BPTY.L Regulatory News (BPTY)

9 Jul 2009 07:00



9 July 2009

PartyGaming Plc

Launch of INTRALOT Poker

Pre-close Trading Update

As part of the Group's agreement signed just three months ago with INTRALOT S.A. ('INTRALOT'), we are pleased to announce the launch of the www.intralot.it poker site.  Following the receipt of certification from the Italian regulator, AAMS, the INTRALOT poker service is now being rolled out and will join the Group’s Italian poker network.

While the Group's Italian poker network has only been operating a few weeks, with the expected introduction of poker cash games before the end of the year, the Board is hopeful that Italy will prove to be a profitable and exciting regulated online gaming market in the medium to long-term.

Pre-Close Trading Update

Since 6 April 2009, Group revenue has remained robust and despite the impact of seasonality, is in line with that achieved in the first quarter of 2009.

Casino revenue has shown a significant increase from the first quarter despite a fall in casino active player days due to seasonality and lower levels of cross-sell from poker.  This revenue growth has been driven by the Group's main casino site, PartyCasino, which accounts for over 70% of the Group's casino revenue, and continues to perform strongly on the back of a substantial increase in the number of games offered as well as the launch of a dedicated affiliate programme and major international marketing campaign, both of which commenced last month.

As expected, poker has seen a marginal reduction in active player days versus the first quarter due to seasonality and continued strong competition from US-facing sites. However, an enhanced player loyalty programme, improved player promotions and a new offline marketing campaign saw each of these metrics improve last month. As a result of these initiatives, poker yields have been softer than in the first quarter due to increased bonus and player loyalty costs, resulting in a reduction in poker revenue versus the first quarter.

Sports betting revenue was down on the previous quarter reflecting a reduction in betting volume due to the end of the season for European football, that remains the single most popular sport for betting customers.

Whilst bingo is currently small in the context of the Group, we believe it represents a significant opportunity with the global online bingo market estimated at $1.5 billion per annum. The B2B deals signed over the past few months with CIRSA, DM plc and Channel 5 are expected to benefit bingo revenues during the fourth quarter of 2009.

In an effort to capitalise upon the recent seizures of player funds from US-facing sites by the United States Attorney's Office of the Southern District of New York, the Group has chosen to increase its marketing spend in certain territories and, whilst this has already had a positive impact on player numbers, it is also expected to lead to distribution costs being slightly higher than our previous full year guidance of 38-40% of net revenue. However, continued cost savings and favourable currency movements have meant that lower staff and overhead costs have mitigated the increase in marketing costs and consequently, Clean EBITDA1 margins for both half year and the full year results are still expected to be in line with that achieved for the full year in 2008. 

The Group's interim results will be announced on 28 August 2009.

Commenting on today's announcement, Jim Ryan CEO said:

"The Group's strategy remains on-track and I am pleased that many of the seeds we have sown over the past year are now beginning to bear fruit. The improvements to our poker product and loyalty programme, the addition of INTRALOT to our Italian poker network and the launch this week of bingo and casino for DM plc are clear examples of this. PartyCasino, the world's largest online casino, continues to go from strength to strength, with strong double digit growth quarter-on-quarter despite difficult economic conditions. We look forward to the rest of the year with confidence."

1EBITDA before payments associated with the Group's Non-Prosecution Agreement, reorganisation costs and non-cash charges relating to share-based payments.

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