Efforts by interactive TV gaming company NetPlay TV (NPT:AIM) to improve its marketing strategy are failing to win over investors with the share price falling 6.5% to 9p this morning.

NetPlay’s revenue fell by 3.9% to £27.3 million in the year to 31 December 2014 after the company introduced a more targeted marketing approach, resulting in a reduction in the number of customers betting on the platform.

Bjarke Larson, chief executive of NetPlay, says every acquisition is now a positive contributor to EBITDA (earnings before interest, tax, depreciation and amortisation).

EBITDA fell by 31% to £3.6 million in 2014 which Larson says was due to the difficult landscape, in particular the introduction of the Point of Consumption tax. ‘Our profit before the Point of Consumption tax is improving but once the tax is included it goes down,’ he adds.

NETPLAY TV - Comparison Line Chart (Rebased to first)

NetPlay believes the regulatory changes will present merger and acquisition opportunities for the group as many operators are expected to struggle to remain cash generative. NetPlay has a cash balance of £14.2 million, up from £13.9 million in 2013, and has no debt.

House broker N+1 Singer is forecasting revenue to fall to £26.1 million in 2015 with pre-tax profit down from £3.3 million to £2.7 million.

NetPlay trades on a 2015 earnings multiple of 4.6 compared to its peers’ average of 9. ‘With a 5.7% yield the shares look good value,’ says N+1 Singer analyst Johnathan Barrett.

Issue Date: 09 Apr 2015