Announcements

OEG consolidated unaudited results for Q3 and 9 months of 2010

Posted on 05.11.2010

OEG consolidated unaudited results for Q3 and 9 months of 2010

Selected financial data, Q3 2010:
Continuing operations

Revenue:

452.4

million kroons

(Q3 2009: 415.1)

EBITDA:

107.0

million kroons

(Q3 2009:  23.4)

EBITDA margin:

23.6%

(Q3 2009:  5.6%)

EBIT:

41.8

million kroons

(Q3 2009: -80.8)

EBIT margin:

9.2%

(Q3 2009:-19.5%)

 

Net profit (loss) before income tax*:

40.1

million kroons

(Q3 2009: -84.5)

Selected financial data, 9 months 2010:
Continuing operations

Revenue:

1 280.4

million kroons

(Q3 2009: 1 279.0)

EBITDA:

242.9

million kroons

(Q3 2009:  53.8)

EBITDA margin:

   19.0%

(Q3 2009:    4.2%)

EBIT:

32.9

million kroons

(Q3 2009:  -222.3)

EBIT margin:

2.6%

(Q3 2009:  -17.4%)

 

Net profit (loss) before income tax*:

26.5

million kroons

(Q3 2009: -227.9)

* Net profit (loss) before minority interest

1 EUR = 15.6466 EEK

In Q3 2010 the Group continued improving its efficiency and financial results according to expectations. In Q3 2010 Group´s revenue growth composed 9.0% or 37.3 million kroons (2.4 million euros) compared to the same period last year. In Q3 2010 Group´s revenues composed 452.4 million kroons (28.9 million euros), in Q3 2009 Group earned 415.1 million kroons (26.5 million euros) of revenue from continuing operations.

Group has earned an EBITDA of 107.0 million kroons (6.8 million euros) in Q3 2010, which is 356% more than within the same period last year from continuing operations. Eliminating an influence of non-recurring expenses from 2009 Q3 EBIDTA, the quarterly growth would compose 70.0 million kroons (4.5 million euros) or 189%. Operating income in Q3 2010 constituted 41.8 million kroons (2.7 million euros), within the same period last year Group has earned operating loss of 80.8 million kroons (5.2 million euros). Operating result grew 122.6 million kroons (7.8 million euros). Eliminating an influence of non-recurring expenses from 2009 Q3 operating loss, the quarterly growth of operating result would compose 82.2 million kroons (5.3 million euros).

In Q3 2010 consolidated revenues have increased in Estonia 14.2%, in Latvia 7.1%, in Lithuania 1.3%, in Belarus 31.0%, in Romania 94.9% and in Slovakia 23.9%compared to Q3 2009. Only in Poland revenues have decreased by 4.4% in comparison to Q3 2009. All segments earned operating profit in Q3 2010, except for Polish segment, which operating result was near breakeven level.

Significant developments in 9 months of 2010:

  • Group has achieved net profit – consolidated net profit for the 9 months of 2010 after corporate income tax composed 18.6 million kroons (1.2 million euros). Within the 9 months of 2009 Group has earned net loss  after corporate income tax in continuing operations in amount of 226.2 million kroons (14.5 million euros).
  • Efficiency of the Group operational activity has improved significantly. 1 280.4 million kroons (81.8 million euros) of revenue was earned in Group continuing operations, 0.1% more compared to 2009 9 months revenue. At the same time, the number of operated casinos was decreased by 4 or 6% and operating expenses have been decreased by 16.9% or 253.8 million kroons (16.2 million euros).
  • In the 2nd quarter of 2010 the Group has decided to close 3 casinos in order to improve operational efficiency: 1 in Estonia and 2 in Poland. This has caused assets impairment, which has influenced Q2 2010 financial results by 11.0 million kroons (0.7 million euros).
  • The Group has grown its market share in accordance with projections. By the end of September 2010 the market share in Estonia was 52%, in Latvia 20% and in Lithuania 68%. At the end of September 2009 the market share in Estonia was 49%, in Latvia 14% and in Lithuania 61%.
  • In January 2010 Group´s subsidiary Olympic Casino Eesti AS has received a first Estonian online gaming operational licence.  Online casino was launched in February. During the 9 months of 2010 the Group has earned 15.1 million kroons (1.0 million euros) of revenue from the online gaming activity.
  • In June new 3rd casino project was started in Slovakia. Slovakian segment revenue growth has been the fastest during 9 months of this year, the growth composed 23.3% compared to the 9 months of the last year. The 3rd Olympic Casino is located in the newest and largest shopping mall Eurovea Galleria in the Bratislava city center. The total investment in the new casino amounted to 6.3 million kroons (0.4 million euros).

In the 9 months of 2010 the Group has earned 1 271.4 million kroons (81.3 million euros) of consolidated sales revenue and 1 280.4 million kroons (81.8 million euros) of total revenue, which is 0.1% more than 1 279.0 million kroons (81.7 million euros) total revenue earned from continuing operations in the 9 months of 2009. Group´s EBITDA has grown from 53.8 million kroons (3.4 million euros) earned from continuing operations in the 9 months of 2009 to 242.9 million kroons (15.5 million euros) earned within the 9 months of the current year. Operating income for the 9 months of 2010 constituted 32.9 million kroons (2.1 million euros), while operating loss for the 9 months of 2009 constituted 222.3 million kroons (14.2 million euros).

In the 9 months of 2010 92% of consolidated revenue was formed by gaming operations and 8% of other income, last year the corresponding proportion was 93% to 7%. External revenue by segments  

(thousands EEK)

9 months 2010

Change%

Proportion

9 months 2009

Proportion

Estonia

316,814

9.6%

24.7%

289,077

22.6%

Latvia

272,151

-1.9%

21.3%

277,440

21.7%

Lithuania

200,381

-10.8%

15.6%

224,538

17.6%

Belarus

35,592

16.3%

2.8%

30,615

2.4%

Poland

312,620

-6.8%

24.4%

335,474

26.2%

Romania

43,675

5.5%

3.4%

41,404

3.2%

Slovakia

99,213

23.3%

7.8%

80,461

6.3%

Total

1,280,446

0.1%

100.0%

1,279,009

100.0%

1 EUR = 15.6466 EEK

At the end of September 2010, Group operated 64 casinos with a total area of 24,988 m². At the end of September 2009 Group had 68 casinos with a total area of 25,642 m². During the 9 months of 2010 1 casino in Estonia and 2 casinos in Poland were closed.

Number of casinos by segments

30 September 2010

30 September 2009

Estonia

17

19

Latvia

21

21

Lithuania

10

11

Belarus

5

5

Poland

7

8

Romania

2

2

Slovakia

2

2

Total

64

68

Group consolidated expenses before depreciation and impairment within the 9 months of 2010 have decreased by 15.3% or 187.6 million kroons (12.0 million euros) compared to the expenses from continuing operations in the 9 months of 2010, including decrease of Q3 expenses by 11.8% or 46.2 million kroons (3.0 million euros) compared to the same period a year ago. The strongest decline compared to the 9 months of 2009 came from personnel expenses 18.1% or 75.0 million kroons (4.8 million euros), rental expenses 25.9% or 43.3 million kroons (2.8 million euros) and gaming equipment maintenance expenses 49.1% or 15.1 million kroons (1.0 million euros).

The largest Group expense article before depreciation and impairment is personnel expenses including social charges of 339.9 million kroons (21.7 million euros), followed by gaming tax expenses of 290.4 million kroons (18.6 million euros), rental expenses of 124.1 million kroons (7.9 million euros) and marketing expenses of 105.8 million kroons (6.8 million euros).

Group´s net profit after corporate income tax for the 9 months of 2010 equalled 18.6 million kroons (1.2 million euros), in the same period of 2009 net loss from continuing operations totalled 226.2 million kroons (14.5 million euros).

Estonian segment

In the 9 months of 2010 the segment external revenue amounted to 316.8 million kroons (20.2 million euros), including landbase gaming revenue of 270.1 million kroons (17.3 million euros), online gaming revenue of 15.1 million kroons (1.0 million euros) and other revenue of 31.6 million kroons (2.0 million euros).

Estonian segment external revenue has grown 9.6% compared to the same period last year. Decline of the Estonian gaming market in the 9 months of 2010 compared to the same period last year composed 2.6%. Olympic Casino Eesti AS market share on Estonian gaming market at the end of September 2010 composed 52%, at the end of September 2009 Olympic Casino Eesti AS market share amounted to 49%. Estonian segment 9 months 2010 EBITDA equalled 57.5 million kroons (3.7 million euros) and operating profit amounted to 4.7 million kroons (0.3 million euros). In the 9 months of 2009 Estonian segment has earned an EBIDTA of -4.2 million kroons (-0.3 million euros) and operating loss of 74.8 million kroons (4.8 million euros). At the end of September, there were 17 Olympic Casinos in Estonia with a total of 698 slot machines and 19 game tables.

Latvian segment

In the 9 months of 2010 Latvian segment external revenue amounted to 272.2 million kroons (17.4 million euros), including gaming revenue of 248.3 million kroons (15.9 million euros) and other revenue of 23.9 million kroons (1.5 million euros). Latvian segment external revenue has decreased by 1.9% compared to the same period last year. The decline of the gaming market in Latvia in the 9 months of 2010 composed 23% compared to the same period last year. At the end of September 2010 Olympic Casino Latvia SIA market share on the Latvian gaming market composed 20%, at the end of the September 2009 Olympic Casino Latvia SIA market share was 14%.

Latvian segment EBITDA for the 9 months of 2010 equalled 91.0 million kroons (5.8 million euros) and operating profit amounted to 42.4 million kroons (2.7 million euros). In the 9 months of 2009 Latvian segment has earned an EBITDA of 34.5 million kroons (2.2 million euros) and operating loss of 40.5 million kroons (2.6 million euros).

At the end of the September 2010 there were 21 Olympic casinos in Latvia with a total of 651 slot machines and 23 game tables.

Lithuanian segment

Lithuanian segment has finished the 9 months of 2010 with an external revenue of 200.4 million kroons (12.8 million euros), including gaming revenue of 188.7 million kroons (12.1 million euros) and other revenue of 11.7 million kroons (0.7 million euros). Lithuanian segment external revenue has decreased by 10.8% compared to the same period last year. Decline of the gaming market in Lithuania in the 9 months of 2010 totalled 20% in comparison with the 9 months of 2009. At the end of September 2010 Olympic Casino Group Baltija UAB market share on Lithuanian gaming market was 68%, at the end of September 2009 Olympic Casino Group Baltija UAB market share was 61%.

Lithuanian segment EBITDA in the 9 months of 2010 amounted to 38.6 million kroons (2.5 million euros) and operating profit equalled 12.5 million kroons (0.8 million euros). In the 9 months of 2009 Lithuanian segment has earned an EBITDA of 25.3 million kroons (1.6 million euros) and operating loss of 9.7 million kroons (0.6 million euros).

At the end of September there were 10 Olympic casinos in Lithuania with a total of 350 slot machines and 50 game tables.

Belarus segment

Belarus segment external revenue for the 9 months of 2010 amounted to 35.6 million kroons (2.3 million euros), including gaming revenue of 32.6 million kroons (2.1 million euros) and other revenue of 3.0 million kroons (0.2 million euros). Belarus segment external revenue has grown 16.3% compared to the same period a year ago.

Belarus segment EBITDA for the 9 months of 2010 totalled 9.0 million kroons (0.6 million euros) and operating loss equalled 1.6 million kroons (0.1 million euros). In the 9 months of 2009 Belarus segment has earned an EBITDA of 2.6 million kroons (0.2 million euros) and operating loss of 8.2 million kroons (0.5 million euros).

At the end of September 2010, 5 Olympic Casinos were operating in Belarus with a total of 246 slot machines.

Polish segment

Polish segment has finished the 9 months of 2010 with an external revenue of 312.6 million kroons (20.0 million euros), including gaming revenue of 306.3 million kroons (19.6 million euros) and other revenue of 6.3 million kroons (0.4 million euros). External revenue of the Polish segment has decreased by 6.8% compared to the same period last year.

Polish segment 2010 9 months EBIDTA totalled 35.4 million kroons (2.3 million euros) and operating loss was 16.2 million kroons (1.0 million euros). Operating loss includes 11.0 million kroons (0.7 million euros) of assets impairment expenses connected with closure of 2 casinos in Q2 2010. In the 9 months of 2009 Polish segment has earned an EBITDA of 21.1 million kroons (1.3 million euros) and operating loss of 25.7 million kroons (1.6 million euros).

During the 9 months of 2010 1 casino was reopened and 2 casinos were closed in Poland. At the end of September there were 7 Olympic casinos in Poland with a total of 319 slot machines and 43 game tables.

Romanian segment

In the 9 months of 2010 Romanian segment external revenue equalled 43.7 million kroons (2.8 million euros), including gaming revenue of 33.0 million kroons (2.1 million euros) and other revenue of 10.7 million kroons (0.7 million euros). Romanian segment external revenue has grown by 5.5% compared to the 9 months of 2009.

Romanian segment EBITDA for the 9 months of 2010 composed -7.9 million kroons (-0.5 million euros) and operating loss was 18.4 million kroons (1.2 million euros). During the 9 months of 2009 Romanian segment has earned an EBITDA of -36.0 million kroons (-2.3 million euros) and operating loss of 64.4 million kroons (4.1 million euros).

At the end of September 2010, there were 2 Olympic casinos operating in Romania with a total of 79 slot machines and 13 game tables.

Slovakian segment

In the 9 months of 2010 Slovakian segment has earned 99.2 million kroons (6.3 million euros) of external revenue, including gaming revenue of 89.9 million kroons (5.7 million euros) and other revenue of 9.3 million kroons (0.6 million euros). Slovakian segment external revenue has grown by 23.3% compared to the 9 months of 2009.

Slovakian segment EBITDA for the 9 months of 2010 amounted to 19.3 million kroons (1.2 million euros) and operating profit was 9.5 million kroons (0.6 million euros). In the 9 months of 2009 Slovakian segment has earned an EBITDA of 10.5 million kroons (0.7 million euros) and operating profit of 0.9 million kroons (0.1 million euros).

At the end of September 2010, there were 2 Olympic casinos operating in Slovakia with a total of 102 slot machines and 22 game tables.

Financial position

At September 30th 2010, the consolidated balance sheet of Group totaled 1,667.4 million kroons (106.6 million euros). At December 31st 2009, the consolidated balance sheet of Group amounted to 1,776.0 million kroons (113.5 million euros). Balance sheet volume has decreased by 6.1% within the 9 months, which is mostly connected with loan repayments.

Current assets accounted for 567.0 million kroons (36.2 million euros) or 34.0% of total assets and non-current assets for 1,100.4 million kroons (70.3 million euros) or 66.0% of total assets. Intangible assets accounted for 455.1 million kroons (29.1 million euros) or 41.4% of non-current assets.

At September 30th 2010 Group´s liabilities amounted to 343.8 million kroons (22.0 million euros) and consolidated equity totalled 1,323.6 million kroons (84.6 million euros). The largest part of Group´s liabilities were loans in amount of 158.1 million kroons (10.1 million euros), tax commitments of 55.6 million kroons (3.6 million euros) and payables to employees of 40.4 million kroons (2.6 million euros).

Investments

In the 9 months of 2010 Group´s investments into tangible assets amounted to 55.5 million kroons (3.5 million euros), including 37.7 million kroons (2.4 million euros) invested into new gaming equipment. Investment into intangible assets within the 9 months of 2010 equalled 9.6 million kroons (0.6 million euros).

In the 9 months of 2009 a total of 63.9 million kroons (4.1 million euros) was invested into tangible and intangible fixed assets. The major part of investments was connected with the flagship casino opened in Romanian capital Bucharest and the opening of the second casino in Slovakia.

Cash flows

Group´s operational cash flows during the 9 months of 2010 were 201.0 million kroons (12.8 million euros). Cash flows from investing activities were 19.7 million kroons (1.3 million euros) and cash outflows from financing activities were 133.1 million kroons (8.5 million euros). Net cash flows amounted to 87.5 million kroons (5.6 million euros).

Group´s operational cash flows in the 9 months of 2009 were 68.8 million kroons (4.4 million euros). Cash outflows from investing activities composed 131.3 million kroons (8.4 million euros) and cash flows from financing activities were 32.6 million kroons (2.1 million euros). Net cash outflows were 30.0 million kroons (1.9 million euros).

People

At September 30th 2010, the Group employed 2,035 people (30 September 2009: 2,461): 439 in Estonia, 424 in Latvia, 491 in Lithuania, 91 in Belarus, 321 in Poland, 140 in Romania and 129 in Slovakia.

Employee remuneration expenses including social charges in the 9 months of 2010 amounted to 339.9 million kroons (21.7 million euros); last year the relevant figure was 414.9 million kroons (26.5 million euros).

Groups selected data:
Continued operations

9 months 2010

9 months 2009

Change

Revenue (million kroons)

1,280.4

1,279.0

0.1%

EBITDA (million kroons)

242.9

53.8

351.4%

Operating loss (million kroons)

32.9

-222.3

Net loss (million kroons)

18.6

-226.2

EBITDA margin

19.0%

4.2%

Operating margin

2.6%

-17.4%

Net margin

1.5%

-17.7%

Equity ration

79.4%

73.6%

Number of casinos at the end of the period

64

68

-4

Total area of casinos m2 at the end of the period

24,988

25,642

-654

Number of slots at the end of the period

2,445

2,417

28

Number of game tables at the end of the period

170

180

-15

  • Underlying formulas o EBITDA = earnings before financial expenses, taxes, depreciation, amortization and impairment losses
  • Operating profit = profit before financial expenses and taxes
  • Net profit = net profit for the period before minority interest
  • EBITDA margin = EBITDA / revenue
  • Operating margin = operating profit / revenue
  • Net margin = net profit / revenue
  • Equity ratio = equity / total assets 

1 EUR = 15.6466 EEK

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands of Estonian kroons)

       
 

Q3 2010

Q3 2009

9M 2010

9M 2009

Continuing operations

       

Revenue and income

       

Income from gaming transactions

417 520

383 732

1 184 016

1 189 621

Revenue

31 848

28 453

87 362

82 325

Other income

3 068

2 960

9 068

7 063

Total revenue and income

452 436

415 145

1 280 446

1 279 009

         

Expenses

       

Cost of materials, goods and services

-9 499

-13 324

-30 060

-37 947

Other operating expenses

-223 692

-234 613

-663 714

-740 520

Personnel expenses

-110 071

-127 388

-339 854

-414 893

Depreciation, amortisation and impairment losses

-65 159

-104 276

-210 000

-275 111

Other expenses

-2 224

-16 388

-3 948

-32 876

Total expenses

-410 645

-495 989

-1 247 576

-1 501 347

Operating income (loss)

41 791

-80 844

32 870

-222 338

Financial income and expenses

       

Interest income

978

1 584

3 062

6 910

Interest expense

-2 362

-4 344

-8 673

-15 172

Foreign exchange loss

-223

-814

-390

2 895

Other financial income and expenses

-48

-119

-419

-192

Total financial income and expenses

-1 655

-3 693

-6 420

-5 559

         

Profit (loss) before tax

40 136

-84 537

26 450

-227 897

Income tax expense

-2 318

501

-7 810

1 708

NET PROFIT (LOSS) FROM CONTINUING OPERATIONS FOR THE PERIOD

37 818

-84 036

18 640

-226 189

         

NET LOSS FROM DISCONTINUED OPERATIONS FOR THE PERIOD

0

-3 725

0

-214 517

         

NET PROFIT (LOSS) FOR THE PERIOD

37 818

-87 761

18 640

-440 706

         

Other comprehensive income (loss)

       

Currency translation differences

       

    continuing operations

8 054

13 658

7 763

-20 380

    discontinued operations

0

-1 608

0

8 601

Total other comprehensive income (loss)

8 054

12 050

7 763

-11 779

Total comprehensive income (loss) for the period

45 872

-75 711

26 403

-452 485

         

Net income (loss) for the period

       

Minority interest

3 315

615

1 415

-656

Attributable to equity owners of the parent

       

    continuing operations

34 503

-84 651

17 225

-225 533

    discontinued operations

0

-3 725

0

-214 517

 

37 818

-87 761

18 640

-440 706

Total comprehensive income (loss) for the period

       

Minority interest

3 315

615

1 415

-656

Attributable to equity owners of the parent

       

    continuing operations

42 557

-70 993

24 988

-245 913

    discontinued operations

0

-5 333

0

-205 916

 

45 872

-75 711

26 403

-452 485

Continuing operations

       

Basic earnings (loss) per share

0,23

-0,56

0,11

-1,49

Diluted earnings (loss) per share

0,23

-0,56

0,11

-1,49

         

Discontinued operations

       

Basic earnings (loss) per share

0,00

-0,02

0,00

-1,42

Diluted earnings (loss) per share

0,00

-0,02

0,00

-1,42

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands of euro)

       
 

Q3 2010

Q3 2009

9M 2010

9M 2009

Continuing operations

       

Revenue and income

       

Income from gaming transactions

26 685

24 525

75 672

76 031

Revenue

2 035

1 818

5 583

5 261

Other income

196

189

580

452

Total revenue and income

28 916

26 532

81 835

81 744

         

Expenses

       

Cost of materials, goods and services

-607

-851

-1 921

-2 426

Other operating expenses

-14 297

-14 995

-42 419

-47 328

Personnel expenses

-7 035

-8 142

-21 721

-26 516

Depreciation, amortisation and impairment losses

-4 164

-6 664

-13 421

-17 582

Other expenses

-142

-1 047

-252

-2 102

Total expenses

-26 245

-31 699

-79 734

-95 954

Operating income (loss)

2 671

-5 167

2 101

-14 210

Financial income and expenses

       

Interest income

62

101

196

442

Interest expense

-151

-278

-554

-970

Foreign exchange loss

-14

-52

-25

185

Other financial income and expenses

-3

-8

-27

-12

Total financial income and expenses

-106

-237

-410

-355

         

Profit (loss) before tax

2 565

-5 404

1 691

-14 565

Income tax expense

-148

32

-499

109

NET PROFIT (LOSS) FROM CONTINUING OPERATIONS FOR THE PERIOD

2 417

-5 372

1 192

-14 456

         

NET LOSS FROM DISCONTINUED OPERATIONS FOR THE PERIOD

0

-238

0

-13 710

         

NET PROFIT (LOSS) FOR THE PERIOD

2 417

-5 610

1 192

-28 166

         

Other comprehensive income (loss)

       

Currency translation differences

       

    continuing operations

515

873

496

-1 303

    discontinued operations

0

-103

0

550

Total other comprehensive income (loss)

515

770

496

-753

Total comprehensive income (loss) for the period

2 932

-4 840

1 688

-28 919

         

Net income (loss) for the period

       

Minority interest

212

38

90

-42

Attributable to equity owners of the parent

       

    continuing operations

2 205

-5 410

1 102

-14 414

    discontinued operations

0

-238

0

-13 710

 

2 417

-5 610

1 192

-28 166

Total comprehensive income (loss) for the period

       

Minority interest

212

38

90

-42

Attributable to equity owners of the parent

       

    continuing operations

2 720

-4 537

1 598

-15 717

    discontinued operations

0

-341

0

-13 160

 

2 932

-4 840

1 688

-28 919

Continuing operations

       

Basic earnings (loss) per share

0,01

-0,04

0,01

-0,10

Diluted earnings (loss) per share

0,01

-0,04

0,01

-0,10

         

Discontinued operations

       

Basic earnings (loss) per share

0,00

-0,002

0,00

-0,09

Diluted earnings (loss) per share

0,00

-0,002

0,00

-0,09

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS

(In thousands of Estonian kroons)

(In thousands of euro)

 

30.09.10

31.12.09

30.09.10

31.12.09

Current assets

       

Cash and cash equivalents

374 586

286 067

23 940

18 283

Financial investments

64 803

48 184

4 142

3 080

Trade receivables

10 406

5 473

665

350

Other receivables and prepayments

69 798

73 977

4 461

4 728

Prepaid income tax

14 951

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