Tipp24 issues profit warning
Lottery operator reduces EBIT forecast by 5m after 44m jackpot is won in August
London-based lottery operator Tipp24 has issued a profit warning after one of its customers landed a 44m jackpot prize.
A secondary lottery held by MyLotto24, a subsidiary in which Tipp24 is a minority shareholder, was won in August and the prize pay-out has prompted Tipp24 to revise its EBIT forecast for the 2014 fiscal year.
Although the company confirmed that around 74% of the pay-out would be covered by hedging instruments established by MyLotto24 to cover such jackpots, Tipp24 would be hit by a one-off charge of approximately 5m.
“Assuming a normal course of business in the remaining fiscal year, Tipp24 is lowering its current EBIT forecast of 15-25m to 10-20m,” a company statement read.
Revenue forecasts have also been adjusted down to 90-100m from 135-145m based on the same assumption.
The profit warning comes less than a month after its last EBIT revision and follows two consecutive quarters of poor performance from the operator which saw its profits collapse by more than 90% in Q2.
CEO Dr Hans Cornehl attributed the performance to “higher than anticipated” operating costs after the firm more than doubled its headcount, with Q2 revenue also falling 10% to 68.2m.
Andreas Keil resigned as Tipp24’s CFO in June after just over a year with the company and is due to be replaced later this month.