Sisal Annual Report 2011 - Permira

• The “convenience services business segment” revenue in 2011 increased 15%over 2010, reaching EUR 99 million, thanks to a significant overall increase incollection flows (+36.6%) in both payments and financial services, togetherwith a rise in receipts (+7%) from contracts for the sale and/or distribution oftelephone cards, telephone top ups and pay TV programmes through the SISALoutlets network, essentially due to mobile phone top ups (+9.6% more thanin 2010). Revenue, in compliance with international accounting standards, isreported net of the cost of purchase of the top ups, but gross of the fees paidto the distribution network. The business segment provided a profit margin ofabout EUR 36.1 million in 2011 compared with EUR 30.6 million year in theprevious financial period, i.e. an increase of nearly 18%.• Finally, revenue relating to contractual agreements with the retail networkgranted approximately EUR 11 million of additional revenue (+15.7% over2010), mainly due to the further increase in the number of points of sale, whichreached 42,000 units at the end of 2010 compared with about 39,000 at theend of the previous period.Operating costs, including amortisation, depreciation and provisions, recorded anincrease of about 22%, slightly higher than the percentage growth of the totalGroup’s revenue (18,2%), mainly owing to greater depreciation of tangible assetscosts (especially gaming terminals and gaming machines) and amortisation ofintangible assets (mainly concession rights) and the partial impairment of aboutEUR 25.5 million of the value of concession rights related to horse race bettingand pool games, due to a significant downward trend in these traditional gamingproducts, as already mentioned.The main component of the Group’s costs structure is the costs of services which,net of both purchase costs for services (telephone top ups, pay TV programmes,collection and payment services) and retail network fees, recorded a modest increaseof about 3%, also thanks to the implementation of a spending reviewprogram during the period whose aim was to enhance operational efficiency. Theabove mentioned program allowed to offset the rise in the costs of marketing services,which almost doubled during the period, as a result of commitments relatedto the NTNG concession.The above factors resulted in an increase of almost 14% in the gross profit income,while the net operating income (EBIT) decreased by about EUR 14 million.22 Sisal ANNUAL REPORT 2011