(PTEC) Playtech

Playtech Limited

('Playtech' or the 'Company')

Acquisition of Geneity Limited

Playtech, (AIM: PTEC) the international designer, developer and licensor of software and services for the online, mobile and land-based gaming industry, announces that it has acquired the entire issued share capital of Geneity Limited ('Geneity'), a UK based provider of e-gaming software products, focused primarily on the sportsbook and lottery sectors, for an initial cash consideration of £11 million (subject to a working capital adjustment), of which £4 million will be held in escrow for 30 months. 

A further £4 million in cash will be payable subject to certain agreed deliverables to be provided by Geniety.

Geneity which is based in Chiswick, has over 20 full time employees, mostly engaged in software development and support, and was formed in 2006. Geneity currently provides its sportsbook software to Gala Coral, which is contracted through to the end of 2012 and its lottery software to the Health Lottery. Its other clients include Betfair, Ladbrokes and other UK bookmakers. In the year to 31 March 2011, Geneity had unaudited revenues of £2.3 million and unaudited profits before tax of £0.82 million.

The acquisition is strategically significant as it brings a modern, proven, robust and scaleable sports betting platform as well as lottery capabilities to Playtech's suite of gaming products, together with a well-respected team of experienced sportsbook developers with many years of in-depth industry expertise. The Geneity sportsbook product will replace the Company's existing offering and Playtech expects to achieve cost savings through the replacement.

The Geneity sportsbook product will enable Playtech to have a stronger offering in regulated markets, where the ability to offer a high quality sportbook platform is increasingly important for market penetration. In addition, following the acquisition last year of the Mobenga mobile sportsbook platform, Playtech sees opportunities to integrate the products and to cross-sell to its wide customer base.

Mor Weizer, Chief Executive Officer of Playtech commented:

"Sportsbook is often the prime entry point for companies into online gaming. Over the past year the pace of change in the sportsbook segment led us to believe that we needed to acquire experienced developers to immediately give us a market leading capability. Geneity will deliver a range of features key to Playtech's sportsbook, such as in-play betting and a broader range of sports on which to wager."

Will Slater, Managing Director of Geneity commented:

"Geneity is delighted to be joining the Playtech family, the synergies between the respective companies and products is very strong. At Geneity we've created a highly advanced sportsbetting platform with integrated in-play algorithms, per channel pricing and a scalable and modular architecture. It's very exciting to be able to offer our sportsbetting platform to a wider audience alongside Playtech's existing best of breed products."

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Further information

About Playtech

Playtech develops unified software platforms and content for the online and land-based gaming industry, together with providing a range of ancillary services such as marketing, hosting and CRM services.

Leading gaming applications include casino, poker, bingo, sports betting, live gaming, casual and fixed odds games. Playtech provides licensees with the tools to maximise cross-selling opportunities, player loyalty and yield, all through the powerful management interface - the IMS. The Group's capabilities enable the delivery of an integrated software or turnkey solution, with players accessing online, broadcast, mobile and server-based gaming terminals through a single account.

New licensees include existing online operators upgrading or diversifying their offering, land-based casino groups, government sponsored entities such as lotteries, and new entrants making their online gaming debut, particularly in newly-regulated markets.

Founded in 1999, Playtech has some 1,000 employees located in development centres in five countries, the majority of whom are engaged in research and development of current and future gaming technologies, together with 900 employees providing ancillary services.

www.playtech.com

Playtech Limited

('Playtech' or the 'Company')

Announcement of German Joint Venture and Licensing Agreement

Playtech signs agreements with leading German gaming group, Merkur-Gauselmann

Playtech, (AIM: PTEC) the international designer, developer and licensor of software and services for the online, mobile and land-based gaming industry, is pleased to announce that it has signed a joint venture agreement with Merkur Interactive GmbH, the online division of the Gauselmann Group. The agreement provides for the joint development of an online gaming operation focused on new opportunities as the German online markets regulate, together with a related software licensing agreement.

Summary

§ Long-term equal joint venture with Gauselmann, owner of Germany's leading gaming brand, Merkur

§ Joint venture formed in advance of expected revisions to German online gaming regulations

§ Partnership will offer broad-based gaming and sports betting products and services, where permitted

§ Initiative in line with stated strategy of expanding joint venture and acquisition activities in regulated markets

Gauselmann

Founded in 1957, Gauselmann has developed its laughing Merkur sun into the most recognisable German domestic gaming brand.  With group revenues in excess of Euro 1.5 billion in 2010 and over 6,000 employees, Gauselmann is one of Europe's leading gaming groups.

Gauselmann has operations across Germany focused on the development and production of amusement and gaming machines and related gaming content, along with over 200 gaming arcades operated by its Merkur Spielothek division.  Internationally, it operates more than 200 gaming arcades in ten European countries and has a global distribution capability for its Merkur Slot/VLT machines and related gaming content.  Gauselmann has additional interests including a retail and online sports book capability in Italy with over 75 shops; and a controlling shareholding in the UK-based games developer, Blueprint. 

Joint venture

The agreement to set up the joint venture is in advance of expected changes to German gaming regulations.  This will enable the joint venture to prepare for the expected regulatory approval process where it will seek to be granted an online gaming license as soon as regulatory developments permit.

The proposed business activities will encompass online sports betting, gaming and gambling products which are regulated by the appropriate authorities in Germany. The joint venture will apply for specific regulatory license dependent upon each territory and gaming activity.

Playtech will inject marketing knowhow, affiliate marketing contacts and certain German-focused marketing managers from its PTTS services division.  This will be in addition to providing online gaming technology and its market leading player management system under a separate software license. Gauselmann will provide exclusive online rights to its Merkur and Gauselmann gaming brands along with related infrastructure and business relationships.

The capital requirements and financial return profile of the business will be highly dependent on the regulatory and fiscal regime developed in Germany.  Substantial working capital requirements for the operations are expected as soon as the market regulates and will from then on be shared equally between the two partners.  It will comprise predominantly first-year marketing spend for player acquisition and player retention. It is however expected that the venture will become self-financing within 18 months and subsequently deliver significant returns to each partner principally by way of cash dividends.

While Gauselmann will hold a technical controlling interest of 50.01 per cent, the partners have agreed to equal board representation and the expectation is that the joint venture will be a long term relationship.  No formal call option exit structures are envisaged, other than under than normal rights of pre-emption, and except in limited circumstances, transfers would not be permitted until at least the end of 2019.

German regulatory environment

The regulatory environment in Germany is likely to remain uncertain until a revised Interstate Gambling Treaty or other regulations is enacted, or alternate legislation put in place. Ministers have indicated that they are contemplating an opening of the online sports betting market in 2012, although clarity on the fiscal regime and whether certain additional online gaming products will also be permitted has not yet been achieved.

Mor Weizer, CEO of Playtech commented:

"We are delighted to be able to announce this significant joint venture with the leading German gaming brand.  Gauselmann and their Merkur brand are universally renowned throughout Germany and will provide a fantastic springboard for the business once regulations permit online activity.  While the regulatory and fiscal environment remains uncertain, it is clear that a partnership between Playtech and Gauselmann can deliver a combination of market leading capabilities which has the potential to achieve a significant market share, however the market regulation develops. 

"A joint venture structure was viewed by both parties as being the best way to achieve their strategic goals and has the potential deliver significant returns to both shareholders.  This transaction also clearly delivers on our indications of the likely form of our joint ventures, and with a partner of the quality of Gauselmann it can be seen to be validation of the PTTS acquisition in March 2011 which made this opportunity achievable.

Dr. Dirk Quermann, CEO of Merkur Interactive, commented:

"As a distribution channel, the internet undeniably provides a wide range of opportunities for us - this equally applies to gaming and cash winning games. Due to the prevailing legal framework, it has hitherto been impossible in Germany to offer domestically such games online. If, however, the domestic legislation on Gambling is amended, and allows for regulatory change to such conditions and enables commercially attractive operations, we will of course commit ourselves accordingly.

In Playtech we found the right partner to work with to provide a successful offer for the German online market - even in the face of tough competition of international gaming groups. The joint venture will be able to particularly benefit from the high awareness level of our brand, where the logo of the smiling Merkur sun is the most popular gaming symbol in Germany, our first class games, as well as Playtech's profound experience and comprehensive technical and especially marketing know-how in the field of internet gaming."

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Further information

About Playtech

Playtech develops unified software platforms and content for the online and land-based gaming industry, together with providing a range of ancillary services such as marketing, hosting and CRM services.

Leading gaming applications include casino, poker, bingo, sports betting, live gaming, casual and fixed odds games. Playtech provides licensees with the tools to maximise cross-selling opportunities, player loyalty and yield, all through the powerful management interface - the IMS. The Group's capabilities enable the delivery of an integrated software or turnkey solution, with players accessing online, broadcast, mobile and server-based gaming terminals through a single account.

New licensees include existing online operators upgrading or diversifying their offering, land-based casino groups, government sponsored entities such as lotteries, and new entrants making their online gaming debut, particularly in newly-regulated markets.

Founded in 1999, Playtech has some 1,000 employees located in development centres in five countries, the majority of whom are engaged in research and development of current and future gaming technologies, together with 900 employees providing ancillary services.

www.playtech.com