Bwin.Party still in sale talks

Online betting and gaming firm Bwin.Party aimed to be the business it always wanted to be by 2015, and now the moment of truth has arrived with its full-year results. It's confirmed it is still in talks with potential suitors over its partial or full sale. That news is potentially supporting its market value after it reported losses of just under €100 million following a big impairment charge. Management are confident they have done enough to position itself well for the year ahead, but the market will be questioning whether Bwin is worth its valuation.

Internet service providers (ISP) in Greece have been blocking Bwin's offering in the region, which dampened its income statement in 2014. Revenue fell 6% to €611.9 million, and was also hindered by the further declines in poker that weren't offset by gains made thanks to the FIFA World Cup. Its "clean" cash profit shrank to €101.2 million, also down 6%. But the gambling firm reported an operating loss of €98 million in 2014, giving a loss per share of 11.3 cents from EPS of +5.4 cents last year. Adjusted to strip out the effect of exchange rates and one-off expenses, its "clean" EPS lost a third of its value to 4.8 cents. But management have increased its final dividend to 1.89p, which boosts its full-year dividend to 3.78p per share, up 5%.

Bwin is on-track with another €15 million of cost savings, and gaming revenue from its mobile/touch offering doubled to €153.2 million throughout the year; but a large chunk of this will have been theoretically wiped out by the €104.4 million non-cash impairment charge against assets in its poker and social gaming division, which was reported in the first half. This is over 11 times what it put aside last year.

Its key performance indicators aren't looking too impressive either, with the number of active players down 13%. The numbers of daily players and new players signing up have also fallen by double digit percentages. Although the average daily net revenue fell 8%, the yield per active player rose 6% to €10.6 - the only positive movement. Sports betting brings in the majority of its revenue, but this only inched 1% higher in the year to €237.1 million. Casino and games fell 6% to €203.7 million and its poker turnover fell by 30% to €81.7 million.

Bwin is trading around 30% lower than this time last year, and had fallen to 74.3p on Wednesday. This puts the gambling service provider on around 18 times earnings, higher than Ladbrokes and William Hill's 15x rating.

Looking ahead, the absence of any large football tournament will make the year tough for Bwin, coupled with new taxes and pressure from European poker. But it reckons it has done enough to reduce costs and position itself well with recent product launches to remain confident. It has earmarked up to €50 million worth of disposable assets.

"Trading in the first eight weeks of 2015 has been broadly in line with our expectations," said the company. "While betting volumes as well as overall player activity on sports and gaming (excluding poker) have been above last year, lower margins in sports betting and casino meant that average daily net revenue was down 12% year-on-year."

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