Differing Results from Neovia and PlaytechBy: Fabian Rictor, Wednesday March 24th 2010
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Neovia is an electronic payments service provider to online casinos and others. Playtech is an online gaming software provider to Internet casinos. They both serve different functions but operate largely in the same industry. Therefore it does come as a bit of a surprise that both have posted completely different financial results for the full year 2009. Neovia has shown a major dip in revenue and profits whereas the profits and revenue of Playtech have shown a marked increase.
In 2009 Neovia revenue declined by 15% to $64.5 million and the gross profit declined by 50% to $8 million. In 2009 Neovia posted a net loss of $1.7 million as compared to a net profit of $6.4 million in 2008. Neovia chairman, Dale Johnson, described 2009 as "a transitional year characterized by progress in dealing with internal and external challenges, including weaker market conditions". He however was confident that the updated business strategy of Neovia would work and that its executive leadership would deliver. Johnson said the investors in Neovia could expect significantly improved shareholder value in 2010 and the coming years. The optimism for the future shown by Johnson is not suspect. In the forth quarter of 2009, the number of active e-wallet users has increased, average daily sign ups have increased and the average daily receipts have improved.
In 2009 Playtech gross profit increased by 25% to €93.7 million and it posted a net profit of €69.5 million as compared to a net profit of €40.7 million in 2008, which showed an increase of 71%. However this was not the result of the normal operations of Playtech. Playtech had acquired a share in the online gambling operator William Hill. Playtech's share of the earnings from William Hill accounted for 95% of its gross profit. This goes to show how critical was Playtech's investment in William Hill. Roger Withers, non-executive chairman of Playtech, said, "This has been another significant year of growth for Playtech. Excellent progress has been made both operationally and strategically. We have made good use of our substantial cash position to make a number of focused acquisitions and investments which should prove highly accretive in the medium to long term." Withers was referring to Playtech's acquisitions of GTS in December 2009 and Virtue Fusion in February 2010 and to strategic partnerships announced with Scientific Games, Sportech, NetPlayTV and Videobet. On the strength of these Withers said, " the Board looks forward to 2010 and beyond with great confidence."
Therefore despite differing performances in 2009 both Neovia and Playtech have expressed confidence in a better performance in 2010. Hopefully this is more than public posturing and the two giants in the online gaming industry will demonstrate better numbers this time next year.
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