Sport Betting Acquisition Gives Playtech a Strong Hand
By Roger Blitz, Leisure Industries Correspondent
The Financial Times UKPublished: March 20 2009
Playtech has added sports betting to its list of services and said it was weighing up a move to the main market.
The online gambling software provider also increased its dividend by nearly 50 per cent as it reported a 55 per cent rise in net profit.
The company, which is majority owned by Israeli entrepreneur Teddy Sagi, has bought Player2Players, a sports betting software provider, for an undisclosed sum, adding to its suite of casino, poker and bingo software products.
It also gave its first update on the impact of its groundbreaking deal with William Hill, struck last year.
Playtech bought a series of gaming assets, businesses and contracts and sold them for $250m to the bookmaker to create William Hill Online in return for a 29 per cent stake in the business.
Playtech, registered in the Isle of Man, said revenues and profits from WHO in the first eight weeks were up 40 per cent on comparable numbers prior to the deal.
Paul Leyland, Collins Stewart analyst, said the WHO numbers "underlines our view that this venture should drive upgrades for both William Hill and Playtech in the medium-term".
Playtech's business model and its relentless search for new licences has won over several analysts, but some have been looking to Playtech to provide some clarity on its medium-term strategy.
Mor Weizer, chief executive, said a move to the main market was under consideration but that no final decision had been taken.
Revenues outside of WHO were up 2.3 per cent in the first 11 weeks of the year, compared with the fourth quarter. Statutory pre-tax profits rose from €26.8m to €41.4m.
Net profit for 2008 was €40.7m, and revenues climbed 70 per cent to €111.5m. Earnings per share were 17.9 cents, compared to 12.3 cents last year.
The company paid a final dividend of 7.6 cents, giving a total pay-out for the year of 15.2 cents - a 49 per cent increase from last year's 10.2 cents.
Playtech clarified comments early yesterday by Shuki Barak, its interim chief finance officer, who told Reuters it could achieve €300m to fund acquisition by raising debt at 2.5 times earnings before interest, tax, depreciation and amortisation.
Mr Barak told the Financial Times: "Theoretically, we could do it yes because we have such a solid balance sheet, we have no debt and we have long-term contracts. But nothing right now is on the table."
Shares rose 4p to 408p.
