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Bwin.Party shakes things up

RESULTS: Bwin.Party Digital Entertainment says it must make "fundamental changes" if it's to turn around its flagging operational performance
September 1, 2014

Chief executive Norbert Teufelberger says that Bwin.Party Digital Entertainment (BPTY) will be "the business it has always wanted to be" by 2015. That will involve "fundamental changes" to transform the online gaming company's operational performance.

IC TIP: Sell at 83p

This admission follows a poor first half. While the sports betting and casino divisions grew revenue by 14 and 7 per cent respectively in regulated markets, this wasn’t enough to offset a soft poker market and the loss of €11.9m revenue from Greece, which Bwin.Party pulled out of following a particularly fierce regulatory crackdown. Overall, adjusted cash profits fell to €46.4m (from €60.7m in 2013).

Chief financial officer Martin Weigold says shareholders and employees can expect further cost-cutting (up to €30m this year) and anywhere between €30-€50m in proceeds from the disposal of non-core assets. These estimated proceeds do not include the potential spin-off and IPO of Kalixa - the group's online payments subsidiary - which is currently being appraised by City advisers.

Meanwhile, conversations with the company's activist investor, Spring Owl, "remain confidential," but chairman Philip Yea said a number of board changes were on the agenda. Batting off suggestions of a group break-up, Mr Yea said the board wanted to "get the best out of the company’s assets."

Brokerage Numis expects pre-tax profits of €86.2m for 2014, giving EPS of 9ȼ.

BWIN.PARTY DIGITAL ENTERTAINMENT (BPTY)
ORD PRICE:83pMARKET VALUE:£681m
TOUCH:83-84p12-MONTH HIGH:136pLOW: 79p
DIVIDEND YIELD:4.4%PE RATIO:na
NET ASSET VALUE:71ȼ*NET DEBT:20%

Half-year to 30 JuneTurnover (€m)Pre-tax profit (€m)Earnings per share (ȼ)Dividend per share (p)
2013343-9.1-1.31.8
2014317-101.0-11.41.89
% change-8--+5

Ex-div: 10 Sep

Payment: 10 Oct

*Includes intangible assets of €557m, or 68ȼ a share