Interim Results

RNS Number : 7257Z

Gaming VC Holdings S.A.

28 September 2009

 



Press Release

28 September 2009

Gaming VC Holdings S.A.

('Gaming VC' or 'the Group')

Interim Results

Gaming VC Holdings S.A., (AIM:GVC) a leading European online gaming company, today announces its interim results for the six months ended 30 June 2009.  

Interim Highlights

•	Net Gaming Revenue ('NGR') of €26.5 million, up €2.5 million (10%) on H2-08 and €0.4 million on H1-08
•	Gross profits increased 4.4% to €22.0 million (H1-08: €21.1 million)
•	Clean EBITDA* up to €8.9 million from €8.7 million in H2-08
•	Basic earnings per share of €0.26 (H1-08: €0.33)
•	Interim dividend per share of €0.20 unchanged, and payable on 6 November 2009
•	Net cash resources increased to €20.8 million, equivalent to approximately 60p per share

* before share option charges and exceptional items

Q3 2009 Highlights

•	Entered South American market with acquisition of betboo.com for €3 million
•	Proposed redomiciliation of the Group from Luxembourg to the Isle of Man

Commenting on the results, Kenneth Alexander, Chief Executive of Gaming VC, said: 'I am pleased to report that, despite the challenging economic conditions, we have achieved a strong set of interim results including improvements in both Net Gaming Revenue and gross profit compared to the same period last year, and more importantly to the second-half of 2008. Our strategy of geographic diversification continues and has been underpinned by our move into South America through the completion of our acquisition of betboo.com. I am encouraged with current trading in the third quarter and remain confident about our prospects for the second half of the year.'

- Ends -

  For further information:

Gaming VC Holdings S.A.
Kenneth Alexander, Chief Executive	Tel: [phone]
Richard Cooper, Group Finance Director	www.gamingvc.com

Arbuthnot Securities Limited	Tel: [phone]
James Steel / Edward Gay, Corporate Finance	www.arbuthnotsecurities.co.uk

Media enquiries:

Abchurch
Stephanie Cuthbert / Nick Probert	Tel: [phone]
[e-mail]	www.abchurch-group.com

  Chief Executive's Statement

Introduction and financial overview

I am pleased to announce a strong set of interim results against the background of a global recession and reduced consumer spend across Europe. Compared with the six months to 31 December 2008, where many other e-gaming companies reported a drop in revenues, the Group's Net Gaming Revenue ('NGR') rose to €26.5 million from €24.0 million. NGR was also higher than in the first six months of 2008 (€26.1 million).

Player numbers in the six months to 30 June 2009 have not decreased, but Gaming VC has seen some reduction in yields from high roller customers in its German casino, casinoclub.com. This business had over 13,000 unique real-money customers during the six month period, and over 4,800 customers spending (or winning) over €500 during the period.

Stakes on sports events rose to €31.8 million, up from €22.5 million in H1-08 and €28.3 million in H2-08. Sportsbook margins, for the six months ended 30 June 2009 were 16.3% (H1-08: 14.7%), but adverse Italian football results at the end of the season resulted in margins for Q2-09 being 8.8% (Q2-08: 13.9%).

The Group's product and geographical diversification strategy is bearing fruit, with Germany now only representing 45% of NGR (H1-08: 61%), and sports representing 18% (H1-08: 12%). The Board is extremely excited about the Group's recent acquisition of Betboo; not only does it cement Gaming VC's geographic diversification but it also provides the Group with an entry point into the Latin American marketplace which we believe will be one of the fastest growing e-gaming markets..

As more fully reported in the financial review, clean ebitda at €8.9 million was higher than H2-08 (€8.7 million) but lower than H1-08 (€10.9 million), as expected by the Board given the overall economic weakness in the European economies. Operating costs remained flat.

Current trading

Current trading has been encouraging. Despite the high percentage of favourites winning in the early weeks of the football season, Q3-09 sports margins exceeded 12% in the 85 days to 23 September 2009. Daily average gaming revenues for the 85 day period to 23 September 2009 were at a similar level to Q3-08.

Post acquisition, Betboo has continued to grow and trade well. For the first 85 days of Q3-09, average daily revenues were Brazilian Reais 33k (€12k), 25% higher than the same period last year. The launch of casino and poker has now been successfully integrated into the sportsbook and bingo product.

Cash at bank and in hand, at 18 September 2009 (the last date when consolidated figures are available) was €20.5 million (approximately GBP 0.60p per share).

Regulation

The Board continues to monitor the regulatory framework closely. The outcome of the recent Bwin/Portugal case does not directly affect the Group and its operations.  

Redomiciliation to Isle of Man

In August 2009, the Group announced its intention, pending formal approval from shareholders, for a redomiciliation from Luxembourg to the Isle of Man. Under the AIM rules, a circular will be sent to shareholders pertaining to the Group's proposed redomiciliation. 

Dividend

The Board has declared an interim dividend per share of €0.20 (2008: €0.20) payable on 6 November 2009 to holders on the register at the close of business on 6 October 2009.

Additional analysis and comments on the financial performance and financial position are included in the Financial Director's Report.

We remain confident about our prospects for the rest of the year.

Kenneth Alexander

Chief Executive

25 September 2009

  Group Finance Director's Statement

Net Gaming Revenue ('NGR')

NGR is stated after ordinary winnings, jackpot winnings, chargebacks, and promotional bonuses. Revenues for the first half of 2009 were €26.5 million, €2.5 million (11%) higher than H2-08 and €0.4 million higher than the same period last year (€26.1 million). The break down between gaming and sports revenues is as follows:

	H1 2009	H1 2008	H2 2008
	€ million	€ million	€ million
Gaming revenues	€21.6	€22.9	€20.9
Sport revenues	€4.9	€3.2	€3.1

Non-German revenues continue to increase, and reached €14.6 million representing 55% of total revenues, compared to €10.2 million (39%) in the first half of 2008 and €12.7 million (55%) in the second half of 2008.

Sports margins held up at 16.3% (H1-08: 14.7%; H2-08: 11.9%). This was despite the unfavourable impact arising from the soccer results in the closing weeks of the season.

Gross profits

Gross profit percentages at 83% were consistent with H2-08 and marginally higher than H1-08.

Contribution

Contribution is defined as gross profits less marketing costs and affiliate commissions and similar.

Contribution, at €13.5 million was 8% higher than H2-08 (€12.5 million), but lower than H1-08 (€15.4 million). This reflects a greater proportion of lower margin non-German business. Encouragingly, contribution from sports rose 110% from €0.7 million in H1-08 to €1.5 million, in H1-09.

  Operating expenses

The total operating expenses, which now include the costs for Winzingo, were €5.5 million, 6% higher than H1-08, mainly as a result of €0.3 million of exceptional charges relating to restructuring the Italian and Tel Aviv operations. Share option charges under IFRS 2 fell as more options reached the end of their vesting period.

All other operating expenses were flat at €4.6 million. Personnel costs, at €2.5 million, were lower than H1-08 (€2.6 million) but higher than H2-08 (€2.2 million) largely reflecting the costs for Winzingo. Professional fees, €0.6 million, dropped by a third over H1-08 (€0.9 million) and remained flat with H2-08. Office running costs, €1.2 million were higher than both H1-08 (€0.8 million) and H2-08 (€1.0 million), reflecting a full period of operations in Malta, Italy and Tel Aviv. An analysis of these costs is shown below:

	€000's 6 months To June 2009		€000's 6 months To June 2008		€000's 12 months To Dec 2008
Personnel expenses (other than share option charges)	2,465		2,634		4,817
Professional fees - Fort Knox	-		(32)		(384)
Professional fees - Other	598		924		1,486
Office running	1,184		756		1,755
Foreign exchange differences	104		13		36
Other	288		280		674
Total	4,639		4,575		8,384

Foreign exchange differences arose principally on the settlement of certain GBP accruals, translated at the year-end rate of 1.0342 Euro to GBP. They were settled when the GBP had strengthened to around 1.15 Euro.

The Group's operating and accounting currency is the Euro, but it has a small exposure to both GBP and Israeli Shekels. Following the acquisition of Betboo, the Group has a currency exposure to the Brazilian Reais, but this is expected to be minimal for the next 24 months. On an exceptional basis, the Group hedges its currency exposures, as it did for the forward purchase of the initial purchase price for Betboo (€3 million).

Depreciation and amortisation

Charges for the period were €0.4 million, which is level with H2-08 (€0.4 million) but a little higher than the first half of 2008 (€0.3 million) 

  Financial income and expense

The dramatic reduction in global interest rates has led to a fall in interest earnings in the first half of 2009 to €0.1 million, down from €0.3 million in H1-08 and €0.3 million in H2-08.

Corporate Taxation

The Group's tax charge was derived primarily from its operations in Malta, where it started trading in August 2007 and became profitable in 2008. Tax is charged at 35% and reduced to 4.17% via a reclaim made by the holding company.

Property, plant and equipment

The Group continued to upgrade its plant and equipment, making additions of €0.2 million during the period.

Intangible assets

A further €0.1 million of additions was made during the period in order to upgrade various websites.

Net current assets, cash and treasury matters

The Group had €21.2 million of net current assets at 30 June 2009 (30 June 2008: €18.9 million), an increase of 12.2%.

The components of the cash balances, €20.8 million (30 June 2008: €18.6 million) were, in Euro equivalents:

	€000’s 30 June 2009		€000’s 30 June 2008		€000’s 31 Dec 2008
Own funds	19,751		17,995		17,502
Client funds	1,037		615		997
Funds held in escrow for founder shareholders	-		-		335
	20,788		18,610		18,834
And split by currency:
Euros	17,795		18,456		18,651
US dollars	112		51		22
GB Pounds	2,879		103		147
Other	2		-		14
	20,788		18,610		18,834
And analysed by bank:
Barclays	15,764		16,046		17,185
Bank of Valetta	4,735		2,437		1,000
Other	289		127		649
	20,788		18,610		18,834

  Since 31 December 2008, cash balances have increased by €2.0 million. The constituents of this increase are shown below:

Profits before tax			€000's 8,109
Add back:	Depreciation	351
	Amortisation	70
	Share option charges	88
			509
Deduct	Purchase of non-current assets		(231)
	Payment of taxes (net)		(1,305)
	Escrow funds remitted		(335)
Movement in working capital			1,434
Net increase in funds before Payment of dividends			8,181
Dividends paid			(6,227)
Increase in cash and cash equivalents			1,954
Cash at 30 June 2009			20,788
Cash at 31 December 2008			18,834
			1,954

Receivables and prepayments at 30 June 2009 were €4.5 million, down €1.6 million from €6.1 million at 30 June 2008. €1.0 million of this reduction was attributable to the write-down, in the second half of 2008, of the working capital loan to Winzingo.

Trade and other payables were €4.7 million at 30 June 2009, down €0.7 million from €5.4 million at 30 June 2008. Around €0.5 million of this reduction was due to the Malta/Italy set-up costs, incurred in H1-08 and accrued at the time, but paid subsequently.

At 30 June 2009, the Group had tax recoverable of €2.0 million and tax payable of €1.2 million. The tax recoverable is from the Maltese tax authorities and the timetable for refund is in Q2-10. The tax is payable at around the same time.

Taxation arises as the Group's principal operating subsidiary is GVC Corporation Limited, a company incorporated in Malta and granted a license by the LGA (the Lotteries and Gaming Authority). The headline rate of corporation tax is 35%. Reclaims of tax are possible provided that the profits of this company are distributed. The post-refund rate of tax nets to 4.17%.

Taxation on activities in the Netherlands Antilles is at 2%, but is sheltered by tax losses created by the write-down of intangible assets in 2006.

To the extent that the Group's subsidiary in Cyprus (which in turn owns 100% of the shares in the Netherlands Antilles company and the Group's Jersey company) receives dividends from profits deemed to have been earned from 'non-trading' income, then a non-recoverable 10% withholding tax applies.

As announced on 27 August 2009, the Company will be seeking shareholder approval to re-domicile to the Isle of Man. This should lead both to financial advantages (no 15% withholding tax on dividends) and to operational advantages (shares become CREST eligible). At the same time, the Group is also currently undertaking some internal corporate restructuring to reduce the number of companies in the Group and to improve its ability to upstream profits without incurring withholding tax.

On 2 July 2009, the Group paid US$4 million (€3 million) as initial purchase consideration for the business and assets of betboo.com. The acquisition comprised an initial consideration and an earn-out, payable in three stages, dependent on profits in the three accounting periods ending 30 June 2010, 2011, and 2012. The maximum earn-out is US$26 million. The cash out-flows in respect of the earn-out are anticipated to be negligible until the final earn-out period (year ended 30 June 2012) and any earn-out for this will be payable in Q4-12.

Richard Cooper

Group Finance Director

25 September 2009

   CONSOLIDATED INCOME STATEMENT

For the six month period ended 30 June 2009

		Six month period ended 30 June 2009 (Unaudited)		Six month period ended 30 June 2008 (Unaudited)		Year ended 31 Dec 2008 (Audited)
	Notes	€000’s		€000’s		€000’s
Net Gaming Revenue	3	26,509		26,126		50,085
Cost of sales	4	(4,479)		(5,025)		(9,163)
Gross profits	4	22,030		21,101		40,922
Marketing and affiliate costs	5	(8,511)		(5,666)		(12,990)
Contribution	5	13,519		15,435		27,932
Operating costs (as below)	6	(5,464)		(5,159)		(11,574)
Other operating costs		(4,639)		(4,575)		(8,384)
Share option charges		(88)		(276)		(557)
		(4,727)		(4,851)		(8,941)
Exceptional items	7	(316)		-		(1,917)
Depreciation and amortisation		(421)		(308)		(716)
Operating profit		8,055		10,276		16,358
Financial income		54		261		551
Financial expense		-		-		(6)
Profit before tax		8,109		10,537		16,903
Taxation (charge)/income	8	(166)		(218)		(360)
Profit after taxation		7,943		10,319		16,543
Earnings per share		€		€		€
Basic	9	0.255		0.331		0.531
Diluted	9	0.251		0.323		0.521

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six month period ended 30 June 2009

	6 month period ended 30 June 2009 (Unaudited)		6 month period ended 30 June 2008 (Unaudited)		Year ended 31 Dec 2008 (Audited)
	€000’s		€000’s		€000’s
Profit and total recognised income and expense for the period	7,943		10,319		16,543

  CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2009

		30 June 2009 (Unaudited)		30 June 2008 (Unaudited)		31 Dec 2008 (Audited)
		€000’s		€000’s		€000’s
Assets
Property, plant and equipment	10	1,356		1,469		1,538
Intangible assets	10	55,871		55,976		55,879
Deferred tax asset	8	5		11		11
Total non-current assets		57,232		57,456		57,428
Receivables and prepayments	11	4,516		6,058		6,367
Corporation Tax reclaimable	8	2,001		-		2,611
Cash and cash equivalents		20,788		18,610		18,834
Total current assets		27,305		24,668		27,812
Liabilities
Trade and other payables	12	(4,712)		(5,401)		(5,477)
Corporation Taxes payable	8	(1,205)		(236)		(2,982)
Other taxes payable		(186)		(157)		(173)
Deferred tax liability	8	(22)		-		-
Total current liabilities		(6,125)		(5,794)		(8,632)
Current assets less current liabilities		21,180		18,874		19,180
Total assets less current liabilities		78,412		76,330		76,608
As represented by:
Equity
Issued share capital	13	38,608		38,608		38,608
Share premium		8,748		13,832		13,832
Retained earnings		31,056		23,890		24,168
Total equity attributable to equity holders of the parent		78,412		76,330		76,608

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six month period ended 30 June 2009

Attributable to equity holders of the parent company		Share Capital	Share Premium	Retained earnings	Total
		€000's	€000's	€000's	€000's
Balance at 1 Jan 2008		38,608	51,977	(18,623)	71,962
Share option charges		-	-	276	276
Transfer between reserves		-	(38,145)	38,145	-
Dividend paid		-	-	(6,227)	(6,227)
Total comprehensive income		-	-	10,319	10,319
Balance as at 30 June 2008		38,608	13,832	23,890	76,330
Balance at 1 July 2008		38,608	13,832	23,890	76,330
Share option charges		-	-	281	281
Dividend paid		-	-	(6,227)	(6,227)
Total comprehensive income		-	-	6,224	6,224
Balance at 31 Dec 2008		38,608	13,832	24,168	76,608
Balance at 1 Jan 2009		38,608	13,832	24,168	76,608
Share option charges		-	-	88	88
Dividend paid		-	(5,084)	(1,143)	(6,227)
Total comprehensive income		-	-	7,943	7,943
Balance at 30 June 2009		38,608	8,748	31,056	78,412

  CONSOLIDATED STATEMENT OF CASHFLOWS

For the period ended 30 June 2009

	6 month period ended 30 June 2009 (Unaudited)		6 month period ended 30 June 2008 (Unaudited)		Year ended 31 Dec 2008   (Audited)
	€000’s		€000’s		€000’s
Cash flows from operating activities
Cash receipts from customers	30,766		25,939		47,528
Cash paid to suppliers and employees	(21,145)		(15,700)		(30,703)
Taxes paid (note 8)	(1,305)		-		(8)
Net cash from operating activities	8,316		10,239		16,817
Cash flows from investing activities
Interest received	63		261		542
Acquisition of property, plant & equipment (note 10)	(169)		(1,084)		(1,453)
Acquisition of intangible assets	(62)		(424)		(435)
Net cash from investing activities	(168)		(1,247)		(1,346)
Cash flows from financing activities
Interest paid			-		(6)
Dividend paid	(6,227)		(6,227)		(12,454)
Net cash from financing activities	(6,227)		(6,227)		(12,460)
Net increase in cash and cash equivalents	1,921		2,765		3,011
Cash and cash equivalents at beginning of the year	18,834		15,859		15,859
Effect of exchange rate fluctuations on cash held	33		(14)		(36)
Cash and cash equivalents at end of the year	20,788		18,610		18,834

  NOTES TO THE INTERIM FINANCIAL INFORMATION

1.    SIGNIFICANT ACCOUNTING POLICIES

Gaming VC Holdings S.A. (the 'Group') is a company registered in Luxembourg and incorporated on 30 November 2004.

These interim condensed consolidated financial statements are for the six months ended 30 June 2009. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2008.

1.1   Basis of preparation

The financial statements are presented in the Euro, rounded to the nearest thousand. They are prepared on the historical cost basis.

These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2008 except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007) and IFRS 8 Operating Segments.

Betting and gaming duties for the six months ended 30 June 2008 ('H1-08') are now a component of Net Gaming Revenue, as opposed to being included within cost of sales - this is consistent with the full year financial statements for 2008.

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. In accordance with the new standard the entity does not present a 'Statement of recognised income and expenses (SORIE)', as was presented in the 2008 consolidated financial statements. Further, a 'Statement of changes in equity' is presented as a primary statement.

Under IFRS 8 the accounting policy for identifying segments is now based on the internal management reporting information that is regularly reviewed by the chief operating decision maker. Management consider that the segmental disclosure presented in the previous annual financial statements, which was revised in that year, reflects the internal management reporting information and therefore do not consider that the adoption of IFRS 8 changes the reportable segments in the financial statements.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

  2.    ALTERNATIVE PRESENTATION OF CONSOLIDATED INCOME STATEMENT

To better aid shareholders and other interested parties, the directors have prepared an alternative presentation of the Consolidated Income Statement. This is included below:

		6 month period  ended 30 June 2009		6 month period  ended 30 June 2008		Year ended 31 Dec 2008
	Notes	€000’s		€000’s		€000’s
Net Gaming Revenue	3	26,509		26,126		50,085
Cost of sales	4	4,479		(5,025)		(9,163)
Gross profit	4	22,030		21,101		40,922
Gross profit ratio		83%		80%		82%
Marketing and affiliate costs	5	(8,511)		(5,666)		(12,990)
Contribution	5	13,519		15,435		27,932
Other operating costs	6	(4,639)		(4,575)		(8,384)
Clean EBITDA		8,880		10,860		19,548
Exceptional items	7	(316)		-		(1,917)
Share Option Charges		(88)		(276)		(557)
EBITDA		8,476		10,584		17,074
Depreciation		(351)		(136)		(436)
Amortisation		(70)		(172)		(280)
Operating Profit		8,055		10,276		16,358
Financial income		54		261		551
Financial expense		-		-		(6)
Profit before tax		8,109		10,537		16,903
Taxation (charge) / income	8	(166)		(218)		(360)
Profit after tax		7,943		10,319		16,543

3.    NET GAMING REVENUE

3.1    Analysis of Net Gaming Revenue by quarter and by segment

	Q1	Q2	H1
	€000s	€000s	€000s
Period ended 30 June 2009
Gaming	11,231	10,413	21,644
Sports	3,645	1,220	4,865
Total	14,876	11,633	26,509
Sports margin	23.4%	8.8%	16.3%
	Q1	Q2	H1	Q3	Q4	Full year
Year ended 31 December 2008	€000s	€000s	€000s	€000s	€000s	€000s
Gaming	11,588	11,351	22,939	11,045	9,818	43,802
Sports	1,690	1,497	3,187	1,150	1,946	6,283
Total	13,278	12,848	26,126	12,195	11,764	50,085
Sports margin	15.6%	13.9%	14.7%	12.4%	11.1%	11.4%

  3.2    Analysis Net Gaming Revenue by geography and by segment

	Germany	Austria	Southern Europe	Other Europe	Other	TOTAL
	€000s	€000s	€000s	€000s	€000s	€000s
Period ended 30 June 2009
Gaming	11,890	1,791	6,825	1,043	95	21,644
Sports	-	-	4,865	-	-	4,865
Total	11,890	1,791	11,690	1,043	95	26,509
Period ended 30 June 2008
Gaming	15,902	2,249	3,774	976	38	22,939
Sports	-	-	3,187	-	-	3,187
Total	15,902	2,249	6,961	976	38	26,126
Year ended 31 December 2008
Gaming	27,154	4,198	7,983	3,954	513	43,802
Sports	-	-	6,283	-	-	6,283
Total	27,154	4,198	14,266	3,954	513	50,085

4.    GROSS PROFIT AND COST OF SALES

Cost of sales principally includes: payment processing costs, royalties on software licences, and chargebacks/bad debts. Gross profit is calculated as Net Gaming Revenues less Cost of Sales.

Gross profit	Germany	Austria	Southern Europe	Other Europe	Other	TOTAL
	€000s	€000s	€000s	€000s	€000s	€000s
Period ended 30 June 2009
Gaming	9,565	1,441	5,402	838	76	17,322
Sports	-	-	4,708	-	-	4,708
Total	9,565	1,441	10,110	838	76	22,030
Period ended 30 June 2008
Gaming	12,480	1,765	2.967	766	30	18,008
Sports	-	-	3,093	-	-	3,093
Total	12,480	1,765	6,060	766	30	21,101
Year ended 31 December 2008
Gaming	21,615	3,342	6,345	3,147	408	34,857
Sports	-	-	6,065	-	-	6,065
Total	21,615	3,342	12,410	3,147	408	40,922

  5.    CONTRIBUTION, MARKETING AND AFFILIATE COSTS

Contribution is calculated as Gross profit, less Marketing expenditure, and Affiliate charges (being commissions and similar paid to third parties).

Contribution	Germany	Austria	Southern Europe	Other Europe	Other	TOTAL
	€000s	€000s	€000s	€000s	€000s	€000s
Period ended 30 June 2009
Gaming	8,334	1,255	1,586	731	64	11,970
Sports	-	-	1,549	-	-	1,549
Total	8,334	1,255	3,135	731	64	13,519
% of total	61.6%	9.3%	23.2%	5.4%	0.5%
Period ended 30 June 2008
Gaming	11,308	1,599	1,069	694	27	14,697
Sports	-	-	738	-	-	738
Total	11,308	1,599	1,807	694	27	15,435
% of total	73.3%	10.4%	11.7%	4.5%	0.2%
Year ended 31 December 2008
Gaming	19,238	2,974	1,883	2,801	363	27,259
Sports	-	-	673	-	-	673
Total	19,238	2,974	2,556	2,801	363	27,932
% of total	68.9%	10.6%	9.2%	10%	1.3%

6.    OPERATING COSTS

		6 month ended 30 June 2009		6 month ended 30 June 2008		Year ended 31 Dec 2008
	Notes	€000’s		€000’s		€000’s
Other operating costs	6.1	4,727		4,851		8,941
Exceptional items	7	316		-		1,917
Depreciation		351		136		436
Amortisation		70		172		280
		5,464		5,159		11,574

6.1    Other operating costs

		6 month ended 30 June 2009		6 month ended 30 June 2008		Year ended 31 Dec 2008
	Notes	€000’s		€000’s		€000’s
Other Personnel expenditure	6.1.1	2,465		2,634		4,817
Share option charges		88		276		557
Personnel expenditure		2,553		2,910		5,374
Professional fees	6.1.2	598		892		1,102
Office running expenses		1,184		756		1,755
Foreign exchange differences		104		13		36
Other expenditure		288		280		674
		4,727		4,851		8,941
Note: Excluding share option charges		4,639		4,575		8,384

6.1.1    Other Personnel expenditure

		6 month period ended 30 June 2009		6 month period ended 30 June 2008		Year ended 31 Dec 2008
		€000’s		€000’s		€000’s
Wages and salaries, including directors remuneration		1,839		1,357		3,031
Amounts paid to long term contractors		496		1,206		1,594
Compulsory social security contributions		94		35		123
Pension allowances		36		36		69
		2,465		2,634		4,817
		At 30 June 2009		At 30 June 2008		At 31 Dec 2008
Number of personnel		Number		Number		Number
With employment contracts or service contracts		66		29		59
Contractors		6		21		11
		72		50		70

6.1.2    Professional fees

The Group has legal entities in the following jurisdictions: Luxembourg, Cyprus, Malta, Italy, Netherlands Antilles, Jersey and Israel. The business of Winzingo, is operated from Spain. Accordingly the Group seeks professional advice in these and other jurisdictions including the UK where its shares are traded on the Alternative Investment Market ('AIM') of the London Stock Exchange.

		6 month period ended 30 June 2009		6 month period ended 30 June 2008		Year ended 31 Dec 2008
		€000’s		€000’s		€000’s
(Credit) / Costs incurred in the settlement of fees with Fort Knox Consulting LLC		-		(32)		(384)
Other professional fees		598		924		1,486
		598		892		1,102

  7.         EXCEPTIONAL ITEMS

The Group incurred expenditure on exceptional items. These are items which are both exceptional in size and nature, and in the judgement of the directors need to be disclosed for the user to obtain a proper understanding of the financial information.

	6 month period ended 30 June 2009		6 month period ended 30 June 2008		Year ended 31 Dec 2008
	€000’s		€000’s		€000’s
Write-off of working capital loan to New Town Capital Limited (trading as Winzingo)	-		-		1,075
Termination and other costs associated with Board changes	-		-		526
Professional fees associated with abortive take-over during the year	-		-		316
Costs of restructuring Tel Aviv and Italy	316		-		-
	316		-		1,917

8.         TAXATION

             Recognised in the Income Statement

	6 month period ended 31 June  2009		6 month period ended 31 June  2008		Year ended 31 Dec  2008
	€000's		€000's		€000's
Current tax expense
Current period	138		218		360
Deferred tax expense
Origination and reversal of temporary differences	28		-		-
Total income tax expense in income statement	166		218		360

  8. TAXATION (continued)

Reconciliation of effective tax rate
	6 month period ended 30 June 2009		6 month period ended 30 June 2008		Year ended 31 Dec 2008
	€000's		€000's		€000's
Profit before tax	8,109		10,537		16,903
Income tax using the domestic corporation tax rate	2,317		3,056		4,817
Effect of tax rates in foreign jurisdictions (Rates decreased)	(2,123)		(2,838)		(4,457)
Capital allowances for period in access of depreciation	(28)		-		-
	166		218		360

          A deferred tax asset was recognised as the Group considers that it is more probable than not that future
          taxable profits will be available against which the asset could be utilised.

Amounts recognised in the Statement of Financial Position

	Corporation Tax		Deferred Tax		Total
	€000's	€000's	€000's	€000's	€000
	Payable	Receivable	Asset	Liability
At 1 January 2008	(18)	-	11	-	(7)
Paid/(received) during six months to 30 June 2008	-	-	-	-	-
(Charge)/credit in income statement to six months to 30 June 2008	(218)	-	-	-	(218)
Balances at 30 June 2008	(236)	-	11	-	(225)
Paid/(received) during six months to 31 December 2008	7	-	-	-	7
(Charge)/credit in income statement	(2,753)	2,611	-	-	(142)
Balances at 31 December 2008	(2,982)	2,611	11	-	(360)
Paid/(received) during six months to 30 June 2009	2,956	(1,651)	-	-	1,305
(Charge)/credit in income statement for six months to 30 June 2009	(1,179)	1,041	(6)	(22)	(166)
Balances at 30 June 2009	(1,205)	2,001	5	(22)	779
Note:
Paid/received during year ended 31 December 2008	7	-	-	-	7
Charge/credit in income statement for year ended 31 December 2008	(2,971)	2,611	-	-	(360)

9.       EARNINGS PER SHARE

9.1     Basic earnings per share and Basic earnings per share before exceptional items

	6 month period ended 30 June  2009		6 month period ended 30 June  2008		Year ended 31 Dec  2008
Basic earnings per share (in €)	0.255		0.331		0.531
Basic earnings per share before exceptional items (in €)	0.265		0.331		0.593

            Basic earnings per share has been calculated by taking the profit attributable to ordinary shareholders,
            €7,943k (2008 interim: €10,319k, full year 2008: €16,543k) and dividing by the weighted average number 
            of shares in issue, 31,135,762 (2008 interim: 31,135,762, full year: 31,135,762).

            Basic earnings per share before exceptional items has been calculated by taking the profit attributable to
            ordinary shareholders of €7,943k, (2008 interim: €10,319k, full year 2008: €16,543k) adding back the cost
            of exceptional items of €316k (2008 interim: nil, full year 2008: €1,917k), and dividing by the weighted 
            average number of shares in issue, 31,135,762 (2008 interim: 31,135,762, full year 31,135,762).

9.2       Diluted earnings per share and Diluted earnings per share before exceptional items

	Six month period ended 31 June 2009		Six month period ended 31 June 2008		Year ended 31 Dec 2008
Diluted earnings per share (in €)	0.251		0.323		0.521
Diluted earnings per share before exceptional items (in €)	0.261		0.323		0.582

            Diluted earnings per share has been calculated by taking the profit attributable to ordinary shareholders,
            €7,943k (2008 interim €10,319k, full year €16,543k) and dividing by the weighted average number of 
            shares in issue as diluted by share options, 31,670,028 (2008 interim: 31,912,744, full year: 31,726,146).

            Diluted earnings per share before exceptional items has been calculated by taking the profit attributable 
            to ordinary shareholders of €7,943k, (2008 interim: €10,319k, full year €16,543k) adding back the cost of 
            exceptional items of €316k (2008 interim: nil, full year: €1,917k), and dividing by the weighted average
            number of shares in issue, as diluted by share options, 31,670,028 (2008 interim: 31,912,744, full year:
            31,726,146).

Diluted number of shares

	Six month period ended 30 June 2009		Six month period ended 30 June 2008		Year ended 31 Dec 2008
Weighted average number of ordinary shares at end of the year	31,135,762		31,135,762		31,135,762
Effect of share options in issue	534,266		776,982		590,384
Weighted average number of ordinary shares (diluted) during the period	31,670,028		31,912,744		31,726,146

10.    NON-CURRENT ASSETS

	Property Plant & Equipment	Intangible assets	TOTAL
	€000's	€000's	€000's
Balance at 1 January 2008	521	55,724	56,245
Additions	1,084	424	1,508
Depreciation/amortisation charged in the period	(136)	(172)	(308)
Balance at 30 June 2008	1,469	55,976	57,445
Additions	369	11	380
Depreciation/amortisation charged in the period	(300)	(108)	(408)
Balance at 31 December 2008	1,538	55,879	57,417
Additions	169	62	231
Depreciation/amortisation charged in the period	(351)	(70)	(421)
Balance at 30 June 2009	1,356	55,871	57,227
Additions in year to 31 December 2008	1,453	435	1,888
Depreciation/amortisation in year to 31 December 2008	(436)	(280)	(716)

11.    RECEIVABLES AND PREPAYMENTS

	Six month period ending 30 June 2009	Six month period ending 30 June 2008	Year ended 31 Dec 2008
	€000's	€000's	€000's
Trade Receivables	3,523	3,630	5,475
Interest Receivable	-	16	9
Winzingo loan	-	990	-
Assets for resale	360	394	360
Other receivables	-	384	233
Loans and receivables	3,883	5,414	6,077
Prepayments	633	644	290
	4,516	6,058	6,367

12.     TRADE AND OTHER PAYABLES

	Six month period ending 30 June 2009	Six month period ending 30 June 2008	Year ended 31 Dec 2008
	€000's	€000's	€000's
Balances with customers	1,037	616	997
Other trade payables	1,182	1,510	1,254
Total trade payables	2,219	2,125	2,251
Accruals	2,493	3,196	2,891
Balances due to founder shareholders in respect of tax recovered	-	80	335
	4,712	5,401	5,477

13.      SHARE CAPITAL

Since 20 December 2004 the authorised and issued share capital has been:

	Authorised	Issued
Number of Ordinary shares	40,000,000	31,135,762
Par value per share	€1.24	€1.24
Aggregate paid up value	€49,600,000	€38,608,345
Number of Redeemable shares	30,000	Nil
Par value per share	€1.24	-
Aggregate value	€37,300	-

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Should the Company not be satisfied as to the true identity of the shareholders it can suspend the entitlement of those shareholders to receive dividends.

  13.1    Share Options

The number of share options granted at 31 December 2008 was 2,723,359. There were no share options granted in the six month period to 30 June 2009, and a total of 516,000 options lapsed during this period. The table below shows the number of options at 30 June 2009, and, at the date of this interim statement, 28 September 2009.

At 30 June 2009

Individual and grant date	Strike price	Vested	Not vested	Total
L Feldman   21.12.04   16.05.05	£4.20 £4.20	155,000 34,688	- 10,313	155,000 45,000
N.Blythe-Tinker   21.12.04   16.05.05	£4.20 £4.20	155,000 73,229	- 21,771	155,000 95,000
K Alexander   01.03.07	£1.00	450,000	350,000	800,000
R Cooper   12.12.08	£1.26	-	400,000	400,000
Other personnel   28.09.05   15.05.07   21.08.07   26.02.08	£4.20 £1.29 £1.2850 £1.3816	50,444 126,590 58,059 50,000	3,363 116,462 51,944 100,000	53,807 243,052 110,000 150,000
		1,153,006	1,053,853	2,206,859

At 28 September 2009

Individual and grant date	Strike price	Vested	Not vested	Total
L Feldman   21.12.04   16.05.05	£4.20 £4.20	155,000 37,500	- 7,500	155,000 45,000
N.Blythe-Tinker   21.12.04   16.05.05	£4.20 £4.20	155,000 79,167	- 15,833	155,000 95,000
K Alexander   01.03.07	£1.00	500,000	300,000	800,000
R Cooper   12.12.08	£1.26	-	400,000	400,000
Other personnel   28.09.05   15.05.07   21.08.07   26.02.08	£4.20 £1.29 £1.2850 £1.3816	53,807 141,780 - 59,375	- 101,272 - 96,625	53,807 243,052 - 150,000
		1,181,629	915,230	2,096,859

14.       DIVIDENDS

The total dividend for the year ended 31 December 2008 amounted to €0.40, €0.20 was already declared and paid as an interim dividend at 31 October 2008. The final dividend in respect of the financial year 2008 of €0.20 per share was declared by the Annual General Meeting held on 19 May 2009 and paid on 29 May 2009.

The Board has today declared an interim dividend of €0.20 (2008: €0.20), payable on 6 November 2009 to shareholders on the register at the close of business on 6 October 2009.

15.      SUBSEQUENT EVENTS

On 2 July 2009, the Group acquired the trade and assets of betboo.com, a leading South American internet gaming operator, offering, bingo, casino, poker and a sports betting product.

The terms of the acquisition were an upfront payment of US$4 million (€3 million). The sellers can earn a further US$26 million depending on performance, being the sum of: one times the post tax profits for the year ended 30 June 2010; plus one times the post tax profits for the year ended 30 June 2011; and five times the post tax profits for the year ended 30 June 2012, subject to a total consideration including the initial consideration of US$30 million.

The Group acquired the asset through the acquisition of a shell company, Intera NV, (incorporated in the Netherlands Antilles) and its subsidiary, Intertronic Ltd (incorporated in Malta).

The acquisition cost principally relates to goodwill and other intangibles acquired, such as brand names, customer lists, trademarks and software licences. At the present time, it is not practical to provide a more detailed analysis of the valuation of the assets acquired, and this will be disclosed in the annual financial statements of the Group to 31 December 2009

16.       CONTINGENT LIABILITIES

The Group, through its trading websites, offers progressive jackpots on slot machines. The total of the available jackpots at 30 June 2009 was €5 million (31 December 2008: €4.0 million).

- Ends -

 

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