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Positive start to the year for a leaner and more focused NetPlay - Panmure

Positive start to the year for a leaner and more focused NetPlay - Panmure

Television and online gambling business NetPlay TV (LON: NPT) is now leaner, more focused and “on a much improved trajectory”, according to house broker Panmure Gordon after the firm announced its results for 2010.

Panmure reiterated its hold recommendation and nine pence target for the company’s shares, which were trading at that price at midday today.

NetPlay said it had a positive start to 2011 with it seeing double-digit percentage increases in the number of new players who use its services during the first quarter.

According to Charles Butler, NetPlay’s CEO, the firm saw a 15 per cent increase in new casino players during Q1 2011, compared with Q4 2010, while active casino customers were up by 22 per cent. 22 per cent of all the sign-ups for NetPlay’s Supercasino.com offering came via the iPhone app, demonstrating the increasing popularity among punters of mobile platforms for gambling.

“These encouraging KPIs [key performance indicators], combined with a restructured management team and a successful cost restructuring, have seen the group return to positive EBITDA and underpin the board’s confidence in the outlook for the current year,” he added.

Panmure added that it believes the opening of the Italian online casino market, now anticipated in the third quarter of this year, will provide the first opportunity for NetPlay to replicate its proven TV-based gaming model outside of the UK.

Revenues at NetPlay increased 7.1 per cent in 2010 to £19.8 million, while the firm made an EBITDA loss of £2.8 million (2009: £1.3 million). The firm’s total loss was £13.7 million (2009: £10 million).

Casino revenue made up the bulk of NetPlay’s total revenues, contributing £17.4 million – an increase of 21.8 per cent over 2009.

Revenue from the firm’s Bingo operation fared less well, falling 45 per cent to £2.5 million due to a reduction in new customer acquisitions. NetPlay said that, although Bingo is not its core focus, it would continue to support the operation and expected it to generate positive EBITDA this year.

Butler said that since the home computing market is being transformed with the mass introduction of smartphones and tablets such as the iPad, the firm’s business model would be based on a “converged live casino gaming experience whether at home or on the move”. The firm will offer iPhone and tablet-based casino gaming to its existing customer base while also targeting a new customer segment through customer acquisition.

NetPlay plans to launch its own iPad application by the end of June.

Panmure estimates £2.1 million in adjusted EBITDA for NetPlay during 2011, with a pre-tax loss of £0.9 million (which translates to around 0.3 pence earnings share).

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