Netplay TV full-year results hurt by Point of Consumption gambling tax

9th Apr 2015 09:12

Gaming company Netplay Television on Thursday saw its full-year revenues and profits decline, which was in line with expectations.Revenues declined 4% to £27.4m in 2014 as the introduction of the Point of Consumption (POC) duty created challenging market conditions for the group.The POC tax was implemented last December and represents a 15% duty to gambling operators on bets placed online by UK consumers.Adjusted profits before tax fell 33.8% to £3.2m, but reported pre-tax profits plunged 97.8% to £94,000. Earnings per share were down from 1.68p in 2013 to 1.09p.However, the company proposed a 10% increase in its dividend at 0.55p per share.Chief executive Bjarke Larsen remained confident with the business, supported by Wednesday's announcement of an extension of its contract with Channel 5. He also expects its "successful" marketing review will help the group's results in 2015."Whilst the full environmental impact of the Point of Consumption duty on the industry is yet to be seen, we are confident with our post-POC operational strategy and believe the group is in a strong position for opportunistic mergers and acquisitions (M&A)," he added.N+1 Singer analysts said: " With product developments being rolled out there is opportunity to improve average customer spend and lifetime values through better retention."There is further upside potential through M&A and ultimately, we also expect more economically rational activity by market participants to lead to higher returns for Netplay."The broker maintained its 'corporate' recommendation as it expects the shares to continue to recover.Shares in Netplay TV fell 7.43% to 8.9p on Thursday at 09:28.