Playtech Limited
13 November 2006
Playtech Limited
('Playtech' or 'the Company')
Third Quarter Trading Update
Playtech (AIM: PTEC), the international designer, developer and licensor of
software for the online and land-based gaming industry, announces today its
trading update for the third quarter of 2006. The Company is also pleased to
announce the acquisition of certain assets and undertaking of Tribeca Tables
Europe Limited, detailed in a separate announcement made today.
Highlights
•Total revenues for this traditionally slow quarter increased by 103%
compared to the same period last year and 4% on the previous quarter to
US$26.5m. This breaks down as follows:
- Casino revenues increased by 95% compared to the same period last
year and 2% on the previous quarter to US$22.6m.
- Poker revenues increased by 274% compared to the same period last
year and 26% on the previous quarter to US$3.4m.
•Income from non-US players increased to 53% from 49% for the same period
last year and from 52% in the previous quarter.
•In line with the statement issued on 6 October 2006, Playtech continues
to enforce its request from its licensees to shutdown all of their US-facing
activity. To date almost all of its licensees have blocked their US-facing
activity, with the few remaining expected to conclude their US blocking
shortly. Playtech has adopted a policy of not accepting royalties derived
from US players as of the date of the Unlawful Internet Gambling Enforcement
Act 2006. As a result of this, there will be a material impact on revenue
generation in the fourth quarter and into 2007.
•During the quarter, an interim dividend of US$18.5m was paid,
representing approximately 8.7 cents per share.
Current Trading
Playtech is an international business that has striven to diversify its
portfolio through both product range and geography. As a result, the Board
believes that the Company has a robust model that will successfully adapt to the
new legislative environment. The Company continues to have a solid balance sheet
with cash reserves of over US$90m, post the dividend payment of US$18.5m.
Current trading is strong on a non-US pro forma basis. Playtech continues to
increase the number of licensees in Europe and Asia. In October 2006, Playtech's
non-US pro forma casino revenues increased by 5.5% to US$4,570k (September 2006:
US$4,333k) and the Company's non-US pro forma poker revenues increased by 11.4%
to US$831k (September 2006 US$746k).
As a result of the deal with Tribeca Tables Europe Limited, it is expected that
Playtech's poker revenues will significantly increase in 2007.
At present, Playtech has 41 licensees. Given the Company's decision to stop
licensing its software to operators who accept bets from US players, this above
figure includes two licensees who opted to terminate their agreements with
Playtech. A further three licensees who are heavily reliant on income from the
US are also expected to end their relationships with Playtech. Given the above
five licensees had marginal non-US activity (total non-US royalties in September
2006 were US$46k), their termination will not significantly affect the Company's
non-US results going forward. As noted bellow, Club on Park has recently
migrated to the Playtech platform and the Company continues to actively seek new
licensees to strengthen its portfolio.
Product and Platform Expansion
•Videobet
Videobet is the land-based spin-off of Playtech's successful online
platform. Videobet offers a comprehensive, server-based gaming system for
land-based operators as well as stand-alone or local network casino floor
machines. Featuring an improved version of Playtech's suite of exclusive,
captivating games, Videobet's platform includes a powerful, real-time
backend with dynamic content delivery and unparalleled control over the
entire operation down to each terminal.
The advanced graphics provided by the VGP (Videobet Gaming Platform) combine the
thrill of traditional gaming machines with the power and flexibility of
Playtech's online software technology. The VGP is flexible enough to be deployed
at virtually any location from betting shops and casinos to hotel lobbies and
cruise ships.
The Videobet games package, which currently includes Casino and FOBT games, is
based on Playtech's highly successful games. Coming soon is the development of a
land-based version of Playtech's popular Live Gaming.
The Videobet product is now being integrated with the operation of several
licensees in the UK and in South America and is expected to generate revenues
during the fourth quarter of 2006.
•Asian Games
Playtech continues to devote significant resources to the development and launch
of games in the Asian market. With the launch of Pachinko during the fourth
quarter of 2006 and Solo Mahjong and Solo Mahjong Pro and a new version of the
live gaming software and functionality by the end of the year, Playtech's
penetration of the Asian market will be greatly accelerated. Other Mahjong
products, such as the Duo and Full Mahjong tournaments will be launched during
2007 alongside the launch of other Asian card games.
Club on the Park
During the quarter, 365 Media Group PLC launched the Club on the Park online
gaming site on the Playtech platform. As previously announced, 365 Media Group
PLC recently acquired the business, which was formerly known as the Ritz Club
Online. Both the online casino and online poker rooms of Club on the Park have
been migrated to the new Playtech platform and the sites have been designed to
convey to players a look and feel reminiscent of a luxurious land-based casino.
The Company will also provide a fully branded mobile solution, fully supporting
and replicating the casino's look and feel onto compatible mobile phone
handsets.
The Club on the Park brand is focused on the UK and European markets. Both its
casino and its poker operations are tightly integrated within the Playtech
platform using Playtech's proprietary integration package that has been created
to provide added value to Playtech's existing licensees and customers.
Litigation
Cranway Limited (an Isle of Man company), has issued proceedings in the English
High Court against the Company and a licensee of its software claiming
infringement of EP (UK) 0625760. Following an initial review of the case,
Playtech intends to vigorously defend the claim in order to achieve a successful
outcome.
Avigur Zmora, Chief Executive Officer, commenting on the results, said today:
'I am very pleased with the way the Company had handled the implications of the
passing of the Unlawful Internet Gambling Enforcement Act 2006. There is no
doubt that this legislation will affect Playtech's revenue generation but the
actions taken over previous years to create a balanced business portfolio and
the acceleration of non-US business will ensure the Company's continued growth
prospects and success as we can already see on a non US pro forma basis. The
Board and I look forward to the next quarter and beyond with confidence.'
Third Quarter Key Performance Indicators at 30 September 2006
Revenues
Three months ended 30 Sep 30 Sep Change 30 June Change
'000 ($) 2006 2005 2006
Total Revenues 26,546 13,100 103% 25,411 4%
Casino Revenues 22,597 11,584 95% 22,141 2%
Poker Revenues 3,418 914 274% 2,723 26%
Active Licensees and Game Sites
As of 30 Sep 30 Sep 30 June
2006 2005 2006
Number of Active Licensees 42 35 42
Number of Game Sites 153 117 137
Relative Share of Geographical Diversity(1)
Three months ended 30 Sep 30 Sep 30 June
2006 2005 2006
North America - USA(2) 47% 51% 48%
North America - Canada 4% 4% 4%
Europe 28% 22% 26%
Asia Pacific 18% 20% 20%
Rest of the World 3% 3% 2%
Nominal Growth in Geographical Regions
Period Q3 2005 to Q3 2006 Q2 2006 to Q3 2006
North America - USA(2) 87% 3%
North America - Canada 103% 5%
Europe 158% 17%
Asia Pacific 82% (7%)
Rest of the World 103% 69%
Nine Months Key Performance Indicators at 30 September 2006
Revenues
Nine months ended 30 Sep 30 Sep Change
'000 ($) 2006 2005
Total Revenues 72,725 31,798 129%
Casino Revenues 62,984 29,215 116%
Poker Revenues 8,231 1,420 480%
Relative Share of Geographical Diversity(1)
Nine months ended 30 Sep 30 Sep
2006 2005
North America - USA(2) 48% 58%
North America - Canada 4% 4%
Europe 26% 21%
Asia Pacific 20% 14%
Rest of the World 2% 3%
Nominal Growth in Geographical Regions
Period 9M 2005 to 9M 2006
North America - USA(2) 89%
North America - Canada 129%
Europe 183%
Asia Pacific 227%
Rest of the World 52%
(1) The relative share is calculated as the total players income derived from
the specific region divided by the total players income from all regions
(2) All revenue earned from USA was stopped on 13 October 2006
- ends -
Analyst Conference Call
An analyst conference call has been organised for 10:00 am GMT today hosted by
the Chief Executive Officer, Avigur Zmora.
The dial-in details are:+44(0) 20 8515 2312. For US Participants: 1866 384 2824.
Conference call title: Playtech Q3 trading Update
For Further Information:
Avigur Zmora, CEO, Playtech Ltd
c/o Bell Pottinger Tel: 020 7861 3232
www.playtech.com
David Rydell / Amy Rajendran
Bell Pottinger Corporate & Financial Tel: 020 7861 3232
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