Playtech 2013 Full Year Results

Playtech released their 2013 (year to 31 December) full year results yesterday.

Shareholders should be pretty happy.

Revenue and profit were up significantly on 2012, partially due to a big gain made on the sale of their interest in William Hill Online during the year, but also from growth in pretty much every sector of their online casino business.

Things were so good that a special dividend of £100 million has been declared (that’s about £50 million to Teddy Sagi via his Brickwood Trading Limited holding).

Got me thinking, perhaps I should have invested in their shares rather than chips at their live tables over the last 5 years or so?

The first two lines of the Chairman’s statement flagged a couple of events viewed as most significant:

One of the most significant highlights was the completion of the sale of our stake in William Hill Online. This transformational transaction delivered a substantial return of over 3.5 times the original investment. Playtech also signed two landmark agreements with Ladbrokes to revolutionise the bookmaker’s digital offering until 2017.

An unhappy (but very profitable) divorce from William Hill, and new love with Ladbrokes.

Of course these weren’t the only developments for year and live dealers played a not insignificant part in their operational highlights as well as their financial performance.

Operational highlights – remember these?

• Successful sale of Playtech’s 29% stake in William Hill Online for approximately £424 million (€497 million)
• Playtech signed landmark agreements with Ladbrokes to provide a full product suite and innovative marketing services
• Ladbrokes launched the Vegas tab and launched live casino in January 2014
• Mobile live casino on HTML5 with a number of licensees
• Live casino in Spain being delivered in partnership with Casino Gran Madrid
• Paddy Power migrated its live casino to Playtech including a dedicated facility

The Financials

Revenue for the year jumped 16% to €367.2 million. 50% of this amount came from their Casino games (other sectors are Services, Bingo, Sport, Poker, VideoBet, Other).

Casino was where the bulk of growth came from, up  25% on 2012. The below figure illustrates where growth within the casino segment came from.

Not surprisingly, mobile casino was a star performer, up 212%.

Surprisingly, core games (RNG) outgrew live dealers. What’s with that? Seems punters still enjoy simulated random.

2 Interesting Footnotes

1 On 31 January 2014, Playtech purchased 100% of the share capital of a company called Euro Live Technologies Ltd for €1.0 million up front and a further €3.5 million in 2018 contingent on certain performance targets.

Euro Live Technologies calls itself,

“…a company based in Latvia which in collaboration with Playtech Ltd.group, provides live video stream facilities…”

From what I can tell (from job adds and various other bits and pieces found on Google), their part of the collaboration was the employment, training and management of the dealers and studio in Latvia. Playtech presumably looked after the technology (and now everything).

2 2 of Playtech’s biggest licensees contribute over a third of total revenue. Their 5 biggest licensees contribute more than half of all revenue.