Third Quarter Trading Update
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 | 31,789 | 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 | 29% |
| 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
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
http://www.playtech.com
David Rydell / Amy Rajendran
Bell Pottinger Corporate & Financial
Tel: 020 7861 3232
