Q&A: Martin Weigold, on PartyGaming's latest figures

Martin Weigold, Partygaming FD

Q: What’s your take on the numbers today?

A: We are very pleased to be announcing these results – 17% increase in
revenues year-on-year, 76% in clean EBITDA to $64.9m, and a 266% increase in the
clean earnings per share from continuing operations. I think we can be happy
about that. They are also 12% ahead of the market expectations. So all in all,
particularly against the current economic backdrop, I think they’re a good set
of results.

Q: But you must be disappointed with poker performance. New sign-ups
are down, the average number of daily players is down. What’s behind
that?

A: Well, although poker revenues were only up by six per cent, the clean
EBITDA was up substantially year-on-year. I think, if you look at the
performance in terms of poker sign-ups, we still managed to sign up a
considerable number of new players – 235,000 in that six-month period. I think
if you look at the first quarter of last year, you will see that the prior year
comparative was distorted by a concerted effort to drive liquidity that we
undertook.

Q: Looking at margins, cuts in marketing have made a big difference.
What further efficiencies can we expect to see this year?

A: When you say cuts in marketing, we actually increased spend year-on-year,
but it’s true, as a percentage of revenue, that these costs did fall, as we have
guided the market to expect. And that’s really just a function of a reduced
proportion of new players being added to the player base each year. So we’re
maintaining our guidance to expect distribution costs for the full year to be
less than 40% of revenue.

Q: Once again, there’s no dividend. What’s the strategy on this going
forward?

A: The business performance has been incredibly strong, as you’ve seen. So
that’s not a driver of our decision not to pay a dividend here. It’s really
driven by the fact that we’ve got the continuing Department of Justice
discussions. And we also wanted to retain sufficient financial flexibility for
when those discussions are concluded, because we do expect that there are going
to be significant consolidation opportunities available to the company, and
that’s very much a driver of our decision. But all that having been said, of
course, we and the board continually review the dividend policy for the company,
and we’ll make sure that’s it appropriate for the business going forward.

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