Key performance indicators of the Group
| 2016 | 2015 | 2014 | ||
| Revenue before gaming taxes | m€ | 205.1 | 177.2 | 157.8 |
| Gaming tax | m€ | -44.2 | -40.4 | -34.4 |
| Net revenue | m€ | 161.0 | 136.8 | 123.4 |
| Total revenue | m€ | 179.5 | 137.4 | 123.8 |
| EBITDA | m€ | 53.8 | 39.5 | 36.2 |
| EBIT | m€ | 34.6 | 31.4 | 25.8 |
| Net profit | m€ | 29.8 | 27.1 | 22.4 |
| EBITDA margin | % | 33.4 | 28.9 | 29.3 |
| Operating margin | % | 21.5 | 22.9 | 20.9 |
| Net margin | % | 18.5 | 19.8 | 18.2 |
| Assets | m€ | 152.7 | 162.3 | 126.2 |
| Equity | m€ | 129.9 | 122.9 | 109.2 |
| ROE | % | 24.4 | 23.4 | 21.4 |
| ROA | % | 18.9 | 18.8 | 18.3 |
| Current ratio | times | 2.1 | 1.4 | 3.0 |
| Casinos at end of period | # | 120 | 119 | 98 |
| Casino floor area at end of period | m2 | 39,083 | 33,969 | 32,242 |
| Betting points at the end of period | # | 31 | 34 | 0 |
| Betting points floor area at end of period | m2 | 856 | 970 | 0 |
| Employees | # | 3,024 | 2,665 | 2,515 |
| Slot machines at end of period | # | 4,123 | 4,101 | 3,470 |
| Electronic roulette terminals at the end of period | # | 106 | 122 | 96 |
| Gaming tables at end of period | # | 170 | 183 | 193 |
| Tournament poker gaming tables at the end of period | # | 64 | 65 | 46 |
Key developments of the Group in 2016:
- The Group’s consolidated sales revenues before gaming taxes for 2016 amounted to EUR 205.1 million, up 15.8% or EUR 28.0 million y‑o‑y.
- Total gaming revenues before gaming taxes accounted for 92.4% (189.5 m€) and other revenues for 7.6% (15.7 m€) of the Group’s consolidated total sales revenues for 2016. A year before the revenue split was 94.2% (166.8 m€) and 5.8% (10.3 m€), respectively.
- The Group’s consolidated EBITDA for 2016 amounted to EUR 53.8 million, a growth of 36.2% from EUR 39.5 million a year before. The Group’s consolidated operating profit increased EUR 3.2 million (10.2%) to EUR 34.6 million.
- The Group’s consolidated net profit attributable to equity holders of the parent company for 2016 totalled EUR 29.3 million compared to EUR 25.7 million a year ago.
- The presentation of gaming taxes has been changed in the current financial statements. The income statement now presents revenue before gaming taxes, then gaming taxes and thereafter net revenue.
- In the current financial statements Polish and Belarus segments have been classified as discontinued operations, for which the net loss for 2016 amounted to EUR 9.6 million (in 2015 net profit of EUR 1.7 million), consisting mainly of goodwill and assets impairment due to freezing of active operations in Poland.
- Group company Baina Investments Sp. z o.o. signed the agreement on 14 January 2016 to acquire a 20% holding in the Polish subsidiary Casino Polonia-Wrocław Sp. z o.o., increasing Group holding to 100%.
- After receiving an approval from the Estonian Competition Authority, on 16 February 2016 Group completed the acquisition of 100% shareholding in Estonian casino operator AS MC Kasiinod, which is also the 100% owner of the subsidiary OÜ Oma & Hea, which is providing casino bar services. As a result of the completion of the transaction Group owns 24 casinos in Estonia.
- The Estonian subsidiaries of Group, Olympic Casino Eesti AS and the casino operating company AS MC Kasiinod which was acquired in winter of 2016, concluded a merger agreement on 21 March 2016. The merger was finalised in May 2016 and during the course of the merger AS MC Kasiinod merged with Olympic Casino Eesti AS.
- The Slovak subsidiaries of Group, Olympic Casino Slovakia S.r.o. and Olympic F&B S.r.o., concluded a merger agreement on 22 March 2016. The merger was finalised in April 2016 and during the course of the merger Olympic F&B S.r.o. merged with Olympic Casino Slovakia S.r.o.
- On 31 March 2016 Group decided to liquidate its Dutch subsidiary Siquia Holding B.V., which does not have any business activity. The area of activity for the subsidiary was holding activities. The liquidation was finalised on 30 June 2016.
- The Latvian subsidiaries of Group, Olympic Casino Latvia SIA AS and the casino operating company SIA Garkalns which was acquired in autumn 2015, concluded a merger agreement on 20 May 2016. The merger was finalised on 23 December 2016 and during the course of the mereger SIA Garkalns merged with Olympic Casino Latvia SIA.
- On 1 June 2016 Group opened a new hotel and entertainment complex in Tallinn investing over 45 million euros in the building that accommodates the Baltic's first Hilton and the flagship casino of OEG.
- The general meeting of shareholders held on 16 June 2016 decided to pay out dividends in amount of EUR 22,768,680.90 (EUR 0.15 per share), of which EUR 0.10 per share was paid out to shareholders on 15 July 2016 and EUR 0.05 was paid out to shareholders on 14 October 2016.
- On 15 July 2016 Group company Jessy Investments B.V. entered into an agreement to divest the 100% holding in its Estonian subsidiary Kesklinna Hotelli OÜ that owns the hotel and entertainment complex building in Tallinn, where the Hilton Tallinn Park hotel and the flagship casino of OEG group, Olympic Park Casino, are based in. The buyer was East Capital group company ECB3 Tallinn OÜ. The transaction price was 48 million euros and profit 17.8 million euros. The aim of the sales transaction was to release capital that has been invested into real estate and to focus on the core business of the group – operating casino and entertainment complexes. The hotel and casino operations that are in the building were not part of the sales transaction and will continue to be owned by the Group.
- On 23 September 2016 the Group announced that it is forced to freeze active operations in Poland from 24 September 2016 due to the lack of valid location specific activity license, but remains to be interested in continuing its operations in the Polish market and plans to participate in the upcoming public tenders for the licenses. The main purpose of freezing the active operations is to minimise the everyday costs and expenses.
- On 23 September 2016 the Group announced of its decision to exit Belarus gaming market due to the inefficient operations caused by the macroeconomic situation and poor prospects to increase profitability in Belarus.
The Group’s consolidated sales revenues before gaming taxes by segments:
| ‘000€ | Q4 2016 | Q4 2015 | Change | 2016 | 2015 | Change |
| Estonia | 12,924 | 9,375 | 37.9% | 45,364 | 35,566 | 27.6% |
| Latvia | 17,922 | 15,364 | 16.7% | 66,185 | 56,015 | 18.2% |
| Lithuania | 6,956 | 6,037 | 15.2% | 25,286 | 22,016 | 14.9% |
| Poland | 35 | 5,953 | -99.4% | 13,565 | 24,037 | -43.6% |
| Slovakia | 3,866 | 4,62 | -16.3% | 16,546 | 16,347 | 1.2% |
| Belarus | 0 | 148 | -100.0% | 185 | 804 | -77.0% |
| Italy | 7,9 | 6,065 | 30.3% | 26,838 | 22,077 | 21.6% |
| Malta | 2,731 | 266 | 926.9% | 11,169 | 291 | 3,738.2% |
| Total | 52,334 | 47,828 | 9.4% | 205,138 | 177,153 | 15.8% |
Number of casinos by segment:
| 31 December 2016 | 31 December 2015 | |
| Estonia | 24 | 20 |
| Latvia | 54 | 57 |
| Lithuania | 18 | 19 |
| Poland | 0 | 1 |
| Slovakia | 8 | 7 |
| Belarus | 0 | 2 |
| Italy | 15 | 12 |
| Malta | 1 | 1 |
| Total | 120 | 119 |
Overview by markets
Estonia
The sales revenues before gaming taxes of Estonian segment for 2016 amounted to EUR 45.4 million (+9.8 m€, +27.6%), EBITDA to EUR 23.1 million (+17.1 m€, +285.3%) and operating profit to EUR 19.7 million (+15.6 m€, +382.5%). Gaming revenue before gaming taxes increased 16.5% y-o-y amounting to EUR 39.2 million. Sales revenues increased partially due to hotel sales revenues. EBITDA and operating profit increased largely due to the profit from the hotel real estate sales transaction in amount of EUR 17.8 million.
At the end of 2016, there were 24 Olympic casinos with 990 slot machines, 36 electronic roulette terminals, 24 gaming tables and 22 poker tournament tables operating in Estonia. As at 31 December 2016 Estonian operations employed 715 people.
Latvia
The sales revenues before gaming taxes of Latvian segment for 2016 amounted to EUR 66.2 million (+10.2 m€, +18.2%), EBITDA to EUR 27.8 million (+1.6 m€, +5.9%) and operating profit to EUR 24.1 million (+0.9 m€, +3.7%). Gaming revenue before gaming taxes increased 17.7% y‑o‑y amounting to EUR 60.6 million.
At the end of 2016, there were 54 Olympic casinos with 1,475 slot machines, 8 electronic roulette terminals, 24 gaming tables and 9 poker tournament tables operating in Latvia. As at 31 December 2016 Latvian operations employed 915 people.
Lithuania
The sales revenues before gaming taxes of Lithuanian segment for 2016 amounted to EUR 25.3 million (+3.3 m€, +14.8%), EBITDA to EUR 2.3 million (-1.0 m€, -30.3%) and operating profit to EUR 0.7 million (-1.4 m€, -65.6%). Gaming revenue before gaming taxes increased 15.5% y-o-y amounting to EUR 24.4 million.
At the end of Q4 2016, there were 18 Olympic casinos with 543 slot machines, 8 electronic roulette terminals, 59 gaming tables and 2 poker tournament tables and 31 betting shops operating in Lithuania. As at 31 December 2016 Lithuanian operations employed 750 people.
Slovakia
The sales revenues before gaming taxes of Slovak segment for 2016 amounted to EUR 16.5 million (+0.2 m€, +1.2%), EBITDA to EUR 1.1 million (+0.2 m€, +27.4%) and operating profit to EUR 0.04 million (+0.13 m€). Gaming revenue before gaming taxes increased 1.4% y-o-y amounting to EUR 14.7 million.
At the end of 2016, there were 8 Olympic casinos with 291 slot machines, 36 electronic roulette terminals, 44 gaming tables and 21 poker tournament tables operating in Slovakia. As at 31 December 2016 Slovak operations employed 324 people.
Italy
The sales revenues before gaming taxes of Italian segment for 2016 amounted to EUR 26.8 million (+4.8 m€, +21.6%), EBITDA to EUR 1.0 million (+0.4 m€, +58.7%) and operating profit to EUR 0.6 million (+0.4 m€, +215.5%). Gaming revenue before gaming taxes increased 21.7% y-o-y amounting to EUR 26.6 million.
At the end of 2016, there were 15 VLT slot casinos with 539 slot machines operating in Italy. As at 31 December 2016 Italian operations employed 88 people.
Malta
The sales revenues before gaming taxes of Maltese segment for 2016 amounted to EUR 11.2 million (+10.9 m€, +3,738.3%), EBITDA to EUR -0.1 million (+0.3 m€) and operating loss to EUR -1.2 million (-0.8 m€). Gaming revenue before gaming taxes increased 3752% y-o-y amounting to EUR 11.0 million.
At the end 2016, there was 1 casino with 285 slot machines, 18 electronic roulette terminals, 19 gaming tables and 10 poker tournament tables operating in Malta. As at 31 December 2016 Maltese operations employed 209 people.
Discontinued operations
Poland
The sales revenues before gaming taxes of Polish segment for 2016 amounted to EUR 13.6 million (-10.5 m€, -43.6%), EBITDA to EUR 0.03 million (-3.1 m€, -99.2%) and operating loss to EUR 7.8 million (-10.5 m€, -396.7%). Gaming revenue before gaming taxes decreased 43.8% y-o-y amounting to EUR 13.3 million. Operating loss was caused by the impairment of goodwill and assets due to freezing active operations.
Polish flagship casino was closed on 23 September 2016 due to expiration of location specific activity license. As at 31 December 2016 Polish operations employed 23 people. The Group remains to be interested in continuing its operations in the Polish market and plans to participate in the upcoming public tenders for the licenses. The main purpose of freezing the active operations is to minimise the everyday costs and expenses.
Belarus
The sales revenues before gaming taxes of Belarus segment for 2016 amounted to EUR 0.2 million (-0.6 m€, -76.7%), EBITDA to EUR -1.5 million (-1.1 m€) and operating loss to EUR 1.5 million (-1.1 m€). The EBITDA and operating loss include EUR 1.3 million of currency translation losses recycled from other comprehensive income to the income statement.
The Group has announced of its decision to exit Belarus gaming market due to the inefficient operations caused by the macroeconomic situation and poor prospects to increase profitability in Belarus.
Financial position
As at 31 December 2016, the total assets of the Group amounted to EUR 152.7 million, down 5.9% or EUR 9.6 million compared to the same period a year ago.
Current assets totalled EUR 45.0 million or 29.5% of total assets, and non-current assets EUR 107.7 million or 70.5% of total assets. The liabilities amounted to EUR 22.8 million and equity to EUR 129.9 million. The largest liabilities included suppliers payables and advances (7.7 m€), tax liabilities (6.1 m€) and payables to employees (4.9 m€).
Investments
Within 2016, the Group’s expenditures on property, plant and equipment totalled EUR 33.7 million (+1.1 m€, +3.4%), of which EUR 27.5 million was invested into construction of hotel and construction and reconstruction of casinos (+5.9 m€, +27.3%) and EUR 4.8 million into new gaming equipment (-5.5 m€, -53.4%).
Cash flows
Group’s 2016 cash flows generated from operating activities amounted to EUR 34.5 million (-2.5 m€) and cash flows used in investing activities to EUR -25.3 million (+8.9 m€). Financing cash flows amounted to EUR -6.0 million (+2.1 m€). Net cash flows totalled EUR 3.2 million (+8.6 m€).
Staff
As at 31 December 2016 Group employed 3,024 people, up by 359 y-o-y mostly due to expansion in Estonia, Latvia, Lithuania and Malta.
Within 2016, total personnel expenses amounted to EUR 53.5 million (+9.8 m€, +22.3%). For 2016, the members of the Management Board and Supervisory Board of all Group entities were paid remuneration and benefits including social security taxes in the amount of EUR 1,286 thousand (EUR 1,006 thousand for 2015) and EUR 149 thousand (EUR 149 thousand for 2015), respectively.
Consolidated statement of financial position
| (EUR thousands) | 31.12.2016 | 31.12.2015 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 37,933 | 34,710 | |
| Financial investments | 99 | 1,835 | |
| Receivables and prepayments | 4,552 | 5,537 | |
| Prepaid income tax | 913 | 551 | |
| Inventories | 1,532 | 1,366 | |
| Total current assets | 45,029 | 43,999 | |
| Non-current assets | |||
| Deferred tax assets | 426 | 801 | |
| Financial investments | 4,988 | 3,512 | |
| Other long-term receivables and prepayments | 776 | 914 | |
| Investment property | 295 | 288 | |
| Property, plant and equipment | 51,250 | 58,877 | |
| Intangible assets | 49,932 | 53,942 | |
| Total non-current assets | 107,667 | 118,334 | |
| TOTAL ASSETS | 152,696 | 162,333 | |
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Borrowings | 0 | 292 | |
| Trade and other payables | 19,806 | 27,680 | |
| Income tax payable | 292 | 1,058 | |
| Provisions | 1,329 | 1,842 | |
| Total current liabilities | 21,427 | 30,872 | |
| Non-current liabilities | |||
| Borrowings | 703 | 8,079 | |
| Deferred tax liability | 693 | 513 | |
| Total non-current liabilities | 1,396 | 8,592 | |
| TOTAL LIABILITIES | 22,823 | 39,464 | |
| EQUITY | |||
| Share capital | 60,716 | 60,716 | |
| Share premium | 258 | 258 | |
| Statutory reserve capital | 4,860 | 3,574 | |
| Other reserves | 538 | 329 | |
| Translation reserves | -26 | -1,156 | |
| Retained earnings | 57,825 | 51,822 | |
| Total equity attributable to equity holders of the parent | 124,171 | 115,543 | |
| Non-controlling interest | 5,702 | 7,326 | |
| TOTAL EQUITY | 129,873 | 122,869 | |
| TOTAL LIABILITIES AND EQUITY | 152,696 | 162,333 |
Consolidated statement of comprehensive income
Summary of the income statements of continued and discontinued operations is presented on page 13 of the report.
| (EUR thousands) | Q4 2016 | Q4 2015 | 2016 | 2015 | |
| Continuing operations | |||||
| Gross gaming revenue | 47,211 | 38,863 | 175,998 | 142,468 | |
| Other revenue | 5,088 | 2,864 | 15,390 | 9,844 | |
| Total revenue before gaming taxes | 52,299 | 41,727 | 191,388 | 152,312 | |
| Gaming taxes | -10,032 | -7,703 | -37,497 | -28,409 | |
| Net revenue | 42267 | 34,024 | 153,891 | 123,903 | |
| Other income | 61 | 131 | 18,201 | 342 | |
| Total revenue and income | 42,328 | 34,155 | 172,092 | 124,245 | |
| Cost of materials, goods and services | -1,506 | -968 | -5,331 | -3,473 | |
| Other operating expenses | -17,179 | -12,685 | -60,311 | -44,379 | |
| Staff costs | -13,287 | -10,516 | -50,667 | -39,122 | |
| Depreciation, amortisation and impairment | -3,138 | -2,080 | -11,371 | -7,591 | |
| Changes in fair value of investment property | 7 | 20 | 7 | 20 | |
| Other expenses | -97 | -507 | -525 | -605 | |
| Total operating expenses | -35,200 | -26,736 | -128,198 | -95,150 | |
| Operating profit | 7,128 | 7,419 | 43,894 | 29,095 | |
| Interest income | 2 | 6 | 26 | 31 | |
| Interest expense | 0 | -3 | -41 | -24 | |
| Foreign exchange gains (losses) | 2 | -2 | 16 | -6 | |
| Other finance income and costs | -1 | -4 | -23 | -9 | |
| Total finance income and costs | 3 | -3 | -22 | -8 | |
| Profit before income tax | 7,131 | 7,416 | 43,872 | 29,087 | |
| Income tax expense | -1,655 | -977 | -4,448 | -3,714 | |
| Net profit for the period from continuing operations | 5,476 | 6,439 | 39,424 | 25,373 | |
| Net profit (-loss) for the period from discontinued operations | -188 | 244 | -9,618 | 1,712 | |
| Net profit (-loss) for the period | 5,288 | 6,683 | 29,806 | 27,085 | |
| Attributable to equity holders of the parent company | 5,630 | 6,115 | 29,292 | 25,719 | |
| Attributable to non-controlling interest | -342 | 568 | 514 | 1,366 | |
| Other comprehensive income | |||||
| Items that may be subsequently reclassified to profit or loss | |||||
| Currency translation differences | |||||
| From continuing operations | -176 | 0 | -176 | -3 | |
| From discontinuing operations | 854 | 46 | 1,306 | 267 | |
| Total comprehensive profit for the period | 5,966 | 6,729 | 30,936 | 27,349 | |
| Attributable to equity holders of the parent company | 6,308 | 6,161 | 30,422 | 25,983 | |
| Attributable to non-controlling interest | -342 | 568 | 514 | 1,366 | |
| Basic earnings (loss) per share* | 3.7 | 4.0 | 19.3 | 16.9 | |
| From continuing operations | 3.8 | 3.9 | 25.6 | 15.8 | |
| From discontinuing operations | -0.1 | 0.1 | -6.3 | 1.1 | |
| Diluted earnings (loss) per share* | 3.7 | 4.0 | 19.3 | 16.9 | |
| From continuing operations | 3.8 | 3.9 | 25.6 | 15.8 | |
| From discontinuing operations | -0.1 | 0.1 | -6.3 | 1.1 |
* euro cents
Madis Jääger
CEO
Olympic Entertainment Group AS
Tel + 372 667 1250
E-mail madis.jaager@oc.eu
http://www.olympic-casino.com
