Snaitech acquisition drives revenue growth at Playtech

Playtech announced its results for the year ended 31 December on Thursday, reporting a 54% improvement revenue to €1.24bn, or 55% when measured at constant currency.

The FTSE 250 gambling technology developer said adjusted EBITDA was up 7% at €343m, while adjusted net profit rose 11% to €256.2m, or 6% at constant exchange rates.

Its reported net profit was €123.8m - down 50% - while adjusted diluted earnings per share were ahead 20% at 72.9 euro cents, or up 16% at constant currency.

The board confirmed Playtech’s total dividend per share was down 33% year-on-year at 24.1 euro cents.

Playtech spoke of an “improved” quality of earnings in the results, reporting that its B2B regulated gaming revenue was up 12% at constant currency, while its proportion of regulated revenue increased to above 80%, from 54% in the 2017 financial year.

It also completed the Snaitech acquisition during the year, with the now-subsidiary 100% owned from 3 August.

Snaitech reportedly had a “very strong” second half operational performance, with Playtech’s synergy targets reaffirmed.

The group’s adjusted EBITDA growth of 7% at constant currency was put down to the Snaitech acquisition offsetting a decline in Asia.

Excluding acquisitions, the board said its B2B gaming cost of operations reduced by €17m in 2018, which when combined with revenue growth, led to “significant” margin expansion in B2B non-Asia.

The B2B non-Asia gaming margin was expected to increase to over 30% in medium term.

Net cash from operations rose 26% to €387m, Playtech added.

Looking at its balance sheet, Playtech reported “significant” progress on efficiency, with its net debt-to-EBITDA ratio standing at 1.5x as at 31 December.

During the year it conducted a €530m bond raise, and achieved its first public credit rating of Ba2/BB.

It sold holdings in GVC and Plus500, realising €447m in cash, and repaid its €200m revolving credit facility before organising a new, undrawn €272m facility.

Playtech said that, in order to maximise the efficiency of its shareholder returns, and following shareholder feedback, it was preparing to reallocate part of its payout into share repurchases.

The board said shareholder distributions would be balanced between dividends and share repurchases, adding that its intention was that the overall level of capital returned to shareholders would continue to be progressive, in line with medium term earnings.

Playtech said its share buyback programme was approved by the board up to an initial amount of €40m via an irrevocable, non-discretionary arrangement with its corporate brokers, Goodbody and UBS.

It also declared a final dividend of 12 euro cents per share.

“In the face of changing market dynamics Playtech achieved significant strategic and operational progress in 2018, delivering a markedly improved financial profile,” said chairman Alan Jackson.

“The group achieved new licensee wins in key regulated markets, the UK, Europe and Latin America.

“The combination of progress in regulated markets and headwinds in unregulated activity saw regulated Group revenue increase to over 80%.”

Jackson said the acquisition of Snaitech and the ongoing strong performance of that business had delivered geographical diversification of the group's revenue profile, and also delivered a “leading presence” in the largest, and one of the fastest growing gambling markets in Europe.

“Following shareholder engagement, I am pleased to announce our new progressive shareholder return policy.

“The strength of the balance sheet and cash flows allow the Board to demonstrate its confidence in the future growth of the business through both a share buyback programme and a final recommended dividend.”