Financial Reports and Trading Updates — Weekly Round-up for May 19, 2017

By Brian Cullingworth, Last updated May 19, 2017

Amaya To Change Title

Transformation plans involve a move from Montreal to Toronto

Alongside its Q1-2017 results, Pokerstars parent group Amaya revealed that change is in the air in Montreal, with plans to change the Amaya brand name to “The Stars Group Inc.” and move to Toronto.

The changes are subject to shareholder approval, and are part chief executive Rafi Ashkenazi’s efforts to transform the online gambling company after a difficult period which has seen merger deals fall through and former CEO David Baazov step down to fight official accusations of insider trading in the acquisition deal on The Rational Group.

Ashkenazi has worked diligently to pay down debt, install a new management team and lessen the company’s exposure to the online poker business by diversifying into other gambling verticals.

Most recently the company appointed strategic planning ace and former William Hill executive Robin Chhabra to focus on mergers and acquisitions, which Ashkenazi has said could play a central role in the second half of 2017.

Amaya posted Q1-2017 results that included:

* The first increase in revenue from poker in three quarters: Poker made up 69 percent of company revenues, down from 75 percent in the same period last year as a result of diversification strategies;

* First quarter poker revenues came in at Cdn$218.7 million – up a modest 1.1 percent y-o-y;

* Online casino games and sports book accounted for 27.3 percent of revenue, up from 21 percent;

* EBITDA exceeding analyst expectations was up 18.5 percent year-over-year to Cdn$65.75 million;

* Active player numbers rose 5 percent year-on-year to about 2.7 million, with total registrations at 111 million;

* Net income rose to Cdn$65.8 million, or 33 cents per share in the first quarter, from Cdn$55.5 million, or 28 cents per share, last year;

* Excluding items, Amaya reported a profit of 56 cents per share, beating analysts’ average estimate of 52 cents;

* Revenue rose 10 percent to Cdn$317.3 million – analysts on average had expected Cdn$316.7 million;

* The company is addressing what it describes as “material weaknesses” in internal controls over financial reporting as of Dec. 31;

“We continued our momentum in the first quarter as we executed on our strategy and reinforced the foundation for sustainable and diversified revenue growth, including through the strengthening of our core management team and operations,” said Ashkenazi.

“Our company also continues to evolve through corporate initiatives to deliver the greatest value for our shareholders.”

Fortuna Delivers Another Strong Quarter

Eastern and Central European online operator posts a 12.2 percent year-on-year revenue increase

The Fortuna Central and Eastern Europe-facing online and land betting group has reported another strong quarterly performance, particularly in online gambling operations.

The Q1-2017 results include:

* Overall revenue up 12.2 percent y-o-y to Euro 42.7 million;

* Overall handle grew 20.1 percent to Euro 302.2 million;

* Operational and pay-out costs higher, reducing EBITDA which fell 36.3 percent year-on-year to just Euro 3 million;

* Total sports betting handle up 14 percent at Euro 281.5 million;

* Online gambling turnover out-performed that of retail activity, recording double-digit growth vs. single-digit growth;

* Overall sports betting revenue rose 11.1 percent year-on-year to Euro 40 million, most of the revenue gains coming from online operations;

*.Digital betting revenue up 18.5 percent y-o-y to Euro 28.3 million;

* Retail revenue down 3.6 percent at Euro 11.7 million;

* Lottery operations suffered an 18.6 percent y-o-y decrease in revenue to Euro 1.7 million, resulting in a Euro 20,000 net loss from the vertical;

* Online casino operations were launched in the Czech Republic in February.

Fortuna CEO Per Widerström said that mobile betting was a star performer in the quarter, and predicted that the second quarter results would see further growth as revenues accrued from recent Romanian acquisitions and the new Czech online casino.

He revealed that further acquisitions embracing Croatia and Spain are currently being finalised.

Asia Facing Lottery Firm Continues To Post Losses

Increased staff costs, declining hardware sales and “remeasurement of company convertible bonds” hamper progress at AGTech Holdings

Asia-facing lottery company AGTech Holdings is hoping that at some future point it will be in a position to leverage its capabilities in the online environment, according to a hint at its future plans in its latest performance results.

The company has been watching relevant government moves regarding internet and mobile channels and thinks that there could be approval for use of the channels in lottery sales.

In the case of the massive Chinese market, which has suspended online lottery sales for almost two years now due to alleged administrative misconduct (see previous InfoPowa reports) such a development would be significant.

AGTech could certainly use the boost; the Q1-2017 numbers it posted this week made for dismal reading for investors, who it seems will be denied a dividend due to the widening losses the company has incurred.

Attributing these to increased staff costs, declining hardware sales and “remeasurement of company convertible bonds,” the company reported:

* Overall loss of HK$ 232.8 (US$ 29.9 million), a staggering increase from the HK$ 14.4 million loss reported in the same period last year;

* Overall revenue down 23 percent y-o-y at HK$ 14.9 million;

On the plus side, the company was able to report a partnership deal with Chinese lottery technology firm SF Lottery which will see the introduction of SF-themed instant scratch lottery products, and a new sports lottery distribution model for retail shops in China under the Tabao Village concept – a Chinese venture allied to online activity operated in Hangzhou, Zhejiang by Alibaba Group.

The latter project has good potential in China’s rural areas which apparently lack full services regarding lottery sales. AGTech already has business links with the Alibaba Group and Ant Financial Group.

Jackpotjoy Plc Showcase Progress In First Quarter Report

But net income impacted by additional debt facility

In a first quarter report, online bingo-led operator Jackpotjoy plc highlighted an 11 percent increase in gaming revenue amounting to GBP 71.4 million (Q1/2016: GBP 64.2 million) and adjusted EBITDA of GBP 29.2 million, up 4 percent y-o-y.

However, an 11 percent decline in adjusted net income was attributed to higher interest expenses from an additional debt facility obtained in Q4 2016, and the impact of income earned from the revenue guarantee in the prior year.

Jackpotjoy contributes 71 percent of Group revenue presently, followed by Vera&John 22 percent, and Mandalay, 7 percent.

“The past quarter has been an exciting time for  the Group as we have settled into our new home on

the London Stock Exchange,” Andrew McIver, CEO of Jackpotjoy, said.

“Group trading has continued to be in line with our expectations and we remain confident that we will grow in line with the market during 2017.”

Zeal’s Q1-2017 Performance Hit By Big Lottery Win

Euro 15 million win dampens earnings

Specialist B2C and B2B online lottery company Zeal Networks SE (formerly Tipp24) has posted lack lustre Q1-2017 results, noting that a Euro 15 million MyLotto24 lottery win adversely impacted performance in the quarter.

KPIs from the company included:

* Revenue down at Euro 23.6 million (Q1-2016: Euro 37.6 million);

* Operating income down at Euro 24.1 million (Q1-2016: Euro 38.6 million);

* EBITDA down at Euro 245,000 (Q1-2016: Euro 14.2 million);

* Net profit down at Euro 165,000 (Q1-2016: Euro 8.7 million;

* EPS Euro 0.02 cents (Q1-2016: Euro 0,02 cents).

CEO Helmut Becker emphasised positive developments, saying that the launch of the company’s Irish online lottery product was successful, and that new licenses in Norway and the Netherlands are evidence of an expanding footprint.

Playtech Issues Trading Report

AGM today will be told that Q1-2017 has seen another strong performance

In advance of its annual general meeting today (Wednesday) Playtech plc has issued a trading report in which chairman Alan Jackson notes that the group has enjoyed another strong quarter to end March 2017, driven by organic growth and recent strategic acquisitions.

“Growth in daily average revenues in the Gaming division in the year to date remains strong with organic growth supplemented by acquisitions made in 2016 and 2017 including BGT, Quickspin, ECM and Eyecon,” Jackson will report.

“As previously indicated, the initial phase of our contract with the Sun Bingo has been more challenging than anticipated and we have recently taken further steps to address the issues, including significantly strengthening the management team, resulting in an improving performance.

“The Financials division has performed in line with our expectations, with continued growth in the B2B business and improved B2C customer KPIs. CFH continues to perform well following the acquisition in November.

“Our M&A pipeline remains strong and we continue to have active discussions with a range of businesses in the Gaming division as well as discussions for selective bolt-on acquisitions in the Financials division.

“The Board has confidence in the continued success of Playtech and of the business meeting its expectations for 2017.”

Brian Cullingworth

Infopowa news was a staple of Casinomeister’s news from 2000 until 2019. Brian Cullingworth was the main writer, contributor, and was one of the most knowledgeable persons I have ever known involved in the online casino industry.

We first met in January 2001 at the ICE in London where I observed him going booth to booth interviewing online casino, software, and licensing jurisdiction representatives. Brian was also heavily involved with our forum as “Jetset“, he was involved as an informal consultant to eCOGRA, the OPA, and was a player advocate who assisted countless aggrieved players with his connections to industry folks. He also published “Casino Cautions” via Infopowa news for quite a number of years. These can be found in our news archives.

His passing in February 2019 was a dark day for us. He will be forever missed.

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