Another strong performance from Playtech

Online gambling software group Playtech plc continued to deliver a strong performance throughout the first quarter of 2012, the company’s Key Performance Indicators published Wednesday show.

The numbers cover the three months ending 31 March 2012, and reveal financial highlights:

* Gross income up 90 percent to Euro 88.4 million, (Q1/2011: Euro 46.6 million) and up 13 percent on Q4/2011

* Total revenues up 104 percent to Euro 75.1 million, (Q1/2011: E uro 36.7 million) and up 8 percent on Q4/2011

Quarter-on-quarter revenue breakdown included:

* Casino revenues up 35 percent to Euro 34.5 million, (Q1/2011: Euro 25.4 million) and up 5 percent on Q4/2011

* Poker revenues down 6 percent to Euro 5.3 million, (Q1/2011: Euro 5.7 million) and down 3 percent on Q4/2011

* Bingo revenues up 26 percent to Euro 4.4 million, (Q1/2011: Euro 3.5 million) and up 6 percent on Q4/2011

* Videobet revenues up 171 percent to Euro 2.4 million, (Q1/2011: Euro 900,000) and down 10 percent on Q4/2011

* Services revenues up 11 percent to Euro 25.7 million on Q4/2011

* Share of profit in William Hill Online up 34 percent to Euro 13.3 million, (Q1/2011: Euro 9.9 million) and up 51 percent from Q4/2011

Management provided the following trading update:

Daily activity for the first 31 days of Q2/2012 is over 90 percent above the comparable quarter last year (over 20 percent after excluding the influence of acquisitions), and over 1 percent on Q1/2012.

Operational highlights included:

* Services division, of which PTTS is a significant component, delivered an outstanding performance, influenced by both organic growth and a new agreement with an existing licensee to provide marketing consultancy and operational services for the Asian market

* In accordance with the original terms of the PTTS acquisition, the determination of the Additional Consideration of Euro140 million is set once the EBITDA performance achieves the target of  Euro 20 million in two consecutive quarters. In addition, such target is required to be achieved when the first quarter is over Euro 8 million and the second quarter is higher than the first. As a result of the strong performance in PTTS reflected by EBITDA of over Euro 9 million in Q1 2012, the Board believes there is an increased likelihood of accelerated payment of the Additional Consideration

* January’s Geneity acquisition is making good integration progress alongside strong performances from Mobenga and Ash Gaming, which are both ahead of expectations

* Intention to enter into an agreement to amend the MoU announced on 17 April relating to the potential acquisition of certain social gaming assets and businesses to a software licensing agreement (see previous reports on CTXM, Viaden, Slots Farm and Zeda Poker)

But see footnote in this report.

* MoU signed regarding the intention to acquire or lease the office space currently occupied by subsidiary Gaming Technology Solutions in London, UK, ahead of the intended move to a Premium Listing on the Main Market of the London Stock Exchange

* Preparations are well advanced for the start of business in the Gauselmann joint venture, an agreement with Merkur Interactive GmbH that will see the duo create an online gaming operation focused on the German market.

* Playtech licensees, including Bet365, Betsson, Sportingbet, and Unibet, have launched in the newly regulated Danish market

* Several licensees are in advanced preparation for launch in Spain ahead of new regulations expected in H2 2012

* Software licensing agreement announced with Caliente, Mexico’s largest land-based gaming operator, covering Playtech’s online casino product, including table and slot games and the IMS .

* Successful launch of Boyles Casino onto the Playtech platform in February

* Gala Coral launch preparation with Playtech casino, bingo, poker and mobile sports at an advanced stage

* Agreement signed with Freemantle to launch game titles for ‘Britain’s Got Talent’ and ‘The X Factor’

Management announced that it is to purchase 300,000 shares held by Playtech chairman Roger Withers for a total of GBP 500,000 in order to render him independent in terms of the UK Corporate Governance Code.

A surprise addition to the update is a comment under the heading “Social gaming MoU” which advises changes in the group’s April 17th  unpopular announcement that it was to purchase certain social gaming assets from main sharholder Teddy Sagi

The Playtech board has decided to instead enter into a software licence agreement for those assets in the ordinary course of business.

“Playtech remains committed and excited about the prospects for the impact of entering into the social gaming arena and believes it will aid the company’s growth in the future,” a spokesman said Wednesday.

“However, the complexity around the process and timing with respect to the company’s move to the Main Market has influenced this decision. The licence agreement for the social and real money gaming assets will be negotiated on arm’s length terms and will be announced as soon as is reasonably practicable.”

Commenting on the KPI’s, Playtech’s chief executive, Mor Weizer, said:

“Playtech has made an excellent start to 2012. Year-on-year growth across all our products has been strong, with the exception of poker. The services division is performing ahead of management’s expectations, which has provided us the confidence to agree a discounted accelerated payment of the PTTS acquisition’s initial consideration, whilst also looking increasingly certain to trigger the additional consideration threshold.

“We expect the services division to continue growing as the exciting opportunities in markets such as Germany and Spain come on stream. Although we anticipate a seasonal slowdown during the traditionally weaker summer months, I believe that the company is well positioned to maintain the momentum into the rest of the year.”

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