31st Jul 2019 10:58
(Alliance News) - Keywords Studios PLC on Wednesday said it continues to review acquisition options following a surge in revenue in the first half of 2019.
In addition, the company said it has agreed terms for a new revolving credit facility. It will be provided by Barclays Bank, Citibank, HSBC and Silicon Valley Bank for an initial EUR100 million over a three-year term, with the option to extend the facility up to EUR140 million and by a further two years. It replaces Keywords' existing EUR105 million facility.
Keywords provides creative and technical services to the video games industry. It said it grew very strongly during the six months to the end of June, with revenue for the period expected to be up by 39% to EUR153.1 million. On a constant currency, like-for-like basis, Keywords' revenue was up 17%, it said.
The company said its performance was driven by strong growth in the Functional Testing and Game Development, which are now the largest and second largest divisions.
Adjusted pretax profit is expected to increase by 15% to EUR18.4 million, Keywords said, which reflects the strong revenue growth, partly offset by investment in and rapid expansion of capacity.
During the first half, the particularly strong demand for some service lines required the company to bring forward the expansion of its facilities, it said, and incur extra costs in areas such as recruitment, training, IT and human resources.
Keywords said it expects the greater first half weighting to investment in capacity and cost base to result in stronger margins in the second half than in the first half.
"As we move into the second half, we expect to be able to leverage that investment to the benefit of margins in the second half," explained Chief Executive Andrew Day, adding: "We continue to review a healthy pipeline of acquisition candidates in line with our strategy to build our business both organically and through acquisition."
The stock was trading 2.1% lower on Wednesday in London at 1,679.48 pence a share.
Keywords will publish its half-year results on September 18.
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