Keywords Studios PLC - Trading Statement
Full year trading update
15% organic revenue growth supported by significant investment
The Board expects to report full year revenues of approximately
This performance was driven primarily by the particularly strong organic growth of our two largest service lines, Functional Testing and
Adjusted Profit Before Tax** is expected to be approximately
As strong demand continued in the second half we invested further in our facilities, recruitment, training, IT, security and HR to both meet this growth opportunity and to support the business in future periods, which introduced some short term operational inefficiency as well as an increase in overhead cost. The Group's investment during the year included substantial expansion of its facilities in
During the year, Keywords made eight high quality acquisitions which further strengthened the breadth of value-added services we are able to offer our global video games clients, particularly in
Cash invested in acquisitions totalled approximately
€28m, which comprised of c. €13m (net of cash acquired) in respect of those companies acquired during the year and c. €15m in settlement of deferred consideration payments for earlier acquisitions that became due in the period. Net debt at 31 December 2019 is expected to be approximately €18m ( €9.0m at 30 June 2019, €0.4m at 31 December 2018).
"In what was a relatively light year for the video games industry against a backdrop of the tail end of the current generation of video games consoles from Microsoft and Sony, the Group has delivered strong growth, particularly from our two largest divisions, Functional Testing and
"We have also continued to invest in expanding our business, including in new and enlarged facilities, improved technology, strengthened management and additional functional support. Whilst this investment held back margins in 2019, it will enable us to continue to deliver high levels of growth as we position ourselves as the 'go to' global services platform for video games in a market which is seeing an accelerating trend towards outsourcing.
"Looking forward, we expect the launch of a new generation of games consoles and the further development of new streaming platforms, in addition to the structural drivers of growth across the video games market as a whole and the ongoing trend towards external development, to drive continued strong demand for our services through 2020 and beyond. The full benefit of this new generation of consoles is expected to increase over the medium term. We will continue to invest in the Group to take full advantage of these growth opportunities with margins expected to increase incrementally in 2020 towards our historic norms as we leverage these costs over a growing revenue base.
"Our recently enlarged banking facility positions us well to capitalise on this clear opportunity to take a leading share of the increasingly outsourced video games services market both organically and via acquisitions, as we further enhance shareholder value. We fully expect to make a number of selective acquisitions as we continue to build our global video games services platform and we are managing a strong acquisition pipeline as we enter 2020."
* Organic revenue growth is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership in the current year results, and applying the 2018 foreign exchange rates in both years.
** the Group reports Adjusted Profit Before Tax before acquisition and integration expenses, share option charges, amortisation of intangibles, non-controlling interests and foreign currency gains or losses.
*** EBITDA comprises profit before taxation, adding back depreciation, amortisation, both interest income and expense, and exchange gains and losses. Adjusted EBITDA is also before acquisition and integration expenses, share option charges and non-controlling interests.
Notification of Full Year Results and Capital Markets Day
The Group expects to announce its full year results for the year ended
We will also host a Capital Markets Day in
For further information, please contact:
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+353 190 22 730
Numis (Financial Adviser)
020 7260 1000
020 3128 8100
This information is provided by RNS, the news service of the
Quick facts: Keywords Studios PLC
Market Cap: £949.72 m
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