Playtech CEO: "We are the B2B powerhouse"

Strong casino growth and Playtech’s PTTS, Mobenga and Ash Gaming acquisitions surpassing expectations has seen the supplier solidify its position as the industry’s “B2B powerhouse”, its chief executive has said.

Announcing its first half interim results CEO Mor Weizer (pictured) called the last six months “the most exciting period in the company’s history” with its move to the main list (FTSE 250), three key acquisitions and continued organic growth, including gaining lucrative new licensees such as Gala Coral, cementing its position as egaming’s leading supplier.

Playtech’s adjusted earnings climbed 64% to €91.2m compared to €55.8m in 2011 as a result of its casino product delivering €71.5m of revenues, up 36% on the first half last year (€52.7m), as well as the outperformance of its PTTS, Mobenga and Ash Gaming acquisitions, all three of which have enabled it to expand its client portfolio across existing and newly regulated and regulating markets.

Gross income rose by up by 86% to €176.5m for the six months ended 30 June 2012 compared to €95m for the same period last year, while total revenues were up by 101% to €153.8m compared to €76.3m.

Its share price lept 4% to a three-month high of 386p on the news this morning.

Ivor Jones, analyst at Numis called Playtech’s financials good but questioned its corporate and financial strategy describing it as a “source of concern”.

“A period of consolidation following the move to the main market and clarity over the future of the William Hill joint venture may make prospects for the business easier to understand,” he said suggesting that until this is clearer he would maintain his recommendation to sell.

Nick Batram, nalayst at Peel Hunt, however, recommended a buy following this morning’s impressive start to the third quarter and calling the risk to forecasts “firmly on the upside”.

The acquisitions have seen its client list grow to 37 licensees including Boyles casino, Gala bingo and casino, 188Bet, Sisal, and Australian sports betting operator Tom Waterhouse, the last three companies signing contracts with its new mobile arm that was bolstered with the takeover of Mobega in July last year.

Ron Hoffman, VP of finance, who will replace David Mathewson as CFO following his retirement at the end of this year, told an analyst presentation that out of its 37 licensees, three have grown to exceed €4m of revenues per year, while a further eight generate more than €1m per year. Including acquisitions in the first half of this year such as PTTS, its top two licensees, which it did not name, saw revenues grow from 27% to 41%.

Playtech’s joint venture with William Hill, of which the UK operator has the first of two contractural call options on whether or not to acquire the software supplier’s 29% stake in the fourth quarter of this year, continues to generate strong numbers for both parties. William Hill Online recently reported its strongest interim performance since the creation of the JV with the first quarter producing €3.4m more in share of profit for Playtech than in any previous quarter.

WHO achieved double digit growth with an increase in operating profit of £68.9m, growing 23% comparred to the first half (£55.9m) of last year. Playtech’s non-controlling interest resulted in a share of profit of €22.7 million before amortisation of intangibles (H1/2011: €18.7 million), up 21% for the period.

Both William Hill and Playtech have yet to comment on exactly which way the call option could go with the supplier this morning reiterating that it continues to engage in “constructive and amicable meetings” with the Hills board and management.

During the first half of this year Playtech:

Completed its move to a premium listing on the main market of the London Stock Exchange.

Paid an accelerated payment of €140m due to the outperformance of PTTS.

Signed two so far not revenue generating joint ventures “in anticipation of regulatory changes” in each respective country with Gauselmann, the owner of German gaming brand Merkur, and South African gaming operator Peermont.

Acquired software developer Geneity in January for an initial €11m to enhance the group’s sportsbook capabilities. Integration “continues to progress as planned”, according to the company’s statement today.

Saw licensees, including JV partner William Hill, launch in the newly regulated Spanish market, with further, as yet unnamed, licensees looking to launch next month.

Saw Gala Coral, one if its largest licensees after signing a 10 year deal in 2011, “progress well”, according to the supplier, with the successful launch of Gala Casino and Gala Bingo.

Accessed the Mexican market by signing a software licensing agreement with Grupo Caliente, the largest local land-based gaming operator in the country.

Saw mobile acquisition Mobenga perform “ahead of expectations” with additional licensees launched.

Saw Paddy Power launch nine casino games in an integrated mobile solution as well as become the first Playtech licensee to launch an Android bingo app on its Virtue Fusion network.

Finalised a €6m a year software licensing agreement with founder and majority shareholder Teddy Sagi’s social gaming business Skywind giving it access to the B2C platforms and products developed by CTXM and Viaden, including Slots Farm and rummy brand Raminoz, which attract more than 1.5m monthly active users.