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Higher Costs Impact Gaming VC’s H1 Profit

28th September 2009 7:59 am GMT

As the company continues to reduce its dependency on the German casino market, Gaming VC has reported net gaming revenues of €26.5 million for the six month ended June 30th, a marginal improvement on the corresponding period last year, despite the challenging global economic conditions and reduced customer spend across Europe.

Gaming revenues for the period fell 6% year-on-year to €21.6 million while sports revenues rose by 53% to €4.9 million, benefiting from a 41% increase in sports betting stakes to €31.8 million and sportsbook margins of 16.3%. Sports now represent 18% of Gaming VC's total net gaming revenues, compared to 12% in the same period last year.

Offsetting overall revenue growth however was a 50% increase in marketing and affiliate costs to €8.5 million, while total operating expenses, which now include the cost of the company's Spanish site Winzingo, were up 6% year-on-year at €5.5 million, mainly as a result of exceptional charges of €0.3 million relating to the restructuring of its Italian and Tel Aviv operations.

As a result Gaming VC's operating profit fell 22% to €8.1 million, with net profit down 23% at €7.9 million, or €0.26 per share.

The company added that Germany now represents only 45% of its total net gaming revenues, down from a 61% share last year, with Southern Europe accounting for 44% and Austria 7%.

In line with H1 2008, the company's Board has declared an interim dividend of €0.20 per share.

"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," said Kenneth Alexander, Chief Executive of Gaming VC.

"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."

The company added that its recent Betboo acquisition has continued to grow and trade well during the third quarter of 2009, with average daily revenues of €12,000 per day, 25% higher than the corresponding period last year. Casino and poker has now been successfully integrated into the sportsbook and bingo product.

As at June 30th the company held and cash equivalents of €20.8 million versus €18.8 million at the end of last year.

Shares in Gaming VC Holdings S.A (Co. Profile) (AIM:GVC) are down marginally at 202.00 pence per share in London this morning.

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