Half Year Results

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31 August 2012

bwin.party digital entertainment plc

Half year report for the six months ended 30 June 2012

Solid growth in Clean EBITDA as Merger synergies more than offset increased gaming taxes 

●     Pro forma# total revenue up 3% to €410.0m with growth in casino & games and sports partially offset by a decline in poker.  Actual total revenue up 50% to €410.0m driven primarily by the Merger*

●     Pro forma Clean EBITDA from Continuing operations up 13% to €92.3m due to revenue growth and synergies, partly offset by increased gaming duties from locally regulated markets.  Actual Clean EBITDA from Continuing operations up 81% to €92.3m primarily due to the Merger 

●     Clean EPS from Continuing operations up 23% on a pro forma basis to 9.2 € cents per share (2011: 7.5 € cents per share)

●     Strong cash generation in the period used to fund increased taxes, M&A and cash returns to shareholders; €100m in dividends and buybacks returned to shareholders in the twelve months to 30 June 2012

●     Social games unit established with substantial dedicated development team

●     Half year dividend increased by 10% to 1.72 pence per share (2011: 1.56 pence)

●     Board remains confident about the full year result; net gaming revenue down 8% versus Q2 12 reflecting the Euro 2012 Championship, the late start of the German Bundesliga and seasonality

Financial summary (unaudited)

Pro forma

Actual

Six months ended 30 June

2012

€million

2011

€million

2012

€million

2011

€million

 

 

 

 

Revenue

 

 

 

 

  Sports betting

128.1

125.7

128.1

59.9

  Casino & Games

139.7

124.3

139.7

99.1

  Poker

96.4

104.9

96.4

79.8

  Bingo

31.5

33.0

31.5

27.8

 

 

 

 

Net revenue

395.7

387.9

395.7

266.6

Other revenue

14.3

10.1

14.3

6.5

 

 

 

 

 

Total revenue

410.0

398.0

410.0

273.1

 

 

 

 

 

Clean EBITDA~ from Continuing operations

92.3

81.9

92.3

50.9

Clean EBITDA~ from Discontinued operations^

(6.7)

(9.5)

(6.7)

(5.1)

 

 

 

 

 

 

Total Clean EBITDA~

85.6

72.4 

85.6

45.8

 

 

 

 

Loss before tax - Continuing operations

(15.3)

(35.7)

(15.3)

(50.8)

Loss after tax - Continuing operations

(14.2)

(29.0)

(14.2)

(42.5)

Loss after tax

(21.3)

(41.0)

(21.3)

(49.1)

 

 

 

* On 31 March 2011 PartyGaming Plc merged with bwin Interactive Entertainment AG (’the Merger’).

# The actual results include PartyGaming’s results throughout the entire period and the results of bwin Interactive Entertainment AG with effect from the Merger on 31 March 2011.  Pro forma results set out the financial performance of the Group as if the Merger had always been in place.

~ Before the provision for costs associated with the Group’s Non-Prosecution Agreement, reorganisation expenses, retroactive taxes and associated charges, merger and acquisition expenses, exchange differences and before non-cash charges relating to share-based payments (see reconciliation of Clean EBITDA to operating profit (loss) below).

^ Discontinued operations refers to Ongame’s B2B business as well as operations located physically outside of the US but which relate to US customers that were no longer accepted following the enactment of the UIGEA.

Earnings per share (unaudited)

Pro forma

Actual

Six months ended 30 June

2012

€ cents

2011

€ cents

2012

€ cents

2011

€ cents

 

 

 

 

Basic EPS (loss per ordinary share) - Continuing operations

 

 

Standard

(1.7)

(3.2)

(1.7)

(6.6)

Clean~

9.2

7.5

9.2

5.9

 

 

 

 

 

 

Basic EPS (loss per ordinary share) - Total operations

 

Standard

(2.5)

(4.6)

(2.5)

(7.6)

Clean~

8.4

6.4

8.4

5.1

 

 

 

 

 

 

 

 

 

 

~ EPS before the provision for costs associated with the Group’s Non-Prosecution Agreement, reorganisation expenses, retroactive taxes and associated charges, merger and acquisition expenses, exchange differences, non-cash charges relating to share-based payments and amortisation and impairments on acquisitions (see reconciliation of Clean EPS to Basic EPS in note 8 to the Financial Information).

Commenting on today’s results announcement, Jim Ryan and Norbert Teufelberger, Co-CEOs said:

“Our focus during the first half of 2012 was to continue to execute our integration plan in order to deliver the synergies committed to as part of the Merger, secure meaningful market positions in newly regulated markets and improve our core operations. With a shifting regulatory landscape and a challenging economic backdrop in several European markets, we have delivered on all three objectives as well as grown revenue and Clean EBITDA, a testament to the strength of our business model.  The business remains highly cash generative and in the past 12 months we have returned €100 million to shareholders through share buy-backs and dividends.

“The fundamentals of our two largest product verticals, sports betting and casino, remain strong and we remain excited by their prospects as we develop our mobile offering in conjunction with our expansion into a number of regulated markets.

“Our UK bingo business has returned to revenue growth and we have stabilised the position in Italy where we remain the clear leader in terms of market share.  In Spain, our new Binguez brand has started well and has secured a top three position in this newly regulated market.

“Poker is a key area of focus and we are determined to return it to growth through execution of a detailed plan that includes pooling our poker liquidity as well as repositioning our flagship PartyPoker brand. We expect both initiatives to have a positive impact on our performance, along with our recently launched FastForward Poker product.

“The regulatory landscape continues to evolve. During the first half we launched into Denmark where we have a strategic alliance with Danske Spil, the market leader, and also into Spain where we have established a top three position for each of our products.  Having secured a sports betting licence in the northern state of Schleswig-Holstein, the regulatory backdrop in Germany, our largest market in terms of revenue, remains fluid. While we continue to believe that the proposed regime put forward by the other 15 Länder fails to meet the tests set by the European Commission and the Court of Justice of the European Union, we are engaging with the German authorities to develop and secure a long-term solution for all stakeholders.”

On current trading and outlook they added:

“In the eight week period ended 25 August 2012 average gross daily revenue was down 11% and average net daily revenue was down 8% versus the second quarter of 2012.  This reflects the end of the Euro 2012 Championship, the late start of the German Bundesliga and seasonality.  As expected, there has been a marked reduction in bonus rates in sports betting since 1 July 2012 following the end of the Euro 2012 Championship and as a result net daily sports revenue was marginally above that in the second quarter.  The Board remains confident about the full year result.

“The Board has declared an interim dividend of 1.72 pence per share, a 10% increase over 2011 and will consider making further share repurchases, subject to prevailing market conditions, other investment opportunities, appropriate gearing levels and the overall financial position of the Company.  Further announcements will be made as and when market purchases are made.”

Contacts:

bwin.party digital entertainment plc    

Investors                                                           Media
Peter Reynolds             +44 (0) 20 7337 0100     John Shepherd     +44 (0) 20 7337 0100                                                      

Interviews with Jim Ryan, Norbert Teufelberger and Martin Weigold

Interviews with Jim Ryan and Norbert Teufelberger, Co-CEOs, and Martin Weigold, Chief Financial Officer, in video/audio and text will be available from 7.00am BST on 31 August 2012 on: http://www.bwinparty.com.

Analyst meeting, webcast, dial-in and conference call details: 31 August 2012

There will be an analyst meeting for invited UK-based analysts at Numis Securities, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT starting at 9.30am BST.  There will be a simultaneous webcast and dial-in broadcast of the meeting.  To register for the live webcast, please pre-register for access by visiting the Group website (www.bwinparty.com).  Details for the dial-in facility are given below.  A copy of the webcast and slide presentation given at the meeting will be available on the Group’s website later today.

Dial-in details to listen to the analyst presentation at 9.30am, 31 August 2012

9.20 am

Please call:+44 (0) 203 003 2666

Title

bwin.party Half Year Results

9.30 am

Meeting starts

A recording of the meeting will be available for a period of seven days from 31 August 2012.  To access the recording please dial the following replay telephone number:

Replay telephone number:

+44 (0) 208 196 1988

Replay passcode:

2442609#

Conference call: 2.30pm, Friday 31 August 2012

For international analysts and investors there will be an opportunity to put questions to Jim Ryan and Norbert Teufelberger, Co-Chief Executive Officers, and Martin Weigold, Chief Financial Officer, on a conference call using the following number:

2.20pm

Please call:+44(0) 203 003 2666

Title

bwin.party Half Year Results

2.30pm

Conference call starts

A recording of the conference call will be available for seven days from 31 August on the following number:

Replay telephone number

+44 (0) 208 196 1988

Replay passcode:

4632491#

All times are British Summer Time (BST).

 Click here to read the full press release

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