Playtech PLC Trading update (1663T)
02 July 2018 - 4:00PM
UK Regulatory
TIDMPTEC
RNS Number : 1663T
Playtech PLC
02 July 2018
Trading update
B2B Gaming division
The key trends reported at our Annual General Meeting in May
2018 have continued.
Average daily revenue year to date excluding Asia (on a constant
currency and ex-acquisition basis) are up 7% vs the same period
last year and up 12% in Q2 2018 vs Q2 2017.
As previously reported, average daily revenue in Asia continues
to be impacted by an increasingly competitive backdrop. Towards the
end of the first half, this market has seen a particularly
aggressive pricing environment from new entrants to the market and
this has impacted revenue. The management team continues to take
steps to protect Playtech's position in the region and to drive
revenue generation. However, given the recent decline and in the
absence of any change in market dynamics, we expect a significant
impact on revenue throughout the rest of the year.
B2C Gaming division
The B2C Gaming Division is performing in line with expectations
with the Sun Bingo contract continuing to see some revenue
improvement and negotiations with News UK ongoing.
Tradetech
TradeTech Group's reported good start to 2018 has continued,
with the B2B division delivering a strong performance in line with
management's strategy communicated at the recent TradeTech investor
day held in May.
Acquisition of Snaitech
Playtech completed the acquisition of 70.6% of Snaitech on 5
June 2018. As a result, Snaitech's results have been fully
consolidated into Playtech's group accounts with effect from this
date and will contribute to Playtech's interim results.
Playtech has subsequently acquired a further 10.8% of Snaitech's
issued share capital and has launched the mandatory takeover offer
for the remaining shares of Snaitech not already owned by the
Group.
As Snaitech currently remains a separately listed company, it
will provide any update on its trading separately. However,
Playtech believes the increased activity due to the FIFA World Cup
and general strength in the Italian gaming market is encouraging
for the current period.
Sale of holding in GVC Holdings plc
As part of the continued improvement in capital structure and
balance sheet efficiency, Playtech sold its 3.4% stake in GVC
Holdings plc ("GVC") on 7 June 2018. Net proceeds of EUR222 million
will be accounted for within the Group's cash balances on the
interim balance sheet date of 30 June 2018, having previously been
held as an available for sale asset.
Together with the proceeds received from the sale of shares
pursuant to the takeover of Ladbrokes Coral plc ("Ladbrokes") by
GVC, the disposal is expected to lead to a one-off credit to
Playtech's profit & loss account of approximately EUR42 million
in H1 2018.
Outlook
Playtech will announce its interim results for the six months
ended 30 June 2018 on 23 August 2018. Given the downturn in Asia
came towards the end of the period together with the strong
performance from Tradetech in the first half, Playtech's H1 2018
group performance is broadly in line with its expectations at the
start of the year.
Looking to the remainder of the year, the current run rate in
Asia is materially below both the average in H2 2017 and the
average which was expected for H2 2018 at the start of the year. If
the current run rate in Asia continues unchanged for the remainder
of 2018, including no material improvement in Malaysia, Playtech's
expected revenue from Asia will be c. EUR70 million lower than
original expectations. Given that the downturn in Asia has been
relatively sudden and taking into account Playtech's centralised
cost base, the vast majority of this revenue loss will drop through
to adjusted EBITDA.
Consolidating Snaitech from June 2018 will contribute c. EUR80
million of adjusted EBITDA to Playtech's group forecasts for 2018,
based on Snaitech's current market consensus.
Taking into account all of the above, including the
consolidation of Snaitech and specifically taking into account the
uncertainty in Asia, Playtech now expects group adjusted EBITDA for
2018 in the range of EUR320 million to EUR360 million. This
excludes the EUR42 million one-off gain in 2018 relating to the
sale of shares in Ladbrokes and GVC which will not impact adjusted
EBITDA but will increase adjusted EPS.
Mor Weizer, CEO, said: "Clearly the recent trading performance
in Asia is disappointing. We have taken steps to further support
our partners in the region and we will continue to work to preserve
our position in the face of an increasingly competitive
environment.
"In line with our stated strategy, progress in fast-growing,
regulated and soon to-be-regulated markets continues apace.
Momentum in key regulated markets continued in the first part of
2018 with new agreements with Gala Leisure in the UK, SAS in
Portugal and Totalizator, the Polish national lottery.
Additionally, regulatory developments in the US represent a
significant opportunity for the Group. The organic growth reported
in the non-Asian B2B gaming business combined with the recent
acquisition of Snaitech in Italy provides management with
confidence that this strategy will materially improve the quality
and diversification of Playtech's performance in 2018 and
beyond."
- ENDS -
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information please contact:
Playtech plc
James Newman, Head of Investor
Relations & Corporate Communications +44 (0) 16 2464 5954
Headland (PR adviser to Playtech)
Lucy Legh, Stephen Malthouse +44 (0) 20 3805 4822
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END
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