Jackpotjoy fails to cash in despite jump in first half revenues
Jackpotjoy PLC , said higher costs and a big jump in financing expenses resulted in a much wider loss in the first half of 2017, despite reporting a material lift in interim revenue.
The online bingo and casino operator said revenue in the first half of 2017 rose to GBP146.6 million from GBP127.6 million the year before, but said its net loss before tax swelled to GBP19.9 million from GBP9.6 million.
The rise in revenue, which was up 12% at constant currency, was partly offset by increased costs that totalled GBP126.6 million from GBP121.9 million, driven by higher distribution and administrative costs, as well as a foreign exchange hit of GBP6.9 million compared to a GBP2.5 million drag the year before.
However, the lift in financing expenses to GBP40.9 million from GBP17.4 million was the major cause for the wider interim loss.
Operating cashflows in the half improved 2% year-on-year to GBP45.6 million from GBP44.9 million. Gross debt including earn-outs stood at GBP414.5 million at the end of June versus GBP514.8 million at the end of 2016.
A key priority for the group is to reduce our historic debt burden. The business is highly cash generative with cash conversion in the second quarter of 99%, excluding one-off and exceptional items. Consequently, our adjusted net leverage reduced from 4.0x to 3.6x during the six months,” said the company.
A “major milestone” in this debt reduction was achieved in June when the business made the final earn-out payment of GBP94.2 million for the non-Spanish assets within the Jackpotjoy segment, using existing cash resources.
The trading momentum witnessed during the first quarter and which continued during the second and the early stages of the third, helped to deliver a solid performance across the group. We continue to expect robust top-line growth through the second half. As previously flagged, there will be an impact on profitability in the second half from the introduction of UK point-of-consumption tax on bonuses scheduled to commence in August 2017. Likewise, and also as previously highlighted, marketing spend will be weighted towards the second half of the financial year, said the company.