Keywords Studios PLC (LON:KWS), the provider of technical services to the computer gaming industry, has traded in line with expectations this year.
The acquisitive firm ended 2016 with net cash of €8.7mln, down from €17.3mln a year earlier, but with an expanded and more diversified business.
It ended the year with 64 clients that are using three or more of the group’s services, up from 51 the year before. The group now has six service lines operating from 27 studios across four continents.
WATCH: "Another fabulous year", says Keywords boss ...
The group said it remains confident it will make strong progress in the current year and left its expectations for 2017 unchanged.
In the meantime, it will maintain a watching brief on markets that are similar to the ones in which it operates, such as e-learning, film and television, plus any other areas where the group’s skills and expertise would be easily transferable.
Strong top-line growth driven by performance of Synthesis
The group’s full-year results for 2016 largely confirmed the numbers revealed in the February trading update, with revenue rising 67% to €96.6mln from €58.0mln the year before and adjusted profit before tax jumping 86% to €14.9mln from 48.0mln.
Like-for-like year-on-year revenue growth was 24% and included a very strong performance by Synthesis, the audio and localisation testing business it acquired in April of last year.
Increases in the penetration of smart phones and other mobile devices and in consumer spend on video games continue unabated, supporting strong demand for the services provided by Keywords.
“Keywords' recent early steps to take a more influential position in technology and player experience consulting through the acquisition of Player Research, provides the group with the opportunity to become ever more embedded in how the world of electronic gaming evolves,” said Ross Graham, chairman of Keywords.
“This is, genuinely, an exciting development,” he added.
Virtual reality - not a reality yet
One of the few things that did not go well for Keywords last year was the response to the launches of various first generation virtual reality (VR) hardware devices.
Andrew Day, chief executive of Keywords, said the group is not expecting stronger demand for its services in this area in 2017 than in 2016 but with the likes of Facebook, Google, Sony and others behind the technology, its day will most likely come.
“Overall, we expect VR to be just one factor in the continued growth in content over time,” Day said.
January 2017 saw the launch of Nintendo’s Switch, which the group hopes will establish itself as a major gaming platform along with PS4 and Xbox One.
“We fully expect to make continued good progress during 2017 as we take advantage of the synergies afforded by our enlarged platform and as we make further selective acquisitions, with the support of our strong cash generation and increased debt facilities,” Day said.
The full-year dividend pay-out, at 1.33p, was up 10% year-on-year.