I/c article NOT by S Thompson11 Apr 2014 09:29
I/c Article 08Apr by Harriet Russell:
"NetPlay's TV gamble pays off"
Investors Chronicle favourite NetPlay TV
(NPT) has reported another strong set of annual results after continued heavy spending on marketing delivered a 25 per cent increase in new players. The interactive gaming company also witnessed gross bets exceeding the £1bn mark for the first time in 2013.
Consistently cash-generative, the group reported a healthy bank balance at the end of the year - up £1.6m on 2012 even though it funded hefty promotional work, paid out dividends and spent £3m on Sportech's e-gaming division, Vernons.com. The key has been keeping costs low: operational expenses accounted for just 22 per cent of revenues in 2013.
Big TV deals also helped increase the scale of the business, as the group signed a new three-year contract with ITV and agreed to sponsor Big Brother. Chief executive Charles Butler said he hoped such deals would be replicated this year, but admitted that online marketing would be the priority. Player retention rates will remain crucial: 45 per cent of 2013 revenues came from players who had held an account for 12 months or longer.
Broker N+1 Singer expects pre-tax profits of £5.7m for 2014, giving EPS of 1.98p - up from £4.9m and 1.6p, respectively, in 2013.
NETPLAY TV (NPT)
ORD PRICE: 19p MARKET VALUE: £55m
TOUCH: 18-19p 12-MONTH HIGH: 24p LOW: 16p
DIVIDEND YIELD: 2.7% PE RATIO: 13
NET ASSET VALUE: 6p* NET CASH: £13.9m
Year to 31 Dec
Turnover (£m)
Pre-tax profit (£m)
Earnings per share (p)
Dividend per share (p)
2009 18.5 -8.4 -5.5 nil
2010 19.8 -14.2 -6.7 nil
2011 20.7 0.6 0.2 nil
2012 21.8 3.1 1.2 0.375
2013 28.5 4.2 1.4 0.50
% change +31 +35 +19 +32
Ex-div: 21 May
Payment: 19 Jun
*Includes intangible assets of £8.4m, or 3p a share
IC VIEW:
A boost to the dividend signals confidence in the group's growth strategy, which has been in place since the 2010 restructuring. But the growth profile still only commands a forward PE ratio of 11 - undemanding given the year's achievements. Buy.