http://tinyurl.com/qf9nskg The chief executive of live TV gaming firm Netplay TV (LON:NPT), Bjarke Larsen, explains how a new approach to marketing and an opportunistic acquisition strategy is set to boost the group's performance. The company runs SuperCasino.com, Jackpot247.com and Vernons.com and its TV services can be viewed 24 hours a day live on Sky Channel 862, and every evening on ITV and Channel 5. Like other players in the gambling sector, Netplay has had to deal with the new point of consumption tax that has been levied on all online gaming. To mitigate the impact, the group cut its marketing expenses by 24% to £5.9mln, and purchased Otherside Inc, a digital marketing firm that has been bought to help increase its customer base, for £3.2mln.
A couple of points - cash balance healthy but £3.2m has been spent on Otherside so closer to £10m and I agree dividend strong But where is the growth? The post-POCT issues this business faces is that it has to cut marketing spend to save costs - marketing spend down a massive 36% H1 against H1 and revenues come down as a result - down 12% like for like but that impact is likely to be more so in H2 due to marketing spend in H1 (unless Otherside helps in this regard). Accordingly, one can get caught in a downward spiral of reducing marketing spend and reducing revenues - it is noticeable that there is no encouraging noises in the H2 trading outlook. As I mentioned before, it is very difficult for a sub-scale business in this regard to compete with the gaming giants -even more so once all the current consolidation completes Cash generation looks good because of the £1.9m increase in working capital balances but that is a one-time only impact
16 Sep '15
over aggressive mark down in the sp with an overly negative reaction to the tax imposition last December. The stock is worth holding for the dividend alone with a possibly take over medium term for capital gain. Gla
15 Sep '15
Never understood this....
Never understood NPT sp. It has half its value as cash in the bank, it pays dividends, doesn't borrow, yet the SP seems to lag many companies on the stock market which have no cash, tons of borrowings/recaps and has never turned over a penny. Surely this is a 15 - 20p share. Mind you I guess if they used some of their savings to buy up firms, then the sp might rise? Am I missing something here?
15 Sep '15
Watch This Space
A fine set of results showing that the strategy of offsetting the POC tax introduced last year: is working a treat. And, what a great idea it was to purchase Otherside in August: to have a dedicated marketing/advertising business driving traffic to the various brands' sites. Watch out for the new brand launches in the next few weeks! Outstanding cash generation continues with 4.7p of the current SP covered by cash in the bank! Note also the references to the increased M&A activities. Must be ripe for a takeover approach given the metrics and depressed value on offer here. A Market Cap of circa £28M and £13.9M of that is already accounted for by cash in the bank (excluding depositing players' balances) for a highly successful niche gaming company and its very own highly successful bolt-on marketing business. Wonder who might be looking at this with a view to a kill?
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