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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Business name

Olympic Entertainment Group AS

Registration number

10592898

Address

Pronksi 19, Tallinn 10124

Telephone

+372 6 671 250

Fax

+372 6 671 270

E-mail

info@oc.eu

Website

www.olympic-casino.com

Core activity

Provision of gaming services

Beginning of financial year

1 January 2009

End of reporting period

30 June 2009

General Manager

Andri Avila

Auditor

PriceWaterhouseCoopers AS

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Contents General Manager’s report .................................................................................................................................. 4 Consolidated interim financial statements ....................................................................................................... 13 Consolidated interim statement of financial position ...................................................................................... 13 Consolidated interim statement of comprehensive income ............................................................................. 15 Consolidated interim statement of cash flows ................................................................................................. 17 Consolidated interim statement of changes in equity ...................................................................................... 19 Notes to the consolidated interim financial statements .................................................................................... 20 Note 1. Summary of significant accounting policies.............................................................................. 20 Note 2. Discontinued operations ............................................................................................................ 21 Note 3. Investment property and property, plant and equipment ........................................................... 23 Note 4. Intangible assets ........................................................................................................................ 23 Note 5. Finance lease liabilities.............................................................................................................. 24 Note 6. Interest-bearing loan .................................................................................................................. 24 Note 7. Share capital .............................................................................................................................. 25 Note 8. Segment reporting ..................................................................................................................... 25 Note 8. Transactions with related parties ............................................................................................... 29 Management Board`s confirmation of the consolidated interim financial statements for the 1st half and 2nd quarter of 2009 ................................................................................................................................................ 30

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

General Manager’s report Olympic Entertainment Group AS (the “Company” or, together with the subsidiaries, the “Group”) is the leading gaming services provider in the Baltic countries (Estonia, Latvia and Lithuania) and gaming facilities operator in Belarus, Poland, Romania and Slovakia. Group`s subsidiaries in Ukraine are in liquidation. Olympic Entertainment Group AS is the Group’s ultimate holding company, which deals with the Group’s strategic management and financing. The Group’s casinos are operated by local subsidiaries: Olympic Casino Eesti AS in Estonia, Olympic Casino Latvia SIA in Latvia, Olympic Casino Group Baltija UAB in Lithuania, Olympic Casino Bel IP in Belarus, Casino Polonia-Wroclaw Sp. Z O.O. in Poland, Olympic Casino Bucharest S.R.L. in Romania and Olympic Entertainment Slovakia S.r.o in Slovakia. In Estonia, Latvia, Lithuania, Romania and Slovakia the Group’s non-core activities, such as the operation of a hotel in Tallinn and the operation of casino bars, have been separated from casino operations and transferred to specialized entities. Most of the Group’s casino properties operate under the Olympic Casino name. In Estonia, Latvia and Lithuania, Olympic Casinos operate in conformity with the international quality management standard ISO 9001 (in Estonia since 1998, in Latvia and Lithuania since 2004).

Companies belonging to the Group:

Olympic Casino Eesti AS Nordic Gaming AS Kungla Investeeringu AS Fortuna Travel OÜ Kasiino.ee OÜ Jokker-Pokker OÜ Casinova OÜ Kesklinna Hotelli OÜ Olympic Casino Latvia SIA Ahti SIA Olympic Casino Group Baltija UAB Mecom Grupp UAB Olympic Casino Bel IP Olympic Casino Ukraine TOV Alea Private Company Eldorado Leisure Company Ukraine Leisure Company Silber Investments Sp. Z o.o. Baina Investments Sp. Z o.o. Casino-Polonia Wroclaw Sp.Z.o.o. Olympic Casino Bucharest S.r.l. Muntenia Food Beverage S.r.l Olympic Exchange S.r.l Olympic Entertainment Slovakia Olympic F & B S.r.o.

Domicile Estonia Estonia Estonia Estonia Estonia Estonia Estonia Estonia Latvia Latvia Lithuania Lithuania Belarus Ukraine Ukraine Ukraine Ukraine Poland Poland Poland Romania Romania Romania Slovakia Slovakia

Ownership interest 30 June 2009 31 Dec 2008 95% 95% 100% 100% 100% 100% 95% 95% 100% 100% 0% 95% 0% 100% 97,5% 97,5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Core activity Gaming services Holding activities Hotel services, catering Casino tourism Internet solutions Liquidated Liquidated Hotel services Gaming services Bar services Gaming services Bar services Gaming services Gaming services Gaming services Gaming services Gaming services Holding activities Holding activities Gaming services Gaming services Bar services Currency exchange Gaming services Bar services

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

The Group’s structure at 30 June 2009

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The main objective of the Group in 2009 is continually to adapt to rapidly changing market situation, raising the market share and improving the efficiency in core activity. In order to comply, Group management will make decisions regarding the changes in operating activities based on cash flow indicators. Financial highlights, Q2 2009: Revenue: Incl from continuing operations EBITDA from day-to-day operations *: EBIT from day-to-day operations *: Extraordinary expenses, incl Non-capitalized investment expenses: Structure optimization and closure of casinos: Impairments related to liquidation of Ukrainian subsidiaries: Financial income and expenses net: Net loss before income tax **:

475.9 433.4 44.1 -46.1

million kroons million kroons million kroons million kroons

-4.8 million kroons -15.9 million kroons -187.1 million kroons -3.2 million kroons -257.1 million kroons

â‚Ź1 = 15.6466 kroons *Ordinary business activity is referred to as business activity excluding investment activities, structure optimization, casinos closures, and financial income and expenses. **Net loss before minority interest.

In the second quarter of 2009 the overall degradation of the economic situation and resultant decreasing trend of the gaming markets continued. The gaming markets contracted in the first half-year of 2009 compared to the first half-year of 2008 by 56% in Estonia, by 40% in Latvia and by 38% in Lithuania. In spite of negative developments on markets, in the second quarter of the year the level of consolidated revenues has stabilised after significant decline during the first two months of this year. Increase in revenues in continuing operations (or in operations without Ukraine segment) was 0.7% in the second quarter compared to the first quarter of this year. The operating expenses of the Group before depreciation and impairment expenses decreased continually, declining in the second quarter compared to the first quarter of this year by 8.6% or 41.9 million kroons (2.7 million euros). EBITDA of the Group increased in the second quarter up to 23.4 million kroons (1.5 million euros). EBITDA before costs related to investment activities, structure optimization and casinos closures increased from the 16.8 million kroons (1.1 million euros) earned in the first quarter up to 44.1 million kroons (2.8 million euros) earned in the second quarter of this year. In the second quarter, the consolidated financial results of the Group were substantially influenced by developments on Ukrainian gaming market. Due to the law suspending all casino operations activities in Ukraine, the casinos of OEG Ukrainian subsidiaries were closed for a total of 27 days within May and June 2009 and approximately 18.0 million kroons (1.2 million euros) of revenues were not received. OEG has launched a liquidation process of Ukrainian operations due to the fact, that Ukrainian parliament has banned casino operations in Ukraine for an undefined period and has cancelled all licences issued to casino enterprises. According to estimations, liquidation of Ukrainian subsidiaries will cause impairment losses in amount of 187.1 million kroons (12.0 million euros). OEG is planning to demand compensation of investments from the Ukrainian state basing on investments propitiation and mutual protection agreement signed between Estonian and Ukrainian governments and has already started this process.


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009 Financial highlights, 6 months 2009: Revenue: Incl from continuing operations EBITDA from day-to-day operations *: EBIT from day-to-day operations *:

965.6 863.9 60.9 -128.0

Extraordinary expenses, incl Non-capitalized investment expenses: Structure optimization and closure of casinos: Impairments related to liquidation of Ukrainian subsidiaries:

-11.5 million kroons -25.5 million kroons -187.1 million kroons

million kroons million kroons million kroons million kroons

-2.1 million kroons

Financial income and expenses net: Net loss before income tax **:

-354.2 million kroons

â‚Ź1 = 15.6466 kroons The Group ended the first half-year with sales revenue of 961.2 million kroons (61.4 million euros). Total consolidated revenue (sales revenue and other income) surged to 965.6 million kroons (61.7 million euros), 30.8% less than the first first half-year of 2008 total consolidated revenue of 1,395.3 million kroons (89.2 million euros). In the first half-year of 2009 93% consolidated revenue was formed by gaming operations and 7% of other income. In the first half-year of 2008 gaming revenues accounted for 94% and other revenues for 6% of consolidated revenue. External revenue by segments Estonia Latvia Lithuania Ukraine Belarus Poland Romania Slovakia Total

6 months 2009 187,846 188,299 158,315 101,772 20,658 225,995 29,992 52,760 965,637

Change -53.1% -42.9% -30.1% -32.9% 60.1% -9.5% 46.6% 1136.7% -30.8%

Proportion 19.5% 19.5% 16.4% 10.5% 2.1% 23.4% 3.1% 5.5% 100.0%

6 months 2008 400,345 329,504 226,414 151,703 12,901 249,679 20,461 4,266 1,395,273

Proportion 28.7% 23.6% 16.2% 10.9% 0.9% 17.9% 1.5% 0.3% 100.0%

â‚Ź1 = 15.6466 kroons At the end of the first half-year 2009, the Group had 86 casinos with a total area of 30,376 square metres. At the end of the first half-year 2008, the number of casinos was 130 and their total area was 36,617 square metres. During the first half-year, 1 new casino was opened in Lithuania and 1 new casino in Slovakia, in total 49 casinos were closed: 13 in Estonia, 7 in Latvia, 2 in Lithuania, 3 in Romania and 24 in Ukraine. Number of casinos by segments Estonia Latvia Lithuania Ukraine Belarus Poland Romania Slovakia Total

30 June 2009 23 26 15 0 5 9 6 2 86

31 December 2008 36 33 16 24 5 9 9 1 133

30 June 2008 35 36 16 23 4 8 7 1 130 7


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Already during 2008 the Group implemented an extensive efficiency program in order to adapt the Group operations to changing market situation. The Group closed 10 casinos that had negative cash flows and reduced the number of jobs by 288 or approximately 7%. In the first half-year of 2009 the Group continued its activities for increasing the efficiency: the remuneration payable to employees was reduced by 20% and number of employees was reduced by 616 positions or 16%, during the current year 27 casinos with negative cash flows were closed. The number of employees reduced within the last year and first quarter of this year totals 904 positions or approximately 21%. In the light of shrinking demand and with the aim of implementing a new concept of casino lounges the Group has reduced the number of slot machines in most of its casinos during the first half-year of 2009. As a result of this, the fixed costs related to the gaming tax decreased significantly. In addition, the Group shortened the opening time of several casinos, before, all casinos operated by Olympic Casino were opened 24 hours a day. The positive influence on the cost structure of the Group since the second quarter of 2009 appeared as agreements of reducing the rental prices on average 30% have been concluded. The expected cost impact until the end of the year is 58.2 million kroons (3.7 million euros). The total cost effect of optimisation activities implemented within the last year and first quarter of the current year is expected to be 497.3 million kroons (31.8 million euros), constituting 16.7% of the year 2008 total operating expenses. Consolidated expenses before depreciation and impairment expenses for 6 months of 2009 decreased in total by 16.4% or 184.8 million kroons (11.8 million euros) in comparison to consolidated expenses of 6 months of 2008, including decrease in the second quarter by 23.0% or 135.0 million kroons (8.6 million euros) in comparison to consolidated expenses of the same period last year. In comparison with the first half-year of 2008 the strongest cost deacline came from personnel expenses –25.4% or 107.2 million kroons (6.9 million euros) and marketing expenses -35.2% or 37.2 million kroons (2.4 million euros). Expenses declined in Estonian segment by 21.4%, in Latvian segment by 31.8% and Lithuanian segment by 12.8% in comparison with the first half-year of 2008. The largest expense item before depreciation and impairment expenses was personnel expenses including social charges which amounted to 314.5 million kroons (20.1 million euros), followed by gaming tax expenses of 216.0 million kroons (13.8 million euros), rental expenses of 147.3 million kroons (9.4 million euros) and marketing expenses of 68.4 million kroons (4.4 million euros). Consolidated expenses of the first half-year of the 2009 include non-capitalizable expenses related to opening of new casinos in total 11.4 million kroons (0.7 million euros), expenses related to closure of casinos and reducing the number of personnel in total 25.5 million kroons (1.6 million euros) and impairment costs in amount of 187.1 million kroons (12.0 million euros) connected with liquidation of Ukrainian subsidiaries. Expenses related to closure of casinos in 2009 in amount of 84.2 million kroons (5.4 million euros) are reflected in the results of the last quarter of 2008. Consolidated operating loss for the first half-year of 2009 amounted to 352.0 million kroons (22.5 million euros). The operating profit for the first half-year of 2008 totalled 99.4 million kroons (6.4 million euros). Consolidated net loss for the first half-year of 2009 totalled 352.9 million kroons (22.6 million euros), in the first half-year of 2008 the net profit amounted 97.4 million kroons (6.2 million euros). The management of Group has revised its estimations regarding the intra Group loan contracts in preparing consolidated interim financial results of the first half-year of 2009, as the intra Group loans will not be settled in the forseeable future. Consequently, the exchange differences will be recognised directly in the separate component of equity.

Estonian segment In the half-year quarter of 2009, the segment’s external revenue amounted to 187.8 million kroons (12.0 million euros) including gaming revenue of 169.4 million kroons (10.8 million euros). In first half-year 2009, the segment’s external revenue declined by 53.1% compared to the same period of last year. In first half-year 2009 the gaming market in Estonia shrank by 56%. In first half-year of 2009 the segment’s operating loss reached 66.1 million kroons (4.2 million euros). In first half-year of 2008 the segment earned operating profit in amount of 77.5 million kroons (5.0 million euros). 8


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009 During the half-year, 13 casinos were closed in Estonia, occurring expenses related to closures amounted to 12.0 million kroons (0.8 million euros). At the end of half-year, there were 23 Olympic Casinos in Estonia with a total of 674 slot machines and 19 game tables.

Latvian segment In the first half-year of 2009, the segment’s external revenue amounted to 188.3 million kroons (12.0 million euros) including gaming revenue of 172.4 million kroons (11.0 million euros) and other revenues of 15.9 million kroons (1.0 million euros). In the first half-year of 2009, the segment’s external revenue declined by 42.9% compared to the same period last year. The Latvian gaming market declined with the same magnitude. The Latvian segment’s operating loss amounted to 27.0 million kroons (1.7 million euros). In first half-year of 2008 the segment earned operating profit in amount of 13.8 million kroons (0.9 million euros). During the half-year, 7 casinos were closed in Latvia, occurring expenses related to closures amounted to 11.9 million kroons (0.8 million euros). At the end of June, there were 26 Olympic Casinos in Latvia with a total of 740 slot machines and 25 game tables.

Lithuanian segment In the first half-year of 2009, the segment’s external revenue amounted to 158.3 million kroons (10.1 million euros) including gaming revenue of 149.0 million kroons (9.5 million euros) and other revenues of 9.3 million kroons (0.6 million euros). In the first half-year of 2009, the segment’s external revenue declined by 30.1%, the Lithuanian gaming market shrank by 38%. In the first half-year the segments`s operating loss reached 2.6 million kroons (0.2 million euros). The operating profit of the last year`s the same periood was 41.8 million kroons (2.7 million euros). Within the half-year 1 casino was opened and 2 casinos were closed in Lithuania. At the end of June 2009, the Lithuanian segment was operating 15 casinos with a total of 523 slot machines and 61 game tables.

Ukrainian segment Before launching a liquidation process of Ukrainian subsidiaries, the segment was operating 22 casinos with a total of 997 slot machines and 24 game tables. In the first half-year of 2009, the segment’s external revenue amounted to 101.8 million kroons (6.5 million euros), in the first half-year of 2008, the segment’s external revenue amounted to 151.7 million kroons (9.7 million euros). Due to the banning of casino activities, the casinos of OEG Ukrainian subsidiaries were closed for a total of 27 days within May and June 2009 and approximately 18.0 million kroons (1.2 million euros) of revenues were not received. Liquidation of Ukrainian subsidiaries will cause partial sale and partial write-off of assets located in Ukraine, which estimatedly bring impairment losses in amount of approximately 187.1 million kroons (12.0 million euros). In connection with the circumstances mentioned above Ukrainian segment has earned an operating loss in amount of 200.3 million kroons (12.8 million euros) in the 2nd quarter of 2009 and 210.5 million kroons (13.5 million euros) in total for the first half of 2009. Ebitda of Ukrainian subsidiaries for the first half of 2009 was positive and totalled 0.7 million kroons (0.04 million euros).

Belarusian segment At the end of half-year, Olympic Casino Bel IP was operating 5 casinos with a total of 261 slot machines in Minsk. The Belarusian segment’s sales revenue has grown 60.1% compared to the first half-year of 2008 and amounted to 20.7 million kroons (1.3 million euros). The Belarusian segment’s sales revenue has grown in roubles 1.5 times compared to the first half-year of 2008. The operating loss of Belarusian segment was 5.6 million kroons (0.4 million euros). In the first half-year of 2008, the Belarusian segment’s external revenues amounted to 12.9 million kroons (0.8 million euros) and operating loss was 9.3 million kroons (0.6 million euros). 9


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009 Polish segment In the first half-year of 2009, the segment’s external revenue amounted to 226.0 million kroons (14.4 million euros), accounting for largest part or 23.4% of the Group’s consolidated revenue. During the first half-year of 2009, segment’s revenue has declined by 9.5% compared to the first half-year of 2008, but in polish zlotys the segment’s sales revenue has grown by 17.2%. The operating loss of Polish segment was 8.5 million kroons (0.5 million euros). The segment’s operating result was influenced by expenses related to the removal and renovation of casinos in total amount of 1.8 million kroons (0.1 million euros) and by increase in investment related depreciation cost in amount of 9.0 million kroons (0.6 million euros). At the end of half-year, Group was operating 9 casinos in Poland with 415 slots and 67 gaming tables.

Romanian segment The Romanian segment finished the first half-year of 2009 with a revenue of 30.0 million kroons (1.9 million euros) and operating loss 29.7 million kroons (1.9 million euros). Expenses related to the preparations of opening of the flagship casino in Bucharest opened on 15th May in this year influenced the operating result by 6.3 million kroons (0.4 million euros). In the same period of the last year, the Romanian segment’s external revenues amounted to 20.5 million kroons (0.8 million euros) and operating loss was 22.6 million kroons (1.4 million euros). Within the first half-year, 3 casinos were closed and a flagship casino which was temporarily closed for renovation was reopened in Romania, at the end of June Group operated 8 casinos in Romania with 17 game tables and 329 slots.

Slovakian segment The first casino in Bratislava, the capital of Slovakia, was opened in June 2008. In January 2009 a second Olympic casino was opened in Trnava. The Slovakian segment finished the first half-year of 2009 with a revenue of 52.7 million kroons (3.3 million euros) and operating loss 1.9 million kroons (0.1 million euros). In the first half-year of 2008, the Slovakian segment’s external revenues amounted to 4.3 million kroons (0.3 million euros) and operating loss was 7.1 million kroons (0.5 million euros).

Balance sheet At 30 June 2009, the consolidated balance sheet of Group totalled 1,978.0 million kroons (126.4 million euros). At 31 December 2008, the consolidated balance sheet of Group amounted to 2,403.6 million kroons (153.6 million euros). Within the first half-year of 2009, the balance sheet volume declined by 17.7%. Current assets accounted for 425.9 million kroons (27.2 million euros) or 21.5% of total assets and noncurrent assets for 1,552.1 million kroons (99.2 million euros) or 78.5% of total assets. Intangible assets accounted for 460.4 million kroons (29.4 million euros) or 29.7% of non-current assets. At 30 June 2009, Group´s consolidated liabilities amounted to 510.4 million kroons (32.6 million euros) and consolidated equity amounted to 1,467.6 million kroons (93.8 million euros). The largest part of liabilities were loans in amount of 311.8 million kroons (19.9 million euros), payables to employees of 61.6 million kroons (3.9 million euros), tax commitments of 57.9 million kroons (3.7 million euros).

Investment In the first half-year of 2009, the Group’s expenditures on property, plant and equipment totalled 61.1 million kroons (3.9 million euros) including investment in gaming equipment of 16.2 million kroons (1.0 million euros), renovation of casinos in amount of 25.1 million kroons (1.6 million euros), and acquisition of other items of property, plant and equipment in amount of 5.1 million kroons (0.3 million euros), prepayments for tangible assets amounted to 14.7 million kroons (0.9 million euros). 10


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009 Cash flows Group’s operating cash flows during the first half-year of 2009 were 27.0 million kroons (1.7 million euros), cash outflows from investing activities were 120.2 million kroons (7.7 million euros), cash flows from financing activities were 33.7 million kroons (2.2 million euros). Net cash outflows amounted to 59.5 million kroons (3.8 million euros).

People At 30 June 2009, the Group employed 3,308 people (31 December 2008: 3,924): 553 in Estonia, 498 in Latvia, 708 in Lithuania, 619 in Ukraine, 98 in Belarus, 502 in Poland, 216 in Romania and 114 in Slovakia. Employee remuneration expenses including relevant social charges amounted to 314.5 million kroons (20.1 million euros), in first half-year of 2008 the relevant figure was 421.7 million kroons (27.0 million euros). Olympic Entertainment Group AS shares Olympic Entertainment Group AS is listed on main list of Tallinn Stock Exchange from 23rd of October 2006, the enterprise has issued 151.0 million ordinary shares with nominal value of 10 kroons. Starting from 26th of September 2007, Olympic Entertainment Group AS shares are traded on Warsaw Stock Exchange.

ISIN code Short name of the security Market Nominal value Number of securities issued Number of listed securities Listing date

EE3100084021 OEG1T BALTIC MAIN LIST 10.00 EEK 151 000 000 151 000 000 23.10.2006

Movements in Olympic Entertainment Group AS’ share price (in kroons) and traded volume (number of securities) in the first-half year of 2009:

€1 = 15.6466 kroons

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009 Shareholder`s structure At 30 June 2009, the largest shareholders were: HansaAssets OÜ Hendaya Invest OÜ Central Securities Depository of Lithuania Nordea Bank Finland Plc/non-resident legal entities Swedbank AB clients Firebird Avrora Fund Ltd ING Luxembourg S.A. State Street Bank and Trust Omnibus account SEB Pank AS kauplemine The Northen Trust Company / RBS as trustee of Jupiter Emerging European Opprotunities Fund

54.38% 22.87% 3.06% 3.01% 1.39% 1.32% 1.25% 1.04% 0.74% 0.74%

Management and Supervisory Board There are four members in Supervisory Board of Olympic Entertainment Group AS, the chairman of the Supervisory Board is Armin Karu, members of the board are Jaan Korpusov, Liina Linsi and Peep Vain. The Management Board has one member – Andri Avila. The Management Board is completely independent in matters concerning the daily management of the Company and acts in the best interests of all shareholders, ensuring the sustainable development of the Company in accordance with set objectives and adopted strategies and the implementation and execution of appropriate internal control and risk management procedures. Information concerning the education and career of the memebers of the Management and Supervisory Board has been published on the home page of the Group www.olympic-casino.com. The Group’s key financials:

Revenue (kroons, millions) Incl from continuing operations EBITDA(kroons, millions) Operating profit/loss (kroons, millions) Net profit/loss (kroons, millions) EBITDA margin Operating margin Net margin Equity ratio Number of casinos at end of period Total area of casinos at end of period (in square metres) Number of slots at end of period Number of game tables at end of period

6 months 2009

6 months 2008

Change

965.6 863.9 23.9 -352.0 -352.9 2.5% -36.5% -36.6% 74.2%

1,395.3 1,243.6 269.1 99.4 97.4 19.3% 7.1% 7.0% 84.9%

-30.8% -30.5% -91.1%

86

130

-44

30,376

36,617

-6,241

3,037 209

4,961 213

-1,924 -4

Underlying formulas o EBITDA = earnings before financial expenses, taxes, depreciation, amortisation and impairment losses o Operating profit = profit before financial expenses and taxes o Net profit = net profit for the period before minority interest o EBITDA margin = EBITDA / revenue o Operating margin = operating profit / revenue o Net margin = net profit / revenue o Equity ratio = equity / total assets €1 = 15.6466 kroons 12


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim financial statements Consolidated interim statement of financial position AS S ETS (In thousands of Estonian kroons) Current assets Cash and cash equivalents Trade receivables Other receivables and prepayments Prepaid income tax Inventories Fixed assets for selling Total current assets Non-current assets Deferred tax assets Other financial investments Other long-term receivables Investment property Property, plant and equipment Intangible assets Total non-current assets TOTAL AS S ETS LIABILITIES AND EQUITY (In thousands of Estonian kroons) LIABILITIES Current liabilities Interest-bearing loans and borrowings Customer advances Trade payables Other payables Income tax liability Other tax liabilities Other accrued payables Provisions Total current liabilities Non-current liabilities Deferred tax liability Interest-bearing loans and borrowings Total non-current liabilities Total liabilities EQUITY Share capital Share premium Statutory capital reserve Translation reserves Retained earnings Total equity attributable to equity holders M inority interest Total equity TOTAL LIABILITIES AND EQUITY

Note

3 3 4

30 June 2009 31 December 2008 255,688 6,062 76,863 20,994 24,450 41,886 425,943

315,919 6,507 86,174 20,464 29,576 0 458,640

17,324 61,306 10,225 44,030 958,808 460,392 1,552,085 1,978,028

16,847 15,930 45,292 45,330 1,313,076 508,459 1,944,934 2,403,574

30 June 2009 31 December 2008

5;6

39,560 12,591 29,299 8,798 1,517 56,420 68,049 11,140 227,374

82,802 16,041 70,101 9,273 1,249 87,156 73,879 12,797 353,298

10,831 272,214 283,045 510,419

10,924 194,968 205,892 559,190

1,510,000 227,273 37,759 11,577 -383,664 1,402,945 64,664 1,467,609 1,978,028

1,510,000 227,273 37,759 35,407 -31,989 1,778,450 65,934 1,844,384 2,403,574

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of financial position (continued) ASSETS (In thousands of euro) Current assets Cash and cash equivalents Trade receivables Other receivables and prepayments Prepaid income tax Inventories Fixed assets for selling Total current assets Non-current assets Deferred tax assets Other financial investments Other long-term receivables Investment property Property, plant and equipment Intangible assets Total non-current assets TOTAL ASSETS LIABILITIES AND EQUITY (In thousands of euro) LIABILITIES Current liabilities Interest-bearing loans and borrowings Customer advances Trade payables Other payables Income tax liability Other tax liabilities Other accrued payables Provisions Total current liabilities Non-current liabilities Deferred tax liability Interest-bearing loans and borrowings Total non-current liabilities Total liabilities EQUITY Share capital Share premium Statutory capital reserve Translation reserves Retained earnings Total equity attributable to equity holders of Minority interest Total equity TOTAL LIABILITIES AND EQUITY

Note

3 3 4

30 June 2009 16,341 387 4,913 1,342 1,563 2,677 27,223

20,191 416 5,508 1,308 1,890 0 29,312

1,107 3,918 654 2,814 61,279 29,424 99,196 126,419

1,077 1,018 2,895 2,897 83,921 32,496 124,304 153,616

30 June 2009

5;6

31 December 2008

31 December 2008

2,528 805 1,873 562 97 3,606 4,349 712 14,532

5,292 1,025 4,480 593 80 5,570 4,722 818 22,580

692 17,397 18,089 32,621

698 12,461 13,159 35,739

96,507 14,525 2,413 740 -24,520 89,665 4,133 93,798 126,419

96,507 14,525 2,413 2,263 -2,044 113,664 4,214 117,878 153,616

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Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of comprehensive income Q2 2009

Q2 2008

6M 2009

6M 2008

431,105 2,300 433,405

617,989 2,999 620,988

859,761 4,104 863,865

1,237,826 5,743 1,243,569

-12,785 -245,583 -135,248 -81,769 -11,563 -486,948 -53,543

-14,357 -304,540 -189,400 -75,314 -4,185 -587,796 33,192

-24,623 -505,908 -287,505 -164,700 -22,622 -1,005,358 -141,493

-28,420 -574,785 -381,333 -145,131 -8,242 -1,137,911 105,658

2,456 -5,417 12 -24 -2,973

2,758 -2,780 9,675 0 9,653

5,326 -10,828 3,709 -74 -1,867

6,191 -3,092 6,251 0 9,350

-56,516 1,576

42,845 -13,023

-143,360 1,207

115,008 -15,321

-54,940

29,822

-142,153

99,686

-200,555

5,686

-210,792

-2,244

PROFIT (LOSS) FOR THE PERIOD

-255,495

35,508

-352,945

97,442

Other comprehensive income (loss) for the period Translation reserve including continuing operations including discontinued operations Other comprehensive income (loss) for the period Total comprehensive income (loss) for the period

16,032 -1,130 14,902 -240,593

-5,901 23,122 17,221 52,729

-34,040 10,210 -23,830 -376,775

-7,732 24,623 16,891 114,333

-261

-166

-1,270

5,984

-54,679 -200,555 -255,495

29,988 5,686 35,508

-140,883 -210,792 -352,945

93,702 -2,244 97,442

-261

-166

-1,270

5,984

-38,647 -201,685 -240,593

24,087 28,808 52,729

-174,923 -200,582 -376,775

85,970 22,379 114,333

Continuing operations Basic earnings per share (kroons) Diluted earnings per share (kroons)

-0.36 -0.36

0.20 0.20

-0.94 -0.94

0.62 0.62

Discontinued operations Basic earnings per share (kroons) Diluted earnings per share (kroons)

-1.33 -1.33

0.04 0.04

-1.40 -1.40

-0.01 -0.01

(In thousands of Estonian kroons) Continuing operations

Note

Sales revenue Other income Total revenue Cost of materials, goods and services used Other operating expenses Labour costs Depreciation, amortisation and impairment Other expenses Total expenses Operating profit (loss)

3;4

Interest income Interest expense Foreign exchange gain (losses) Other financial income and expenses Net financing income and expenses Profit (loss) before tax Income tax expense PROFIT (LOSS) FROM CONTINUING OPERATIONS PROFIT (LOSS) FROM DISCONTINUED OPERATIONS

Profit (loss) for the period attributable to Minority interest Equity holders of the parent including continuing operations including discontinued operations Total comprehensive income (loss) attributable to Minority interest Equity holders of the parent including continuing operations including discontinued operations

2

15


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of comprehensive income (continued) Q2 2009

Q2 2008

6M 2009

6M 2008

27 553 147 27 700

39 497 192 39 688

54 949 262 55 211

79 112 367 79 479

-817 -15 696 -8 644 -5 226 -739 -31 122 -3 422

-918 -19 464 -12 105 -4 813 -267 -37 567 2 121

-1 574 -32 333 -18 375 -10 526 -1 446 -64 254 -9 043

-1 816 -36 735 -24 372 -9 276 -527 -72 726 6 753

157 -346 1 -2 -190

176 -178 618 0 617

340 -692 238 -5 -119

396 -198 399 0 597

-3 612 101

2 738 -832

-9 162 77

7 350 -979

-3 511

1 906

-9 085

6 371

-12 818

363

-13 472

-143

PROFIT (LOSS) FOR THE PERIOD

-16 329

2 269

-22 557

6 228

Other comprehensive income (loss) for the period Translation reserve including continuing operations including discontinued operations Other comprehensive income (loss) for the period Total comprehensive income (loss) for the period

1 025 -73 952 -15 377

-377 1 478 1 101 3 370

-2 176 653 -1 523 -24 080

-494 1 574 1 080 7 307

-17

-11

-81

382

-3 494 -12 818 -16 329

1 917 363 2 269

-9 004 -13 472 -22 557

5 989 -143 6 228

-17

-11

-81

382

-2 470 -12 890 -15 377

1 539 1 841 3 370

-11 180 -12 820 -24 080

5 494 1 430 7 307

Continuing operations Basic earnings per share (euros) Diluted earnings per share (euros)

0,02 0,02

0,01 0,01

-0,06 -0,06

0,04 0,04

Discontinued operations Basic earnings per share (euros) Diluted earnings per share (euros)

-0,08 -0,08

0,00 0,00

-0,09 -0,09

0,00 0,00

(In thousands of euro) Continuing operations

Note

Sales revenue Other income Total revenue Cost of materials, goods and services used Other operating expenses Labour costs Depreciation, amortisation and impairment Other expenses Total expenses Operating profit (loss)

3;4

Interest income Interest expense Foreign exchange gain (losses) Other financial income and expenses Net financing income and expenses Profit (loss) before tax Income tax expense PROFIT (LOSS) FROM CONTINUING OPERATIONS PROFIT (LOSS) FROM DISCONTINUED OPERATIONS

Profit (loss) for the period attributable to Minority interest Equity holders of the parent including continuing operations including discontinued operations Total comprehensive income (loss) attributable to Minority interest Equity holders of the parent including continuing operations including discontinued operations

2

16


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of cash flows Note

6M 2009

6M 2008

-352,945

97,442

3;4

375,179 8,200 775 2,123 30,037 5,126 -19,830 -14,459 -6,847 27,359

169,386 4,668 0 -13,504 -64,184 -7,895 -106,556 -2,284 -25,999 51,074

3;4

-86,077 3,684 524 -45,316 6,600 -120,585

-271,712 14,537 0 0 4,228 -252,947

6 6 5 7

55,545 -19,558 -2,261 0 33,726 -59,500

125,173 0 -2,329 -75,500 47,344 -154,528

Increase in cash and cash equivalents Cash and cash equivalents at beginning of period Effect of exchange rate fluctuations

-59,500 315,919 -731

-154,528 501,800 3,779

Cash and cash equivalents at end of period

255,688

351,051

(In thousands of Estonian kroons) Cash flows from operating activities Net profit for the period Adjustments for Depreciation and amortisation Loss on disposal of property, tangibles, intangibles Loss on disposal of investment property Other net financing items Change in receivables and prepayments related to operating Change in inventories Change in payables and advances related to operating activity Interest paid Corporate income tax paid Net cash from operating activities Cash flows from investing activities Acquisition of property, tangibles, intangibles Proceeds from sale of non-current assets Proceeds from sale of investment property Acquisition of other long-term financial investments Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from loans received Repayment of loans received Payment of finance lease principal Dividends paid Net cash used in financing activities NET CASH FLOWS

17


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of cash flows (continued) Note

6M 2009

6M 2008

-22,557

6,228

3;4

23,978 524 50 136 1,920 328 -1,268 -924 -438 1,749

10,826 298 0 -863 -4,102 -505 -6,810 -146 -1,662 3,264

3;4

-5,501 235 33 -2,896 422 -7,707

-17,366 929 0 0 270 -16,166

6 6 5 7

3,550 -1,250 -145 0 2,155 -3,803

8,000 0 -149 -4,825 3,026 -9,876

Increase in cash and cash equivalents Cash and cash equivalents at beginning of Effect of exchange rate fluctuations

-3,803 20,191 -47

-9,877 32,071 242

Cash and cash equivalents at end of period

16,341

22,436

(In thousands of euros) Cash flows from operating activities Net profit for the period Adjustments for Depreciation and amortisation Loss on disposal of property, tangibles, intangibles Loss on disposal of investment property Other net financing items Change in receivables and prepayments related to operating Change in inventories Change in payables and advances related to operating activity Interest paid Corporate income tax paid Net cash from operating activities Cash flows from investing activities Acquisition of property, tangibles, intangibles Proceeds from sale of non-current assets Proceeds from sale of investment property Acquisition of other long-term financial investments Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from loans received Repayment of loans received Payment of finance lease principal Dividends paid Net cash used in financing activities NET CASH FLOWS

18


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of changes in equity

(In thousands of Estonian kroons) At 31 December 2007 Total comprehensive income for the period Transfer to capital reserve Dividend distribution At 30 June 2008

Share capital 1,510,000 0 0 0 1,510,000

At 31 December 2008 Total comprehensive income for the period At 30 June 2008

1,510,000 0 1,510,000

Equity attributable to equity holders of the parent Statutory capital Translation Share premium reserve reserve 227,273 19,444 -1,344 0 0 16,891 0 18,315 0 0 0 0 227,273 37,759 15,547

227,273 0 227,273

37,759 0 37,759

35,407 -23,830 11,577

Retained earnings 518,394 91,458 -18,315 -75,500 516,037

Total Minority interest 2,273,767 61,321 108,349 5,984 0 0 -75,500 0 2,306,616 67,305

Total 2,335,088 114,333 0 -75,500 2,373,921

-31,989 -351,675 -383,664

1,778,450 -375,505 1,402,945

65,934 -1,270 64,664

1,844,384 -376,775 1,467,609

Total Minority interest 145,320 3,919 6,925 382 0 0 -4,824 0 147,420 4,302

Total 149,239 7,307 0 -4,824 151,721

113,664 -23,999 89,665

117,878 -24,080 93,798

Consolidated interim statement of changes in equity

(In thousands of euro) At 31 December 2007 Total comprehensive income for the period Transfer to capital reserve Dividend distribution At 30 June 2008

Share capital 96,507 0 0 0 96,507

At 31 December 2008 Total comprehensive income for the period At 30 June 2008

96,507 0 96,507

Equity attributable to equity holders of the parent Statutory capital Translation Retained Share premium reserve reserve earnings 14,525 1,243 -86 33,131 0 0 1,080 5,845 0 1,171 0 -1,171 0 0 0 -4,824 14,525 2,413 994 32,981

14,525 0 14,525

2,413 0 2,413

2,263 -1,523 740

-2,044 -22,476 -24,520

4,214 -81 4,133

19


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Notes to the consolidated interim financial statements Note 1. Summary of significant accounting policies Olympic Entertainment Group AS (the “Company”) is a company registered in Estonia on 15 November 1999. The condensed consolidated interim financial statements of the Company as at and for the three months ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the “Group”). The complete audited consolidated financial statements of the Group as at and for the year ended 31 December 2008 are available upon request from the Company’s registered office at Pronksi 19, Tallinn and at the company’s website at www.olympic-casino.com. Statement of compliance These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2008. These condensed consolidated interim financial statements were approved by the management board on 11 August 2009. Basis of preparation The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2008. The Company’s functional and presentation currency is the Estonian kroon (EEK). In these financial statements and notes to the financial statements, all figures are presented both in thousands of Estonian kroons and in thousands of euro (€), rounded to the nearest thousand. The data has been translated from Estonian kroons to euro using the Eesti Pank (Bank of Estonia) exchange rate of 15.6466 Estonian kroons to 1 euro. Use of estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In consisting these financial statements, the management of Group has revised its estimations regarding the intra Group loan contracts in preparing consolidated interim financial results of the first quarter of 2009, as the intra Group loans will not be settled in the forseeable future. Consequently, the exchange differences will be recognised directly in the separate component of equity. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those which applied to the consolidated financial statements as at and for the year ended 31 December 2008, except estimations regarding the intra Group loan contracts. Changes in the presentation of information Revised IAS 1 presentation of Financial Statements came into force as of 1 January 2009 replaced the term Consolidated balance sheet with the term Consolidated statement of financial position. Revised IAS 1 requires information in financial statements to be aggregated on the basis of shared characteristics and introduced a statement of comprehensive income. The comprehensive income combines income statement and all non owner changes in equity. The report on changes in equity does not recognize statement of comprehensive income elements as separate changes, instead on row Comprehensive income for period should presented. IFRS 8 Operating Segments came into force as of 1 January 2009, introducing the management approach and requiring segment disclosure based on the components of the entity that management monitors in making decisions. Reportable operating segments are identified on the basis of how the internally generated financial information is used by the Group management in allocating the resources and assessing the performance of the operating segments. Renewed IFRS 8 does not change Group`s segment reporting principles used until 31 December 2008. 20


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Note 2. Discontinued operations Due to “Ukrainian gaming activities suspension� law, which was issued by Ukrainian parliament on May 15th and is in force since the moment of publication on June 25th, all casino operations in Ukraine are impossible for an unspecified period. All casino operations in Ukraine have been banned and all licences issued to casino enterprises have been cancelled. In connection with circumstances mentioned above OEG initiated the liquidation process of subsidiaries Olympic Casino Ukraine TOV, Ukraine Leisure Company and Eldorado Leisure Company. OEG is planning to demand investments compensation from the Ukrainian state basing on investments propitiation and mutual protection agreement signed between Estonian and Ukrainian governments.

Consolidated interim statement of income from discontinued operations (In thousands of Estonian kroons) Discontinued operations Sales revenue Other income Total revenue Cost of materials, goods and services used Other operating expenses Labour costs Depreciation and amortisation Ipairment of tangible assets Ipairment of intangible assets Other expenses Total expenses Operating profit (loss) Interest income Foreign exchange gain (losses) Net financing income and expenses Profit (loss) before tax Income tax expense PROFIT (LOSS) FROM DISCONTINUED OPERATIONS

Q2 2009

Q2 2008

6M 2009

6M 2008

42,464 41 42,505

79,258 4 79,262

101,414 357 101,771

151,673 30 151,703

-1,459 -33,258 -10,544 -13,537 -149,202 -32,769 -2,031 -242,800 -200,295

-4,488 -48,689 -21,815 -13,387 0 0 0 -88,379 -9,117

-3,417 -68,871 -26,973 -29,283 -149,202 -32,769 -1,792 -312,307 -210,536

-7,610 -83,854 -40,333 -24,255 0 0 -1,930 -157,982 -6,279

36 -296 -260

2 14,920 14,922

39 -295 -256

19 4,135 4,154

-200,555

5,805

-210,792

-2,125

0

-119

0

-119

-200,555

5,686

-210,792

-2,244

21


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Consolidated interim statement of income from discontinued operations (continued) (In thousands of euro) Discontinued operations Sales revenue Other income Total revenue Cost of materials, goods and services used Other operating expenses Labour costs Depreciation and amortisation Ipairment of tangible assets Ipairment of intangible assets Other expenses Total expenses Operating profit (loss) Interest income Foreign exchange gain (losses) Net financing income and expenses Profit (loss) before tax Income tax expense PROFIT (LOSS) FROM DISCONTINUED OPERATIONS

Q2 2009

Q2 2008

6M 2009

6M 2008

2,714 3 2,717

5,066 0 5,066

6,482 22 6,504

9,694 2 9,696

-93 -2,126 -674 -865 -9,536 -2,094 -130 -15,518 -12,801

-287 -3,112 -1,394 -856 0 0 0 -5,649 -583

-217 -4,402 -1,724 -1,872 -9,536 -2,094 -115 -19,960 -13,456

-487 -5,359 -2,578 -1,550 0 0 -123 -10,097 -401

2 -19 -17

0 954 954

2 -18 -16

1 264 265

-12,818

371

-13,472

-136

0

-8

0

-8

-12,818

363

-13,472

-144

Consolidated interim statement of cash flows from discontinued operations (In thousands of Estonian kroons) Net cash from operating activities Net cash used in investing activities Net cash flows

6M 2009 4,494 -900 3,594

6M 2008 85,922 -85,956 -34

(In thousands of euro) Net cash from operating activities Net cash used in investing activities Net cash flows

6M 2009 288 -58 230

6M 2008 5,491 -5,494 -3

22


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Note 3. Investment property and property, plant and equipment (In thousands of Estonian kroons) At 31 December 2008 Additions Impairment Disposals Fixed assets for selling Depreciation for the period Accumulated depreciation on disposals Effect of movements in exchange rates At 30 June 2009

Investment property 45,330 0 0 -1,300 0 0 0 0 44,030

Property, plant and equipment 1,313,076 61,098 -149,202 -116,366 -41,473 -186,397 98,424 -20,352 958,808

Total 1,358,406 61,098 -149,202 -117,666 -41,473 -186,397 98,424 -20,352 1,002,838

(In thousands of euro) At 31 December 2008 Additions Impairment Disposals Depreciation for the period Fixed assets for selling Accumulated depreciation on disposals Effect of movements in exchange rates At 30 June 2009

Investment property 2,897 0 0 0 -83 0 0 0 2,814

Property, plant and equipment 83,921 3,905 -9,536 -7,437 -2,651 -11,913 6,290 -1,300 61,279

Total 86,818 3,905 -9,536 -7,437 -2,734 -11,913 6,290 -1,300 64,093

In the second quarter of 2009, impairment of tangible assets in total amount of EEK 149,202 (EUR 9,536) thousand was recognised. The impairment is related to liquidation of Ukrainian subsidiaries and reclassifications of assets as held for sale.

Note 4. Intangible assets (In thousands of Estonian kroons) At 31 December 2008 Additions Impairment Disposals Amortisation for the period Amortisation on disposals Effect of movements in exchange rates At 30 June 2009

Goodwill 461,123 0 -32,769 0 0 0 -5,681 422,673

Other intangible assets 47,336 475 0 -7,655 -6,811 4,463 -89 37,719

(In thousands of euros)

Goodwill

Other intangible assets

29,471 0 -2,094 0 0 0 -363 27,014

3,025 30 0 -489 -435 285 -6 2,410

At 31 December 2008 Additions Impairment Disposals Amortisation for the period Amortisation on disposals Effect of movements in exchange rates At 30 June 2009

Total 508,459 475 -32,769 -7,655 -6,811 4,463 -5,770 460,392 Total 32,496 30 -2,094 -489 -435 285 -369 29,424

In first-half of 2009, impairment of goodwill in amount of EEK 32,769 (EUR 2,094) thousand was recognised due to initiated liquidation of Ukrainian subsidiaries.

23


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Note 5. Finance lease liabilities (In thousands of Estonian kroons) Finance lease liabilities at beginning of period Principal payments made Effect of movements in exchange rates Finance lease liabilities at end of period current position non-current portion

30 June 2009 19,051 -2,261 151 16,941 2,722 14,219

(In thousands of euro) Finance lease liabilities at beginning of period Principal payments made Effect of movements in exchange rates Finance lease liabilities at end of period current position non-current portion

30 June 2009 1,218 -145 10 1,083 174 909

31 December 2008 22,857 -3,476 -330 19,051 4,569 14,482

31 December 2008 1,461 -222 -21 1,218 292 926

The Latvian subsidiary has acquired gaming equipment with finance lease. The lease contract is concluded in July 2007, the term is 4 years, the annual interest rate of the lease is 4.8% and the base currency is euro.

Note 6. Interest-bearing loan (In thousands of Estonian kroons) At beginning of period Loan received Repayment of loans received At end of period current position non-current portion

30 June 2009 258,713 55,545 -19,558 294,700 36,837 257,863

31 December 2008 0 493,412 -234,699 258,713 78,233 180,480

(In thousands of euro) At beginning of period Loan received Repayment of loans received At end of period current position non-current portion

30 June 2009 16,535 3,550 -1,250 18,835 2,354 16,481

31 December 2008 0 31,535 -15,000 16,535 5,000 11,535

On 5th of June 2008 Olympic Entertainment Group AS and AS Hansapank have concluded a loan agreement with the limit amount of EUR 15,000,000 (the equivalent of EEK 234,699,000 according to the exchange rate of the Bank of Estonia at the date of the agreement conclusion). On 26th of November 2008 Olympic Entertainment Group AS and AS Hansapank have concluded a loan agreement, which increased the existing limit amount by EUR 10,000,000 up to EUR 25,000,000 and extended the final term of loan up to 5 years until 25th December 2013. The basis for calculation of annual interest is Euro 6 months' Euribor + 4%. The purpose of the loan is OEG concern investments financing in Romania, Poland, Slovakia and Lithuania. The loan shall be guaranteed by a pledge to be established in favour of AS Hansapank in the form of financial collateral on OEG`s subsidiaries shares in Estonia, Latvia, Lithuania and Poland and in the form of guarantee from OEG subsidiaries in Belarus, Romania and Slovakia

24


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Note 7. Share capital Basic earnings per share for the first half of 2009 have been calculated by dividing the loss attributable to the equity holders of the parent for the period by number of 151,000,000 (2008: 151,000,000) shares . In accordance with IAS 33, in calculating diluted earnings per share the Group has not taken into account the option agreements concluded with members of the board of Olympic Entertainment Group AS and the Group’s key persons. The exact number of the shares that may be subscribed by a member of the management board or a key person will depend on the attainment of the Group’s financial targets and the individual performance of the member of the management board or the key person.

Profit for the period (in thousands of Estonian kroons) Weighted average number of shares outstanding (in thousands) Basic earnings per share (in Estonian kroons) Diluted earnings per share (in Estonian kroons)

Q 2 2009 -255,234 151,000 -1.69 -1.69

Q 2 2008 35,674 151,000 0.24 0.24

6 m 2009 -351,675 151,000 -2.33 -2.33

6 m 2008 91,458 151,000 0.61 0.61

Profit for the period (in thousands of euros) Weighted average number of shares outstanding (in thousands) Basic earnings per share (in euro) Diluted earnings per share (in euro)

Q 2 2009 -16,312 151,000 -0.11 -0.11

Q 2 2008 2,280 151,000 0.02 0.02

6 m 2009 -22,476 151,000 -0.15 -0.15

6 m 2008 5,845 151,000 0.04 0.04

Note 8. Segment reporting Operating segments observed by the chief operating decision maker are based on the geographical dimension by customers’ geographical location. The Group’s secondary segments are business segments, which comprise gaming services and other services (hotel services, bar services and other). Inter-segment pricing is determined on an arm’s length basis.

25


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Geographical segments (in thousands of Estonian kroons) Sales revenue from external customers Other external income Inter-segment sales revenue and other income

Estonia

Latvia

Lithuania

Belarus

Poland

Romania

Slovakia

Eliminations

Consolidated

Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 Q2 2009 Q2 2008 96,084 191,412 89,313 166,461 76,838 114,040 9,868 6,674 113,189 127,208 19,130 7,928 26,683 4,266 0 0 543 2,050 948 430 0 10 22 0 509 462 270 47 8 0 0 0

Q2 2009 431,104 2,301

Q2 2008 617,989 2,999

1,960 98,587

3,234 196,696

388 90,649

464 167,355

0 76,838

7 114,057

0 9,890

0 6,674

0 113,698

0 127,670

0 19,400

0 7,975

0 26,691

0 4,266

-2,348 -2,348

-3,705 -3,705

0 433,405

0 620,988

External expenses Inter-segment expenses Total expenses

-119,963 -5,443 -125,406

-160,644 0 -160,644

-100,293 -1,349 -101,642

-155,255 -836 -156,091

-75,732 -410 -76,142

-95,029 -669 -95,698

-12,641 -86 -12,727

-11,423 -119 -11,542

-114,062 -382 -114,444

-132,051 -1,008 -133,059

-35,351 -978 -36,329

-23,499 -1,210 -24,709

-28,906 -118 -29,024

-9,895 -227 -10,122

0 8,766 8,766

0 4,069 4,069

-486,948 0 -486,948

-587,796 0 -587,796

Operating profit (loss)

-26,819

36,052

-10,993

11,264

696

18,359

-2,837

-4,868

-746

-5,389

-16,929

-16,734

-2,333

-5,856

6,418

364

-53,543

33,192

-2,973 1,576 -54,940

9,653 -13,023 29,822

Total revenue

Net financial items Income tax expense Net profit (loss) for the period

Geographical segments (in thousands of Estonian kroons) Sales revenue from external customers Other external income Inter-segment sales revenue and other income

Estonia

Latvia

Lithuania

Belarus

Poland

Romania

Slovakia

Eliminations

Consolidated

6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 6m 2009 6m 2008 186,666 397,707 186,929 328,376 158,314 226,404 20,636 12,899 224,867 248,336 29,606 19,838 52,744 4,266 0 0 1,182 2,637 1,370 1,127 0 10 22 2 1,125 1,343 387 624 17 0 0 0

6m 2009 859,762 4,103

6m 2008 1,237,826 5,743

4,032 191,880

5,618 405,962

1,028 189,327

1,449 330,952

0 158,314

228 226,642

0 20,658

0 12,901

0 225,992

0 249,679

0 29,993

0 20,462

0 52,761

0 4,266

-5,060 -5,060

-7,295 -7,295

0 863,865

0 1,243,569

External expenses Inter-segment expenses Total expenses

-253,911 -5,443 -259,354

-322,876 0 -322,876

-215,297 -1,743 -217,040

-315,668 -1,501 -317,169

-160,952 -840 -161,792

-184,612 -1,301 -185,913

-26,304 -159 -26,463

-22,170 -293 -22,463

-234,483 -857 -235,340

-238,145 -1,955 -240,100

-59,724 -2,180 -61,904

-43,101 -2,524 -45,625

-54,687 -278 -54,965

-11,340 -240 -11,580

0 11,500 11,500

0 7,814 7,814

-1,005,358 0 -1,005,358

-1,137,912 0 -1,137,912

Operating profit (loss)

-67,474

83,086

-27,713

13,783

-3,478

40,729

-5,805

-9,562

-9,348

9,579

-31,911

-25,163

-2,204

-7,314

6,440

519

-141,493

105,657

-1,867 1,207 -142,153

9,350 -15,321 99,686

Total revenue

Net financial items Income tax expense Net profit (loss) for the period

26


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Geograafilised segmendid (in thousands of euros)

Estonia

Q2 2009 Sales revenue from external customers Other external income

Latvia

Q2 2008

Q2 2009

Lithuania

Q2 2008

Q2 2009

Belarus

Q2 2008

Q2 2009

Poland

Q2 2008

Q2 2009

Romania

Q2 2008

Q2 2009

Slovakia

Q2 2008

Q2 2009

Eliminations

Q2 2008

Q2 2009

Consolidated

Q2 2008

Q2 2009

Q2 2008

6,142 35

12,233 131

5,708 61

10,639 27

4,911 0

7,288 1

631 1

427 0

7,234 33

8,130 30

1,223 16

507 3

1,704 1

272 0

0 0

0 0

27,553 147

39,496 192

126 6,303

207 12,571

25 5,794

30 10,696

0 4,911

0 7,289

0 632

0 427

0 7,267

0 8,160

0 1,239

0 510

0 1,705

0 272

-151 -151

-237 -237

0 27,700

0 39,688

External expenses Inter-segment expenses Total expenses

-7,667 -348 -8,015

-10,267 0 -10,267

-6,410 -86 -6,496

-9,923 -53 -9,976

-4,840 -26 -4,866

-6,073 -43 -6,116

-808 -6 -814

-730 -8 -738

-7,290 -24 -7,314

-8,440 -64 -8,504

-2,259 -63 -2,322

-1,502 -77 -1,579

-1,847 -8 -1,855

-632 -15 -647

0 561 561

0 260 260

-31,122 0 -31,122

-37,567 0 -37,567

Operating profit (loss)

-1,712

2,304

-702

720

45

1,173

-182

-311

-47

-344

-1,083

-1,069

-150

-375

410

23

-3,422

2,121

-190 101 -3,511

617 -832 1,906

Inter-segment sales revenue and other income

Total revenue

Net financial items Income tax expense Net profit (loss) for the period

(in thousands of euros)

Estonia

6m 2009 Sales revenue from external customers Other external income

Latvia

6m 2008

6m 2009

Lithuania

6m 2008

6m 2009

Belarus

6m 2008

6m 2009

Poland

6m 2008

6m 2009

Romania

6m 2008

6m 2009

Slovakia

6m 2008

6m 2009

Eliminations

6m 2008

6m 2009

Consolidated

6m 2008

6m 2009

6m 2008

11,931 76

25,419 169

11,947 88

20,987 72

10,118 0

14,470 1

1,319 1

824 0

14,372 72

15,872 86

1,892 24

1,268 39

3,370 1

272 0

0 0

0 0

54,949 262

79,112 367

258 12,265

359 25,947

66 12,101

93 21,152

0 10,118

15 14,486

0 1,320

0 824

0 14,444

0 15,958

0 1,916

0 1,307

0 3,371

0 272

-324 -324

-467 -467

0 55,211

0 79,479

External expenses Inter-segment expenses Total expenses

-16,228 -348 -16,576

-20,636 0 -20,636

-13,760 -111 -13,871

-20,175 -96 -20,271

-10,287 -54 -10,341

-11,799 -83 -11,882

-1,681 -10 -1,691

-1,417 -19 -1,436

-14,986 -55 -15,041

-15,220 -125 -15,345

-3,817 -139 -3,956

-2,755 -161 -2,916

-3,495 -18 -3,513

-724 -15 -739

0 735 735

0 499 499

-64,254 0 -64,254

-72,726 0 -72,726

Operating profit (loss)

-4,311

5,311

-1,770

881

-223

2,604

-371

-612

-597

613

-2,040

-1,609

-142

-467

411

32

-9,043

6,753

-119 77 -9,085

597 -979 6,371

Inter-segment sales revenue and other income

Total revenue

Net financial items Income tax expense Net profit (loss) for the period

27


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Business segments (in thousands of Estonian kroons) Sales revenue from external customers Other revenues from external customers Inter-segment sales revenue and other income Total revenue

(in thousands of Estonian kroons) Sales revenue from external customers Other revenues from external customers Inter-segment sales revenue and other income Total revenue

Gaming services Q2 2009 Q2 2008 410,799 583,351 1,643 2,139 422 1,264 412,864 586,754

Other services Q2 2009 Q2 2008 20,306 34,638 657 860 1,960 16,723 22,923 52,221

Eliminations Q2 2009 Q2 2008 0 0 0 0 -2,382 -17,987 -2,382 -17,987

Consolidated Q2 2009 Q2 2008 431,105 617,989 2,300 2,999 0 0 433,405 620,988

Gaming services 6 m 2009 6 m 2008 819,307 1,175,518 2,856 4,294 3,248 3,754 825,411 1,183,566

Other services 6 m 2009 6 m 2008 40,456 62,308 1,246 1,449 18,100 36,026 59,802 99,783

Eliminations 6 m 2009 6 m 2008 0 0 0 0 -21,348 -39,780 -21,348 -39,780

Consolidated 6 m 2009 6 m 2008 859,763 1,237,826 4,102 5,743 0 0 863,865 1,243,569

Gaming services Q2 2009 Q2 2008 26,255 37,282 105 137 27 81 26,387 37,500

Other services Q2 2009 Q2 2008 1,298 2,214 42 55 125 1,069 1,465 3,338

Eliminations Q2 2009 Q2 2008 0 0 0 0 -152 -1,150 -152 -1,150

Consolidated Q2 2009 Q2 2008 27,553 39,496 147 192 0 0 27,700 39,688

Gaming services 6 m 2009 6 m 2008 52,362 75,129 183 274 208 240 52,753 75,643

Other services 6 m 2009 6 m 2008 2,586 3,983 80 93 1,157 2,302 3,823 6,378

Eliminations 6 m 2009 6 m 2008 0 0 0 0 -1,365 -2,542 -1,365 -2,542

Consolidated 6 m 2009 6 m 2008 54,948 79,112 263 367 0 0 55,211 79,479

Business segments (in thousands of euro) Sales revenue from external customers Other revenues from external customers Inter-segment sales revenue and other income Total revenue

(in thousands of euro) Sales revenue from external customers Other revenues from external customers Inter-segment sales revenue and other income Total revenue

28


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Note 8. Transactions with related parties For the purposes of these consolidated interim financial statements, related parties include: a. shareholders with significant influence b. members of the executive and higher management; c. close family members of and companies related to the above; and d. the parent company HansaAssets OĂœ. In the preparation of the consolidated interim financial statements, all intra-group receivables and liabilities and all intra-group revenues, expenses and unrealised gains and losses were eliminated. During the reporting period, Group entities performed transactions with related parties in the following volumes and at the end of the reporting period balances with related parties were the following:

(In thousands of Estonian kroons) Related party Parent company Company related to Supervisory Board

Transaction Lease of business premises Purchase of goods

Total

(In thousands of euro) Related party Parent company Company related to Supervisory Board

Transaction Lease of business premises Purchase of goods

Total

6 M 2009 Purchases

6 M 2008 Purchases

555 30 585

554 0 554

6 M 2009 Purchases

6 M 2008 Purchases

35 2 37

35 0 35

At 30 June 2009 and at 31 December 2009 there were no payables to related parties.

In the first half of 2009, the remuneration of management and supervisory board members with social taxes totalled 3,193,000 kroons (204,000 euros). The corresponding figure for the first half of 2008 was 4,623,000 kroons (295,000 euros).

29


Olympic Entertainment Group AS Unaudited consolidated interim financial statements for the 1st half and 2nd quarter of 2009

Management Board`s confirmation of the consolidated interim financial statements for the 2nd quarter and 1st half of 2009 The Management Board confirms the correctness and completeness of the consolidated financial statements of the Olympic Entertainment Group AS and its subsidiaries (together the “Group�) for the 6 months of 2009 and confirms that to the best of its knowledge, information and belief that: -

the General Manager’s report presents fairly the development, performance and financial position of Olympic Entertainment Group AS, the company and the Group, and provides an overview of the main risks and uncertainties;

-

the policies applied in the preparation of the consolidated interim financial statements comply with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU;

-

the consolidated interim financial statements give a true and fair view of the assets, liabilities and financial position of the Group and of the results of its operations and its cash flows;

-

Olympic Entertainment Group AS and its subsidiaries (except Olympic Casino Ukraine TOV, Eldorado Leisure Company and Ukraine Leisure Company) are going concerns.

30

OEG_2009_q2_en_uni  
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