TIDMPRTY TIDMTTM
RNS Number : 4573D
PartyGaming Plc
23 March 2011
23 March 2011
Announcement by bwin Interactive Entertainment AG ("bwin")
Below is the text of an announcement issued today by bwin.
Wednesday, 23 March 2011
Q4 and financial year 2010
Highlights
Q4 2010
Outlook
Financial Year 2010
Selected Key Figures
Investors: Konrad Sveceny, Press: Matthias Winkler bwin
Investor Relations bwin Interactive Entertainment AG
Interactive Entertainment AG Borsegasse 11, 1010 Vienna,
Borsegasse 11, 1010 Vienna, Austria Tel.: +43 (0)50
Austria Tel.: +43 (0)50 858-20067 E-mail: press@bwin.org
858-20017 E-mail: www.bwin.org
investorrelations@bwin.org
www.bwin.org
The bwin Group has over 20 million registered customers in more
than 25 core markets. On a number of different platforms, the Group
offers sports betting, poker, casino games, soft and skill games,
as well as audio and video streams of top sporting events such as
the Spanish Primera and Segunda divisions. The holding company bwin
Interactive Entertainment AG is listed on the Vienna Stock Exchange
(ID code BWIN, Reuters ID code BWIN.VI), and as the parent company
provides various services such as software development, marketing,
communications, human resources and finance to its subsidiaries and
associated companies. The operational business of the bwin Group is
carried out by subsidiaries and associated companies on the basis
of licences. The merger between bwin Interactive Entertainment AG
and PartyGaming Plc has already been approved and is scheduled to
be implemented on 31 March 2011. Full details about the Company can
be found on its investor relations website at www.bwin.org.
Key financial indicators (pro forma consolidated, unaudited)
EUR million Q4 2010 Q4 2009 % YoY 2010 2009 % YoY
----------------------- -------- -------- ------- ------ ------ -------
Gross gaming revenues 130.8 132.9 -1.6% 514.5 446.6 15.2%
Net gaming revenues 103.1 109.8 -6.1% 408.0 373.0 9.4%
Total revenues 115.0 125.4 -8.3% 457.2 433.8 5.4%
EBITDA (adjusted*) 20.9 34.3 -39.0% 72.0 102.2 -29.5%
EBIT 2.7 21.2 -87.3% 11.7 51.2 -77.2%
Result after tax 5.2 19.3 -73.0% 13.9 46.3 -69.9%
Development of business in Q4 2010 defined by forthcoming
merger
-- bwin established as one of the leading poker providers in
France and a top three player in Italy ahead of further product
expansion in 2011
-- Preparations for forthcoming regulation in a number of
European markets resulted in one-off expenditure for consulting and
system development
-- Continuing increase in turnover and customer volume in sports
betting segment
-- Gross gaming revenues slightly down year-on-year due to lower
sports betting margin and intense competition in poker, but
significant increase versus Q3 2010
-- EBITDA impacted by IT-related expenditure in preparation for
merger with PartyGaming and forthcoming regulation in Europe
-- Reorganisation by product segments in preparation for the
merger with PartyGaming successfully completed
-- Conclusion of merger scheduled for 31 March 2011
Current development of business above expectations coupled with
reduction of costs
-- Average daily gross gaming revenues (1 January - 17 March
2011) up 10.5% compared to Q4 2010 and up 6.2% compared to Q1 2010
to EUR 1.57 million
-- Average daily net gaming revenues (1 January - 28 February
2011) up 5.2% compared to Q4 2010 to EUR 1.18 million
-- Expenses for services received (e.g. external software
writing and maintenance, consulting) for January and February 2011
down by approximately 15% compared to the monthly average of Q4
2010
Q4 2010 (pro forma consolidated)
-- Gross gaming revenues of EUR 130.8 million (Q4 2009: EUR
132.9 million)
-- Record sports betting turnover of EUR 917.0 million (Q4 2009:
EUR 786.4 million)
-- Sports betting margin of 7.1% (Q4 2009: 8.5%)
-- Net gaming revenues of EUR 103.1 million (Q4 2009: EUR 109.8
million)
-- Active customers: 1,213,000 active and 305,000 new active
real-money customers (minus 2.5% and plus 2.4% respectively)
-- EBITDA (adjusted*) of EUR 20.9 million (Q4 2009: EUR 34.3
million)
-- Result after tax of EUR 5.2 million (Q4 2009: EUR 19.3
million)
*Excluding non-cash expenses in connection with share-based
payment (IFRS 2) and one-off effects in connection with proposed
merger.
Financial year 2010 (pro forma consolidated, including bwin
e.K.)
-- Gross gaming revenues up 15.2% to EUR 514.6 million (2009:
EUR 446.6 million)
-- Net gaming revenues up 9.4% to EUR 408.0 million (2009: EUR
373.0 million)
-- Active customers: 2,606,000 active and 1,283,000 new active
real-money customers (plus 9.0% and plus 16.4% respectively)
-- EBITDA (adjusted*) of EUR 72.0 million (2009: EUR 102.2
million)
-- Result after tax of EUR 13.9 million (2009: EUR 46.3
million)
*Excluding non-cash expenses in connection with share-based
payment (IFRS 2) and one-off effects in connection with proposed
merger.
Development of business in Q4 2010 (pro forma consolidated,
unaudited)
Record turnover for sports betting for both pre-match and live
betting
Due to the on-going improvement of the product portfolio to
specific customer requirements, in Q4 2010 sports betting turnover
(betting stakes) was up by 16.6% to EUR 917.0 million compared to
Q4 2009. Both live betting and conventional sports betting
(pre-match) contributed to this growth with betting volumes up by
16.8% and 16.0% respectively.
Though the number of bookmakers-traders remained constant, the
betting portfolio has been expanded considerably and regionalized
through increased automation. A new video promotion page was
designed to appeal to new customers, who are able to choose from up
to 1,500 live events a month. This makes bwin one of the world's
largest online broadcasters of live sports.
Gross gaming revenues of EUR 130.8 million (Q4 2009: EUR 132.9
million)
In Q4 2010 gross gaming revenues (stakes less winnings or rake
in the poker segment) declined by 1.6% compared to Q4 2009 to EUR
130.8 million.
Sports betting
While sports betting turnover grew significantly, due to a
relatively smaller pre-match margin of 12.3% (Q4 2009: 16.3%),
gross gaming revenues for the sports betting segment (betting
stakes less customer winnings) fell 2.4% to EUR 65.0 million (Q4
2009: EUR 66.6 million). Gross gaming revenues for pre-match
betting fell by 12.1% to EUR 30.4 million, whilst live betting rose
7.3% to EUR 34.3 million.
Sports betting Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
(in EUR million) 2010 2010 2010 2010 2009 2009 2009 2009 2008
Pre-match 247 191 240 232 212 177 188 195 216
Live betting 670 629 664 628 574 566 572 568 578
Sports betting
turnover 917 820 904 860 786 743 760 763 793
Pre-match 30 30 31 31 35 23 14 31 32
Live betting 34 35 34 33 32 30 31 31 32
Gross gaming
revenues sports
betting 65 65 65 64 67 53 45 62 65
Pre-match margin 12.3% 15.6% 13.1% 13.4% 16.3% 12.8% 7.4% 16.0% 15.0%
Live betting
margin 5.1% 5.5% 5.1% 5.3% 5.6% 5.3% 5.3% 5.5% 5.6%
Sports betting
margin 7.1% 7.9% 7.2% 7.5% 8.5% 7.1% 5.9% 8.2% 8.1%
Poker
Gross gaming revenues declined by 5.8% in Q4 2010 to EUR 35.5
million mainly due to continuing strong competition in the
international poker market. However, strong growth in newly
regulated markets resulted in an increase of 6.3% in gross gaming
revenues versus Q3 2010.
Supported by new marketing campaigns, bwin's Italian poker
network represented approximately 22.3% of the Italian poker market
in Q4 2010 (excluding Microgame, an online gaming software provider
for retail shops). As a result, bwin was the second largest online
poker provider in this expanding market, that currently comprises
only poker tournaments. In established online poker markets, poker
cash games generally have a higher share than online poker
tournaments and the launch of poker cash games, originally planned
for 2010, is now scheduled for Q2 2011, and should generate further
market growth.
Following the successful market launch in France in July 2010,
supported by extensive marketing activities, poker gross gaming
revenues in France grew significantly in Q4 2010, establishing bwin
as one of the leading online poker providers in France. In the
latest survey([1]) on the awareness of online gaming providers in
France, bwin was mentioned as the leading non-French
enterprise.
Whilst these newly regulated markets are performing well, the
international poker business (.com) is still dominated by poker
providers offering real money gaming to US customers, giving them
significant advantages of size and player liquidity.
Casino and games
In line with the French regulatory requirements, casino products
previously offered on bwin.com were not available to French
customers in Q4 2010. This contributed to a decline of 3.9% in
gross gaming revenues in this segment to EUR 19.4 million (Q4 2009:
EUR 20.2 million). On a comparable basis, i.e. Q4 2009 excluding
France, the Company would have reported an increase in casino gross
gaming revenue of 3.1%.
It is expected that Italy will issue licences for casino table
and card games for the first time in Q2 2011. It is expected that
this will deliver attractive growth opportunities as bwin currently
generates about 75% of its casino revenue from these games.
Gross gaming revenues in the games operating segment grew by
29.3% versus the prior year to EUR 10.9 million (Q4 2009: EUR 8.4
million). This was primarily attributable to the satisfactory
development of bingo, which has been available on
www.giocodigitale.it since the beginning of the year, and on
www.bwin.it since 21 September 2010.
Strong growth in the mobile gaming segment
In Q4 2010 bwin reported again a strong increase in gross gaming
revenues for mobile products for sports betting, poker, casino and
games of 66.0% compared to Q4 2009 to EUR 3.6 million. The number
of active customers more than doubled in the same period. In
addition to the success of the iPhone and Android applications, the
mobile casino and games offering is complemented by 2 mobile games:
"European Roulette" and "Blackjack".
Net gaming revenues of EUR 103.1 million (Q4 2009: EUR 109.8
million)
Net gaming revenues (gross gaming revenues less betting duties,
betting duties, licence fees and bonuses granted to customers)
amounted to EUR 103.1 million in Q4 2010. This represented a
decrease of 6.1% compared to Q4 2009, attributable mainly to higher
betting duties that almost doubled to EUR 10.2 million (Q4 2009:
EUR 5.6 million). A total of EUR 13.5 million in customer bonuses
(including the "b'inside" customer loyalty programme) were granted
in Q4 2010 (Q4 2009: EUR 15.6 million).
A lower sports betting margin and a EUR 3.3 million increase in
betting duties meant that the sports betting segment reported a
drop of 9.7% in net gaming revenues to EUR 52.9 million (Q4 2009:
EUR 58.5 million). Poker declined by 17.4% to EUR 23.2 million (Q4
2009: EUR 28.1 million) partly due to the significant increase in
poker related duties, particularly in France, but also due to lower
gross gaming revenues. The casino segment increased net gaming
revenues by 8.5% to EUR 17.1 million due to a reduction in bonuses
(Q4 2009: EUR 15.8 million). The successful operation of bingo,
especially in the Italian network, helped grow the games segment by
33.8% to EUR 9.9 million (Q4 2009: EUR 7.4 million).
Other income
Other income in Q4 2010 totalled EUR 12.0 million (Q4 2009: EUR
15.6 million). This decline was attributable mainly to lower
inactivity fees and own work capitalised. bwin reported own work
capitalised (e.g. development of in-house software) of EUR 3.4
million in Q4 2010 (Q4 2009: EUR 4.7 million). Currency gains
accounted for EUR 3.2 million in Q4 2010 (Q4 2009: EUR 3.2
million). These gains were offset by the currency losses recognised
under other expenses (Q4 2009: --EUR 0.1 million).
Active customers: 1,213,000 active and 305,000 new active
real-money customers (minus 2.5% and plus 2.4% respectively)
Whereas active customers fell by 2.5% in Q4 2010, bwin reported
growth of 2.4% in new active customers compared to Q4 2009.
Gross gaming revenues per active customer rose by 1.0% to EUR
107.9 (Q4 2009: EUR 106.8), however net gaming revenues per active
customer fell by 3.7% to EUR 85.0 (Q4 2009: EUR 88.2). This
nevertheless represented an increase of 7.8% over Q3 2010 (Q3 2010:
EUR 78.8).
Costs (marketing expenses including bonuses) per new active
customer declined by 7.7% to EUR 133.2 (Q4 2009: EUR 144.7).
EBITDA (adjusted*) of EUR 20.9 million (Q4 2009: EUR 34.3
million)
After adjustment for non-cash expenses (IFRS 2 - share-based
payment in the amount of EUR 3.5 million and one-off expenses in
the amount of EUR 3.4 million in connection with the proposed
merger), in Q4 2010 adjusted EBITDA (earnings before interest,
taxes, depreciation and amortization) amounted to EUR 20.9 million
(Q4 2009: EUR 34.3 million). Based on net gaming revenues, this
represented an EBITDA margin of 20.3% in Q4 2010 (Q4 2009:
31.2%).
The reduction in adjusted EBITDA versus the prior year was
partly due to the lower total gaming revenues as described above
but also caused by increased expenses, including legal consulting,
and accelerated one-off investments in technology in anticipation
of a massive wave of regulatory changes in Europe and in
preparation of the planned merger with PartyGaming.
Operating expenses
Operating expenses in the 2010 financial year and especially in
Q4, were affected by two major strategic initiatives that resulted
in two sizeable one-off effects that impacted operating
performance. Significant investment ahead of the anticipated
regulation in a number of countries in Europe was necessary to
ensure that bwin is able to participate in these markets as soon as
regulations allow. This resulted in increased expenditure on
consulting and system development. In addition, high priority was
attached to the implementation of a number of measures in
connection with the merger with PartyGaming. These are described in
more detail below.
Marketing expenses
Marketing expenses of EUR 27.2 million in Q4 2010 were slightly
below the previous year (Q4 2009: EUR 27.4 million), accounting for
26.4% of net gaming revenues (Q4 2009: 24.9% of net gaming
revenues). Marketing activities were focused mainly on the newly
regulated markets of Italy and France.
Personnel expenses
The market launch in France and investments in all areas of
technology meant that personnel expenses were up from EUR 28.3
million in Q4 2009 to EUR 29.5 million, or EUR 25.8 million
excluding IFRS 2 share-based payment (Q4 2009: EUR 25.3 million
excluding IFRS 2). This was further compounded by an adverse
movement in the rate of exchange of the Swedish krona against the
euro.
As of 31 December 2010, bwin had 1,667 employees (excluding
freelance staff) representing an increase of 6.0% compared to the
previous year (31 December 2009: 1,573 employees excluding
freelance staff). As of February 2011 the number of employees on
the same basis was down 5% compared with the highest level of the
previous year.
The reorganisation of bwin by product divisions commenced in Q4
2010 and is now complete. This involved transforming the previous
horizontal structure into vertical business units. This means that
bwin's organisational structure now largely matches that of the
target blueprint of bwin.party post closing of the merger.
Other expenses
In Q4 2010 the bwin Group's other expenses rose by 14.8%
compared to the previous year to EUR 44.3 million (Q4 2009: EUR
38.7 million). One-off expenses of EUR 3.2 million in connection
with the merger were incurred in the period and are included under
other expenses.
As highlighted above, expenses for services received, such as
third-party software development and maintenance, consulting and
internet charges, rose by 45.1% compared to the previous year to
EUR 12.4 million (Q4 2009: EUR 8.6 million).
This observed increase in Q4 2010 was largely attributable to
one-off expenditures. The Company made extensive preparations for
its first compliance audit with the licensing authorities in
France, which was carried out in January 2011. Increased
expenditure was also incurred due to preparations for technological
and organisational integration to be implemented following
completion of the merger with PartyGaming. In this context,
preparations were also made to outsource further roles to India.
Finally, the increased pace of regulatory changes necessitated
investments and expenditure earlier than anticipated. Due to the
latest judgments of the European Court of Justice for Germany and
Austria, regulations already approved or planned in various
countries of the European Union such as Denmark, Greece, Spain,
Poland and the Netherlands may be implemented faster than planned.
bwin's goal is to be a first mover in each of these markets and the
Group has therefore stepped up its efforts in order to ensure that
its technology, particularly in the area of sports betting is as
flexible as possible in order to minimise market entry costs and
start-up times.
Since the year end, expenses for services received in January
and February 2011 were already approximately 15% down compared to
the monthly average of Q4 2010. This represented a reduction of EUR
0.5 million in monthly expenses for services rendered.
Despite a rise of 15.2% in total turnover, banking expenses were
reduced by 8.4% compared to the same period the previous year to
EUR 7.1 million (Q4 2009: EUR 7.7 million). Legal, auditing and
consulting expenses totalled EUR 8.0 million in Q4 2010 (Q4 2009:
EUR 5.6 million), and included one-off expenses of EUR 3.2 million
relating to the proposed merger with PartyGaming.
Result after tax of EUR 5.2 million (Q4 2009: EUR 19.3
million)
In Q4 2010 bwin recognised depreciation and amortisation on
hardware and software in the amount of EUR 7.3 million (Q4 2009:
EUR 8.4 million). Amortisation associated with the acquisitions of
bwin Games (formerly Ongame) and Gioco Digitale amounted to EUR 4.0
million (Q4 2009: EUR 1.3 million).
The financial result for Q4 2010 increased to EUR 0.2 million
following a loss of EUR 1.5 million in Q4 2009. Investment losses
in the amount of EUR 1.1 million were largely attributable to
start-up costs for "Sajoo", an at-equity accounted investment that
is majority-owned by the French Amaury Group (L'Equipe) (Q4 2009:
EUR 0.0 million).
This resulted in an operating profit (EBIT) of EUR 2.7 million
for Q4 2010 (Q4 2009: EUR 21.2 million, and tax income of EUR 3.9
million for the year 2010, mainly due to the impact of deferred
taxes. Profit after tax was EUR 5.2 million (Q1 2009: EUR 19.3
million).
Legislative developments
Gaming is preoccupying the majority of member states of the
European Union and a growing number are realising that the
regulation of online gaming is inevitable for the protection of the
consumer. This trend was triggered by the infringement proceedings
instituted by the European Commission against numerous member
states back in 2006, and further accentuated by the latest
judgments passed down by the European Court of Justice (ECJ) in the
cases of Markus Stoss(C-316/07), Carmen Media (C-46/08), Winner
Wetten (C-409/06) and Engelmann (C-64/08).
In its judgments on Carmen Media and Markus Stoss, the ECJ ruled
that Germany's lottery and sports betting monopoly in its present
form infringed EU law since it did not pursue the stated objectives
in a consistent and systematic manner. The European Court of
Justice emphasised once again the necessity for coherent and
consistent gaming policies, imposing strict limits on state
monopolies. The court also went on to establish that no fines could
be imposed on providers unable to obtain gaming licences in the
certain member states as a result of national regulations not in
conformity with EU legislation.
Notwithstanding the judgments passed down by the ECJ, there are
still numerous court and administrative proceedings pending against
the bwin Group in Germany. Their aim is to prohibit bwin's
operations throughout Germany, or at least in individual states.
For instance, several German state operators instituted competition
proceedings against the bwin Group as long ago as 2004 and 2006. On
18 November 2010, Germany's Federal Supreme Court dismissed the
case brought by Westdeutsche Lotterie GmbH & Co. OHG, the state
provider in North Rhine-Westphalia, and confirmed the legal
position of the bwin Group. The Federal Supreme Court heard three
further German proceedings on 17 March 2011. A judgment is expected
on 7 July 2011.
The prospects of regulation of the sports betting market in
Germany have improved significantly, not least due to the
above-mentioned judgments of the ECJ. Germany's State Treaty on
Gaming expires at the end of 2011, and has been under evaluation by
the states since the autumn of 2009. A decision is expected later
this year.
Italian legislators have expanded the permissible range of games
since the introduction of the licensing system in 2006. Following
the opening of the market for online poker tournaments in 2008, the
first licenses for further poker and casino products are expected
to be issued in early summer 2011. France opened its market to
private operators in June 2010, and bwin was the first
international provider to receive a licence for sports betting and
poker. Danish legislators have also already decided to regulate the
opening-up of the gaming market, and Spanish regulators are
planning to issue the first national licences for online gaming at
the end of 2011. Other member states - Greece, Cyprus, Romania,
Bulgaria and Poland - have followed suit in recent months and have
presented bills at least for the partial regulation of their gaming
markets.
Finally, in the USA, there are also a number of initiatives
looking to regulate online gaming both at a national and a state
level. Earlier this month a new federal bill was introduced to the
Financial Services Committee of the House of Representatives, one
that had previously been sponsored by the then Chairman of the
Committee, Congressman Barney Frank. State initiatives in
California, New Jersey, Florida and Iowa have seen the introduction
of bills for the regulation of online poker within each state.
Outlook
Dividend
In accordance with the agreement of 29 July 2010 regulating
implementation of the merger with PartyGaming, the management of
bwin did not propose a dividend for the financial year 2010. The
Company's dividend policy will be discussed by the Board of
bwin.party digital entertainment plc following completion of the
merger with PartyGaming.
Merger with PartyGaming
The merger with PartyGaming will create the world's largest
publicly listed online gaming company, with a well-balanced revenue
base by product, geographic market and distribution channel. As a
publicly listed company, bwin.party will be a clear market leader
across the four major product verticals of sports betting, poker,
casino and bingo.
Following the planned merger on 31 March 2011, the management of
bwin.party will focus on achieving the annual synergies of EUR 55
million already identified that should be fully realised by 2013.
The primary strategic goals of bwin.party will have the following
priorities:
Focus on regulated and to-be-regulated markets: The online
gaming industry is undergoing an unprecedented regulatory shift
from unregulated towards regulated markets. Following the merger of
bwin and PartyGaming, the new company will be well-positioned to
secure significant market shares in all product verticals in all of
major regulated and to-be-regulated markets. This will be achieved
largely through organic growth as well as selective acquisitions.
At the same time, bwin.party will continue to lobby governments for
legislation that meets the needs and desires of the regulators
whilst remaining commercially attractive. In particular, the
Company will seek to ensure that new legislation incorporates
taxation models that make sound business sense so that licensed
companies are not at a significant disadvantage to unlicensed
operators.
Invest in the development of technology and brands:Both bwin and
PartyGaming's success has been borne out of an ability to innovate
and a willingness to invest in developing the best products and
brands. The respective brands and products are already some of the
strongest in the industry and will be made stronger through
delivery of the best customer experience, irrespective of product
or channel.
Secure long-term strategic alliances: bwin's brand has become
synonymous with sport through its sponsorship of some of the
world's biggest names in sport such as Real Madrid and Bayern
Munich. Its long-standing cooperation with soccer clubs like these
and the Italian and Portuguese soccer leagues testify to the
Company's continuing commitment to top soccer. In addition, bwin
and PartyGaming have established several strategic alliances with a
number of third parties such as those with PMU and Amaury in
France.
Act responsibly: As a market leader, both companies are
determined to lead by example, intent on opening new markets and
promoting the merits of real money gaming around the world. bwin
and PartyGaming have been pioneers in the areas of gaming research
and innovation. Building on bwin's existing collaboration with the
Division on Addictions, Cambridge Health Alliance, a Harvard
Medical School Teaching Affiliate and other institutions,
bwin.party plans to increase its efforts to promote safe and secure
gaming on the internet.
Current trading
Over the period 1 January to 17 March 2011, average gross daily
gaming revenues were EUR 1.57 million, 10.5% above that achieved in
Q4 2010 (EUR 1.34 million) and 6.2% higher than Q1 2010. This
largely reflected a return to a satisfactory sports betting margin.
Over the period 1 January to 28 February 2011, average daily net
gaming revenues were EUR 1.18 million, 5.2% up on the level of Q4
2010 (EUR 1,12 million).
Since the year end, expenses for services received in January
and February 2011 were already down by approximately 15% compared
to the monthly average of Q4 2010. This represented a reduction of
EUR 0.5 million in monthly expenses for services received.
Development of business in the financial year 2010 (pro forma
consolidated, unaudited)
Development of gross and net gaming revenues
Sustained by the major event of the Soccer World Cup and the
first full annual contribution by the Italian subsidiary Gioco
Digitale, acquired in October 2009, in 2010 bwin reported gross
gaming revenues (betting stakes less betting winnings or the rake
taken in the poker segment) of EUR 514.5million, a 15.2% increase
on the previous year's figure of EUR 446.6 million.
Net gaming revenues (gross gaming revenues less sales
commissions, betting duties, licence fees and bonuses) rose by 9,4%
in the year under review, from EUR 373,0 million in the year 2009
to EUR 408,0 million.The smaller increase in net gaming revenues
compared to gross gaming revenues was attributable mainly to higher
betting duties in the regulated Italian and French online gaming
online gaming markets. Betting duties rose by 156.9% to EUR 33.0
million (2009: EUR 12.8 million).
Gross gaming revenues sports betting
In Soccer World Cup year 2010, betting stakes for sports betting
increased 14.7% to EUR 3,500.1 million (2009: EUR 3,052.0 million),
and were therefore up 19.6% compared to European
Football-Championship year 2008. The live betting segment accounted
for 74.0% of turnover, reporting growth of 13.7% to EUR 2,591.2
million (2009: EUR 2,279.4 million, or 74.7% of betting stakes),
whereas conventional sports betting (pre-match) rose 17.6% to EUR
908.9 million (2009: EUR 772.6 million).
The 14.6% increase in gross gaming revenues for sports betting
to EUR 259.3 million (2009:EUR 226.3 million) was attributable to
the 10.3% growth of live betting to EUR 136.5 million (2009: EUR
123.7 million). On the other hand, pre-match gross gaming revenues
were up 19.4% to EUR 122.5 million (2009: EUR 102.6 million).
Live betting (mainly single bets) has a more stable, but lower
margin on the basis of gross gaming revenues in proportion to
payments in than pre-match sports betting (mainly combination
bets). At 5.3%, the margin for live betting in the financial year
2010 was slightly down on the previous year's level (2009: 5.4%).
The pre-match margin rose to 13.5% (2009: 13.3%). The overall
sports betting margin for 2010 was 7.4% (2009: 7.4%).
The positive development of sports betting was sustained by an
expanded product portfolio coupled with additional possibilities
for the individual configuration of betting services. The "Country
Highlights" function, for example, automatically offers regionally
specific bets for up to 15 different sports. In 2010 bwin attached
particular importance to improving the clarity of the extensive
betting portfolio, which also resulted in faster placing of
bets.
bwin offers up to 1,500 live events with videos every month,
making the Company the world's largest broadcaster of live sports.
A new video promotion page is designed to appeal especially to new
customers.
In the financial year under review bwin achieved tremendous
progress both in the improvement of its user interface (front end)
and the tools used to produce betting services and its interactive
risk management (back end). The flexible betting platform is able
to optimally handle a wide variety of regulatory requirements. This
has been demonstrated in France, where bwin was the first
international provider on the market with an extensive sports
betting portfolio.
Gross gaming revenues poker
Compared to 2009, in 2010 bwin reported an 17.4% increase in
gross gaming revenues (commission/fee, or "rake") in the poker
segment to EUR 139,5 million (2009: 118.8 million). This increase
was largely attributable to the contribution made by Gioco Digitale
and the successful market launch in France.
The Italian poker network launched in autumn 2008 now also
offers bingo and skill games for B2B customers and currently has
about 20 partners, who generate around 6% of Italian poker
liquidity. With approximately five million registered customers, in
the financial year under review bwin's poker network accounted for
22.3% of the competitive Italian online poker market, excluding
Microgame, an online gaming software provider for retail shops.
This means that bwin has been able to establish itself as the
second largest online poker provider on this rapidly expanding
market, currently comprising only poker tournaments.
In established online poker markets, poker cash games generally
have a higher share than online poker tournaments. The launch of
poker cash games originally planned for 2010 is now scheduled for
Q2 2011, and should generate further growth on the Italian online
poker market.
bwin was one of the first operators to introduce real money
poker operations in France with effect from 1 July 2010. The smooth
launching of a wide product portfolio of cash games and tournaments
is evidence of bwin's technological maturity, the flexibility of
its platform, and its thorough groundwork. bwin was able to meet
its goal of playing a leading role on the French online gaming
market.
Apart from bwin.fr, bwin's regional French poker network also
comprises the B2B partner sajoo.fr (at-equity accounted),
eurosportbet.fr and Unibet, and was recently enlarged by the
arrival of Buongiorno with the "Winga" brand. The network partners
contribute about 40% of French poker liquidity.
Developments in Italy and France illustrate the positive impact
of a secure regulatory framework.According to
Pokertrafficindex.com, the Italian online poker market is the
world's second largest after the USA. In a year-on-year comparison,
its share of the world-wide market increased from 15.8% to 16.7%,
whilst the French online poker market's share grew from 9.3% to
9.6%. Over the same period, the share of the unregulated US market
declined from 23.3% to 21.6%.([2])
Thanks to extensive and timely groundwork, bwin has been able to
establish a good position for itself on both the Italian and French
market despite the intense competition. On the other hand, the
international poker business (.com), i.e. without Italy and France,
is still dominated by poker providers offering real money gaming to
US customers, giving them significant economies of scale.
With over 70,000 real-money customers a day at peak times and
guaranteed tournament prize money of over USD 30 million a month,
bwin and Ongame Network now operate the world's largest poker
network.([3]) In the financial year under review this network was
further expanded both regionally (.country) and internationally
(.com). For example, betfair, the world's largest betting exchange,
has been a new partner in the international Ongame network since
July 2010, and Unibet was a newcomer to the regional Italian poker
network in December 2010. The international B2B poker network
currently comprises 25 partners contributing about 47% of poker
liquidity. Overall the B2B partners in the three poker networks
operated by bwin generate about 39% of the Company's total poker
liquidity.
Gross gaming revenues casino und games
Notwithstanding the termination of French online casino
operations due to regulatory restrictions, in a year-on-year
comparison the casino segment reported a 1.3% rise in gross gaming
revenues (stakes less winnings paid out) to EUR 74.7 million
(2009:EUR 73.7 million). Following the introduction of a total of
11 new casino games, customers can now choose from 105 casino
games. As in 2009, in the year 2010 the proportion of turnover
generated by casino table and card games amounted to some 75% of
total casino turnover. For regulatory reasons, the launch of casino
table games in Italy had to be postponed to the current financial
year 2011, and will be supported by targeted marketing
campaigns.
The games segment once again reported very attractive rates of
increase in the financial year 2010. Gross gaming revenues rose by
47.7% to EUR 41.0 million (2009: EUR 27.8 million). This was mainly
attributable to the expanded product portfolio, the successful
integration of MiniGames into the live betting segment, and the
satisfactory development of the bingo product in Italy. Bingo has
been offered on www.giocodigitale.it since the beginning of 2010,
and on www.bwin.it since 21 September 2010.
New mobile web applications
The development of gross gaming revenues for mobile offerings
for sports betting, poker, casino and games continued to be
satisfactory. Since the Soccer World Cup in South Africa, monthly
gross gaming revenues from mobile web applications have
consistently been over EUR 1 million. In 2010 these amounted to EUR
12.4 million, an increase of 82.9% compared to the previous year's
level (2009: EUR 6.8 million). With the introduction of "bwin live"
to the app store and the Android marketplace in the United Kingdom
and Austria, bwin now offers users of Apple's iPhone and Android
smartphones a live betting app for sports such as soccer, tennis,
Formula 1, American football, ice hockey and skiing. In 2010 bwin
launched "bwin Poker", the first real-money poker app for the
iPhone in app stores in the United Kingdom and Austria. In addition
to the successful iPhone and Android applications, the mobile
casino and games offering is rounded out by the web apps "European
Roulette" and "Blackjack".
Net gaming revenues of EUR 408.0 million (2009: EUR 373.0
million)
Net gaming revenues (gross gaming revenues less all deductions
such as betting duties on the product portfolio, commissions,
licence fees and bonuses granted to customers) amounted to EUR
408.0 million in 2010 (2009: EUR 373.0 million). This represented
an increase of 9.4% compared to 2009.
The sports betting segment reported growth of 11.2% to EUR 216.4
million (2009: EUR 194.6 million). Poker improved by 4.0% to EUR
93.1 million (2009: EUR 89.5 million). Net gaming revenues in the
casino segment totalled EUR 60.9 million in 2010 and were thus down
4.7% (2009: EUR 63.9 million). Management expects a significant
increase in net gaming revenues in this segment following the
conclusion of the planned merger with PartyGaming.
The successful marketing of bingo in Italy coupled with the
expansion of gaming products enabled the games segment to achieve
growth of 50.5% to EUR 37.6 million (2009: EUR 25.0 million).
As a result of higher betting duties on the regulated Italian
and French online gaming markets, net gaming revenues in 2010
increased less than gross gaming revenues, and amounted to 79.3% of
gross gaming revenues (2009: 83.5%).
In 2010 a total of EUR 63.4 million (2009: EUR 54.3 million) was
granted in customer bonuses (including "b'inside" customer loyalty
programme). In 2010 they increased to 12.3% of gross gaming
revenues (2009: 12.2%).
Other revenues
Other revenues in 2010 totalled EUR 49.2 million (2009: EUR 60.9
million). This considerable reduction was attributable mainly to
the absence of revenues from the sale abroad of marketing rights to
the German Soccer League (2009: EUR 14.6 million).
Charges passed on to customers - such as deposits made by credit
card - amounted to EUR 10.9 million (2009: EUR 9.9 million). In
2010 bwin reported own work capitalized (e.g. in-house software) of
EUR 12.4 million (2009: EUR 14.3 million). This was related to
preparations for additional product launches in Italy and the
opening-up of the French online gaming market. Currency gains of
EUR 15.8 million were recognized in 2010 (2009: EUR 14.1 million).
Offset against the currency losses recognized under other expenses,
this resulted in a contribution from currency fluctuations in 2010
in the amount of EUR 3.2 million (2009: EUR 0.6 million).
Development of customer base
The major event of the Soccer World Cup and the successful
market launch in France resulted in a new record for active
customers. In 2010 the number of active customers rose to 2,606,000
(2009: 2,391,000), and that of new active customers to 1,283,000
(2009: 1,102,000). Customer growth was underpinned by targeted
activation and reactivation measures, particularly in connection
with the Soccer World Cup, and a number of product enhancements.
The games segment reported the strongest growth of 25.9%, followed
by sports betting, which increased the number of active customers
by 12.9%. At the present time some 200,000 customers a day use the
range of entertainment products offered by bwin.
bwin's Customer Service handled more than 1.7 million customer
contacts in the year under review (2009: 1.6 million). The
processing time for messages was reduced by 60 minutes to an
average of less than three hours. Thanks to continuous quality
improvement, customer satisfaction rose to over 80%, a figure well
above the industry standard.
Performance indicator customer base
(in 000) 2010 2009
Number of active customers (Group total) 2,606 2,391
Number of active customers (sports betting) 1,981 1,754
Number of active customers (casino) 400 371
Number of active customers (poker) 1,117 1,050
Number of active customers (games) 519 412
EBITDA (adjusted*) of EUR 72.0 million (2009: EUR 102.2
million)
In 2010 earnings before interest, taxes, depreciation and
amortization (EBITDA) amounted to EUR 56.4 million (2009: EUR 91.9
million). After adjustment for non-cash expenses (IFRS 2 -
share-based payment in the amount of EUR 8.6 million and one-off
expenses in the amount of EUR 7.1 million in connection with the
proposed merger), in 2010 EBITDA fell by 29.5% to EUR 72.0 million
(2009: EUR 102.2 million). This development was largely
attributable to expenses in connection with the Soccer World Cup,
the market launch in France, and timely investments made in all
areas of technology in anticipation of the merger and a
multi-regulated market environment in Europe. In Italy, too,
preparations were made for additional product launches.
Operating expenses
Operating expenses in the 2010 financial year were affected by
two major strategic initiatives that resulted in two sizeable
one-off effects that impacted operating performance. Significant
investment ahead of the anticipated regulation in a number of
countries in Europe was necessary to ensure that bwin is able to
participate in these markets as soon as regulations allow. This
resulted in increased expenditure on consulting and system
development. In addition, high priority was attached to the
implementation of a number of measures in connection with the
merger with PartyGaming.
Marketing expenses
Marketing expenses increased 17.1% in the year 2010 to EUR 120.3
million. This was due to the first full annual contribution from
Gioco Digitale, intensified communications activities around the
Soccer World Cup, and the rapid development of the market in France
immediately after the granting of a licence. Special priority was
given to offline marketing (print, TV, radio), although increased
use was also made of cheaper distribution channels, such as search
engine optimization on the internet.
In 2010 marketing expenses accounted for 29.5% of net gaming
revenues (Q1-Q4 2009: 27.5%).
In the financial year 2010 bwin was once again perceived as one
of the most recognized sports sponsors internationally. Apart from
existing successful partnerships, such as the ones with Real
Madrid, one of the world's best known soccer clubs, which runs
until the 2012/2013 season, or with Bayern Munchen and the
Portuguese soccer league, a further commitment to top soccer was
made in 2010: Italy's Liga Serie B soccer league became the Serie
bwin. This cooperation between bwin and the 22 clubs in the league
runs until 30 June 2012. The contract with AC Milan expired in mid
2010. However, bwin once again featured as one of the key sponsors
of the famous Hahnenkamm ski race, and the existing MotoGP
sponsoring was enhanced by the addition of exclusive content for
all MotoGP fans and bwin customers.
Customer bonuses
A total of EUR 63.4 million in customer bonuses including the
"b'inside" customer loyalty programme were granted in the financial
year 2010 (2009: EUR 54.3 million). This increase was attributable
mainly to increased reactivation measures during the soccer World
Cup, the market launch in France, and intensive competition in the
regulated Italian online gaming market. The percentage of gross
gaming revenues accounted for by bonuses rose from 12.2% in the
year 2009 to 12.3% in 2010.
Personnel expenses
As a result of the growing number of employees due to the
acquisition of Gioco Digitale, the market launch in France, and
anticipative investments in all areas of technology, personnel
expenses were up compared to 2009, from EUR 98.0 million to EUR
114.3million, or EUR 106.1 million excluding share-based payment
(2009: EUR 63.7 million excluding IFRS 2). Increased expenses also
resulted from the development in the rate of exchange of the
Swedish krona to the euro. At the reporting date of 31 December
2010, bwin had 1,667 employees (excluding freelance staff), 6.0% up
on the previous year.
Other expenses
At EUR 166.3 million, the bwin Group's other expenses were up
17.8% compared to the same period the previous year (2009: EUR
141.2 million). In 2010 one-off expenses in the amount of EUR 7.1
million were incurred in connection with the merger (2009: EUR 0
million). Currency losses in the amount of EUR 18.9 million (2009:
EUR 13.5 million) were offset by currency gains recognized under
other operating income in the amount of EUR 15.8 million (2009: EUR
14.1 million), resulting in a net loss of EUR 3.2 million.
Including one-off expenses in connection with the planned
merger, consulting expenses rose to EUR 27.7 million (2009: EUR
17.8 million). This was attributable to regulatory measures already
taken or planned in various countries of the European Union, such
as France, Italy, Germany, Greece, Denmark, Spain and Poland. Due
to the dynamic nature of this development, bwin has stepped up its
efforts to ensure that the taxation models incorporated in the
draft laws make sound business sense. In the financial year 2010
the Company also incurred higher consulting expenses resulting from
preparations for integration after conclusion of the merger.
In 2010 expenses for services received, such as third-party
software writing and maintenance, and internet charges, rose by
30.6% compared to the previous year to EUR 43.5 million (2009: EUR
33.3 million). These were associated with the market launch in
France, preparations for additional product launches in Italy, and
the incorporation of Betfair into the Ongame network. Some software
services were also outsourced to India.
Despite an increase of 14.8% in total turnover, at EUR 28.0
million banking expenses decreased by 2,6% compared to the previous
year (2009: EUR 28.8 million).
Depreciation and amortization
In 2010 depreciation on tangible assets and amortization of
intangible assets amounted to EUR 44.7 million (2009: EUR 40.6
million). This rise was largely attributable to increased
amortization of the customer base in the amount of EUR 18.1 (2009:
EUR 5.4 million) due to the acquisition of Gioco Digitale.
Operating result and profit for the year
After reporting an operating profit (EBIT) of EUR 51.2 million
the previous year, in 2010 bwin achieved an operating profit in the
amount of EUR 11.7 million. In 2010 the Company reported a
financial result in the amount of EUR 0.2 million (2009: -EUR 0.9
million). Due to start-up costs for Sajoo in France, the loss from
at-equity accouted investments totalled EUR 3.7 million in the
financial year under review (2009: EUR 0 million). Following a
profit after tax of EUR 46.3 million for the year 2009, profit
after tax amounted to EUR 13.9 million in 2010.
Notes
This report contains statements about possible future
developments that have been made on the basis of information
currently available. These statements reflect the present opinion
of the Executive Board with respect to such future events, and
should not be taken as a guarantee of future performance, since
they entail risks and uncertainties that are difficult to predict.
For many different reasons, actual events or circumstances may
differ significantly from the assumptions made for such
statements.
This report includes the silent investment bwin e.K. reported in
a pro forma consolidated version which therefore differs from the
consolidated financial statements. This has no impact on
fundamental statements by the management on the development of the
Company.
The at-equity consolidated group accounts are available on
request electronically and will be filed with the companies'
register on March 23(rd) 2011. They will be published in the
official Vienna gazette on March 24(th) 2011.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/4573D_1-2011-3-23.pdf
[1] Source: OpinionWay - bwin / Les Francais et les jeux
d'argent sur Internet, February 2011
[2] Source: Pokertrafficindex.com December 2010 - measured in
terms of average number of real-money customers per day (Cash
Games, tournaments, Sit'n goes)
[3] Source: Pokertrafficindex.com December 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
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