Gambling Industry Acquisitions and Financial News — Weekly Round-up for August 24, 2018

Paddy Power Betfair Shares Repurchasing On Track

First tranche of GBP 200 million completed

Paddy Power Betfair is making good progress with its two-phase share buy-back program, reporting in a stock advisory Monday that the initial share buy-back tranche of GBP 200 million that commenced on 29 May 2018 has now completed, with the repurchase of a total 2,429,174 ordinary shares in the company, all of which have been cancelled.

Further to the announcement on 8 August 2018 in relation to the second buy-back programme tranche of GBP 300 million (see previous InfoPowa report) to be undertaken by Goodbody Stockbrokers UC, the group confirms the commencement of this second phase programme.

Any shares repurchased in this phase will also be cancelled. Details of any shares repurchased will be notified to a Regulatory Information Service by the company following any repurchase.

Sportech Posts Unimpressive H1-2018 Results

Losses deepen as revenue slips

Sports betting technology company Sportech has posted a less than impressive set of H1-2018 results, reporting deepening losses as a new sports bar in the US failed to perform as well as expected and margins remained under pressure.

Pre-tax losses for the six months through June amounted to GBP 602,000, compared to a GBP 320,000 in the same period last year, whilst revenue fell 5.7 percent to GBP 31.6 million, though on a continuing operations and constant currency basis it edged 1.3 percent higher.

On an adjusted basis, from continuing operations, the company swung to a GBP 200,000 loss, compared to a GBP 900,000 profit on-year.

Chief executive Andrew Gaughan highlighted the striking down of the federal PASPA legislation in the USA by the Supreme Court earlier this year, saying that it had opened up exciting prospects for that market.

‘In Connecticut, we believe that we will have a strong direct-to-consumer sports betting offering for our brick-and-mortar and web/mobile betting services,” he pointed out. “We also believe that we are very well positioned to offer a competitive integrated sports and race betting solution in other US states.”

He noted that the company’s Stamford, Connecticut Bobby V’s Restaurant & Sports Bar has begun to grow both in terms of handle and food and beverage sales.

Gaughan observed that Sportech’s Racing and Digital business maintained consistent levels of service revenues for H1 2018 versus the prior year, and that management continued to assess further operational efficiencies to maintain profit levels.

The company recently concluded a previously announced sale of Dutch unit Sportech BV, realising Euro 2.8 million (GBP 2.5 million).

However, Gaughan acknowledged that growth has been slower than forecast.

Lack-Lustre Half-Yearly From Playtech Plc

Revenue and cash generation up, but other key indicators perform less well as profits plunge

Major online gambling group Playtech plc posted rather lack-lustre H1-2018 results Thursday, reporting:

  • Overall revenue up just 4 percent at Euro 436.5 million. However the company noted that excluding the troubled Asian operations revenue was up 35 percent on a reported basis;
  • Adjusted EBITDA down 15 percent on a reported basis at Euro 145 million;
  • Adjusted net profit down 34 percent at Euro 83.3 million;
  • Reported net profit down 25 percent at E uro 112.4 million;
  • Dividend flat at 12.1 euro cents.
  • 69 percent of group revenues were regulated in H1 (H1 2017: 50 percent), with around 80 percent of regulated revenues forecast for FY 2018 at current run rate;
  • Strong cash generation: net cash from operations up 51 percent to Euro 222.5 million;
  • Completion of Snaitech acquisition; consolidated from 5 June and now fully owned. This gives the company a strong presence in Europe’s largest regulated market by GGR;

Operational highlights

B2B Gaming Division

  • Regulated Gaming revenues of 53 percent (H1 2017: 38 percent);
  • Organic growth in regulated B2B Gaming revenue 16 percent at constant currency;
  • Playtech BGT Sports continues to win new clients and deliver growth, with 27 percent growth in revenue, 8 percent growth in retail machine footprint globally;
  • New licensees include Gala Leisure Buzz Bingo UK omni-channel deal, Casino: Polish National Lottery Totalizator, Sports: SAS in Portugal, Sportium in Columbia;
  • Pipeline strong across key geographies;
  • GVC negotiations progressing to benefit of both parties.

B2C Gaming Division

  • Sun Bingo 28 percent revenue growth at constant currency.

TradeTech Group

  • 16 percent revenue growth to Euro 52.3 million and 58 percent Adjusted EBITDA growth to Euro 25.2 million.

Current trading and outlook

  • Average daily revenue in the B2B Gaming Division for the first 52 days of Q3 2018 was down 13 percent y-o-y;
  • Excluding Asia, average daily revenue in the B2B Gaming Division for the first 52 days of Q3 2018 was up 6 percent;
  • Snaitech saw a strong performance at the start of H2 2018 driven by the closing weeks of the World Cup following which the business has continued to trade in line with expectations;
  • B2C gaming excluding Snaitech is performing in line with expectations with the Sun Bingo contract continuing to see revenue momentum;
  • TradeTech’s positive momentum reported for the first half of 2018 has continued into the second half.

Alan Jackson, chairman of Playtech, reported:

‘Playtech has had an extremely busy first half of the year with important operational progress and new licensee wins in key strategic markets, the UK, Europe and Latin America. This continued progress is resulting in higher quality earnings for Playtech with Group revenue now 69 percent regulated. Following headwinds in Asia and a full year contribution from the landmark Snaitech acquisition, regulated revenue at current run rate is expected to be c. 80 percent in 2018.

“This progress is marked against the disappointing market conditions in Asia. However, it should be noted the headwinds in the Asian market are not reflective of the core strength of the Playtech model as the regulated segment continues to report organic growth and encouraging momentum.

“Looking to the future, the delivery of the Snaitech acquisition in the period has not only delivered geographical diversification of the Group’s revenue profile but more importantly delivered a cornerstone presence in the largest, and one of the fastest growing gambling markets in Europe.”

Oryx Gaming Acquisition Agreed

UK media company Breaking Data has big US plans for online gambling game developer

Online gambling software and games developer Oryx Gaming revealed Thursday that, subject to shareholder and regulatory approvals, it is about to be acquired by UK media and AI company Breaking Data in a Euro 7.5 million deal that includes earn-out provisions.

Breaking Data says it plans to use its subsidiary GiveMeSport and Oryx Gaming to expand into the US online sports betting market with a new brand GiveMeBet, leveraging GiveMeSports’ 26 million Facebook followers.

There are plans to rebrand Oryx as Bragg Gaming Group, which will be helmed by industry veteran Dominic Mansour as CEO. Mansour is well known in the online gambling industry and has held executive positions with many of the major companies in the space, including FullTilt poker, GTECH G2, NetPlay TV and Globalcom/WMC UK.

He will be supported by former NetPlayTV executive Akshay Kumar as CFO. The current CEO of Oryx Gaming, Matevz Mazij, will remain with the company.

The expectation is that GiveMeBet will go live at the latest by early 2019.

In a press release Thursday (see footnote) Breaking Data chief executive Nick Thain said that GiveMeBet would be developed in a similar model to that used by Sky in building Sky Betting and Gaming into an industry leader.

Mansour said that more acquisitions are planned as Bragg Gaming is developed into a “next generation gambling company.

“The newly-combined group will now have the opportunity to grow into gaming and to leverage synergies through the combination of the businesses,” Mansour said. “GiveMeSport has a bigger following on Facebook than ESPN and Sky Sports and we plan to use this as a platform to grow into sports betting initially in the UK and further into the US.”

Breaking Data shareholders will vote on the deal at the company’s annual general meeting next month.

Financing arrangements have yet to be finalised, along with stock exchange and regulatory approvals.

Full details of the deal and company performance statistics can be viewed in the press release here:

http://globenewswire.com/news-release/2018/08/22/1555289/0/en/Breaking-Data-Corp-Enters-Into-Agreement-to-Acquire-Oryx-Gaming.html

Greek Punters Big In Online Gambling Last Year

Revenues from online gambling reached almost Euro 5.3 billion in 2017

Greek online punters were active last year, according to the local publication ekathimerini, which reports that online gambling and betting in Greece generated nearly Euro 5.3 billion in revenues in 2017, quoting official numbers from the regulator.

According to the data, gross gaming revenue stood at Euro 280.6 million.

The overall gambling market is estimated to at Euro 11 billion, generating gross gaming revenues of Euro 2 billion.