Keywords Studios PLC (LON:KWS) has announced that, whilst it is in a position to announce the group's audited results for the year ended 31 December 2020, it has decided to delay their announcement, previously expected 31 March, in response to the guidance recently issued by the Financial Conduct Authority and the Financial Reporting Council due to the coronavirus (COVID-19) pandemic.
In an update, the group said it has cash and undrawn cash from its €100mln committed revolving credit facility of €82mln as at the end of December, and a further €40mln from an accordion credit facility.
Keywords added that in order to preserve cash, it will focus on costs by eliminating discretionary expenditure, reducing working capital, and delaying some capital expenditure.
The company pointed out that its full-year 2019 numbers are in line with its January trading statement, which noted revenues of approximately €326mln, representing around a 30% increase on the prior year, and adjusted pre-tax profit of approximately €41mln, representing around an 8% increase.
The group noted that trading in 2020 started in line with market expectations, with only minimal impact from COVID-19 in the first two months, due principally to short-term disruption in China that affected its five studios there.
It said these operations have now returned to near full production, following the return to work after the government-mandated shutdowns and its subsequent implementation of social distancing and rigorous hygiene regimes in the studios, as well as some work from home measures.
Keywords pointed out: “Drawing on our experiences of territories that are further progressed in dealing with the crisis such as China and Italy, we have in many cases been able to get ahead of local guidance with the implementation of measures for the safety of our people and the continuity of business.”
Some short term disruption
The group said that there has clearly been some short-term disruption involved in these logistics, with some of its service lines and locations affected more than others, but overall the company is pleased with how both staff and clients have coped with these challenges.
The company added: “We are also currently seeing an increase in the demand for certain services, as existing and new clients look to us for support during this challenging time and as they reappraise their production arrangements.
“We are making efforts to satisfy their requests subject to our own near-term resource constraints, as we prioritise the wellbeing of our people. It looks likely that demand will outstrip our ability to fulfil it in the near term and we hope to benefit from pent up demand once our operating environment normalizes.”
It continued: “Operating within the global video games market and with seven service lines delivered from 59 studios across 21 countries, coupled with our ability to deliver the majority of our services from work from home arrangements, means we are able to offer clients a high degree of resilience to the varying cycles of the spread of the virus in different locations.
“However, the situation is changing rapidly, and it is difficult to foresee the impact on our clients and the further threats and opportunities that may await us. As such, the Board does not believe it is prudent to provide guidance on the potential full-year outcome for FY20 at this time.”
Andrew Day, Keywords’ CEO, commented: "Whilst we do expect disruption to the provision of our services due to the COVID-19 pandemic, we anticipate the underlying drivers of growth across the video games market to remain intact, whilst games companies also look to enhance their resilience across their production arrangements.
"There will be some further challenges ahead, but we are well-financed, with a global footprint, a unique position in a resilient market and a strong team to manage the business through these difficult times and emerge in a robust position to deliver on the pent up demand across our client base."