Tough 2018 sees Playtech place efficiency in scale as driver for 2019 growth

Publishing its full-year 2018 results, FTSE250 gambling technology group Playtech Plc states that it closes a ‘year of many challenges’, as governance places returning shareholder value and capital at the top of its agenda.

Operating within a much-changed global gambling landscape, Playtech B2B and B2C divisions continue to adjust to Asian market downturns and regulatory headwinds across the UK and Italy.

Despite facing multiple adjustments, Playtech continues to show its capacity as gambling’s leading ‘Tier-1 operator’ technology supplier recording a 54% group revenue increase to €1.2 billion (FY2017: €807m), combined with a 7% increase in group adjusted EBITDA to €343 million (€322 million).

Nevertheless, adjusting to tougher regulatory landscapes, Playtech accounts for significant tax item increases of €54 million (FY2017: €21 million), as the company reports a 50% decline in operating profits to €124 million (FY2017: €248 million).

Updating investors, Alan Jackson, Chairman of Playtech, commented on its 2018 corporate performance: “This has been an extremely important year in the growth and development of Playtech. The year has produced many challenges for Playtech and the industries we operate in, making our achievements this year all the more critical to our longer-term success.

“Playtech has continued to improve its quality of earnings, has delivered strategic progress in fast-growing markets, has an improved financial profile and continued to develop its corporate governance through the evolution of the Board. This progress lays the foundations for the long term, sustainable growth and shareholder value in 2019 and beyond.”

Facing new challenges, Playtech governance has undertaken a review of its corporate position and options within all operating territories, focusing on its core business units.

At a B2B-level, Playtech will focus on higher margin opportunities moving forward, which will prioritise securing new customers in both existing regulated markets and newly regulated markets. In its mandate the FTSE firm has identified a potential of ‘1,000 betting/gambling clients that do not utilise any Playtech provisions’.

Presenting its 2019 guidance, Playtech governance expects 2019 adjusted EBITDA in the range of €390-to-€415 million, as the company anticipates positive contributions for its new Italian gambling asset SNAITECH and returning Sun Bingo to growth, following a loss-making 2018.

A corporate commitment for 2019 and beyond, Jackson and Playtech governance state that the gambling technology group will be prioritised delivering efficiency at an operational and fiscal level, as Playtech governance launches a €40 million buyback programme open to existing shareholders.

“The progress on balance sheet efficiency and sustained fiscal control coupled with the Group’s continued high levels of cash generation has allowed the Board to introduce greater balance and flexibility into its shareholder return policy by transitioning to a balance of dividends and share buy backs,” Jackson continued.

“Following shareholder engagement the Board believes it is in the interest of all shareholders to reallocate part of our capital returns into share buybacks. Following the adoption of the policy the Board has approved an initial share buyback programme of up to €40 million and a final dividend of 12.0 €c per share.”