Gambling Industry Acquisitions and Financial News — Weekly Round-up for May 18, 2018

Codere Reports Weak First Quarter

Net profit down at Spanish land and online gambling group

The Spanish online and land gambling group Codere has posted a dismal set of Q1-2018 results, blaming adverse foreign exchange rates and a drop in LatAm business for its misfortunes.

Highlights of the quarter included:

  • Net profit down 70.3 percent y-o-y at just Euro 800,000 (Q1-2017: Euro 2.7 million);
  • Operating revenue down 5.4 percent at Euro 363.3 million;
  • Operating profit down 22.2 percent at Euro 27.9 million;
  • Capex lower by almost 50 percent at Euro 24.2 million, with just Euro 7.8 million devoted to growth projects;
  • Earnings down 12.6 percent at Euro 56 million;
  • Adjusted EBITDA down 0.4 percent at Euro 67.9 million on margin of 17.7 percent;
  • One-off exceptional charges of Euro 11.9 million due to management and efficiency changes;
  • Total liquidity of Euro 177.8 million, od which Euro 9.4 millon is in cash;
  • Resignation from the board of directors of Joseph Zappala.

Group chief executive Vicente Di Loreto, who took up post in January this year, reported:

“Codere’s focus remains on the profitability of the company, its growth and, therefore, on the creation of value for all its shareholders. As a large company, we are exposed to the fluctuations of currencies in the markets where we operate, but that does not affect our capacity for organic growth and development.

“Proof of this is the good results obtained in European markets. In addition, it should be noted that in these first months of work we have begun an organisational and cultural transformation that will lead us to accelerate the company’s value creation potential.

“This first quarter is only the beginning of this new stage and we are already demonstrating operational improvements and results above expectations.”

Italian Sports Betting Market Eases In April

Turnover and revenue both down

Italian market statistics for April were published Friday, showcasing a weaker performance in sports betting and the following highlights:

  • Total sports betting turnover down almost 5 percent y-o-y at Euro 955 million;
  • Betting revenue down 2 percent at Euro 146.5 million;
  • Online betting revenue up 3.7 percent at Euro 58.7 million (year-to-date online betting revenues up 47.6 percent at Euro 221 million);
  • Online casino revenue up 28.6 percent at Euro 58.1 million (year-to-date total rose 39.7 percent to Euro 233.3 million);
  • The online casino segment was headed by PokerStars with an 8.67 market share, chased by Lottomatica (8.65 percent and Sisal (8.5 percent);
  • Retail betting revenue down 8.1 percent at Euro 87.8 million (year-to-date up 45.6 percent at Euro 310.5 million);
  • Virtual betting turnover at Euro 139.3 million, generating revenue of Euro 20.5 million;
  • Horse racing turnover of Euro 35.3 million with revenue of Euro 8.4 million;
  • Online poker tournament fees were flat at Euro 6.6 million with PokerStars leading the market on a 62.9 percent market share, trailed by Sisal on 6.8 percent and Snai on 6 percent;
  • Online poker cash game revenue down 5 percent at Euro 5.3 million, with PokerStars again dominant on 39.6 percent market share, followed by Lottomatica (7.7 percent) and Sisal (6.7 percent);
  • Online bingo turnover of Euro 9.9 million, generating revenue of Euro 2.4 million with Tombola Interactive dominant on a market sharte of 42 percent, folloiwed by Bwin (13.6 percent)
  • The official Italian black list of unauthorised operators now lists 7,100 domains.

Portuguese Online Gambling Market Improves In Q1-2018

Government coffers benefit by Euro 11.2 million

The Portuguese online gambling market showed improvement year-on-year in Q1-2018, although it lagged behind the Q4-2017 results.

Highlights of the performance published this week by regulator Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) included:

  • Revenue up Euro 2.5 million to Euro 33.8 million;
  • Government reaped a tax harvest of Euro 11.2 million from the seven licensed operators;
  • Online sports betting revenue was essentially flat year-over-year at Euro 17.4 million, with football by far the most popular for punters;
  • Online casino and poker revenue up 18 percent to Euro 16.4 million, with slots the big earner, contributing almost 60 percent of revenues, whilst poker delivered 18.6 percent;
  • New player accounts opened in the quarter numbered 89,300, over 22,000 less than the corresponding period last year, taking total registrations to 890,000 with a 22.4 percent self-exclusion rate.

 

Jackpotjoy Moving In The Right Direction

Delivers solid first quarter report

Jackpotjoy plc has delivered a good performance in its latest first quarter results reporting a 13 percent rise in consolidated gaming revenue year-on-year driven by 7 percent revenue growth in the Jackpotjoy segment and an impressive 35 percent rise in revenue from Vera&John.

By segment, Jackpotjoy currently contributes 74 percent of group revenue of which Starspins and the Botemania brands are responsible for 24 percent. Vera&John delivers 26 percent of group revenue.

A decrease in adjusted EBITDA was attributed to marketing costs and the application of POC tax to gross gaming revenue in the UK in the last quarter of 2017.

The company is heading in the right direction in terms of adjusted net debt which was reported at GBP 379.9 million down from GBP 387.3 million in December 2017. The reduction of net debt remains a key strategic target for the Group.

Neil Goulden, Executive Chairman, commented:

“The first quarter has seen a continuation in the good underlying momentum we saw in 2017.

“I am confident that we will continue to drive good growth and attractive returns for our shareholders over the remainder of FY18 and beyond.”

Playtech Investors Concerned At Exec Pay

CEO’s 78 percent rise triggers a push back from some investors

Playtech’s agm today (Wednesday) may be a lively affair following reports that some investors – among them major stakeholders – are disturbed at the size of executive pay rises in an environment where company growth has slowed and a warning issued on further declines in 2018.

The Financial Times and other publications reported earlier this week that concerns centre on CEO Mor Weizer’s 78 percent annual increase to almost GBP 4.2 million with proxy advisers Institutional Shareholder Services leading in calls for explanations from company chairman Alan Jackson and his board committee on remuneration.

The concerned investors have claimed that the level of bonuses awarded this year is not justified by Playtech’s performance, and have expressed concerns regarding corporate governance.

Shareholder revolts over executive pay have become something of a trend in UK public companies in recent years.

Investors Give Playtech Directors Food For Thought (Update)

Resolution on executive pay comes under fire

Media reports earlier this week that the Playtech agm today (Wednesday) could see fireworks over investor concerns regarding executive remuneration (see previous InfoPowa report) have been followed by a statement from the company on this clearly contentious issue and how stakeholders voted.

The statement details the results on the resolution on remuneration:

  • Total votes cast: 231,043,589
  • For: 98,840,469
  • Against: 137,203,120
  • Votes withheld: 1,773,241.

The re-election of pay committee boss John Jackson was opposed by 43 percent of shareholders, and company chairman Alan Jackson’s re-election was resisted by 35.2 percent.

Playtech’s Wednesday afternoon statement noted that the Annual Report on Remuneration did not pass, commenting:

“Ahead of the AGM, Playtech conducted an in-depth shareholder engagement programme in order to better understand shareholders’ objections to specific parts of the remuneration policy.

“In what is a highly active and dynamic sector, Playtech’s Remuneration Committee has sought to balance the parameters of a publicly listed company’s remuneration policy with the need to retain and incentivise its leadership team.

“The Company has considered the reasons for the results of today’s meeting, reflected in the voting results regarding the remuneration report and the re-election of John Jackson, the Chairman of the Remuneration Committee and Alan Jackson, Chairman of the Board, and will take these into account in the implementation of its remuneration policy going forwards.

“Playtech intends to review the composition of its Remuneration Committee and discussions are also underway with potential candidates to join the Board as a non-executive director.”

Alan Jackson, Group Chairman, said: “We have listened to our shareholders and we understand their concerns. We are committed to working with shareholders to address the issues raised going forward”.

The Isle of Man-based company’s shares have lost nearly a fifth of their value in a year.

Good Q1-2018 For Fortuna Entertainment

Stakes, revenue and EBITDA all headed in the right direction

Eastern Europe-facing gambling group Fortuna Entertainment has posted a positive Q1-2018 report, highlighting:

  • Revenues up 157.6 percent y-o-y at Euro 110 million;
  • Player stakes rose 163.7 percent to almost Euro 800 million;
  • EBITDA up an impressive 665.6 percent at Euro 22.8 million;
  • Adjusted EBITDA up 724 percent at Euro 222.8 million;
  • Total net profit up 923.6 percent at Euro 14 million.

Per Widerström, chief executive and chairman of the board of Fortuna, reported to shareholders:

“The strong reported financial results for the first quarter of 2018 reflect our growth strategy with investments into operational excellence, new platforms and regional expansion. Thanks to that, we recorded a substantial growth in all reported key indicators, driven both by strong organic growth as well as M&A.”

Management confirmed it is on track to meet earlier guidance for the remainder of the year.