Keywords Studios (KWS), which provides services to the video games industry, has enjoyed an excellent run over the past 12 months, with its shares more than doubling in value. Top-line momentum was buoyed by 11 acquisitions and 15 per cent organic growth – admittedly slightly lower than the prior year – while management says the video games market is expanding by 6-8 per cent a year.
Keywords made two of its largest acquisitions in 2017. VMC, purchased for $66.4m (£47m), helped to lift sales for the dominant segment – functional testing – by 248 per cent to €30m (£26m). Meanwhile, the $27m acquisition of Sperasoft strengthened Keywords’ engineering service line. Management has more bolt-ons in its sights, plus a newly extended €105m credit facility backing its pipeline.
Three acquisition announcements coincided with these preliminary numbers, all tied to Keywords’ audio business. Maximal, bought for up to €0.5m, bolsters its South American presence and existing specialism in voice-over production. Cord and Laced, costing £4.5m, brings new expertise in licensing video game soundtracks and music composition.
Broker Numis forecasts pre-tax profit of €37.1m and EPS of 47.3¢ for the 12 months to December 2018, against €23m and 31.7¢ in 2017.
| KEYWORDS STUDIOS (KWS) | ||||
| ORD PRICE: | 1,546p | MARKET VALUE: | £954m | |
| TOUCH: | 1,542-1,556p | 12-MONTH HIGH: | 1,848p | LOW: 715p |
| DIVIDEND YIELD: | 0.1% | PE RATIO: | 144 | |
| NET ASSET VALUE: | 261ȼ | NET CASH: | €11.1m | |
| Year to 31 Dec | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (ȼ) | Dividend per share (p) |
| 2013 | 16.2 | 1.2 | 2.1 | 1.00 |
| 2014 | 37.3 | 3.4 | 4.9 | 1.10 |
| 2015 | 58.0 | 5.1 | 7.0 | 1.21 |
| 2016 | 96.6 | 9.4 | 11.2 | 1.33 |
| 2017 | 151 | 12.0 | 12.4 | 1.46 |
| % change | +57 | +27 | +10 | +10 |
| Ex-div: | 31 May | |||
| Payment: | 22 Jun | |||
*Includes intangible assets of €133m, or 215ȼ a share £1=€1.15 | ||||
