bwin.party digital BPTY 2012 Q3 IMS and KPIs

  bwin.party digital (BPTY) - 2012 Q3 IMS and KPIs

RNS Number : 1642Q
bwin.party digital entertainment
02 November 2012




2 November 2012



bwin.party digital entertainment plc

('bwin.party' or the 'Company' and, together with its subsidiaries, the
'Group')



Interim Management Statement and

Third Quarter 2012 Pro forma Key Performance Indicators



This is an interim management statement for the period from 1 July 2012  until 
31 October 2012.



Key points



· Total pro forma revenue^1 in Q3 down 5% versus the previous quarter to
€184.4m (2011: €201.1m); average daily revenue for Q3 down 8% versus the prior
year.



· Total pro forma revenue for the  nine month period to 30 September  of 
€594.5m, down 1% versus 2011 (2011: €599.1m)



· Q3  revenue impacted  by German  sports  betting tax,  a poor  run  of 
sporting results  in European  football, decline  in poker  and a  challenging 
macroeconomic backdrop in southern Europe



· Strong  current  trading since  30  September in  all  verticals  with 
average net daily revenue up 19% versus Q3 2012



· Agreement with Zynga to supply real money poker and casino in the UK



· Sale of Ongame completed



· Board remains confident about the full year result



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



"The introduction of a 5% turnover  tax on sports betting in Germany,  revenue 
decline in poker and continued pressure on consumer spending, particularly  in 
parts of southern Europe, held back our performance in the third quarter.  An 
unfavourable run of football results in our core markets in September together
with the previously announced delay to  the start of the Bundesliga were  also 
contributing factors.  However, we  are encouraged  by a  marked recovery  in 
trading across all products since 30 September.



"Our transition from merger integration towards innovation, that includes  new 
product launches and business development initiatives, is gathering momentum.
We have completed the sale of Ongame and entered into an agreement with  Zynga 
that is a testament to the strength of our vision for the future of poker  and 
casino, our ability to  deliver turnkey solutions  for strategic partners  and 
our industry-leading position.



"The macroeconomic outlook in  most of Europe  remains fragile, with  consumer 
spending under pressure, particularly in southern European markets. While the
headwinds associated with the transition  to regulated markets and the  impact 
of gaming  taxes can  be expected  to continue,  given the  completion of  our 
technology integration and the next evolution of each of our core products due
in 2013, the Board remains confident about the full year result."



Pro Forma Consolidated Key Performance Indicators (Excluding Other Revenues)


                                                     % change % change
Three months to 30 September                    2012                      2011
                                                       versus   versus
                                                      Q2 2012  Q3 2011
Active player days (m)                          16.9    (20%)    (17%)    20.3
Daily average players (000)                    183.7    (21%)    (17%)   220.7
Yield per active player day (€)                 10.4      18%       8%     9.6
Yield  per  unique  active  player  in   the   114.9      11%       2%   112.7
quarter (€)
Real money sign-ups (000)                      282.7    (28%)    (34%)   430.4
Unique  active  players  during  the  period 1,529.3    (15%)    (12%) 1,736.2
(000)
Net revenue (€m)                               175.7     (6%)    (10%)   195.7
Average net daily revenue (€000)             1,909.8     (7%)    (10%) 2,127.2



Whilst trading improved after a particularly soft start to the third  quarter, 
this failed  to prevent  total revenue  declining by  8% year-on-year  and  5% 
quarter-on-quarter. For the  nine months  to 30 September,  total revenue  is 
down 1% versus the same period in 2011. 



Other revenue  increased by  61% year-on-year  and by  12%  quarter-on-quarter 
reflecting a strong  performance from  World Poker Tour,  InterTrader and  our 
network services customers. Total average net daily revenue, including  other 
revenue, fell by 8%  year-on-year and by  6% quarter-on-quarter to  €2,004,300 
(2011: €2,185,900) principally due to declines in poker and casino,  partially 
offset by growth in sports and bingo.



Sports

Sports betting  revenues grew  by 2%  versus the  previous quarter  to  €58.7m 
despite the absence of the European Championship that took place in June,  but 
was down by  2% year-on-year reflecting  the late start  to the Bundesliga  in 
Germany and the impact of a 5%  turnover tax on all sports betting in  Germany 
with effect from 1 July 2012. Both of these factors impacted a number of  key 
performance indicators in the  period. The amount  wagered in sports  betting 
fell by 8% to €828.3m (2011: €903.5m)  following our decision on 20 July  2012 
to remove all single bets with odds of less than 1.1 in Germany as  short-odds 
bets were no  longer viable  following the  introduction of  the new  turnover 
tax.



Whilst assessing the  net impact of  the turnover tax  in Germany, we  reduced 
marketing spend that reduced new player sign-ups in the period. The reduction
in the live offer also impacted active player days that fell 8% year-on-year.
As we  expected, there  was a  compensating increase  in gross  win margin  as 
German customers switched to placing bets  on events with higher odds as  well 
as the impact of the partial recovery of the turnover tax from winning  German 
customers. However, an unfavourable run of results in major European  leagues 
in September  meant  that the  overall  gross  win margin  in  sports  betting 
increased by less than expected to 7.8% (2011: 7.6%). The net result was that
average daily revenue in sports betting  was down 2% year-on-year at  €638,000 
(2011: €654,300).



Casino & other games

After a soft start to the third  quarter, that was impacted by the closure  of 
slots and certain other games in  Spain following the introduction of the  new 
regulations in June 2012 as  well as ISP blocking  in Belgium, casino &  other 
games recovered some lost  ground during the rest  of the period although  net 
revenue was  still down  5% year-on-year  to €65.2m  (2011: €68.6m).  Despite 
these challenges, the total amount wagered was flat year-on-year at  €1,957.8m 
(2011: €1,959.6m), reflecting growth in the amount wagered on the bwin  casino 
that was  offset  by  declines  in  PartyCasino  that  continues  to  rely  on 
PartyPoker for the majority of its active customers. These trends fed through
into lower  daily average  customer numbers  that were  down 16%  year-on-year 
although the impact on revenue was mostly offset by a 13% increase in  average 
yield per active  player to €31.0  (2011: €27.4). As  a result average  daily 
revenue was down 5% to €708,700 (2011: €745,700).



Poker

In poker, the recent revenue trends  continued into the third quarter and  net 
revenue fell by 29%  year-on-year to €37.0m  (2011: €52.3m), although  trading 
since the  period end  has seen  a marked  improvement. We  believe that  the 
integration of our dotcom poker networks later this quarter will be the  first 
major catalyst to  return our  poker business to  growth. This  will soon  be 
followed  by  the  launch  of  PartyPoker  on  mobile  and  then  a   complete 
repositioning and relaunch of PartyPoker in the first half of 2013.



Bingo

In bingo, total revenue was up 1% to €14.8m (2011: €14.6m). The removal of  a 
number of  low  value  players  together  with a  loss  of  market  share  and 
cannibalisation from casino in Italy last year meant that the number of  daily 
average players was down by 15% to 18,500  but this was more than offset by  a 
19% increase in  player yield  to €8.7  per day  (2011: €7.3).  As a  result, 
average net daily revenues increased by 1% to €160,900 (2011: €158,700).



Strategic partnerships



We are delighted to have recently announced a new partnership with Zynga,  the 
world's largest social gaming company, to launch white label real money  poker 
and casino services for UK players.



Regulatory update



The regulatory landscape across Europe is  continuing to evolve with a  number 
of  Member  States  at  various  stages  of  the  transition  to  a  regulated 
framework.



The European Commission's recent communication on its long-awaited green paper
has reinforced the  position taken  by the Court  of Justice  of the  European 
Union that  Member  States  cannot  continue to  ignore  EU  law  in  applying 
overly-restrictive regimes regarding the provision of online gaming services.
This is  a clear  sign  that the  Commission  intends to  address  outstanding 
infringements and complaints against a number of Member States.



Whilst encouraged by the stance of  the European Commission, the situation  in 
Germany, our largest  market, remains  unclear as the  Commission considers  a 
revision to the law in Schleswig-Holstein and the process for licensing in the
other 15 states continues to unfold.



Elsewhere in Europe, the Dutch Government is making progress towards  adopting 
a regulatory regime and we currently expect slot games to be allowed in  Italy 
by the end of the  year. In France, despite  a continued exodus of  operators 
leaving the market  in recent months,  any change to  the punitive tax  regime 
appears unlikely  in the  short-term with  the result  that it  will remain  a 
challenging market. ISP blocking in Belgium  that has been in place for  some 
months is  continuing  to  present  challenges  for  many  operators  and  has 
contributed to a reduction in net revenue of approximately €0.7m per month.



In the United States, the prospects for federal legislation will depend upon a
bill being  tabled  during  the  so-called  'lame-duck  session'  that  starts 
following the outcome of the elections. If no federal bill is enacted then we
believe that regulated intra-state online gaming is certain. We expect Nevada
to be  the  first state  to  begin to  accept  wagers online  and  whilst  the 
regulations currently permit poker-only, there has been speculation that  this 
could be  expanded to  include other  games at  a later  date. Delaware,  New 
Jersey, California and Illinois are expected  to follow in 2013. Through  our 
existing agreements with  MGM Resorts,  Boyd Gaming and  United Auburn  Indian 
Community, we  are well-positioned  to enter  the US  either on  a federal  or 
intra-state model.



Current trading and outlook



Since the end of September 2012 there has been a marked improvement in trading
performance with  average  daily  net revenue  (excluding  other  revenue)  in 
October up 19% versus the previous quarter at €2,276,400 (Q3 12: €1,909,800).
This has been driven by a  particularly strong recovery in sports betting  and 
to a lesser  extent poker and  bingo. In the  four weeks to  28 October,  the 
average gross win margin in sports betting was 10.2% (Q3 12: 7.8%) driven by a
favourable set of sporting results  as well as an  uplift in Germany where  we 
are benefiting from customers  switching to higher odds  bets and the  partial 
recovery of the new tax.  As a result, average  daily net revenue for  sports 
betting was up 44% to €921,700 (Q3 12: €638,000). Seasonality and an improved
player mix has  helped poker that  was up  9% to €437,800  (Q3 12:  €402,200), 
casino & other games was up 5% to €741,700 (Q3 12: €708,700) and bingo was  up 
9% to €175,200 (Q3 12: €160,900).



The macroeconomic outlook  in most  of Europe remains  fragile, with  consumer 
spending under pressure, particularly in southern European markets. While the
headwinds associated with the transition  to regulated markets and the  impact 
of additional gaming taxes can be  expected to continue, given the  completion 
of our  technology integration  and the  next evolution  of each  of our  core 
products due in 2013, the Board remains confident about the full year result.



Material Events, Transactions and Financial Position



As at  30 September  2012, the  Group  had cash  (and cash  equivalents)  plus 
short-term investments of €204.6m, processor receivables of €63.5m, less  bank 
borrowings of  €27.0m  and  client liabilities  (including  progressive  prize 
pools) of €138.2m  resulting in  net company cash  of €102.9m  (30 June  2012: 
€117.1m). During  the period,  the final  instalment of  $15.0m was  paid  in 
accordance with the  Group's Non-Prosecution  Agreement and  we completed  the 
sale of  Ongame  to Amaya  Gaming  for €15.0m  with  up to  €10.0m  additional 
contingent consideration.



Between 30 June  2012 up  to and  including 30  September 2012  the Group  had 
repurchased 315,800 ordinary shares at an average price of 94.99p per  share. 
A half year dividend amounting to €17.2m was paid to shareholders on 9 October
2012.



There have been no material events,  transactions or changes in the  financial 
position of the Group since  the 2012 half year  results were announced on  31 
August 2012 other than as outlined in this statement.



Full details of all of the Group's quarterly KPI data by segment will be  made 
available for  download at  the  Group's website  at  http://www.bwinparty.com 
later today.



Conference call



Friday 2 November 2012

For analysts and investors  there will be an  opportunity to put questions  to 
Jim Ryan and Norbert Teufelberger, Co-CEOs, and Martin Weigold, CFO, by way of
a conference call at 09.30 (GMT). The details of the call are as follows:



Dial-In No:                    +44 (0) 20 3003 2666
Replay (available for 1 week): +44 (0) 20 8196 1998
Replay passcode:               5034460#



Contacts:

bwin.party digital entertainment plc

Investors

Peter Reynolds +44 (0) 20 7337 0100



Media

John Shepherd +44 (0) 20 7337 0100



Appendix I
Pro forma Key Performance Indicators - three months to 30 September 2012



Sports Betting

Three months to 30 September                      2012 % change % change  2011
                                                         versus   versus
                                                        Q2 2012  Q3 2011
Active player days (m)                             8.9    (27%)     (8%)   9.7
Daily average players (000)                       96.7    (28%)     (8%) 105.4
Yield per active player day (€)                    6.6      40%       6%   6.2
Yield per unique  active player  in the  quarter  67.5      33%       5%  64.4
(€)
Real money sign-ups (000)                        141.8    (40%)    (16%) 168.1
Unique active players during the period (000)    869.1    (24%)     (7%) 935.4
Bet amount (€m)                                  828.3    (23%)     (8%) 903.5
Gross revenue (€m)                                64.3     (8%)     (6%)  68.5
Gross margin                                      7.8%      18%       3%  7.6%
Net revenue (€m)                                  58.7       2%     (2%)  60.2
Average  net  daily  revenue  (excluding  skins) 638.0       1%     (2%) 654.3
(€000)



Casino & Other Games

Three months to 30 September                    2012 % change % change    2011
                                                       versus   versus
                                                      Q2 2012  Q3 2011
Active player days (m)                           2.1    (16%)    (16%)     2.5
Daily average players (000)                     22.8    (17%)    (16%)    27.2
Yield per active player day (€)                 31.0      13%      13%    27.4
Yield  per  unique  active  player  in   the   172.7       1%      11%   156.0
quarter (€)
Real money sign-ups (000)                       28.3    (17%)    (16%)    33.8
Unique  active  players  during  the  period   377.6     (6%)    (14%)   439.7
(000)
Bet amount (€m)                              1,957.8     (4%)     (0%) 1,959.6
Gross revenue (€m)                              78.0     (4%)     (3%)    80.0
Gross margin                                    4.0%     (0%)     (2%)    4.1%
Net revenue (€m)                                65.2     (5%)     (5%)    68.6
Average net daily revenue (excluding  skins)   708.7     (6%)     (5%)   745.7
(€000)



Poker

Three months to 30 September                      2012 % change % change  2011
                                                         versus   versus
                                                        Q2 2012  Q3 2011
Active player days (m)                             6.0    (14%)    (29%)   8.5
Daily average players (000)                       65.2    (16%)    (29%)  92.4
Yield per active player day (€)                    6.2       0%       0%   6.2
Yield per unique  active player  in the  quarter  62.5     (8%)    (10%)  69.8
(€)
Real money sign-ups (000)                         79.1     (4%)    (59%) 191.6
Unique active players during the period (000)    591.8     (9%)    (21%) 748.8
Net revenue (€m)                                  37.0    (16%)    (29%)  52.3
Average  net  daily  revenue  (excluding  skins) 402.2    (17%)    (29%) 568.5
(€000)



Bingo

Three months to 30 September                      2012 % change % change  2011
                                                         versus   versus
                                                        Q2 2012  Q3 2011
Active player days (m)                             1.7     (6%)    (15%)   2.0
Daily average players (000)                       18.5     (1%)    (15%)  21.7
Yield per active player day (€)                    8.7     (7%)      19%   7.3
Yield per unique  active player  in the  quarter  84.3     (9%)      13%  74.3
(€)
Real money sign-ups (000)                         33.5    (11%)     (9%)  36.9
Unique active players during the period (000)    175.5       2%    (11%) 196.6
Net revenue (€m)                                  14.8     (7%)       1%  14.6
Average  net  daily  revenue  (excluding  skins) 160.9     (8%)       1% 158.7
(€000)



Appendix II

Pro forma Key Performance Indicators - nine months to 30 September 2012



Sports Betting

Nine months to 30 September                           2012 % change    2011
                                                             versus
                                                               2011
Active player days (m)                                33.8      12%    30.2
Daily average players (000)                          123.4      12%   110.6
Yield per active player day (€)                        5.5    (11%)     6.2
Real money sign-ups (000)                            616.8      22%   507.5
Bet amount (€m)                                    2,981.5       7% 2,783.4
Gross revenue (€m)                                   218.5       4%   209.1
Gross margin                                          7.3%     (3%)    7.5%
Net revenue (€m)                                     186.8       0%   185.9
Average net daily revenue (excluding skins) (€000)   681.8       0%   681.0



Casino & Other Games

Nine months to 30 September                            2012 % change    2011
                                                              versus
                                                                2011
Active player days (m)                                  7.3     (4%)     7.6
Daily average players (000)                            26.6     (4%)    27.8
Yield per active player day (€)                        28.1      11%    25.4
Real money sign-ups (000)                             105.1     (1%)   106.2
Bet amount (€m)                                     6,165.3       8% 5,732.4
Gross revenue (€m)                                    242.3       7%   227.2
Gross margin                                           3.9%     (2%)    4.0%
Net revenue (€m)                                      205.0       6%   192.9
Average net daily revenue (excluding skins) (€000)   748.2       6%   706.6



Poker

Nine months to 30 September                         2012 % change  2011
                                                           versus
                                                             2011
Active player days (m)                              21.8    (21%)  27.7
Daily average players (000)                         79.9    (21%) 101.1
Yield per active player day (€)                      6.1       7%   5.7
Real money sign-ups (000)                          291.4    (48%) 565.3
Gross revenue (€m)                                 168.2    (14%) 196.3
Net revenue (€m)                                   133.4    (15%) 157.2
Average net daily revenue (excluding skins) (€000) 486.9    (15%) 575.8



Bingo

Nine months to 30 September                         2012 % change  2011
                                                           versus
                                                             2011
Active player days (m)                               5.3    (20%)   6.6
Daily average players (000)                         19.3    (20%)  24.2
Yield per active player day (€)                      8.8      22%   7.2
Real money sign-ups (000)                          110.2    (14%) 128.8
Gross revenue (€m)                                  88.1    (13%) 101.1
Net revenue (€m)                                    46.4     (3%)  47.6
Average net daily revenue (excluding skins) (€000) 169.3     (3%) 174.4



------------------------------------------------------------------------------

^1Includes €8.7m (2011: €5.4m) of net revenue from network services, payment
services, software services, domain sales, World Poker Tour, Winners (retail)
and InterTrader.com

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


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