Thursday 21 February 2019 3:26 pm | Updated: Monday 03 June 2019 12:30 am

Playtech shares rise as it plots €40m buyback after drop in profits

British gambling software provider Playtech saw shares rise almost nine per cent today as it announced a €40m (£34.7m) share buyback scheme after full-year profits plummeted.

The figures

Total revenue for 2018 grew 54 per cent year on year to €1.24bn.

But net profit slumped 50 per cent to €256.2m, hurt by a rise in one-off costs including depreciation and amortisation and professional costs related to acquisitions.

Earnings per share grew 20 per cent, to €0.73, and cash flow also increased to €622m from €583m.

The company slashed its dividend payout to €0.24, a 33 per cent drop as the company focused on its new share buyback programme.

Why it’s interesting

Playtech concluded a difficult year by rewarding shareholders with a buyback after issuing two profit warnings over 2018 – the second following poor online gaming revenue in Malaysia, one of its biggest Asian markets.

In January it warned that earnings would fall by €20m to €25m as a result of tax hikes in Italy.

The company has shifted its focus to more regulated markets, seeing B2B revenues grow at a rate of 12 per cent in constant currency as its proportion of regulated revenue from these areas rise to 80 per cent in 2018.

The company completed an acquisition of Snaitech, a retail gambling business in Italy, in August. Adjusted earnings for Snaitech increased 14 per cent in the year, with the help of 27 per cent growth in online earnings.

The company expects earnings before interest, tax, depreciation and amortisation (Ebitda) to be in the range of €390m to €415m this year, roughly 14 to 21 per cent increase on the €343m it earned in 2018.

What Playtech said

Chairman Alan Jackson said: “In the face of changing market dynamics Playtech achieved significant strategic and operational progress in 2018, delivering a markedly improved financial profile.

“Following shareholder engagement, I am pleased to announce our new progressive shareholder return policy. The strength of the balance sheet and cash flows allow the Board to demonstrate its confidence in future growth of the business."