|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest results show 56 percent dip in profits at online gambling's biggest group, but the comeback is well underway
The long awaited Party Gaming annual results out this week show the adverse impact of the Unlawful Internet Gambling Enforcement Act in the United States, but an encouraging resilience and diversification into other markets by the group.
"Trading patterns since the year end have seen continued recovery in poker and casino revenue, in line with the board's expectations," the company statement said, noting gross revenue per day in the four weeks to February 25 has averaged $1.3 million.
|
|
|
|
|
|
Annual profit dropped 56 percent at the London listed company on costs for withdrawing from the U.S. after a crackdown on online gambling financial transactions in that country forced the company to stop taking bets from Americans.
Net income fell to $128.4 million from $293.2 million in 2005, the Gibraltar-based company revealed in a public statement. One-time expenses for exiting the U.S. were $243.2 million. However, sales climbed 13 percent to $1.1 billion as Party Gaming signed up more customers from non-US sources.
The company lost around 75 percent of its revenue last October, when the UIGEA was enacted after a questionable passage through Congress attached to an unrelated but critical bill.
The good news was that sales more than doubled to $325 million last year in business outside the USA, helped by February's introduction of new casino gaming facilities and the acquisition in August of an online sports-betting company.
Poker remained the largest business segment of the company�s continuing operations, representing 82 percent of revenues. However, the casino business enjoyed strong revenue growth over the year, up 278 percent to US$51 million from US$13.5 million, helped by the launch of Party�s blackjack product in October 2005 and the launch of Party Casino in the first quarter of 2006. Sports betting made a debut contribution of US$5.6 million since Party acquired Gamebookers last year. Emerging games contributed US$2 million.
In terms of new player sign-ups by region, Party saw a 192 percent increase to 382 000 in Europe, the Middle East and Africa (EMEA). The Americas, excluding the US, rose 43 percent to 102 000 and Asia rose 84 percent to 42 400. Unique active players in EMEA rose 224 percent to 530 000, the Americas non-US rose 70 percent to 162 300 and Asia rose 119 percent to 56 400.
"While the decision to stop accepting customers from the U.S. was a bitter blow for our business, our continuing operations have grown strongly,'' Chief Executive Officer Mitch Garber said in the statement.
EBITDA from continuing operations came to $50.9 million. Shares prices on the companys stock have declined 68 percent since monthend last September, the last session before the U.S. Senate unexpectedly approved the law, and the company currently has a market value of GBP1.35 billion ($2.6 billion).
Revenue totaled $1.10 billion, up 13 percent from $977.7 million but pretax profit fell to $138.9 million from $324.9 million.
U.S. gamblers are believed to have accounted for 71 percent of Party Gaming's sales in 2006. The company now gets about two-thirds of revenue from Europe, the Far and Middle East and Africa.
France "is not an attractive market'' because of regulations, Garber told reporters. "We may decide to make it next to impossible for French customers to sign up to Party Gaming,'' he said. "It's already difficult.'' The statement seemed to confirm news emerging earlier in the week that Party was closing the door on French based operations.
Party Gaming has not lost its appetite for acquisitions, it appears - Garber said the company would continue to consider big or small acquisitions, despite being "very content with where we are at right now.''
"It's a very good opportunity for us to step back and breathe for a minute,'' Garber said. "We need to see whether we are better off alone in a strong leadership position or whether we need to take on another business.''
Garber said the passing of the UIGEA last October in the US had �accelerated� the company�s move to transform itself towards a multi-geography and multi-product company. He hinted at good news for affiliate marketers, saying that the focus for 2007 in terms of marketing would be online as opposed to offline. �A large and effective affiliate programme will be the way forward,� he said.
The portion of Party Gaming's non-U.S. sales coming from poker dropped to 82 percent last year from 91 percent in 2005. Casino sales almost quadrupled to $51 million.
The company signed up an average of more than 2 400 new customers a day and had 66 000 active daily players in the four weeks to February 25. That compares with about 2 300 new players a day and 58 000 active players during January.
Bad news for investors is that Party Gaming will not be paying a second-half dividend. The company in October scrapped its 3 cents-a-share payout for the first half following the U.S. ban.
|
|
|
|
| Back to News Menu... |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
