Playtech quiet on Hills renegotiations
Group profit up 21% for FY2011 " no mention of restructuring of William Hill JV.
Playtech’s results revealed significant growth over the course of the year, allowing the group to post a 21% year-on-year increase in net profit from 93.2m to 112.8m in its results announcement for the year ending December 31 2011
Despite William Hill CEO Ralph Topping admitting that the joint venture (JV) between the companies “needs to change” in the operator’s results presentation in February this year, Playtech did not make any further statements on discussions between the companies relating to the restructuring of the deal .
The results show that Playtech earned 36.1m from its 29% share in William Hill Online, up 17% from the 30.8m it earned in 2010. Among Playtech’s costs, however was 1.4m in one-off legal costs “relating to the litigation with William Hill.” It is unclear whether or not this relates directly to the injunction Hills took out to end Playtech’s discussions with Ladbrokes in February last year. This was followed by a walk-out which saw Hills’ Tel Aviv office shut down for ten days.
The company’s gross income rose 41% to 243.6m for the year, with total revenues rising from 142.3m to 207.5m. This in turn led to a 22% increase in EBITDA, up to 125.5m from 103.1m in 2010.
Commenting on the results, chairman Roger Withers said: “These are really exciting times for Playtech which has once again delivered an excellent set of financial results, and has consolidated its position as the clear market leader in the provision of software and services to the online gaming industry.
“It has developed its product and service offering to encompass all aspects of online gaming, including a full suite of products, cutting edge management systems, integration with land-based operations and the marketing and other operational skills that enable operators to get the most out of their online businesses,” Withers explained.
Broken down by product, casino proved to be the best performer, with revenues up 18% to 114.4m for the year. Bingo saw significant growth, aided by supplier deals signed during the year with the likes of Gala Coral, with revenues up from 10.9m to 15.1m “ an increase of 38.8%. Its Videobet gaming machines business, run by former group COO Shmuel Weiss, saw its income grow by 283% to 7.8m after a “transformational” year.
Revenues for poker, however, declined by 20%, from 27.4m to 21.8m, despite a 20% year-on-year growth in network liquidity and the introduction of cash games in Italy, where Playtech counts like likes of Snai and Sisal “ market-leading operators “ among its customers. The company did not comment on the proposed iPoker split, which would see a selection of the network’s skins cash games ring-fenced.
The full-year results also revealed that Playtech made an 0.6m loss from the breakdown of the SciPlay joint venture with Scientific Games, which was ‘restructured’ in January.
Analyst Nick Batram of Peel Hunt posted a Buy recommendation, saying that the company was likely to achieve its goal of qualifying for a Premium Listing on the London Stock Exchange: “The company has delivered a good set of numbers (ahead of our and most expectations), the desire to move to a premium listing has been reiterated, PTTS is performing ahead of expectations, and the balance sheet is capable of financing further strategic deals. All of this gives us confidence that Playtech could be at the start of a re-rating.”
Simon French of Panmure Gordon, however, reiterated his company’s Hold recommendation, saying, citing the pressures caused by regulation: “Given the uncertain regulatory landscape, there is a lower than typical degree of conviction attached to these forecasts. However, we would expect to upgrade our 2013E earnings if the group successfully deploys the balance of the placing proceeds.”