Gaming VC Annual Report 2006
2006 2005 % Change
New registrations 25,957 7,308 255%
New depositing customers 11,845 3,355 353%
Daily average revenue o6,051 o1,779 240%
Total revenue o2,208,489 o327,362 575%
Poker has demonstrated solid growth during the ˘nancial year and has compensated for the slight fall in
Casino revenues. Similarly to the Casino, the marketing efforts on Poker will concentrate on online
measurable channels to deliver the growth in our Poker offering.
Group Financial Performance
The total gross wagers placed were C1.6 billion (2005: C1.6 billion) and net revenues were
C40.6 million (2005: C40.4 million). The gross pro˘t for the ˘nancial year ended 31 December 2006
was C29.4 million (2005: C30.8 million). The small decrease in gross margin has arisen due to both the
impact of the one high stake roulette player discussed above, and the increased percentage of lower
margin poker business in the total wagers placed. The primary operating cost element for the Group are
the turnkey online casino services provided by Boss Media SA and its subsidiaries.
In the ˘nancial year there were no signi˘cant one-off jackpot winners on the Group’s slot machine games
with associated ‘‘progressive’’ jackpots, although 3 players won over C0.1 million each in the year
(2005: none). The total of the available jackpots at the end of December 2006 was C2.2 million
(2005: C1.7 million) with the largest available individual jackpot being C1.3 million
(2005: C0.8 million). Upon this jackpot becoming payable it will be a charge against the relevant
period’s gross pro˘t. The last major jackpot win was for C0.5 million in November 2004.
The Group operating pro˘t for the ˘nancial year ended 31 December 2006 before exceptional items and
share option charge was C13.5 million (2005: C13.9 million) after the deduction of distribution and
administrative expenses. The Group incurred C41.6 million of exceptional charges in the year
(2005: nil), these consist of C8.3 million of accelerated amortisation charges on the Groups software
licences and a C33.3 million write down of goodwill after considering the potential impact of the
continuing German Laender’s regulatory position against the online gaming industry in the foreseeable
future. This resulted in a Group operating loss after exceptional items of C28.9 million (2005: pro˘t of
Net operating expenses before goodwill impairment in the year of C25.1 million (2005: C17.4 million)
are analysed as distribution, administration and amortisation costs as detailed below.
Distribution costs of C7.1 million (2005: C7.4 million) reŁect the third party marketing costs incurred by
the Group to recruit active members to the Casino.
The major items within the administrative expenses (excluding amortisation) incurred during the
˘nancial year are detailed below:
Employment costs 3,434 2,378
Travel 886 1,121
Legal, accounting and tax 1,682 1,941
Re-organisation costs ^ 545
All other costs 775 1,207
Total administrative expenses 6,777 7,192
Employment costs which are analysed in note 2 to the ˘nancial statements, include C0.4 million
settlement for contractual obligations to Mr S Barlow and Mr S Miller on their standing down as
Executive Directors of the Group.
Of the total C44.4 million amortisation and impairment charge (2005: C2.8 million), detailed in note 6
to the ˘nancial statements, C41.6 million was an exceptional charge in 2006. C8.3 million reŁects
accelerated amortisation of the Group’s software licenses following a review that identi˘ed a reduced
bene˘cial life of the licenses due to both technical developments and price pressure on royalties in the
market place; C33.3 million reŁects an ongoing concern regarding the continued uncertainty in the
German regulatory position.