UK Edition
Higher debt means online casino Jackpotjoy falls to a loss
Rising debt costs linked to an acquisition have pushed newly-listed online gambling company Jackpotjoy to a loss in the first three months of the year.
The decision to take on more debt at the end of last year meant rising interest costs wiped out profits.
Rising finance costs pushed Jackpotjoy to a pre-tax loss, compared to a £5.2m profit in the same period a year ago.
Prior to its stock market listing in January, the company borrowed an extra £150m as part of a deal to buy the Jackpotjoy and Starspin brands from rival Gamesys. This pushed borrowings to roughly £407m once cash it has on its balance sheet is taken into account.
The loss failed to dampen investors’ enthusiasm for the shares however, with shares rising more than 3pc to 588p in lunchtime trading.
Chief executive Andrew McIver warned profit growth could be held back in the UK this year when a Government tax on the gambling sector is extended to bonuses.
At present, the point of consumption tax is levied against online bets made by punters in the UK regardless of whether the company they are placing it with is based domestically or not. At the moment, bonuses, which are effectively free bets, have escaped the tax.
The company also said its rapid growth in Spain could be a double-edged sword. Sales in the country are currently rising, but Spain's relatively high tax regime could cool the pace that profits rise at.
For the first quarter to March 31, the group boasted a 15pc year-on-year rise in the number of average active customers to 239,452, with each gambler spending an average of £87 - a 2pc rise on the comparative six-month period.
The group’s bingo and roulette business Jackpotjoy, which is advertised by former Eastenders star Barbara Windsor, makes up 71pc of sales for the company, and saw a 17pc rise in revenue to £188m.
Its casino business Vera&John, which makes up more than a fifth of sales, saw revenue growth of 20pc to just shy of £70m, while its Mandalay division, its affiliate arm, registered flat sales at £21.7m.