8 April 2014 – final results
The interactive gaming group has announced results for the year to 31 December 2013 with net revenue rising by 31% to £28.5m and adjusted pre-tax profits increasing by 35% to £4.87m. Earnings per share on the same basis were 32% higher at 1.68p and the dividend for the year was increased by 33% to 0.5p. The group has no debt and year end cash balances increased to £13.9m from £12.3m at the end of 2012. These are excellent results and represent the third consecutive year that net revenue increased by over 20% whilst the group also remains highly cash generative. The acquisition of the Vernons.com e-gaming business has helped the group to diversify and there has been significant investment in digital online marketing. There is clearly some concern about the introduction of the new point of consumption tax which is expected to be applied from December 2014 on gaming companies such as Netplay. If this had been in place last year, the group estimates that pre-tax profits could have been £1.7m lower. Although this is clearly a worry, there may be some benefits as competitors may be driven out of business allowing the group to increase market share. At the moment, pre-tax profits for the current year are expected to increase to around £5.8m for earnings per share of 1.9p. The fall in the share price looks harsh and despite the concerns over the potential new tax the shares remain a BUY.