Three initiatives that have transformed JackpotJoy

Three initiatives that have transformed JackpotJoy

Wednesday, March 29, 2017
Listed bingo operator has performed well in a 'tumultuous year'

JackpotJoy Plc chairman Neil Goulden believes the bingo operator is now in the perfect position for growth after a ‘tumultuous year’ of change.

The firm has just revealed strong group financial performance on a like-for-like basis with revenue growth of 15% and adjusted EBITDA growth of 19%, with record cash generation for the year in the shape of £83.0m of operating cash flow.

Goulden said that three initiatives have revamped the fortunes of the business; the development of a UK-centered focus which included listing on the London Stock Exchange, a refinancing of the business to provide it with the flexibility to pay main supplier Gamesys £150m and a renegotiation of terms and conditions with Gamesys.

He explained there is still much to do though: “The three key strategic initiatives are building blocks, not the final destination. We now need to prove that our stock deserves a re-rating in the UK by supplying consistent growth and delivering against our trading objectives.

“While it was a long journey to this point, I am immensely gratified by the position that Jackpotjoy plc now holds in the UK and in particular, the strong governance and Board we now have in place which includes newly appointed experienced non-executive directors, Colin Sturgeon and Nigel Brewster. While there will inevitably be challenges ahead, the path is clear and all of us - directors, management and employees - are ready to push forward.

“To conclude, this was a year of unprecedented change for the Group. However, I feel that we are now extremely well set to deliver on our targets in 2017 and beyond, with the right leadership team and right strategy in place. We are committed to providing strong financial returns to our shareholders, and are confident that the path we've identified will allow us to continue producing solid organic growth and free cash flow for the benefit of both the company and investors.”

Goulden’s call for a re-rating by investors appears to be feasible. Victoria Pease, analyst at Edison Investment Research, commented: “Jackpotjoy plc’s maiden London-listed results demonstrated the benefits of leading market-brands in a profitable and cash generative business. Proforma group revenues grew 15%, with an industry leading EBITDA margin of 38%.

“The stock has suffered from unusually high net debt, a lack of dividend and a complex relationship with Gamesys. However, the revised terms of the contract, together with the end of the major earn-out period, suggest that deleveraging will be on track. A trading multiple of 6.9x 2017 EV/EBITDA is far below the sector and, as JPJ continues to demonstrate its market dominance in bingo-led gaming, the stock appears attractive as a turn-around candidate.”

Totally Gaming says: It’s been a huge project to bring the bingo operators over to London from Toronto, combined with the in-depth talks with its vital supplier Gamesys, but the early indications are that the move is paying off. Led by executives familiar to the investment market and with experience in listed firms and debt management, CEO Andrew McIver and Neil Goulden have got off to a good start.

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