Playtech could be forced to close live casino locations over coronavirus
Board pulls dividend and scraps shareholder returns in move to maximise liquidity
Playtech has contingency plans in place should its core B2B gambling revenue be negatively impacted by the closure of its live casino portfolio.
The London-listed supplier has already been forced to close its live casino facility in the Philippines due to the coronavirus pandemic, although its Riga-based studio remains open.
Updating investors on Thursday, the company said: “Live casino is a business that requires a significant number of employees working in the same location and has the potential to be disrupted as the Covid-19 situation continues.
“Playtech’s facility in the Philippines has been closed with traffic being redirected to other facilities. While its facilities in Riga and other locations currently remain operational, there is a risk that these facilities will need to close in the future.”
Should its remaining studio locations shut down, the supplier will continue its live casino service via remote solution.
Playtech estimates its B2B sports business is already facing adjusted EBITDA losses of €4m per month following the postponement of major sports and the closure of its client’s retail outlets in the UK and Greece.
The B2B sports business had been expected to contribute around 10% of overall adjusted EBITDA in 2020.
In Italy, Europe’s hardest-hit country, Playtech’s B2C-facing sports betting business Snaitech has gone from making an average profit of €13m per month to an average loss of €3m per month after the country entered a strict lockdown.
Playtech’s poker and bingo businesses have however seen increased activity in recent days following lockdown restrictions in various markets.
The Playtech board has moved to maximise liquidity in the current circumstances by suspending shareholder distributions with immediate effect and until further notice, including the share repurchase programme announced during the supplier’s full-year financial results.
All shareholder returns have been suspended to reserve cash.
Peel Hunt analyst Ivor Jones said: “We are lowering our FY 2020 EBITDA forecast by 22% to €267m.
“Playtech has adequate liquidity to trade through the Covid-19 situation and may be undervalued on a long-term view but, in light of the current uncertainty, we retain our Hold rating and reduce our target price to 140p.”