14th Nov 2005 07:00
Gaming VC Holdings S.A.14 November 2005 14th November 2005 Gaming VC Holdings S.A. ("the Company") Third Quarter Update In line with the company's commitment to make quarterly figures available to themarket, the Directors of Gaming VC wish to provide the following trading updatefor the three months ended 30th September 2005. Financials 1st Half to June 30th Quarter 3 to Sept 30th* Euro Millions Euro Millions Revenue 21.3 9.2 Gross Profit 16.5 6.9 EBITDA 12.5 1.8(after exceptionals for Q3) * Results for Quarter 3 are unaudited. There were Euro 2.0 million in exceptional charges in the quarter including Euro1.6 million related to poker and Euro 0.4 million related to inbound M & A. Anadditional Euro 0.9 million will be taken in quarter 4 related primarily topoker. 4662 new depositing customers were added during the quarter representing a 23%increase over quarter 2 making 12,777 for the year to date. Marketing spend in the third quarter was Euro 3.9 million compared to 0.9million in the first half. October Following the marketing spend in quarter 3, new registrations in October werewell over 3000, making it the most successful month this year. Revenue comparedto September was ahead by 6%. Casino As expected due to the previously mentioned delay in H1 marketing, net revenueper day continued to decline in Q3 with the average daily revenue some 7% belowQ2 at Euro 100k per day. However the decline in the later months of the quarterslowed due to the increase in new players from the August campaign. The fullimpact of this Q3 spend will be reflected in Q4 revenues, as demonstrated by theOctober results, and into 2006. In Germany, the company's historically strong direct mail marketing campaign wasre-started in the first two weeks of August. Using the results of this campaign,Gaming VC launched a second more focused direct mail campaign on Oct 15th. In Spain, both Poker and Casino were launched, with on-line channels showinggood leads to the site. Visits to the Spanish site in September and October wereover 9,000 per day. However, lead conversion to paid play has been slower thanexpected. The company therefore is working on improving ad targeting, webnavigation and Spanish support services in order to improve conversion. Phasetwo of the Spanish marketing campaign is planned for early in the new year. Poker Casino Club's on-line poker room completed a soft-launch in August, andunderwent beta-level testing during the European summer holiday. Substantivemarketing efforts to promote this new product began in September. Effortsincluded promotion in Casino Club magazine to the existing German customer base,a direct marketing campaign to new prospects and inclusion in the rollout of theSpanish marketing campaign. Early indications show that net revenue per player has increased with poker/casino combination, with less than 3% of casino players defecting to play lowermargin Poker only games. The company's typical customer acquisition through direct mail has proveduneconomic given the competitive nature of bigger brands in poker, and plansmoving forward will not include substantive direct marketing mailings. Restructuring Following the post-acquisition build out of corporate infrastructure andmanagement, the company is now able to more precisely focus its operations andhas therefore reduced staffing levels both in Boston and London. In addition, asseparately announced, Dr. Robert Willis will become a non executive director toconcentrate solely on business development and strategy. Bob will be replaced byGerard W. Cassels as interim finance director. These measures are expected toreduce general and administration expenses by approximately 15%. Outlook The first half of 2005 saw exceptional and unrealistic EBITDA results due to thelack of marketing spend. Third quarter results suffered from a continued declinein net revenue per day as a result of this lack of marketing spend and asignificant increase in marketing costs to return to normalized levels. In October the company has experienced a dramatic increase in new playerregistrations and has completed a realignment of management focus. Daily revenuein October has improved by a 2% average month over month along with a furtherincrease of 4700 new depositing customers for the quarter. These earlyindications bode well for the company into 2006. The Director's will declare a final dividend in March, whilst the level ofdividend will be based on the cash available, the Director's believe that adividend is sustainable. For further information contact: Steve Barlow, CEO 020 7554 1400Ken Cronin, Gavin Anderson & Company 020 7554 1400Robert Speed, Gavin Anderson & Company 020 7554 1400 Note to Editors Gaming VC Holdings SA (AIM: GMHq.L) is a leading online casino games operatorwith an annualized handle in excess of EUR 1.5 billion. The majority of itsexisting customers come from German speaking countries. The company listed onthe Alternative Investment Market in December 2004. Gaming VC Holdings also ownstwo magazines, Casino Club and Roulette. Through unique marketing approaches andits innovative informational magazines GVC is able to attract and retain some ofthe highest value casino players in the sector. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GVC.L