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Tipp24 Retracts Profit Warning, Raises Earnings Estimate

3rd November 2009 8:44 am GMT

In what is turning out to be a landmark year for the company in which its share price has climbed 350%, Germany's Tipp24 has reported a 63% increase in revenues to €54.7 million for the nine month period ended September 30th, leading the company to retract its previous profit warning and raise its earnings forecast for 2009 by €13 million to at least €43 million.

Revenues from Germany fell by 92% to €2.3 million during the nine-month period after the company's near complete withdrawal from Germany following enactment of the State Treaty on Gaming, with a negative EBIT of €9.3 million versus a positive EBIT of €7.9 million last year.

However revenues from outside Germany have jumped to €52.9 million from just €4.2 million in the corresponding period last year, as a result of the company's strong focus on expanding its international business.

Tipp24's international business now accounts for over 98% of the company's total revenues, contributing €43.7 million in EBIT during the period compared to a negative EBIT of €1.6 million last year.

Personnel expenses in the first nine months of the year rose by 6% to €10.1 million, mainly due to the necessary restructuring of Tipp24 in the first six months, while other operating expenses increased 79% to €30.7 million as costs in connection with the hedging transactions of MyLotto24 offset a reduction in marketing spend in Germany.

The strong revenue growth helped the company achieve a net profit of €25.1 million for the period, up from €4.7 million in the corresponding period last year, with earnings per share of €3.24.

After reducing the company's consolidated EBIT forecast by €10 million to €30 million for the 2009 year following an exceptional winning payment to a customer of MyLotto24 in September (more), Tipp24 has now retracted this warning due to the addition of income from hedging transactions, an unexpectedly high gaming volume at MyLotto24 and a tax credit formed in connection with the large winnings.

As a result, Tipp24 has raised its consolidated EBIT forecast for the 2009 year by €13 million to at least €43 million, with revenues forecast of at least €95 million after income from hedging transactions.

As at September 30th the company held cash and cash equivalents of €79.4 million compared to €9.9 million last year.

Shares in Tipp24 AG (Co. Profile) (TIM.DE) have gained over 350% in value since the beginning of the year, reaching an all-time high of €30.60 per share on October 21st. Tipp24 shares are currently trading at €30.23 in Frankfurt this morning, having gained 12.59% in trading yesterday.

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