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Annual Report & Accounts 2009 - Report of the Finance Director
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11 Review of CasinoClub The high margin CasinoClub business has been shrinking due to the combination of a maturing customer base, challenges of the economic crisis, severe restrictions on our ability to advertise and hence grow the business, increasing competition, and limitations in software used. The economic crisis hit hard in the second half of 2008, seeing a 17% decrease in clean EBITDA compared with the first half of 2008. Clean EBITDA have continued to decrease, albeit at a significantly slower rate (H2- 2009 v H2-2008 18%; H2-2009 v H1-2009 6%) d000's 2009 2008 2007 2006 NGR 29,626 36,475 40,639 38,365 ------- ------- ------- ------- Gross profits 23,885 29,036 31,625 30,199 ------- ------- ------- ------- Contribution 20,640 25,841 26,943 22,639 ------- ------- ------- ------- Direct costs (2,241) (1,985) (2,098) (1,920) ------- ------- ------- ------- Clean Ebitda 18,399 23,856 24,845 20,719 ------- ------- ------- ------- Q1 5,073 6,800 5,692 H1 Q2 4,434 6,251 6,659 10,973 Q3 4,396 5,870 6,607 H2 Q4 4,496 4,935 5,887 9,746 ------- ------- ------- ------- 18,399 23,856 24,845 20,719 ------- ------- ------- ------- The average daily revenues for 2009 were c81k per day - the same as for Q4-2008, albeit lower than the nine months before the economic crisis which saw average daily revenues of c106k per day. CasinoClub has, under difficult trading conditions, been able to increase its contribution margin at 70% of NGR but on lower levels of revenue. The cost base for CasinoClub increased to c2.24 million from c1.98 million reflecting a full year of costs of the Tel Aviv office. Review of Betaland Betaland moved into profit during 2009 generating c20.8 million in NGR (2008: c13.4 million) with c9.1 million from sports (2008: c6.3 million) and c11.7 million from gaming (2008: c7.1 million). Sports hold averaged 17.9% (2008: 13.4%). Gaming VC has revenue sharing arrangements with introducers of business. The consequent contribution amounted to c5.0 million in 2009 (2008: c2.2 million) representing a contribution margin of 24% (2008: 16%). Operating expenses are largely fixed and consist principally of staff, technology and office costs. Expenses fell to c3.27 million from c3.38 million, giving rise to a divisional clean EBITDA of c1.74 million (2008: loss, c1.23 million), representing an operating margin of 8.4%. Review of Winzingo Despite a significant increase in NGR (2009: c1.33 million, 2008: c0.25 million), this business has struggled to break even. It generated a contribution margin of c507k but incurred c729k of costs, resulting in a loss of c222k (2008: c61K).