Market announcement

Title

OEG: consolidated unaudited results for Q2 and H1 2012

Message

Key performance indicators of the Group

(in millions of euros)

                                           H1 2012  H1 2011
                                          -----------------
                                          -----------------
Revenue                                       64.1     61.9
EBITDA                                        17.3     15.0
Operating profit                              11.7      5.7
Net profit                                    10.4      4.4
EBITDA margin                                27.0%    24.2%
Operating margin                             18.3%     9.3%
Net margin                                   16.2%     7.2%
ROE                                          13.8%     5.9%
ROA                                           9.8%     4.1%
Current ratio                                  1.9      1.7
                                                           
Number of casinos at year-end                   62       63
Casino floor area (m²) at year-end          23,480   23,076
                                                           
Number of slot machines at the period end    2,487    2,441
Number of gaming tables at the period end      183      173



Key developments of the Group in H1 2012:

  -- The Group’s consolidated net profit totalled EUR 10.4 million. In H1 2011,
     the Group earned a net profit of EUR 4.4 million.
  -- The efficiency of the Group’s business operations improved. In H1 2012, the
     Group’s income from gaming transactions and revenues totalled EUR 63.6
     million, i.e. 10.0% more than compared to H1 2011. The number of casinos in
     operation declined by 1 year-over-year.
  -- At 27 July 2012, the reduction of share capital of Olympic Entertainment
     Group AS on the basis adopted by resolution of the General Meeting of
     Shareholders held at 19 April 2012 was entered in the Commercial Register.
     The Company’s registered share capital was EUR 81,717,932.70 and the new
     size of share capital is EUR 60,531,802. The share capital is divided into
     151,329,505 ordinary shares with the book value of EUR 0.40 each.

In H1 2012, the Group’s consolidated sales revenue totalled EUR 63.6 million
and the revenue totalled EUR 64.1 million, which is 3.7% more than the total
revenue of EUR 61.9 million earned in H1 2011. The Group’s EBITDA increased
from EUR 15.0 million in H1 2011 to EUR 17.3 million in H1 2012. In H1 2012,
the operating profit totalled EUR 11.7 million, in H1 2011 the operating profit
totalled EUR 5.7 million. 

In H1 2012, gaming operations accounted for 92.3% and other revenue 7.7% of the
Group’s consolidated revenue, the respective percentages for the H1 2011 were
87.1% and 12.9%. 



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



           Q2 2012   Change  Percentage of total  Q2 2011  Percentage of total
          --------------------------------------------------------------------
Estonia      8,180    13.3%                25.6%    7,218                25.1%
Latvia       7,767    13.1%                24.3%    6,865                23.9%
Lithuania    4,466     2.9%                14.0%    4,341                15.1%
Poland       7,138    10.5%                22.3%    6,458                22.5%
Slovakia     3,504    14.2%                11.0%    3,067                10.7%
Belarus        885    13.2%                 2.8%      782                 2.7%
Romania*         0  -100.0%                 0.0%       11                 0.0%
          --------------------------------------------------------------------
Total       31,940    11.1%               100.0%   28,742               100.0%





           6m 2012   Change  Percentage of total  6m 2011  Percentage of total
          --------------------------------------------------------------------
Estonia     15,794    15.2%                24.8%   13,709                23.7%
Latvia      15,743    18.6%                24.8%   13,276                23.0%
Lithuania    9,360     6.9%                14.7%    8,756                15.1%
Poland      13,376    -4.3%                21.0%   13,981                24.2%
Slovakia     7,759    41.1%                12.2%    5,499                 9.5%
Belarus      1,575    -5.1%                 2.5%    1,660                 2.9%
Romania*         0  -100.0%                 0.0%      954                 1.6%
          --------------------------------------------------------------------
Total       63,607    10.0%               100.0%   57,835               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 Q2 2012, the Group had 62 casinos, with the total floor area of
23,480 m². At the end of Q2 2011, the number of the Group’s casinos was 63 and
total floor area was 23,076 m². 



Number of casinos by segment



           30.06.2012  30.06.2011
          -----------------------
Estonia            18          17
Latvia             21          21
Lithuania          10          11
Poland              4           6
Slovakia            4           3
Belarus             5           5
          -----------------------
Total              62          63



In H1 2012, the Group’s consolidated operating expenses decreased by 6.6% or
EUR 3.7 million as compared to the respective expenses in H1 2011.
Depreciation, amortisation and impairment losses decreased the most compared to
H1 2011 by EUR 3.7 million. Staff costs with social security taxes increased
the most as compared to H1 2011 by EUR 1.0 million and licence fees and gaming
taxes by EUR 0.4 million. 

Staff costs with social security taxes made up the largest share of the Group’s
operating expenses, i.e. EUR 16.0 million, followed by gaming tax expenses of
EUR 13.5 million, depreciation, amortisation and impairment losses of EUR 5.6
million, rental expenses of EUR 4.7 million and marketing expenses of EUR 4.3
million. 

In H1 2012, the consolidated net profit attributable to equity holders of the
parent company totalled EUR 10.4 million. In H1 2011, the consolidated net
profit attributable to equity holders of the parent company totalled EUR 4.4
million. 



Overview by markets

Estonian segment

In H1 2012, the external revenue of the Estonian segment totalled EUR 16.1
million, of which the income from gaming transactions totalled EUR 14.3 million
and other revenue and income totalled EUR 1.8 million. The external revenue of
the Estonian segment increased by 2.4% compared to H1 2011. The market share of
Olympic Casino Eesti AS in the Estonian gaming market was 56% based on Q2 2012
and 55% based on Q2 2011. In H1 2012, the total Estonian gaming market
increased by 12.3% as compared to H1 2011. 

In H1 2012, the EBITDA of the Estonian segment totalled EUR 3.8 million and the
operating profit totalled EUR 2.3 million. In H1 2011, the EBITDA of the
Estonian segment totalled EUR 4.3 million and the operating profit totalled EUR
2.3 million. 

At the end of Q2 2012, there were 18 Olympic casinos with 739 slot machines and
21 gaming tables in operation in Estonia. 



Latvian segment

In H1 2012, the external revenue of the Latvian segment totalled EUR 15.9
million, of which the income from gaming transactions totalled EUR 14.5 million
and other revenue and income totalled EUR 1.4 million. The external revenue of
the Latvian segment increased by 19.5% compared to H1 2011. The market share of
Olympic Casino Latvia SIA in the Latvian gaming market was 21% based on Q2 2012
and 20% based on Q2 2011. 

In H1 2012, the EBITDA of the Latvian segment totalled EUR 6.9 million and the
operating profit totalled EUR 5.6 million. In H1 2011, the EBITDA of the
Latvian segment totalled EUR 5.0 million and the operating profit totalled EUR
3.3 million. 

At the end of Q2 2012, there were 21 Olympic casinos with 646 slot machines and
25 gaming tables in operation in Latvia. 



Lithuanian segment

In H1 2012, the external revenue of the Lithuanian segment totalled EUR 9.4
million, of which the income from gaming transactions totalled EUR 8.8 million
and other revenue and income totalled EUR 0.6 million. The external revenue of
the Lithuanian segment increased by 6.6% compared to H1 2011. The market share
of Olympic Casino Group Baltija UAB in the Lithuanian gaming market was 68%
based on Q2 2012 and 71% based on Q2 2011. 

In H1 2012, the EBITDA of the Lithuanian segment totalled EUR 2.1 million and
the operating profit totalled EUR 1.3 million. In H1 2011, the EBITDA of the
Lithuanian segment totalled EUR 1.9 million and the operating profit totalled
EUR 0.8 million. 

At the end of Q2 2012, there were 10 Olympic casinos with 350 slot machines and
52 gaming tables in operation in Lithuania. 



Polish segment

In H1 2012, the external revenue of the Polish segment totalled EUR 13.5
million, of which the income from gaming transactions totalled EUR 13.2 million
and other revenue and income totalled EUR 0.3 million. The external revenue of
the Polish segment decreased by 15.7% compared to H1 2011. 

In H1 2012, the EBITDA of the Polish segment totalled EUR 2.3 million and the
operating profit totalled EUR 1.0 million. In H1 2011, the EBITDA of the Polish
segment totalled EUR 3.3 million and the operating profit totalled EUR 1.2
million. 

At the end of Q2 2012, there were 4 Olympic casinos with 306 slot machines and
41 gaming tables in operation in Poland. 



Slovak segment

In H1 2012, the external revenue of the Slovak segment totalled EUR 7.8
million, of which the income from gaming transactions totalled EUR 7.1 million
and other revenue and income totalled EUR 0.7 million. The external revenue of
the Slovak segment increased by 41.1% compared to H1 2011. 

In H1 2012, the EBITDA of the Slovak segment totalled EUR 1.6 million and the
operating profit totalled EUR 1.0 million. In H1 2011, the EBITDA of the Slovak
segment totalled EUR 1.1 million and the operating profit totalled EUR 0.6
million. 

At the end of Q2 2012, there were 4 Olympic casinos with 218 slot machines and
44 gaming tables in operation in Slovakia. 



Belarusian segment

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

In H1 2012, the external revenue of the Belarusian segment totalled EUR 1.6
million, of which the income from gaming transactions totalled EUR 1.5 million
and other revenue and income totalled EUR 0.1 million. The external revenue of
the Belarusian segment decreased by 3.4% compared to H1 2011. 

In H1 2012, the EBITDA of the Belarusian segment totalled EUR 0.6 million and
the operating profit totalled EUR 0.5 million. In H1 2011, the EBITDA of the
Belarusian segment totalled EUR 0.3 million and the operating loss totalled EUR
0.1 million. 

At the end of Q2 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 30 June 2012, the consolidated balance sheet total of the Group was EUR
109.9 million (31 December 2011: EUR 101.0 million). The balance sheet total
increased by 8.8% in H1 2012. 

Current assets totalled EUR 57.1 million or 52.0% of total assets, and
non-current assets totalled EUR 52.8 million or 48.0% of total assets. At the
balance sheet date, the liabilities totalled EUR 31.8 million and the equity
totalled EUR 78.1 million. The largest liability items included payables to the
shareholders from the reduction of share capital in the amount of EUR 15.2
million, borrowings of EUR 4.7 million, tax liabilities of EUR 3.9 million and
payables to employees of EUR 2.9 million. 



Investments

In H1 2012, the Group’s expenditures on property, plant and equipment totalled
EUR 3.6 million, of which EUR 2.4 million was spent on construction and
reconstruction of casinos and EUR 1.2 million on new gaming equipment. 

In H1 2011, expenditures on property, plant and equipment totalled EUR 0.9
million. 



Cash flows

In H1 2012, the Group’s cash flows generated from operating activities totalled
EUR 14.0 million. Cash flows used in investing activities totalled EUR 5.5
million and cash flows used in financing activities totalled EUR 1.6 million.
Net cash flows totalled EUR 6.9 million. 

In H1 2011, the Group’s cash flows generated from operating activities totalled
EUR 14.2 million. Cash flows used in investing activities totalled EUR 0.8
million and cash flows used in financing activities totalled EUR 1.6 million.
Net cash flows totalled EUR 11.9 million. 



Staff

At 30 June 2012, the Group employed 2,349 people (31 December 2011: 2,336): 530
in Estonia, 492 in Latvia, 613 in Lithuania, 389 in Poland, 222 in Slovakia and
103 in Belarus. 

In H1 2012, employee wages and salaries including social security taxes
totalled EUR 16.0 million (H1 2011: EUR 15.1 million). In H1 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
0.47 million (H1 2011: EUR 0.36 million) and EUR 0.08 million (H1 2011: EUR
0.08 million), respectively. 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION



                                                          30.06.2012  31.12.2011
                                                         -----------------------
                                                         -----------------------
ASSETS                                                                          
Current assets                                                                  
Cash and cash equivalents                                     40,308      33,413
Financial investments                                         12,513       9,508
Receivables and prepayments                                    2,989       2,606
Prepaid income tax                                               263         397
Inventories                                                    1,023         909
                                                         -----------------------
Total current assets                                          57,096      46,833
                                                                                
Non-current assets                                                              
Deferred tax assets                                            1,136       1,111
Financial investments                                          2,944       2,937
Other long-term receivables                                      685         712
Investment property                                            1,800       1,795
Property, plant and equipment                                 18,075      19,754
Intangible assets                                             28,126      27,822
                                                         -----------------------
                                                         -----------------------
Total non-current assets                                      52,766      54,131
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL ASSETS                                                 109,862     100,964
                                                                                
                                                                                
LIABILITIES AND EQUITY                                                          
Current liabilities                                                             
Borrowings                                                     3,111       3,113
Trade and other payables                                      25,310       9,870
Income tax payable                                               464       1,215
Provisions                                                     1,309       1,881
                                                         -----------------------
                                                         -----------------------
Total current liabilities                                     30,194      16,079
                                                                                
Non-current liabilities                                                         
Deferred tax liability                                            23          90
Borrowings                                                     1,582       3,136
                                                         -----------------------
                                                         -----------------------
Total non-current liabilities                                  1,605       3,226
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL LIABILITIES                                             31,799      19,305
                                                                                
EQUITY                                                                          
Share capital                                                 60,532      81,718
Share premium                                                      0      14,535
Statutory reserve capital                                          0       2,470
Other reserves                                                    94          53
Translation reserves                                          -1,079      -1,776
Retained earnings / accumulated losses                        13,487     -19,930
                                                         -----------------------
                                                         -----------------------
Total equity attributable to equity holders of the            73,034      77,070
 parent                                                                         
Non-controlling interest                                       5,029       4,589
                                                         -----------------------
                                                         -----------------------
TOTAL EQUITY                                                  78,063      81,659
                                                                                
                                                         -----------------------
                                                         -----------------------
TOTAL LIABILITIES AND EQUITY                                 109,862     100,964



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



                                              Q2 2012  Q2 2011  6m 2012  6m 2011
                                             -----------------------------------
                                             -----------------------------------
Continuing operations                                                           
Income from gaming transactions                29,625   26,701   59,221   53,050
Revenue                                         2,315    2,030    4,386    3,831
Other income                                       39    1,990      523    4,011
                                             -----------------------------------
                                             -----------------------------------
Total revenue and income                       31,979   30,721   64,130   60,892
                                                                                
Cost of materials, goods and services            -692     -671   -1,356   -1,306
Other operating expenses                      -14,652  -14,088  -29,297  -28,267
Staff costs                                    -7,996   -7,217  -16,032  -14,373
Depreciation, amortisation and impairment      -2,667   -3,605   -5,567   -7,791
Other expenses                                    -48     -660     -157     -986
                                             -----------------------------------
                                             -----------------------------------
Total operating expenses                      -26,055  -26,241  -52,409  -52,723
                                                                                
                                             -----------------------------------
Operating profit                                5,924    4,480   11,721    8,169
                                                                                
Interest income                                    80       78      154      153
Interest expense                                  -48     -117     -103     -244
Foreign exchange gains (losses)                   -31       98      -45      114
Other finance income and costs                    237       -3      523       -5
                                             -----------------------------------
                                             -----------------------------------
Total finance income and costs                    238       56      529       18
                                                                                
Profit from operating activities                6,162    4,536   12,250    8,187
                                                                                
Income tax expense                               -737     -604   -1,441     -957
Net profit for the period from continuing       5,425    3,932   10,809    7,230
 operations                                                                     
                                                                                
Net profit (loss) for the period from               0      634        0   -2,462
 discontinued operations                                                        
                                                                                
                                             -----------------------------------
                                             -----------------------------------
Net profit for the period                       5,425    4,566   10,809    4,768
Attributable to equity holders of the parent    5,236    4,245   10,359    4,427
 company                                                                        
Attributable to non-controlling interest          189      321      450      341
                                                                                
                                                                                
Other comprehensive income                                                      
Currency translation differences                                                
Continuing operations                               0     -291        0     -187
Discontinued operations                          -171     -388      697     -718
                                             -----------------------------------
                                             -----------------------------------
Total comprehensive profit for the period       5,254    3,887   11,506    3,863
Attributable to equity holders of the parent    5,065    3,566   11,056    3,522
 company                                                                        
Attributable to non-controlling interest          189      321      450      341
                                                                                
                                                                                
Basic earnings per share*                         3.5      2.8      6.8      2.9
From continuing operations                        3.5      2.4      6.8      4.5
From discontinuing operations                     0.0      0.4      0.0     -1.6
                                                                                
Diluted earnings per share*                       3.5      2.8      6.8      2.9
From continuing operations                        3.5      2.4      6.8      4.5
From discontinuing operations                     0.0      0.4      0.0     -1.6

     * 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