Dual-listed gaming firm increased adj earnings by 19%, saw net losses fall to £40m from £111m
Companies: Gamesys Group
Revenues at Jackpotjoy, the online gaming company, rose by 15% to c.£270m last year, with the dual-listed firm Jackpotjoy increasing adjusted earnings by 19% in 2016, and dramatically cutting net losses 65% to -£40m.
The recently UK-listed firm, which also trades in Canada under the Intertain Group (TSX: ITX), enjoyed record cash generation of £83m, and on an adjusted basis saw EBITDA and EPS grow 19% to 113p.
Its brands Jackpotjoy and Vera&John faired well during the year, with the former seeing revenue growth of 17% (adjusted net income growth of 34%), whilst the latter posted 20% growth (adj 124%). However, Mandalay, another brand under the Group, grew revenues by just 1%.
Active customers grew to 236k, up 15% Yoy, whilst real money gaming revenue per month increased 20% to £20m. Average revenue per customer also increased to £86.
Jackpotjoy is a new entry to the AIM-market in the UK, previously Intertain Group's largest brand, and hasn't faired too well on the market just yet. Its share price rose 5% on Wednesday, but it is still about 11% down on its IPO price in February.
One of the factors holding back the company is its debt, and it sure does have a fair bit. On Edison’s expectations, net debt including expected earn-outs for year-end 2016 should be around £385m or about 3.9 x EBITDA, and this goes a long way to explaining the low PE rating.
It also pays some hefty interest rates. Most of the debt pays LIBOR plus 6.5% with 90m at LIBOR plus 9%, meaning total interest charges in 2017 are estimated at £33m, compared to forecast EBITDA of £105m.
CEO Andrew McIver said the past year had been turbulent but he was pleased to be reporting strong results, with Jackpotjoy growing 17%:
"Strong group revenue growth of 15% has been driven by growth across all our business units, with our largest brand, Jackpotjoy, reporting impressive growth of 17%."
On a constant currency basis, the firm achieved the high end of its market guidance. Mr. McIver said that this, which was achieved whilst big strategic initiatives were undertaken, demonstrated the firm's ability to develop and grow brands:
"I am confident that our strong portfolio of brands will continue to deliver strong organic growth and this is further evidenced by the 10% revenue growth year-on-year we are forecasting for Q1 2017."