Playtech's income tops expectations

Playtech, the mobile and online gaming company, has continued its rapid rise after announcing a near doubling of income, although its poker offering has disappointed as the craze for Texas Hold 'em wanes.

In the first three months of 2012 gross income rose 90% to €88.4m from €46.6m in the corresponding period of 2011, ahead of a forecast of €84.1m by broker Panmure Gordon. Revenues grew 104% to €75.1m from €36.7m the year before, and were up 8% on revenues seen in the final quarter of 2011.

Casino revenues were 35% ahead of the prior year and 5% up on the fourth quarter of 2011, bingo was up 26% year-on-year (y/y) and up 6% quarter-on-quarter (q/q) and Videobet gained 171% (+10% q/q), but Poker was down 6% y/y at €5.3m and down 3% q/q.

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Playtech's share in William Hill Online (WHO) produced income of €13.3m, up 34% on 2011 and 51% higher than the level seen in the fourth quarter of 2011. Panmure Gordon had forecast a contribution of €13.0m from WHO.

Growth has continued in the second quarter of 2012 with daily activity for the first 31 days of the period up more than 90% on the comparable quarter last year, and although this performance is flattered by contributions from the PTTS business acquired in July 2011 stripping these contributions out still leaves a gain of more than 20% y/y. Activity in the second quarter is currently more than 1% higher than in the first quarter.

The company said its move to the main market of the London Stock Exchange is progressing well, a view that is likely to be wholeheartedly shared by Chairman Roger Withers, who, in order to comply with the corporate governance code is to sell for £500,000 for share options that are apparently only worth £409,000. The company says the premium it is paying to buy the options reflects "the contribution and time Mr. Withers has devoted to the company." Non-executive director Withers received total emoluments of €582,393 in 2011. As at the end 2010, he had just 19,333 shares in Playtech, according to the company's web site, and options over 200,000 shares that could be exercised at 257p any time before March 28th, 2016. The options have been comfortably "in the money" throughout 2012.

The group has changed its mind about buying certain social business-to-business (B2B) and real money gaming assets and businesses, plus an equity stake in a related business-to-consumer (B2C) venture from entities in which Playtech founder Teddy Sagi is beneficially interested. The whole deal was proving too complex and time consuming at a time when the board is busy preparing for the transfer from AIM to the main market. Instead, the board has decided to enter into a software licence agreement for those assets in the ordinary course of business. 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.

The Chief Executive Mor Weizer says he expects a slowdown during the traditionally weaker summer months but the company "is well positioned to maintain the momentum into the rest of the year."

At 10:54 the stock had gained 2.4%.

BS