 Sep 31 Dec Intangible assets 1,245 1,359 1,314 Tangible assets Financial assets Deferred tax assets Total non-current assets 2,059 2,456 2,260 Short-term receivables Marketable securities Cash and bank accounts 3 3,866 5,020 5,542 Total current assets 4,409 5,666 6,349 Total assets 6,468 8,122 8,609 Shareholders equity and liabilities Share capital 2,136 2,136 2,136 Additional contributed capital 1,363 1,363 1,363 Reserves Retained earnings incl income for the period 3,492 5,100 5,564 Total equity attributed to parent company 6,241 7,853 8,313 Total shareholders equity 6,241 7,853 8,313 Deferred Tax Liabilities Current Liabilities Total liabilities Total shareholders equity and liabilities 6,468 8,122 8,609 Note 2 Financial Assets and short term receivable comprise from a receivable of 210 KEUR and 120 KEUR respectively, arising from the sale of GameVillage. comparable amounts were 582 KEUR and 133 KEUR respectively. As at 31 December 2012 the Note 3 Cash and bank accounts include cash assets held with customers. As at 30 September 2013 cash held with customers amounted to 3,145 KEUR (4,612) and as at 31 December ,600 KEUR. INTERIM REPORT 2013 BETTING PROMOTION 9

10 GROUP CASH-FLOW STATEMENT (KEUR) Note Jul-Sep Jul-Sep Jan-Sep Jan-Sep Income after financial items 4-1, , Depreciation & gain/losses from disposal/sale of fixed assets Taxes Cash flow from change in working capital Cash flow from operating activities -1, , Cash flow from investing activities Cash flow from financing activities Cash flow for the period , Cash and cash equivalents, start of period 4,517 4,823 5,542 5,570 Translation difference on cash and cash equivalents Cash and cash equivalents, end of period 3,866 5,020 3,866 5,020 Note 4 The difference in income after financial items compared to the Group Income Statement relates to non cash financial items such as unpaid interest and unrealized currency differences. GROUP CHANGES IN SHAREHOLDERS EQUITY (KEUR) Jan-Sep Jan-Sep Jan-Dec Equity Attributed to Parent Company Total equity at beginning of period 8,313 8,425 8,425 Total comprehensive income for the period -2, Total equity attributed to parent company 6,241 7,853 8,313 INTERIM REPORT 2013 BETTING PROMOTION 10

11 PARENT COMPANY INCOME STATEMENT (KEUR) Jul-Sep Jul-Sep Jan-Sep Jan-Sep Net turnover Other external expenses Staff expenses Depreciation Operating income Interest income and similar credits Interest expense and similar credits Income after financial items Income taxes Income for the period PARENT COMPANY BALANCE SHEET (KEUR) 30 Sep 31 Dec Assets Financial assets 11,373 11,367 Total non-current assets 11,373 11,367 Short-term receivables Marketable securities - 3 Cash and bank accounts Total current assets Total assets 12,151 12,147 Shareholders equity and liabilities Restricted Capital Share capital 2,136 2,136 Non-Restricted Capital Share premium reserve Retained earnings 9,708 9,861 Income for the period Total shareholders equity 12,099 12,094 Current liabilities Total liabilities Total shareholders equity and liabilities 12,151 12,147 INTERIM REPORT 2013 BETTING PROMOTION 11