TIDMPTEC
RNS Number : 4590N
Playtech PLC
20 May 2020
Playtech plc
('Playtech' or the 'Company')
Trading and COVID-19 update
Strong Q1 performance & actions taken to ensure Playtech
remains well placed
Playtech plc ("Playtech") today reports trading for the period
from 1 January to 30 April 2020 and provides a further update on
the impact of COVID-19 following the Company's previous
announcements of 9 March and 19 March 2020.
Summary
-- Playtech took early and decisive action in response to
COVID-19 and has performed better than envisaged in its update on
19 March 2020
-- Strong Q1 with Adjusted EBITDA of EUR117 million
-- In April 2020 Adjusted EBITDA was EUR23 million driven by
TradeTech in addition to cash preservation measures
-- Monthly cash flow remained positive in March and April
(excluding contingent consideration payments and cash from land
sale)
-- Significant operational progress with existing and new Tier-1
licensees and over 20 new brands added
-- Over EUR600 million of cash available including fully drawn
RCF; covenant light debt
-- Further EUR14 million received from Snaitech land sale with
remaining EUR36 million expected in early Q3
-- Claire Milne appointed as Interim Chairman to provide
continuity and stability
Response to COVID-19
As COVID-19 continues to impact the global economy, Playtech is
doing everything it can to mitigate the effects of the outbreak on
its staff, its partners and its business. Management has taken
decisive action to ensure the health and wellbeing of its employees
and to preserve cash flow, while continuing to provide customers
with Playtech's leading technology to deliver what they need.
Actions taken include the deferral or cancellation of capital
expenditure, strict working capital management, suspension of
shareholder distributions, salary reductions across the Company
(including 20% for all members of the Board and the executive
management team), reduced working hours in certain locations,
significant reduction of marketing spending, reduced office and
maintenance costs, and the renegotiation of timing of cash outflows
including contingent consideration payments due in 2020.
Playtech enacted its business continuity plan in the early
stages of the COVID-19 pandemic with many of its offices moving to
remote working during February to protect employees' health and
safety, while remaining locations transitioned in early March.
Playtech has managed this transition while maintaining productivity
levels and delivery deadlines.
Playtech has also made its Safer Gambling engagement tools and
data analytics technology, including BetBuddy, available to all
operators across the industry for free during the crisis.
Results for period 1 January 2020 to 30 April 2020
Overall, Playtech had an extremely strong Q1 2020 with Adjusted
EBITDA of EUR117 million. This was in large part driven by the
exceptional performance of TradeTech which, as stated on 19 March
2020, benefitted significantly from increased market volatility and
trading volumes. In addition, the Group benefitted in January and
February from a very strong performance from Snaitech and
favourable sporting results.
Despite COVID-19 starting to severely impact some of the Group's
businesses, the results for March as a whole were in line with the
Company's original pre-COVID-19 expectations with strong
performance from the Company's online business including Live
Casino, its JV partners as well as a particularly strong
performance from TradeTech. These positive trends have continued
which has resulted in Adjusted EBITDA of EUR23 million for April,
with Adjusted EBITDA for the first four months of 2020 totalling
EUR140 million.
Safer Gambling
Playtech recognises that at this unprecedented time, the
industry needs to provide an increased level of player engagement
and data analysis to identify, support and protect customers who
may be experiencing increased levels of risk. As a result, Playtech
has made its Safer Gambling engagement tools and data analytics
technology, including BetBuddy, available to all licensees during
the COVID-19 pandemic.
Playtech is supporting its licensees and partners to ensure that
pre-COVID Safer Gambling commitments and industry codes of conduct
to further safeguard consumers during the crisis are met and are
effective. Across our B2B and B2C businesses we are actively
reviewing advertising and operational procedures and are
strengthening safeguards to account for the changing environment
and new risks arising during the crisis, for the benefit of our
licensees and end consumers.
Divisional review - Current trading
Core B2B Gambling
In B2B, Playtech's online businesses have performed very well so
far in 2020 while the retail elements of B2B have been severely
impacted by retail closures in various countries. Playtech's online
Casino (including Live), Bingo and Poker businesses have seen
significant increases in activity. Playtech's largest Live Casino
facility, which is in Riga, has remained open throughout the
pandemic. As a result, not only has the Live Casino business
experienced strong growth, it has been able to take on traffic from
one of the most significant providers of Live Casino in Asia that
was forced to close its main facility in Manila (see further
details below).
Playtech's B2B Sport business is predominantly retail focused,
through SSBTs, with its biggest markets being the UK and Greece.
Betting shops in the UK currently remain closed. In Greece, the
majority of retail locations have reopened, however the business
remains impacted by the lack of major sporting events and
competitions globally. The B2B Sport business is currently
generating a loss of EUR3 million Adjusted EBITDA per month.
Despite the transition to remote working during the period,
Playtech has continued to deliver on its operational objectives for
2020. Playtech has added new Tier 1 licensees including Betsson,
Kindred and Svenska Spel. Playtech has added more than 20 new
brands so far in 2020 and is on track to surpass its target of 50
for the year.
Playtech has extended its relationships to new products and/or
geographies with existing customers including GVC and Fortuna while
renewing contracts with licensees including Betfred and Mansion.
Its structured agreement with Wplay in Colombia is progressing as
planned with the next phase due to launch later in 2020. Playtech
remains very excited about the opportunity this market presents.
Live Casino has seen exceptional operational progress during the
period with new customer signings and the launching of further
tables and markets with existing customers such as GVC and
PokerStars amongst others. In Poker, Playtech has seen a
significant increase in activity and has added several major
operators to its network so far in 2020.
B2C Gambling
Snaitech is currently performing better than was anticipated in
the Company's announcement on 19 March 2020. While Snaitech
continues to lose significant revenue from retail closures and the
lack of sporting events, given the low fixed costs in this business
and the revenues generated from online, as well as certain
mitigating actions, Snaitech was only slightly loss making on an
Adjusted EBITDA basis in April. The timing of the reopening of
retail locations in Italy currently remains unclear. Snaitech
achieved the number one market share position in the Italian sports
betting market (retail and online combined) in Q1 2020, up from the
number two position in 2019, showing its operational and brand
strength.
As previously indicated, Playtech's white label business
(predominantly Sun Bingo) has seen a strong performance so far in
2020.
Playtech's Retail B2C Sport business (HPYBET) is seeing
restrictions eased with shops beginning to reopen in Germany and
Austria.
Asia
Since Playtech's last trading update on 19 March, Playtech's
revenues from Asia have been negatively impacted by government
restrictions in China, Malaysia and the Philippines.
However, since late March these negative impacts have been more
than offset by a contract with the leading provider of Live Casino
in the region. The Philippines government's strict lockdown
measures in Manila have forced many POGO license holders as well as
Live Casino facilities to cease operating including Playtech's Live
Casino facility in Manila. Playtech was not impacted by this
closure as it was able to shift all traffic to its Riga facility.
Playtech's ability to offer seamless integration to its facilities
led to an agreement with the leading Asian provider of Live Casino.
The provider integrated into Playtech's Live Casino feed to ensure
that it could continue to provide its product to its customers,
resulting in an increase in Playtech's revenue for April. The
integration to Playtech's facility in Riga was completed within
days giving Playtech access to the Asian provider's extensive
distribution channel highlighting the strength of Playtech's Live
Casino offering in being able to integrate a major new customer in
a very short timescale.
This temporary contract materially increased Playtech's revenues
and EBITDA from Asia in April resulting in revenues of EUR8 million
for the month. Playtech's revenue from Asia in May is expected to
be approximately EUR6 million including a lower benefit from the
Asian provider which began resuming its normal operations this
month.
TradeTech
TradeTech continues to benefit from the recent increase in
market volatility and generated Adjusted EBITDA of over EUR45
million in the period from 1 January 2020 to 30 April 2020. As
mentioned in the Company's announcement on 19 March 2020, this
performance already exceeds Playtech's FY 2020 expectations for
this business.
TradeTech has also taken initial steps towards a more efficient
balance sheet, which has released EUR10 million of cash that was
previously tied up.
Balance sheet & liquidity
As announced on 19 March 2020, given the ongoing current
circumstances related to COVID-19 the Board determined that it was
appropriate to maximise liquidity within the Company and suspended
shareholder distributions until further notice. The share
repurchase programme announced at the FY 2019 results was postponed
with immediate effect and the 2019 final dividend of EUR0.12 is not
being proposed at today's AGM. Together these measures have saved
the Company over EUR65 million of cash outflows.
Playtech has also renegotiated the payment terms of the
contingent consideration payable related to the Playtech BGT Sports
business. The total payment of EUR36.9 million was originally
payable in H1 2020 but it was agreed that 50% will be deferred with
30% payable on 1 July 2020 and the remaining 20% on 1 October
2020.
Playtech has a 3x net debt / Adjusted EBITDA covenant and a 4x
Adjusted EBITDA / interest cover covenant in its revolving credit
facility, and a 2x Adjusted EBITDA / interest cover covenant in its
bonds with the covenants tested semi-annually. As of 30 April 2020,
Playtech had over EUR600 million of available liquidity including
its revolving credit facility which has been fully drawn down.
Playtech has received a further EUR14 million from the sale of
Snaitech land in Italy and expects to receive the remaining EUR36
million in early Q3.
Mor Weizer, CEO, commented
"So far this year, alongside actions taken to protect our people
and our business, Playtech demonstrated remarkable operational
resilience - demonstrating the strength and flexibility of our
technology and our position in the industry. We have added new Tier
1 licensees, added over 20 new brands and expanded agreements with
some of our largest existing customers. Given this strategic
progress and the actions we have taken, I am confident we will
emerge stronger as the current restrictions related to COVID-19
ease.
"Playtech also launched its new sustainable business strategy,
Sustainable Success. The strategy will consolidate Playtech's
position as a global leader in safer products, data analytics and
player engagement solutions. Playtech has made safer gambling a
core pillar of its strategy. At this time actions being taken by
Playtech and the wider industry to advance safer gambling and raise
standards are more important than ever.
"Finally, today marks Alan's last day as Chairman of Playtech
and I would like to take this opportunity to thank him for his
tireless commitment during his time on the Board since our IPO in
2006 and as Chairman for the last 7 years.'
Alan Jackson, outgoing Chairman, said:
"It is with great pride that I look back over my time as
Chairman of Playtech. During my time with the Company the gambling
industry has changed dramatically and Playtech has demonstrated the
strategic vision to grow into a diversified and trusted technology
leader in its industry. In these uncertain times the Board and I
are confident Claire's appointment as Interim Chairman will bring
the required experience, industry knowledge and stability
needed."
- Ends -
For further information please contact:
Playtech plc
Chris McGinnis, Director of
Investor Relations & Strategic
Analysis
James Newman, Director of Corporate
Affairs +44 (0) 16 2464 5954
Headland (PR adviser to Playtech)
Lucy Legh, Stephen Malthouse +44 (0) 20 3805 4822
About Playtech
Founded in 1999 and premium listed on the Main Market of the
London Stock Exchange, Playtech is a technology leader in the
gambling and financial trading industries.
Playtech is the gambling industry's leading technology company
delivering business intelligence driven gambling software,
services, content and platform technology across the industry's
most popular product verticals, including, casino, live casino,
sports betting, virtual sports, bingo and poker. It is the pioneer
of omni-channel gambling technology through its integrated platform
technology, Playtech ONE. Playtech ONE delivers data driven
marketing expertise, single wallet functionality, CRM and
responsible gambling solutions across one single platform across
product verticals and across retail and online.
Playtech partners with and invests in the leading brands in
regulated and newly regulated markets to deliver its data driven
gambling technology across the retail and online value chain.
Playtech provides its technology on a B2B basis to the industry's
leading retail and online operators, land-based casino groups and
government sponsored entities such as lotteries. As of June 2018,
through the acquisition of Snaitech, Playtech directly owns and
operates a leading sports betting and gaming brand in online and
retail in Italy, Snai.
Playtech's Financials Division, named TradeTech Group, is a
technology leader in the CFD and financial trading industry and
operates both on a B2B and B2C basis.
Playtech has in total c.6,000 employees across 21 countries and
is headquartered in the Isle of Man.
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END
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