Source - RNS
RNS Number : 7612G
Playtech PLC
19 March 2020
 

Playtech plc

('Playtech' or the 'Company')

Coronavirus (COVID-19) update

Playtech plc ("Playtech") provides the following update on the impact of COVID-19. Given the uncertainty and rapidly changing nature of the situation, Playtech is working to protect its cash flow by pro-actively managing its capital expenditure and working capital as well as identifying opportunities for cost savings that will not impact the long-term success of the Company.

Core B2B Gambling

Playtech's Casino business (including Live) has seen limited impact at this point although the Company is continually monitoring the situation. Playtech's Poker and Bingo businesses have seen increases in activity in recent days following the restrictions on physical movement put in place by various governments. The Company believes there is a risk that player behaviour changes the longer the COVID-19 situation continues.

Live Casino is a business that requires a significant number of employees working in the same location and has the potential to be disrupted as the COVID-19 situation continues. Playtech's facility in the Philippines has been closed with traffic being redirected to other facilities. While its facilities in Riga and other locations currently remain operational, there is a risk that these facilities will need to close in the future. Playtech has contingency plans in place for this business should this occur.

Playtech's B2B Sport business is being significantly impacted by the postponement of most major sporting events and competitions globally. Playtech's B2B Sport business is predominantly retail focused, through SSBTs, with its biggest markets being the UK and Greece. Prior to the impact of COVID-19, this business was expected to contribute approximately 10% of Playtech's Adjusted EBITDA in 2020. While there are a lack of sporting events and retail locations are severely impacted either through closures or social distancing measures, Playtech estimates this business will generate a loss of €4 million of Adjusted EBITDA per month before mitigation.

B2C Gambling

Following the closure of all Snaitech retail locations as announced on 9 March 2020, the business has been further impacted by the postponement of most sporting events and competitions globally. Snaitech continues to generate revenues from its online business, albeit with online betting being impacted by the lack of sporting events.

Snaitech operates almost exclusively a franchise model with a low fixed cost base. Its underlying cost base is lower than it appears from its income statement as it recognises pass-through revenues and then distribution costs that are revenue share payments to franchisees. While Snaitech continues to lose significant revenue from retail closures and the lack of sporting events, given the low fixed costs in this business and the revenues being generated from online, Snaitech is currently expected to generate a loss of only €3 million of Adjusted EBITDA per month before mitigating actions. Prior to the impact of COVID-19, Snaitech was expected to generate an average profit of over €13m Adjusted EBITDA per month.

Playtech's White label business (predominantly Sun Bingo) has seen a solid performance so far in 2020.

Playtech's Retail B2C Sport business (HPYBET) is being impacted as its retail locations in Germany and Austria are closed. The Company expects this business to generate a loss of €0.5 million Adjusted EBITDA per month while shops remain closed and there are a lack of sporting events taking place.

Asia

Playtech's revenue in Asia for March is expected to be at the same level as February at €7 million, as communicated at the Company's FY 2019 results on 27 February 2020.

TradeTech

TradeTech continues to benefit from the recent increase in market volatility and has generated Adjusted EBITDA in excess of €30 million so far in 2020. While this performance already exceeds Playtech's FY 2020 expectations for this business, there is no certainty that market conditions will continue to remain as favourable as they have been so far in 2020.

Balance sheet

Given the current circumstances the Board has determined that it is appropriate to maximise liquidity within the Company and is suspending shareholder distributions until further notice. The share repurchase programme announced at the FY 2019 results has been postponed with immediate effect. Approximately €10 million of the €40 million share repurchase programme has been completed to date. The 2019 final dividend of €0.12 will not be proposed at the AGM scheduled to be held on 20 May 2020. Together these measures will save the Company over €65 million of cash outflows. 

Playtech has a 3x net debt / Adjusted EBITDA covenant and a 4x Adjusted EBITDA / interest cover covenant in its revolving credit facility, alongside a 2x Adjusted EBITDA / interest cover covenant in its bonds. As at 31 December 2019, Playtech had €672 million of gross cash on its balance sheet and €333 million when adjusted for client funds and progressive jackpots. In addition, Playtech has a further €250 million available under its revolving credit facility, with another €50 million cash expected in Q2 2020 from the previously agreed sale of surplus Snaitech land in Italy.

Playtech continues to monitor the situation closely and will provide further updates as appropriate.

 

- Ends -

 

For further information please contact:

 

Playtech plc

 

Chris McGinnis, Director of Investor Relations & Strategic Analysis

 

James Newman, Director of Corporate Affairs

 

+44 (0) 16 2464 5954


Headland (PR adviser to Playtech)

 

Lucy Legh, Stephen Malthouse

 

+44 (0) 20 3805 4822


 

About Playtech

Founded in 1999 and premium listed on the Main Market of the London Stock Exchange, Playtech is a technology leader in the gambling and financial trading industries.

 

Playtech is the gambling industry's leading technology company delivering business intelligence driven gambling software, services, content and platform technology across the industry's most popular product verticals, including, casino, live casino, sports betting, virtual sports, bingo and poker. It is the pioneer of omni-channel gambling technology through its integrated platform technology, Playtech ONE. Playtech ONE delivers data driven marketing expertise, single wallet functionality, CRM and responsible gambling solutions across one single platform across product verticals and across retail and online.

 

Playtech partners with and invests in the leading brands in regulated and newly regulated markets to deliver its data driven gambling technology across the retail and online value chain. Playtech provides its technology on a B2B basis to the industry's leading retail and online operators, land-based casino groups and government sponsored entities such as lotteries. As of June 2018, through the acquisition of Snaitech, Playtech directly owns and operates a leading sports betting and gaming brand in online and retail in Italy, Snai.

 

Playtech's Financials Division, named TradeTech Group, is a technology leader in the CFD and financial trading industry and operates both on a B2C and B2B basis.

 

Playtech has in total c.6,000 employees across 21 countries and is headquartered in the Isle of Man.

 

 


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