FIRST GFED, NOW L&G

28 September 2007

GCTV Games goes after Leisure and Gaming plc


The Vancouver and Dublin based online gambling software developer GCTV Games is apparently going after Leisure and Gaming plc, having acquired the non-US business of Gambling Federation in March of this year (see previous InfoPowa report).

In its six month interim results published this week, L&G confirmed that it has received an indicative offer from CGTV Games Limited, which it described as "a global provider of casino software and slots located in Dublin, Ireland."

The notification cautioned that the approach may or may not lead to a cash offer being made by CGTV to acquire the entire issued share capital of L&G and is subject to a number of pre-conditions, including satisfactory due diligence, all of which are waivable at CGTV’s discretion.

In recognition of the time and cost implications of completing due diligence and seeking to satisfy its pre-conditions, L&G has agreed to grant CGTV a period of exclusivity up to 31 October 2007, during which it is prohibited from soliciting other offers for the company or its assets.

While there can be no certainty that an offer will be made, even if the pre-conditions are satisfied or waived, the offer would be in cash at not less than 13 pence per ordinary share, being the price at which the company carried out its most recent placing.

The rest of the interim report made for disappointing reading, mainly due to poor results during May and June.

Leisure and Gaming's CEO, Henry Birch, said: “Last season was not great for the Italian industry as a whole and on top of Milan winning the Champions League, there were a number of weekends where many of the favourites won in the league. When you take combination bets, the margins are usually very good but a bad run of results will hit hard.”

Birch went on to say that LNG is an attractive option CGTV because of its distribution network throughout Italy, where it has around 800 Betshop franchises. “Italy is one of CGTV’s biggest markets and it wants to dominate the market. Our network gives them a fantastic opportunity to roll out their gaming products in one of their key markets as well as benefiting from the regular sports betting revenue that we have,” he said.

The L&G report encompassed results from chief subsidiary Betshop Group (Europe) Limited, Grouse Entertainment NV, its Acropolis-branded online casino business, and central costs for L&G.

Highlights noted were:

* Top-line growth in the equivalent 6 month period from 2006 to 2007:

* 75 percent growth in turnover to Euro 65.4 million on a like-for-like basis

* 44 percent growth in net win to Euro 13.9 million on a like-for-like basis

However, gross profit and EBIT were severely impacted by adverse sporting results in May and June, notably Milan’s victory in the Champion’s League Final:

Euro 1.2 million gross profit compared to Euro 1.7 million in 2006
Euro 1.1 million EBIT loss in Betshop compared to Euro 100 000 loss in 2006

Trading over the summer period from 1 July to 17 September saw turnover of Euro 14.0 million, compared to Euro 15.7 million for the equivalent period in 2006. Net win was down to Euro 3.6 million, compared to Euro 4.2 million for the equivalent period in 2006, and gross profit declined to of Euro 600 000, compared to Euro 800 000 for the equivalent period in 2006.

Online Casino News courtesy of InfoPowa