Zeal Network profits treble following PoC boost
Reduced tax burden sees operator post H1 EBIT of 18.5m but revenues are hit by 48m jackpot pay out
Zeal Network this morning said profits trebled for the first six months of 2015, with the company benefitting considerably from the introduction of the UK Point of Consumption tax.
The lottery operator, which is based in London but predominantly sells into mainland Europe, said the switch in tax at the end of 2014 produced a “considerable decrease in operational expenses” and helped the firm report EBIT for the half-year ended 30 June of 18.5m.
The rise in profits came despite sharp a drop in revenues from 68m to 25.7m, although this fall was the result of one customer having scooped a 47.9m single ticket jackpot during the period.
However, the firm said it had been able to recoup much of the jackpot cost through a hedging structure which returned 38.3m to the operator.
The firm recently switched its measure for top line guidance from revenues to ‘total operating performance’ – which incorporates other income such as hedging payments – as a result of these types of jackpot wins.
And total operating performance during H1 amounted to 65.5m, which represented an 8% year-on-year fall.
The results comes just weeks before the firm welcomes a new chief executive with Dr Helmut Becker due to take the reins from incumbent Dr Hans Cornehl on 1 September.
“We have delivered strong earnings growth in the first half of the year and are on track to achieving our full-year targets,” Becker said. “The company is well-positioned for further success while we continue to execute on our growth initiatives,” he added.
The firm said its full-year guidance for operating performance was 140m with EBIT expected to come in at around 40m.