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May 16, 2018 6:13 pm | FILED UNDER: business

Fortuna Entertainment Group Reports Net Profits Up 923%

By ČTK

Prague, May 16 (CTK) – Lottery company Fortuna Entertainment Group saw its net profit rise by 923.6 percent to EUR14m (about Kc358m) in the first quarter of this year, according to preliminary unaudited consolidated results made available to CTK by Fortuna today.

 

Fortuna’s operating profit grew almost seven times, and the amounts staked increased as well. Figures were improved thanks to the growth of on-line odds bedding as well as by acquisitions abroad, the company said.

 

Operating profit EBITDA rose by 666.5 percent to EUR22.7m.

 

Total amounts staked grew by 163.7 percent to EUR797m. In the Czech Republic and Slovakia they saw a two-digit growth, in Poland a three-digit growth.

 

Total gross win increased by 157.6 percent to EUR110m.

 

Analysts stopped providing their estimates of Fortuna’s results after Fortuna shares were withdrawn from the Prague Stock Exchange (BCPP) at the end of April.

 

The company’s revenues in Q1 grew by 196.7 percent to EUR77.1m.

 

“The value of revenues was influenced by higher amounts staked in all countries and the expansion of on-line casino in the Czech Republic,” the company said.

 

The annual improvement was also influenced by acquisitions of companies after Q1 2017. Last year, Fortuna bought Ireland’s Hattrick Sports Group, thus becoming a leader on the Romanian market, and later it entered the markets of Croatia and Spain. It also took over Romanian companies Bet Active Concept, Bet Zone, Public Slots and Slot Arena from majority owner Fortbet Holdings Limited.

 

“The incredibly high growth at all levels of the income statement is the result of the strong growth of on-line odds betting, investments in new platform and acquisitions of Hattrick Sports Group companies and Fortbet assets in Romania, which were acquired in Q1 2017,” Komercni banka analyst Miroslav Frayer said.

 

Fortuna today also confirmed its outlook for EBITDA rise of 25-35 percent this year.

 

“The organic growth will be based mainly on odds betting and on-line games as well as on the new acquisitions in Romania and Croatia. The growth should also be boosted by the soccer World Cup in Russia,” the company said.

 

Besides the rise of EBITDA, Fortuna expects its amounts staked to grow up to EUR3bn this year. Last year, it accepted bets worth EUR2bn.

 

Fortuna was established as a Czech company in 1990. A year later, sister betting office Terno was opened in Slovakia. In 2005, both companies were acquired by Penta. Under Penta, Fortuna’s operation was modernised, its brand unified and the company entered the Polish market.

 

In 2009, all the companies were incorporated in Dutch entity Fortuna.

 

Earlier this year, Penta raised its stake in Fortuna to 95.8 percent, which enabled it to squeeze out other shareholders and withdraw Fortuna shares from the Prague bourse.

 

According to Frayer, Fortuna’s results have confirmed the success of the company’s strategy.

 

“Its shares are currently traded on the unregulated Free Market of the Prague bourse, and will be traded there until the company’s shares from the Warsaw stock exchange are withdrawn,” Frayer noted.

 

Following the withdrawal from the BCPP’s main market at the end of April, daily trading volumes have been reaching less than Kc2,000 on same days. After today’s release of Q1 results, the volume rose markedly. By 10:30, Fortuna shares worth almost Kc1m exchanged hands, their price rising by 4 percent to Kc213 since the open.

 

“What is important from the viewpoint of shares is the price at which Fortbet will squeeze out the minority shareholders after it acquired more than 95 percent in the company. In our opinion, the reported business results would justify valuation markedly above the current market price,” J&T Banka analyst Milan Lavicka said.

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