Last close As at 05/08/2026
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Research: Consumer
Gamesys has reported a positive pre-close trading update following a strong final quarter. The company expects FY19 pro-forma revenue and adjusted EBITDA to reach the top end of consensus estimates, with encouraging trends across the different divisions. Revenues from international markets (35% of total) continue to post high growth and, importantly, H219 has witnessed a return to growth in the core UK market. FY19 results are due in March 2020 and we believe there is a slight upside risk to our FY19 figures. For FY20e the stock trades at 6.2x P/E and 7.3x EV/EBITDA, with a 13.3% FCF yield.
Written by
Gamesys Group |
Top end of consensus |
Trading update |
Travel & leisure |
14 January 2020 |
Share price performance
Business description
Next events
Analysts
Gamesys Group is a research client of Edison Investment Research Limited |
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Gamesys has reported a positive pre-close trading update following a strong final quarter. The company expects FY19 pro-forma revenue and adjusted EBITDA to reach the top end of consensus estimates, with encouraging trends across the different divisions. Revenues from international markets (35% of total) continue to post high growth and, importantly, H219 has witnessed a return to growth in the core UK market. FY19 results are due in March 2020 and we believe there is a slight upside risk to our FY19 figures. For FY20e the stock trades at 6.2x P/E and 7.3x EV/EBITDA, with a 13.3% FCF yield.
Year end |
Revenue (£m) |
EBITDA |
EPS* |
DPS |
P/E |
Yield |
12/17 |
304.7 |
108.6 |
103.9 |
0.0 |
7.0 |
N/A |
12/18 |
319.6 |
112.7 |
118.5 |
0.0 |
6.1 |
N/A |
12/19e** |
547.4 |
153.8 |
93.7 |
0.0 |
7.8 |
N/A |
12/20e** |
578.4 |
175.4 |
117.8 |
30.0 |
6.2 |
4.1 |
Note: *EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Pro forma figures.
A strong final quarter for both UK and overseas
Gamesys’s pre-close trading statement confirmed continued strong growth in overseas markets, which comprise c 35% of pro-forma revenues. As reported at Q319, the UK brands have returned to growth in H219 and we believe the final quarter had a strong performance, particularly in terms of new deposits. Gamesys is confident its FY19 pro-forma revenue and EBITDA will reach the upper end of consensus (the top is £550m revenue and £155m adjusted EBITDA) and we therefore believe there is a slight upside risk to our FY19 figures. FY19 results are due in March 2020.
Acquisition of Gamesys: A transformative year
The group completed the acquisition of Gamesys in September 2019 for £490m, creating a business with high-profile brands, meaningful scale and complete operational control. At Q319, the Gamesys brands comprised 36% of total revenues (broadly equivalent to the Jackpotjoy division) and in future we expect the company to report geographically rather than by division.
Valuation: 6.2x P/E for FY20e
At Q319, Gamesys reported adjusted net debt of £484.7m, which equates to 3.0x net debt/EBITDA, which we forecast will fall to 2.0x by year-end FY20. The stock trades at 7.3x EV/EBITDA and 6.2x P/E for FY20e, with an attractive FCF yield of 13.3%. These remain at the lower end of the peer group and, as the company rapidly deleverages, we expect value to shift from debt to equity.
Exhibit 1: Financial summary
£m |
2017 |
2018 |
2019e* |
2020e* |
2021e* |
||
December |
|||||||
PROFIT & LOSS |
|||||||
Revenue |
|
|
304.7 |
319.6 |
547.4 |
578.4 |
618.8 |
Cost of Sales |
(147.5) |
(158.9) |
(305.5) |
(309.6) |
(323.8) |
||
Gross Profit |
157.2 |
160.7 |
241.9 |
268.9 |
295.0 |
||
EBITDA |
|
|
108.6 |
112.7 |
153.8 |
175.4 |
200.1 |
Operating Profit (before amort. and except.) |
|
|
108.2 |
112.2 |
142.8 |
163.9 |
187.6 |
Intangible Amortisation |
(62.6) |
(60.3) |
(50.0) |
(50.0) |
(50.0) |
||
Exceptional and other items |
(104.9) |
(16.3) |
(18.8) |
0.0 |
0.0 |
||
Share based payments |
(1.4) |
(0.6) |
(0.5) |
(0.5) |
(0.5) |
||
Operating Profit |
(60.8) |
35.0 |
73.5 |
113.4 |
137.1 |
||
Net Interest |
(30.0) |
(19.5) |
(30.0) |
(22.0) |
(16.0) |
||
Profit Before Tax (norm) |
|
|
78.2 |
92.7 |
112.8 |
141.9 |
171.6 |
Profit Before Tax (FRS 3) |
|
|
(65.8) |
18.5 |
45.0 |
91.4 |
121.1 |
Tax |
(0.7) |
(0.5) |
(11.3) |
(14.2) |
(17.2) |
||
Profit After Tax (norm) |
77.5 |
92.3 |
101.5 |
127.7 |
154.4 |
||
Profit After Tax (FRS 3) |
(66.5) |
18.1 |
33.7 |
77.2 |
103.9 |
||
Average Number of Shares Outstanding (m) |
73.9 |
74.2 |
108.4 |
108.4 |
108.4 |
||
EPS |
104.9 |
119.5 |
93.7 |
117.8 |
142.4 |
||
EPS - normalised (p) |
|
|
103.9 |
118.5 |
93.7 |
117.8 |
142.4 |
EPS - (IFRS) (p) |
(90.0) |
19.5 |
31.1 |
71.2 |
95.9 |
||
Dividend per share (p) |
0.0 |
0.0 |
0.0 |
30.0 |
45.0 |
||
Gross Margin (%) |
51.6 |
50.3 |
44.2 |
46.5 |
47.7 |
||
EBITDA Margin (%) |
35.6 |
35.3 |
28.1 |
30.3 |
32.3 |
||
Operating Margin (before GW and except.) (%) |
35.5 |
35.1 |
26.1 |
28.3 |
30.3 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
595.9 |
521.9 |
1,012.0 |
968.5 |
926.0 |
Intangible Assets |
589.0 |
514.7 |
980.0 |
939.0 |
899.0 |
||
Tangible Assets |
1.3 |
2.2 |
27.0 |
24.5 |
22.0 |
||
Other long term assets |
5.6 |
5.0 |
5.0 |
5.0 |
5.0 |
||
Current Assets |
|
|
93.2 |
124.0 |
178.5 |
189.7 |
181.8 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors (incl swaps) |
26.0 |
30.5 |
61.0 |
66.0 |
71.0 |
||
Cash |
59.0 |
84.4 |
101.5 |
106.7 |
92.8 |
||
Player balances |
8.2 |
9.0 |
16.0 |
17.0 |
18.0 |
||
Current Liabilities |
|
|
(98.5) |
(52.3) |
(138.6) |
(133.6) |
(128.6) |
Creditors |
(46.3) |
(47.8) |
(134.0) |
(129.0) |
(124.0) |
||
Short term borrowings |
(0.3) |
0.0 |
(4.6) |
(4.6) |
(4.6) |
||
Contingent consideration |
(51.9) |
(4.5) |
0.0 |
0.0 |
0.0 |
||
Long Term Liabilities |
|
|
(386.7) |
(374.5) |
(556.4) |
(456.4) |
(356.4) |
Long term borrowings |
(369.5) |
(371.5) |
(555.4) |
(455.4) |
(355.4) |
||
Contingent consideration |
(7.7) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities |
(9.4) |
(3.0) |
(1.0) |
(1.0) |
(1.0) |
||
Net Assets |
|
|
204.1 |
219.1 |
495.5 |
568.2 |
622.8 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
102.0 |
106.8 |
84.6 |
159.4 |
184.1 |
Net Interest |
(30.9) |
(19.5) |
(20.0) |
(22.0) |
(16.0) |
||
Tax |
(1.0) |
(0.8) |
(8.0) |
(14.2) |
(17.2) |
||
Capex |
(3.2) |
(5.3) |
(10.0) |
(18.0) |
(20.0) |
||
Acquisitions (inc earn-outs) |
(94.2) |
(55.3) |
(462.0) |
0.0 |
0.0 |
||
Financing |
22.2 |
(2.3) |
244.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
(44.7) |
||
Net Cash Flow |
(5.2) |
23.6 |
(171.4) |
105.2 |
86.2 |
||
Opening net debt/(cash) |
|
|
305.6 |
310.7 |
287.1 |
458.5 |
353.3 |
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
310.7 |
287.1 |
458.5 |
353.3 |
267.1 |
NPV of outstanding earnouts/ other |
|
|
76.6 |
15.0 |
0.0 |
0.0 |
0.0 |
Currency swaps |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Adjusted net debt |
|
|
387.3 |
302.1 |
458.5 |
353.3 |
267.1 |
Source: Gamesys, Edison Investment Research. Note: *Pro-forma figures.
|
|
Research: Healthcare
Acacia Pharma has announced a deal with Cosmo Pharmaceuticals to acquire the US rights to registrational phase asset ByFavo (remimazolam). The deal strengthens Acacia’s product offering beyond key asset BARHEMSYS for post-operative nausea and vomiting (PONV), as it looks to build its US sales and marketing infrastructure in 2020. Both assets are under FDA review, with imminent PDUFA dates (BARHEMSYS 26 February, ByFavo 5 April) and potential US launch of both in H220. The terms of the deal are complex and we place our forecasts and valuation under review. However, the €10m equity investment and access of up to $35m in loan facilities from Cosmos is important in extending Acacia’s cash reach into 2020, enabling it to expand its much-needed US commercial infrastructure ahead of product launches.