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OEG: Consolidated unaudited results for Q2 and 6 months of 2018

George Miller

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OEG: Consolidated unaudited results for Q2 and 6 months of 2018
Reading Time: 9 minutes

Key performance indicators of the Group

6M 2018 6M 2017 6M 2016
Revenue before gaming taxes m€ 106.6 104.4 99.2
Gaming tax m€ -22.9 -21.6 -22.9
Net revenue m€ 83.8 82.8 76.3
Total net revenue and income m€ 83.9 82.8 76.8
EBITDA m€ 21.7 20.9 17.1
EBIT m€ 15.2 14.7 12.0
Net profit m€ 14.7 12.6 10.1
EBITDA margin % 25.9 25.3 22.5
Operating margin % 18.1 17.8 15.8
Net margin % 17.6 15.2 13.3
Assets m€ 183.2 150.1 188.9
Equity m€ 160.2 127.2 108.8
ROE % 9.6 10.4 8.9
ROA % 8.3 8.3 5.8
Current ratio times 3.4 2.0 0.8
Casinos at end of period # 115 117 125
Casino floor area at end of period m2 37,389 38,784 39,223
Betting points at the end of period # 25 30 34
Betting points floor area at end of period m2 690 846 899
Employees # 3,031 3,059 3,260
Slot machines at end of period # 4,021 4,098 4,159
Electronic roulette terminals at the end of period # 109 116 148
Gaming tables at end of period # 156 165 198
Tournament poker gaming tables at the end of period # 63 66 63

 

Key developments of the Group during 6 months of 2018:

  • The Group’s consolidated total revenue before gaming taxes for 6 months of 2018 amounted to EUR 106.6 million, up 2.2% or EUR 2.3 million y‑o‑y.
  • Total gaming revenue before gaming taxes accounted for 89.5% (95.5 m€) and other revenues for 10.5% (11.2 m€) of the Group’s consolidated total sales revenues for 6 months of 2018. A year before the revenue split was 90.4% (94.3 m€) and 9.6% (10.0 m€), respectively.
  • The Group’s consolidated EBITDA for 6 months of 2018 amounted to EUR 21.7 million, a growth of 3.7% from EUR 20.9 million a year before. The Group’s consolidated operating profit increased EUR 0.4 million (3.0%) to EUR 15.2 million.
  • The Group’s consolidated net profit attributable to equity holders of the parent company for 6 months of 2018 totalled EUR 14.1 million compared to EUR 12.8 million a year ago.
  • On 19 February 2018 Group established and registered the company Olybet Italia S.r.l. in Italy. The aim of establishing the subsidiary is to develop the legal platform for the expansion of Group’s activities in the business of remote gambling.
  • On 19 March 2018 Group announced of the contemplated exit by major shareholders, voluntary takeover offer and business combination agreement. On 19 March 2018, two major shareholders of the Group OÜ HansaAssets (a company under the sole control of Mr Armin Karu, the former Chairman of the Supervisory Board of OEG) and OÜ Hendaya Invest (a company under the sole control of Mr Jaan Korpusov, the former member of the Supervisory Board of OEG), entered into a share sale and purchase agreement with Odyssey Europe AS, under which OÜ HansaAssets and OÜ Hendaya Invest sold and transferred all the shares of OEG held by them. The purchase price of the shares was EUR 1.9 per one share. The transactions were settled by the selling shareholders tendering their shares in the voluntary takeover offer. On 4 April 2018 the Buyer launched a voluntary takeover offer to all the shareholders of OEG for the same price of EUR 1.9 per one share. The voluntary takeover offer ended on 2 May 2018. The settlement date of the voluntary takeover offer was 10 May 2018.
  • On 29 March 2018 Group announced that it has received the decision of the District Administrative Court in Riga regarding one of the casinos located in Riga (Marijas street 2). The court ruled in favour of Riga City Council. According to the Riga City Council decision the casino has to be closed in October 2022. OEG appealed the decision to higher level court.
  • On 7 May 2018 Group announced that it has received the decision of the District Administrative Court in Riga regarding one of the casinos located in Riga (Raina blv 15). The court ruled in favour of Riga City Council. According to the Riga City Council decision the casino has to be closed in October 2022. OEG appealed the decision to higher level court.
  • On 10 May 2018 the voluntary takeover offer was settled, after which Novalpina Capital Partners I GP S.à r.l. informed OEG that on 10 May 2018 the shareholding of Odyssey Europe AS in OEG increased above 2/3. As of 10 May 2018 Odyssey Europe AS held 135,024,430 shares of OEG, representing 88.95% of all the votes represented by the shares of OEG. At 30 June 2018 Odyssey Europe AS held 135,604,521 shares of OEG (89.34% of all the votes represented by the shares of OEG). Novalpina Capital Partners I GP S.à r.l. is the ultimate parent of Odyssey Europe AS.
  • On 11 May 2018 the annual general meeting of shareholders was held, where in addition to regular agenda items the delisting of the Company’s shares from Nasdaq Tallinn Stock Exchange was approved, a new supervisory board was elected and a decision not to pay dividends was taken.
  • On 15 May 2018 the management board of OEG submitted the application for the immediate and unconditional termination of listing of OEG shares to the Nasdaq Tallinn Listing and Surveillance Committee. The Listing and Surveillance Committee of Nasdaq Tallinn Stock Exchange decided on 31 May 2018 not to approve the application of OEG and to refuse to terminate the listing/trading in shares on Baltic Main List before the takeover of the shares.  OEG filed a claim with the Court of Arbitration of the Nasdaq Tallinn Stock Exchange to appeal the resolution of the Listing and Surveillance Committee.
  • On 25 May 2018 Group announced that it has received the decision of the District Administrative Court in Riga regarding one of the casinos located in Riga (Pragas street 1). The court ruled in favour of Riga City Council. According to the Riga City Council decision the casino has to be closed in October 2022. OEG appealed the decision to higher level court.
  • On 7 June 2018 Regional Court in Bratislava overturned the Bratislava City Council decision to ban gambling operations in Bratislava as of 1 May 2017, in a way that ensures the continuity of operations to the current licence holders until the expiration dates of the existing licences and decided that the ban on gambling in Bratislava is not in accordance with the law.
  • On 25 June 2018 Group announced that it has received the decision of the District Administrative Court in Riga regarding one of the casinos located in Riga (Meistaru street 10). The court ruled in favour of Riga City Council. According to the Riga City Council decision the casino has to be closed in October 2022. OEG appealed the decision to higher level court.
  • On 29 June 2018 an extraordinary general meeting was held, where it was decided to amend Group articles of association.

 

The Group’s consolidated total revenue before gaming taxes by segments:

000€ Q2 2018 Q2 2017 Change 6M 2018 6M 2017 Change
Estonia 13,584 14,329 -5.2% 28,256 26,729 5.7%
Latvia 17,084 16,662 2.5% 33,381 33,203 0.5%
Lithuania 6,365 6,673 -4.6% 12,369 13,705 -9.8%
Slovakia 4,352 4,288 1.5% 8,336 8,790 -5.2%
Italy 8,240 7,750 6.3% 16,435 15,665 4.9%
Malta 4,584 3,143 45.8% 7,871 6,259 25.8%
Total 54,209 52,845 2.6% 106,648 104,351 2.2%


Number of casinos by segment:

30 June 2018 30 June 2017
Estonia 24 24
Latvia 53 52
Lithuania 17 18
Slovakia 6 7
Italy 14 15
Malta 1 1
Total 115 117

 

The Group’s consolidated operating expenses for 6 months of 2018 amounted to EUR 68.7 million, up 0.9% or EUR 0.6 million y‑o‑y. The growth was highest in personnel expenses (+1.0 m€, +3.7%), amortisation, depreciation and impairment costs (+0.3 m€, +5.3%) and other external services (+0.3m€, +10.8%). Personnel expenses (28.5 m€) and rent costs (8.4 m€) represented the largest cost items accounting for 53.7% of total operating expenses.

The income statement presents revenue before gaming taxes, then gaming taxes and thereafter net revenue. Gaming taxes for 6 months of 2018 increased 6% (+1.3 m€) compared to the same period a year ago.

 

Overview by markets

Estonia

Total revenue before gaming taxes of Estonian segment for 6 months of 2018 amounted to EUR 28.3 million (+1.5 m€, +5.7%), EBITDA to EUR 4.6 million (+0.4 m€, +8.5%) and operating profit to EUR 2.7 million (+0.2 m€, +9.3%). Gaming revenue before gaming taxes increased 2.6% y-o-y amounting to EUR 22.1 million.

At the end of June 2018, there were 24 Olympic casinos with 988 slot machines, 37 electronic roulette terminals, 24 gaming tables and 24 poker tournament tables operating in Estonia. As at 30 June 2018 Estonian operations employed 723 people.

Latvia

Total revenue before gaming taxes of Latvian segment for 6 months of 2018 amounted to EUR 33.4 million (+0.2 m€, +0.5%), EBITDA to EUR 12.3 million (-1.2 m€, -8.9%) and operating profit to EUR 10.1 million (-1.5 m€, -12.6%). Gaming revenue before gaming taxes increased 0.1% y‑o‑y amounting to EUR 30.3 million.

At the end of June 2018, there were 53 Olympic casinos with 1,469 slot machines, 16 electronic roulette terminals, 24 gaming tables and 9 poker tournament tables operating in Latvia. As at 30 June 2018 Latvian operations employed 923 people.

Lithuania

Total revenue before gaming taxes of Lithuanian segment for 6 months of 2018 amounted to EUR 12.4 million (‑1.3 m€, ‑9.8%), EBITDA to EUR 1.6 million (-0.1 m€, -5.0%) and operating profit to EUR 0.8 million (-0.1 m€, -10.6%). Gaming revenue before gaming taxes decreased 10.3% y-o-y amounting to EUR 11.7 million.

At the end of June 2018, there were 17 Olympic casinos with 504 slot machines, 8 electronic roulette terminals, 48 gaming tables and 2 poker tournament tables and 25 betting shops operating in Lithuania. As at 30 June 2018 Lithuanian operations employed 720 people.

Slovakia

Total revenue before gaming taxes of Slovak segment for 6 months of 2018 amounted to EUR 8.3 million (-0.5 m€, -5.2%), EBITDA to EUR 0.9 million (-0.02 m€, -2.5%) and operating profit to EUR 0.3 million (+0.1 m€, +23.6%). Gaming revenue before gaming taxes decreased 6.1% y-o-y amounting to EUR 7.4 million.

At the end of June 2018, there were 6 Olympic casinos with 249 slot machines, 30 electronic roulette terminals, 39 gaming tables and 18 poker tournament tables operating in Slovakia. As at 30 June 2018 Slovak operations employed 319 people.

Italy

Total revenue before gaming taxes of Italian segment for 6 months of 2018 amounted to EUR 16.4 million (+0.8 m€, +4.9%), EBITDA to EUR 1.3 million (+0.3 m€, +34.0%) and operating profit to EUR 0.9 million (+0.3 m€, +53.5%). Gaming revenue before gaming taxes increased 5.0% y-o-y amounting to EUR 16.3 million.

At the end of June 2018, there were 14 VLT slot casinos with 526 slot machines operating in Italy. As at 30 June 2018 Italian operations employed 89 people.

Malta

Total revenue before gaming taxes of Maltese segment for 6 months of 2018 amounted to EUR 7.9 million (+1.6 m€, +25.8%), EBITDA to EUR 1.0 million (+1.4 m€) and operating profit to EUR 0.4 million (+1.4 m€). Gaming revenue before gaming taxes increased 26.0% y-o-y amounting to EUR 7.8 million.

At the end of June 2018, there was 1 casino with 285 slot machines, 18 electronic roulette terminals, 21 gaming tables and 10 poker tournament tables operating in Malta. As at 30 June 2018 Maltese operations employed 196 people.

 

Financial position

As at 30 June 2018, the total assets of the Group amounted to EUR 183.2 million, up 22.1% or EUR 33.1 million compared to the same period a year ago.

Current assets totalled EUR 77.5 million or 42.3% of total assets, and non-current assets EUR 105.7 million or 57.7% of total assets. The liabilities amounted to EUR 23.0 million and equity to EUR 160.2 million. The largest liabilities included suppliers payables and advances (7.6 m€), tax liabilities (5.7 m€) and payables to employees (5.6 m€).

Investments

Within 6 months of 2018, the Group’s expenditures on property, plant and equipment totalled EUR 6.7 million (+2.2 m€, +47.9%), of which EUR 4.8 million was invested into construction and reconstruction of casinos and EUR 1.7 million into new gaming equipment.

Cash flows

Group’s 6 months 2018 cash flows generated from operating activities amounted to EUR 19.5 million (+0.1 m€) and cash flows used in investing activities to EUR -9.3 million (-4.5 m€). Financing cash flows amounted to EUR 0 million (+15.3 m€). Net cash flows totalled EUR 10.2 million (+11.0 m€).

Staff
As at 30 June 2018 Group employed 3,031 people, down by 28 y-o-y.

Within 6 months of 2018, total personnel expenses amounted to EUR 28.5 million (+1.0 m€, +3.7%). For 6 months of 2018, the members of the Management Board and Supervisory Board of all Group entities were paid remuneration and benefits including social security taxes in the amount of EUR 680 thousand (EUR 511 thousand for 6 months of 2017) and EUR 54 thousand (EUR 74 thousand for 6 months of 2017), respectively.

 

Consolidated statement of financial position

(in EUR thousands)       30.06.2018     31.12.2017
ASSETS      
Current assets      
Cash and cash equivalents 68,711 58,482
Financial investments 160 919
Receivables and prepayments 5,058 4,554
Prepaid income tax 1,869 286
Inventories 1,680 1,658
Total current assets   77,478 65,899
       
Non-current assets      
Deferred tax assets 511 507
Financial investments 1,133 457
Other long-term receivables and prepayments 3,964 3,957
Investment property 357 323
Property, plant and equipment 49,529 49,046
Intangible assets 50,217 49,935
Total non-current assets   105,711 104,225
   
TOTAL ASSETS   183,189 170,124
LIABILITIES AND EQUITY      
Current liabilities      
Trade and other payables 20,530 22,082
Income tax payable 531 612
Provisions 1,628 1,780
Total current liabilities   22,689 24,474
     
Non-current liabilities    
Other long-term payables 336 309
Total non-current liabilities   336 309
     
TOTAL LIABILITIES   23,025 24,783
EQUITY      
Share capital 60,716 60,716
Share premium 252 252
Treasury shares -53 -53
Statutory reserve capital 6,325 6,325
Other reserves 690 566
Translation reserves -24 19
Retained earnings 85,274 71,209
Total equity attributable to equity holders of the parent                                                          153,180 139,034
Non-controlling interest 6,984 6,307
TOTAL EQUITY   160,164 145,341
   
TOTAL LIABILITIES AND EQUITY   183,189 170,124


Consolidated statement of comprehensive income

(in EUR thousands)       Q2 2018     Q2 2017     6M 2018     6M 2017
 
Gross gaming revenue 48,279 47,291 95,465 94,319
Other revenue 5,930 5,554 11,183 10,032
Total revenue before gaming taxes   54,209 52,845 106,648 104,351
Gaming taxes -11,628 -10,365 -22,867 -21,575
Net revenue   42,581 42,480 83,781 82,776
Other income 67 10 80 20
Total net revenue and income   42,648 42,490 83,861 82,796
Cost of materials, goods and services -1,588 -1,382 -3,032 -2,845
Other operating expenses -15,641 -15,860 -30,551 -31,373
Staff costs -14,565 -14,077 -28,537 -27,524
Depreciation, amortisation and impairment -3,297 -3,148 -6,542 -6,213
Other expenses -14 -66 -42 -129
Total operating expenses   -35,105 -34,533 -68,704 -68,084
Operating profit   7,543 7,957 15,157 14,712
Interest income 1 0 3 4
Interest expense 0 0 -1 0
Foreign exchange losses -1 -21 -12 -29
Other finance income and costs 0 -9 -2 -9
Total finance income and costs   0 -30 -12 -34
         
Profit before income tax   7,543 7,927 15,145 14,678
Income tax expense -208 -978 -403 -2 113
Net profit for the period   7,335 6,949 14.742 12,565
Attributable to equity holders of the parent company 6,766 6,825 14,065 12,835
Attributable to non-controlling interest 569 124 677 -270
Other comprehensive income    
Items that may be subsequently reclassified to profit or loss
Currency translation differences -35 0 -43 37
Total comprehensive profit for the period   7,300 6,949 14,699 12,602
Attributable to equity holders of the parent company   6,731 6,825 14,022 12,872
Attributable to non-controlling interest   569 124 677 -270
Basic earnings per share* 4.5 4.5 9.3 8.5
Diluted earnings per share* 4.5 4.5 9.3 8.4
           

* euro cents

George Miller started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.

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