Gamesys Group PLC Announces Results for the Year Ended 31 December 2020

Rhea-AI Summary

Gamesys Group plc announced strong financial results for the year ending December 31, 2020, amid COVID-19 challenges. Revenue soared to £727.7 million, a 75% increase year-on-year, driven by significant growth in Asia and steady performance in the UK. Adjusted EBITDA rose 75% to £206.2 million, while net income jumped 638% to £67.2 million. The company declared a final dividend of 28.0p, totaling 40.0p for the year. Operationally, average active players increased by 21%, reflecting robust engagement and revenue growth.

Positive

• Revenue increased 75% year-on-year to £727.7 million.
• Adjusted EBITDA rose by 75% to £206.2 million.
• Net income from continuing operations surged 638% to £67.2 million.
• Final dividend proposed at 28.0p, totaling 40.0p for the year.
• Average active players per month grew by 21%.
• Revenue from Asia increased by 78% in 2020.

Negative

• None.

Outstanding financial performance and operational execution,

pro-forma adjusted EBITDA up 30%

Adapting to the challenges of COVID-19 and focussed on player and employee wellbeing

Strong start to the current financial year

LONDON, UK / ACCESSWIRE / March 9, 2021 / Gamesys Group plc (LSE:GYS) (the 'Group', 'Gamesys'), announces its financial results for the year ended 31 December 2020.

Financial summary

		Year ended 31 December 2020 (??m)				Year ended 31 December 2019 (??m)				Reported change (%)
Revenue			727.7				415.1				75
Adjusted EBITDA[1],[2]			206.2				117.7				75
Net income from continuing operations (as reported under IFRS)			67.2				9.1				638
Adjusted net income1,2,[3]			155.4				83.5				86
Diluted adjusted net income per share from continuing operations1,2,3,[4]			142.2p				99.9	p			42
Operating cash flow per share4			196.2p				89.7	p			119
Dividend per share4			40.0p				n/a				n/a

Pro-forma financial summary^[5]

		Year ended 31 December 2020 (??m)				Year ended 31 December 2019 (??m)				Change (%)
Revenue			727.7				565.3				29
Adjusted EBITDA1,2			206.2				158.4				30

Financial highlights

• Excellent reported and pro-forma⁵ financial performance across the Group
  • Revenue grew by 75% and 29% year-on-year on reported and pro-forma⁵ basis, respectively, primarily due to ongoing impressive growth in Asia as well as a strong performance in the UK even with enhanced responsible gambling measures
  • Reported adjusted EBITDA^1,2 increased by 75% year-on-year and by 30% on a pro-forma⁵ basis, driven by strong revenue growth
  • Adjusted net income^1,2,3 increased by 86% year-on-year
  • Excellent H2 performance reflected in final dividend of 28.0p (a total of 40.0p for the year)
• Cash conversion of over 100% from adjusted EBITDA¹; adjusted net leverage ratio^[6] reduced to 1.51x
  • Outstanding operating cash flow of £214.4 million in 2020 up from £75.0 million in 2019
  • Unlevered free cash flow^[7] of £194.9 million up from £58.3 million in 2019. Unlevered free cash flow per share^4,7 of 178.3p
  • Cash balance of £212.6 million at 31 December 2020 and adjusted net debt^[8] reduced to £312.3 million underpins a solid balance sheet
  • Adjusted net leverage ratio⁶ reduced to 1.51x at year end from 2.83x at 31 December 2019

Operational highlights (pro-forma)⁵

• We continue to execute strongly against our stated key performance indicators^[9]:
  • Average Active Players per Month⁹ grew 21%, from 587,399 to 712,334
  • On a monthly average basis, Real Money Revenue per Month⁹ increased 28%, from £45.4 million to £58.2 million
  • This meant our Monthly Real Money Revenue per Average Active Player⁹ increased by 6%, from £77 to £82
• In the UK, revenues increased 19%; Virgin Games, Monopoly Casino and our new Rainbow Riches Casino drove a strong performance as illustrated by a 24% increase in monthly active players.
• Asia continues to be a standout performer, with revenues increasing 78% in 2020 as the launch of InterCasino supported established market leader Vera&John. Our operational performance is driven by continued investment in content, marketing and customer service.
• In Europe, Spain is our largest territory and showed a healthy positive performance despite a shifting regulatory landscape, which has now stabilised. The launch of Monopoly Casino in Spain in the summer has been well-received, experiencing faster revenue growth in the first six months of operating than any of our previous launches globally. Revenue in total from our European operations fell marginally year-on-year, reflecting ongoing challenges in the Nordics.
• In ROW, the majority of revenues derive from our business in New Jersey, where revenues grew 25% year-on-year and we remain excited about the opportunities available in North America, not only through entry into newly regulated states in the US, but also in Canada as it moves along a path towards regulation.
• We're delighted to be able to thank and recognise employees for an amazing full first year as Gamesys Group, with a one-off grant of free shares. Our results have allowed us to provide £1.8 million in shares, meaning that all employees can link their efforts to sustainable success and benefit from future growth.

COVID-19, responsible gambling and ESG

• Following the unprecedented challenges presented by the COVID-19 pandemic, our top priority has been the health and wellbeing of our players and employees, a focus which will continue as long as the virus continues to affect the markets in which we operate and the communities we serve.
• Our teams have shown remarkable commitment and focus to maintain 100% business continuity globally during such a challenging period and we will continue to support them as we revise our ways of working and move towards a model that will provide increased flexibility post COVID-19.
• Our focus continues to be on providing an entertaining but safe experience for our recreational players, which is demonstrated by the increased use of our chatrooms and the level of non-wagering activity across our sites throughout the course of the year.
• After the commencement of COVID-19 lockdowns in Q1 2020, we were the first operator to cease untargeted customer marketing in the UK, including the suspension of TV and radio campaigns; an initiative that was soon embraced by our industry peers on the Betting and Gaming Council.
• During 2020, we invested in additional resources and capabilities in our responsible gambling teams, which supported a significant increase in players setting deposit limits and other tools as well as a step-up in our proactive customer engagement.
• We achieved the demanding GamCare Safer Gambling Level 2 Standard, which indicates that our responsible gambling approach goes well beyond the expectations set out by our UK licence, and have also implemented a Global Sustainability Commitment to continually enhance these standards.
• Created in February 2020, we have provided over £2.3 million in funding to our Gamesys Foundation, which funds both corporate and employee initiatives, while also scoring highly in a number of ESG rating schemes, including the achievement of 'Prime' status from ISS, a leading shareholder proxy group.
• We have also achieved a number of other ESG milestones of late, including becoming signatories of the UN Global Compact, which solidifies our ongoing commitment to best practice in relation to human rights, labour, environment and anti-corruption. Also, we have been awarded carbon neutral status for our operations by the Carbon Trust.
• Looking ahead, we continue to support the UK Government's review of the 2005 Gambling Act and call for a rigorous evidence-based approach to potential policy change that will better protect vulnerable customers while at the same time allowing the majority to continue to enjoy their play.

Capital allocation

• Utilise the Group's exceptionally strong cash generation to maintain a long-term adjusted net leverage ratio⁶ in a range of 1-2x adjusted EBITDA¹.
• This policy will provide maximum flexibility to support cash returns to shareholders while retaining sufficient resources to invest in growth.
• The Board has implemented a progressive dividend policy and the proposed inaugural final dividend for 2020 is 28.0p (40.0p for the year), which reflects strong trading in H2 2020 and our confidence in the outlook for 2021.
• The balance sheet also provides flexibility to undertake returns to shareholders through share buyback programmes, should the Board consider it to be the best use of excess capital at that time.

Outlook

Following a very good start to the current financial year, the Group is trading in line with expectations. In our main market of the UK, we welcome the ongoing review of the 2005 Gambling Act and we are proactively contributing to an evidence-based assessment as to how to enhance the environment for responsible gambling. We remain excited by our growth prospects in our fast-growing Asian market and we expect to be live in additional states in the US as it continues to legislate at pace - as well as to build on our presence in Canada as it too moves to regulate online gaming. Our sustained operational execution, robust cash generation and strong balance sheet means we remain confident about our ability to deliver significant revenue growth and to generate returns for our shareholders.

Neil Goulden, Chair, Gamesys Group plc commented:

"We are pleased to announce another strong set of results, particularly against the backdrop of the COVID-19 pandemic, which has impacted so many across the world. All our colleagues have done an incredible job in maintaining seamless business continuity throughout the year, while also enhancing our responsible gambling approach to ensure we remain a best-in-class operator in protecting our recreational players. Our commitment to both employees and players is further emphasised with today's announcement of the appointment to the Board of our Chief People Officer, Tina Southall. On behalf of the Board, I am delighted to welcome Tina and I'm sure she will add a very important new voice to our deliberations. We also continue to deliver for our shareholders, with the proposed final dividend announced today (and the payment of our inaugural interim dividend in October of 2020), setting a foundation for a progressive policy in this respect moving forward. Support from our colleagues, customers and shareholders was crucial during such an uncertain period and has put us in a strong position to continue to execute and drive growth as we move into 2021."

Lee Fenton, CEO, Gamesys Group plc, commented:

"Despite 2020 being a year like no other, our ongoing focus on operational execution, product innovation and responsible gambling underpinned a strong performance, with pro-forma⁵ revenues increasing by 29% and pro-forma⁵ adjusted EBITDA^1,2 up 30%. We continue to go from strength to strength in Asia, while the UK delivered strong double-digit revenue growth - all set against the backdrop of ongoing enhancements to our responsible gambling approach. We also remain excited by our prospects in North America, both in the US and Canada. Our focus on recreational customers, our differentiated brands, proprietary technology and established market positions, have attracted record numbers of players in 2020 and we believe this foundation will allow us to continue to deliver sustainable and long-term growth in the year ahead and beyond."

Conference call

There will be a conference call for analysts and investors at 1.00pm GMT / 8.00am ET on 9 March 2021. To join the call, participants should dial one of the following numbers, using the password 'Gamesys', approximately 10 minutes ahead of the scheduled start time.

UK toll free	0808 109 0700
Canada toll free	1 866 378 3566
USA toll free	1 866 966 5335
Standard international access	+44 (0) 33 0551 0200

A replay facility will be available until and including 8 April 2021 and can be accessed by dialling one of the numbers below and quoting conference 6240627#

Standard international access	+44 (0) 20 8196 1480
USA toll free	1 866 583 1035

About Gamesys Group plc

Gamesys Group plc is the parent company of an online gaming group that provides entertainment to a global consumer base. Through its subsidiaries, Gamesys Group plc currently offers bingo and casino games to its customers using brands which include Jackpotjoy (www.jackpotjoy.com), Virgin Games (www.virgingames.com), Botemania (www.botemania.es), Vera&John (www.verajohn.com), Heart Bingo (www.heartbingo.co.uk), Monopoly Casino (www.monopolycasino.com), Rainbow Riches Casino (www.rainbowrichescasino.com) and MEGAWAYS Casino (www.megawayscasino.com).

Enquiries
Gamesys Group plc Jason Holden Director of Investor Relations	jason.holden@gamesysgroup.com +44 (0) 207 478 8150 +44 (0) 7812 142118
Finsbury	gamesysgroup-LON@finsbury.com +44 (0) 207 251 3801
James Leviton, Robert Allen

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SOURCE: Gamesys Group PLC

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FAQ

What were Gamesys Group's financial results for 2020?

Gamesys Group reported revenue of £727.7 million, a 75% increase year-on-year, along with a net income increase of 638% to £67.2 million.

How much did Gamesys Group's adjusted EBITDA grow in 2020?

Adjusted EBITDA increased by 75% to £206.2 million for the financial year 2020.

What was the final dividend declared by Gamesys Group for 2020?

Gamesys Group declared a final dividend of 28.0p, bringing the total for the year to 40.0p.

By how much did the average active players increase for Gamesys Group?

The average active players per month grew by 21%, from 587,399 to 712,334.

What challenges did Gamesys Group face during the COVID-19 pandemic?

Gamesys Group adapted to COVID-19 by prioritizing the health and wellbeing of players and employees, while maintaining business continuity.