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NetPlayTV plc

Preliminary Results

NetPlayTV plc (AIM: NPT) (the "Company"), the interactive gaming company, is pleased to announce its preliminary results for the year ended 31 December 2012. The full annual report and financial statements are available on the website www.NetPlayTV.plc.uk.

Financial Highlights

§ 27.5% increase in net revenue to £21.8m (2011 recategorised: £17.1m)

§ 30.5% increase in EBITDA[*] to £4.3m (2011: £3.3m)

§ 470% increase in statutory profit before tax to £3.1m (2011: £0.6m)

§ Cash balance up 55% to £12.3m (2011: £7.9m)

§ Cash generated from operations up 73% to £4.3m (2011: £2.5m)

§ Final dividend proposed of 0.225 pence per share (2011: nil) bringing the full year dividend to 0.375 pence per share (2011: nil)

Operational Highlights

§ Increased investment in pure online and mobile marketing which together with TV marketing resulted in an increase in new depositing customers of 61.5%

§ All live TV roulette games now available across iPhone, iPad and Android applications

§ Strengthened relationships with ITV and Channel 5, plus extended agreement with ITV

Post Period Highlights

§ New ITV three-year broadcast agreement: now six nights with access to the ITV.com website to further enhance customer reach

§ Current trading strong with Q1 2013 new depositing customers increasing by 42.4% over the same period in 2012 and net revenue up by 38.9%.

Commenting on the results, Charles Butler, NetPlayTV's Chief Executive said:

"This has been an exceptional year both financially and operationally for the Group. With key performance indicators and our broadcast relationships going from strength to strength, we are particularly pleased with the progress that has been made in line with our stated growth strategy.

"The significant investment the Group continues to make in marketing has had a significant impact over the year and this enhances our ability to drive further growth in our core UK market, whilst the viable overseas markets and the commercial opportunities they offer will be appraised as regulation starts to take shape.

"We enter 2013 with confidence as the Group's strategy continues to bear fruit. Building upon the strong start to the year, we look forward to continuing to drive growth and shareholder value."

Enquiries:

Notes to Editors:

About NetPlayTV plc

NetPlayTV plc is admitted to trading on the AIM market of the London Stock Exchange (NPT). NetPlayTV operates a number of interactive gaming services under an Alderney gaming license, including Supercasino.com and Jackpot247.com. These services can also be viewed 24 hours a day live on Sky Channel 862, six nights a week on ITV, and every evening on Channel 5.

The Company is focused on the delivery of a converged interactive gaming experience allowing its customers to interact with its games on a variety of platforms, TV, internet, mobile and tablet from a common integrated wallet.

Chairman's Statement

Performance Overview

NetPlayTV has delivered a very strong performance in 2012, with profit before tax increasing 470% to £3.1m compared to £0.6m in 2011. The strategy has remained unchanged, and we are committed to focusing on providing the best live casino experience in the industry across Mobile, TV and Online and this strategy has continued to drive impressive growth in new customer numbers and in turn net revenue and cash flow.

We continue to build upon our relationships with key broadcasters and the live roulette shows on both ITV and Channel 5 continue to perform well. In April 2012, we renewed our relationship with ITV by signing a new broadcast agreement. We have further enhanced this relationship in March 2013 by signing a new 3 year agreement which will extend until March 2016. This new agreement increases the number of nights of live broadcast from 4 to 6 and includes access to the ITV.com website and Video on Demand customers. I am also pleased to report that the Group continues to be at the cutting edge of innovation on mobile and tablet gaming. All live TV roulette games are now available across iPhone, iPad and Android devices and following the addition of slots at the end of Q3 this area of the business continues to go from strength to strength. With the natural fit between mobile and TV the mobile and tablet performance throughout 2012 has surpassed our expectations, and accounted for 12% of all new depositing customers in Q1 and rising to 31% by Q4.

Financial Results

NetPlayTV has delivered an impressive set of 2012 results, with net revenue increasing 27.5% to £21.8 million and EBITDA increasing 30.5% to £4.3million.

The Group has no debt and cash generation has been strong with the year-end balance increasing by £4.3 million to £12.3 million.

The Group continued to invest heavily in marketing during the year, resulting in an increase in new depositing customers of 61.5%.

To provide a greater level of detail on the financials this year, we have chosen to extend the disclosure provided on the consolidated statement of comprehensive income. Full details of this recategorisation can be seen in note 1.

Dividend

During the year, the board announced a maiden interim dividend of 0.150 pence per share and is proposing a final dividend of 0.225 pence per share, subject to approval by the shareholders at the Annual General Meeting, bringing the full year dividend to 0.375 pence per share. The dividend is payable on 13 June 2013 for shareholders on the register on 24 May 2013.

Looking ahead

Q1 2013 has continued the positive momentum achieved throughout 2012 with new depositing customers increasing by 42.4% over the same period in 2012 and net revenue up by 38.9%.

NetPlayTV enters the new financial year with confidence and with increasing investment in marketing and product innovation I believe we are well positioned to build on the successful results delivered in 2012.

Clive Jones

Non-Executive Chairman

8 April 2013

Financial review

2012 was a record year for NetPlayTV with net revenue up 27.5% to £21.8m (2011 recategorised: £17.1m), EBITDA[†] of £4.3m (2011: EBITDA of £3.3m), profit before tax of £3.1m (2011: £0.6m) and net cash from operating activities of £4.3m (2011: £2.5m).

Net revenue

In order for revenue to better represent the consideration received or receivable, the Group has introduced net revenue to these financial statements. A full reconciliation is shown in note 1. Revenue as shown in prior years' financial statements is now shown as gross gaming win and is still regarded as an important key performance indicator for the Group which is disclosed separately in note 2. Gross gaming win accounted for £26.9m during 2012 representing year on year growth of 30.5%.

Net revenue accounted for £21.8m representing year on year growth of 27.5% (2011 recategorised: £17.1m). Customer incentives have increase as a percentage of gross gaming win from 17.7% to 20.7% as marketing and CRM activity have increased during the year. During the same period average quarterly active depositing casino players have increased by 45.4% from 15,873 to 23,077.

During the year the Group disposed of its Bingo business segment for £425,000. Full details of this disposal are within note 3 of the financial statements. This operation contributed net revenue of £301,000 in the year (2011: £1,679,000).

Expenses

The Group now discloses marketing, operating and administrative expenses on the face of the consolidated statement of comprehensive income.

During the year the Group has invested heavily in marketing, increasing its expenditure by 57.5% from £5.9m in 2011 to £9.2m in 2012. Marketing expenditure includes revenue share agreements in respect of key broadcast relationships with ITV and Channel 5 as well as TV advertising and online marketing. The 57.5% increase in marketing expenditure has resulted in an increase in average quarterly new depositing casino players of 61.5% to 12,725 (2011: 7,879).

Operating expenses include costs directly in relation to the gaming and broadcast operations including software royalties, payment processing fees, customer care, production, hosting and connectivity. These expenses include both fixed and variable costs. These costs have increased by 16.0% while net revenue has increased by 27.5%.

The group continues to focus on cost control and during the year administrative expenses have reduced by £0.4m to £3.3m.

EBITDA 

The Directors regard earnings before interest, tax, depreciation and amortisation (EBITDA) as a reliable measure of profits that is not unduly subjective and is close to the Group's operating cash flows. EBITDA as disclosed in the consolidated statement of comprehensive income does not include share based payments. The Directors recognise that EBITDA is a non-GAAP company specific measure however it is a measure that is widely used within the betting and gaming industry.

EBITDA has increased from £3.3m in 2011 to £4.3m in 2012 resulting in an increase in the Group's EBITDA margin (as a percentage of net revenue) to 19.8% (2011: 19.4%).

The Group did not incur any exceptional expenditure in 2012 or 2011 and the items below EBITDA on the consolidated statement of comprehensive income (i.e. depreciation, amortisation, share based payments and finance income) do not affect cash generated from operations.

Cash flow

The cash balance at 31 December 2012 was £12.3m (2011: £7.9m) representing an increase of £4.3m. Cash generated from operations was £4.3m (2011: £2.5m) and is one of the key performance indicators used by the directors in running the business. This measure not only reflects the liquidity of the Group but also on the EBITDA to cash conversion. The adjusted earnings per share calculated using net cash generated from operating activities is 1.52 pence for 2012 (2011: 0.89 pence).

During the year the net expenditure on property, plant and equipment and intangible assets was £0.2m (2011: £0.1m). Any staff costs in relation to continual web and other platform development have been expensed in full during the year. The increase in cash and cash equivalents includes proceeds for the disposal of the Bingo operation of £0.4m and the payment of the interim maiden dividend of £0.4m.

Key financial metrics

Chief Executive's review

Delivering against our strategy

2012 has seen the Group deliver its second consecutive year of net revenue growth in excess of 20%. We have continued to focus on our strategy of taking market share by providing the best interactive live casino experience in the industry and this has delivered strong year on year growth with net revenue increasing by 27.5% to £21.8m and EBITDA by 30.5% to £4.3m.

We continue to improve our multi channel offering, with customers able to play via TV, mobile and online. Mobile (including tablet) has been a key focus during 2012 and at the end of Q3 we launched slots games for mobile and tablet to compliment the live casino TV games already offered. Customers can now access these games via iPhone, iPad and Android with impressive growth quarter on quarter ending in Q4 with 31.1% of all new depositing customers opening an account via mobile or tablet. This has increased further to 33.6% in Q1 2013.

Our new customer reach and brand awareness has also improved significantly throughout 2012 with TV continuing to lead the way. As key broadcast partners we worked closely with both ITV and Channel 5 and during 2012 signed a new agreement with ITV to extend this relationship. This was followed up in Q1 2013 with a further agreement extending for three years until 31 March 2016 and increasing the airtime to 6 nights a week, Monday to Saturday, as well as adding online media into the agreement with NetPlayTV now having access to the ITV.com website. With the product and brands now positioned well we took the decision to invest more heavily in marketing which increased by 57.5% on the previous year. TV dominated this spend which was a combination of the late night teleshopping agreements with Channel 5 and ITV but also significant spend buying ad spots across other channels including Channel 4, UKTV and the Sky network. This spend has proven very effective, resulting in new depositing sign-ups for 2012 increasing by 61.5% to 50,900 (2011: 31,516). Towards the end of the year we started to invest more in pure online and mobile marketing in addition to the existing TV marketing spend. We are pleased to say our brands have both been very responsive to this diversification in marketing and the results have shown through towards the end of 2012 and leading into Q1 of 2013.

Although marketing expenditure has driven increased new customer numbers we have also continued our strong focus on player retention and value. We believe we have some of the highest customer loyalty rates and values in the industry and this can be seen in the core revenue stream we generate from existing customers. 40.6% of gross gaming win generated during the year came from players who had signed up over 12 months ago and this increased to 55.2% for players who had accounts greater than 6 months. We continue to analyse customer behaviour and this enables us to continually improve and optimise our multi channel live casino experience for our customers.

Financials

The Group made the decision to increase the level of disclosure on the consolidated statement of comprehensive income in 2012 to show greater clarity through more detailed analysis.

During 2012 the Group has produced a very positive set of financial results. The core KPI's that drove the business were new depositing players and active depositing players which increased by 61.5% and 45.4%[§] respectively compared with 2011. This led to an increase in net revenue of 27.5% to £21.8m (2011: £17.1m) and 30.5% increase in EBITDA to £4.3m (2011: £3.3m).

Marketing expenditure increased by 57.5% during the year to £9.2m (2011: £5.9m). However, with continued tight control over operating and administrative expenses the EBITDA margin (as a percentage of net revenue) increased to 19.8% (2011: 19.4%).

The Group increased cash during 2012 by £4.3m to £12.3m (2011: £7.9m) which included the sale of some non-core bingo assets for £0.4m.

In May 2012 the courts approved a share capital reorganisation enabling a maiden interim dividend of 0.15 pence per share to be paid in October 2012. The Board is pleased to propose a final dividend of 0.225 pence per share, subject to shareholder approval at the Annual General Meeting, to be paid on 13 June 2013 with an ex-dividend date of 22 May 2013 bringing the full year dividend to 0.375 pence per share.

People

We want to thank all the employees of NetPlayTV for their continued hard work and dedication, as without them our strategy to be the leading interactive live casino operator would not have been possible. Through focused execution and strong team work we delivered an excellent set of results for 2012 and we are well positioned for continued success and growth in 2013 and beyond.

Current Trading & Outlook

2013 has started strongly with Q1 new depositing customers up 42.4% to 17,712 total active depositing customers up by 38.8% to 30,360 and net revenue up by 38.9% on the same period in 2012.

Mobile continues to deliver impressive growth from an ever increasing base and in Q1 2013 accounted for 33.6% of all new depositing customers with year on year net revenue growth of 363.7%, now accounting for 29.6% of total net revenue for the quarter. We continue to invest heavily in mobile and tablet marketing along with product development and expect to see this growth trend continue throughout the year ahead.

The Group has strong growth opportunities in its core UK market and continues to look at viable overseas markets as regulation starts to take shape.

We are excited about 2013 and are looking forward to building further on the positive momentum and successful results of 2012.

Charles Butler

Chief Executive Officer

8 April 2013

NetPlayTV plc

Consolidated statement of comprehensive income

for the year ended 31 December 2012

NetPlayTV plc

Consolidated statement of financial position

as at 31 December 2012

NetPlayTV plc

Consolidated statement of cash flows

for the year ended 31 December 2012

Consolidated statement of changes in equity

for the year ended 31 December 2012

Notes to the financial statements

1. Basis of preparation

The financial information set out in these preliminary results does not constitute the company's statutory accounts for the years ended 31 December 2012.

Statutory accounts for the year ended 31 December 2011 have been filed with the Registrar of Companies and those for the year ended 31 December 2012 will be delivered to the Registrar in due course; both have been reported on by the Independent Auditors. The independent auditors' reports on the Annual Report and accounts for the year ended 31 December 2011 and 31 December 2012 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The financial information in these preliminary results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies adopted have been consistently applied to all the years presented and are consistent with the policies published in the statutory accounts for the year ended 31 December 2011.

Adjustment to prior year comparatives

The Directors have chosen to provide greater clarity and disclosure to the face of the consolidated statement of comprehensive income by modifying the presentational layout. As a consequence cost of sales has been reanalysed to recategorise customer incentives as a deduction from gross income and show separately marketing and operating expenses. Additionally, depreciation, amortisation and share based payments have been shown separately from administrative expenses. As detailed in note 3, comparative figures have also been recategorised relating to the Bingo segment disposed of in February 2012. Below are reconciliations from the entries in this year's consolidated statement of comprehensive income to the entries included in the 2011 Annual Report:

A comparative prior year balance sheet as at 31 December 2011 has not been presented as the revised presentation of the consolidated statement of comprehensive income has not effect on the reported profit or the net assets.

2. Segmental information

The Board is the group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Group has one reportable segment, being the Casino segment. This division consists of all online casino products and ancillary income. The brands operated in this division are Supercasino.com and Jackpot247.com which are aggregated into one reportable segment. The Bingo Segment was discontinued in February and March 2012. Its results are shown in note 3.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Board evaluates performance on the basis of segment EBITDA. This measurement basis excludes head office costs not derived from operations of any segment and are only disclosed in total.

During the year, the Group traded in the UK and Channel Islands (comprising Supercasino.com, Jackpot247.com). In addition the Group holds some domain names as specified in note 8 in the British Virgin Islands.

3. Discontinued operations

In the year the Group disposed of its Bingo business segment in two transactions on the 29 February 2012 and 31 March 2012 for cash consideration of £425,000. As a result of this, discontinued operations comprise the 'Bingo' business segment as reported in past Annual Reports.

There were no discontinued operations in the financial year up to 31 December 2011.

The gain on disposal of discontinued operations was determined as follows:

Analysis of the result of discontinued operations is as follows:

Analysis of the cash flows of discontinued operations is as follows:

4. Income tax

5. Earnings per share

Adjusted Earnings per Share

The Directors believe that EPS calculated using net cash generated from operating activities better reflects the underlying performance of the business and assists in providing a clearer view of the performance of the Group. It is also a performance measure used internally to manage the operations of the business.

6. Property, plant and equipment - Group

7. Goodwill

£2,565,000 of goodwill arose on the acquisition of NetPlayTV Services Limited and NetPlayTV Broadcasting Limited in December 2006.

The recoverable amount of the SuperCasino cash generating unit, to which the goodwill was allocated, has been determined using a value in use calculation.

The calculation of value in use is based on several assumptions which feed into a forecast model based on past player behaviour.

The key assumptions of the forecast were as follows:

·; number of new player depositing registrations;

·; rate of retention of existing players;

·; spending patterns of players

·; cost per acquisition (CPA) from different acquisition sources;

·; the growth rate applied to cash flows arising after the end of approved budgets; and

·; the discount rate applied to cash flows.

The above assumptions are based on past experience, as considered appropriate for any external influences. For example a planned increase of marketing activity or TV airtime would be expected to increase player registrations.

Management forecasts cover a 12-month period and, beyond that, a growth rate of 2% is applied to cash flows up to 60 months. A discount rate of 13.7% has been used.

The directors do not believe that any reasonably possible change in key assumptions would lead to impairment of the carrying amount of the SuperCasino cash generating unit.

£1,050,000 of goodwill arose on the business combination due to the acquisition of certain assets from Two Way Gaming Limited ("TWG") and the simultaneously entering into production and gaming contract with VMTV to operate the Jackpot247 Service.

The calculation of value in use is based on several assumptions which feed into a forecast model based on past player behaviour. The key assumptions of the forecast were as follows:

·; number of new player registrations;

·; rate of retention of existing players;

·; spending patterns of players;

·; the growth rate applied to cash flows arising after the end of approved budgets; and

·; the discount rate applied to cash flows.

The above assumptions are based on past experience, adjusted as considered appropriate for any external influences. For example a planned increase of marketing activity or TV airtime would be expected to increase player registrations.

Management forecasts cover a 12-month period, beyond that no growth is applied to cash flows. A discount rate of 13.7% has been used.

£2,000 of goodwill arising on the consolidation of NetPlay IP Limited was disposed of in the year as this company was dissolved.

8. Intangible assets

The Group holds several highly desirable domain names which were acquired as part of the Bingos transaction in 2008, some of which being .de, .fr and .it domains, are particularly attractive for use in the German, French and Italian markets respectively. These domain names are held by NetPlayTV Marketing BVI Limited a company resident in the British Virgin Islands. Domain names with a cost of £225,000 and amortisation of £75,000 and therefore a net book value of £150,000 were disposed of as part of the discontinued operation disclosed in note 3.

During the year, the directors of the company have considered any indications of impairment and have come to the conclusion that there are none.

9. Share capital & share premium

The reduction of share premium account and cancellation of issued Deferred Shares, as described in a circular sent to shareholders on 16 March 2012, was approved by the High Court of Justice and became effective upon registration by the Registrar of Companies on 3 May 2012.

10. Subsequent events

On 14 March 2013, the Group signed a new three year broadcast agreement with ITV. The agreement will see NetPlayTV increase its live broadcast on ITV to six nights and provide the Company with access to ITV's online inventory.