TIDMKWS
RNS Number : 5685D
Keywords Studios PLC
01 February 2018
1 February 2018
Keywords Studios plc
("Keywords Studios", "the Group")
Full year trading update
Strong financial performance- strengthening our market leading
position
Keywords Studios, the international technical services provider
to the global video games industry, today provides an unaudited
trading update for the year ended 31 December 2017, following a
year of further strong organic growth and geographic expansion,
complemented by a number of significant and successful
acquisitions.
The Board is pleased to announce that it expects revenues to be
not less than EUR150m (FY16: EUR96.6m) and adjusted PBT* of at
least EUR22.5m (FY16: EUR14.9m), both of which are comfortably
ahead of consensus market expectations. Strong organic growth
remains a feature of the Group's performance and this has been
supplemented by acquisitions as the Group continues to deliver on
its strategy in order to become the "go to" supplier of technical
services to the global video games industry. The Group is now
comprised of seven globally managed service lines operating from 42
production studios in 20 countries, compared to four service lines
operating from five production studios in five countries at the
time of our IPO in July 2013.
During the year, we welcomed eleven businesses into the Group
across all its existing service lines as well as its newly
established Engineering service line. 2017 saw two of the Group's
largest acquisitions to date, VMC and Sperasoft, which have further
strengthened our service offerings and client penetration and
extended our geographic reach and access to talent. Sperasoft
enabled our entry into Co-Development, in which multiple services
including game programming and art creation are delivered
holistically in the game development phase, whilst VMC has
bolstered our Engineering capabilities. These significant
acquisitions represent yet further steps in the pursuit of our
strategy and we are pleased with how smoothly they are being
integrated with the rest of the Group.
The Group has invested net cash of EUR89.1m in the acquisitions
described above, funded by the Group's strong cash generation,
available debt facilities and a successful GBP75m equity placing in
October 2017. The placing further demonstrated the support of our
existing shareholders as well as enhancing our shareholder base
through the addition of a number of new institutional investors.
Following these acquisitions, the Group had EUR30.5m in cash at the
year end and had utilised EUR18.3m of its EUR35m rolling credit
facility, which leaves the Group well placed to complete further
selective acquisitions in 2018.
The Group's effective tax rate has continued to decrease as we
make better use of our brands, operating models and tools from our
Dublin operational headquarters in support of our business around
the world, much of which is in higher tax rate jurisdictions
including Canada, the US, Japan, India and Italy. The Group's
effective tax rate based on Keywords Studios' measure of profit
before taxation in the period was 20.5% (2016: 21.7%). We note the
enactment of the Tax Cuts and Jobs Act in the United States on 22
December 2017. Our preliminary view is that we can expect a
devaluation of some of our deferred tax liabilities in 2017 due to
the reduction in the statutory federal tax rate to 21%. While we
continue to review the full future impact of the new US tax
legislation on the Group, we currently anticipate that the changes
will not have a material impact on the Group's effective tax rate.
We will give updated guidance on the impact of these provisions
together with our final results later this year.
Andrew Day, Chief Executive of Keywords, commented:
"We are delighted with the Group's performance as we grew
revenues and profits strongly again this year. Our ever-increasing
geographic footprint and broader range of services have combined to
grow market share, introduce additional services to established
clients and win new clients.
"The eleven acquisitions in 2017 demonstrate strong progress in
our strategy to selectively consolidate the fragmented video games
market and generate synergies through scale, and our entry into
Engineering and particularly Co-Development, enhances our
positioning as a strategic partner to game developers and
publishers, whilst continuing to ensure we are not directly exposed
to the commercial performance of individual titles. As games are
becoming bigger and are higher definition, game developers are
increasingly relying upon co-development arrangements with
companies like Keywords to provide them with broader capability to
develop both initial games and ongoing content and features
post-launch.
"We look forward to another year of strong progress as we
continue to invest in existing and new businesses, building our
talent pool and integrating the newer members of our Group."
*The Group reports adjusted PBT before acquisition and
integration expenses, share option charges, amortisation of
intangibles and foreign currency gains
For further information, please contact:
Keywords Studios (www.keywordsstudios.com)
Andrew Day, Chief Executive
Officer
David Broderick, Chief Financial
Officer +353 190 22 730
Numis (Financial Adviser)
Stuart Skinner / Kevin Cruickshank
(Nominated Adviser)
James Black / Tom Ballard
(Corporate Broker) 020 7260 1000
020 3128 8100
MHP Communications (Financial keywords@mhpc.com
PR)
Katie Hunt / Ollie Hoare
About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is an international technical services provider
to the global video games industry. Established in 1998, and now
with 42 facilities in 20 countries strategically located in Asia,
the Americas and Europe, it provides integrated art creation,
software engineering, testing, localisation, audio and customer
support services across more than 50 languages and 16 games
platforms to a blue-chip client base of over 400 clients across the
globe. It has a strong market position, providing services to 23 of
the top 25 most prominent games companies, including Activision
Blizzard, Bandai Namco, Bethesda, Electronic Arts, Konami, Riot
Games, Sony, Square Enix, Supercell, TakeTwo, and Ubisoft. Recent
titles worked on include Uncharted 4: A Thief's End, Call of Duty:
WWII, Mortal Combat X, Assassin's Creed Origins, Battlefield 1,
Overwatch, World of Warcraft: Legion, Hearthstone, Clash Royale,
and Mobile Strike. Keywords Studios is listed on AIM, the London
Stock Exchange regulated market (KWS.L).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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