August 25, 2016

Playtech's share price and market capitalisation jump as group treats investors to €150m special dividend

Gambling software group Playtech's share price popped to a record high this morning after it announced it will treat shareholders to a bumper €150m special dividend.

Playtech said it will make the payout in December, though it has also hiked its interim dividend by 15 per cent to €0.11. The company said the boosts were in anticipation of higher growth and cash generation.

Revenue at the group was up 18 per cent to €338m in the six months to 30 June.

Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) reached €144m, a rise of 27 per cent.

Playtech's stock jumped around five per cent to over 944p on the news and took its market capitalisation above £3bn for the first time.

The jump means it is now the second largest gambling company in the UK in terms of market capitalisation, behind only the merged behemoth Paddy Power Betfair.

Its stock was trading around four per cent higher at the time of writing to 934.7p.

In the first half of this year Playtech continued to push forward with its M&A strategy by acquiring Swedish software firm Quickspin in May for €24m and buying up 90 per cent of Best Gaming Technology for €138m in July.

Chief executive Mor Weizer told City A.M. Playtech remains an "opportunistic and highly acquisitive company".

However, it is not aiming to join the wave of high-profile mergers, such as those between Paddy Power and Betfair and Ladbrokes and Gala Coral, anytime soon.

"Given the health pipeline of M&A in discussion we expect to remain busy and active in the coming quarters. We would never say never to a merger – every opportunity would be considered – but we intend to be the group leading the consolidating rather than being consolidated by others.

"We are very much focused on certain companies that can add to our capabilities at the moment and help us target greater international expansion," Weizer said.

Playtech supplies some of the most profitable bookmakers in markets such as the UK and Spain, including Betfred, Codere, Coral, Ladbrokes, Paddy Power Betfair and William Hill.

However, Weizer said the company intends to be "the most important B2B provider" in the gambling industry in the key regulated markets of the Czech Republic, Slovakia, Poland, the Netherlands and Mexico, among others.

It said it is "locking in" future growth in its gaming division, after announcing important new licensees this year including PokerStars and SunBets, as well as a slew of contract renewals that now put seven of its top 10 licensees on contracts with at least three years remaining.

Weizer told City A.M. he expects Playtech's casino and sports products to generate the most growth in the coming quarters, while mobile will be the group's most lucrative channel. Mobile growth grew 29 per cent in the first half in total and generated 54 per cent of UK revenues.

Chairman Alan Jackson said:

"Playtech has made significant progress in 2016 as we have delivered on our strategic objectives. The gaming division continues to deliver strong growth, driven by our industry-leading casino offering.

Given this progress, we remain confident of strong growth in 2016 and beyond."

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