Börsiteade

Pealkiri

OEG: consolidated unaudited results for Q4 and 12m 2016

Teade

Key performance indicators of the Group

                                                            2016    2015    2014
                                                         -----------------------
Revenue before gaming taxes                        m€      205.1   177.2   157.8
Gaming tax                                         m€      -44.2   -40.4   -34.4
Net revenue                                        m€      161.0   136.8   123.4
Total revenue                                      m€      179.5   137.4   123.8
EBITDA                                             m€       53.8    39.5    36.2
EBIT                                               m€       34.6    31.4    25.8
Net profit                                         m€       29.8    27.1    22.4
                                                                                
EBITDA margin                                      %        33.4    28.9    29.3
Operating margin                                   %        21.5    22.9    20.9
Net margin                                         %        18.5    19.8    18.2
                                                                                
Assets                                             m€      152.7   162.3   126.2
Equity                                             m€      129.9   122.9   109.2
ROE                                                %        24.4    23.4    21.4
ROA                                                %        18.9    18.8    18.3
Current ratio                                      times     2.1     1.4     3.0
                                                                                
Casinos at end of period                           #         120     119      98
Casino floor area at end of period                 m2     39,083  33,969  32,242
Betting points at the end of period                #          31      34       0
Betting points floor area at end of period         m2        856     970       0
Employees                                          #       3,024   2,665   2,515
                                                                                
Slot machines at end of period                     #       4,123   4,101   3,470
Electronic roulette terminals at the end of        #         106     122      96
 period                                                                         
Gaming tables at end of period                     #         170     183     193
Tournament poker gaming tables at the end of       #          64      65      46
 period                                                                         



Key developments of the Group in 2016:

  -- The Group’s consolidated sales revenues before gaming taxes for 2016
     amounted to EUR 205.1 million, up 15.8% or EUR 28.0 million y?o?y.
  -- Total gaming revenues before gaming taxes accounted for 92.4% (189.5 m€)
     and other revenues for 7.6% (15.7 m€) of the Group’s consolidated total
     sales revenues for 2016. A year before the revenue split was 94.2% (166.8
     m€) and 5.8% (10.3 m€), respectively.
  -- The Group’s consolidated EBITDA for 2016 amounted to EUR 53.8 million, a
     growth of 36.2% from EUR 39.5 million a year before. The Group’s
     consolidated operating profit increased EUR 3.2 million (10.2%) to EUR 34.6
     million.
  -- The Group’s consolidated net profit attributable to equity holders of the
     parent company for 2016 totalled EUR 29.3 million compared to EUR 25.7
     million a year ago.
  -- The presentation of gaming taxes has been changed in the current financial
     statements. The income statement now presents revenue before gaming taxes,
     then gaming taxes and thereafter net revenue.
  -- In the current financial statements Polish and Belarus segments have been
     classified as discontinued operations, for which the net loss for 2016
     amounted to EUR 9.6 million (in 2015 net profit of EUR 1.7 million),
     consisting mainly of goodwill and assets impairment due to freezing of
     active operations in Poland.
  -- Group company Baina Investments Sp. z o.o. signed the agreement on 14
     January 2016 to acquire a 20% holding in the Polish subsidiary Casino
     Polonia-Wroc?aw Sp. z o.o., increasing Group holding to 100%.
  -- After receiving an approval from the Estonian Competition Authority, on 16
     February 2016 Group completed the acquisition of 100% shareholding in
     Estonian casino operator AS MC Kasiinod, which is also the 100% owner of
     the subsidiary OÜ Oma & Hea, which is providing casino bar services. As
     a result of the completion of the transaction Group owns 24 casinos in
     Estonia.
  -- The Estonian subsidiaries of Group, Olympic Casino Eesti AS and the casino
     operating company AS MC Kasiinod which was acquired in winter of 2016,
     concluded a merger agreement on 21 March 2016. The merger was finalised in
     May 2016 and during the course of the merger AS MC Kasiinod merged with
     Olympic Casino Eesti AS.
  -- The Slovak subsidiaries of Group, Olympic Casino Slovakia S.r.o. and
     Olympic F&B S.r.o., concluded a merger agreement on 22 March 2016. The
     merger was finalised in April 2016 and during the course of the merger
     Olympic F&B S.r.o. merged with Olympic Casino Slovakia S.r.o.
  -- On 31 March 2016 Group decided to liquidate its Dutch subsidiary Siquia
     Holding B.V., which does not have any business activity. The area of
     activity for the subsidiary was holding activities. The liquidation was
     finalised on 30 June 2016.
  -- The Latvian subsidiaries of Group, Olympic Casino Latvia SIA AS and the
     casino operating company SIA Garkalns which was acquired in autumn 2015,
     concluded a merger agreement on 20 May 2016. The merger was finalised on 23
     December 2016 and during the course of the mereger SIA Garkalns merged with
     Olympic Casino Latvia SIA.
  -- On 1 June 2016 Group opened a new hotel and entertainment complex in
     Tallinn investing over 45 million euros in the building that accommodates
     the Baltic's first Hilton and the flagship casino of OEG.
  -- The general meeting of shareholders held on 16 June 2016 decided to pay out
     dividends in amount of EUR 22,768,680.90 (EUR 0.15 per share), of which EUR
     0.10 per share was paid out to shareholders on 15 July 2016 and EUR 0.05
     was paid out to shareholders on 14 October 2016.
  -- On 15 July 2016 Group company Jessy Investments B.V. entered into an
     agreement to divest the 100% holding in its Estonian subsidiary Kesklinna
     Hotelli OÜ that owns the hotel and entertainment complex building in
     Tallinn, where the Hilton Tallinn Park hotel and the flagship casino of OEG
     group, Olympic Park Casino, are based in. The buyer was East Capital group
     company ECB3 Tallinn OÜ. The transaction price was 48 million euros and
     profit 17.8 million euros. The aim of the sales transaction was to release
     capital that has been invested into real estate and to focus on the core
     business of the group – operating casino and entertainment complexes. The
     hotel and casino operations that are in the building were not part of the
     sales transaction and will continue to be owned by the Group.
  -- On 23 September 2016 the Group announced that it is forced to freeze active
     operations in Poland from 24 September 2016 due to the lack of valid
     location specific activity license, but remains to be interested in
     continuing its operations in the Polish market and plans to participate in
     the upcoming public tenders for the licenses. The main purpose of freezing
     the active operations is to minimise the everyday costs and expenses.
  -- On 23 September 2016 the Group announced of its decision to exit Belarus
     gaming market due to the inefficient operations caused by the macroeconomic
     situation and poor prospects to increase profitability in Belarus.



The Group’s consolidated sales revenues before gaming taxes by segments:

‘000€      Q4 2016  Q4 2015   Change     2016     2015    Change
          ------------------------------------------------------
Estonia     12,924    9,375    37.9%   45,364   35,566     27.6%
Latvia      17,922   15,364    16.7%   66,185   56,015     18.2%
Lithuania    6,956    6,037    15.2%   25,286   22,016     14.9%
Poland          35    5,953   -99.4%   13,565   24,037    -43.6%
Slovakia     3,866     4,62   -16.3%   16,546   16,347      1.2%
Belarus          0      148  -100.0%      185      804    -77.0%
Italy          7,9    6,065    30.3%   26,838   22,077     21.6%
Malta        2,731      266   926.9%   11,169      291  3,738.2%
          ------------------------------------------------------
Total       52,334   47,828     9.4%  205,138  177,153     15.8%



Number of casinos by segment:

           31 December 2016  31 December 2015
          -----------------------------------
Estonia                  24                20
Latvia                   54                57
Lithuania                18                19
Poland                    0                 1
Slovakia                  8                 7
Belarus                   0                 2
Italy                    15                12
Malta                     1                 1
          -----------------------------------
Total                   120               119



Overview by markets

Estonia

The sales revenues before gaming taxes of Estonian segment for 2016 amounted to
EUR 45.4 million (+9.8 m€, +27.6%), EBITDA to EUR 23.1 million (+17.1 m€,
+285.3%) and operating profit to EUR 19.7 million (+15.6 m€, +382.5%). Gaming
revenue before gaming taxes increased 16.5% y-o-y amounting to EUR 39.2
million. Sales revenues increased partially due to hotel sales revenues. EBITDA
and operating profit increased largely due to the profit from the hotel real
estate sales transaction in amount of EUR 17.8 million. 

At the end of 2016, there were 24 Olympic casinos with 990 slot machines, 36
electronic roulette terminals, 24 gaming tables and 22 poker tournament tables
operating in Estonia. As at 31 December 2016 Estonian operations employed 715
people. 

Latvia

The sales revenues before gaming taxes of Latvian segment for 2016 amounted to
EUR 66.2 million (+10.2 m€, +18.2%), EBITDA to EUR 27.8 million (+1.6 m€,
+5.9%) and operating profit to EUR 24.1 million (+0.9 m€, +3.7%). Gaming
revenue before gaming taxes increased 17.7% y?o?y amounting to EUR 60.6
million. 

At the end of 2016, there were 54 Olympic casinos with 1,475 slot machines, 8
electronic roulette terminals, 24 gaming tables and 9 poker tournament tables
operating in Latvia. As at 31 December 2016 Latvian operations employed 915
people. 

Lithuania

The sales revenues before gaming taxes of Lithuanian segment for 2016 amounted
to EUR 25.3 million (+3.3 m€, +14.8%), EBITDA to EUR 2.3 million (-1.0 m€,
-30.3%) and operating profit to EUR 0.7 million (-1.4 m€, -65.6%). Gaming
revenue before gaming taxes increased 15.5% y-o-y amounting to EUR 24.4
million. 

At the end of Q4 2016, there were 18 Olympic casinos with 543 slot machines, 8
electronic roulette terminals, 59 gaming tables and 2 poker tournament tables
and 31 betting shops operating in Lithuania. As at 31 December 2016 Lithuanian
operations employed 750 people. 

Slovakia

The sales revenues before gaming taxes of Slovak segment for 2016 amounted to
EUR 16.5 million (+0.2 m€, +1.2%), EBITDA to EUR 1.1 million (+0.2 m€, +27.4%)
and operating profit to EUR 0.04 million (+0.13 m€). Gaming revenue before
gaming taxes increased 1.4% y-o-y amounting to EUR 14.7 million. 

At the end of 2016, there were 8 Olympic casinos with 291 slot machines, 36
electronic roulette terminals, 44 gaming tables and 21 poker tournament tables
operating in Slovakia. As at 31 December 2016 Slovak operations employed 324
people. 

Italy

The sales revenues before gaming taxes of Italian segment for 2016 amounted to
EUR 26.8 million (+4.8 m€, +21.6%), EBITDA to EUR 1.0 million (+0.4 m€, +58.7%)
and operating profit to EUR 0.6 million (+0.4 m€, +215.5%). Gaming revenue
before gaming taxes increased 21.7% y-o-y amounting to EUR 26.6 million. 

At the end of 2016, there were 15 VLT slot casinos with 539 slot machines
operating in Italy. As at 31 December 2016 Italian operations employed 88
people. 

Malta

The sales revenues before gaming taxes of Maltese segment for 2016 amounted to
EUR 11.2 million (+10.9 m€, +3,738.3%), EBITDA to EUR -0.1 million (+0.3 m€)
and operating loss to EUR -1.2 million (-0.8 m€). Gaming revenue before gaming
taxes increased 3752% y-o-y amounting to EUR 11.0 million. 

At the end 2016, there was 1 casino with 285 slot machines, 18 electronic
roulette terminals, 19 gaming tables and 10 poker tournament tables operating
in Malta. As at 31 December 2016 Maltese operations employed 209 people. 

Discontinued operations

Poland

The sales revenues before gaming taxes of Polish segment for 2016 amounted to
EUR 13.6 million (-10.5 m€, -43.6%), EBITDA to EUR 0.03 million (-3.1 m€,
-99.2%) and operating loss to EUR 7.8 million (-10.5 m€, -396.7%). Gaming
revenue before gaming taxes decreased 43.8% y-o-y amounting to EUR 13.3
million. Operating loss was caused by the impairment of goodwill and assets due
to freezing active operations. 

Polish flagship casino was closed on 23 September 2016 due to expiration of
location specific activity license. As at 31 December 2016 Polish operations
employed 23 people. The Group remains to be interested in continuing its
operations in the Polish market and plans to participate in the upcoming public
tenders for the licenses. The main purpose of freezing the active operations is
to minimise the everyday costs and expenses. 

Belarus

The sales revenues before gaming taxes of Belarus segment for 2016 amounted to
EUR 0.2 million (-0.6 m€, -76.7%), EBITDA to EUR -1.5 million (-1.1 m€) and
operating loss to EUR 1.5 million (-1.1 m€). The EBITDA and operating loss
include EUR 1.3 million of currency translation losses recycled from other
comprehensive income to the income statement. 

The Group has announced of its decision to exit Belarus gaming market due to
the inefficient operations caused by the macroeconomic situation and poor
prospects to increase profitability in Belarus. 



Financial position

As at 31 December 2016, the total assets of the Group amounted to EUR 152.7
million, down 5.9% or EUR 9.6 million compared to the same period a year ago. 

Current assets totalled EUR 45.0 million or 29.5% of total assets, and
non-current assets EUR 107.7 million or 70.5% of total assets. The liabilities
amounted to EUR 22.8 million and equity to EUR 129.9 million. The largest
liabilities included suppliers payables and advances (7.7 m€), tax liabilities
(6.1 m€) and payables to employees (4.9 m€). 

Investments

Within 2016, the Group’s expenditures on property, plant and equipment totalled
EUR 33.7 million (+1.1 m€, +3.4%), of which EUR 27.5 million was invested into
construction of hotel and construction and reconstruction of casinos (+5.9 m€,
+27.3%) and EUR 4.8 million into new gaming equipment (-5.5 m€, -53.4%). 

Cash flows

Group’s 2016 cash flows generated from operating activities amounted to EUR
34.5 million (-2.5 m€) and cash flows used in investing activities to EUR -25.3
million (+8.9 m€). Financing cash flows amounted to EUR -6.0 million (+2.1 m€).
Net cash flows totalled EUR 3.2 million (+8.6 m€). 

Staff

As at 31 December 2016 Group employed 3,024 people, up by 359 y-o-y mostly due
to expansion in Estonia, Latvia, Lithuania and Malta. 

Within 2016, total personnel expenses amounted to EUR 53.5 million (+9.8 m€,
+22.3%). For 2016, 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 1,286 thousand (EUR 1,006 thousand for
2015) and EUR 149 thousand (EUR 149 thousand for 2015), respectively. 



Consolidated statement of financial position

(EUR thousands)                                           31.12.2016  31.12.2015
                                                         -----------------------
ASSETS                                                                          
Current assets                                                                  
Cash and cash equivalents                                     37,933      34,710
Financial investments                                             99       1,835
Receivables and prepayments                                    4,552       5,537
Prepaid income tax                                               913         551
Inventories                                                    1,532       1,366
                                                         -----------------------
Total current assets                                          45,029      43,999
                                                                                
Non-current assets                                                              
Deferred tax assets                                              426         801
Financial investments                                          4,988       3,512
Other long-term receivables and prepayments                      776         914
Investment property                                              295         288
Property, plant and equipment                                 51,250      58,877
Intangible assets                                             49,932      53,942
                                                         -----------------------
Total non-current assets                                     107,667     118,334
                                                                                
                                                         -----------------------
TOTAL ASSETS                                                 152,696     162,333
                                                                                
                                                                                
LIABILITIES AND EQUITY                                                          
Current liabilities                                                             
Borrowings                                                         0         292
Trade and other payables                                      19,806      27,680
Income tax payable                                               292       1,058
Provisions                                                     1,329       1,842
                                                         -----------------------
Total current liabilities                                     21,427      30,872
                                                                                
Non-current liabilities                                                         
Borrowings                                                       703       8,079
Deferred tax liability                                           693         513
                                                         -----------------------
Total non-current liabilities                                  1,396       8,592
                                                                                
                                                         -----------------------
TOTAL LIABILITIES                                             22,823      39,464
                                                                                
EQUITY                                                                          
Share capital                                                 60,716      60,716
Share premium                                                    258         258
Statutory reserve capital                                      4,860       3,574
Other reserves                                                   538         329
Translation reserves                                             -26      -1,156
Retained earnings                                             57,825      51,822
                                                         -----------------------
Total equity attributable to equity holders of the           124,171     115,543
 parent                                                                         
Non-controlling interest                                       5,702       7,326
                                                         -----------------------
TOTAL EQUITY                                                 129,873     122,869
                                                                                
                                                         -----------------------
TOTAL LIABILITIES AND EQUITY                                 152,696     162,333



Consolidated statement of comprehensive income

Summary of the income statements of continued and discontinued operations is
presented on page 13 of the report. 

(EUR thousands)                              Q4 2016  Q4 2015      2016     2015
                                            ------------------------------------
                                                                                
Continuing operations                                                           
Gross gaming revenue                          47,211   38,863   175,998  142,468
Other revenue                                  5,088    2,864    15,390    9,844
Total revenue before gaming taxes             52,299   41,727   191,388  152,312
Gaming taxes                                 -10,032   -7,703   -37,497  -28,409
Net revenue                                    42267   34,024   153,891  123,903
Other income                                      61      131    18,201      342
                                            ------------------------------------
Total revenue and income                      42,328   34,155   172,092  124,245
                                                                                
Cost of materials, goods and services         -1,506     -968    -5,331   -3,473
Other operating expenses                     -17,179  -12,685   -60,311  -44,379
Staff costs                                  -13,287  -10,516   -50,667  -39,122
Depreciation, amortisation and impairment     -3,138   -2,080   -11,371   -7,591
Changes in fair value of investment                7       20         7       20
 property                                                                       
Other expenses                                   -97     -507      -525     -605
                                            ------------------------------------
Total operating expenses                     -35,200  -26,736  -128,198  -95,150
                                                                                
                                            ------------------------------------
Operating profit                               7,128    7,419    43,894   29,095
                                                                                
Interest income                                    2        6        26       31
Interest expense                                   0       -3       -41      -24
Foreign exchange gains (losses)                    2       -2        16       -6
Other finance income and costs                    -1       -4       -23       -9
                                            ------------------------------------
Total finance income and costs                     3       -3       -22       -8
                                                                                
                                            ------------------------------------
Profit before income tax                       7,131    7,416    43,872   29,087
                                                                                
Income tax expense                            -1,655     -977    -4,448   -3,714
                                            ------------------------------------
Net profit for the period from continuing      5,476    6,439    39,424   25,373
 operations                                                                     
Net profit (-loss) for the period from          -188      244    -9,618    1,712
 discontinued operations                                                        
                                                                                
                                            ------------------------------------
Net profit (-loss) for the period              5,288    6,683    29,806   27,085
Attributable to equity holders of the          5,630    6,115    29,292   25,719
 parent company                                                                 
Attributable to non-controlling interest        -342      568       514    1,366
                                                                                
Other comprehensive income                                                      
Items that may be subsequently reclassified                                     
 to profit or loss                                                              
Currency translation differences                                                
From continuing operations                      -176        0      -176       -3
From discontinuing operations                    854       46     1,306      267
                                            ------------------------------------
Total comprehensive profit for the period      5,966    6,729    30,936   27,349
Attributable to equity holders of the          6,308    6,161    30,422   25,983
 parent company                                                                 
Attributable to non-controlling interest        -342      568       514    1,366
                                                                                
                                                                                
Basic earnings (loss) per share*                 3.7      4.0      19.3     16.9
From continuing operations                       3.8      3.9      25.6     15.8
From discontinuing operations                   -0.1      0.1      -6.3      1.1
                                                                                
Diluted earnings (loss) per share*               3.7      4.0      19.3     16.9
From continuing operations                       3.8      3.9      25.6     15.8
From discontinuing operations                   -0.1      0.1      -6.3      1.1

  * euro cents



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