Netplay TV (LSE: NPT) released its annual results this morning, sending its share price soaring by over 20%. The interactive gaming company reported earnings at the top end of consensus expectations and is proposing to pay a special dividend of 0.68p on top of an ordinary final dividend of 0.34p.
Netplay has had to negotiate regulatory changes that saw betting and gaming duties rise to £3.8m this year from £0.5m in 2015. The company more than offset the rise by slashing marketing expenses by £4m with a more targeted strategy, and also by reducing operating and administrative costs.
Netplay has a strong balance sheet with £10.8m of corporate cash and no debt, putting it in a good position for pursuing acquisitions as well as organic growth. Management recently looked at purchasing the Football Pools business from Sportech, but decided against entering a sealed-bid auction process, which suggests the board are only interested in doing the right deals at the right price.
Trading on 13.8 times last year’s earnings at a share price of 10.5p, and with cash representing 3.7p a share, Netplay appears a decent-value buy. A dividend yield of 6.3% (which excludes the special) is an added attraction.
Good business but rich rating
Lighting firm FW Thorpe (LSE: TFW) released half-year results this morning, and also saw its shares rise (up 7% as I write). Like-for-like earnings were 7.5% higher, but actual earnings rose 14% thanks to the contribution of an acquisition.
The strong performance, and £22m cash and no debt on the balance sheet, have persuaded Thorpe’s board to pay a 2p a share special dividend on top of a 1.2p ordinary dividend.
Thorpe is a old family-run business, and the board tends not to be gushing about performance and prospects: thus, underlying growth was generally “solid rather than astounding” and management is “cautiously optimistic” about the rest of the financial year.
Thorpe’s shares have had a strong run, and while this is a company I very much like, the current share price of 236p gives a rich rating of 22.6 times trailing 12-month earnings and yield of 1.6% (excluding the special dividend). Not a price at which I’m rushing to buy.
Risky and speculative
News this morning from Amur Minerals (LSE: AMC) didn’t get the positive response from the market that the results from Netplay and Thorpe received. The shares of the nickel-copper explorer with projects in the far east of Russia are down 2.3%, as I write.
Nevertheless, the news was positive. The company reported that it had completed the annually-constructed 350km ice road to its Kun-Manie project and begun the restocking of the site for its 2016 drilling programme. Amur also said it anticipates being able to release results soon showing a successful conversion of 2015’s targeted Inferred resource area to Indicated and to have successfully added 400 metres of Inferred resource.
Given the stage of development and the geo-political location, Amur remains a risky and speculative proposition, well outside my personal comfort zone.
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G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of FW Thorpe. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.