TIDMKWS
RNS Number : 4749H
Keywords Studios PLC
04 August 2021
4 August 2021
Keywords Studios plc ("Keywords Studios", "Keywords", the
"Group")
Half year trading update and notice of results
23% organic revenue growth and strong margin performance
Keywords Studios, the international technical and creative
services provider to the global video games industry, today
provides a trading update for the six months ended 30 June 2021,
ahead of half year results which will be announced on 15 September
2021.
Trading update
The Group has performed strongly during the first half, with the
Board expecting to report revenues of approximately EUR238m
representing a c.37% increase on the comparative period (H1 2020:
EUR173.5m, FY 2020: EUR373.5m). On an organic(1) basis, which
excludes the impact of currency movements and acquisitions, Group
revenues are expected to increase by approximately 23% (H1 2020:
8.0%, H2 2020: 15.0%, FY 2020: 11.7%) with all service lines
performing well against the comparative period during which certain
service lines were held back by COVID-19 constraints.
This strong first half performance was driven by robust demand
for the Group's services, continuing the momentum seen in the
second half of 2020, with the buoyant video games market focussed
on developing new content to keep gamers engaged following
increases in both numbers of gamers and gameplay during the
pandemic.
Adjusted profit before tax(2) is expected to be approximately
EUR40m, representing an increase of over 80% from EUR21.7m in the
prior year, which was particularly disrupted in the earlier stages
of COVID-19 pandemic. While certain parts of the business continue
to experience some COVID-19 related operational constraints,
Keywords has delivered a strong underlying margin, driven by
operational leverage and good cost control, in addition to the
continued short term benefit of a reduction in certain costs due to
COVID-19, primarily resulting from a higher proportion of remote
working and lower costs relating to travel, business development
and marketing.
Keywords Studios continues to deliver on its acquisition
strategy with the acquisition of Tantalus and Climax Studios this
year. These high quality acquisitions have extended the reach and
scale of the Group's Game Development service line, and are
performing in line with our expectations. We continue to actively
review a healthy pipeline of acquisition opportunities.
As at 30 June 2021, the Group had net cash of EUR84m (31
December 2020: EUR102.9m) after cash spend on acquisitions in the
first half of the year amounting to EUR45m, including EUR5m of
deferred consideration in respect of prior year acquisitions. The
Group's cash balance, strong cash generation and the EUR100m
available under its undrawn committed revolving credit facility,
leave the Group well placed to pursue it organic and acquisition
growth strategy, whilst also returning to a progressive dividend
policy in 2021.
CEO Succession Update
On 15 June 2021, we announced that Andrew Day had decided to
bring forward his longer term retirement plan following a health
scare. Accordingly, the Board initiated a full search process to
find a successor with the requisite experience and expertise to
lead a fast growing and ambitious global group. Whilst this process
remains ongoing, a number of high calibre candidates have been
identified and an update will be provided when appropriate.
In the interim, Keywords is fortunate to have an extremely
strong senior management team in place with Jon Hauck and Sonia
Sedler continuing as joint interim CEOs, who are well supported by
the broader leadership team across the Group, and who continue to
both drive the Company's strategy forward and enhance its
operational performance.
Notification of Half Year Results
The Group expects to announce its half year results for the six
months ended 30 June 2021 on 15 September 2021. To register your
interest, please use the following link:
https://www.keywordsstudios.com/H1-2021-results/ , or contact
Keywords@mhpc.com .
Jon Hauck, Joint Interim CEO of Keywords Studios commented:
"Keywords has made a strong start to the year, continuing the
momentum seen in the second half of 2020, with demand for our
services being driven by a buoyant video games market, structural
trends towards outsourcing, and a renewed focus on content
creation. Whilst parts of our business remain constrained by
COVID-19 related measures, we would like to thank all our
colleagues for their resourcefulness and dedication as they have
continued to serve our clients with passion and commitment.
" Looking forward, we expect strong demand to continue across
most service lines underpinning our confidence of delivering a
performance that is at least in line with market expectations for
the year, albeit with growth rates and margins expected to moderate
against stronger H2 2020 comparatives, and as some costs return
with the easing of restrictions.
" We are delighted to have welcomed Tantalus Media and Climax
Studios to the Group earlier in the year, as we continue to review
a healthy pipeline of acquisitions that extend the breadth and
depth of services Keywords is able to offer its global video games
clients, particularly as we build our Marketing and Game
Development service lines to be the supplier of choice.
"Our unrivalled breadth of services and sought after 9,000
people-strong specialised resource base positions Keywords well to
increase our share of our buoyant market, whilst our financial
strength supports further acquisitions to enhance the scale and
reach of our services as we cement our position as the 'go to'
services platform for the global video games industry."
(1) Organic Revenue at constant exchange rates is calculated by
adjusting the prior year revenues, adding pre-acquisition revenues
for the corresponding period of ownership, and applying the prior
year foreign exchange rates to both years.
(2) Adjusted profit before tax comprises Profit before taxation
as reported in the Consolidated statement of comprehensive income,
adjusted for share option expense, costs of acquisition and
integration, amortisation and impairment of intangible assets,
non-controlling interest, foreign exchange gains and losses, and
unwinding of discounted liabilities. In order to present the
measure consistently year-on-year, the impact of COVID-19
government subsidies claimed in the prior year and investment
income are also excluded.
For further information, please contact:
Keywords Studios ( www.keywordsstudios.com
)
Jon Hauck, Joint Interim Chief Executive
Officer
Sonia Sedler, Joint Interim Chief Executive
Officer
Joseph Quinn, Investor Relations +353 190 22 730
Numis Securities
Stuart Skinner/Kevin Cruickshank/Will
Baunton +44 20 7260 1000
MHP Communications (Financial PR) +44 20 3128 8193
Katie Hunt/James Midmer/Charles Hirst keywords@mhpc.com
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 over 65 facilities in 22 countries strategically located in
Asia, Australia, the Americas and Europe, it provides integrated
art creation, marketing services, game development, testing,
localization, audio and player support services across more than 50
languages and 16 games platforms to a blue-chip client base of over
950 clients across the globe.
Keywords Studios 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, Microsoft, Riot Games, Square Enix, Supercell,
TakeTwo, Epic Games and Ubisoft. Recent titles worked on include
Call of Duty: Black Ops Cold War, Anthem, Star Wars Jedi: Fallen
Order, Assassin's Creed Valhalla, Valorant, League of Legends,
Fortnite, Clash Royale and Doom Eternal. Keywords Studios is listed
on AIM, the London Stock Exchange regulated market (KWS.L).
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