NetPlay puts acquisition top of agenda

NetPlay TV is determined to complete an acquisition by the year end, placing either a bolt-on or a transformative transaction at the top of its agenda for 2016, its chief executive has told eGaming Review.

Speaking to EGR after reporting a 4% drop in 2015 revenues, CEO Bjarke Larsen (pictured) said the firm was “very inquisitive” and would use “whatever we can to find the right deals”.

“We want to be in the position where we can complement our existing core operation with an acquisition, but it’s got to be right for the group,” Larsen said.

“We’ve got cash on the balance sheet and we are very acquisitive so it’s about looking at opportunities that represent good shareholder value. At the moment there are a number of opportunities we are reviewing but nothing material,” he added.

NetPlay has ?13m cash on the balance sheet and Larsen said the business was keeping its options open regarding the size of potential targets.

The firm had previously been on the hunt for the Sportech-owned Football Pools but after “careful consideration” pulled out of the race in January.

“The Football Pools business would have been a transformational piece but it’s all down to whether a deal stands up on its own, so from our perspective it could be a transformational deal or something to complement our core brands,” Larsen said.

The chief executive also revealed the firm was in the process of reviewing its Vernons-branded sportsbook with future investment dependent on its performance over the next few months.

“We have tried to put all the tools in place to see if the sportsbook market is one we want to push, pursue and invest in,” Larsen said.

“Now we’ve got the mobile sportsbook, we’ve got a web offering, we’ve got the virtual sportsbook, and a number of other features that are important in the sportsbook space; we have driven quite a bit of traffic.

“But now it’s about evaluating over the next couple of months and looking at the performance across some of the key events, such as the Euros, then deciding how sports fits within the overall product mix,” he explained.

Whatever the results of the sportsbook review, Larsen said the firm was “definitely not” considering a sale of the Vernons’ business, with the brands’ casino and bingo verticals making a positive contribution to the group.

However, plans for a sportsbook-focused TV show, akin to its late night SuperCasino slots on Channel 5 and ITV, are on hold until at least after the European Championships this summer.

“We obviously looked at that [TV] but from our point of view we’ll digest the performance [of sportsbook] in the next couple of months to decide whether it warrants a significant amount of investment for a TV show,” Larsen said.

Despite posting a revenue drop, which amounted to 8% for the B2C business – last year NetPlay acquired B2B digital marketing firm Otherside – underlying metrics were strong with new depositing customers and active depositing customers up 17% and 14% respectively.

And while EBITDA was down from ?3.7m to ?2.7m, the firm said like-for-like EBITDA would have been up ?1.8m without the UK Point of Consumption headwind, while revenues for the year to date were up 16% year-on-year.

However, the firm may be faced with additional tax burdens after the UK government last week announced plans to remove the tax-free status of free plays from August 2017.

“It came as a surprise to hear there’s a possibility of free spins being taxed and from our perspective we are waiting for the consultation with the RGA and HMRC after which we’ll take a view on how we manage that moving forward,” Larsen said.

NetPlay TV’s stock reacted positively to today’s results with its share price up more than 20% to 10.50p.