TIDMLNG
RNS Number : 0890R
Leisure & Gaming plc
24 April 2009
24 April 2009
Leisure & Gaming plc
Unaudited preliminary results for the year ended 31 December 2008
Leisure & Gaming plc ("L&G", "the Company" or "the Group"), the online betting
and gaming group, today announces its unaudited preliminary results for the year
ended 31 December 2008.
Financial highlights
* Amounts staked EUR76.9m (2007: EUR109.2m)
* Net win EUR20.6m (2007: EUR24.7m)
* Net win margin 26.8% (2007: 22.6%)
* Gross profit EUR6.2m (2007: EUR3.5m)
* Overheads, excluding amortization were EUR4.2m (2007: EUR5.1m)
* Operating profit before interest, tax, amortisation and impairment EUR2.0m (2007:
Loss EUR1.7m)
* Cash held in escrow EUR2.1m (2007: EUR1.7m)
* Cash held at banks, excluding borrowings EUR1.5m (2007: EUR0.6)
Key business performance indicators
* Italian partner network increased by 114 from 470 to 584.
* Number of Italian customers increased by 26% from 26,293 to 33,191.
* New Cyprus partner network recruited of 47.
* New Greek online offering developed.
* Betshop.com offering enhanced.
* Successful launch of poker in Italy.
* New suite of casino products launched in Greece and betshop.com
* Development of proprietary IT platform
* Bank and loan note terms favourably renegotiated.
* Sponsorship deal in Italy with Serie A team Palermo
Richard Creed, CEO of Leisure & Gaming plc said:
"The Group completed the re-structuring of the Italian business in 2007 and has
grown the estate of shops in Italy in 2008.
In addition, the introduction of the land based Cypriot network and Greek online
offering has started the geographic diversification which spreads the risk.
The introduction of poker in Italy and casino products online has widened the
product offering, which reduces the impact of sports betting results.
The rescheduling of the bank and loan note borrowings results in annual capital
and interest repayments being projected to be less than 25% of cash flow over
2009.
As at 31 December 2008, the Group held cash balances of EUR1.5m, excluding cash
held in escrow covering Italian Government gaming guarantees of EUR2.1m."
For further information, please contact:
Richard Creed, Leisure & Gaming plc
Tel: 020 8545 2190
William Vandyk, Blue Oar Securities
Tel: 020 7448 4400
Chairman's statement
Business growth and diversification
Last year, the Group restructured the Italian business and in 2008, the network
of partners in Italy grew by 24% as well as adding a new land based operation in
Cyprus and driving growth in online activities, particularly a new offering for
the Greek market. This geographic diversification is important as it spreads
risk through different betting patterns and selections.
The introduction of poker in Italy and a new suite of casino products in other
markets has expanded the customer offerings and produced excellent results which
have reduced the reliance on sports betting results.
Many markets continue to move toward regulation and open opportunities for the
Group, particularly if land based operations are permitted in Greece. The target
over the next three years is that no country supplies more than 30% of the
Group's business.
Financial strength
The conversion of the loan and overdraft facilities with Barclays Bank and
rescheduling of the loan note repayments results in annual capital and interest
repayments being projected to be less than 25% of cash flow over the next year.
In addition, the conversion of the Barclays sterling borrowings into euro takes
away the exchange rate risk as the Group's earnings are in that currency.
The concentration on developing our existing businesses has resulted in a net
operating profit before interest, tax, amortisation and impairment costs of
EUR2.0m this year, which has importantly realised itself in cash through the
increase of cash resources, including our escrow deposits, from EUR2.3m to EUR3.6m,
excluding the borrowings.
Management team
We have enjoyed a stable and motivated management team headed up by Richard
Creed, and our teams in every country have performed effectively and with
diligence.
Regulation
We are finally seeing movement towards the resolution of US legal issues with
many of our peers in active discussion with the US Department of Justice and
Party Gaming having already resolved their position. We have disclosed a full
note as to the reasons we consider it unlikely we will be prosecuted in the
Chief Executive's review that follows.
In Italy, we enjoy a good relationship with the regulator, AAMS,
(Administrazione Autonoma dei Monopoli di Stato) and are comfortable in the
structured framework they have imposed. This is now recognised as a well
regulated market and an example to many other countries.
Capital re-organisation
A circular will be included with the Annual Report which starts the process to
cancel the deficiency on the profit and loss account by writing off part of the
share premium account and cancelling the deferred shares. This further
demonstrates that your Company is placing itself in a position to ensure
shareholders are rewarded for their investment through a dividend or share buy
back when funds permit.
Outlook
Gaming businesses remain highly cash generative and that is one of their key
attractions. We continue to look at the creation of long term value through
organic growth. The Group's financial position is strengthening and the
excellent results for the first quarter have added cash. The Palermo sponsorship
deal demonstrates that we are a significant operation and presents superb brand
building and marketing opportunities. With the sector stabilising after the 2006
shock, the outlook looks good for M&A activity and sustained growth.
Chief Executive's review
In 2007, the Group significantly reduced the size of its estate in Italy from
over 800 outlets to under 470 based on a predetermined selective process. The
Group's business has grown throughout 2008 by the addition of partners in Italy,
the start of a new business in Cyprus and through the development and
enhancement of its online presence, particularly in Greece.
The Group owns and operates its own proprietary betting software which is used
in the online business and for the Cyprus retail outlets. This software
continues to be developed by a team of dedicated IT staff based in Greece. The
major work undertaken in the year to enhance the platform has been in the
integration of in game betting, skill games, poker and additional payment
solution options as well as improvements to the customer management systems. The
IT team is also responsible for the development of the goalslive web site.
The odds compilation and risk management team are based in Cyprus. Their prime
responsibility is to set the odds for each market that Betshop offers its
services. This necessitates reviewing fixtures as well as monitoring the odds on
a real time basis dependent on the bets that are accepted. This team also update
our real time results web site www.goalslive.com. Our Cyprus network of partners
is also managed and controlled from this office.
We operate a call centre in Italy where we have operators and administrators
working on shifts, who look after enquiries from our partners and customers, as
well as country and area managers.
The UK office contains our financial management team as well as marketing and
business development staff. All other services are outsourced.
Geographic review: Italy
The Group's largest market is Italy where the Group has various gaming licences,
pays betting duties and operates a partner network of shops branded "Betshop"
through a wholly owned subsidiary, Betshopitalia srl.
The Italian gaming market is regulated by AAMS who currently allow sports
betting and certain skill games to be offered to registered customers. The
regulator ensures that all customers are registered with them, marketing
initiatives and advertising is approved and all bets are recorded. Betting
duties have been gradually lowered and now stand at 5% on sports betting for
multiple bets.
Following the introduction of the new "Bersani" licences in September 2007, 52
outlets were opened. The Group tried unsuccessfully to sell the remaining 7
licences. In June 2008, the Group acquired an online licence to add to the other
licences owned, that allows for bets to be taken online from any location in
Italy. On 4 December 2008, the Group obtained a poker licence in Italy.
The Group now has a partner network totalling 584 mainly covering the Centre and
South of Italy. This network grew over the year by 114 partners. This shows a
successful recruitment startegy as well as a good partner retention programme.
The size of a partner's premises varies from an area within a coffee shop,
containing a counter and a few computers to a 3,000 square feet shop offering
slot machines, TV displays, drinks, a betting counter and a number of computer
terminals as well as seating and tables where the latest odds sheets and daily
sports newspapers are available.
The betting platform software used in Italy is supplied by Microgame S.p.A., an
Italian company that has been approved by AAMS and has connected with Sogei
S.p.A., (Societa Generale d'Informatica) which is the technical arm of the
Italian Regulator and responsible for the collection of betting duties in Italy.
The number of active customers in Italy increased by 26% in the year to 33,191
(2007: 26,293). The number of bets placed in the year was 6.8m (2007: 8.9m), of
which 81% (2007: 85%) were multiples, being 5 or greater propositions at an
average bet size of EUR8.0 (2007: EUR10.2). Over 70% of the sports bets placed were
on the result of Italian league teams, followed by English and Spanish teams and
then the other European teams.
Following the launch of play for fun poker in mid 2008 and an extensive
marketing campaign, Betshopitalia joined the People's Poker Network operated by
Microgame on 24 November 2008 which offered play for money poker tournaments, in
accordance with the regulations issued by AAMS.
Skill games are now permitted and the Group provides a range of skill games and
are constantly looking at options for the provision of more offerings and the
Group looks forward to the regulation of casino products.
Slot machines are regulated and the majority of our partners already have
arrangements with local hardware providers. The Group is testing machines from
various suppliers and monitoring the market as well as waiting for the launch of
new versions of slot machines which will be launched imminently. The Group is
planning an arrangement with a preferred supplier.
Geographic review: Cyprus
In addition to the odds compilation and risk management team located in Cyprus,
the Group identified that the local Cypriot gaming market was large and a
betting culture was established and understood.
The Group has recruited 47 partners in the year, of which 21 joined in the last
quarter of 2008, which demonstrates good growth and the establishment of a
sizeable base. The partners have a variety of outlets, mainly the more
conventional shops with TVs, terminals and an operations counter.
Betting patterns by customers are similar to Italy with an average bet size of
EUR8 and bets mainly placed on the major European leagues as well as their own.
The participation of Cypriot teams in the early stages of the Champions league
has further diversified the variety of betting of the Group.
Geographic review: Greece
In April 2008, the Group signed a partnership agreement to develop an online
offering in Greece which was launched through a dedicated website
(www.betshop.gr), which contniues to be enhanced and developed. The initial
marketing campiagn undertaken and underwritten by our local partner involved an
attractive EUR100,000 prize and attracted great interest.
During the period, the web site attracted over 1,500 regular customers and this
online development will continue until land based retail outlets are permitted,
when the Group intends to apply for a licence and establish a land based
network.
Customers in Greece wager an average EUR9 per bet which are mainly on single
propositions on the Greek, English, Spanish and Italian leagues.
In December 2008, the Group introduced a new interface containing a casino suite
of games called Gold Chip Lounge Casino, which is provided by Chartwell
Technology Inc. and has proved popular.
Online
The Group offers online services through www.betshop.com to European customers
but has a strong vetting and registration process to ensure this is within the
EU and country legislation. The European online gaming market is well served by
many operators and consequently competitive.
Goalslive
The goalslive web site (www.goalslive.com) is translated into 10 languages and
contains the full results and league tables of all major worldwide football
leagues for 12 seasons covering 70 different leagues.
The web site achieves 100m page impressions every month during the football
season and has 1.6m unique users who are mainly from Italy, UK, Germany, Greece,
Thailand and Turkey.
The Group has attracted over 5,000 subscribers receiving real time short message
services (SMS) on live scores with half time and final results with over 10,000
subscribers also receiving the service through e-mail. Advertising income of
EUR0.2m (2007: EUR0.2m) was generated through this site and the Group intends to
develop this offering with country specific content and marketing.
Geographic review: Romania
The Group had a license in Romania but has been unable to find a suitable local
partner and decided to close its one shop in August 2008. We are maintaining a
watching brief while we are focussing our efforts and resources on the Italian,
Cypriot and Greek markets. All costs relating to this activity have been written
off in the accounts.
Sports betting
Betting on sports results continues to be the largest part of the business,
however the introduction of poker in Italy and casino games in Greece has
started the process of product diversification.
The introduction of the Cypriot and Greek markets as well as the increased
online activity has produced different betting styles and markets with the
Cyprus and Greek customers betting on their domestic and major European teams.
This means the Group is less reliant on the outcome of Italian league results.
The volume of sports betting generated through our Italian retail network was
EUR54.8m (2007: EUR90.4m), in Cyprus was EUR5.6m (2007: EUR1.5m) and online in Europe
was EUR10.9m (2007: EUR8.2m). Importantly, the domination of the Italian market has
reduced from 90% to 77% of the sports betting activity.
The net win margin is dependent on the outcome of sports events, where if
favourites tend to prevail, margins are lower. Odds are set to reflect the
expected outcome and to entice custom based on knowledge of the market and
competitor odds. In the year to 31st December 2008, the Group achieved a margin
of 24.0% (2007: 20.9%). In 2007, the Group suffered two weekends of particularly
unfavourable results in the second quarter.
Euro 2008 in June 2008 was beneficial in generating bets, with volume of EUR2.5m
however, even though Italy was defeated in the quarter finals, the semi finals
and finals were won by favourites and this resulted in a net win of EUR0.6m.
Horse betting
Horse racing betting has decreased substantially in Italy because of the small
and reducing number of horse racing events. In addition, the Group has
experienced difficulties with the supply and reliability of suitable horse
betting software and results feeds. In 2007, a large proportion of the amounts
wagered were generated by a few partners who have left the network. This led to
the reduction in amounts staked to EUR3.1m (2007: EUR7.2m), the net win margin
improved to 31% (2007: 27%), though in monetary terms, decreased to EUR1.0m (2007:
EUR1.9m).
Online casino
Online casino products are not yet permitted in Italy, so our casino products
are only offered to European online customers. The amounts staked decreased to
EUR39.1m (2007: EUR57.5m) though net win marginally increased to EUR1.3m (2007:
EUR1.2m).
In December 2008, the Group introduced a new interface for Greek customers which
has proved popular and volumes are increasing.
The Acropolis casino was closed in early January 2009. In taking this decision,
the possibility of growing the business in Europe was considered, but the market
is already heavily saturated and without significant marketing funds and the
substantial costs of integration within the Group's other offerings, this was
unlikely to succeed.
In the year to 31 December 2008, Acropolis generated volumes of EUR10.3m with net
revenue before direct costs of EUR0.3m and after direct costs (service provider,
maintenance and payment processor fees) of EUR0.1m. After corporate costs the
business was at break even.
In January 2009, the sale of the business not having been successful, the
customer database was transferred to an existing Playtech operator on an
affiliate basis where the Group continues to earn a 40% commission on customer
losses, but has ceased the corporate costs.
Online lotto and skill games
These are games offered through the web sites which are essentially online
scratch cards as well as blackjack.
The amounts staked in the year decreased to EUR3.0m (2007: EUR4.7m) but earned a
similar net win contribution of EUR0.7m (2007: EUR0.7m).
Poker
From the launch of play for real poker tournaments on 24th November 2008 to the
year end, 4,886 players have played in tournaments. 3,958 clients are existing
players and 928 are new poker clients. 204 of these new poker clients also
wagered on sports events.
In the period, these clients have spent EUR2.7m in tournament fees, earning gross
rake of EUR0.5m before betting duties and provider and other costs and net rake of
EUR0.2m. The interest in poker has continued in 2009.
Regulatory developments
The Group continues to seek operations in regulated jurisdictions and will apply
for licenses in countries as and when they become available.
The global supply of betting and gaming services often involves complex
regulatory issues, including various trade barriers as well as a lack of
consistency in jurisdictions' determination of where an online gaming
transaction takes place.
Regulatory developments: The European Union
In Europe, the market continues to move towards a liberalisation of supply
across all Member States who are monitored by The European Commission, who
appear to have applied pressure to Member States where their local legislation
is not in agreement with EU law.
Regulatory developments: Italy
Since 2004, the Italian government's regulatory authority AAMS has controlled
gaming products and monitored their use.
All operators are required to connect their transactions through Sogei, which
validates the transaction with a view to calculating the betting duty due to the
Italian treasury.
As part of the licensing process, operators must provide guarantees with AAMS to
cover betting duties and customer monies. Betshopitalia currently has
EUR2.1million lodged as security with Monte dei Paschi di Siena Bank for a
guarantee of a similar amount to AAMS.
The maximum exposure in terms of betting duties and client funds is about EUR1.4m
and the Group continues to request a release of part of the guarantee funds and
to look at financing routes that require less than a fully cash backed
guarantee.
Regulatory developments: US
Between June and December 2005, the Company acquired the shares of companies
that operated online gaming activities, with the majority of their customers
based in the US. The total cash paid for the shares in these businesses was
$26.4m and shares issued in the Company amounted to a value of $53.9m
On 13 October 2006, ahead of the signing of the Safe Ports Act which included
the Unlawful Internet Gambling Enforcement Act ("UIGEA") the Company sold or
closed all of its businesses with US customers. During the period that the
Company owned these companies, they achieved a profit of $16.9m. The Group
therefore sustained a cash loss of $9.5m on activities of these businesses and
fully complied with UIGEA.
The Company has itself never traded in the US or undertaken any gaming activity
but is merely a holding company whose shares are listed on the Alternative
Investment market (AIM") of the UK Stock Exchange.
The Company has not received any notification of legal action against it in
connection with these activities and in the light of recent settlements with
other corporates, believes that any legal action would be unlikely. The Company
will be seeking clarification on this matter in the near future.
Outlook
The steps made to diversify the business both geographically and by product have
been effective. The reduction in reliance on Italian football betting results
means the business is less volatile. The addition of poker and casino games,
also provides more stable revenue and a greater variety of products for
customers. We continue to look at further products such as bingo, but our
resources and the nature of our existing business mean these have to be
synergetic and complimentary.
New markets such as France and Greece are expected to pass gaming legislation
which present opportunites for growth and further diversification and our goal
is to operate in five countries within the next 3 years, in addition to
increasing our market share in our existing markets. In Italy, our recent
sponsorship deal with Palermo football club has heightened our profile and will
act as a catalyst to gaining further partners and business.
The Group has a stable and scalable business platform and management team to
continue to grow geographically and to introduce new products into existing and
new markets.
Financial review
Trading summary
In total, the amounts staked on all our products for the year to 31 December
2008 were EUR119.2m (2007: EUR169.5m), earning net win of EUR20.6m (2007: EUR24.7m)
generating an overall net win margin of 17.3% (2007: 14.5%).
The turnover stated in these accounts, in accordance with standard accounting
convention, represents amounts staked on sports events and net win on other
products and amounted to EUR76.9m (2007: EUR109.1m).
Amounts staked on sports betting, including horse racing, were EUR74.4m (2007:
EUR107.3m) generating a net win of EUR18.1m (2007: EUR22.8m) at a net win percentage
of 24.3% (2007: 21.2%).
Amounts staked on casino products were EUR39.1m in plays (2007: EUR57.5m) generating
net win of EUR1.3m (2007: EUR1.2m).
Amounts staked on lotto and skill games were EUR3.0m (2007: EUR4.7m) generating net
win of EUR0.7m (2007: EUR0.6m).
The tournament fees generated by poker customers amounted to EUR2.7m in the period
generating a gross rake of EUR0.5m and net rake of EUR0.2m. As a new activity, there
are no comparative figures.
Other income mainly comprised advertising revenue generated on our results web
site, www.goalslive.com and the release of the deferred income generated on
licences.
The cost of sales of EUR15.3m (2007: EUR21.5m) includes commissions payable to our
partner network, betting duties, IT software provider commissions, bonuses given
to customers and the cost of processing payments to and from customers. The
decrease was mainly attributable to the revision of the commission structure,
lower betting duties and lower amounts wagered.
Administrative costs of EUR4.5m (2007: EUR5.1m) include salaries of EUR1.6m
(2007:EUR1.7m), IT hosting and servicing costs of EUR1.0m (2007:EUR1.2m), risk
management costs of EUR0.5m (2007: EUR0.5m) and legal and professional fees of EUR0.5m
(2007:EUR0.6m). The other costs of EUR0.9m (2007: EUR1.1m) represent rent of premises,
telephone, insurance and other operational costs. Amortisation costs of EUR0.3m
(2007: nil) were charged against the cost of the licences and included in other
costs.
The figures above include approximately EUR0.5m in non recurring costs, but
include an exchange gain of EUR0.5m (2007: nil)
The resultant operating profit before interest, tax, amortisation and impairment
was EUR2.0m (2007: loss EUR1.7m).
An impairment charge against the cost of the licenses was made of EUR0.2m (2007:
nil) Interest of EUR0.2m (2007:EUR0.3m) was paid to banks and on the loan note.
Taxation
Taxation arises on the profits generated in Italy and losses elsewhere in the
Group are currently not relieveable against these taxable profits. Full
provision has been made for the tax in Italy of EUR0.7m (2007: EUR0.1m) . The Group
is reviewing the current corporate and tax structure with a view to mitigating
the tax charge.
The net profit attributable to shareholders was EUR0.6m (2007: Loss of EUR2.1m).
Earnings per share
There are 94,122,692 Ordinary shares in issue, with a further 306,955 ordinary
shares shown as shares to be issued which relate to any warranty claims in
respect of the purchase of the Betshop Group. These shares will be issued after
the completion of the audit as there are no claims. The weighted average number
of shares in issue in 2008 was 88,769,837 (2007: 78,563,172)
Basic and diluted earnings per share were 0.7c (2007: loss 2.7c)
Balance sheet assets
Goodwill represents the price paid for the Betshop Group which was denominated
in sterling. The balance sheet shows that the goodwill value has decreased by
EUR4.8m which is due to the exceptional movement in the exchange rate reflecting
the Euro/Sterling exchange rate moving from the rate at the begining of the year
of EUR1.39 to GBP1 to the end of the year rate of EUR1.03 to GBP1.
Other intangible assets comprise the gaming licences which increased by EUR0.3m
through the acquisition of an online gaming licence in Italy.
In 2007, amounts due from partners were set against client funds. This treatment
has been reversed in 2008 to disclose gross balances due from partners under
trade receivables and full amounts due to customers under client funds.
Cash flow
The net cash position was comprised of borrowings of EUR1.2m (2007: EUR1.7m), and
net client funds of EUR1.0m (2007: EUR1.1m) totalling EUR2.2m (2007: 2.8m). Cash
amounted to EUR1.5m (2007: EUR0.6m) plus cash held in escrow of EUR2.1m (2007: EUR1.7m)
totalling EUR3.6m (2007: EUR2.3m). Overall, the net cash position has grown by EUR1.9m
to a positive of EUR1.4m (2007: deficiency EUR0.5m).
The fund raising exercise in July provided EUR0.7m to acquire the online license
in Italy and strengthen working capital resources.
Treasury management
In December 2008, the Group renegotiated its borrowings facility with Barclays
Bank Plc that consolidated a sterling overdraft and Euro and Sterling loan into
a Euro loan. The loan is repayable over three years and amounts to EUR1.3m with
monthly repayments of capital linked to the business's cash flow and interest
charged at 6.5% over Euribor. There will be no penalties for early repayment of
capital. This transaction was completed in mid January 2009.
The Group's treasury function controls the finance and management of liquidity,
foreign exchange and interest rates and seeks to reduce risk in accordance with
policies approved by the Board. It is not the policy of the Group to trade in or
enter into speculative transactions.
The Directors took the decision to transfer all borrowings into Euro which is
the trading currency to match earnings with borrowings and take advantage of the
exchange rates at January 2009.
Equity and reserves
On 30 May 2007, following a substantial fall in the Company's share price the
Company redesignated its authorised share capital by converting its existing
authorised share capital of GBP50,000,000 consisting of 200,000,000 ordinary
shares of 25p each into issued capital of 714,219,392 ordinary shares of 5p each
and 71,445,152 deferred shares of 20p each. This enabled the Company to issue
ordinary shares at a price below 25p but above 5p.
The deferred shares are not entitled to receive any dividend or other
distribution and on winding up, are entitled to receive a sum equal to the
nominal capital paid up after the sum of GBP1m has been distributed to each
ordinary share. In effect, this makes these shares worthless. The deferred share
capital amounts to EUR14.3m.
The share premium account represents the total of all the premiums paid for the
ordinary shares of the Company being the price paid above the nominal value.
At 31 December 2008, the share premium account was EUR77.7m. This is mainly made
up of shares issued for businesses acquired, where the price of the shares
exceeds the nominal value. The share premiums paid in respect of businesses with
US customers acquired before 1st January 2006 amounted to EUR67.8m. These
businesses were sold in October 2006.
The Company sustained significant losses in the year to 31 December 2006 of
EUR104.5m mainly as a result of the reduction in goodwill arising from the forced
sale of these businesses. As at 31 December 2008, the negative balance on the
retained earnings reserve was EUR81.2m.
Under English Company law, a Company may only make distributions, such as
dividends or share buy backs, to shareholders out of distributable reserves, so
the Company will be seeking shareholders consent and court approval cancel the
deferred shares and reduce the share premium account by adjustment against the
retained earnings reserve.
+----------------------------------------+-------+--------+-----+--------+--------+
| Leisure & Gaming Plc | |
| Unaudited consolidated income statement | |
| Year ended 31 December 2008 | |
+------------------------------------------------------------------------+--------+
| | | 2008 | | 2007 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | Notes | EURm | | EURm | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Amounts staked (see note below) | 2 | 76.9 | | 109.1 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Revenue | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Net win | 2 | 20.6 | | 24.7 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Other income | | 0.9 | | 0.3 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | 21.5 | | 25.0 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Cost of sales | | (15.3) | | (21.5) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Gross profit | | 6.2 | | 3.5 | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Impairment charge | | (0.2) | | - | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Share option charge | | - | | (0.1) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Other administrative expenses | | (4.5) | | (5.1) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Operating profit / (loss) | | 1.5 | | (1.7) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Finance costs | | (0.2) | | (0.3) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Profit / (Loss) before tax | 3 | 1.3 | | (2.0) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Tax | 5 | (0.7) | | (0.1) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Profit / (Loss) for the period | | 0.6 | | (2.1) | |
| attributable to equity holders of the | | | | | |
| parent. | | | | | |
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Earnings per share (cents) | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Basic and diluted | 4 | 0.7c | | (2.7c) | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
| Amounts staked does not represent the Group's statutory revenue and comprises |
| the total amount |
+---------------------------------------------------------------------------------+
| staked by customers on sports and horse betting and net win | | |
| on gaming activities. | | |
+---------------------------------------------------------------+--------+--------+
| | | | | | |
+----------------------------------------+-------+--------+-----+--------+--------+
+--------------------+--------+--+--+----+---+--+--+--+-----+--+--+--+--+--+----+--+--+--+-------+-----+--+--+---+----+--+--+--+------+------+--+--+-------+--------------+--+--+--+---------+--+-------+
| Leisure & Gaming Plc | | | | | | |
| Unaudited consolidated balance sheet | | | | | | |
| As at 31 December 2008 | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | 31 | | | 31 Dec |
| | | | Dec | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | 2008 | | | 2007 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | Notes | | EURm | | | EURm |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| ASSETS | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Non-current assets | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Property, plant and equipment | | | 0.2 | | | 0.1 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Goodwill | 5 | | 13.9 | | | 18.7 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Other intangibles | 6 | | 1.9 | | | 1.8 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | 16.0 | | | 20.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Current assets | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Trade and other receivables | | | 4.2 | | | 3.0 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Cash and cash equivalents | | | 1.5 | | | 0.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | 5.7 | | | 3.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Total assets | | | 21.7 | | | 24.2 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| LIABILITIES | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Current liabilities | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Borrowings | | | (1.2) | | | (1.7) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Trade and other payables | | | (2.3) | | | (2.2) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Deferred income | | | (1.1) | | | (1.8) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Client funds | | | (2.3) | | | (1.1) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Current tax liabilities | | | (0.6) | | | (0.2) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Loan notes | | | (0.4) | | | (0.5) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | (7.9) | | | (7.5) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Net Assets | | | 13.8 | | | 16.7 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| EQUITY | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Share capital | | | 27.6 | | | 27.1 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Share premium | | | 77.7 | | | 77.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Share option reserve | | | 0.6 | | | 0.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Shares to be issued | | | 0.6 | | | 0.6 |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Foreign exchange reserve | | | (11.5) | | | (7.4) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Retained earnings | | | (81.2) | | | (81.8) |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Equity attributable to equity holders of | | | 13.8 | | | 16.7 |
| the parent | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| | | | | | | |
| | | | | | | |
+--------------------------------------------------------------------+----------------+----------+---------------+----+--------+----------------+
| Leisure & Gaming Plc | | | | | | | | | | | | |
| Unaudited statement of changes in | | | | | | | | | | | | |
| equity | | | | | | | | | | | | |
+--------------------------------------------------+-----------+------------------------------------------+--------------+-----+-------------+-----+-------+--------------+--------+---------+--+-------+
| | | | | | | | | | | | Attributable to | | |
| | | | | | | | | | | | the equity holders | | |
| | | | | | | | | | | | of the parent | | |
+--------------------+--------+-----+----+---+-----+--------+-----+-----+-------+--+---------------------------------------------------------------+-------------------------+--+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | Share | | Share | | Share | | Shares | | Foreign | | Retained | | Total |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | Capital | | Premium | | Option | | to | | exchange | | earnings | | |
| | | | | | | | be | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | Reserve | | issued | |translation | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | EURm | | EURm | | EURm | | EURm | | EURm | | EURm | | EURm |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Balance as at 31 | 23.4 | | 76.2 | | 0.5 | | 3.2 | | (5.6) | | (79.7) | | 18.0 |
| December 2006 | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Foreign exchange | - | | - | | - | | - | | (1.8) | | - | | (1.8) |
| movements | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Net gains | 23.4 | | 76.2 | | 0.5 | | 3.2 | | (7.4) | | (79.7) | | (16.2) |
| /(losses) | | | | | | | | | | | | | |
| recognised | | | | | | | | | | | | | |
| directly in equity | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Loss for the year | | | | | | | | | | | (2.1) | | (2.1) |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Total recognised | 23.4 | | 76.2 | | 0.5 | | 3.2 | | (7.4) | | (81.8) | | (14.1) |
| income and | | | | | | | | | | | | | |
| expenses | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Issue of ordinary | 3.7 | | 1.6 | | - | | (2.6) | | - | | - | | 2.7 |
| shares | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Share option | - | | - | | 0.1 | | - | | - | | - | | 0.1 |
| charge | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Costs attributable | - | | (0.2) | | - | | - | | - | | - | | (0.2) |
| to share issue | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Balance as at 31 | 27.1 | | 77.6 | | 0.6 | | 0.6 | | (7.4) | | (81.8) | | 16.7 |
| December 2007 | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Foreign exchange | - | | - | | - | | - | | (4.1) | | - | | (4.1) |
| movements | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Net gains / | 27.1 | | 77.6 | | 0.6 | | 0.6 | | (11.5) | | (81.8) | | 12.6 |
| (losses) | | | | | | | | | | | | | |
| recognised | | | | | | | | | | | | | |
| directly in equity | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | 0.6 | | 0.6 |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Profit for the | | | | | | | | | | | | | |
| year | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Total recognised | 27.1 | | 77.6 | | 0.6 | | 0.6 | | (11.5) | | (81.2) | | 13.2 |
| income and | | | | | | | | | | | | | |
| expenses | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Issue of ordinary | 0.5 | | 0.1 | | - | | - | | - | | - | | 0.6 |
| shares | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| | | | | | | | | | | | | | |
+--------------------+-----------+--+-----------+-----+-----------------+--+----------+--+-------------+-----+--------------+---------+------------+
| Balance as at 31 | 27.6 | | 77.7 | | 0.6 | | 0.6 | | (11.5) | | (81.2) | | 13.8 |
| December 2008 | | | | | | | | | | | | | |
+--------------------+--------+--+--+----+---+--+--+--+-----+--+--+--+--+--+----+--+--+--+-------+-----+--+--+---+----+--+--+--+------+------+--+--+-------+--------------+--+--+--+---------+--+-------+
+----------------------------------------------+-------+--------+------+--------+-------+--+--+
| Leisure & Gaming Plc |
| Unaudited cash flow statement |
| Year ended 31 December 2008 |
+---------------------------------------------------------------------------------------+
| | 2008 | | 2007 |
+----------------------------------------------+----------------+------+----------------+
| | EURm | EURm | | EURm | EURm |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Profit / (loss) before tax | | 1.3 | | | (2.0) |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Operating cash flows before movements in | | | | | |
| working capital: | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Amortisation | | 0.3 | | | - |
+----------------------------------------------+-------+--------+------+--------+-------+
| Impairment of intangible assets | | 0.2 | | | - |
+----------------------------------------------+-------+--------+------+--------+-------+
| Foreign exchange loss | | 0.4 | | | - |
+----------------------------------------------+-------+--------+------+--------+-------+
| Interest expense | | 0.2 | | | 0.3 |
+----------------------------------------------+-------+--------+------+--------+-------+
| Decrease / (Increase) in trade and other | | (1.2) | | | (1.1) |
| receivables | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| (Decrease) / Increase in trade and other | | 0.1 | | | (3.0) |
| payables | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| (Decrease) / Increase in deferred income | | (0.7) | | | 1.8 |
+----------------------------------------------+-------+--------+------+--------+-------+
| (Decrease)/ Increase in client funds | | 1.2 | | | (0.1) |
+----------------------------------------------+-------+--------+------+--------+-------+
| Share option charge | | - | | | 0.1 |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Cash generated from /(used in) operating | | 1.8 | | | (4.0) |
| activities | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Tax paid | | (0.3) | | | (0.2) |
+----------------------------------------------+-------+--------+------+--------+-------+
| Net cash from /(used in) operating | | 1.5 | | | (4.2) |
| activities | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Investing activities | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Purchases of intangible assets | (0.4) | | | (1.7) | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Purchases of property, plant and equipment | (0.1) | | | - | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Net cash used in investing activities | | (0.5) | | | (1.7) |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Financing activities | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Proceeds from issue of ordinary shares | 0.6 | | | 2.5 | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Repayment of bank loan | (0.7) | | | (0.6) | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Proceeds from new loan | 0.2 | | | - | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Interest paid | (0.2) | | | (0.3) | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Net cash (outflow)/ inflow from financing | | (0.1) | | | 1.6 |
| activities | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Net increase /(decrease) in cash and cash | | 0.9 | | | (4.3) |
| equivalents | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Cash and cash equivalents at beginning of | | 0.6 | | | 4.9 |
| period | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| Cash and cash equivalents at end of period | | 1.5 | | | 0.6 |
+----------------------------------------------+-------+--------+------+--------+-------+
| | | | | | |
+----------------------------------------------+-------+--------+------+--------+-------+
| |
+---------------------------------------------------------------------------------------------+
| |
+----------------------------------------------+-------+--------+------+--------+-------+--+--+
Leisure & Gaming Plc
Unaudited notes to the unaudited financial information
1. Accounting policies
The unaudited financial information set out in this preliminary announcement was
approved by the Board of Directors on 23rd April 2009 and has been prepared in
accordance with International Financial Reporting Standards adopted for use in
the European Union.
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the year ended 31 December 2008 or 2007, within
the meaning of Section 240 of the Companies Act 1985.
The figures for the year ended 31st December 2008 are unaudited. Statutory
accounts for the year ended 31 December 2007 have been filed with the Registrar
of Companies. The auditor's report on those accounts was unqualified and did not
contain any statement under Section 237 (2) or (3) of the Companies Act 1985.
However, it did contain an emphasis of matter dealing with a material
uncertainty relating to going concern.
2. Segmental information
The Directors review the business activities by products offered and
geographically.
There is no benefit gained from differentiating between bets placed at shops and
online as bets placed in shops are by means of electronic transmission and
encourage customers to transact online.
+--------------------------------+-------------+------------+-----------+----------+
| The five key products are:- | Amounts | | Net win | |
| | staked | | | |
+--------------------------------+-------------+------------+-----------+----------+
| | 2008 | 2007 | 2008 | 2007 |
+--------------------------------+-------------+------------+-----------+----------+
| | EURm | EURm | EURm | EURm |
+--------------------------------+-------------+------------+-----------+----------+
| Sportsbook | 71.3 | 100.1 | 17.1 | 20.9 |
+--------------------------------+-------------+------------+-----------+----------+
| Horses | 3.1 | 7.2 | 1.0 | 1.9 |
+--------------------------------+-------------+------------+-----------+----------+
| Casino | 39.1 | 57.5 | 1.3 | 1.2 |
+--------------------------------+-------------+------------+-----------+----------+
| Lotto and skill games | 3.0 | 4.7 | 0.7 | 0.6 |
+--------------------------------+-------------+------------+-----------+----------+
| Poker | 2.7 | - | 0.5 | - |
+--------------------------------+-------------+------------+-----------+----------+
| | 119.2 | 169.5 | 20.6 | 24.7 |
+--------------------------------+-------------+------------+-----------+----------+
| Other income | | | 0.9 | 0.3 |
+--------------------------------+-------------+------------+-----------+----------+
| | | | 21.5 | 25.0 |
+--------------------------------+-------------+------------+-----------+----------+
| Cost of sales (partner | | | (15.3) | (21.5) |
| commissions, betting duty and | | | | |
| service provider fees) | | | | |
+--------------------------------+-------------+------------+-----------+----------+
| Gross profit | | | 6.2 | 3.5 |
+--------------------------------+-------------+------------+-----------+----------+
| Overheads (excluding | | | (4.2) | (5.1) |
| amortisation) | | | | |
+--------------------------------+-------------+------------+-----------+----------+
| Net profit before tax, share | | | 2.0 | (1.6) |
| option charges, amortisation, | | | | |
| impairment and interest | | | | |
+--------------------------------+-------------+------------+-----------+----------+
Amounts staked in the Unaudited Consolidated Income Statement comprises
+--------------------------------------------------------+----------+--------------+
| | 2008 | 2007 |
+--------------------------------------------------------+----------+--------------+
| | EURm | EURm |
+--------------------------------------------------------+----------+--------------+
| Sportsbook amounts staked | 71.3 | 100.1 |
+--------------------------------------------------------+----------+--------------+
| Horses amounts staked | 3.1 | 7.2 |
+--------------------------------------------------------+----------+--------------+
| Casino net win | 1.3 | 1.2 |
+--------------------------------------------------------+----------+--------------+
| Lotto and skill games net win | 0.7 | 0.6 |
+--------------------------------------------------------+----------+--------------+
| Poker net win | 0.5 | - |
+--------------------------------------------------------+----------+--------------+
| Amounts staked | 76.9 | 109.1 |
+--------------------------------------------------------+----------+--------------+
Allocation of assets and liabilities
It is not possible to allocate the assets and liabilities of the Group between
differing business segments as all activities are run on common systems.
3. Taxation
+----------------------------------------------------------+----------+----------+
| | 2008 | 2007 |
| | EURm | EURm |
+----------------------------------------------------------+----------+----------+
| Current tax:- | | |
+----------------------------------------------------------+----------+----------+
| Foreign tax | (0.7) | (0.1) |
+----------------------------------------------------------+----------+----------+
The tax expense for the year arises on the profits made in Italy and can be
reconciled to the profit/(loss) in the income statement as follows:
+----------------------------------------------------------+-----------+------------+
| | 2008 | 2007 |
+----------------------------------------------------------+-----------+------------+
| | EURm | EURm |
+----------------------------------------------------------+-----------+------------+
| Profit / (loss) before tax | 1.3 | (2.0) |
+----------------------------------------------------------+-----------+------------+
| Tax at corporation tax rate of 28% (2007: 30%) | 0.4 | (0.6) |
+----------------------------------------------------------+-----------+------------+
| Tax effect of UK losses not relieved | 0.3 | 0.7 |
+----------------------------------------------------------+-----------+------------+
| Tax charge | 0.7 | 0.1 |
+----------------------------------------------------------+-----------+------------+
As at 31 December 2008, the Group had unrecognised deferred tax assets in
respect of tax losses of approximately EUR26.5m (2007: EUR26.0m). These losses do
not expire.
Factors that may affect future tax charges
The Group has not taken credit for any Italian tax relief available on UK
losses. Under EU law, relief should be available, but until such time as the
Italian authorities agree to the relief, no value is attributed to these losses.
4. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the year.
+-------------------------------------------------+--------------+--------------+
| | 2008 | 2007 |
+-------------------------------------------------+--------------+--------------+
| Profit (Loss) attributable to equity holders of | EUR0.6m | (EUR2.1m) |
| the Company | | |
+-------------------------------------------------+--------------+--------------+
| Weighted average number of ordinary shares | 88,769,837 | 78,563,172 |
+-------------------------------------------------+--------------+--------------+
| Basic and diluted earnings per share | 0.7c | (2.7c) |
+-------------------------------------------------+--------------+--------------+
5. Goodwill
+------------------------------------------------------------------+-----------+
| | EURm |
+------------------------------------------------------------------+-----------+
| At cost or valuation | |
+------------------------------------------------------------------+-----------+
| At 31 December 2006 | 22.8 |
+------------------------------------------------------------------+-----------+
| Foreign exchange movements | (1.7) |
+------------------------------------------------------------------+-----------+
| At 31 December 2007 | 21.1 |
+------------------------------------------------------------------+-----------+
| Foreign exchange movements | (4.8) |
+------------------------------------------------------------------+-----------+
| At 31 December 2008 | 16.3 |
+------------------------------------------------------------------+-----------+
| | |
+------------------------------------------------------------------+-----------+
| Impairment at 31 December 2006 and 2007 | 2.4 |
+------------------------------------------------------------------+-----------+
| At 31 December 2008 | 2.4 |
+------------------------------------------------------------------+-----------+
| | |
+------------------------------------------------------------------+-----------+
| Net Book value at 31 December 2008 | 13.9 |
+------------------------------------------------------------------+-----------+
| Net Book value at 31 December 2007 | 18.7 |
+------------------------------------------------------------------+-----------+
The investment of EUR2.4m in Grouse Entertainment NV, which operated the Acropolis
casino, has been fully impaired.
The goodwill in respect of the Betshop group acquisition has been reviewed for
impairment and the recoverable amount has been determined based on the assets'
value in use over the next ten years. The value in use has been derived from the
forecasts of cash flow.
The key assumptions that impact this value are amounts staked and net win. The
basis of calculating the forecast of amounts staked derived from the current
business and the planned opening of new outlets through the recruitment of new
partners. The forecast of net win is based on historic performance.
6. Other intangibles
+--------------------------------------------+------------+-----------+-----------+
| | Software | Gaming | Total |
| | | licences | |
+--------------------------------------------+------------+-----------+-----------+
| | EURm | EURm | EURm |
+--------------------------------------------+------------+-----------+-----------+
| At cost or valuation | | | |
+--------------------------------------------+------------+-----------+-----------+
| At 31 December 2006 | | 0.9 | 0.9 |
+--------------------------------------------+------------+-----------+-----------+
| Additions | | 1.7 | 1.7 |
+--------------------------------------------+------------+-----------+-----------+
| Foreign exchange movement | | (0.1) | (0.1) |
+--------------------------------------------+------------+-----------+-----------+
| At 31 December 2007 | | 2.5 | 2.5 |
+--------------------------------------------+------------+-----------+-----------+
| Foreign exchange movement | | 0.2 | 0.2 |
+--------------------------------------------+------------+-----------+-----------+
| Additions | 0.1 | 0.3 | 0.4 |
+--------------------------------------------+------------+-----------+-----------+
| At 31 December 2008 | 0.1 | 3.0 | 3.1 |
+--------------------------------------------+------------+-----------+-----------+
| | | | |
+--------------------------------------------+------------+-----------+-----------+
| Accumulated amortisation and impairment | | | |
+--------------------------------------------+------------+-----------+-----------+
| At 31 December 2006 and 2007 | | 0.7 | 0.7 |
| Impairment | | 0.2 | 0.2 |
+--------------------------------------------+------------+-----------+-----------+
| Charge for the year | | 0.3 | 0.3 |
+--------------------------------------------+------------+-----------+-----------+
| At 31 December 2008 | 0 | 1.2 | 1.2 |
+--------------------------------------------+------------+-----------+-----------+
| | | | |
+--------------------------------------------+------------+-----------+-----------+
| Net book value at 31 December 2008 | 0.1 | 1.8 | 1.9 |
+--------------------------------------------+------------+-----------+-----------+
| Net book value at 31 December 2007 | 0 | 1.8 | 1.8 |
+--------------------------------------------+------------+-----------+-----------+
+----------------------------------------------------------------------------+
| The licences became operational in December 2007, when amortisation was |
| applied over their seven year term. |
+----------------------------------------------------------------------------+
The impairment charge relates to 7 Bersani licenses that have not become
operational.
The amortisation expense of EUR0.3m (2007: nil) has been charged to other
administrative expenses.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BRGDSBBDGGCX
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