Unibet first half falls on France exit
CEO Henrik Tjärnström describes financials as "strong underlying results", but gross winnings revenue for group falls 11% compared to H1 2010.
The CEO of Unibet has attempted to put a positive spin on a less than impressive set of first half results with gross winnings revenue for the group falling 11% compared to H1 2010 due largely to its withdrawal from the French market and comparables to last year’s World Cup.
Announcing Q2 and first half numbers Henrik Tjärnström described the financials as “strong underlying results”, however gross winnings revenue amounted to £34.3m (£39.2m in 2010) for the second quarter of this year, a fall of around 13% and £71.8 (£81m) for the first half of 2011.
“I am pleased to report another quarter of strong underlying results. Excluding the additional effect of the World Cup in 2010 and adjusting both for France and for the positive currency benefits in 2011, Unibet’s underlying growth in gross winnings revenue was 16% year-on-year. This was achieved despite sportsbook margins that were lower than the long-term average,” Tjärnström said this morning.
In the second quarter of last year 22% of Unibet’s overall revenue was generated from France, however despite being awarded a licence by regulator ARJEL it has never chosen to operate there since the new regulatory regime was switched on last June.
Unibet’s announcement in May that it was to enter the French licensing process led to 25% of its share price being wiped out the following week, with investors worried about only a marginal contribution from a key market in 2010 due to high tax rates and the absence of Unibet’s core casino product. In August, Tjarnstrom was then forced to defend the prospect of zero revenues from France in the third-quarter of 2010 due to this decision.
Profit from operations for the second quarter of this amounted to £7.3m (8.4m in 2010), while profit from operations for the first half of this year were £18.4m compared to £19m in the same period in 2010. Profit after tax for Q2 2011 amounted to £6.7m (£9.1m in 2010), while profit after tax for the first half of this year amounted to £16.7m (£18.6m in 2010). It also saw lost a quarter of its active customers for Q2 going from 402,091 in Q2 last year to 301,038 this year.
Reported revenues in the Nordics, however, grew by 13% even though the comparables include the positive effect of the World Cup. “Our continued focus on operational efficiency has resulted in the delivery of a good profit performance,” Tjärnström said. “Trading in July was ahead of the same month last year although 2010 included the later stages of the World Cup and despite a sportsbook margin in July 2011 that is a little lower than the long-term average.”
“An excellent casino performance recorded another all time high. However, poker has remained a difficult market with little sign yet of any significant impact from the closure of some US-facing competitors,” he added.
The chief executive also said that following last year’s break down in merger talks with Sportingbet, that it had “assessed a number of possible acquisition targets” including going as far as spending £600,000 on due diligence on an unnamed company. However, due to its “findings”, Tjärnström added that it decided not to proceed.
“We continue to evaluate potential consolidation or growth opportunities while keeping a strong focus on the core business,” he said.
Unibet today also launched sports betting and casino in the Italian market on unibet.it, while its board of directors will initiate a share buy-back plan from 11 August on OMX Nordic Exchange in order to potentially use the additional resources for a future acquisition, according to website Swedish Wire.