A special dividend is a good sign of robust cash generation, especially when it's worth €150m in size, comes alongside a 15 per cent increase in the basic payout and still leaves nearly €600m of net cash on the balance sheet. Such was the news from gaming and financial services technology group Playtech (PTEC), which saw adjusted cash profits rise more than a quarter to €144m. The biggest knock to the reported figures came from foreign exchange movements; the group said there had been a "significant translation impact" on its sterling cash balances.
Operationally speaking, the business is in good shape. The gaming division benefited from new licensees PokerStars and SunBets, while other significant contracts have also been renewed. That means seven of the top 10 licensees have pledged allegiance for at least three years. The division's adjusted cash profit margins rose to 45 per cent from 40.7 per cent in the comparable period.
Chief executive Mor Weizer said costs for the financial division had fallen thanks to a large reliance on digital communication and marketing, rather than targeting customers via introductory brokers. The former is preferred by financial regulators, Mr Weizer said, as it is easier to monitor.
Analysts at Canaccord Genuity upgraded their predictions for the year to December 2016 and now expect adjusted pre-tax profits of €267m and EPS of 72¢, up from €212m and 62¢ in 2015.
| PLAYTECH (PTEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 932p | MARKET VALUE: | £3.01bn | |
| TOUCH: | 932-933p | 12-MONTH HIGH: | 945p | LOW: 699p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 384¢* | NET CASH: | €578m | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 286 | 85.8 | 28.9 | 9.6 |
| 2016 | 338 | 51.3 | 15.3 | 11.0 |
| % change | +18 | -40 | -47 | +15 |
Ex-div: 22 Sep Payment: 25 Oct *Includes intangible assets of €807m, or 250¢ a share £1=€1.17 **Doesn't include special dividend worth 46¢ a share to be paid on 6 Dec 2016 (Ex-div: 3 Nov 2016) | ||||
