REG - Keywords Studios PLC - Half year trading update and notice of results

Keywords StudiosAnnouncement

04/08/2021 07:00

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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 €238m representing a c.37%
increase on the comparative period (H1 2020: €173.5m, FY 2020: €373.5m).
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 €40m,
representing an increase of over 80% from €21.7m 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 €84m (31 December 2020:
€102.9m) after cash spend on acquisitions in the first half of the year
amounting to €45m, including €5m of deferred consideration in respect of
prior year acquisitions. The Group's cash balance, strong cash generation and
the €100m 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/
(https://www.keywordsstudios.com/H1-2021-results/) , or
contact Keywords@mhpc.com (mailto: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 (http://www.keywordsstudios.com) )   +353 190 22 730

 Jon Hauck, Joint Interim Chief Executive Officer

 Sonia Sedler, Joint Interim Chief Executive Officer

 Joseph Quinn, Investor Relations

 Numis Securities                                                               +44 20 7260 1000

 Stuart Skinner/Kevin Cruickshank/Will Baunton

 MHP Communications (Financial PR)                                              +44 20 3128 8193

 Katie Hunt/James Midmer/Charles Hirst                                          keywords@mhpc.com (mailto:keywords@mhpc.com)

 

About Keywords Studios ( www.keywordsstudios.com
(http://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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