Playtech upbeat on FY-2016 results

Online gambling software and games developer Playtech has posted its FY-2016 results, flagging a busy year with many achievements.

Highlights of the report include:

* Total revenues up 12 percent y-o-y at Euro 708.6 million: 20 percent revenue growth at constant currency; 13 percent revenue growth excluding acquisitions and at constant currency; and 48 percent of group revenues generated in the regulated markets (2015: 47 percent);

* Adjusted EBITDA up 20 percent on a reported basis and 32 percent at constant currency;

* Adjusted group EBITDA margin of 42.7 percent (2015: 40 percent);

* Adjusted Net Profit and Adjusted diluted EPS at constant currency up 42 percent at Euro 206.2 million and 37 percent at 59.8 Euro cents respectively;

* Improved cash conversion of 94 percent (2015: 80 percent) with DSOs5 down 23 days from H1 2016;

* Gross cash at end December 2016 of Euro 545 million (Euro 469 million adjusted for CFH customer deposits) taking into account: Euro 240 million spent on acquisitions including BGT, CFH, Quickspin and ECM in 2016; returning Euro 296 million to shareholders in 2016 including Euro 150 million special dividend and Euro 50 million via a share buyback;

* Full year dividend per share up 15 percent in accordance with progressive dividend policy adopted in 2016.

Operational highlights of the report include:

Gaming division:

* Strong revenue performance with 21 percent growth at constant currency led by flagship online casino offering;

*Strong performance in Sports in H2 2016 following acquisition of BGT;

* Regulated Gaming revenues of 42 percent (2015: 41 percent);

* Software revenues from mobile of 33 percent in 2016 (2015: 21 percent), with 54 percent of UK revenues from mobile;

* Over 10 new customers signed in 2016 including Pokerstars, MaxBet and Mr Green with OPAP after the period end;

* Significant contracts renewed, including with Paddy Power Betfair, William Hill, Rank and Betfred in 2017;

* Nine of top 10 licensees now on long-term contracts;

* Launched Playtech BGT Sports representing opportunity across Europe and South America;

* Acquisitions integrated and performing in line with expectations;

* Pipeline of new licensees and new structured agreements remains strong.

Financials division:

* Revenue of Euro 65.6 million (2015: Euro 60 million) in 2016 with Adjusted EBITDA of Euro 15.4 million (2015: Euro 15.9 million);

* Encouraging performance and improved KPIs in H2 2016;

* B2B offering strengthened by acquisition of CFH in November 2016;

* Ron Hoffman now full time CEO of the Financials division.

Playtech also issued a trading update to February 20, noting:

* Average daily revenue in the Gaming division for the first 51 days of Q1 2017 was up 26 percent on Q1 2016 (30 percent at constant currency) and up 10 percent on Q4 2016 (9 percent at constant currency);

* Excluding acquisitions, average daily revenue in the Gaming division for the first 52 days of Q1 2017 was up 9 percent on Q1 2016 (12 percent at constant currency) and up 10 percent on Q4 2016 (up 9 percent at constant currency);

* The Financials division has performed in line with expectations in 2017 to date: Markets.com KPIs continue to be encouraging against a backdrop of low volatility; CFH continues to perform well with B2B volumes in line with expectations; Management remains confident of a strong performance in 2017 driven by both organic growth and the acquisitions made in 2016.

Commenting on the results, Playtech chairman Alan Jackson said:

“Playtech has continued to successfully execute its strategy for strong operational and financial performance, strategic M&A and shareholder returns.

“The Gaming division once again delivered very strong growth. Sports saw a good second half performance following the acquisition of BGT with the newly formed Playtech BGT Sports bringing together all aspects of the Playtech’s sports offering creating a fully integrated, best-in-class sports betting technology. 2016 also saw the signing of more than ten new customers with ten new customer go-lives. 9 of out of 10 top customers are now on long-term contracts with Paddy Power Betfair, William Hill, Rank and Betfred all renewing in the past few months.

“Following the transitioning of the Financials division in the first half of the year, the second half performance was encouraging with improved KPIs. The second half also saw the acquisition of CFH, enhancing Playtech’s position as it continues to build a B2B financials offering within its Financials division.

“The year was a strong year for M&A with Euro 240 million spent on acquisitions including BGT, CFH, Quickspin and ECM. In addition to this, reflecting the strength of Playtech’s cashflows and flexibility of its balance sheet, Euro 296 million was returned to shareholder including a Euro 150 million special dividend and Euro 50 million through a share buyback, with no impact on its M&A capabilities. In accordance with the new progressive dividend policy adopted in 2016, the full year 2016 dividend has been increased by 15 percent.

“Management remains confident of a strong performance in 2017 and beyond.”

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