Market announcement

Title

OEG: consolidated unaudited results for Q1 2012

Message

Key performance indicators of the Group

(in millions of euros)

                                           Q1 2012  Q1 2011
                                          -----------------
                                          -----------------
Revenue                                       32.2     31.1
EBITDA                                         8.7      6.3
Operating profit                               5.8      0.6
Net profit                                     5.1      0.2
EBITDA margin                                27.1%    20.1%
Operating margin                             18.0%     2.0%
Net margin                                   15.9%     0.6%
ROE                                           6.4%     0.2%
ROA                                           4.9%     0.2%
Current ratio                                  2.2      2.9
                                                           
Number of casinos at year-end                   61       65
Casino floor area (m²) at year-end          23,418   24,658
                                                           
Number of slot machines at the period end    2,446    2,494
Number of gaming tables at the period end      183      184

Underlying formulas:

  -- EBITDA = earnings before financial expenses, taxes, depreciation and
     amortisation and impairment losses
  -- Operating profit = profit before financial expenses and taxes
  -- Net profit = net profit for the period less non-controlling interests
  -- EBITDA margin = EBITDA / revenue
  -- Operating margin = operating profit / revenue
  -- Net margin = net profit / revenue
  -- ROE = net profit / average total equity attributable to the shareholders of
     the parent company
  -- ROA = net profit / average total assets
  -- Current ratio = current assets / current liabilities



Key developments of the Group in Q1 2012:

  -- The Group’s consolidated net profit totalled EUR 5.1 million. In Q1 2011,
     the Group earned a net profit of EUR 0.2 million.
  -- The efficiency of the Group’s business operations improved. In Q1 2012, the
     Group’s income from gaming transactions and revenues totalled EUR 31.7
     million, i.e. 8.8% more than compared to Q1 2011. The number of casinos in
     operation declined by 4, i.e. 6.2% year-over-year.
  -- At the annual general meeting of the shareholders held on 19 April 2012 it
     was decided to reduce the share capital of the Company altogether by EUR
     21,186,130.70 from EUR 81,717,932.70 to EUR 60,531,802. The share capital
     is reduced by reducing the calculated value of the shares from EUR 0.54 to
     EUR 0.40, whereas the number of the shares remains the same (i.e.
     151,329,505). The reduction of share capital in the amount of EUR
     15,132,950.50 shall be paid to the shareholders within the term set forth
     by the law. Upon reducing the share capital, EUR 6,053,180.20 shall not be
     paid to the shareholders but shall be used to cover the accumulated losses.

In Q1 2012, the Group’s consolidated sales revenue totalled EUR 31.7 million
and the revenue totalled EUR 32.2 million, which is 3.3% more than the total
revenue of EUR 31.1 million earned in Q1 2011. The Group’s EBITDA increased
from EUR 6.3 million in Q1 2011 to EUR 8.7 million in Q1 2012. In Q1 2012, the
operating profit totalled EUR 5.8 million, in Q1 2011 the operating profit
totalled EUR 0.6 million. 

In Q1 2012, gaming operations accounted for 92.1% and other revenue 7.9% of the
Group’s consolidated revenue, the respective percentages for the Q1 2011 were
87.3% and 12.7%. 



Total external income from gaming transactions and revenue (EUR thousands):

           Q1 2012   Change  Percentage of total  Q1 2011  Percentage of total
          --------------------------------------------------------------------
Estonia      7,614    17.3%                24.0%    6,490                22.3%
Latvia       7,976    24.4%                25.2%    6,411                22.0%
Lithuania    4,894    10.8%                15.5%    4,415                15.2%
Poland       6,238   -17.1%                19.7%    7,523                25.9%
Slovakia     4,255    75.0%                13.4%    2,432                 8.4%
Belarus        690   -21.4%                 2.2%      878                 3.0%
Romania*         0  -100.0%                 0.0%      944                 3.2%
          --------------------------------------------------------------------
Total       31,667     8.8%               100.0%   29,093               100.0%

* Romanian income from gaming transactions and revenue were recognised until
transfer of control to the new owner at 30 June 2011. 

At the end of Q1 2012, the Group had 61 casinos, with the total floor area of
23,418 m². At the end of Q1 2011, the number of the Group’s casinos was 65 and
total floor area was 24,658 m². 



Number of casinos by segment

           31.03.2012  31.03.2011
          -----------------------
Estonia            17          17
Latvia             21          21
Lithuania          10          11
Poland              4           6
Slovakia            4           3
Belarus             5           5
Romania             0           2
          -----------------------
          -----------------------
Total              61          65



In Q1 2012, the Group’s consolidated operating expenses decreased by 13.6% or
EUR 4.1 million as compared to the respective expenses in Q1 2011.
Depreciation, amortisation and impairment losses decreased the most compared to
Q1 2011 by EUR 2.7 million. Staff costs with social security taxes increased
the most as compared to Q1 2011 by EUR 0.3 million, rental expenses by EUR 0.2
million and licence fees and gaming taxes by EUR 0.2 million. 

Staff costs with social security taxes made up the largest share of the Group’s
operating expenses, i.e. EUR 8.0 million, followed by gaming tax expenses of
EUR 6.7 million, depreciation, amortisation and impairment losses of EUR 2.9
million, rental expenses of EUR 2.9 million and marketing expenses of EUR 2.2
million. 

In Q1 2012, the consolidated net profit attributable to equity holders of the
parent company totalled EUR 5.1 million. In Q1 2011, the consolidated net
profit attributable to equity holders of the parent company totalled EUR 0.2
million. 





Overview by markets

Estonian segment

In Q1 2012, the external revenue of the Estonian segment totalled EUR 7.9
million, of which the income from gaming transactions totalled EUR 6.9 million
and other revenue and income totalled EUR 1.0 million. The external revenue of
the Estonian segment decreased by 6.9% compared to Q1 2011 (whereas the
external sales revenue increased by 17.3%). The market share of Olympic Casino
Eesti AS in the Estonian gaming market was 54% at the end of Q1 2012 and 54% at
the end of Q1 2011. In Q1 2012, the total Estonian gaming market increased by
16.6% as compared to Q1 2011. 

In Q1 2012, the EBITDA of the Estonian segment totalled EUR 1.8 million and the
operating profit totalled EUR 1.1 million. In Q1 2011, the EBITDA of the
Estonian segment totalled EUR 2.9 million and the operating profit totalled EUR
1.8 million. 

At the end of Q1 2012, there were 17 Olympic casinos with 699 slot machines and
21 gaming tables in operation in Estonia. 



Latvian segment

In Q1 2012, the external revenue of the Latvian segment totalled EUR 8.1
million, of which the income from gaming transactions totalled EUR 7.3 million
and other revenue and income totalled EUR 0.8 million. The external revenue of
the Latvian segment increased by 26.1% compared to Q1 2011. The market share of
Olympic Casino Latvia SIA in the Latvian gaming market was 21% at the end of Q1
2012 and 20% at the end of Q1 2011. In Q1 2012, the total Latvian gaming market
increased by 23.8% as compared to Q1 2011. 

In Q1 2012, the EBITDA of the Latvian segment totalled EUR 3.6 million and the
operating profit totalled EUR 2.9 million. In Q1 2011, the EBITDA of the
Latvian segment totalled EUR 2.4 million and the operating profit totalled EUR
1.4 million. 

At the end of Q1 2012, there were 21 Olympic casinos with 646 slot machines and
25 gaming tables in operation in Latvia. 



Lithuanian segment

In Q1 2012, the external revenue of the Lithuanian segment totalled EUR 4.9
million, of which the income from gaming transactions totalled EUR 4.6 million
and other revenue and income totalled EUR 0.3 million. The external revenue of
the Lithuanian segment increased by 10.2% compared to Q1 2011. The market share
of Olympic Casino Group Baltija UAB in the Lithuanian gaming market was 68% at
the end of Q1 2012 and 73% at the end of Q1 2011. The total Lithuanian gaming
market increased by 13.6% as compared to Q1 2011. 

In Q1 2012, the EBITDA of the Lithuanian segment totalled EUR 1.1 million and
the operating profit totalled EUR 0.7 million. In Q1 2011, the EBITDA of the
Lithuanian segment totalled EUR 0.9 million and the operating profit totalled
EUR 0.4 million. 

At the end of Q1 2012, there were 10 Olympic casinos with 350 slot machines and
52 gaming tables in operation in Lithuania. 



Polish segment

In Q1 2012, the external revenue of the Polish segment totalled EUR 6.3
million, of which the income from gaming transactions totalled EUR 6.1 million
and other revenue and income totalled EUR 0.2 million. The external revenue of
the Polish segment decreased by 16.2% compared to Q1 2011. 

In Q1 2012, the EBITDA of the Polish segment totalled EUR 0.9 million and the
operating profit totalled EUR 0.2 million. In Q1 2011, the EBITDA of the Polish
segment totalled EUR 1.1 million and the operating loss totalled EUR 0.1
million. 

At the end of Q1 2012, there were 4 Olympic casinos with 307 slot machines and
41 gaming tables in operation in Poland. 



Slovak segment

In Q1 2012, the external revenue of the Slovak segment totalled EUR 4.3
million, of which the income from gaming transactions totalled EUR 3.9 million
and other revenue and income totalled EUR 0.4 million. The external revenue of
the Slovak segment increased by 75.0% compared to Q1 2011. 

In Q1 2012, the EBITDA of the Slovak segment totalled EUR 1.1 million and the
operating profit totalled EUR 0.8 million. In Q1 2011, the EBITDA of the Slovak
segment totalled EUR 0.4 million and the operating profit totalled EUR 0.1
million. 

At the end of Q1 2012, there were 4 Olympic casinos with 216 slot machines and
44 gaming tables in operation in Slovakia. 



Belarusian segment

In this interim financial statements, the Belarusian segment is regarded as a
hyperinflationary economy that is subject to the accounting policies of IAS 29. 

In Q1 2012, the external revenue of the Belarusian segment totalled EUR 0.7
million, of which the income from gaming transactions totalled EUR 0.6 million
and other revenue and income totalled EUR 0.1 million. The external revenue of
the Belarus segment decreased by 19.5% compared to Q1 2011. 

In Q1 2012, the EBITDA of the Belarusian segment totalled EUR 0.2 million and
the operating profit totalled EUR 0.1 million. In Q1 2011, the EBITDA of the
Belarusian segment totalled EUR 0.3 million and the operating profit totalled
EUR 0.1 million. 

At the end of Q1 2012, there were 5 Olympic casinos with 228 slot machines in
operation in Belarus. 



Romanian segment

Olympic Entertainment Group AS signed share purchase agreement on 30 April 2011
with an Israeli entrepreneur for selling all the shares in Romanian
subsidiaries Olympic Casino Bucharest S.R.L, Muntenia Food and Beverage S.R.L.
and Olympic Exchange S.R.L. As of 30 June 2011 shares of Romanian subsidiaries
have been registered to the buyer. 





Financial position

At 31 March 2012, the consolidated balance sheet total of the Group was EUR
107.0 million (31 December 2011: EUR 101.0 million). The balance sheet total
increased by 6.0% in Q1 2012. 

Current assets totalled EUR 53.6 million or 50.1% of total assets, and
non-current assets totalled EUR 53.4 million or 49.9% of total assets. At the
balance sheet date, the liabilities totalled EUR 19.0 million and the equity
totalled EUR 87.9 million. The largest liability items included borrowings of
EUR 5.5 million, tax liabilities of EUR 4.9 million and payables to employees
of EUR 3.2 million. 



Investments

In Q1 2012, the Group’s expenditures on property, plant and equipment totalled
EUR 1.4 million, of which EUR 1.0 million was spent on construction and
reconstruction of casinos and EUR 0.4 million on new gaming equipment. 

In Q1 2011, expenditures on property, plant and equipment totalled EUR 0.4
million. 



Cash flows

In Q1 2012, the Group’s cash flows generated from operating activities totalled
EUR 8.3 million. Cash flows from investing activities totalled EUR 1.6 million
and cash flows used in financing activities totalled EUR 0.8 million. Net cash
flows totalled EUR 9.2 million. 

In Q1 2011, the Group’s cash flows generated from operating activities totalled
EUR 7.3 million. Cash flows used in investing activities totalled EUR 0.5
million and cash flows used in financing activities totalled EUR 0.8 million.
Net cash flows totalled EUR 6.0 million. 



Staff

At 31 March 2012, the Group employed 2,296 people (31 December 2011: 2,336):
520 in Estonia, 470 in Latvia, 603 in Lithuania, 375 in Poland, 222 in Slovakia
and 101 in Belarus. 

In Q1 2012, employee wages and salaries including social security taxes
totalled EUR 7.9 million (Q1 2011: EUR 7.8 million). In Q1 2012, 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
0.17 million (Q1 2011: EUR 0.15 million) and EUR 0.04 million (Q1 2011: EUR
0.04 million), respectively. 



Consolidated statement of financial position

                                                          31.03.2012  31.12.2011
                                                         -----------------------
                                                         -----------------------
ASSETS                                                                          
Current assets                                                                  
Cash and cash equivalents                                     42,590      33,413
Financial investments                                          7,246       9,508
Receivables and prepayments                                    2,524       2,606
Prepaid income tax                                               286         397
Inventories                                                      925         909
                                                         -----------------------
Total current assets                                          53,571      46,833
                                                                                
Non-current assets                                                              
Deferred tax assets                                            1,162       1,111
Financial investments                                          2,941       2,937
Other long-term receivables                                      723         712
Investment property                                            1,795       1,795
Property, plant and equipment                                 18,469      19,754
Intangible assets                                             28,296      27,822
                                                         -----------------------
                                                         -----------------------
Total non-current assets                                      53,386      54,131
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL ASSETS                                                 106,957     100,964
                                                                                
                                                                                
LIABILITIES AND EQUITY                                                          
Current liabilities                                                             
Borrowings                                                     3,112       3,113
Trade and other payables                                      10,219       9,870
Income tax payable                                             1,572       1,215
Provisions                                                     1,716       1,881
                                                         -----------------------
                                                         -----------------------
Total current liabilities                                     16,619      16,079
                                                                                
Non-current liabilities                                                         
Deferred tax liability                                            40          90
Borrowings                                                     2,360       3,136
                                                         -----------------------
                                                         -----------------------
Total non-current liabilities                                  2,400       3,226
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL LIABILITIES                                             19,019      19,305
                                                                                
EQUITY                                                                          
Share capital                                                 81,718      81,718
Share premium                                                 14,535      14,535
Statutory reserve capital                                      2,470       2,470
Other reserves                                                    80          53
Translation reserves                                            -908      -1,776
Accumulated losses                                           -14,808     -19,930
                                                         -----------------------
                                                         -----------------------
Total equity attributable to equity holders of the            83,087      77,070
 parent                                                                         
Non-controlling interest                                       4,851       4,589
                                                         -----------------------
                                                         -----------------------
TOTAL EQUITY                                                  87,938      81,659
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL LIABILITIES AND EQUITY                                 106,957     100,964



Consolidated statement of comprehensive income

                                                      Q1 2012  Q1 2011
                                                     -----------------
                                                     -----------------
Continuing operations                                                 
Income from gaming transactions                        29,596   26,349
Revenue                                                 2,071    1,800
Other income                                              484    2,021
                                                     -----------------
                                                     -----------------
Total revenue and income                               32,151   30,170
                                                                      
Cost of materials, goods and services                    -664     -635
Other operating expenses                              -14,644  -14,178
Staff costs                                            -8,035   -7,156
Depreciation, amortisation and impairment              -2,901   -4,186
Other expenses                                           -110     -326
                                                     -----------------
                                                     -----------------
Total operating expenses                              -26,354  -26,481
                                                                      
                                                     -----------------
Operating profit                                        5,797    3,689
                                                                      
Interest income                                            74       75
Interest expense                                          -55     -126
Foreign exchange gains (losses)                           -14       16
Other finance income and costs                            285       -2
                                                     -----------------
                                                     -----------------
Total finance income and costs                            290      -37
                                                                      
                                                     -----------------
Profit from operating activities                        6,087    3,652
                                                                      
Income tax expense                                       -703     -353
                                                     -----------------
Net profit for the period from continuing operations    5,384    3,299
                                                                      
Net loss for the period from discontinued operations        0   -3,096
                                                                      
                                                     -----------------
                                                     -----------------
Net profit for the period                               5,384      203
Attributable to equity holders of the parent company    5,122      183
Attributable to non-controlling interest                  262       20
                                                                      
                                                                      
Other comprehensive income                                            
                                                                      
Currency translation differences                                      
From continuing operations                                868     -329
From discontinuing operations                               0      103
                                                     -----------------
                                                     -----------------
Total comprehensive profit (-loss) for the period       6,252      -23
Attributable to equity holders of the parent company    5,990      -43
Attributable to non-controlling interest                  262       20
                                                                      
                                                                      
Basic earnings per share*                                 3.4      0.1
From continuing operations                                3.4      2.2
From discontinuing operations                             0.0     -2.1
                                                                      
Diluted earnings per share*                               3.4      0.1
From continuing operations                                3.4      2.2
From discontinuing operations                             0.0     -2.1

  * euro cents



For further information, please contact:

Madis Jääger
CEO
Olympic Entertainment Group AS
Tel + 372 667 1250
E-mail [email protected]
http://www.olympic-casino.com