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BWIN spring cleans

Bwin.Party tries to impose order after its merger with Party Gaming, but at least investors can look forward to dividend payouts
October 3, 2011

Bwin.Party's interims were rather disfigured by the merger of Bwin and Partygaming. But even if you strip out the impairment, amortisation and restructuring charges, clean cash profits on a pro forma basis still fell by 21 per cent to €81.9m, on revenue down 3 per cent.

IC TIP: Buy

The regulatory situation continues to be Bwin's main bugbear. A US crackdown on poker sites has not so far led to an increase in players for Bwin's regulated services because the remaining sites are competing ferociously for players. And in Germany, which makes up 22 per cent of group net revenue, there has so far been no formal response to European Commission and member state concerns over its proposed gambling law, which, if enacted, would drive Bwin out of the market. In addition, the business faced tough comparisons because of the FIFA World Cup last year, which led to 9 per cent fall in the number of daily active players with average daily net revenue down 4 per cent to €2.14m.

Cost savings, though, can be achieved and management expects to find an extra €10m of savings through the merger to take the total to €65m by 2013.

Peel Hunt forecasts full-year EPS of 13¢, down from 16¢ in 2010.

BWIN.PARTY DIGITAL ENTERTAINMENT (BPTY)

ORD PRICE:127pMARKET VALUE:£1.07bn
TOUCH:126-127p12-MONTH HIGH:299pLOW: 98.5p
DIVIDEND YIELD:1.2%PE RATIO:na
NET ASSET VALUE:142¢*NET CASH:€183m

Half-year to 30 JunTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (p)
201017720.34.8nil
2011273-42.5-6.61.56
% change+54---

Ex-div: 7 Sep

Payment: 7 Oct

*Includes intangible assets of €1.19bn, or 141¢ a share

£1:€1.12