Online bingo and gambling company Jackpotjoy said today that it is on track to cut down its debt pile and return cash to investors, following better-than-expected results for the first half of the year.
Revenue for the first half of the year came in at £146.6m, up 13 per cent on the same time last year.
Adjusted underlying earnings grew 15 per cent to £59.2m while operating cash flows were up two per cent to £45.6m.
Net loss for the period was £20.1m.
Crucially, the group's debt pile - which has been playing on investors' minds since Jackpotjoy debuted in London this year - was cut from £514.8m at the end of last year to £414.5m.
All sections of the business reported double digit earnings growth. underlying earnings for the Jackpotjoy brand, which accounts for 70 per cent of the business, were up 35 per cent. Vera&John grew 21 per cent while Mandalay was up 50 per cent due to lower advertising costs.
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Why it's interesting
Jackpotjoy's debt has been considered unusually high for a UK company. Chief executive Andy McIver today outlined that reducing the debt pile was a "key priority" for the company.
"It's getting us much nearer to what you'd expect for a normal UK company", he told City A.M. this morning.
He also said that the goal was to return some cash to investors as soon as the debt reached a reasonable level, which he expected to happen by the end of 2018.
The group entered the stock market in March this year, rebranding from Intertain to Jackpotjoy, the name of its biggest UK brand.
What the company said
Chief executive Andy McIver was also keen to stress that the company would not be entering into any mergers or acquisition deals in the future, despite a trend in the gambling market for consolidation.
"We don't need to buy anything," he said. "We have a market-leading position in Sweden, in Spain, in the UK. I don't see us on the M&A trail.
"I think where it might interesting in the future would be in geographies we don't have. We're very interested in South America for instance, but that would be very much in the future."
He added that although the company was not looking to buy more businesses, it was always keen to support entrepreneurs with new gaming ideas.
What analysts said
The market reacted positively, with Jackpotjoy shares trading up nearly three per cent today.
Victoria Pease, an analyst at Edison Investment Research said the stock, currently priced at 682p, was relatively cheap. “The balance sheet is simplifying following a major earn-out payment and, as the company continues to demonstrate its market dominance, we would expect a re-rating in the shares.”
Simon Davies at Canaccord was optimistic on the company's prospects. He said: "Profits came in comfortably above our forecast, and while we nudge up our revenue forecasts and leave Ebitda/EPS unchanged, we see definite upward pressure on our assumptions."