NPT.L Regulatory News (NPT)

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NetPlay TV plc

Interim Results & Directorate Changes

NetPlay TV plc (AIM: NPT), the interactive gaming company, announces its interim results for the six months ending 30 June 2014:

Key Performance indicators

§ 24% increase in new depositing players to 40,585 (H1 2013: 32,618)

§ 29% increase in active depositing players to 62,356 (H1 2013: 48,218)

§ Mobile and tablet now accounting for 36% of total net revenue and 39% of new depositing players (H1 2013: 28% of total net revenue and 34% of new depositing players)

Financial Performance

§ Net revenue of£14.5m (H1 2013: £14.2m)

§ EBITDA[*] of £2.2m (H1 2013: £2.7m)

§ Adjusted earnings per share of 0.70 pence per share (H1 2013: 0.87 pence per share)

§ Cash and cash equivalents, increase by £0.4m to £14.3m from £13.9m(H1 2013: £14.9m)

§ Cash conversion ratio[†] remained strong at 84%

§ Profit before tax of £1.2m (H1 2013: £2.4m)

§ 22% increase in interim dividend to 0.22pence per share (H1 2013: 0.18 pence per share)

Post Period events

§ Charles Butler appointed Non-executive Chairman following Clive Jones' retirement from the Board

§ Bjarke Larsen, Commercial Director, appointed Interim CEO

§ Q3 average daily net revenue up 6%[‡] on the same period last year

§ Full year results expected to be in-line with current market expectations

Commenting on the results and the trading update, Charles Butler, NetPlay TV said:

"The period has been one of adjustment for the sector as a whole and notwithstanding this, we are pleased to be reporting increased levels of both new depositing players and active depositing players, an illustration of the success of our marketing strategy. In addition, we are pleased to announce that due to the continued strong cash position of the Group, the Board is increasing the interim dividend payable to 0.22 pence per share. We have worked hard during the period in preparing the business for the six months ahead, ensuring it is well positioned post the impending legislative changes.

"I would like to take this opportunity to thank Clive Jones for his significant contribution to the Company and welcome Bjarke as Interim CEO. Bjarke's knowledge of both the Company and the wider industry puts him well placed, with the rest of the Board, to drive the business forward."

Enquiries:

Jonny Franklin-Adams

Jen Boorer

Notes to Editors:

About NetPlay TV plc

NetPlay TV plc is admitted to trading on the AIM market of the London Stock Exchange (NPT). NetPlay TV operates a number of interactive gaming services under an Alderney gaming license, including SuperCasino.com, Jackpot247.com and Vernons.com. Its TV services can also be viewed 24 hours a day live on Sky Channel 862, six nights a week on ITV1, and every evening on Channel 5.The Company is focused on the delivery of a converged interactive gaming experience allowing its players to interact with its games on a variety of platforms, TV, internet, mobile and tablet from a

common integrated wallet.

Operational and Financial Review

The Group is pleased to announce continued strong growth in new depositing players and total active depositing players during the first half, up 24% and 29% respectively versus the same period in 2013. The increase in active unique depositing players translated into an increase in net revenue of 2% versus the same period in the prior year reflecting the fall in average revenue per active depositing player ('ARPU') in the period, due principally to unsustainable promotional activity in the industry.

Mobile and tablet have continued to perform very strongly with almost 50% of all customer registrations coming via a mobile or tablet device which in turn contributed36% of total net revenue.

Marketing expenditure & performance

Total marketing expenditure has increased by 6% or £421,000 during the period which helped drive the 24% increase in new depositing players. The Company continued to adopt a diversified marketing strategy in the first half and this was shown in the number of new player sign ups.

As a result of the expected incoming point of consumption ('POC') tax, the Company believes there has been an unsustainable level of competitor marketing and bonus offers which in turn has had the effect of lowering ARPU in the period. The Company expects marketing levels to normalise and even fall once POC is in place at the end of H2. The Group continues to believe that POC is a manageable challenge and ultimately creates an opportunity for Netplay.

With the increase in total registered customers now exceeding 1.5 million the Company will be actively implementing a strategy to balance its marketing spend between player acquisition and retention to ensure that maximum player value is extracted through H2. This will be delivered through a combination of new content delivery and product enhancements.

The Group has continued to invest in its core live casino product and again was the lead sponsor of Big Brother and Celebrity Big Brother in January this year which was the most successful series for Channel 5 to date and brought in strong new player numbers. This sponsorship continued into the summer with Big Brother starting in June however with the Football World Cup there were lower than expected viewer numbers and resulting new player numbers when compared with the January series and the broadcast in summer 2013.

Mobile and tablet growth

NetPlay TV continues to drive investment into mobile and tablet through marketing, product enhancements and new content delivery. This can be seen in the fact that over 50% of all new customer registrations came via mobile and tablet in Q2 2014 and accounted for 36% of net revenue for the first half. Mobile net revenue has been dominated by casino during the first half however the Group's mobile sportsbook is expected to be launched in H2 bringing with it another driver for continued growth in this area.

There will be further enhancements to the mobile user experience throughout H2 2014 with more available content and player specific bonus features. This is expected to increase player retention and lead to higher player values.

Throughout H1 the Group initiated the roll-out of a new single wallet functionality across all platforms which allows us to deviate from traditional bonuses to much more granular and targeted campaigns. Initial user testing has shown that this is proving effective.

Our statistics show us that customers interacting with our services on both desktop as well as mobile/tablet have the highest ARPUs (currently over four times greater than just desktop players) and therefore the cross selling between devices to customers with the intention of increasing overall player values will be a focus in H2.

H2 Outlook

While continuing its core focus on a TV-led acquisition strategy backed up by digital campaigns, the Group will also be focused on improving player ARPU in H2 2014 by driving customer retention. New software will be launched that analyses the data and relationships between player behaviour, which will allow the Group's CRM teams to react to player trends earlier allowing them to increase the player life time and in turn value.

Continued product innovation will allow us to further improve the customer experience which in turn should also lead an improvement in ARPU. The Group will be rolling out a new technology to communicate and incentivise players as well as introducing new marketing initiatives to attract new customers which carry a lower CPA, such as refer-a-friend.

The sportsbook which was acquired as part of the Vernons acquisition is gaining traction and while the contribution is currently relatively low there is an opportunity for this part of the business to grow rapidly especially once the mobile application and website is launched.

Regulation

As stated in the Q2 update, there are a number initiatives that the Group can use to mitigate the impact of POC. The Group has started preparing for the new POC regulation by undertaking a consolidation of overseas locations, aligning software and commercial contracts to take into account the tax and will continue to review further consolidation opportunities throughout H2.

The Gambling (Licensing and Advertising) Act 2014 received Royal Assent in May 2014 and requires any operator wishing to transact with or advertise to UK consumers to obtain an operating licence from the Gambling Commission. This licensing regime comes into force from October 2014 and NetPlay TV will obtain a continuation licence as it currently lawfully provides remote gambling into UK. The point of consumption tax is expected to take effect from December 2014.

It should also be noted that the Gibraltar Betting and Gaming Association (GBGA) has filed a legal challenge against new gambling licensing regime on the grounds that it is "unlawful, because it is an illegitimate, disproportionate and discriminatory interference with the right to free movement of services guaranteed by Article 56 TFEU, and is irrational." The outcome of this filing has not been determined yet.

Cash flow and cash generation

The table below shows how EBITDA reconciles to Net Cash Flow from the online gaming operation when stripping out the movement in player balances, working capital, share capital issued, net finance income, reorganisation costs paid, dividends paid and the acquisitions of Vernons.com.

To support our platform for long term growth, during the period the Group has invested in capex associated with software development for the message broker platform between the software provider and our own proprietary roulette games. In addition to this, capital expenditure has been incurred to upgrade the offshore web and hosting environments.

The Group continues to be highly cash generative, with net cash generated from operations being £1.9m. The Group now has cash and cash equivalents of £14.3m (H1 2013: £14.9m), which net of player balances of £1.6m (H1 2012: £1.8m) is £12.6m (H1 2013: £13.1m). This is equivalent to 4.3 pence per ordinary share in issue at the 30 June 2014 (4.5 pence per ordinary share in issue at 30 June 2013).The Board will be reviewing the use of the Group's cash balances at year end.

Earnings per share

The directors have chosen to report an adjusted profit before taxation and adjusted earnings per share as they believe these measures better reflect the underlying performance of the Group. These results are summarised in the table below:

Amortisation of specifically identified intangibles has increased since the prior year due to a full period of amortisation which has occurred due to the customer database acquired as part of the Vernons acquisition in October 2013.

Dividend

Due to the continued strong cash position and the earnings cover of the Group, the Board is increasing the interim dividend payable to 0.22 pence per share (H1 2013: 0.18 pence per share), an increase of 22% on the interim dividend of 2013. The interim dividend will be paid on 23 October 2014 to shareholders on the register on 26 September 2014.

Board changes

Today NetPlay TV announces that Clive Jones, Non-Executive Chairman, has informed the Board of his intention to step down from his role following the release of this year's interims results. Clive has been Non-Executive Chairman of NetPlay TV since June 2009 and having guided the board through the turnaround and growth story, firmly establishing NetPlay TV as a profitable and successful company, now wishes to concentrate on some of his other commercial activities. His knowledge and experience has been invaluable to the Board and the NetPlay TV Management team and the Board would like to take this opportunity to thank Clive for his significant contribution to the Company.

After four years as Chief Executive of Net Play TV, Charles Butler will become Non-Executive Chairman where he will continue to work alongside the rest of the Executive team in supporting them to drive the business forward. He is stepping down from his position as CEO to pursue other opportunities. Bjarke Larsen, Commercial Director will become the Interim CEO while the Board conducts a search for a new CEO. Bjarke's has extensive knowledge of both the Company and the wider industry and will be supported by a strong management team and the Board. The market will be updated on this position at the appropriate time.

The above Board changes take effect from Monday 15 September 2014.

Current trading

The Group is pleased to announce average daily net revenue in Q3 to date is up6% on the same period last year with new depositing players up 20%[**]. The Company expects its full year results to be in-line with current market expectations.

NetPlay TV plc

Consolidated statement of comprehensive income

for the six months ended 30 June 2014

NetPlay TV plc

Consolidated statement of financial position

as at 30 June 2014

NetPlay TV plc

Consolidated statement of cash flows

for the six months ended 30 June 2014

NetPlay TV plc

Consolidated statement of changes in equity

for the six months ended 30 June 2014

Notes to the interim results

1. Basis of preparation

The financial information for the year ended 31 December 2013 does not constitute the full statutory accounts for that year. The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

This interim report, which has neither been audited nor reviewed by independent auditors, was approved by the board of directors on 10 September 2014. The financial information in this interim report has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2013 and which will form the basis of the 2013 financial statements. A number of new and amended standards have become effective for periods beginning on 1 January 2014, however none of these are expected to materially affect the Group.

2. Segmental Information

The Board is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Group has one reportable segment, being the online gaming segment. This division consists of all online products and ancillary income. The brands operated in this division are SuperCasino.com, Jackpot247.com and Vernons.com which are aggregated into one reportable segment.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Board evaluates performance on the basis on the segment EBITDA. This measurement basis excludes head office costs not derived from operations of any segment and are only disclosed in total.

Geographical information

4. Earnings per share

Adjusted earnings per share

An adjusted earnings per share, based on the profit before taxation from continuing operations and before the amortisation of intangible assets arising on acquisitions, share based payments and reorganisation costs, has been presented below in order to highlight the underlying trading performance of the Group.

5. Deferred tax

Deferred income tax assets are recognised for tax loss carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

7. Goodwill

8. Intangible assets

9. Share capital