JPJ hails Vera&John as revenue climbs 14% in first half

13 August 2019

Online bingo and casino operator JPJ Group has reported a 13.8% year-on-year increase in revenue during the first half, with the strong organic growth of its Vera&John business offsetting a decline in revenue from the Jackpotjoy division.

Gaming revenue for the six months through to June 30, 2019 totalled £169.5m (€182.5m/$204.2m), up from £149.0m in the corresponding period last year.

While the operator’s Jackpotjoy division accounted for £97.7m - or 57.6% - of group revenue, this represented a 5.7% decline from £103.6m in the opening six months of 2018.

However this decline was more than offset by the Vera&John segment, which saw revenue rise from £45.4m in H1 2018 to £71.8m, a 58.1% year-on-year increase. The division now accounts for 42.4% of group revenue, with JPJ noting growth had been aided by success in markets such as Germany, Brazil and Japan, with its B2B operations expanding across the broader Asian region.

"We expect Vera&John to continue to be our fastest growing segment as we focus on growing our business both in further emerging markets in Asia, Latin America and more established European markets," JPJ said.

However the Vera&John and InterCasino brands will soon be withdrawn from the UK market. Last week JPJ announced that both brands would be withdrawn from 3 September, with each ceasing to accept new customers from 5 August.

The operator saw costs increase over the six-month periods, rising 21.8% to £152.6m. Distribution costs rose to £87.9m, as a result of higher selling and marketing expenses, coupled with increased licensing fees and gaming taxes. Administrative costs, meanwhile, were up from £49.0m in the prior year to £52.8m, with increased staff costs offsetting a decline in amortisation and depreciation-related expenses.

The operator also spent considerably more on transaction related costs in the first half, with total spending in this area up from £1.1m to £12.2m. This rise was in relation to JPJ’s acquisition of Gamesys, which is currently ongoing, and is expected to be completed in the third quarter of the year.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased marginally from £53.0m to £54.0m.

JPJ also benefitted from a reduction in finance-related expenses, which fell 53.8% to £10.7m, due to a decline in fair value adjustments on contingent consideration, leaving an operating profit of £6.2m, up from £699,000 in the prior year. After income taxes, and a £660,000 loss from discontinued operations, net profit for H1 2019 was up at £4.5m, compared to a £436,000 loss for the first half of 2018.

For the three months to 30 June, revenue was up 15.1% to £86.2m, of which £48.7m came from Jackpotjoy, and £37.6m from Vera&John. Expenses for the quarter rose to £83.3m, due to transaction costs relating to the Gamesys deal, and increased distribution costs. After finance-related costs of £5.1m - down 5.6% year-on-year - JPJ posted an operating loss of £2.2m, which fell to £2.1m once income taxes and a gain from discontinued assets was factored in.

Reflecting on the results, JPJ executive chairman Neil Goulden said he was pleased the operator was able to deliver a good quarter of revenue growth, despite the expected impact of higher gaming taxes on EBITDA.

Goulden also spoke about the pending acquisition of Gamesys, which he said represents a “transformational step in the Group’s growth and one which will provide significant benefits for shareholders, employees and customers”.

“We expect the Gamesys acquisition to deliver double digit earnings accretion in the first full financial year of ownership and our employees will benefit from the combination of two companies with a strong commitment to responsible gaming, with a scale to further enhance our product development and technology capabilities,” he said.

“Our customers will also now have an even greater choice of major brands and different games, creating a truly leading UK and international operator. We expect the Gamesys acquisition to complete during Q3 2019 and we will update the market further in due course.”