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Playtech Plc

Playtech Plc Achieved significant strategic and operational progress

Playtech Plc  (LON: PTEC) today announces its results for the year ended 31 December 2018, together with a trading update for the period to 18 February 2019.

Financial summary

FY 2018

FY 2017

Change

(reported)

Change (const.

currency)3

Revenue

€1,240.4m

€807.1m

54%

55%

Adjusted EBITDA1

€343.0m

€322.1m

7%

7%

Adjusted Net Profit2

€256.2m

€231.4m

11%

6%

Reported Net Profit2

€123.8m

€248.1m

-50%

-50%

Adjusted diluted EPS

72.9 €c

66.8 €c

20%

16%

Total dividend per share4

24.1 €c

36.0 €c

-33%

NA

Group financial highlights

§ Evolving financial profile; improved quality of earnings

– B2B regulated Gaming revenue growth of 12% at constant currency

– Proportion of regulated revenue increased to above 80% in FY 2018; 54% in FY 2017

§ Completion of Snaitech acquisition; consolidated from 5 June; 100% owned from 3 August

– Leading brand, delivers a cornerstone presence in Europe’s largest regulated market

– Very strong H2 2018 operational performance; synergy targets reaffirmed

§ Adjusted EBITDA growth of 7% at constant currency as Snaitech acquisition offsets Asia decline

§ Excluding acquisitions, B2B Gaming cost from operations reduced by €17m in 2018

– Combined with revenue growth led to significant margin expansion in B2B non-Asia

– B2B non-Asia gaming margin expected to increase to over 30% in medium term

§ Net cash from operations up 26% at €387m

Balance sheet

§ Significant progress on balance sheet efficiency

– Net debt / EBITDA of 1.5x at 31 December 2018

– €530m bond raised, first public credit rating (Ba2/BB)

– Sale of holdings in GVC & Plus500 realised €447m in cash

– €200m RCF repaid, new undrawn €272m facility

§ Reallocation of distributions to shareholders and launch of share buyback programme

– In order to maximise efficiency of shareholder returns, and following shareholder feedback, the Group is to reallocate part of its payout into share repurchases

– Shareholder distributions will be balanced between dividends and share repurchases

– It is the Board’s intention that the overall level of capital returned to shareholders will continue to be progressive, in line with medium term earnings

– Share buyback programme approved by Board up to an initial amount of €40m via an irrevocable, non-discretionary arrangement with its corporate brokers, Goodbody and UBS

– Final dividend declared of 12.0 €c per share

Strategic update

§ Playtech will continue to deliver best in class technology to existing licensees

§ Significant R&D investment in recent years has furthered our leading technology allowing current and prospective licensees faster and cheaper time to market

§ Playtech will continue to focus on growing its relationship with existing clients by expanding into new geographies and/or additional products

§ Going forward we will increasingly focus on high margin structured agreements where market dynamics allow

Operational highlights

· B2B Gaming Division

– Growth in regulated B2B Gaming revenue of 12% at constant currency

– Playtech BGT Sports continues strong performance

§ 14% growth in revenue at constant currency

– New wins in key markets

§ Buzz Bingo UK omni-channel deal; signed in H1 2018, live in H2 2018

§ Polish National Lottery Totalizator signed for Casino in H1 2018, live in H2 2018

§ PBS signed SAS in Portugal and Sportium in Columbia

§ Existing Fortuna relationship expanded to further countries and products

§ Sweden regulated on 1 January 2019 – Playtech customers launched in market on Day 1

§ Agreement with Swiss Casinos to launch in recently regulated Switzerland

– Pipeline strong across key geographies

– Applied for license in New Jersey; opportunities across the US

· B2C Gaming Division

– Snaitech consolidated from 5 June 2018

– Snaitech FY 2018 (12 months) adjusted EBITDA growth of 14% driven by 27% growth in online revenues

– Sun Bingo 44% revenue growth at constant currency

– Amended Sun Bingo contract extended for up to 15 years; joint commercial collaboration with no further minimum guarantees from mid-2021; contract expected to be P&L profitable in 2019

· TradeTech Group

– 9% revenue growth to €92.9m and 9% Adjusted EBITDA growth to €29.5m

– Mixed performance across 2018 with strong H1 and tougher conditions across the industry in H2

Current trading

· Regulated B2B Gaming revenue for the first 49 days of 2019 was up 7% on the same period in 2018 at constant currency and excluding acquisitions and one-offs

· Non-regulated B2B Gaming revenue for the first 49 days of 2019 was down 26% on the same period in 2018 at constant currency and excluding acquisitions

· Snaitech has had a strong start to 2019 with the underlying business trends in line with our expectations albeit impacted by the recent negative legislative headwinds

· TradeTech has started 2019 in line with management expectations

Outlook

· Playtech expects 2019 Adjusted EBITDA in range of €390 to €415m

· Guidance reflects following assumptions:

– c. €20m positive impact from IFRS 16 adopted as of 1 January 2019

– Sun Bingo to have positive EBITDA contribution in 2019 (from loss making in 2018)

– assumption that Asia remains stable at approximately €150m annual revenue run rate

Alan Jackson, Chairman of Playtech, commented:

“In the face of changing market dynamics Playtech achieved significant strategic and operational progress in 2018 delivering a markedly improved financial profile. The Group achieved new licensee wins in key regulated markets, the UK, Europe and Latin America. The combination of progress in regulated markets and headwinds in unregulated activity saw regulated Group revenue increase to over 80%.

“The acquisition of Snaitech and the ongoing strong performance of this business has delivered geographical diversification of the Group’s revenue profile, but more importantly delivered a leading presence in the largest, and one of the fastest growing gambling markets in Europe.

“Following shareholder engagement, I am pleased to announce our new progressive shareholder return policy. The strength of the balance sheet and cash flows allow the Board to demonstrate its confidence in the future growth of the business through both a share buyback programme and a final recommended dividend.”