NPT.L Regulatory News (NPT)

4 Feb 2008 07:01

Netplay TV PLC04 February 2008 Date: 4 February 2008On behalf of: NetPlay TV plcEmbargoed until: 0700hrs NetPlay TV plc Trading update NetPlay TV plc (AIM: NPT), the interactive TV gaming company, is pleased to giveits shareholders a trading update on its business. The year has been one ofsignificant positive change. The Directors expect the trading loss for thefinancial period ended 31 December 2007 to be in line with current marketexpectations and are pleased with the progress made to date, and look forward tothe year ahead with confidence. Introduction In November 2006, it was announced that the strategy of the business was to bechanged dramatically to focus on building a converged interactive gamingbusiness. At the start of 2007, we set ourselves a number of goals, all of which have nowbeen achieved: Reach £18m in gross bets on our Live Roulette TV This target was achieved in September 2007, withchannel record bets of £19.2m Re-locate all of our TV operations into one On 3 December 2007, we signed a lease on a purposecentralised building built TV studio and office complex in Battersea, giving us three state of the art TV studios and a centralised office Launch TV Bingo In July 2007, we launched TV Bingo(TM) in beta test format - Britain's first truly interactive live bingo TV show - this went live when it came out of beta test on 20 November 2007 Expand our roulette offering to include other games In November 2007, we secured the domain name www.Supercasino.com under which we will add Live Blackjack(TM) in Q1 2008. We will also offer a range of 76 Internet games to our customers following the agreement signed with Parlay Entertainment in January 2008 Achieve group profitability by the end of 2007 In the last two months of 2007, the group has moved into profit, recording a combined EBIT for November and December in excess of £200,000 Launch an interactive Mobile gaming offering In mid 2007, we launched our first Mobile gaming product - today we have over 50,000 regular players generating over £200,000 per month in revenue During 2007, NetPlay TV plc has established itself as a serious operator in thegaming market. Our aim is to build on these solid foundations and continue togrow the business throughout 2008 and beyond. Product and Service development During 2007, we commenced a major programme of new product development,including our televised bingo show which we believe is the world's first trulyinteractive "live" TV bingo show. This business unit came out of beta testingon 20 November 2007 and, despite being only a once a week event, is expected toachieve break even by the end of February 2008. The addition of 24/7 Internetbingo and slot games which will come into effect from 1 March 2008 will, webelieve, enhance the consumer experience and therefore we believe theprofitability of the business. In 2007, we also developed our interactive Mobile gaming product, "QuidsIn(TM)". Your Board is pleased to report that subscribers to this service nowexceed 50,000, with revenues of over £200,000 per month. It is our intention tointegrate this service with our bingo offering by the end of Q1 2008. The finalnew development initiated in 2007 is our second live TV casino product, "LiveBlackJack". We anticipate this to go live by the end of Q1 2008 in line withthe "soft" launch of our www.Supercasino.com website. Total investment over the past 13 months has been £750k in our new officecomplex, approximately £800k in the development and creation of the bingoconcept, and a further £1m in customer acquisition. Furthermore, we alsoacquired two businesses in the period. The first was Abstract Games Limited,the interactive print company, now focused on using traditional interactiveprint media to attract new customers for our bingo and Mobile services, and PlayMonday, the SuperDraw business, was acquired from Chariot (UK) plc. This £10mdraw now forms a successful part of our live weekly bingo show. We have alsoextended our reach on TV, adding both Virgin and Freeview to the existing accessthrough Sky. This gives us access to over 24m TV-owning homes throughout the UK. We have now moved into our new office and studio complex giving us three purposebuilt TV studios from which to broadcast our Super Casino and Bingo shows. Weanticipate savings of in excess of £10,000 per month by centralising all ouroperations in this one new location. The savings will be realised with effectfrom Q2 2008. During 2007, NetPlay TV entered into talks with a number of terrestrialbroadcasters with a view to developing a Bingo TV format for a terrestrialchannel. In late 2007, Ofcom (the independent regulator and competitionauthority for the UK communications industries) announced a review of the TVgaming industry and whether it should come under the category of "teleshopping". This review continues, with a decision due within the next few months. Under current Ofcom guidelines, terrestrial broadcasters (BBC1, BBC2, ITV1, C4and Five) are not allowed to broadcast "teleshopping" programming. If thiscategorisation is confirmed by the Ofcom review, terrestrial broadcasters willnot be allowed to broadcast any gaming programming on their channels, thusexcluding them from the sector, and allowing NetPlay TV to promote its games ondigital channels, Sky, Virgin and Freeview more proactively, and arguably in aless competitive environment. Trading in 2007 Trading in the last quarter of 2007 saw a move from a monthly loss into profit;with trading profit for the final two months of the year being £150,000 and£50,000 respectively. This was despite a particularly bad margin month for "LiveRoulette" in December 2007; with a margin of 1.9% against the statisticallyexpected margin of 2.7%, thus reducing our expected margin by some £140k. Earlytrading in 2008 is good, with "Live Roulette" correcting the poor margins of theprevious month, and achieving a margin for January 2008 of 3.7%. It was always our expectation that 2007 would be a transformatory year where theCompany would be incurring significant costs as we reshaped the business model.The year has brought many successes, allowing us to take a number of furtherinitiatives than originally planned. We expect the trading loss for the yearended 31 December 2007 to be in line with current market expectations. Current trading As we move into 2008, we are pleased with early trading. As mentioned above,the Roulette service is showing particularly good results. Over the comingmonths we will expand the Live Roulette offering to form the basis of our new "Super Casino(TM)" brand. By the end of Q1 2008 we will add "Live Black Jack" aswell as seventy six Internet games allowing people to play instant slot machineswhilst gaming from the website. Over the past 12 months we have seen the numberof people using the Internet to place bets increase significantly, growing fromzero when we acquired the business to a proportion of over 90%. Our developmentprogramme will continue throughout 2008 as we add more "Live" TV game formats.We will also add more Mobile products through 2008 following the success of our"Quids In" service. Our Bingo offering has started the year well with user numbers increasingsteadily week on week. The addition of 24/7 Internet bingo, slots and anInternet and Mobile chat room facility in March this year will allow us tobroaden our marketing reach throughout the remainder of 2008. Early customeracquisition costs are extremely encouraging, especially when compared to some ofour Internet peers. Based on current statistics, we anticipate our bingo service to move into profitby March 2008. We believe the converged solution we offer is something bingoplayers want. The blend of Internet, TV and Mobile is a unique offering in themarket place and is something that clearly differentiates us from the crowd. Thecurrent "Life Time Value" of players is encouraging with over 65% of our currentbase opting for our weekly bingo subscription service. At the end of February 2008, we will also add our "Quids In" Mobile service toour bingo offering, taking this from a being a standalone offering to being partof a converged solution. As highlighted earlier, we have seen subscribers tothis service increase steadily over the last six months with user numbers nowexceeding 50,000 generating revenue in excess of £200,000 per month. Strategy Over the coming year, our focus will be on growing the business through organicgrowth and, if appropriate, acquisitions. We believe the right acquisition inthe right area could accelerate the business considerably and allow us to takevertical single market businesses and broaden them into three converged marketswith the same product offering. In addition, the right acquisition will offerus the opportunity for significant synergies. Taken together, these benefitswill lead to a greater spend per customer, reduced costs and therefore increasedprofitability. We continue to explore moving our gaming license to an "offshore" jurisdictionand have entered into talks on this matter. Moving the license will have asignificant positive impact on the profitability of the Company. We have achieved much over the last 12 months, although there is still atremendous amount to be done. We have firmly established NetPlay TV as aserious operator in the gaming industry. 2008 will see us establishing solidbrands in both the Casino and Bingo markets as we build strong loyalty throughoffering the consumer choice and simplicity in their gaming experience. The Directors of the business are pleased with the progress made to date andlook forward to the year ahead with confidence. - ends - Enquiries: NetPlay TV plcMartin Higginson, Executive Chairman www.netplaytv.plc.ukPat Greene, Finance Director Via Redleaf Redleaf CommunicationsEmma Kane/Sanna Lehtinen/Mike Ward Tel: 020 7822 0200 Landsbanki Securities (UK) LimitedSindre Ottesen Tel: 020 7426 9000 This information is provided by RNS The company news service from the London Stock Exchange