Playtech
plc
("Playtech", the "Company" or the "Group")
Results for the year ended 31
December 2023
Significant strategic and
operational progress
FY 2023 performance ahead of
expectations; on track to meet medium-term
targets
Playtech (LSE: PTEC), the leading
platform, content and services provider to the gambling industry,
today announces its final results for the year ended 31 December
2023.
Financial summary (continuing
operations)1
|
|
Reported
|
Adjusted2
|
|
|
FY 23
|
FY
225
|
|
FY 23
|
FY
225
|
|
|
|
€'m
|
€'m
|
Change %
|
€'m
|
€'m
|
Change %
|
|
Revenue
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1,706.7
|
1,601.8
|
7%
|
1,706.7
|
1,601.8
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7%
|
|
EBITDA
|
406.5
|
362.3
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12%
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432.3
|
395.4
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9%
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|
Post-tax profit3
|
105.1
|
40.6
|
159%
|
156.8
|
160.5
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-2%
|
|
Diluted EPS
|
33.7
|
13.0
|
159%
|
50.2
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51.5
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-3%
|
|
Net
debt6
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282.8
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275.2
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3%
|
|
|
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Summary
· Strong
overall performance with FY 2023 Adjusted EBITDA up 9% to €432.3
million (FY 2022: €395.4 million), ahead of previously raised
expectations.
· Solid
performances across both B2B and B2C.
· Landmark strategic partnership signed with Hard Rock
Digital.
· Three
US Live Casino facilities now operational; licensed in 11 US
states.
· Resilient balance sheet, with leverage of 0.7x as at end of FY
2023, despite impact from Caliplay
· Medium-term adjusted EBITDA guidance across both B2B (€200 -
€250 million) and B2C (€300 - €350 million) maintained.
Divisional highlights
B2B
· Healthy performance in regulated markets drove FY 2023 revenue
growth of 8% to €684.1 million (FY 2022: €632.4
million).
· Strong
operating leverage supported margin expansion, with B2B Adjusted
EBITDA increasing 14% to €182.0 million (FY 2022: €160.2
million).
· The Americas
was the biggest driver of growth, with revenue up 46% to €211.9
million (FY 2022: €144.7 million).
· In
Latin America, Caliplay in Mexico remains the key driver, with
Wplay an increasingly large contributor. The early performance of
Galerabet was encouraging, as Brazil takes further steps towards
regulating.
·
Well positioned to take
advantage of significant growth opportunities in the US, with
several operators launched in the year across multiple states, a
third Live Casino facility opened in Pennsylvania and licensed in
11 states.
· Excellent start to the expanded relationship with NorthStar in
Canada, which saw strong growth.
· Live
Casino continued to see good revenue growth; the Company remains
focused on regulated markets, which saw revenue growth of 24% in FY
2023 versus FY 2022.
· On
course to achieve the medium-term SaaS revenue target of €60
million - €80 million, with SaaS revenues growing more than 50% in
FY 2023 to €50 million (FY 2022: €32 million)
· Launched BetBuddy, part of Playtech's safer gambling
technology, with six new brands in FY 2023, bringing the total to
16 brands in nine jurisdictions.
B2C
· Good
B2C performance with revenue up 5% to €1,037.0 million (FY 2022:
€983.1 million). Adjusted EBITDA increased 6% to €250.3 million (FY
2022: €235.2 million).
· Snaitech revenue grew 5% to €946.6 million (FY 2022: €899.8
million) and Adjusted EBITDA increased 5% to €256.1 million (FY
2022: €244.0 million), driven by growth across retail and
online.
· The
Snai brand maintained its number one market share position (retail
and online combined measured by GGR) across Italian sports betting
brands in FY 2023.
·
HAPPYBET reported Adjusted
EBITDA of €-11.8 million (FY 2022: €-10.8 million), although 2023
includes a €2 million historical litigation settlement expense.
Losses are expected to narrow as we move through FY
2024.
· Sun
Bingo and Other B2C saw Adjusted EBITDA grow to €6.0 million (FY
2022: €2.0 million), driven by more effective marketing spend and
higher retention of customers due to improved user
experience.
Update on Caliplay (please refer to Note 7 for further
details)
· Playtech is seeking to clarify a point of disagreement in
relation to the Caliente Call Option, which is due to be heard in
Court in October 2024.
· The
dispute with Caliplay now also includes a dispute in relation to
fees payable by Caliplay to the Group, principally B2B licence fees
and the additional B2B services fees.
·
Caliplay has not paid B2B license fee
amounts due from August 2023 and additional B2B services fee
amounts due from July 2023. However, the
Group has recognised the outstanding amount of €86.5 million within
revenue for the year as it has assessed that it is highly probable
that the cash will be collected in full in subsequent
periods.
· Caliplay remains a highly important customer and Playtech is
committed to continuing to maintain its open dialogue with Caliplay
to discuss a path forward.
Financial highlights
· Reported
post-tax profit increased significantly to €105.1 million (FY 2022:
€40.6 million) as a result of an increase in EBITDA and in the fair
value of the Playtech M&A call option related to Caliplay,
partly offset by an impairment to the Sports division within
B2B.
· Group
leverage remained flat at 0.7x in FY 2023 compared to FY 2022.
Excluding the impact of Caliplay, leverage was 0.5x at the end of
FY 2023.
· Strengthened balance sheet following issuance of €300 million
bond due 2028.
Outlook
· Solid start to
trading in 2024, reflecting strong underlying growth trends in B2B
across regulated markets including the Americas, and
B2C.
·
B2B medium term Adjusted EBITDA
target of €200 - 250 million and B2C medium-term Adjusted EBITDA
target of €300 - 350 million maintained.
· Strength of balance sheet gives flexibility to pursue both
organic and inorganic growth opportunities.
· The Board
remains confident in Playtech's ability to execute on growth
opportunities across both the B2B and B2C divisions.
Mor
Weizer, CEO, said:
"Playtech performed very strongly
over the year and delivered Adjusted EBITDA up 9% to €432 million,
ahead of previously raised expectations. As well as delivering
excellent financial results, the Group made important strategic and
operational progress, including our expansion across the US,
opening a third Live Casino facility in Pennsylvania and taking the
number of licenses granted to 11 with further applications pending.
Our B2C division delivered revenues exceeding €1 billion for the
first time, and Snaitech remains well positioned to benefit from
the under-penetration of the online segment, given the strength of
the brand, the continuous improvements to
apps and technology, and a broadening of its content
offering.
"Underpinning this performance are
our c.7,700 talented colleagues around the world. Despite the
significant disruption from geopolitical conflict during the year,
they have continued to deliver for our customers and we are truly
grateful to them all.
"With regards to outlook, we are well
set to achieve our medium-term targets for both B2B and B2C
divisions and have a high-quality balance sheet giving us the
flexibility to pursue both organic and inorganic growth
opportunities.
"In summary, we remain very confident
in our ability to execute our strategy and to continue delivering
value for our shareholders."
- Ends -
For
further information contact:
|
Playtech plc
Mor Weizer, Chief Executive
Officer
Chris McGinnis, Chief Financial
Officer
c/o Headland
Sandeep Gandhi, Head of Investor
Relations
|
+44 (0) 20 3805 4822
+44 (0) 20 3805 4822
|
|
|
|
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Headland (PR adviser to Playtech)
Lucy Legh, Jack Gault
|
+44 (0) 20 3805 4822
|
1Totals in tables throughout this statement may not exactly
equal the components of the total due to rounding.
2Adjusted numbers relate to certain non-cash and one-off items.
The Board of Directors believes that the adjusted results more
closely represent the consistent trading performance of the
business. A full reconciliation between the actual and adjusted
results is provided in Note 11.
3Adjusted Profit refers to post-tax Profit from continuing
operations attributable to the owners of the Company after the
relevant adjustments as detailed above. Reported Profit refers to
post-tax Profit from continuing operations attributable to the
owners of the Company before adjustments.
4Adjusted operating cash flow refers to net cash provided by
operating activities from continuing operations after adjusting
for changes in jackpot balances, client
deposits, professional fees and the ADM
security deposit in Italy.
5FY 2022 numbers have been restated to reflect Snaitech's
online bank charges, which are now being recognised within EBITDA.
Refer to Note 4C for more detail.
6Net debt is defined as being gross debt less cash and cash
equivalents excluding cash held on behalf of clients, progressive
jackpots and security deposits.
Conference call and presentation
A presentation on the earnings will
be held today at 9.00 am via a live audio webcast accessible using
this link:
https://www.investis-live.com/playtech/65d378846195a512002c757f/gkar
Analysts and investors can also dial
into the call using the following details:
United Kingdom (Local): +44 20 3936
2999
United Kingdom (Toll-Free): +44 800
358 1035
Global Dial-In Numbers
Access Code: 195869
The presentation slides will be
available today from 8.30 am at:
https://www.investors.playtech.com/results-and-presentations
Forward looking statements
This announcement includes
statements that are, or may be deemed to be, "forward-looking
statements". By their nature, forward-looking statements involve
risk and uncertainty since they relate to future events and
circumstances. Actual results may, and often do, differ materially
from any forward-looking statements.
Any forward-looking statements in
this announcement reflect Playtech's view with respect to future
events as at the date of this announcement. Save as required by law
or by the Listing Rules of the UK Listing Authority, Playtech
undertakes no obligation to publicly revise any forward-looking
statements in this announcement following any change in its
expectations or to reflect events or circumstances after the date
of this announcement.
About Playtech
Founded in 1999 and premium listed
on the Main Market of the London Stock Exchange, Playtech is a
technology leader in the gambling industry with over 7,700
employees across 19 countries.
Playtech is the gambling industry's
leading technology company delivering business intelligence driven
gambling software, services, content and platform technology across
the industry's most popular product verticals, including, casino,
live casino, sports betting, virtual sports, bingo and poker. It is
the pioneer of omni-channel gambling technology through its
integrated platform technology, Playtech ONE. Playtech ONE delivers
data driven marketing expertise, single wallet functionality, CRM
and responsible gambling solutions across one single platform
across product verticals and across retail and online.
Playtech partners with and invests
in the leading brands in regulated and newly regulated markets to
deliver its data driven gambling technology across the retail and
online value chain. Playtech provides its technology on a B2B basis
to the industry's leading retail and online operators, land-based
casino groups and government sponsored entities such as lotteries.
Playtech directly owns and operates Snaitech, the leading sports
betting and gaming company in online and retail in
Italy.
Chairman's statement
I am pleased to be writing to you
after another successful year for Playtech. The Company has built
on the strong strategic and operational progress of recent years,
and continues to cement its leadership across both B2B and
B2C.
I would like to take this
opportunity to thank the Executive Management team, who continue to
demonstrate their agility and resilience in navigating a
challenging external backdrop, given the ongoing wars in Ukraine
and the Middle-East. I would also like to highlight our
professional and hardworking colleagues around the world, who
remain committed to supporting all our customers and growing our
business. Finally, I would like to acknowledge the support of the
Non-executive Directors, who have worked tirelessly in supporting
the Group's strategy and ambitions.
2023 in review
While there were many challenges in
2023, the consistent quality at the core of our business meant that
we were able to upgrade our expectations during the year and
deliver a strong financial performance. This result was underpinned
by good contributions from both the B2B and B2C businesses, and
ensures we are firmly on track to meet our medium-term Adjusted
EBITDA targets.
B2B
Our B2B performance was powered by
our continued strength in regulated and soon-to-be-regulated
markets:
-
We have laid the groundwork for future growth in
the US; we signed a
landmark strategic partnership with Hard Rock Digital, have three
US Live Casino facilities operational and are now licensed in 11 US
states.
-
In Latin
America, we further cemented our leadership position with
Caliplay in Mexico, as well as our position with Galerabet in
Brazil. We are currently working to resolve a disagreement with
Caliplay, the online casino and sports betting arm of
Caliente. Caliplay remains a highly
important customer for Playtech, and we are committed to continuing
to maintain an open dialogue with Caliplay to discuss a path
forward.
-
Live
Casino remains an attractive product
vertical and we are continuing to invest in both physical
infrastructure and content to capitalise on this exciting
opportunity.
B2C
Our B2C operations continue to go
from strength to strength, with Snaitech extending its reputation
for excellent performance across both retail and online:
-
The management team at Snaitech continue to
deliver superb results, underlined by the Snai brand maintaining
its number one market share position across Italian sports betting
brands for retail and online combined.
-
The retail betting division delivered a record
performance, with revenues c.20% above the pre-pandemic levels
achieved in 2019, illustrating the strength of the Snai brand.
Online continues to perform well, benefitting from the brand
awareness provided by the retail business.
-
We remain very optimistic about the prospects for
B2C, and are actively looking to accelerate the division's growth
through targeted M&A and by optimising HAPPYBET's online
offering.
Corporate activity
Hard Rock Digital
As announced in March 2023, Playtech
signed a landmark strategic agreement with Hard Rock Digital, the
interactive gaming and sports betting division of Hard Rock
International. Partnering with such an iconic brand with a proven
management team will significantly strengthen Playtech's position
in North America and is very much in line with the Group's B2B
strategy. As part of the agreement, Playtech has also invested $85m
in exchange for a minority stake in Hard Rock Digital.
The momentum across our business and
the Group's healthy balance sheet has meant that we have been able
to be active in reviewing potential acquisition opportunities
during 2023, and submitted offers for assets in the B2C segment and
for bolt-on acquisitions within B2B. We expect to continue to be
open to any opportunities in the coming year, but will also remain
very disciplined on price and in assessing the potential for
acquisitions to add value for our shareholders.
Refinancing
The refinancing at the end of June
2023 strengthened our balance sheet, giving us the flexibility to
invest in our business as well as pursue inorganic opportunities.
The new €300 million bond enabled us to redeem all of the
outstanding notes due in 2023 and to repay outstanding debt under
the existing revolving credit facility, which is now wholly
undrawn.
Board changes
At the start of the year, we
welcomed Samy Reeb to the Board as a new independent Non-executive
Director, bringing his extensive experience of working with global
businesses across wealth and tax advisory. We are already
benefitting from the additional depth he brings to the Board and
will continue to draw on his expertise in the years to
come.
A big priority of mine has been to
improve the diversity of the Board, and the appointment of Ruby Yam
as an Independent Non-executive Director in June 2023 moved us in
the right direction. While it was unfortunate that she stepped down
the following month for personal reasons, we continue to be
actively focused on achieving our ambition of having a more diverse
Board.
We said goodbye to John Krumins
following our interim results in September 2023. John's
contribution was invaluable during a period of significant change
for the Company. We wish him all the best for the
future.
Over the year, we have also made
changes to the composition of the Board committees to ensure that
we are making the most of the skills available to us.
Sustainability
Our performance in 2023 was
underpinned by our sustainability strategy, which is central to how
we operate and serve our customers. As an organisation, we are
committed to using technology to advance safer gambling. I am
really pleased with the positive steps we have taken in this area,
including bringing BetBuddy - our player protection tool - to more
brands in more geographies.
2023 also saw Playtech receive
recognition for our efforts to reduce our carbon footprint against
our targets and an improvement in gender diversity within our
leadership ranks. These are both areas I personally feel very
strongly about, and we will not be complacent, but will continue to
invest time and resources in marching towards the targets that we
have set ourselves.
Israel and Ukraine
As has unfortunately become
necessary in recent years, we have to remain mindful of
geopolitical tensions around the world. It can be easy for some to
forget that the war in Ukraine rages on, but it remains front of
mind for all of us at Playtech given the number of employees we
have there. As has been the case since the start of the war, our
colleagues continue to go above and beyond in providing support to
those who remain on the ground in Ukraine.
We are also deeply saddened by the
devastation and death toll caused by the ongoing Israel-Hamas war.
Following the initial terrorist attack on 7 October 2023, our
priority was to ensure the safety of our colleagues in the region
and ensure they had whatever is needed to support them and their
families. It goes without saying that as an organisation, we
strongly oppose all forms of hate and we hope for a resolution in
the near future. Until then, we will continue to offer assistance
to the communities we operate in wherever possible.
Another exciting year ahead
We remain as confident as ever in
the opportunity ahead of us for our business and the industry we
operate in. We have a clear and proven strategy across both B2B and
B2C, driven by outstanding colleagues in some of the most exciting
and fastest growing markets worldwide. We are well on track to meet
our medium-term expectations, and look forward to continuing to
deliver strong returns for all of our stakeholders.
Thank you for your continued support
of Playtech.
Chief Executive Officer's
Review
Overview
2023 was a year of significant
progress across Playtech. We delivered an excellent financial
performance, with strong contributions from both the B2B and B2C
businesses. We also remain firmly on track to meet our medium-term
Adjusted EBITDA targets for B2B (€200 -
€250 million) and B2C (€300 - €350 million), while we see
further long-term upside given the favourable market dynamics and
our competitive advantages.
Playtech's B2B business remains
focused on regulated or soon-to-be-regulated markets. The division
benefits from its exposure to high-growth markets across the
Americas and Europe, which helped the B2B segment to deliver
revenue growth of 8% (+6% on a constant currency basis) to €684
million (FY 2022: €632 million). Strong operating leverage ensured
Adjusted EBITDA margin expanded 130 bps, helping to deliver a 14%
increase in B2B Adjusted EBITDA to €182 million (FY 2022: €160
million). Whilst being mindful that revenue has been recognised in
full from Caliplay despite a large debtor balance at year end (see
note 7 for more detail), this performance reflected broad-based
growth across our portfolio of leading products and
services.
The opportunity in the US is
significant and we have worked hard to position Playtech as a
leading technology partner of choice to operators. Playtech now
holds licences in 11 US states, which include recent licence
approvals in Maryland, West Virginia and Delaware, with
applications underway in further states. Having signed deals with
multiple operators in 2022, 2023 saw a shift in focus as we looked
to execute on launching with these operators across multiple
states. In 2023, we launched with Rush Street Interactive and
PokerStars, while also expanding our presence with BetMGM and
BetParx. Playtech also signed a Player Account Management + (PAM+),
Casino and Live Casino deal with Ocean Resort and Casino in New
Jersey. As our presence grows, so does our team and our physical
footprint. We now have over 200 colleagues in the US, and were
pleased to open our third Live facility in the US in Pennsylvania
at the end of 2023, adding to our New Jersey and Michigan
facilities.
We remain optimistic about the
potential of our landmark agreement with Hard Rock Digital to
provide Casino and Live, amongst other content, in North America.
We finished 2023 by completing the first delivery milestone,
launching Casino slots and table and Live dealer games in New
Jersey. 2024 will see us make further progress in rolling out
Playtech's high-quality offering across North America. Under the
terms of the agreement, Playtech has also invested $85 million
(€79.8 million) in exchange for a small minority stake in Hard Rock
Digital.
Playtech is well-positioned in Latin
America, with established strategic agreements in Mexico and
Colombia, which continue to show strong growth. At the same time,
we have moved quickly to take advantage of newly regulated markets,
such as Brazil. New legislation for sports betting and iGaming has
now been signed into law by the President, and we have been
encouraged by the early performance of our strategic agreement with
Galerabet.
Within our medium-term guidance for
B2B, we have set a medium-term SaaS revenue target of €60 million -
€80 million. In 2023, we added over 100 new brands and grew revenue
by over 50% to €50m (FY 2022: €32m), meaning we remain on track to
meet this target. Attracting new brands through our SaaS business
model is a key component of our strategy, helping to diversify our
customer base and take advantage of the business model's inherent
high operating leverage.
Snaitech powered the B2C business to
another excellent performance in 2023. Revenues across the B2C
division rose 5% to €1,037.0 million (2022:
€983.1 million), exceeding €1 billion for the first time.
Adjusted EBITDA increased 6%
to €250.3 million (2022: €235.2 million). While
Snaitech delivered another strong overall
performance, the dynamics within 2023 were varied. In the first
half of the year, within the betting segment, sales were up
significantly across both retail and online due to pent-up demand
after the football World Cup (given Italy was absent from the
tournament). This was partly offset in the second half of the year
due to the impact of customer-friendly sporting results in
September and October, as has been well-flagged by peers across the
industry. The online segment continues to see good growth, with
Snaitech well-placed to benefit given the strength of the brand,
the continuous improvements to apps and
technology and a broadening of its content offering. The
under-penetration of this segment continues to be a structural
tailwind for the business.
Underpinning this performance are
our talented colleagues around the world. Despite the significant
disruption from geopolitical conflict during the year, they have
continued to deliver for our customers and we are truly grateful to
them all.
Israel and Ukraine
Many of our colleagues continue to
be affected by the Israel-Hamas war and war in Ukraine. Our number
one priority has been the safety and security of our colleagues and
their families, and we are assisting them with a range of support
measures. In Israel, as was the case in Ukraine, we have extended
support to aid local response efforts with in-kind donations and
volunteering as well as donations to hospitals and charities. We
are also providing colleagues and their families with mental health
and trauma services, as well as, where appropriate, financial
assistance. Finally, I want to extend my appreciation to those who
have been volunteering and supporting our colleagues, friends and
their families affected by these tragic events.
B2B
Core B2B
Regulated markets
Playtech's B2B business is one of
the leading platform, content and services providers in regulated
and soon-to-be-regulated markets. The majority of these are
high-growth markets such as the US, Latin America and certain
European countries.
Revenue from regulated markets grew
by 18% (15% on a constant currency basis) in 2023, primarily driven
by a very strong performance from Caliplay in Mexico, albeit with a
large outstanding debtor balance (see note 7 for more details).
There was also good growth from other regulated markets such as
Poland, Spain and Canada.
The Americas
The Americas saw rapid growth once
again, with 2023 revenue up 46% (35% on a constant currency basis)
compared to 2022. This was largely driven by another strong
performance from Caliplay as well as growing contributions from
other customers, including NorthStar in Canada and Wplay in
Colombia.
US
We have dedicated significant
resources to establishing and growing the Group's presence in the
US and we are pleased with the progress to date. The Group has
taken significant steps to capitalise on the favourable regulatory
environment in the US, and there remain multiple opportunities
ahead. Having signed deals with multiple operators in 2022, 2023
was a year where Playtech shifted its focus to executing on those
agreements.
In 2023, we launched with several
operators across multiple states. Rush Street Interactive with its
Betrivers brand went live in Michigan in addition to its Sugarhouse
brand in New Jersey, both for Casino. Furthermore, we expanded our
partnership with BetMGM with the launch of Casino in Michigan and
launched with PokerStars in Michigan for both Casino and
Live.
In partnership with Aristocrat,
Playtech introduced Class II mobile-on-premise gaming at WinStar
World Casino and Resort in Oklahoma with the Chickasaw Nation,
while also signing a PAM+ deal with Ocean Resort and Casino in New
Jersey, to relaunch its site as BetOcean.com.
Our relationship with BetParx has
gone from strength to strength. In 2023, we successfully launched
Live in our newest US studio in Pennsylvania, in addition to New
Jersey, featuring Adventures Beyond WonderlandTM. We
also launched the PAM+ in Ohio and Maryland, giving Playtech a
presence with BetParx in five states: Michigan, Pennsylvania, New
Jersey, Ohio and Maryland. Further product launches in additional
states with BetParx are expected going forward.
One year on from signing a landmark
strategic agreement with Hard Rock Digital (HRD), the exclusive
Hard Rock International and Seminole Gaming vehicle for interactive
gaming and sports betting on a global basis, we remain very
optimistic about its potential to grow our presence in both the US
and other markets. As part of the partnership, in the US and
Canada, HRD's customers will enjoy a variety of Playtech's iGaming
content offering including slots, RNG and live dealer table games
through HRD's existing proprietary platform and technology
offering. These products will also be
supplied outside of North America in addition to PAM+ and services
including marketing and operations. As part
of establishing our agreement with HRD, Playtech invested $85
million (€79.8 million) in exchange for a small minority equity
ownership stake in HRD. In December 2023, Playtech completed the
first delivery milestone, after launching online Casino slots and
table and live dealer games in New Jersey.
During the course of last year, the
Company also made good progress bringing its suite of innovative
content to even more states. Adventures Beyond
WonderlandTM for Live Casino was launched in the New
Jersey facility in July 2023, delivering the first true game show
experience to the American market and won the Gaming Product of the
Year award in the 2023 American Gambling Awards. Mega Fire
BlazeTM Roulette, a Playtech Live Casino hit in multiple
countries, has opened in Michigan, while the Buffalo
BlitzTM Live slot game has also launched in the US in
Michigan. In addition, at the end of 2023, we launched a new Casino
slot game in the US called Gold Rush: Cash CollectTM,
based on the popular Discovery Channel reality TV show. Gold Rush:
Cash CollectTM has already launched in multiple European
jurisdictions, proving successful.
Entry into new markets and high
demand for Live Casino content has led the Group to expand its
physical footprint considerably in recent years. We were pleased to
announce that our third Live facility in the US was opened at the
end of 2023 in Pennsylvania adding to our New Jersey and Michigan
facilities, positioning us well for Live in all three major iGaming
states. Behind the Company's growing physical presence are an
increasing number of employees focused on sales, operations and
back-office functions, taking total headcount in the US to more
than 200 at the end of 2023.
The evolution of the regulatory
landscape in the US continues apace. Since the repeal of PASPA in
2018, numerous states have approved legislation to legalise sports
betting. Many of these markets have already launched in both online
and retail channels, with others expected to launch soon, while in
Florida, progress is being made in relation to mobile sports
betting.
Online casino, which was not subject
to PASPA, is allowed at the discretion of individual states. In
2023, Rhode Island was the only state to authorise online casino
taking the total number of regulated iGaming states to eight
including Nevada (poker only). However, there are several states
where iGaming legislation is being considered.
Playtech now holds licences in 11 US
states which include recent license approvals in Maryland, West
Virginia, and Delaware.
Canada
We are delighted with the positive
start to our expanded partnership with NorthStar, which saw strong
revenue growth in 2023, albeit from a low base. The Company also
made an investment, initially by way of a convertible debenture in
December 2022, which subsequently was converted into equity in H1
23. The agreement also expands the scope of Playtech's offering to
NorthStar to include operational and marketing services, in
addition to PAM+, Casino, Live, Poker and Bingo solutions already
launched. NorthStar has since acquired Slapshot Media Inc. to open
up the Canadian market to the NorthStar brand beyond Ontario, and
raised additional capital in H2 2023 from Playtech and other
investors to accelerate the growth of
NorthStar's footprint across Canada. Aside from NorthStar, Playtech
has further exposure to the Canadian market with more than 10 other
operators and launched with FanDuel, Entain via its SIA brand and
Jumpman, all for Casino and Live in Ontario.
Latin America
Latin America remains a hugely
important market and will be a key driver of growth for the
foreseeable future. Whilst there is a large outstanding debtor
balance, Caliplay in Mexico continues to grow strongly.
As detailed at the interim results,
revenue from Wplay was impacted by certain activities in the first
half of the year. However, the second half of the year saw very
strong growth in Colombia, and we remain excited about the
opportunity afforded by the Colombian market, with Wplay
well-positioned to grow its presence there further in the years
ahead.
Having seen strong demand since
opening our first Live Casino facility in Peru in 2022, last year
we built and opened a second studio in Lima. This second facility
will ensure we have the capacity to take advantage of further
favourable regulation and strong growth in the region, such as in
Brazil, in the years to come. Several customers, such as Wplay and
Betano, have launched tables in the new Live facility with positive
results so far.
We continue to see a shift towards
regulation across Latin America, including in Brazil. 2023 saw the
country take a crucial step with the President signing into law new
legislation for online and retail sports betting and online casino
at the end of 2023, and industry expectations are for a launch at
some point in 2024.
Brazil is anticipated to be a
significant, high-growth market given its large population and love
of sports. Playtech is well positioned to benefit given its
exciting strategic agreement with Galerabet, which migrated its
Sports product onto Playtech's platform in 2023. In addition to
Galerabet, Playtech also has exposure to Brazil via its other B2B
partners in the country and launched with DoradoBet for both Casino
and Live in H2 2023.
Peru has recently enacted
legislation and published online gambling regulations for sports
betting and online gambling, which are expected to come into effect
in 2024, and Playtech is well positioned, launching with Atlantic
City for Casino at the end of 2023.
Europe ex-UK
In Europe ex-UK, B2B revenue growth
of 8% (8% on a constant currency basis) was driven by strong
performances in several countries including Poland, Spain and the
Czech Republic. This was partly offset by lower revenue from the
Netherlands due to increased competition and a strict regulatory
environment, and the loss of two retail sports contracts in the
year.
Elsewhere in Europe, there were
several exciting launches in both Spain and Italy. In Spain, we saw
Juegging and DAZNBET both go live with Casino and Live, KirolBet
with Live, and both Luckia and Platin Casino with Casino. In Italy,
Leo Vegas and StarVegas launched Casino and Live products and
Betway launched Live in the year. Playtech also launched with
Betway in the UK for Casino. This demonstrates the versatility and
scalability of Playtech's business model and the trend to grow
customer relationships over time.
We were pleased to extend our
contract with the Polish state operator, Totalizator, following a
competitive public tender in 2023. The contract, which sees PAM+
extended for multiple years, illustrates the strength of Playtech's
offering and our successful strategy of partnering with leading
brands and institutions in newly regulated online markets. In
February 2024, Playtech also announced that it won the tender via a
rigorous public procurement process to become the partner for Live
Casino for Veikkaus, the Finnish state-owned and monopoly
operator.
We are also growing our Live Casino
infrastructure in Europe. Extensions to facilities in Romania and
the Netherlands were completed in 2023, with the Les Ambassadeurs
casino extension in the UK completed in early 2024, illustrating
the growing demand across the segment.
France saw regulatory developments
in 2023, with discussions about the regulation of the online casino
market taking place with various key French stakeholders. At
present, only poker, sports betting and horse race betting are
regulated within the online sector, so the regulation of online
casino would be a positive for Playtech, particularly as we have
multiple customers already taking our poker product.
UK
UK revenue in 2023 was flat (+1%
growth on a constant currency basis) compared to 2022 despite the
impact of increased regulation.
Having called for evidence as part
of its review into existing gambling laws, the UK Government set
out its conclusions and proposals for reform in a White Paper,
published in April 2023.
Currently, there is still some
uncertainty about the impact of each of the Government's proposals
on the industry. Whilst the Government has announced the
introduction of stake limits for online slot games (£2 maximum
stake for 18-24 year olds and £5 for all other customers), several
other proposals are still subject to consultation or pending the
publication of consultation responses. The introduction of
Financial Risk Assessments (often referred to as 'affordability
checks') which must be completed once customers have reached a
defined loss level, are subject to the most uncertainty in terms of
impact. Until the specifics of any measures that will be
implemented and the precise mechanics required to adhere to them
are known, it is difficult to assess the overall impact.
The UK remains an important market
for Playtech and its customers, as well as being one of the largest
and most mature regulated markets in the world. Playtech is already
working with customers that took pre-emptive measures in advance of
the publication of the White Paper and is committed to supporting
its remaining clients as the proposals come into force.
Playtech is uniquely advantaged
given its market-leading technology and data, which put safety and
responsible gambling at the centre of everything. The Company
remains heavily involved in discussions around safer game design
and will continue to be following this next wave of regulation.
This should further cement Playtech's reputation as the go-to
platform for regulated markets.
Unregulated
The Group's strategy to focus on
both regulated and regulating markets includes unregulated markets
which are likely to regulate in the future. Revenue from these
unregulated markets was down 19% (-17% on a constant currency
basis) versus 2022, with underlying growth in Brazil more than
offset by a decline in Asia, Canada and South Africa.
Asia saw revenue declines compared
to 2022 due to continued pressures in the region. In Canada,
Ontario transitioned to being regulated, and as a result, some
revenue has shifted to regulated markets while other operators have
reduced their exposure to the Canadian market. As regulation
progresses across Canada, it will continue to add to the size of
the North American market opportunity.
The Company is also excited about
the potential of the South African market as it takes steps towards
regulating. At present, it is a nascent but fast-growing market,
which permits sports betting and live casino and Playtech launched
Casino and Live products with TsogoSun at the end of
2022.
B2B
- driving growth through innovation
SaaS
As part of our strategy to grow B2B
revenue by €200 - €250 million in the
medium-term, Playtech is also looking to
diversify its revenue base through the SaaS business model, which
targets the long tail of providers that don't have access to PAM+.
At the FY 2022 results, we announced a medium-term SaaS revenue
target of €60 million - €80 million, and we are pleased to report
that we are making very good progress towards achieving this
target, with the SaaS business seeing revenue growth of more than
50% in 2023 versus 2022.
We target growth by looking to
increase our wallet share with existing brands on our SaaS
platform, as well as attracting new customers in both regulated and
regulating markets. Playtech launched over 100 brands in the
period, with notable progress in the US as Rush Street Interactive
launched in Michigan and New Jersey. We now have more than 450
brands live since the launch of our SaaS model in 2019.
As the SaaS model provides a low
friction method of exposing operators to Playtech's content, we
have the ability to cross and upsell other Playtech products over
time. Meanwhile, a broad range of customers from multiple countries
across different product sets means our revenue base is more
diversified, ensuring our B2B revenues are more resilient to any
changes in our operating environment.
Product developments
Online gaming has undergone
significant change in recent years. The combination of Playtech's
strong technology, content offering and market leading position
means we are well-placed to cater to the ever-increasing demand to
deliver new, engaging and immersive entertainment experiences for
consumers. In August 2023, Playtech announced the launch of Jumanji
The Bonus Level, a new game within Live that combines cutting-edge technology with the cinematic qualities
of the famous movie. Following a complex development process,
Jumanji The Bonus Level is the first-ever Live game inspired by a
Hollywood blockbuster, marking a key milestone in the gaming
industry.
Playtech has a long history of
launching branded content, and the continued demand for themed
games inspired the launch of Breaking Bad: Cash Collect & Link
in December 2023 within Casino. The game features all the show's
key talent and is part of Playtech's award-winning Cash Collect™
suite. Another exclusively licensed branded
game from the Cash Collect power suite is Gold Rush, which has been
particularly noteworthy as it achieved the fastest return on
investment in the history of Playtech Casino for branded games,
breaking even just two months after launch.
In July 2023, Playtech also
announced the launch of Big Bad Wolf Live, an innovative experience
that combines a slot game with elements of a Live experience,
released from Quickspin Live, the RNG arm of our Live division. The
game, which stands apart due to its artwork and unique features,
sets a new industry standard for Live Casino gaming. Having signed
the exclusive US rights to Family Feud, one of US television's
longest-running and highest rated gameshows, Playtech expects to
launch a Game Show next year. Within Live, there were also
developments rolled out to update the in-house video
technology.
Finally, we were delighted that
Playtech's Live product was recognised as a leading solution in the
industry, winning the EGR Live supplier of the year for 2023,
acknowledging the achievements of its extremely talented
team.
B2C
Playtech's B2C business spans
Snaitech, HAPPYBET, and Sun Bingo and Other B2C operations. Overall
B2C revenues grew 5% to €1,037.0 million (2022: €983.1 million). Adjusted EBITDA grew 6%, rising to €250.3 million
(2022: €235.2 million).
Snaitech
Revenue from Snaitech in Italy
increased by 5% compared to 2022, while Adjusted EBITDA also grew
5% versus 2022. This overall performance saw differing dynamics
across the period, with a very strong start to the year driven by
pent up demand following the football World Cup, whilst being
partly offset by customer-friendly sporting results in the second
half of the year. The retail segment saw revenue and Adjusted
EBITDA growth of 4% and 6% versus 2022, respectively, and the
online business which saw revenue and Adjusted EBITDA growth of 8%
and 4% versus 2022, respectively.
Retail betting sales were up 15%
versus 2022, driven by a strong performance in the first half of
the year as customers returned to betting shops after the football
World Cup in the final quarter of 2022 (Italy was absent from the
tournament). This was partly offset in the second half of the year
due to the impact of customer-friendly sporting results in
September and October, as has been well-flagged by peers across the
industry. Gaming Machines revenue was flat versus 2022 as this
business normalises post-pandemic. At the Adjusted EBITDA level,
retail margins expanded 30 bps versus 2022, with operating leverage
on strong revenue growth in H1 2023, partly offset by the impact of
customer-friendly sporting results in H2 2023.
The online business followed a
similar pattern, seeing strong growth in the first half of the year
led by good performances across sports betting and casino. The
second half of the year saw customer-friendly sporting results
impact both revenues and EBITDA margins. The underlying performance
of the online segment remains healthy. The under-penetration of
this segment continues to be a structural tailwind for the
business, with Snaitech well-placed to benefit given the strength
of the brand, the continuous improvements
to apps and technology, and a broadening of its content
offering.
As announced at the time of our
Interim results in September 2023, Snaitech last year acquired
Giove Group, a well-established betting operator in the Puglia
region (southern Italy), the integration of which has now been
completed. Giove holds licences for both retail betting and online
and directly manages 18 betting shops. The acquisition, while
small, illustrates the appetite to grow the Snaitech business in
Italy.
In 2023, the Snai brand was ranked
number one in sports betting (retail and online combined, as
measured by GGR), which is a testament to its consistently strong
operational performance and unique brand identity.
HAPPYBET
HAPPYBET revenues were down 9% in
2023 compared to 2022, driven by a rationalisation of retail sites
in Germany. Adjusted EBITDA losses narrowed to €9.8 million in
2023, when excluding a €2 million historical litigation settlement
expense. Including the historical litigation settlement, Adjusted
EBITDA saw a loss of €11.8 million (2022: €-10.8
million).
The Snaitech management team have
taken on responsibility for HAPPYBET and we are seeing early signs
of improvement across the retail and the online segments. Within
retail, less profitable stores have been rationalised in Germany
with plans to open new shops in 2024 underway. In online, work on
optimisation of the player bonus policy and improvements in the
approach to risk and trading around the sportsbook are
ongoing.
Sun Bingo and Other B2C
Sun Bingo and Other B2C saw 12%
revenue growth in 2023 to reach €73.4 million (2022: €65.3 million)
while Adjusted EBITDA grew to €6.0 million, up from €2.0 million in
2022. The primary reasons for the improvement in performance was
the increased marketing spend at the end of 2022 around the time of
the football World Cup, resulting in higher revenue growth in 2023
at a high contribution margin, in addition to more effective
marketing spend throughout 2023 and higher retention of customers
due to improved product user experience.
Responsible Business and Sustainability
In 2023, we continued to execute
against our five-year sustainability strategy. I am both proud and
pleased to be able to report progress across all our
commitments.
· We
strengthened our portfolio of safer gambling technology and
solutions under Playtech Protect with the development of
personalised responsible gambling journeys to help operators
enhance safer gambling interactions with their players. Playtech
was also awarded the Advanced Level Three of the GamCare B2B Safer
Gambling Standard - the highest possible level of award.
· In
2023, Playtech also made progress against its global target to
reach 35% female representation in leadership positions by 2025. At
the end of the year, Playtech reached 30% female representation
amongst leadership positions as compared to 26% in 2022. In 2024,
Playtech will continue to refine its understanding of gaps in
female talent across the Group and take action to increase female
retention.
· We
initiated our net zero by 2040 plan, and in early 2024, the
Science-Based Targets initiative (SBTi) approved Playtech's
near-term science-based emissions target, a 50.4% reduction in its
scope 1, 2 and 3 emissions by 2032. Playtech has also committed to
set long-term emissions reduction targets with SBTi in line with
reaching net zero by 2040.
· We
supported a wide range of charitable and volunteering activities,
exceeding our community target set for 2025 by the end of 2023,
with over 160,000 people engaged through community investment and
mental health programmes over the past three years.
· We are
honoured to be included in the S&P Global Sustainability
Yearbook 2024 for our sustainability efforts. By championing
sustainability and operating responsibly, we continually strive to
make a positive impact on our customers, colleagues, communities
and the environment.
·
In August 2023, we established a Global Employee
Benevolent Fund to provide support to colleagues and their
immediate families who may encounter unforeseen, severe
life-changing challenges.
Chief Financial Officer's review
Overview
Group performance
Overall, Playtech delivered strong
financial results in 2023, with Adjusted EBITDA1
of €432.3 million (2022: €395.4 million), growing 9% compared
to 2022. Total reported revenue from continuing operations was
€1,706.7 million (2022: €1,601.8 million), representing a 7%
increase compared to 2022.
The strong performance was driven by
both the B2C and B2B divisions. In B2C, Snaitech had a solid 2023
performance driven by growth across both the online and retail
divisions. This drove B2C Adjusted EBITDA of €250.3 million,
an increase of 6% compared to 2022. The overall growth was a
combination of a very strong start to the year, partly driven by
pent-up demand post the 2022 Football World Cup and partly offset
by customer-friendly sporting results in the second half of the
year.
In B2B, the results were driven by
strong growth in regulated markets, with revenues growing by 8%
from €632.4 million in 2022 to €684.1 million in 2023 and Adjusted
EBITDA increasing by 14% from €160.2 million in 2022 to €182.0
million in 2023. With strong growth seen in the Americas and Europe
ex-UK, the good performance reflects the Group's strategy of
focusing on opportunities in regulated and soon to be regulated
markets and is further analysed in this report.
In March 2023, the Group invested
$85.0 million (€79.8 million) in Hard Rock Digital in exchange for
a small minority interest in a combination of equity shares and
warrants. This investment forms part of the Group's strategy to
expand its presence in the US, in addition to providing growth
opportunities globally.
The Group has been dealing with the
ongoing Caliplay disputes and in particular in relation to the
unpaid B2B licence fees and additional B2B services fee in respect
of FY2023 (€32.3 million outstanding for the period August 2023 to
December 2023 and €54.2 million outstanding for the period July
2023 to December 2023 respectively). The Group has recognised the
full outstanding amount within its total revenue for the year and
in line with its revenue accounting policies. In recognising the
entire amount, Playtech has assessed that it is highly probable
that there will not be a significant reversal of this revenue in a
subsequent period and the receivable is fully recoverable as
further explained in Note 7 of the financial statements.
Reported and Adjusted
Profit
Adjusted Profit before tax from
continuing operations grew by 16% to €250.5 million (2022: €215.4
million), driven mainly by the rise in Adjusted EBITDA and decrease
in financing costs, partly offset by the increase in amortisation
and depreciation.
Reported profit before tax from
continuing operations increased to €235.8 million (2022: €95.6
million) which, in addition to the above, also includes the
increase in the unrealised fair value of derivative financial
assets, which was partly offset by higher goodwill and intangible
impairments compared to 2022. Total post-tax reported profit from
continuing operations was €105.1 million (2022: €40.6 million),
with the movement in tax explained further in this
report.
Balance sheet, liquidity and
financing
The Group continues to maintain a
strong balance sheet with Adjusted gross cash, which excludes the
cash held on behalf of clients, progressive jackpots and security
deposits, of €363.3 million as at 31 December 2023 (2022: €272.4
million). The increase is a result of the new €300.0 million bond
issue which took place in June 2023 (see below) and the continued
strong performance of the Group throughout the year, partly offset
by the €200.0 million repayment of the 2018 Bond and the
uncollected €86.5 million Caliplay debt. Net debt increased
slightly to €282.8 million as at 31 December 2023 (2022: €275.2
million), while net debt/Adjusted EBITDA remained flat at 0.7x
(2022: 0.7x).
Playtech has taken a proactive
approach to managing its balance sheet. In June 2023, the Company
acted quickly to take advantage of a window of relative market calm
and secure favourable interest rates, issuing €300.0 million of
senior secured notes due 2028 at an interest rate of 5.875%. Part
of the proceeds were used to redeem all of the outstanding €200.0
million 3.75% senior secured notes due in October 2023. The Company
also used the proceeds to repay the outstanding debt under its
existing revolving credit facility in July 2023, which remains
available and undrawn today.
Group summary (continuing
operations)3
|
|
|
|
|
B2B
|
684.1
|
632.4
|
|
B2C
|
1,037.0
|
983.1
|
B2B License fee -
intercompany*
|
|
|
|
Total Group revenue from
continuing operations
|
1,706.7
|
1,601.8
|
|
|
|
|
Adjusted EBITDA from
continuing operations
|
|
|
|
Reconciliation from EBITDA to
Adjusted EBITDA:
|
|
|
|
EBITDA
|
406.5
|
362.3
|
|
Employee stock option
expenses
|
6.3
|
8.0
|
|
Professional fees
|
14.4
|
15.7
|
|
Ukraine employee support
costs
|
-
|
3.3
|
|
Onerous contract
|
-
|
10.4
|
|
Fair value change of redemption
liability
|
-
|
(4.3)
|
|
Impairment of investment and
receivables
|
5.1
|
-
|
|
|
|
|
|
|
|
|
* These are the B2B license fees
paid from the B2C divisions to B2B
The Group's total reported EBITDA
increased by 12% to €406.5 million (2022: €362.3 million). The
adjusted items between reported and Adjusted EBITDA are explained
in Note 11 of the financial statements.
Divisional performance
B2B
B2B revenue
|
|
|
|
|
|
|
Americas
|
211.9
|
144.7
|
46%
|
35%
|
|
- USA and Canada
|
13.2
|
7.6
|
74%
|
82%
|
|
- Latin America
|
198.7
|
137.1
|
45%
|
32%
|
|
Europe excluding UK
|
200.1
|
184.6
|
8%
|
8%
|
|
UK
|
126.1
|
126.7
|
0%
|
1%
|
|
|
|
|
|
|
|
Total regulated B2B
revenue
|
545.1
|
461.6
|
18%
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall, B2B revenues increased by
8% (6% on a constant currency basis), largely due to an increase in
the regulated B2B business.
Regulated B2B revenues2
increased by 18%, driven by an increase in regulated markets in the
Americas and Europe (excluding the UK) of 46% and 8% respectively
(35% and 8% respectively on a constant currency basis), partly
offset by a decline in unregulated revenues.
The increase in the Americas was
primarily driven by Mexico, due to revenue growth from Caliplay
(albeit it there remains a large outstanding receivable balance -
see Note 7 of the financial statements), with increasing
contributions from other countries such as the US through Parx,
Canada via NorthStar and other licensees, and Colombia via Wplay.
In Europe (excluding the UK) growth was driven by several countries
including Poland, Czech Republic and Spain, although this growth
was partly offset by the loss of two retail sports contracts. The
increase in Poland was driven by Playtech's partnership with Polish
state operator, Totalizator, which is going from strength to
strength, whereas in Spain, there were several new launches during
2023.
The small decline seen across the UK
market was due to the continued impact of the uncertain regulatory
climate. The majority of the decline in unregulated markets is due
to revenue moving to the regulated category, as areas such as
Ontario in Canada regulate, as well as further declines in revenue in
Asia.
B2B costs
|
|
|
|
|
|
Research and Development
|
100.2
|
87.5
|
15%
|
|
General and
Administrative
|
85.5
|
82.6
|
4%
|
|
Sales and Marketing
|
19.5
|
16.8
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total B2B Revenue and
Costs
|
|
|
|
|
B2B revenue
|
684.1
|
632.4
|
8%
|
|
|
|
|
|
|
Total B2B Adjusted EBITDA
|
182.0
|
160.2
|
14%
|
|
|
|
|
|
Research and Development ("R&D")
costs include, among others, employee-related costs, and
proportional office expenses. Expensed R&D costs grew by 15% to
€100.2 million (2022: €87.5 million), driven by the increase in
employee-related costs, including inflationary salary rises from
higher investment in the core gaming development team (Casino, Live
and IMS). Capitalised development costs were 35.3% of total B2B
R&D costs in 2023 (2022: 38.7%).
General and Administrative costs
include employee-related costs, proportional office expenses,
consulting and legal fees, and corporate costs such as audit and
tax fees and listing expenses. These costs increased by 4% to €85.5
million (2022: €82.6 million), mainly due to increases in
professional fees and other administration costs.
Sales and Marketing costs increased
by 16% to €19.5 million (2022: €16.8 million), mainly due to the
full return of marketing and exhibition activities to pre-COVID-19
levels.
Operations include costs relating to
infrastructure and other operational projects, IT and security and
general day-to-day operational costs, including employee and
office-apportioned costs and branded content fees. These costs
increased by 4% to €296.9 million (2022: €285.3 million), driven
mainly by Playtech's expanding Live operations in Peru, US and
Romania, as well as an increase in costs to support Playtech's
structured agreements.
B2B Adjusted EBITDA
Total B2B Adjusted EBITDA increased
by 14% to €182.0 million (2022: €160.2 million), while EBITDA
margin increased to 27% from 25% in 2022, driven by the movement in
revenue and costs, as described above.
B2C
|
|
|
|
|
|
Snaitech
|
|
|
|
|
Revenue*
|
946.6
|
899.8
|
5%
|
|
Costs
|
690.5
|
655.8
|
5%
|
|
Adjusted EBITDA
|
256.1
|
244.0
|
5%
|
|
|
|
|
|
|
Sun Bingo and Other B2C
|
|
|
|
|
Revenue
|
73.4
|
65.3
|
12%
|
|
Costs
|
67.4
|
63.3
|
6%
|
|
Adjusted EBITDA
|
6.0
|
2.0
|
200%
|
|
|
|
|
|
|
HAPPYBET
|
|
|
|
|
Revenue
|
18.2
|
20.1
|
-9%
|
|
Costs**
|
30.0
|
30.9
|
-3%
|
|
Adjusted EBITDA
|
(11.8)
|
(10.8)
|
|
|
|
|
|
|
|
B2C Adjusted EBITDA
|
250.3
|
235.2
|
6%
|
|
|
|
|
|
* Includes
intercompany revenue from HAPPYBET of €1.2 million (2022: €2.1
million).
** Includes
intercompany costs from Snaitech of €1.2 million (2022: €2.1
million).
Snaitech
Snaitech revenues increased 5% from
the prior year to €946.6 million (2022: €899.8 million), with
operating costs seeing the same 5% increase to €690.5 million
(2022: €655.8 million). These results were driven by good growth
across both the retail and online segments, although there were
differing dynamics across the period. The first half saw a very
strong start driven by pent-up demand post the football World Cup.
This was partly offset by customer-friendly sporting results in the
second half of the year.
As a result of Snaitech's movement
in revenue and costs, Adjusted EBITDA increased by 5%, while the
respective margin remained stable at 27% (2022: 27%).
Sun Bingo and Other B2C
Revenue from the Sun Bingo business
increased by 12% to €73.4 million (2022: €65.3 million).
Operating costs within Sun Bingo increased by 6% to €67.4 million
(2022: €63.3 million), leading to an Adjusted EBITDA of €6.0
million (2022: €2.0 million). The increase in Adjusted EBITDA was
due to the increase in marketing spend towards the end of 2022
during the football World Cup, resulting in higher revenue growth
in 2023 at a high contribution margin. Furthermore, during 2023,
the division saw improvements in its return on investment from more
effective marketing and stronger retention rates. Adjusted EBITDA
still includes the unwinding of the minimum guarantee prepayment of
€5.2 million in the current year (2022: €5.4 million), recognised
as an expense over the new period of the contract which was
renegotiated in 2019.
On a reported basis, Playtech
incurred a one-off cost of €10.4 million in 2022 to terminate an
onerous contract with a service provider.
HAPPYBET
Revenue from HAPPYBET decreased by
9% to €18.2 million (2022: €20.1 million), with costs decreasing by
3%. The business remains loss-making, with Adjusted EBITDA loss in
the current year of €11.8 million (2022: loss of €10.8 million),
albeit 2023 includes a €2.0 million expense relating to a
litigation settlement.
Below EBITDA items
Depreciation and
amortisation
Reported and adjusted depreciation
increased by 12% to €46.5 million (2022: €41.5 million). After
deducting amortisation of acquired intangibles of €42.6 million
(2022: €42.0 million), adjusted amortisation increased by 24% to
€84.1 million (2022: €67.8 million) after the renewal of certain
licences in Snaitech during H2 2022, which were previously extended
for free until June 2022 meaning there was no corresponding
amortisation in H1 2022. The remainder of the balance under
depreciation and amortisation of €21.2 million (2022: €18.9
million) relates to IFRS 16 Leases and the recognition of the
right-of-use asset amortisation.
Impairment of intangible
assets
The reported impairment of
intangible assets of €89.8 million (2022: €38.5 million) mainly
relates to:
• The impairment of the Eyecon cash
generating unit (CGU) of €7.8 million (2022: €13.6 million), driven
by underperformance due to the increasingly competitive UK online
market.
• The impairment of the Quickspin
CGU of €9.6 million (2022: €7.0 million), as the business goes
through a transitional period, resulting in a decline in revenue,
but shows signs of recovering following an internal realignment
whereby it is now under management of the Live business
unit.
• The impairment of the Sport B2B
CGU of €72.2 million (2022: €Nil) due to the loss of two
significant retail contracts in the year.
The prior year impairment of €38.7
million related to the impairments of the Eyecon CGU of
€13.6 million, Quickspin CGU of €7.0 million, Bingo VF CGU of
€12.5 million and IGS CGU of €5.6 million.
Finance income and finance
costs
The reported and adjusted finance
income of €12.3 million (2022: €11.6 million) mainly relates to net
foreign exchange gain of €2.2 million (2022: €9.2 million) and
interest received of €10.0 million (2022: €2.4
million).
Reported finance costs include
interest payable on bonds and other borrowings, bank facility fees,
bank charges, interest expense on lease liabilities and expected
credit losses on loan receivables. Reported finance costs decreased
by 26% to €46.2 million (2022: €62.8 million), mainly due to the
repayment of the 2018 Bond in H2 2023. The difference between
adjusted and reported finance costs is the movement in contingent
consideration of €3.3 million (2022: €0.1 million) relating to the
acquisition of AUS GMTC PTY Ltd.
Unrealised fair value changes in
derivative financial assets
The unrealised fair value increase
in derivative financial assets of €153.4 million (2022: €6.0
million) is due to the movement of the fair value of the various
call options held by the Group which fall under the definition of
derivatives within IFRS 9 Financial Instruments, with the most
significant increase being as a result of the uplift in the fair
value of the Playtech M&A Call Option. Further details on the
fair value of the various call options are disclosed in Note 21C of
the financial statements.
Taxation
A reported tax expense from
continuing operations of €130.7 million (2022: €55.0 million)
arises on a reported profit before tax of €235.8 million
(2022: €95.6 million) compared to an expected charge of €55.4
million based on the UK headline rate of tax for the period of
23.5%. The key item for which the reported tax charge has been
adjusted are UK tax losses on which a deferred tax asset of €37.2
million was derecognised as expected utilization would fall outside
the forecasting period and therefore there is not sufficient
certainty they will be recovered.
The total adjusted tax expense is
€93.7 million (2022: €54.9 million) which arises on an
Adjusted Profit before tax of €250.5 million (2022: €215.4
million). The total adjusted tax expense of €93.7 million consists
of an income tax expense of €35.3 million (2022: €20.4 million) and
a deferred tax expense of €58.4 million (2022: €34.5 million). The
total adjusted deferred tax expense mainly consists of a deferred
tax expense of €42.2 million relating to the Snaitech group
including the use of Snaitech tax losses and excess interest
expense.
The Group's effective adjusted tax
rate for the current period is 37.4%. This rate is higher than the
UK headline rate for the period of 23.5%. The key reasons for the
differences are a mix of profits including subsidiaries located in
territories where the tax rate is higher than the UK statutory tax
rate (which predominately relates to Snaitech based in Italy),
current year tax losses not recognised for deferred tax purposes
and expenses not deductible for tax purposes which includes
impairment of intangibles.
Discontinued operations
Finalto (formerly TradeTech
Group)
Finalto was disposed of in July 2022
with cash proceeds of $228.1 million (€223.9 million) and
transaction costs of €1.6 million resulting in a profit on disposal
of €15.1 million.
Adjusted Profit
|
|
|
|
|
Reported profit from continuing
operations
|
105.1
|
40.6
|
|
Employee stock option
expenses
|
6.3
|
8.0
|
|
Professional fees
|
14.4
|
15.7
|
|
Fair value change and finance costs
on contingent consideration and redemption liability
|
3.3
|
(4.2)
|
|
Ukraine employee support
costs
|
-
|
3.3
|
|
Onerous contract
|
-
|
10.4
|
|
Impairment of investment and
receivables
|
5.1
|
-
|
|
Fair value changes of equity
instruments
|
6.6
|
0.3
|
|
Fair value changes of derivative
financial assets
|
(153.4)
|
(6.0)
|
|
Fair value loss on convertible
loans
|
-
|
3.0
|
|
Loss on disposal of
subsidiary
|
-
|
8.8
|
|
Amortisation of intangible assets on
acquisitions
|
42.6
|
42.0
|
|
Impairment of property plant and
equipment and intangible assets
|
89.8
|
38.5
|
|
Deferred tax on
acquisitions
|
(8.2)
|
(8.3)
|
|
Derecognition of brought forward
deferred tax asset
|
37.2
|
-
|
Tax related to uncertain
provision
|
|
|
Adjusted Profit from continuing
operations
|
|
|
The reconciling items in the table
above are further explained in Note 11 of the financial statements.
Reported profit post tax from continuing operations was €105.1
million (2022: €40.6 million), mainly due to the increase in the
fair value of the derivative financial assets, partly offset by an
increase in CGU impairments and the derecognition of brought
forward deferred tax asset.
Adjusted EPS (in Euro
cents)
|
|
|
|
|
Adjusted basic EPS from continuing
operations
|
51.7
|
53.5
|
Adjusted diluted EPS from continuing
operations
|
|
|
|
Basic EPS from profit attributable
to the owners of the Company
|
34.7
|
29.2
|
Diluted EPS from profit attributable
to the owners of the Company
|
|
|
|
Basic EPS from profit attributable
to the owners of the Company from continuing
operations
|
34.7
|
13.5
|
Diluted EPS from profit attributable
to the owners of the Company from continuing
operations
|
|
|
Basic EPS is calculated using the
weighted average number of equity shares in issue during 2023 of
303.3 million (2022: 300.1 million). Diluted EPS also includes the
dilutive impact of share options and is calculated using the
weighted average number of shares in issue during 2023 of 311.9
million (2022: 311.9 million).
Cash flow
Cash conversion
Playtech continues to be cash
generative and delivered operating cash flows of €366.9 million
(2022: €410.9 million) including cash from discontinued operations
which only impacts H1 2022.
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
366.9
|
410.9
|
|
|
|
|
|
Change in jackpot
balances
|
3.3
|
(3.6)
|
|
Change in client funds and security
deposits
|
(2.1)
|
15.3
|
|
Professional fees
|
14.4
|
24.4
|
|
ADM security deposit (Italian
Regulator)
|
0.7
|
11.5
|
Adjusted net cash provided by
operating activities
|
|
|
|
|
|
|
Excluding the impact of discontinued
operations, operating cashflows decreased from €382.7 million in
the prior year to €366.9 million in 2023, with the decline driven
by the outstanding Caliplay receivable as further explained in Note
7 of the financial statements.
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
366.9
|
382.7
|
|
|
|
|
|
Change in jackpot
balances
|
3.3
|
(3.6)
|
|
Change in client funds
|
(2.1)
|
(9.4)
|
|
Professional fees
|
14.4
|
15.7
|
ADM security deposit (Italian
Regulator)
|
|
|
Adjusted net cash provided
by operating activities
|
|
|
|
|
|
|
Adjusted cash conversion of 89%
(2022: 100%) is shown after adjusting for jackpot balances, client
funds, professional fees and ADM security deposit.
Adjusting for the above cash
fluctuations is essential in order to truly reflect the quality of
revenue and cash collection. This is because the timing of cash
inflows and outflows for jackpots, security deposits and client
funds only impact the reported operating cash flow and not Adjusted
EBITDA, while professional fees are excluded from Adjusted EBITDA
but impact operating cash flow.
Cash flow statement
analysis
Net cash outflows used in investing
activities totalled €317.6 million (2022: €358.3 million), key
items of which include:
· €79.8
million for the acquisition of a small minority interest in Hard
Rock Digital (refer to Note 21B);
· €41.3
million cash payment in relation to a subcontractor option
redemption (refer to Note 21C); and
· €150.0
million (2022: €125.4 million) used in the acquisition of property
plant and equipment, intangibles and capitalised development
costs.
Net cash inflows from financing
activities totalled €39.9 million (2022: outflow of €566.9
million), key movements of which include:
· Redemption of the outstanding €200.0 million Bond due 2023;
and
· Net
proceeds of €297.2 million received from the new Bond issued in
2023.
Balance sheet, liquidity and
financing
|
|
|
|
|
Cash and cash equivalents (net of
ECL)
|
516.2
|
426.5
|
Cash held on behalf of clients,
progressive jackpots and security deposits
|
|
|
Adjusted gross cash and cash
equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt/Adjusted EBITDA
ratio
|
|
|
Cash
The Group continues to maintain a
strong balance sheet with total cash and cash equivalents of
€516.2 million at 31 December 2023 (2022: €426.5 million).
Adjusted gross cash, which excludes the cash held on behalf of
clients, progressive jackpots and security deposits, increased to
€363.3 million as at 31 December 2023 (2022: €272.4
million), a result of the new €300.0 million bond issue (see below)
and the continued strong performance of the Group throughout the
year, offset by the repayment of the outstanding €200.0 million
bond due 2023 (the "2018 Bond") and the Caliplay outstanding debt
of €86.5 million.
Financing and net debt
As at 31 December 2023, the Group
had the following borrowing facilities:
· €350.0
million 2019 Bond (31 December 2022: €350.0 million) (4.25% coupon,
maturity 2026) which was raised in March 2019;
· Undrawn €277.0 million revolving credit facility (2022:
Undrawn); This facility is available until October 2025, with an
option to extend by 12 months; and
· €300.0
million 2023 Bond issued in June 2023, as further discussed
below.
Playtech has taken a proactive
approach to managing its balance sheet. In June 2023, the Company
acted quickly to take advantage of a window of relative market calm
and secure favourable interest rates. Playtech issued €300.0
million of senior secured notes due 2028 at an interest rate of
5.875% (2023 Bond). The 2023 Bond has been assigned a rating of BB
by S&P Global Ratings UK Limited and Ba2 by Moody's Investors
Service Ltd upon issue. In July 2023, part of the proceeds of the
bond were used to redeem all of the outstanding 2018 Bond of €200.0
million 3.75% due in H2 2023 and to repay the outstanding debt
under its existing revolving credit facility, which remains
available and undrawn today. The remaining amount, after payment of
transaction-related expenses, will be used for general corporate
purposes.
Net debt, after deducting Adjusted
gross cash, increased slightly to €282.8 million (2022: €275.2
million), while net debt/Adjusted EBITDA remained stable at 0.7x
(2022: 0.7x).
Contingent consideration
Contingent consideration increased
to €6.2 million (2022: €2.9 million) mostly due to the fair value
movement in the contingent consideration related to Aus GMTC PTY
Ltd acquisition. The existing liability as at 31 December 2023
comprised the following:
|
|
Maximum
payable earnout
(per
terms of acquisition)
|
Contingent consideration as at 31 December 2023
|
Payment
date (based on
maximum
payable earnout)
|
|
|
|
|
|
|
|
|
|
|
Going concern and viability
assessment
In adopting the going concern basis
in the preparation of the financial statements, the Group has
considered the current trading performance, financial position and
liquidity of the Group, the principal risks and uncertainties
together with scenario planning and reverse stress tests completed
for a period of no less than 15 months from the approval of these
financial statements.
At 31 December 2023, the Group held
total cash of €516.2 million (2022: €426.5 million) and Adjusted
gross cash, which excludes the cash held on behalf of clients,
progressive jackpots and security deposits, of €363.3 million
(2022: €272.4 million). Net debt, which is gross debt after
deducting Adjusted gross cash, increased slightly to €282.8 million
(2022: €275.2 million).
The financing and net debt position
has been reported and analysed in the relevant section above. As at
the date of this report (26 March 2024) the Group's facilities
include the 2019 Bond of €350.0 million and the 2023 Bond of €300.0
million, both of which are long term borrowings due in 2026 and
2028 respectively, as well as the fully undrawn RCF of €277.0
million.
As per the going concern assessment
under Note 2, under its base case scenario management, the
Directors have a reasonable expectation that the Group will have
adequate financial resources to continue in operational existence
over the relevant going concern period and have therefore
considered it appropriate to adopt the going concern basis of
preparation in the financial statements. While the base case cash
flow forecasts have assumed full recovery of the Caliplay
outstanding amounts within the going concern period of assessment,
there is a remote risk that no cash will be received depending on
the progress of the legal dispute, and hence this was modelled in
the stress test scenario. Even under this scenario the Group still
has sufficient headroom on its covenants and liquidity and hence
the Directors still have a reasonable expectation that the Group
will continue as a going concern over the relevant going concern
period. This remote scenario was also modelled in the viability
assessment which covers a period of three years and concludes that
there is a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the three-year period to 31 December 2026.
1 Adjusted numbers
throughout relate to certain non-cash and one-off items. The Board
of Directors believes that the adjusted results represent more
closely the consistent trading performance of the business. A full
reconciliation between the actual and adjusted results is provided
in Note 11 of the financial statements.
2 Core B2B refers to
the Company's B2B business excluding
unregulated Asia.
3 Totals in tables
throughout this statement may not exactly equal the components of
the total due to rounding.
4 Comparative
information throughout has been re-stated due to change in
accounting policy. Further details are provided in Note 4C of the
financial statements.
Consolidated statement of comprehensive
income
For the year ended 31 December 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue
|
10
|
1,706.7
|
1,706.7
|
|
1,601.8
|
1,601.8
|
|
Distribution costs before depreciation and
amortisation
|
|
(1,147.1)
|
(1,145.1)
|
|
(1,077.5)
|
(1,073.5)
|
|
Administrative expenses before depreciation and
amortisation
|
|
(146.7)
|
(124.3)
|
|
(147.3)
|
(118.2)
|
Impairment of financial assets
|
|
|
|
|
|
|
|
EBITDA
|
11
|
406.5
|
432.3
|
|
362.3
|
395.4
|
|
Depreciation and amortisation
|
|
(194.4)
|
(151.8)
|
|
(170.1)
|
(128.1)
|
|
Impairment of property, plant and equipment and
intangible assets
|
13
|
(89.8)
|
-
|
|
(38.5)
|
-
|
|
Profit on disposal of property, plant and
equipment and intangible assets
|
|
1.4
|
1.4
|
|
-
|
-
|
|
Finance income
|
14A
|
12.3
|
12.3
|
|
11.6
|
11.6
|
|
Finance costs
|
14B
|
(46.2)
|
(42.9)
|
|
(62.8)
|
(59.7)
|
|
Share of loss from associates
|
21A
|
(0.8)
|
(0.8)
|
|
(3.8)
|
(3.8)
|
|
Unrealised fair value changes of equity
investments
|
21B
|
(6.6)
|
-
|
|
(0.3)
|
-
|
|
Unrealised fair value changes of derivative
financial assets
|
21C
|
153.4
|
-
|
|
6.0
|
-
|
Loss on disposal of subsidiary
|
|
|
|
|
|
|
|
Profit before taxation
|
11
|
|
|
|
95.6
|
215.4
|
|
|
|
|
|
|
|
|
|
Profit from continuing
operations
|
11
|
|
|
|
40.6
|
160.5
|
Profit from discontinued operations,
net of tax
|
|
|
|
|
|
|
Profit for the year -
total
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
Items that
are or may be classified subsequently to profit or
loss:
|
|
|
|
|
|
|
|
Exchange loss arising on translation of foreign
operations
|
|
(7.7)
|
(7.7)
|
|
(0.2)
|
(0.2)
|
|
Recycling of foreign exchange loss on disposal
of foreign discontinued operations
|
|
-
|
-
|
|
23.2
|
23.2
|
|
Items that
will not be classified to profit or loss:
|
|
|
|
|
|
|
Gain on remeasurement of employee termination
indemnities
|
|
|
|
|
|
|
Other comprehensive (loss)/income
for the year
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
Profit for the year attributable to
the owners of the Company
|
|
|
|
|
|
|
Total comprehensive income
attributable to the owners of the Company
|
|
|
|
|
|
|
|
Earnings per share attributable to
the ordinary equity holders of the Company
|
|
|
|
|
|
|
|
Profit or loss - total
|
|
|
|
|
|
|
|
Basic (cents)
|
16
|
34.7
|
51.7
|
|
29.2
|
67.2
|
|
|
|
|
|
|
|
|
|
Profit or loss from continuing
operations
|
|
|
|
|
|
|
|
Basic (cents)
|
16
|
34.7
|
51.7
|
|
13.5
|
53.5
|
|
|
|
|
|
|
|
|
1 Adjusted numbers
relate to certain non-cash and one-off items. The Board of
Directors believes that the adjusted results more closely represent
the consistent trading performance of the business. A full
reconciliation between the actual and adjusted results is provided
in Note 11.
2 Comparative
information has been re-stated due to change in accounting policy.
Further details are provided in Note 4C.
Consolidated statement of changes in
equity
For the year ended 31 December 2023
|
|
Additional
paid in
capital
€'m
|
Employee
termination
indemnities
€'m
|
|
Employee
Benefit
Trust
€'m
|
Put/call
options
reserve
€'m
|
Foreign
exchange
reserve
€'m
|
Total
attributable to
equity holders of
Company
€'m
|
Non-
controlling
interests
€'m
|
|
|
Balance at 1 January 2022
|
606.0
|
(0.5)
|
1,025.0
|
(23.2)
|
(3.7)
|
(22.7)
|
1,580.9
|
0.3
|
1,581.2
|
Adjustment on initial recognition of
IAS 12 amendment (Note 4A)
|
|
|
|
|
|
|
|
|
|
Adjusted
balance at 1 January 2022
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
87.6
|
-
|
-
|
-
|
87.6
|
-
|
87.6
|
Other comprehensive income for the
year
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the year
|
|
|
|
|
|
|
|
|
|
|
Transactions
with the owners of the Company
|
|
|
|
|
|
|
|
|
|
|
Contributions
and distributions
|
|
|
|
|
|
|
|
|
|
|
Exercise of options
|
-
|
-
|
(6.0)
|
6.0
|
-
|
-
|
-
|
-
|
-
|
Equity-settled share-based payment
charge
|
|
|
|
|
|
|
|
|
|
Total
contributions and distributions
|
|
|
|
|
|
|
|
|
|
|
Change in
ownership interests
|
|
|
|
|
|
|
|
|
|
Acquisition of non-controlling interest without
change in control
|
|
|
|
|
|
|
|
|
|
Total changes
in ownership interests
|
|
|
|
|
|
|
|
|
|
Total
transactions with owners of the Company
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2022 / 1
January 2023
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
105.1
|
-
|
-
|
-
|
105.1
|
-
|
105.1
|
Other comprehensive loss for the
year
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
|
|
|
|
Transactions with the owners of the
Company
|
|
|
|
|
|
|
|
|
|
|
Contributions and
distributions
|
|
|
|
|
|
|
|
|
|
|
Exercise of options
|
-
|
-
|
(11.9)
|
11.9
|
-
|
-
|
-
|
-
|
-
|
|
Equity-settled share-based payment
charge
|
-
|
-
|
6.3
|
-
|
-
|
-
|
6.3
|
-
|
6.3
|
Transfer from treasury shares to Employee
Benefit Trust
|
|
|
|
|
|
|
|
|
|
Total contributions and
distributions
|
|
|
|
|
|
|
|
|
|
Total transactions with owners of
the Company
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet
As at 31 December 2023
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Property, plant and equipment
|
18
|
350.2
|
341.4
|
329.7
|
|
Right of use assets
|
19
|
71.0
|
71.6
|
73.8
|
|
Intangible assets
|
20
|
881.2
|
980.9
|
1,046.1
|
|
Investments in associates
|
21A
|
51.5
|
36.6
|
5.2
|
|
Other investments
|
21B
|
92.8
|
9.2
|
8.1
|
|
Derivative financial assets
|
21C
|
827.8
|
636.4
|
622.2
|
|
Trade receivables
|
23
|
1.9
|
1.1
|
6.6
|
|
Deferred tax asset
|
33
|
62.5
|
114.0
|
104.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
23
|
207.1
|
163.9
|
178.5
|
|
Other receivables
|
24
|
100.5
|
107.6
|
87.1
|
|
Inventories
|
|
6.8
|
5.5
|
4.9
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
830.6
|
703.5
|
845.9
|
Assets classified as held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Additional paid in capital
|
|
611.8
|
606.0
|
606.0
|
|
Employee termination indemnities
|
|
0.4
|
0.4
|
(0.5)
|
|
Employee Benefit Trust
|
|
(17.8)
|
(17.2)
|
(23.2)
|
|
Put/call options reserve
|
|
-
|
-
|
(3.7)
|
|
Foreign exchange reserve
|
|
(7.4)
|
0.3
|
(22.7)
|
|
|
|
|
|
|
|
Equity attributable to equity
holders of the Company
|
|
1,806.2
|
1,702.5
|
1,582.4
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Loans and borrowings
|
28
|
-
|
-
|
167.1
|
|
Bonds
|
29
|
646.1
|
348.0
|
875.0
|
|
Lease liability
|
19
|
61.9
|
54.0
|
69.8
|
|
Deferred revenues
|
|
1.8
|
1.0
|
2.9
|
|
Deferred tax liability
|
33
|
161.6
|
124.8
|
88.9
|
|
Contingent consideration
|
31
|
5.8
|
2.3
|
6.0
|
|
Provisions for risks and charges
|
30
|
8.9
|
10.0
|
13.5
|
Other non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
29
|
-
|
199.6
|
-
|
|
Trade payables
|
32
|
66.9
|
61.2
|
41.3
|
|
Lease liability
|
19
|
24.9
|
31.8
|
20.3
|
|
Progressive operators' jackpots and security
deposits
|
25
|
111.0
|
114.3
|
110.7
|
|
Client funds
|
25
|
41.9
|
39.8
|
30.4
|
|
Income tax payable
|
|
14.0
|
17.3
|
2.6
|
|
Gaming and other taxes payable
|
35
|
116.1
|
112.8
|
105.4
|
|
Deferred revenues
|
|
4.4
|
5.0
|
5.2
|
|
Contingent consideration
|
31
|
0.4
|
0.6
|
5.0
|
|
Provisions for risks and charges
|
30
|
0.6
|
3.9
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities directly associated with assets
classified as held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND
LIABILITIES
|
|
|
|
|
The consolidated financial statements were
approved by the Board and authorised for issue on 26 March
2024.
Mor
Weizer
Chris McGinnis
Chief Executive Officer Chief
Financial Officer
1 Comparative
information has been re-stated due to change in accounting policy.
Further details are provided in Note 4A.
Consolidated statement of cash flows
For the year ended 31 December 2023
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
Profit for the year
|
|
105.1
|
87.6
|
|
Adjustments to reconcile net income to net cash
provided by operating activities (see below)
|
|
307.7
|
337.1
|
|
|
|
|
|
Net cash from operating
activities
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
Net loans granted/repaid
|
22
|
(23.4)
|
(30.4)
|
|
Dividend income
|
|
1.5
|
-
|
|
Acquisition of subsidiaries/assets under
business combinations, net of cash acquired
|
|
(3.6)
|
(2.9)
|
|
Acquisition of property, plant and
equipment
|
|
(57.6)
|
(54.0)
|
|
Acquisition of intangible assets
|
|
(35.7)
|
(10.1)
|
|
Capitalised development costs
|
|
(56.7)
|
(61.3)
|
|
Acquisition of investment in
associates
|
21A
|
(9.2)
|
(30.2)
|
|
Acquisition of investments at fair value
through profit or loss
|
21B
|
(94.1)
|
-
|
|
Subcontractor option redemption
|
21C
|
(41.3)
|
-
|
|
Proceeds from the sale of property, plant and
equipment and intangible assets
|
|
2.5
|
0.8
|
|
Disposal of Financial segment, net of cash
disposed
|
|
-
|
(169.8)
|
Disposal of subsidiary, net of cash
disposed
|
|
|
|
Net cash used in investing
activities
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
Interest paid on bonds and loans and
borrowings
|
|
(31.3)
|
(36.7)
|
|
Repayment of loans and borrowings
|
|
(77.4)
|
(166.1)
|
|
Proceeds from loans and borrowings
|
|
79.9
|
-
|
|
Proceeds from the issuance of 2023 Bond, net of
issue costs
|
29
|
297.2
|
-
|
|
Repayment of 2018 Bonds
|
29
|
(200.0)
|
(330.0)
|
|
Payment of contingent consideration and
redemption liability (see below)
|
|
(0.2)
|
(5.9)
|
|
Principal paid on lease liability
|
|
(23.1)
|
(22.5)
|
Interest paid on lease liability
|
|
|
|
Net cash from/(used in) financing
activities
|
|
|
|
|
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
89.2
|
(514.3)
|
|
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
|
|
426.9
|
942.1
|
Exchange gain/(loss) on cash and
cash equivalents
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF
YEAR
|
|
|
|
|
|
|
|
|
|
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED FROM OPERATING ACTIVITIES
|
|
|
|
|
Income and expenses not affecting
operating cash flows:
|
|
|
|
|
Depreciation on property, plant and
equipment
|
18
|
46.5
|
41.5
|
|
Amortisation of intangible assets
|
20
|
126.7
|
109.8
|
|
Amortisation of right of use assets
|
19
|
23.3
|
21.5
|
|
Capitalisation of amortisation of right of use
assets
|
|
(1.7)
|
(1.9)
|
|
Impact on early termination of lease
contracts
|
19
|
(0.4)
|
(0.7)
|
|
Share of loss from associates
|
21A
|
0.8
|
3.8
|
|
Impairment and expected credit losses on loans
receivable
|
22
|
2.4
|
1.6
|
|
Impairment of investment
|
21B
|
1.3
|
-
|
|
Impairment of other receivables
|
|
2.2
|
-
|
|
Reversal of impairment of property, plant and
equipment
|
18
|
-
|
(0.2)
|
|
Impairment of intangible assets
|
20
|
89.8
|
38.7
|
|
Profit on disposal of Financial
segment
|
9
|
-
|
(15.1)
|
|
Loss on disposal of subsidiary
|
21A
|
-
|
8.8
|
|
Changes in fair value of equity
investments
|
21B
|
6.6
|
0.3
|
|
Changes in fair value of derivative financial
assets
|
21C
|
(153.4)
|
(6.0)
|
|
Fair value loss on convertible loans
|
|
-
|
3.0
|
|
Interest on bonds and loans and
borrowings
|
|
30.9
|
36.2
|
|
Interest on lease liability
|
|
5.2
|
5.7
|
|
Interest income on loans receivable
|
22
|
(1.9)
|
(1.3)
|
|
Income tax expense
|
|
130.7
|
58.5
|
|
Changes in equity-settled share-based
payment
|
|
6.3
|
8.3
|
|
Movement in contingent consideration and
redemption liability
|
|
3.3
|
(4.3)
|
|
Expected credit loss on cash and cash
equivalents
|
|
-
|
(0.2)
|
|
Unrealised exchange gain
|
|
(2.9)
|
(4.4)
|
|
(Profit)/loss on disposal of property, plant
and equipment and intangible assets
|
|
(1.4)
|
0.2
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Change in trade receivables
|
|
(47.9)
|
13.0
|
|
Change in other receivables
|
|
(0.4)
|
3.5
|
|
Change in inventories
|
|
(1.3)
|
(0.6)
|
|
Change in trade payables
|
|
4.5
|
20.4
|
|
Change in progressive operators, jackpots and
security deposits
|
|
(3.3)
|
3.6
|
|
Change in client funds
|
|
2.0
|
(15.3)
|
|
Change in other payables
|
|
44.1
|
13.6
|
|
Change in provisions for risks and
charges
|
|
(4.6)
|
(2.8)
|
Change in deferred revenues
|
|
|
|
|
|
|
|
|
Payment of contingent consideration and
redemption liabilities on previous acquisitions
|
|
|
|
|
|
A. Acquisition of Eyecon Limited
|
|
-
|
3.6
|
|
B. Acquisition of non-controlling interest of
Statscore SP Z.O.O.
|
|
-
|
1.6
|
|
|
|
|
|
|
|
|
|
|
Notes to the financial statements
Note 1 - General
Playtech plc (the "Company") is an Isle of Man
company. The registered office is located at St George's Court,
Upper Church Street, Douglas, Isle of Man IM1 1EE. Playtech plc is
managed and controlled in the UK and, as a result, is UK tax
resident.
These consolidated financial statements comprise
the Company and its subsidiaries (together referred to as the
"Group").
Note 2 - Basis of preparation
This financial information does not
constitute the Group or company's statutory accounts for the years
ended 31 December 2023 or 2022 but is derived from those accounts.
The auditor has reported on those accounts; their reports were (i)
unqualified and (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report. The financial information has been
prepared in accordance with the UK adopted International Accounting
Standards (IAS). They were authorised for issue by the Company's
Board of Directors on 26 March 2024. Details of the Group's
accounting policies are included in Note 6.
Going concern basis
In adopting the going concern basis in the
preparation of the financial statements, the Directors have
considered the current trading performance, financial position and
liquidity of the Group, the principal and emerging risks and
uncertainties together with scenario planning and reverse stress
tests. The Directors have assessed going concern over a 15-month
period to 30 June 2025 which aligns with the six-monthly covenant
measurement period.
|
|
|
|
|
Cash and cash equivalents
|
516.2
|
426.5
|
Cash held on behalf of clients, progressive
jackpots and security deposits
|
|
|
Adjusted gross cash and cash
equivalents
|
|
|
The increase in adjusted gross cash and cash
equivalents from €272.4 million at 31 December 2022 to €363.3
million at 31 December 2023 is mainly the result of the new €300.0
million bond issued and continued strong performance of the Group
throughout the year, partially offset by the repayment of the
€200.0 million 2018 Bond, the acquisition of a small minority
interest in Hard Rock (Note 21B) in March 2023 and the amounts
currently in dispute due from Caliplay (Note 7).
The Directors have reviewed liquidity and
covenant forecasts for the Group and have also considered
sensitivities in respect of potential downside scenarios, reverse
stress tests and the mitigating actions available to
management.
The modelling of downside stress test scenarios
assessed if there was a significant risk to the Group's liquidity
and covenant compliance position. This includes risks such as not
realising budget/forecasts across certain markets and any potential
implications of changes in tax and other regulations, as well as
the remote probability that no further cash is received from
Caliplay in respect of the dispute.
In June 2023, the Group successfully issued new
€300.0 million senior secured notes at a rate of 5.875% repayable
in June 2028 which were partially used to repay in full the balance
of the €200.0 million bond (initial €530.0 million of senior
secured notes bond) issued in October 2018.
The Group's principal financing arrangements as
at 31 December 2023 include a revolving credit facility (RCF) up to
€277.0 million (which as at 31 December 2023 remains fully
undrawn), the 2019 Bond amounting to €350.0 million and the new
2023 Bond amounting to €300.0 million, which are repayable March
2026 and June 2028 respectively. The RCF, which was restructured in
October 2022, has been reduced from €317.0 million to €277.0
million and is available until October 2025, with the Group having
the option to extend by 12 months.
The RCF is subject to certain financial
covenants which are tested every six months on a rolling 12-month
basis, as set out in Notes 28 and 29. As at 31 December 2023, the
Group comfortably met its covenants, which were as
follows:
• Leverage: Net
Debt/Adjusted EBITDA to be less than 3.5:1 for the 12 months ended
31 December 2023 (2022: less than 3.5:1).
• Interest cover:
Adjusted EBITDA/Interest to be over 4:1 for the 12 months ended 31
December 2023 (2022: over 4:1).
The Bonds only have one financial covenant,
being the Fixed Charge Coverage Ratio (same as the Interest cover
ratio for the RCF), which should equal or be greater than
2:1.
If the Group's results and cash flows are in
line with its base case projections as approved by the Board, it
would not be in breach of the financial covenants for a period of
no less than 15 months from approval of these financial statements
(the "relevant going concern period"). This period covers the bank
reporting requirements for June 2024, December 2024 and June 2025
and is the main reason why the Directors selected a 15-month period
of assessment. Under the base case scenario, the Group would not
need to utilise its RCF facility over the going concern
period.
Stress test
The stress test assumes a worst-case scenario
for the entire Group which includes additional sensitivities around
Italy, the Americas and Asia, but with mitigations available
(including salary and capital expenditure reductions) if needed. It
also includes the remote probability that no further cash is
received from Caliplay in the going concern period to 30 June 2025.
The outstanding amount at 31 December 2023 is €86.5 million (Note
7), with further invoices totalling €35.8 million in relation to
B2B licence fees and additional B2B services fee for January and
February 2024 issued and which remain unpaid (Note 41). Under this
scenario, Adjusted EBITDA would fall on average by 31% per month
compared to the base case over the relevant going concern period,
but the Group would still comfortably meet its covenants. From a
liquidity perspective the Group still would not need to utilise the
RCF.
The Group has also considered any matters
outside of the going concern period such as the renewal of the
Italian licences which will result in a material cash outflow. This
is currently expected to fall outside of the going concern period;
however, should payment be required in the going concern period or
shortly after, this does not give rise to any concerns over
liquidity or covenant compliance.
Reverse stress test
The reverse stress test was used to identify the
reduction in Adjusted EBITDA required that could result in either a
liquidity event or breach of the RCF and bond covenants.
As a result of completing this assessment,
without considering further mitigating actions, management
considered the likelihood of the reverse stress test scenario
arising to be remote. In reaching this conclusion, management
considered the following:
• current trading is
performing above the base case;
• Adjusted EBITDA would
have to fall by 85% in the year ending 31 December 2024 and 85% in
the 12 months to June 2025, compared to the base case, to cause a
breach of covenants; and
• in the event that
revenues decline to this point to drive the decrease in Adjusted
EBITDA, additional mitigating actions are available to management
which have not been factored into the reverse stress test
scenario.
As such, the Directors have a reasonable
expectation that the Group will have adequate financial resources
to continue in operational existence over the relevant going
concern period and have therefore considered it appropriate to
adopt the going concern basis of preparation in the financial
statements.
Note 3 - Functional and presentation
currency
These consolidated financial statements are
presented in Euro, which is the Company's functional currency. The
main functional currencies for subsidiaries includes Euro, United
States Dollar and British Pound. All amounts have been rounded to
the nearest million, unless otherwise indicated.
Note 4 -
Changes in material accounting policies
A. Deferred tax
related to assets and liabilities arising from a single
transaction
The Group has adopted Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
- Amendments to IAS 12 effective from 1 January 2023. The
amendments narrow the scope of the initial recognition exemption to
exclude transactions that give rise to equal and offsetting
temporary differences, e.g. leases and decommissioning liabilities.
For leases and decommissioning liabilities, an entity is required
to recognise the associated deferred tax assets and liabilities
from the beginning of the earliest comparative period presented,
with any cumulative effect recognised as an adjustment to retained
earnings or other components of equity at that date.
Following the change to the initial
recognition exemption, the Group has recognised a separate deferred
tax asset in relation to its lease liabilities and a deferred tax
liability in relation to its right of use assets.
The table below presents the
cumulative effects of the items affected by the initial application
on the consolidated balance sheet as at 1 January 2022 and 31
December 2022:
|
|
|
|
Assets
|
|
|
Deferred tax asset
|
1.5
|
B. Material accounting
policy information
The Group also adopted the
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2) from 1 January 2023. Although the amendments
did not result in any changes to the accounting policies
themselves, they impacted the accounting policy information
disclosed in the financial statements.
The amendments require the
disclosure of "material", rather than "significant", accounting
policies. The amendments also provide guidance on the application
of materiality to disclosure of accounting policies, assisting
entities to provide useful, entity-specific accounting policy
information that users need to understand other information in the
financial statements.
Management reviewed the
accounting policies and made updates to the information disclosed
in Note 6 Material accounting policies (2022: Significant
accounting policies) in certain instances in line with the new
amendments.
C. Reclassification
of bank charges in the profit or loss
Effective 1 January
2023, the Group changed its accounting policy to recognise certain
costs within distribution costs, previously recognised within
finance costs. Management believes that the classification as
distribution costs is more in line with the nature of the cost,
being banking charges relating to players' transaction processing
within the B2C business segment.
Below is a summary
of the impact of the change in accounting policy for the previous
period:
Year ended 31 December
2022
|
|
|
|
As previously
reported
€'m
|
|
|
|
Distribution costs before
depreciation and amortisation
|
|
|
|
1,067.3
|
10.2
|
1,077.5
|
|
Finance costs
|
|
|
|
73.0
|
(10.2)
|
62.8
|
Adjusted EBITDA and reported
EBITDA for the year ended 31 December 2022 decreased by €10.2
million to €395.4 million and €362.3 million respectively. There
was no impact to the profit before tax.
Note 5 - Accounting standards issued but not yet
effective
A number of new standards are effective for
annual periods beginning after 1 January 2023 and earlier
application is permitted. However, the Group has not early adopted
the following new or amended accounting standards in preparing
these consolidated financial statements.
• Amendments to IAS 1
Presentation of Financial Statements: Classification of Liabilities
as Current or Non-current - deferral of effective date.
The amendments affect only the presentation of
liabilities as current or non-current in the statement of financial
position and not the amount of timing of recognition of any asset,
income or expenses, or the information disclosed about those
items.
The amendments clarify that the classification
of liabilities as current or non-current is based on the rights
that are in existence at the end of the reporting period, specify
that the classification is unaffected by expectations about whether
an entity will exercise its right to defer settlement of a
liability, explain the rights that are in existence if covenants
are complied with at the end of the reporting period, and introduce
a definition of "settlement" to make clear that settlement refers
to the transfer to the counterparty of cash, equity instruments,
other assets or services.
• Supplier Finance
Arrangements - Amendments to IAS 7 and IFRS 7
In May 2023, the IASB issued amendments to IAS 7
Statement of Cash Flows and IFRS 7 Financial Instruments:
Disclosures to clarify the characteristics of supplier finance
arrangements and require additional disclosure of such
arrangements. The disclosure requirements in the amendments are
intended to assist users of financial statements in understanding
the effects of supplier finance arrangements on an entity's
liabilities, cash flows and exposure to liquidity risk.
Note 6 - Material accounting policies
The Group has consistently applied the following
accounting policies to all periods presented in the consolidated
financial statements, except if mentioned otherwise.
A. Basis of consolidation
(i) Business combinations
The Group accounts for business combinations
using the acquisition method when the acquired set of activities
and assets meets the definition of a business and control is
transferred to the Group. In determining whether a particular set
of activities and assets is a business, the Group assesses whether
the set of assets and activities acquired includes, at a minimum,
an input and substantive process and whether the acquired set has
the ability to produce outputs.
The consideration transferred in the acquisition
is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill arising is tested semi-annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity
securities.
Any contingent consideration is measured at fair
value at the date of acquisition. If an obligation to pay
contingent consideration that meets the definition of a financial
instrument is classified as equity, then it is not remeasured, and
settlement is accounted for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each
reporting date and subsequent changes in the fair value of the
contingent consideration are recognised in profit or loss. A
contingent consideration in which the contingent payments are
forfeited if employment is terminated is compensation for the
post-combination services and is not included in the calculation of
the consideration and recognised as employee-related
costs.
Cash payments arising from settlement of
contingent consideration and redemption liability are disclosed in
financing activities in the consolidated statement of cash
flows.
When a business combination is achieved in
stages, the Group's previously held interests in the acquired
entity are remeasured to its acquisition-date fair value and the
resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other
comprehensive income are reclassified to the profit or loss, where
such treatment would be appropriate if that interest were disposed
of.
(ii) Subsidiaries
Subsidiaries are entities controlled by the
Group. Control is achieved when the Group:
• has the power over the
entity;
• is exposed, or has
rights, to variable return from its involvement with the entity;
and
• has the ability to use
its power over the entity to affect its returns.
The Group reassesses whether or not it controls
an entity if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed
above.
When the Group has less than a majority of the
voting rights of an investee, it considers that it has power over
the investee when the voting rights are sufficient to give it the
practical ability to direct the relevant activities of the investee
unilaterally. The Group considers all relevant facts and
circumstances in assessing whether or not the Company's voting
rights in an investee are sufficient to give it power,
including:
• the size of the
Group's holding of voting rights relative to the size and
dispersion of holdings of the other vote holders;
• potential voting
rights held by the Company, other vote holders or other
parties;
• rights arising from
other contractual arrangements; and
• any additional facts
and circumstances that indicate that the Group has, or does not
have, the current ability to direct the relevant activities at the
time that decisions need to be made, including voting patterns at
previous shareholders' meetings.
Where the Group holds a currently exercisable
call option, the rights arising as a result of the exercise of the
call option are included in the assessment above of whether the
Group has control.
The financial statements of subsidiaries are
included in the consolidated financial statements from the date on
which control commences until the date on which control
ceases.
(iii) Investments in associates and equity call
options
An associate is an entity over which the Group
has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee but is not control or joint control over those
policies.
The considerations made in determining
significant influence or joint control are similar to those
necessary to determine control over subsidiaries. In the
consolidated financial statements, the Group's investments in
associates are accounted for using the equity method of
accounting.
Under the equity method, the investment in an
associate or a joint venture is carried in the consolidated balance
sheet at cost plus post-acquisition changes in the Group's share of
the net assets of the associate. The Group's share of the results
of the associate is included in the profit or loss. Losses of the
associate or joint venture in excess of the Group's cost of the
investment are recognised as a liability only when the Group has
incurred obligations on behalf of the associate.
On acquisition of the investment, any difference
between the cost of the investment and share of the associate's
identifiable assets and liabilities is accounted for as
follows:
• Any premium paid is
capitalised and included in the carrying amount of the
associate.
• Any excess of the
share of the net fair value of the associate's identifiable assets
and liabilities over the cost of the investment is included as
income in the determination of the share of the associate's profit
or loss in the period in which the investment is
acquired.
Any intangibles identified and included as part
of the investment are amortised over their assumed useful economic
life. Where there is objective evidence that the investment in an
associate may be impaired, the carrying amount of the investment is
tested for impairment in the same way as other non-financial
assets.
The aggregate of the Group's share of profit or
loss of an associate is shown on the face of profit or loss outside
operating profit and represents profit or loss before tax. The
associated tax charge is disclosed in income tax.
The Group recognises its share of any changes in
the equity of the associate through the consolidated statement of
changes in equity. Profits and losses resulting from transactions
between the Group and the associate are eliminated to the extent of
the Group's interest in the associate.
The Group applies equity accounting only up to
the date an investment in associate meets the criteria for
classification as held for sale. From then onwards, the investment
is measured at the lower of its carrying amount and fair value less
costs to sell.
When potential voting rights or other
derivatives containing potential voting rights exist, the Group's
interest in an associate is determined solely on the basis of
existing ownership interests and does not reflect the possible
exercise or conversion of potential voting rights and other
derivative instruments unless there is an existing ownership
interest as a result of a transaction that currently gives it
access to the returns associated with an ownership interest. In
such circumstances, the proportion allocated to the entity is
determined by taking into account the eventual exercise of those
potential voting rights and other derivative instruments that
currently give the entity access to the returns. When instruments
containing potential voting rights in substance currently give
access to the returns associated with an ownership interest in an
associate or a joint venture, the instruments are not subject to
IFRS 9 and equity accounting is applied. In all other cases,
instruments containing potential voting rights in an associate or a
joint venture are accounted for in accordance with IFRS
9.
A derivative financial asset is measured under
fair value per IFRS 9. In the case where there is significant
influence over the investment under which Playtech holds the
derivative financial asset, it should be accounted for under IAS 28
Investment in Associate. However, if the option is not currently
exercisable and there is no current access to profits, the option
is fair valued without applying equity accounting to the investment
in associate.
Derivatives are recorded at fair value and
classified as assets when their fair value is positive and as
liabilities when their fair value is negative. Subsequently,
derivatives are measured at fair value.
(iv) Equity investments held at fair
value
All equity investments in scope of IFRS 9 are
measured at fair value in the balance sheet. Fair value changes are
recognised in profit or loss. Fair value is based on quoted market
prices (Level 1). Where this is not possible, fair value is
assessed based on alternative methods (Level 3).
(v) Transactions eliminated on
consolidation
Intra-group balances and transactions are
eliminated. Unrealised gains arising from transactions with
equity-accounted investees are eliminated against the investment to
the extent of the Group's interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
B. Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are
translated into the respective functional currencies of Group
companies at the exchange rates at the dates of the
transactions.
Monetary assets and liabilities denominated in
foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign currency
are translated into the functional currency at the exchange rate
when fair value was determined. Non-monetary items that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction.
Foreign currency differences are generally recognised in profit or
loss and presented within finance costs.
(ii) Foreign operations
On consolidation, the assets and liabilities of
foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated into Euro using the exchange
rates at the reporting date and the statements of profit or loss
items are translated into Euro at the end of each month at the
average exchange rate for the month which approximates the exchange
rates at the date of the transactions.
The exchange differences arising on the
translation for consolidation are recognised in other comprehensive
income (OCI) and accumulated in the foreign exchange
reserve.
When a foreign operation is disposed of in its
entirety, or partially such that control, significant influence or
joint control is lost, the cumulative amount in the foreign
exchange reserve relating to the foreign operation is reclassified
to the profit or loss as part of the gain or loss on
disposal.
C. Discontinued operation
A discontinued operation is a component of the
Group's business, the operations and cash flows of which can be
clearly distinguished from the rest of the Group and
which:
• represents a separate
major line of business or geographical area of
operations;
• is part of a single
co-ordinated plan to dispose of a separate major line of business
or geographical area of operations; or
• is a subsidiary
acquired exclusively with a view to resale.
Classification as a discontinued operation
occurs at the earlier of disposal or when the operation meets the
criteria to be classified as held for sale.
When an operation is classified as a
discontinued operation, the comparative statement of comprehensive
income is re-presented as if the operation had been discontinued
from the start of the comparative year.
D. Revenue recognition
The majority of the Group's revenue is derived
from selling services with revenue recognised when services have
been delivered to the customer. Revenue comprises the fair value of
the consideration received or receivable for the supply of services
in the ordinary course of the Group's activities. Revenue is
recognised when economic benefits are expected to flow to the
Group. Specific criteria and performance obligations are described
below for each of the Group's material revenue streams.
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Nature, timing of satisfaction of
performance obligations and significant payment terms
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B2B licensee fee
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Licensee fee is the standard operator income of
the Group which relates to licensed technology and the provision of
certain services provided via various distribution channels
(online, mobile or land-based interfaces).
Licensee fee is based on the underlying gaming
revenue earned by our licensees calculated using the contractual
terms in place. Revenue is recognised when performance obligation
is met which is when the gaming transaction occurs and is net of
refunds, concessions and discounts provided to certain licensees.
The payment terms of the B2B licensee fee are on average 30 days
from the invoice date.
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B2B fixed-fee income
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Fixed-fee income is the standard operator
income of the Group which includes revenue derived from the
provision of certain services and licensed technology for which
charges are based on a fixed fee and/or stepped according to the
monthly usage of the service/technology. The usage measurement is
typically reset on a monthly basis.
The performance obligation is met and revenue
is recognised once the obligations under the contracts have been
met which is when the services have been provided.
Services provided and fees for:
a. minimum revenue guarantee: the additional
revenue recognised by the Group for the difference in the minimum
guarantee per licensee contract and actual performance;
and
b. other: hosting, live, set-up, content
delivery network and maintenance fees. The fees charged to
licensees for these services are fixed per month.
The amounts for the above are recognised
over the life of the contracts and are typically charged on a fixed
percentage and stepped according to the monthly usage of the
service depending on the type of service. Set-up fees are
recognised over the whole period of the contract, with an average
period of 36 months. The revenue is recognised monthly over the
period of the contract and the payment terms of the B2B fixed fee
income are on average 30 days from the invoice date.
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B2B cost-based revenue
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Cost-based revenue is the standard operator
income of the Group which is made of the total revenue charged to
the licensee based on the development costs needed to satisfy the
contract with the licensee.
The largest type of service included in
cost-based revenue is the dedicated team costs. Dedicated team
employees are charged back to the client based on time spent on
each product.
Cost-based revenues are recognised on a monthly
basis based on the contract in place between each licensee and
Playtech, and any additional services needed on development are
charged to the licensee upon delivery of the service. The payment
terms of the B2B cost-based revenue are on average 30 days from the
invoice date.
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B2B revenue received from the sale of
hardware
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Revenue received from the sale of hardware is
the total revenue charged to customers upon the sale of each
hardware product. The performance obligation is met and revenue is
recognised on delivery of the hardware and acceptance by the
customer.
Revenue received from future sale of hardware
is recognised as deferred revenue. Once the obligation for the
future sale is met, revenue is then recognised in profit or loss.
The payment terms of the B2B revenue received from the sale of
hardware are on average 30 days from the invoice date.
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Additional B2B services fee
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This income is calculated based on the profit
and/or net revenues generated by the customer in return for the
additional services provided to them by the Group. This is
typically charged on a monthly basis and is measured using a
predetermined percentage set in each licensee arrangement. The
revenue is only recognised when the customer's activities go live
and the revenue from the additional B2B services is recognised only
once the Group is unconditionally contractually entitled to it. The
Directors have determined that this is when the customer starts
generating profits, which is later than when the customer goes live
with its B2C operations. The Directors' rationale is that there is
uncertainty that the Group will collect the consideration to which
it is entitled before the customer starts generating profits and,
therefore, the revenue is wholly variable. The payment terms of the
additional B2B services fees are on average 30 days from the
invoice date.
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B2C revenue
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In respect of B2C Snaitech revenues, the Group
acts as principal with the end customer, with specific revenue
policies as follows:
· The revenues from
land-based gaming machines are recognised net of the winnings,
jackpots and certain flat-rate gaming tax; revenues are recognised
at the time of the bet.
· The revenues from
online gaming (games of skill/casino/bingo) are recognised net of
the winnings, jackpots, bonuses and certain flat-rate gaming tax at
the conclusion of the bet.
· The revenues
related to the acceptance of fixed odds bets are considered
financial instruments under IFRS 9 and are recognised net of
certain flat-rate gaming tax, winnings, bonuses and the fair value
of open bets at the conclusion of the event.
· Poker revenues in
the form of commission (i.e. rake) are recognised at the conclusion
of each poker hand. The performance obligation is the provision of
the poker games to the players.
· All the revenues
from gaming machines are recorded net of players' winnings and
certain gaming taxes while the concession fees payable to the
regulator and the compensation of operators, franchisees and
platform providers are accounted as expenses. Revenue is recognised
at the time of the bet.
Where the gaming tax incurred is directly
measured by reference to the individual customer transaction and
related to the stake (described as "flat-rate tax" above), this is
deducted from revenue.
Where the tax incurred is measured by reference
to the Group's net result from betting and gaming activity, this is
not deducted from revenue and is recognised as an
expense.
In respect of Sun Bingo and B2C Sport revenue,
the Group acts as principal with the end customer, with revenue
being recognised at the conclusion of the event, net of winnings,
jackpots and bonuses.
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Financial trading income (discontinued
operations)
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Financial trading income represents gains
(including commission) and losses arising on client trading
activity, primarily in contracts for difference on shares, indexes,
commodities and foreign exchange.
Open client positions are carried at fair
market value and gains and losses arising on this valuation are
recognised in revenue as well as gains and losses realised on
positions that have closed.
The performance obligation is met in the
accounting periods in which the trading transaction occurs and is
concluded.
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E. Share-based payments
Certain employees participate in the Group's
share option plans. Following the 2012 LTIP employees are granted
cash-settled options and equity-settled options. The Remuneration
Committee has the option to determine if the option will be settled
in cash or equity, a decision that is made at grant date. The fair
value of the equity-settled options granted is charged to profit or
loss on a straight-line basis over the vesting period and the
credit is taken to equity, based on the Group's estimate of shares
that will eventually vest. Fair value is determined by the
Black-Scholes, Monte Carlo or binomial valuation model, as
appropriate. The cash-settled options are presented as a liability.
The liability is remeasured at each reporting date and settlement
date so that the ultimate liability equals the cash payment on
settlement date. Remeasurements of the fair value of the liability
are recognised in profit or loss.
The Group has also granted awards to be
distributed from the Group's Employee Benefit Trust. The fair value
of these awards is based on the market price at the date of the
grant; some of the grants have performance conditions. The
performance conditions are for the Executive Management and include
targets based on growth in earnings per share and total shareholder
return over a specific period compared to other competitors. The
fair value of the awards with market performance conditions is
factored into the overall fair value and determined using a Monte
Carlo method. Where these options lapse due to not meeting market
performance conditions the share option charge is not
reversed.
F. Income tax
The income tax expense represents the sum of the
tax currently payable and deferred tax.
(i) Current tax
The tax currently payable is based on taxable
profit for the year. Taxable profit differs from net profit as
reported in profit or loss because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the
reporting period.
A provision is recognised for those matters for
which the tax determination is uncertain, but it is considered
probable that there will be a future outflow of funds to a tax
authority. The provisions are measured at the best estimate of the
amount expected to become payable. The assessment is based on the
judgement of tax professionals within the Company supported by
previous experience in respect of such activities and in certain
cases based on specialist tax advice.
(ii) Deferred tax
The Group adopted the amendments to IAS 12
issued in May 2023, which provide a temporary mandatory exception
from the requirement to recognise and disclose deferred taxes
arising from enacted tax law that implements the Pillar Two model
rules, including tax law that implements qualified domestic minimum
top-up taxes described in those rules. Under these amendments, any
Pillar Two taxes incurred by the Group will be accounted for as
current taxes from 1 January 2024.
Deferred tax is provided using the liability
method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax liabilities are recognised for all
taxable temporary differences, except:
• when the deferred tax
liability arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss, and does not give
rise to equal taxable and deductible temporary differences;
and
• in respect of taxable
temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, when the timing of the
reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all
deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised in the period in which the deductible temporary
differences arise when there are sufficient taxable temporary
differences relating to the same taxation authority and the same
taxable entity which are expected to reverse, or where it is
probable that taxable profit will be available against which a
deductible temporary difference can be utilised.
Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward
of unused tax credits and unused tax losses, can be utilised,
except:
• when the deferred tax
asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss, and does not give rise to equal taxable and
deductible temporary differences; and
• in respect of
deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred
tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted at
the reporting date.
Deferred tax relating to items recognised
outside the profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Tax benefits acquired as part of a business
combination, but not satisfying the criteria for separate
recognition at that date, are recognised subsequently, if new
information about facts and circumstances change. The adjustment is
either treated as a reduction in goodwill (as long as it does not
exceed goodwill) if it was recognised during the measurement period
or is otherwise recognised in profit or loss.
The Group offsets deferred tax assets and
deferred tax liabilities, if and only if, it has a legally
enforceable right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities which intend either to settle current tax liabilities and
assets on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which
significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
The tax base of assets and liabilities is
assessed at each reporting date, and changes in the tax base that
result from internal reorganisations, changes in the expected
manner of recovery or changes in tax law are reflected in the
calculation of deductible and taxable temporary
differences.
G. Finance expense
Finance expense arising on interest-bearing
financial instruments carried at amortised cost is recognised in
the profit or loss using the effective interest rate method.
Finance expense includes the amortisation of fees that are an
integral part of the effective finance cost of a financial
instrument, including issue costs, and the amortisation of any
other differences between the amount initially recognised and the
redemption price. All finance expenses are recognised over the
availability period.
Interest expense arising on the above during the
period is disclosed under the financing activities in the
consolidated statement of cash flows.
H. Inventories
Inventories are initially recognised at cost,
and subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present
location and condition.
I. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are
measured at cost less accumulated depreciation and any accumulated
impairment losses.
If significant parts of an item of property,
plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property,
plant and equipment.
Any gain or loss on disposal of an item of
property, plant and equipment is recognised in profit or
loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it
is probable that the future economic benefits associated with the
expenditure will flow to the Group.
(iii) Depreciation
Depreciation is calculated to write off the cost
of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated
useful lives and is generally recognised in profit or loss. Land is
not depreciated.
The estimated useful lives of property, plant
and equipment for current and comparative periods are as
follows:
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Computers and gaming machines
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20-33
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Office furniture and equipment
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7-33
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Freehold and leasehold buildings and
improvements
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3-20, or over the
length of the lease
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Depreciation methods, useful lives and residual
values are reviewed at each reporting date and adjusted if
appropriate.
J. Intangible assets and goodwill
(i) Recognition and measurement
Goodwill
Goodwill represents the excess of the cost of a
business combination over the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired. Cost comprises the fair value of assets given,
liabilities assumed and equity instruments issued, plus the amount
of any non-controlling interests in the acquiree plus, if the
business combination is achieved in stages, the fair value of the
existing equity interest in the acquiree. Contingent consideration
is included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, remeasured subsequently through profit or loss. Direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment
in carrying value being charged to profit or loss. Where the fair
value of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess
is credited in full to the profit or loss on the acquisition date
as a gain on bargain purchase.
Externally acquired intangible
assets
Other intangible assets that are acquired by the
Group and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment
losses.
Business combinations
Intangible assets are recognised on business
combinations if they are separable from the acquired entity or give
rise to other contractual/legal rights. The amounts ascribed to
such intangibles are arrived at by using appropriate valuation
techniques.
Internally generated intangible assets
(development costs)
Development costs that are directly attributable
to the design and testing of identifiable and unique software
products controlled by the Group are recognised as intangible
assets where the following criteria are met:
• it is technically
feasible to complete the software so that it will be available for
use;
• management intends to
complete the software and use or sell it;
• there is an ability to
use or sell the software;
• it can be demonstrated
how the software will generate probable future economic
benefits;
• adequate technical,
financial and other resources to complete the development and to
use or sell the software are available; and
• the expenditure
attributable to the software during its development can be reliably
measured.
The amount initially recognised for internally
generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition
criteria listed above. Expenditure includes salaries, wages and
other employee-related costs directly engaged in generating the
assets and any other expenditure that is directly attributable to
generating the assets (i.e. certifications and amortisation of
right of use assets). Where no internally generated intangible
asset can be recognised, development expenditure is recognised in
profit or loss in the period in which it is incurred.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when
it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditures, including
expenditures on internally generated goodwill and brands, are
recognised in the profit or loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost
of intangible assets less their estimated residual values using the
straight-line method over their estimated useful lives and is
generally recognised in the profit or loss. Goodwill is not
amortised.
The estimated useful lives for current and
comparative periods are as follows:
|
|
|
|
Domain names
|
Nil
|
|
Internally generated capitalised development
costs
|
20-33
|
|
Technology IP
|
13-33
|
|
Customer lists
|
In line with projected cash flows or
7-20
|
|
Affiliate contracts
|
5-12.5
|
|
|
10-33 or over the period of the
licence
|
Amortisation methods, useful lives and residual
values are reviewed at each reporting date and adjusted if
appropriate.
K. Assets held for sale
Non-current assets, or disposal groups
comprising assets and liabilities, are classified as held for sale
if it is highly probable that they will be recovered primarily
through sale rather than through continuing use.
The criteria for held for sale classification
are regarded as met only when the sale is highly probable, and the
asset or disposal group is available for immediate sale in its
present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale
will be made or that the decision to sell will be withdrawn.
Management must be committed to the plan to sell the asset and the
sale expected to be completed within one year from the date of the
classification.
Such assets, or disposal groups, are measured at
the lower of their carrying amount and fair value less costs to
sell. Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets on a pro rata basis,
except that no loss is allocated to inventories, financial assets
or deferred tax assets, which continue to be measured in accordance
with the Group's other accounting policies. Impairment losses on
initial classification as held for sale or held for distribution
and subsequent gains and losses on remeasurement are recognised in
the profit or loss.
Once classified as held for sale, intangible
assets and property, plant and equipment are no longer amortised or
depreciated.
L. Financial instruments
Initial recognition and subsequent
measurement
A financial instrument is any contract that
gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial
recognition, as subsequently measured at amortised cost, fair value
through other comprehensive income and fair value through profit or
loss.
The classification of financial assets at
initial recognition depends on the financial asset's contractual
cash flow characteristics and the Group's business model for
managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group
has applied the practical expedient, the Group initially measures a
financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs.
Trade receivables that do not contain a significant financing
component or for which the Group has applied the practical
expedient are measured at the transaction price. In order for a
financial asset to be classified and measured at amortised cost or
fair value through OCI, it needs to give rise to cash flows that
are solely payments of principal and interest (SPPI) on the
principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level. Financial assets
with cash flows that are not SPPI are classified and measured at
fair value through profit or loss, irrespective of the business
model.
Subsequent measurement
For purposes of subsequent measurement,
financial assets are classified in four categories:
• financial assets at
amortised cost (debt instruments);
• financial assets at
fair value through other comprehensive income with recycling of
cumulative gains and losses (debt instruments);
• financial assets
designated at fair value through other comprehensive income with no
recycling of cumulative gains and losses upon derecognition (equity
instruments); and
• financial assets at
fair value through profit or loss.
Financial assets at amortised cost (debt
instruments)
Financial assets at amortised cost are
subsequently measured using the effective interest (EIR) method and
are subject to impairment. Gains and losses are recognised in
profit or loss when the asset is derecognised, modified or
impaired. The Group's financial assets at amortised cost include
trade receivables, loans receivable and cash and cash
equivalents.
At every reporting date, the Group evaluates
whether the debt instrument is considered to have low credit risk
using all reasonable and supportable information that is available
without undue cost or effort. In making that evaluation, the Group
reassesses the internal credit rating of the debt instrument. In
addition, the Group considers whether there has been a significant
increase in credit risk depending on the characteristics of each
debt instrument.
Cash and cash equivalents consist of cash at
bank and in hand, short-term deposits with an original maturity of
less than three months and customer balances.
Financial assets at fair value through profit
or loss
Financial assets at fair value through profit or
loss are carried in the balance sheet at fair value with net
changes in fair value recognised in profit or loss. This category
includes listed equity investments which the Group had not
irrevocably elected to classify at fair value through
OCI.
The Group recognises a debt financial instrument
with an embedded conversion option, such as a loan convertible into
ordinary shares of an entity, as a financial asset in the balance
sheet. On initial recognition, the convertible loan is measured at
fair value with any gain or loss arising on subsequent measurement
until conversion recognised in profit or loss. On conversion of a
convertible instrument, the Group derecognises the financial asset
component and recognises it as an investment (equity interest,
associate, joint venture or subsidiary) depending on the results of
the assessment performed under the relevant standards.
Derecognition
A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from the Group's
consolidated balance sheet) when:
• the rights to receive
cash flows from the asset have expired; or
• the Group has
transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full
without material delay to a third party under a "pass-through"
arrangement, and either (a) the Group has transferred substantially
all the risks and rewards of the asset; or (b) the Group has
neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the
asset.
When the Group has transferred its rights to
receive cash flows from an asset, it evaluates if, and to what
extent, it has retained the risks and rewards of ownership. When it
has neither: transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred control of the
asset, the Group continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the Group
also recognises an associated liability. The transferred asset and
the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Impairment
The Group recognises an allowance for expected
credit losses (ECLs) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale
of collateral held or other credit enhancements that are integral
to the contractual terms.
ECLs are recognised in two stages. For credit
exposures for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within the
next 12 months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables, the Group applies a
simplified approach in calculating ECLs. Therefore, the Group does
not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date. The Group
has established a provision matrix that is based on its historical
credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or derivatives designated
as hedging instruments in an effective hedge, as appropriate. All
financial liabilities are recognised initially at fair value and,
in the case of loans and borrowings and payables, net of directly
attributable transaction costs. The Group's financial liabilities
include trade and other payables, loans and borrowings including
bank overdrafts, and derivative financial instruments.
Subsequent measurement
For purposes of subsequent measurement,
financial liabilities are classified in two categories:
• financial liabilities
at fair value through profit or loss; and
• financial liabilities
at amortised cost (loans and borrowings and bonds).
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through
profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at
fair value through profit or loss.
Financial liabilities at amortised
cost
This is the category most relevant to the Group.
After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Gains and losses are recognised in the
profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process. Amortised cost is calculated
by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in profit or
loss.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by
another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in
profit or loss.
(iii) Offsetting
Financial assets and financial liabilities are
offset and the net amount is reported in the balance sheet if there
is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities
simultaneously.
M. Share capital
Ordinary shares are classified as equity and are
stated at the proceeds received net of direct issue
costs.
N. Share buyback
Consideration paid for the share buyback is
recognised against the additional paid in capital. Any excess of
the consideration paid over the weighted average price of shares in
issue is debited to the retained earnings.
O. Employee Benefit Trust
Consideration paid/received for the
purchase/sale of shares subsequently put in the Employee Benefit
Trust, which is controlled by the Company, is recognised directly
in equity. The cost of shares held is presented as a separate
reserve (the "Employee Benefit Trust reserve"). Any excess of the
consideration received on the sale of treasury shares over the
weighted average cost of the shares sold is credited to retained
earnings.
P. Dividends
Dividends are recognised when they become
legally due. In the case of interim dividends to equity
shareholders, this is when paid by the Directors. In the case of
final dividends, this is when they are declared and approved by the
shareholders at the AGM.
Q. Impairment of non-financial assets
At each reporting date, the Group reviews the
carrying amounts of its non-financial assets (other than
inventories and deferred tax assets) to determine whether there is
any indication of impairment. If any such indication exists, then
the asset's recoverable amount is estimated. For goodwill in
particular, the Group is required to test annually and also when
impairment indicators arise, whether goodwill and indefinite life
assets have suffered any impairment.
For impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Goodwill arising from a
business combination is allocated to CGUs that are expected to
benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs of
disposal. Value in use is based on the estimated future cash flows,
discounted to their present value using a post-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying
amount of an asset or CGU exceeds its recoverable
amount.
Impairment losses are recognised in the profit
or loss. They are allocated first to reduce the carrying amount of
any goodwill allocated to the CGU, and then to reduce the carrying
amounts of the other assets in the CGU on a pro rata
basis.
An impairment loss in respect of goodwill is not
reversed. For other assets, an impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
R. Provisions
Provisions for legal claims are recognised when
the Group has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources
will be required to settle the obligation, and the amount can be
reliably estimated. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations,
the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A
provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations
may be minimum.
Provisions are measured at the present value of
management's best estimate of the expenditure required to settle
the present obligation at the end of the reporting period. The
discount rate used to determine the present value is a pre-tax rate
that reflects current market assessments of the time value of money
and the risks specific to the liability.
S. Leases
At inception of a contract, the Group assesses
whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration.
Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease
liabilities to make lease payments and right of use assets
representing the right to use the underlying assets.
(i) Right of use assets
The Group recognises right of use assets at the
commencement date of the lease (i.e. the date the underlying asset
is available for use). Right of use assets are measured at cost,
less any accumulated amortisation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of
right of use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received. Right of use assets are amortised on a straight-line
basis over the shorter of the lease term and the estimated useful
lives of the assets.
(ii) Lease liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include
fixed payments (including in-substance fixed payments) less any
lease incentives receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating the lease, if
the lease term reflects the Group exercising the option to
terminate.
Variable lease payments that do not depend on an
index or a rate are recognised as expenses in the period in which
the event or condition that triggers the payment occurs.
In calculating the present value of lease
payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the
lease is not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made.
In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (e.g. changes to
future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset. When the lease liability
is remeasured in this way, a corresponding adjustment is made to
the carrying amount of the right of use asset or is recorded in the
profit or loss if the carrying amount of the right of use asset has
been reduced to zero.
The cash payments made in relation to long-term
leases are split between principal and interest paid on lease
liability and disclosed within financing activities in the
consolidated statement of cash flows.
(iii) Short-term leases and leases of low-value
assets
The Group applies the short-term lease
recognition exemption to its short-term leases (i.e. those leases
that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases that are
considered to be low value. Lease payments on short-term leases and
leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term and included within
financing activities in the consolidated statement of cash
flows.
T. Fair value measurement
"Fair value" is the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either: (a) in the principal market for the asset or liability; or
(b) in the absence of a principal market, in the most advantageous
market for the asset or liability.
The fair value of an asset or a liability is
measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Group uses valuation techniques that are
appropriate in the circumstances and for which sufficient data is
available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
All assets and liabilities for which fair value
is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair
value measurement as a whole:
• Level 1 - quoted
(unadjusted) market prices in active markets for identical assets
or liabilities.
• Level 2 - valuation
techniques for which the lowest level input that is significant to
the fair value measurement is directly or indirectly
observable.
• Level 3 - valuation
techniques for which the lowest level input that is significant to
the fair value measurement is unobservable.
U. Adjusted performance measures
(APMs)
In the reporting of financial information, the
Directors use various APMs. The Directors use the APMs to
understand, manage and evaluate the business and make operating
decisions. These APMs are among the primary factors management uses
in planning for and forecasting future periods.
As these are non-GAAP measures, they should not
be considered as replacements for IFRS measures. The Group's
definition of these non-GAAP measures may not be comparable to
other similarly titled measures reported by other
companies.
The following are the definitions and purposes
of the APMs used:
|
APM
|
Closest equivalent
IFRS measure
|
Reconciling items to
statutory measure
|
Definition and
purpose
|
|
Adjusted
EBITDA and Adjusted Profit
|
Operating
profit and Profit before tax
|
Note 11
|
Adjusted results exclude the
following items:
· Material non-cash items: these items are excluded to better
analyse the underlying cash transactions of the business as
management regularly monitors the operating cash conversion to
Adjusted EBITDA.
· Material one-off items: these items are excluded to get
normalised results that are distorted by unusual or infrequent
items. Unusual items include highly abnormal, one-off and only
incidentally relating to the ordinary activities of the Group.
Infrequent items are those which are not reasonably expected to
recur in the foreseeable future given the environment in which the
Group operates.
· Investment/acquisition-related items: these items are excluded
as they are not related to the ordinary activities of the business
and therefore are not considered to be ongoing costs of the
operations of the business.
These APMs provide a consistent
measure of the performance of the Group from period to period by
removing items that are considered to be either non-cash , one-off
or investment/acquisition related items. This is a key management
incentive metric.
|
|
Adjusted
gross cash and cash equivalents
|
Cash and
cash equivalents
|
Chief Financial Officer's
statement
|
Adjusted gross cash and cash
equivalents is defined as the cash and cash equivalents after
deducting the cash balances held on behalf of operators in respect
of operators' jackpot games and poker and casino operations as well
as client funds with respect to B2C.
|
|
Net
debt
|
None
|
Chief Financial Officer's
statement
|
Net debt is defined as the Adjusted
gross cash and cash equivalents after deducting loans and
borrowings and bonds. Used to show level of net debt in the Group
and movement from period to period.
|
|
Adjusted
net cash provided by operating activities
|
Net cash
provided by operating activities
|
Chief Financial Officer's
statement
|
Net cash provided by operating
activities after adjusting for jackpots and client funds,
professional fees and ADM (Italian regulator) security deposit.
Adjusting for the above cash fluctuations is essential in order to
truly reflect the quality of revenue and cash collection. This is
because the timing of cash inflows and outflows for jackpots,
security deposits and client funds only impact the reported
operating cash flow and not Adjusted EBITDA, while professional
fees are excluded from Adjusted EBITDA but impact operating cash
flow.
|
|
Cash
conversion
|
None
|
Chief Financial Officer's
statement
|
Cash conversion is defined as cash
generated from operations as a percentage of Adjusted
EBITDA.
|
|
Adjusted
cash conversion
|
None
|
Chief Financial Officer's
statement
|
Adjusted cash conversion is defined
as Adjusted net cash provided by operating activities as a
percentage of Adjusted EBITDA.
|
|
Adjusted
EPS
|
EPS
|
Note 16
|
The calculation of Adjusted EPS is
based on the Adjusted Profit and weighted average number of
ordinary shares outstanding.
|
|
Adjusted
diluted EPS
|
Diluted
EPS
|
Note 16
|
The calculation of Adjusted diluted
EPS is based on the Adjusted Profit and weighted average number of
ordinary shares outstanding after adjusting for the effects of all
dilutive potential ordinary shares.
|
|
Adjusted
tax
|
Tax
expense
|
Note 11
|
Adjusted tax is defined as the tax
charge for the period after deducting tax charges related to
uncertain tax positions relating to prior years, deferred tax on
acquisition and the write down of deferred tax assets in respect of
tax losses arising in prior years. As these items either do not
relate to the current year or are adjusted in arriving at the
Adjusted Profit, they distort the effective tax rate for the
period.
|
V. Onerous
contracts
Present obligations arising under
onerous contracts are recognised and measured as provisions. An
onerous contract is considered to exist where the Group has a
contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits
expected to be received under it.
Note 7 - Significant accounting judgements,
estimates and assumptions
In preparing these consolidated financial
statements, management has made judgements and estimates that
affect the application of the Group's accounting policies and the
reported amounts of assets, liabilities, income and expenses.
Actual events may differ from these estimates.
Judgements
In the process of applying the Group's
accounting policies management has made the following judgements,
which have the most significant effect on the amounts recognised in
the consolidated financial statements.
Impact of Caliplay dispute
Background
As per the public announcement
released by Playtech on 6 February 2023, the Group, through its
subsidiary, PT Services Malta Limited ("PT Malta"), is seeking a
declaration from the English Courts to obtain clarification on a
point of disagreement between Tecnologia en Entretenimiento
Caliplay, S.A.P.I. ("Caliplay") and PT Malta in relation to the
Caliente Call Option. The Caliente Call Option is an option held by
Caliplay where, for 45 days after the finalisation of Caliplay's
2021 accounts, Caliplay could redeem PT Malta's additional B2B
services fee or (if the Playtech Call Option had been exercised at
that time) Caliente would have the option to acquire PT Malta's 49%
stake in Caliplay. The Group believes the Caliente Call Option has
expired and first referred to its expiry having taken place in its
interim report for the six-month period ended 30 June 2022, which
was published on 22 September 2022. The Group has not changed its
position with regards expiry at both 31 December 2022 and 2023. The
matter is still unresolved and it is currently due to be heard in
English Court in October 2024.
If the Caliente Call Option was
declared as being exercisable and was exercised, this would
extinguish the Playtech Call Option and the Playtech M&A Call
Option (refer to Note 21A for details on these option
arrangements).
The dispute with Caliplay now also
includes a litigation in relation to the B2B licensee fees and
additional B2B services fees owed by Caliplay to Playtech under the
terms of the Group's licence agreement. The dispute relates to
amounts that date back to July 2023.
The Group became aware in early
October 2023 that, in August 2023, without prior notice, Caliplay
commenced proceedings in Mexico against the Group seeking (amongst
other things) to invalidate the licence agreement between Caliplay
and PT Malta (and the associated framework agreement which also
includes the Playtech Call Option and the Playtech M&A Call
Option). From that point, Caliplay has declined to pay nearly all
monthly sums due under the licence agreement (for B2B licensee fee
amounts due from August 2023 and additional B2B services fee
amounts due from July 2023). Those Mexican proceedings have since
been withdrawn by Caliplay, having been ordered to do so by the
English Courts, but the amounts due to PT Malta remain
unpaid.
PT Malta has therefore amended its
case in the English Courts to include a debt claim for monies owed
by Caliplay under the licence agreement for sums due as B2B
licensee fees and additional B2B services fees. Caliplay has denied
in its defence that these fees are outstanding or otherwise
payable.
As regards the B2B licensee fees,
Caliplay has made a counterclaim relating to alleged complaints
about the quality of certain software licensed to it by PT Malta.
Caliplay alleges that the difference in value provided to it by the
software, as compared with the B2B licensee fees invoiced by PT
Malta, entitles Caliplay to reduce the B2B licensee fees. Caliplay
has also claimed that amounts invoiced by PT Malta in respect of
the B2B licensee fees are in excess of those allowed by the
contractual terms.
As regards the monthly additional
B2B services fees, Caliplay has alleged that on 3 January 2024 it
recorded a significant provision for the months of July to November
2023 and argues that, because of this provision, Caliplay's profits
for Q3 2023 stand to be retrospectively adjusted downwards to zero,
with the effect that all of the additional B2B services fees (which
are calculated based on predefined percentage of revenue generated
by Caliplay with a profit-linked cap (as provided for in the
agreement)) for Q3 2023 also stand to be retrospectively adjusted
downwards to zero. Caliplay also alleges, as a result of the
significant provision, that it does not have sufficient working
capital (after taking account of this provision) to pay these
additional B2B services fees.
The monthly additional B2B services
fees in respect of Q4 2023 have also not been paid. PT Malta is
still to formally amend its claim to include these amounts and
Caliplay has therefore not yet pleaded any defence as to the basis
of its non-payment. However, the Group anticipates that Caliplay
will seek to rely on substantially the same bases for non-payment
of these fees as are relied upon in respect of Q3 2023.
Impact on revenue recognition and
recovery of receivable
At 31 December 2023, the outstanding
amount of the B2B licensee fee was €32.3 million and the
outstanding amount of the additional B2B services fee was €54.2
million.
The Group has recognised the full
outstanding amount above of €86.5 million within its total revenue
for the year and in line with its revenue accounting policies as
per Note 6D. In recognising the entire amount, the Group has
assessed that it is highly probable that there will not be a
significant reversal of this revenue in a subsequent period. This
was principally supported by the following:
In relation to the monthly B2B
licensee fees, the Group believes that Caliplay's counterclaim is
unlikely to succeed and that Caliplay will also not be entitled to
set it off against the B2B licensee fees owed. PT Malta's legal
position is that Caliplay's interpretation of the licence agreement
is not correct and that Caliplay will not be legally entitled, even
if it did have a valid counterclaim, to set it off against the B2B
licensee fees owed or to claim an alleged difference in value
between the software provided and the B2B licensee fees
invoiced.
The Group also does not accept the
factual allegations which Caliplay has made about its software,
considers that Caliplay's case does not accurately reflect the
contractual obligations which relate to the Group's software, and
in any event firmly believes that it has met its performance
obligations under the agreement and therefore is entitled to the
full revenue. The Group's software has helped to deliver
considerable year-on-year revenue growth for Caliplay; the Group
believes that growth is inconsistent with the allegations which
Caliplay is now making about the quality of software and services
delivered.
In relation to the monthly additional
B2B services fees, the Group believes that Caliplay is unlikely to
convince the English Courts on its current case that the provision
is valid and has any effect on the amounts due to the Group
(through PT Malta). This is principally for the following
reasons:
•
Caliplay has provided very little information about the basis and
nature of the provision, despite requests, and the Group believes
that Caliplay's pleading is defective.
•
There is no contractual mechanism under the licence agreement to
retrospectively adjust the additional B2B services fees.
•
Caliplay's case on working capital does not make any reference to
the timeframe in which the alleged provision would theoretically be
paid, and therefore based on the information provided this
provision has no bearing on any working capital
requirements.
The Adjusted EBITDA recorded for the
year ended 31 December 2023 is therefore exposed to the outstanding
invoices of €86.5 million should the Group not recover the debt.
This is reduced by certain subcontractor payments linked to the
revenue recognised which per the agreement would only be made when
the debt is received by the Group.
In addition, there is potentially a
risk that if the English Court orders the immediate payment of all
outstanding fees, Caliplay may still refuse to pay under the
relevant settlement agreement and/or court order. However, the
Group considers that this probability is unlikely based on
current information. Not complying with an English Court order
carries significant reputational risks for Caliplay and the
potentially adverse impact upon its external relationships.
Furthermore, we are not aware of any current risk of
non-compliance. Instead, so far Caliplay has complied with the two
court orders in PT Malta's favour in relation to the order to
withdraw the proceedings in Mexico and not to litigate there
further (granted by Mr Justice Foxton in October 2023 and Mr
Justice Bright in December 2023 respectively). In the unlikely
event that Caliplay refuses to pay the Group in circumstances where
Playtech has the benefit of an English Court judgment ordering
Caliplay to do so, Playtech will take all steps available to seek
immediate enforcement of the order in Mexico by way of recognition
of the English judgment under the appropriate bi-lateral
enforcement treaty, and continue to demand the outstanding fees
from Caliplay.
Impact on Playtech M&A Call Option
valuation
The Playtech M&A Option is
further described in Note 21A of the financial statements, with the
valuation methodology and assumptions covered in Note
21C.
The Group's view of a reasonable
market participant base discount rate for the 31 December 2023
valuation is unchanged since last year. However, due to the ongoing
legal proceedings and the disputes with Caliplay, the Group has
adjusted the fair value of the Playtech M&A Call Option to
reflect this risk, by including an additional company-specific risk
premium in the discount rate, which overall increased it to 20% (31
December 2022: 16%). The impact of the increase in discount rate is
to reduce the fair value of the option from €846.0 million to
€730.2 million.
Furthermore, although we do not
believe the significant provision made by Caliplay is valid, were
this to be included in the valuation of the Playtech M&A Call
Option as an adjustment to net debt, this would have a material
impact on the value of the Playtech M&A Call Option.
Impact on CGU impairment reviews and recoverability of
deferred tax assets
Whilst our current contract with
Caliplay under which we are entitled to receive our fees (including
the B2B licensee fees and the additional B2B services fees) is
expiring in 2034, and this was our base assumption in the CGU
impairment reviews and deferred tax asset recoverability
assessment, should there be material changes to the cash flows
arising from the contract this could potentially lead to
impairments in certain CGUs of the Group including Casino, Sports
B2B, Services, Quickspin and Eyecon (Note 20).
Similarly, this could also affect
the recoverability assessment of the deferred tax asset, due to the
reduction in profits against which the deferred tax asset is able
to be utilised, as well as impacting the carrying value of the
Parent Company investment in subsidiary.
Given the current uncertainty, the
Group is not able to materially estimate the effect of this and in
any event considers it highly unlikely that there will be material
changes to the cash flows such that the assets referred to above
are materially impacted.
Impact on going concern and viability statement
assessment
As per the going concern assessment
under Note 2, while in the base case cash flow forecasts the Group
has assumed full recovery of the outstanding amounts within the
going concern period of assessment, there is a remote risk
depending on the progress of the legal dispute that no cash will be
received in the going concern period to 30 June 2025 and hence this
was modelled in the stress test scenario.
Even under this scenario the Group
still has sufficient headroom on its covenants and liquidity and
hence the Directors still have a reasonable expectation that the
Group will continue as a going concern over the relevant going
concern period.
This remote scenario was also
modelled in the viability assessment which covers a period of three
years, with the conclusion being that there is a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the three-year
period to 31 December 2026.
Revenue from contracts with customers
The Group applies judgement in determining
whether it is acting as a principal or an agent specifically on the
revenue earned under the B2B licensee fee stream. This income falls
within the scope of IFRS 15 Revenue from Contracts with Customers.
In making these judgements, the Group considers, by examining each
contract with its customers, which party has the primary
responsibility for providing the services and is exposed to the
majority of the risks and rewards associated with providing the
services, as well as if it has latitude in establishing prices,
either directly or indirectly. The business model of this division
is predominantly a revenue share model which is based on software
fees earned from B2C business partners' revenue.
IFRS 15, paragraph B37 describes indicators that
an entity controls the specified good or service before it is
transferred to a customer and therefore acts as the principal.
Based on this assessment it was concluded that Playtech is acting
as an agent under the B2B licensee fee stream due to the three
indicators under B37 which are not satisfied as follows:
• Playtech is
responsible in fulfilling the contract to the operator, principally
in respect of the software solutions, and not to the end customer
which is the responsibility of the operator;
• there is no inventory
risk as Playtech does not have the ability to direct the use of,
and obtain substantially all of the remaining benefits from, the
good or service before it is transferred to the end customer;
and
• Playtech does not have
any discretion in establishing prices set by the operator to third
parties.
Based on the above it was determined that the
Group was acting as agent and revenue is recognised as the net
amount of B2B licensee fees received. The majority of this B2B
revenue is recognised when the gaming or betting activity used as
the basis for the revenue share calculation takes place, and
furthermore is only recognised when collection is virtually certain
with a legally enforceable right to collect.
The Group applied judgement in determining
whether price concessions in respect of ongoing negotiations and
contract modifications should be accounted for as variable
consideration in revenue. Once there is a valid expectation that
the concession of the variable consideration is highly probable,
the Group accounts for it under IFRS 15 paragraph 52.
IFRS 15, paragraph 52 describes that in addition
to the terms of the contract, the promised consideration is
variable if either of the following circumstances
exists:
· The operator has
a valid expectation arising from Playtech's customary business
practices, published policies or specific statements that Playtech
will accept an amount of consideration that is less than the price
stated in the contract, that is, it is expected that Playtech will
offer a price concession. Depending on the jurisdiction, industry
or customer this offer may be referred to as a discount, rebate,
refund or credit.
· Other facts and
circumstances indicate that Playtech's intention, when entering
into the contract with the operator, is to offer a price concession
to the operator.
The Group has estimated the variable
consideration based on the best estimates of future outcomes to
determine the most likely amount of consideration to be
received.
Internally generated intangible
assets
The Group capitalises costs for product
development projects. Expenditure on internally developed products
is capitalised when it meets the following criteria:
• adequate resources are
available to complete and sell the product;
• the Group is able to
sell the product;
• sale of the product
will generate future economic benefits; and
• expenditure on the
project can be measured reliably.
Initial capitalisation of cost is based on
management's judgement that the technological and economic
feasibility is confirmed, usually when product development has
reached a defined milestone and future economic benefits are
expected to be realised according to an established project
management model. Following capitalisation, an assessment is
performed in regard to project recoverability which is based on the
actual return of the project. During the year, the Group
capitalised €56.7 million (2022: €57.5 million) and the carrying
amount of capitalised development costs as at 31 December 2023 was
€133.5 million (2022 restated: €128.1 million).
Adjusted performance measures
As noted in Note 6, paragraph U, the Group
presents adjusted performance measures which differ from statutory
measures due to exclusion of certain non-cash and one-off items
from the actual results. The determination of whether these items
should form part of the adjusted results is a matter of judgement
as management assess whether these items meet the definition
disclosed in Note 6, paragraph U. The items excluded from the
adjusted measures are described in further detail in Note
11.
Provision for risks and charges and potential
liabilities
The Group operates in a number of regulated
markets and is subject to lawsuits and potential lawsuits regarding
complex legal matters, which are subject to a different degree of
uncertainty in different jurisdictions and under different laws.
For all material ongoing and potential legal and regulatory claims
against the Group, an assessment is performed to consider whether
an obligation or possible obligation exists and to determine the
probability of any potential outflow to determine whether a claim
results in the recognition of a provision or disclosure of a
contingent liability. The timing of payment of provisions is
subject to uncertainty and may have an effect on the presentation
of the provisions as current and non-current liabilities in the
balance sheet. Expected timing of payment and classification of
provision is determined by management based on the latest
information available at the reporting date. See Note 30 for
further details.
Classification of equity call
options
Background
In addition to the provision of software-related
solutions as a B2B product, the Group also offers certain customers
a form of offering (which includes software and related services)
which is termed a "structured agreement". Structured agreements are
customarily with customers that have a gaming licence and are
retail/land-based operators that are looking to establish their
online B2C businesses - these customers require initial support
beyond the provision of the Group's standard B2B software
technology. With this product offering, Playtech offers additional
services to support the customer's B2C activities over and above
the B2B software solution products.
Playtech generates revenues from the structured
agreements as follows:
• B2B licensee fee
income (as per Note 6D); and
• revenue based on
predefined revenue generated by each customer under each structured
agreement which is typically capped at a percentage of the profit
(also defined in each agreement) generated by the customer, which
compensates Playtech for the additional services provided
(additional B2B services fee as per Note 6D).
Under these agreements, Playtech typically has a
call option to acquire equity in the operating entities. If the
call option is exercised by Playtech, the Group would no longer
provide certain services (which generally include technical and
general strategic support services) and would no longer receive the
related additional B2B services fee. This mechanism is not designed
as a control feature but mainly to protect Playtech's position
should the customer be subject to an exit transaction. Playtech is
therefore able to benefit from any value appreciation in the
operation and could also potentially cease to provide the
additional B2B services should it choose to do so dependent on the
nature of the exit transaction.
Judgement applied
In respect of each of the structured agreements
where the Group holds equity call options, management applies
judgement to assess whether the Group has control or significant
influence. For each of the Group's structured agreements an
assessment was completed in Note 21 using the below
guidance.
The existence of control by an entity is
evidenced if all of the below are met in accordance with IFRS 10
Consolidated Financial Statements, paragraph 7:
• power over the
investee;
• exposure, or rights,
to variable returns from its involvement with the investee;
and
• the ability to use its
power over the investee to affect the amount of the investor's
returns.
In the cases where the Group assessed that it
exercises control over these arrangements, then the company is
consolidated in the Group's annual results in accordance with IFRS
10.
The existence of significant influence by an
entity is usually evidenced in one or more of the following ways in
accordance with IAS 28 Investment in Associates and Joint Ventures,
paragraph 6:
• representation on the
board of directors or equivalent governing body of the
investee;
• participation in
policy-making processes, including participation in decisions about
dividends or other distributions;
• material transactions
between the entity and its investee;
• interchange of
managerial personnel; or
• provision of essential
technical information.
If the conclusion is that the Group has
significant influence, the next consideration made is whether there
is current access to net profits and losses of the underlying
associate. This is determined by the exercise conditions of each
relevant equity call option and in particular whether the options
are exercisable at the end of each reporting period.
If the option is exercisable then the investment
is accounted for using the equity accounting method. However, in
the cases where the company over which the Group has a current
exercisable option generates profits, management made a judgement
and concluded that Playtech's share of profits (were the option to
be exercised) should not be recognised as it is unlikely that the
profits will be realised as the existing shareholder has the right,
and is entitled, to extract distributable profits. As such,
management did not consider it appropriate to recognise any share
of these profits. However, in the cases where the associate has
generated losses, the Group's percentage share is recognised and
deducted from the carrying value of the investment in
associate.
Management has made a further judgement that if
the equity call option is not exercisable at the end of the
reporting period, then the option is recorded at fair value as per
IAS 28, paragraph 14 and recognised as a derivative financial asset
as per IFRS 9 Financial Instruments.
Furthermore, under some of these arrangements
the Group has provided loan advances. In such instances a judgement
was made as to whether these amounts form part of the Group's
investment in the associate as per IAS 28, paragraph 38, with a key
consideration being whether the Group expects settlement to occur
in the foreseeable future. In the case where this is not expected
and there is no set repayment term, then it is concluded that in
substance these loans are extensions of the entity's investment in
the associate and therefore would form part of the cost of the
investment.
Finally, the Group has certain agreements in
relation to the provision of services by service providers in
connection with certain of the Group's obligations under their
various structured agreements. Under these arrangements, the
service providers have certain rights to equity. In order for these
rights to crystallise, the Group must first exercise the relevant
option. A judgement was therefore made that no current liability
exists under IAS 32, until the point when Playtech exercises the
option.
Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at the reporting date,
which have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year, are described below. The Group based its
assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising that are beyond the
control of the Group. Such changes are reflected in the assumptions
when they occur.
Impairment of non-financial assets
Cash-generating units
Impairment exists when the carrying value of an
asset or cash-generating unit (CGU) exceeds its recoverable amount,
which is the higher of its fair value less costs to sell and its
value in use. The value in use calculation is based on a discounted
cash flow model (DCF). The cash flows are derived from the
three-year budget, with CGU-specific assumptions for the subsequent
two years. They do not include restructuring activities that the
Group is not yet committed to or significant future investments
that may enhance the performance of the assets of the CGU being
tested. The recoverable amount is sensitive to the discount rate
used for the DCF model as well as the expected future cash inflows
and the growth rates used in years four and five and for
extrapolation purposes. These estimates are most relevant to
goodwill and other intangibles with indefinite useful lives
recognised by the Group. The key assumptions used to determine the
recoverable amount of the different CGUs are disclosed and further
explained in Note 20, including a sensitivity analysis for the CGUs
that have lower headroom.
Investment in associates
In assessing impairment of
investments in associates, management utilises various assumptions
and estimates that include projections of future cash flows
generated by the associate, determination of appropriate discount
rates reflecting the risks associated with the investment, and
consideration of market conditions relevant to the investee's
industry. The Group exercises judgement in evaluating impairment
indicators and determining the amount of impairment loss, if any.
This involves assessing the recoverable amount of the investment
based on available information and making decisions regarding the
appropriateness of key assumptions used in impairment
testing.
Income taxes
The Group is subject to income tax in several
jurisdictions and significant judgement is required in determining
the provision for income taxes. During the ordinary course of
business, there are transactions and calculations for which the
ultimate tax determination is uncertain. As a result, the Group
recognises tax liabilities based on estimates of whether additional
taxes and interest will be due. These tax liabilities are
recognised when, despite the Group's belief that its tax return
positions are supportable, the Group believes it is more likely
than not that a taxation authority would not accept its filing
position. In these cases, the Group records its tax balances based
on either the most likely amount or the expected value, which
weights multiple potential scenarios. The Group believes that its
accruals for tax liabilities are adequate for all open audit years
based on its assessment of many factors including past experience
and interpretations of tax law. This assessment relies on estimates
and assumptions and may involve a series of complex judgements
about future events. To the extent that the final tax outcome of
these matters is different than the amounts recorded, such
differences will impact income tax expense in the period in which
such determination is made. Where management conclude that it is
not probable that the taxation authority will accept an uncertain
tax treatment, they calculate the effect of uncertainty in
determining the related taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits or tax rates. The effect of
uncertainty for each uncertain tax treatment is reflected by using
the expected value - the sum of the probabilities and the weighted
amounts in a range of possible outcomes. More details are included
in Note 15.
Deferred tax asset
In evaluating the Group's ability to recover our
deferred tax assets in the jurisdiction from which they arise,
management considers all available positive and negative evidence,
projected future taxable income, tax-planning strategies and
results of recent operations. Deferred tax asset is recognised to
the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Judgement is required in determining the initial recognition and
the subsequent carrying value of the deferred tax asset. Deferred
tax asset is only able to be recognised to the extent that
utilisation is considered probable. It is possible that a change in
profit forecasts or risk factors could result in a material change
to the income tax expense and deferred tax asset in future
periods.
Deferred tax asset in the UK
As a result of the Group's internal
restructuring in January 2021, the Group is entitled to UK tax
deductions in respect of certain goodwill and intangible assets. A
deferred tax asset was recognised as the tax base of the goodwill
and intangible assets is in excess of the book value base of those
assets. At the beginning of the period, the net recognised deferred
tax asset amounted to €56.8 million. As at 31 December 2023, an
additional deferred tax asset of €5.2 million was recognised. This
additional deferred tax asset has been recognised as the Group's
management has concluded that it is probable for the UK entities to
continue to generate taxable profits in the future against which
the Group can utilise the tax deductions for goodwill and
intangible assets. During the year, €14.8 million has been utilised
and the net recognised deferred tax asset as at 31 December 2023
amounts to €47.2 million. In addition, a total of €31.8 million of
deferred tax asset has not been recognised in respect of the
benefit of future tax deductions related to the goodwill and
intangible assets which will arise more than five years after the
balance sheet date.
Deferred tax assets are reviewed at each
reporting date. In considering their recoverability, the Group
assesses the likelihood of their being recovered within a
reasonably foreseeable timeframe, which is broadly in line with our
viability assessment and the cash flow forecasts period used in our
CGU impairment assessment. The Group updated its forecasts,
following changes in assumptions made to the forecasts during 2023,
due to certain changes in the current period to the expected profit
profile within its UK business unit that carries significant
losses. This forms a change in accounting estimate and resulted in
a reversal of €37.2 million in the current year of previously
recognised deferred tax assets in respect of UK tax losses and tax
attributes relating to excess interest expense brought
forward.
As at 31 December 2023, a deferred tax asset of
€27.2 million has been recognised in respect of UK tax losses
(2022: €64.4 million). Based on the current forecasts, these losses
will be fully utilised over the forecast period. Remaining UK tax
losses and excess interest expense of €268.3 million (2022: €Nil)
have not been recognised as at 31 December 2023 as expected
utilisation would fall outside the forecasting period and therefore
there is not sufficient certainty they will be
recovered.
Any future changes in the tax law or the
structure of the Group could have a significant effect on the use
of the tax deductions, including the period over which the
deductions can be utilised.
Deferred tax assets in Italy
The Group has recognised a deferred tax asset of
€2.1 million (2022: €23.1 million) in respect of tax losses in
Italy which are available to offset against the future profits of
the Italian Group companies. Based on the current forecasts, these
losses will be fully utilised within the next year.
The Group reviewed the latest forecasts for the
Italian companies for the next five years, including their ability
to continue to generate income beyond the forecast period under the
tax laws substantively enacted at the reporting date. Based on
this, the Group management concludes that it is probable that the
Italian Group companies will continue to generate taxable income in
the future against which the losses can be utilised. Any future
changes in the tax law or the structure of the Group could have a
significant effect on the use of the tax deductions, including the
period over which the deductions can be utilised.
Impairment of financial assets
The Group undertook a review of trade
receivables and other financial assets, as applicable, and their
expected credit losses (ECLs). The review considered the
macroeconomic outlook, customer credit quality, exposure at
default, and effect of payment deferral options as at the reporting
date. The ECL methodology and definition of default remained
consistent with prior periods. The model inputs, including
forward-looking information, scenarios and associated weightings,
together with the determination of the staging of exposures, were
revised. The Group's financial assets consist of trade and loans
receivables and cash and cash equivalents. ECL on cash balances was
considered and calculated by reference to Moody's credit ratings
for each financial institution, while ECL on trade and loans
receivables was based on past default experience and an assessment
of the future economic environment. More details are included in
Note 39.
In respect of the Group's Asian licensees'
business model an additional ECL risk was identified due to
increase in collection days and uncertainty over timing of receipt
of funds. An additional provision was made in the year ended 31
December 2023 of €3.4 million (2022: €15.4 million).
Sun Bingo agreement
Background
The News UK contract commenced in 2016 and was
originally set for a five-year period to June 2021. Both parties
have obligations under the contract, which includes News UK
providing access to brand and related materials as well as other
services. Playtech has the primary responsibility for the operation
of the arrangement, but both parties have contractual
responsibilities.
The related brands are used in Playtech's B2C
service, where the Group acts as the principal, meaning that in the
Group's consolidated statement of comprehensive income:
• revenue from B2C
customers is recognised as income; and
• the fees paid to News
UK for use of the brands are an expense as they are effectively a
supplier.
In the original contract, the fees payable were
subject to a predetermined annual minimum guarantee (MG) which
Playtech had to pay to News UK.
During the period from 2016 to 2018, performance
was not in line with expectations, and as such, the MG made this
operation significantly loss-making for the Group. This opened the
negotiations with News UK for certain amendments to the contract,
which were agreed and signed in February 2019 as
follows:
• the MG was still
payable up until the end of the original contract period, being
June 2021, with no MG payable after that; and
• the contract term was
extended to permit Playtech access to News UK's brands and other
related materials and other services, for a longer period, to allow
Playtech to recover its MG payments and to make a commercial return
as was always envisaged. The term of the contract was extended to
end at the earlier of: a) five years from the date when Playtech
had fully recovered all MG payments made; or b) 15 years from the
renegotiation (i.e. June 2036).
Judgements made on recognition and
measurement
The annual MG paid to News UK was recognised in
Playtech's profit or loss up until February 2019, essentially being
expensed over the original term of the contract. However, from the
point at which the amended contract became effective, the timing of
the MG paid (being based on the original terms) no longer reflected
the period over which Playtech was consuming the use of the News UK
brands and other related services from them. As such, a prepayment
was recorded to reflect the amount that had been paid, as at each
period end, which related to the future use of the brands and
services. IFRS do not have a specific standard that deals with
accounting for prepayments; however, the asset recognised as a
prepayment is in accordance with IAS 1 Presentation of Financial
Statements.
At the commencement of the agreement and on
renegotiation of the contract, the Directors considered whether the
nature of the arrangement gave rise to any intangible assets. At
contract inception the Directors concluded that there were no such
assets to recognise as both parties had contractual obligations
under the agreement to deliver services, as explained above. Post
the contract renegotiation, the amounts to be paid in the remainder
of the initial period were considered to be advanced payments in
respect of amounts to be earned by News UK over the remainder of
the extended contract period. Consequently, the Directors did not
believe that there was a fundamental change in the nature of the
arrangements and it was considered most appropriate to categorise
the amounts paid as operating expense prepayments.
As noted above, the term of this renegotiated
contract is dependent on the future profitability of the contract,
and it was expected that the future profitability would mean the
contract would finish before the end of the fixed term period. For
this reason, it was considered appropriate that the prepayment
recognised should be released to the profit or loss in line with
this expected profitability, rather than on a straight-line
basis.
The amounts held in non-current and current
assets of €58.7 million (2022: €63.4 million) and €4.4 million
(2022: €3.6 million) in Notes 22 and 24, respectively, are the
differences between the MG actually paid to News UK from February
2019 to June 2021 and the amounts recognised in the Group's profit
or loss from February 2019 to December 2022.
As with any budgeting process, there is always a
risk that the plan may not be realised. This risk increases the
longer the period for which the budget covers and in this instance
the period is potentially up to 13 years from 31 December 2023.
When producing the budget, management applies reasonable
assumptions based on known factors, but sometimes and outside of
management's control, these factors may vary. However, management
also reviews these forecasts at each reporting period and more
regularly internally and adjusts the expense released accordingly.
Based on the most recent forecasts and current profitability and
the fact that the Group had been running the operation since 2016
and therefore has significant experience of the level of
profitability that can be derived from the operation, it is
confident that the performance of the business will allow the full
recovery of this asset, before the contract ends.
Calculation of legal provisions
The Group ascertains a liability in the presence
of legal disputes or ongoing lawsuits when it believes it is
probable that a financial outlay will take place and when the
amount of the losses can be reasonably estimated. The Group is
subject to lawsuits regarding complex legal problems, which are
subject to a differing degree of uncertainty (also due to a complex
legislative framework), including the facts and the circumstances
inherent to each case, the jurisdiction and the different laws
applicable. Given the uncertainties inherent to these problems, it
is difficult to predict with certainty the outlay which will derive
from these disputes and it is therefore possible that the value of
the provisions for legal proceedings and disputes may vary
depending on future developments in the proceedings underway. The
Group monitors the status of the disputes underway and consults
with its legal advisers and experts on legal and tax-related
matters. More details are included in Note 30.
Measurement of fair values of equity
investments and equity call options
The Group's equity investments and, where
applicable (based on the judgements applied above), equity call
options held by the Group, are measured at fair value for financial
reporting purposes. The Group has an established control framework
with respect to the measurement of fair value.
In estimating the fair value of an asset and
liability, the Group uses market-observable data to the extent it
is available. Where Level 1 inputs are not available, the Group
engages third-party qualified valuers to assist in performing the
valuation. The Group works closely with the qualified valuers to
establish the appropriate valuation techniques and inputs to the
model.
As mentioned in Note 21, the Group
has:
• investments in listed
securities where the fair values of these equity shares are
determined by reference to published price quotations in an active
market;
• equity investments in
entities that are not listed, accounted at fair value through
profit or loss under IFRS 9; and
• derivative financial
assets (call options in instruments containing potential voting
rights), which are accounted at fair value through profit or loss
under IFRS 9.
The fair values of the equity investments that
are not listed, and of the derivative financial assets, rely on
non-observable inputs that require a higher level of management
judgement to calculate a fair value than those based wholly on
observable inputs. Valuation techniques used to calculate fair
values include comparisons with similar financial instruments for
which market observable prices exist, DCF analysis and other
valuation techniques commonly used by market participants. Upon the
use of DCF method, the Group assumes that the expected cash flows
are based on the EBITDA.
The Group only uses models with unobservable
inputs for the valuation of certain unquoted equity investments. In
these cases, estimates are made to reflect uncertainties in fair
values resulting from a lack of market data inputs; for example, as
a result of illiquidity in the market. Inputs into valuations based
on unobservable data are inherently uncertain because there is
little or no current market data available from which to determine
the level at which an arm's length transaction would occur under
normal business conditions. Unobservable inputs are determined
based on the best information available. Further details on the
fair value of assets are disclosed in Note 21.
The following table shows the carrying amount
and fair value of non-current assets, as disclosed in Note 21,
including their levels in the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Other investments (Note 21B)
|
92.8
|
|
15.8
|
-
|
77.0
|
Derivative financial assets (Note
21C)
|
|
|
|
|
|
|
|
920.6
|
|
15.8
|
-
|
904.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Other investments (Note 21B)
|
9.2
|
|
1.4
|
-
|
7.8
|
Derivative financial assets (Note
21C)
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 8 - Segment information
The Group's reportable segments are strategic
business units that offer different products and
services.
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker has
been identified as the Board including the Chief Executive Officer
and the Chief Financial Officer.
The operating segments identified
are:
• B2B: Providing
technology to gambling operators globally through a revenue share
model and, in certain agreements, taking a higher share in exchange
for additional services;
• B2C - Snaitech: Acting
directly as an operator in Italy and generating revenues from
online gambling, gaming machines and retail betting;
• B2C - Sun Bingo and
Other B2C: Acting directly as an operator in the UK market and
generating revenues from online gambling;
• B2C - HAPPYBET: Acting
directly as an operator in Germany and Austria and generating
revenues from online gambling and retail betting; and
• Financial -
including B2C and B2B CFD (discontinued operations): Online CFDs,
broker and trading platform provider, operating a number of brands
across numerous countries. This division was disposed in the year
ended 31 December 2022.
The Group-wide profit measure is Adjusted EBITDA
(see Note 11).
Year ended
31 December 2023
|
|
|
Sun
Bingo
and
Other
B2C
€'m
|
|
|
|
|
|
|
Revenue
|
684.1
|
946.6
|
73.4
|
18.2
|
(1.2)
|
1,037.0
|
(14.4)
|
1,706.7
|
|
Adjusted EBITDA
|
182.0
|
256.1
|
6.0
|
(11.8)
|
-
|
250.3
|
-
|
432.3
|
|
Total assets
|
2,102.4
|
1,115.5
|
90.6
|
17.3
|
-
|
1,223.4
|
-
|
3,325.8
|
|
|
|
|
|
|
|
|
|
|
Year ended
31 December 2022
|
|
|
Sun Bingo
and Other
B2C
€'m
|
|
|
|
|
Total
Gaming -
continuing
operations
€'m
|
Financial
-
discontinued
operations
€'m
|
|
|
Revenue
|
632.4
|
899.8
|
65.3
|
20.1
|
(2.1)
|
983.1
|
(13.7)
|
1,601.8
|
74.5
|
1,676.3
|
|
Adjusted EBITDA
|
160.2
|
244.0
|
2.0
|
(10.8)
|
-
|
235.2
|
-
|
395.4
|
33.8
|
429.2
|
|
Total assets
|
1,854.1
|
1,070.8
|
89.7
|
9.3
|
-
|
1,169.8
|
-
|
3,023.9
|
-
|
3,023.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical analysis of non-current
assets
The Group's information about its non-current
assets by location is detailed below:
|
|
|
|
|
Italy
|
750.3
|
746.1
|
|
UK
|
332.9
|
328.4
|
|
Austria
|
54.8
|
131.5
|
|
Alderney
|
63.9
|
75.9
|
|
Sweden
|
48.7
|
59.9
|
|
Gibraltar
|
27.8
|
27.9
|
|
Cyprus
|
19.4
|
22.0
|
|
Latvia
|
17.5
|
15.5
|
|
Australia
|
17.3
|
18.8
|
|
Ukraine
|
4.0
|
8.8
|
|
Estonia
|
8.6
|
7.8
|
|
British Virgin Islands
|
7.5
|
8.2
|
|
|
|
|
|
|
|
|
The segment assets and liabilities are not
provided to the chief operating decision maker.
Note 9 - Discontinued operations
The results of the discontinued operations for
the year are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
-
|
-
|
|
74.5
|
74.5
|
|
Distribution costs before depreciation and
amortisation
|
-
|
-
|
|
(34.9)
|
(34.8)
|
|
Administrative expenses before depreciation and
amortisation
|
-
|
-
|
|
(13.3)
|
(4.0)
|
Impairment of financial assets
|
|
|
|
|
|
|
EBITDA
|
-
|
-
|
|
24.4
|
33.8
|
|
Finance income
|
-
|
-
|
|
11.6
|
11.6
|
|
Finance costs
|
-
|
-
|
|
(0.5)
|
(0.5)
|
Profit on disposal of discontinued
operations
|
|
|
|
|
|
|
Profit before taxation
|
-
|
-
|
|
50.6
|
44.9
|
|
|
|
|
|
|
|
Profit from discontinued operations,
net of tax
|
|
|
|
|
|
All of the profit from discontinued operations,
net of tax, in the year ended 31 December 2022 relates to the
Financial segment, which was disposed in July 2022 for a cash
consideration of $228.1 million (€223.9 million).
The following table provides a full
reconciliation between adjusted and actual results from
discontinued operations:
For the year ended 31 December 2022
|
|
|
Profit
from
discontinued
operations
attributable
to
the owners
of
the
Company
€'m
|
|
Reported as actual
|
74.5
|
24.4
|
47.0
|
|
Employee stock option expenses
|
-
|
0.3
|
0.2
|
|
Professional fees1
|
-
|
9.1
|
9.1
|
Profit on disposal of discontinued
operations
|
|
|
|
|
|
|
|
|
1 On the completion of
the disposal, the break fee of US$8.8 million to the Consortium
that had previously agreed to acquire the Financial segment, as
announced in May 2021, was triggered and therefore paid. This is
included in professional fees.
Earnings per share from discontinued
operations
The net cash flows incurred by the Financial
segment in the period are as follows:
|
|
|
|
|
Operating
|
-
|
28.2
|
|
Investing
|
-
|
(3.8)
|
|
|
|
|
|
|
|
|
The above net cash inflow does not include the
disposal proceeds.
Note 10 - Revenue from contracts with
customers
The Group has disaggregated revenue into various
categories in the following tables which is intended to:
• depict how the nature,
amount, timing and uncertainty of revenue and cash flows are
affected by recognition date; and
• enable users to
understand the relationship with revenue segment information
provided in the segmental information note.
Revenue analysis by geographical location of
licensee, product type and regulated vs unregulated by geographical
major markets
The revenues from B2B (consisting of licensee
fee, fixed-fee income, revenue received from the sale of hardware,
cost-based revenue and additional B2B services fee) and B2C are
described in Note 6D.
Upon signing a software licence agreement with a
new licensee, the Group verifies its gambling licence
(jurisdiction) and registers it accordingly to the Group's
database. The table below shows the revenues generated from the
jurisdictions of the licensee.
Playtech has disclosed jurisdictions with
revenue greater than 10% of the total Group revenue separately and
categorised the remaining revenue by wider jurisdictions, being
Rest of Europe, Latin America (LATAM) and Rest of World.
For the year ended 31 December 2023
Primary geographic
markets
|
|
|
Sun Bingo
and Other B2C
€'m
|
|
|
|
|
|
|
Italy
|
36.9
|
945.4
|
-
|
-
|
-
|
945.4
|
(10.6)
|
971.7
|
|
UK
|
127.0
|
-
|
73.4
|
-
|
-
|
73.4
|
(3.8)
|
196.6
|
|
Mexico
|
183.0
|
-
|
-
|
-
|
-
|
-
|
-
|
183.0
|
|
Rest of Europe
|
232.4
|
1.2
|
-
|
18.2
|
(1.2)
|
18.2
|
-
|
250.6
|
|
LATAM
|
44.8
|
-
|
-
|
-
|
-
|
-
|
-
|
44.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B licensee fee
|
467.2
|
-
|
(12.6)
|
454.6
|
|
B2B fixed-fee income
|
32.8
|
-
|
(0.8)
|
32.0
|
|
B2B cost-based revenue
|
57.4
|
-
|
(1.0)
|
56.4
|
|
B2B revenue received from the sale of
hardware
|
13.8
|
-
|
-
|
13.8
|
Additional B2B services fee
|
|
|
|
|
|
|
|
|
|
|
|
Snaitech
|
-
|
946.6
|
-
|
946.6
|
|
Sun Bingo and Other B2C
|
-
|
73.4
|
-
|
73.4
|
|
HAPPYBET
|
-
|
18.2
|
-
|
18.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated - Americas
|
|
|
- US and Canada
|
13.2
|
|
- Latin America
|
198.7
|
|
Regulated - Europe (excluding UK)
|
200.1
|
|
Regulated - UK
|
126.1
|
Regulated - Rest of World
|
|
|
Total regulated B2B
revenue
|
545.1
|
|
|
|
Total B2B Gambling
revenue
|
|
For the year ended 31 December 2022
Primary geographic markets
|
|
|
Sun Bingo
and Other B2C
€'m
|
|
|
|
|
Total
Gaming
-
continuing
operations
€'m
|
Financial
-
discontinued
operations
€'m
|
|
|
Italy
|
35.1
|
897.7
|
-
|
-
|
-
|
897.7
|
(10.0)
|
922.8
|
1.3
|
924.1
|
|
UK
|
127.0
|
-
|
65.2
|
-
|
-
|
65.2
|
(3.7)
|
188.5
|
34.1
|
222.6
|
|
Rest of Europe
|
233.3
|
2.1
|
0.1
|
20.1
|
(2.1)
|
20.2
|
-
|
253.5
|
10.4
|
263.9
|
|
LATAM
|
160.7
|
-
|
-
|
-
|
-
|
-
|
-
|
160.7
|
18.6
|
179.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Gaming
-
continuing
operations
€'m
|
Financial
-
discontinued
operations
€'m
|
|
|
B2B licensee fee
|
451.7
|
-
|
(12.4)
|
439.3
|
-
|
439.3
|
|
B2B fixed-fee income
|
42.1
|
-
|
(0.6)
|
41.5
|
-
|
41.5
|
|
B2B cost-based revenue
|
59.9
|
-
|
(0.7)
|
59.2
|
-
|
59.2
|
|
B2B revenue received from the sale of
hardware
|
13.2
|
-
|
-
|
13.2
|
-
|
13.2
|
Additional B2B services fee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Snaitech
|
-
|
899.8
|
-
|
899.8
|
-
|
899.8
|
|
Sun Bingo and Other B2C
|
-
|
65.3
|
-
|
65.3
|
-
|
65.3
|
|
HAPPYBET
|
-
|
20.1
|
-
|
20.1
|
-
|
20.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated - Americas
|
|
|
- US and Canada
|
7.6
|
|
- Latin America
|
137.1
|
|
Regulated - Europe (excluding UK)
|
184.6
|
|
Regulated - UK
|
126.7
|
Regulated - Rest of World
|
|
|
Total regulated B2B
revenue
|
461.6
|
|
|
|
Total B2B Gambling
revenue
|
|
There were no changes in the Group's revenue
measurement policies and procedures in 2023 and 2022. The vast
majority of the Group's B2B contracts are for the delivery of
services within the next 12 months. For the year ended 31 December
2023, Playtech recognised revenue from a single customer totalling
approximately 10.3% of the Group's total revenue (2022: no single
customer accounted for over 10%).
The Group's contract liabilities, in other words
deferred income, primarily include advance payment for hardware and
services and also include certain fixed fees paid by the licensee
in the beginning of the contract. Deferred income as at 31 December
2023 was €6.2 million (2022: €6.0 million).
The movement in contract liabilities during the
year was as follows:
|
|
|
|
|
Balance at 1 January
|
6.0
|
8.1
|
|
Recognised during the year
|
8.0
|
8.4
|
Realised in the profit or loss
|
|
|
|
|
|
|
Note 11 - Adjusted items
Management regularly uses adjusted financial
measures internally to understand, manage and evaluate the business
and make operating decisions. These adjusted measures are among the
primary factors management uses in planning for and forecasting
future periods. The primary adjusted financial measures are
Adjusted EBITDA and Adjusted Profit, which management considers are
relevant in understanding the Group's financial performance. The
definitions of adjusted items and underlying adjusted results are
disclosed in Note 6 paragraph U.
As these are not a defined performance measure
under IFRS, the Group's definition of adjusted items may not be
comparable with similarly titled performance measures or
disclosures by other entities.
The following tables provide a full
reconciliation between adjusted and actual results from continuing
operations:
For the year ended 31 December
2023
|
|
|
|
|
Profit
before
tax
from
continuing
operations
€'m
|
Profit
from
continuing
operations
attributable
to
the
owners
of
the
Company
€'m
|
|
Reported as actual
|
1,706.7
|
157.9
|
248.6
|
406.5
|
235.8
|
105.1
|
|
Employee stock option expenses1
|
-
|
5.6
|
0.7
|
6.3
|
6.3
|
6.3
|
|
Professional fees2
|
-
|
13.4
|
1.0
|
14.4
|
14.4
|
14.4
|
|
Impairment of investment and
receivables3
|
-
|
5.1
|
-
|
5.1
|
5.1
|
5.1
|
|
Fair value changes and finance costs on
contingent consideration4
|
-
|
-
|
-
|
-
|
3.3
|
3.3
|
|
Fair value changes of equity
instruments5
|
-
|
-
|
-
|
-
|
6.6
|
6.6
|
|
Fair value change of derivative financial
assets5
|
-
|
-
|
-
|
-
|
(153.4)
|
(153.4)
|
|
Amortisation of intangible assets on
acquisitions6
|
-
|
-
|
-
|
-
|
42.6
|
42.6
|
|
Impairment of intangible assets7
|
-
|
-
|
-
|
-
|
89.8
|
89.8
|
|
Deferred tax on acquisitions6
|
-
|
-
|
-
|
-
|
-
|
(8.2)
|
|
Derecognition of brought forward deferred tax
asset8
|
-
|
-
|
-
|
-
|
-
|
37.2
|
Tax related to uncertain positions9
|
|
|
|
|
|
|
|
Adjusted measure
|
1,706.7
|
182.0
|
250.3
|
432.3
|
250.5
|
156.8
|
1 Employee stock option
expenses relate to non-cash expenses of the Group and differ from
year to year based on share price and the number of options
granted.
2 The vast majority of
the professional fees relate to the acquisition of Hard Rock
Digital (Note 21B) and the Caliplay disputes (Note 7). These
expenses are not considered ongoing costs of operations and
therefore are excluded.
3 Provision against
investments and other receivables that do not relate to the
ordinary operations of the Group.
4 Fair value change and
finance costs on contingent consideration mostly related to the
acquisition of AUS GMTC. These expenses are not considered ongoing
costs of operations and therefore are excluded.
5 Fair value changes of
equity instruments and derivative financial assets. These are
excluded from the results as they relate to unrealised
profit/loss.
6 Amortisation and deferred
tax on intangible assets acquired through business combinations.
Costs directly related to acquisitions are not considered ongoing
costs of operations and therefore are excluded.
7 Impairment of
intangible assets mainly relates to the impairment of Eyecon €7.8
million, Quickspin €9.6 million and Sports B2B €72.2 million. Refer
to Note 20.
8 The reported tax
expense has been adjusted for the derecognition of a deferred tax
asset of €37.2 million relating to UK tax losses. This was adjusted
because the losses in relation to the derecognised amount were
generated over a number of years and therefore distorts the
effective tax rate for the year. Refer to Notes 7, 15 and
33.
9 Change in estimates related
to uncertain overseas tax positions in respect of prior years which
have now been settled with the relevant tax authority.
For the year ended 31 December 2022
|
|
|
|
|
Profit
before
tax
from
continuing
operations
€'m
|
Profit
from
continuing
operations
attributable
to
the
owners
of the
Company
€'m
|
|
Reported as actual
|
1,601.8
|
138.4
|
223.9
|
362.3
|
95.6
|
40.6
|
|
Employee stock option expenses1
|
-
|
7.1
|
0.9
|
8.0
|
8.0
|
8.0
|
|
Professional fees2
|
-
|
15.7
|
-
|
15.7
|
15.7
|
15.7
|
|
Fair value change and finance cost on
contingent consideration and redemption liability3
|
-
|
(4.3)
|
-
|
(4.3)
|
(4.2)
|
(4.2)
|
|
Ukraine employee support costs4
|
-
|
3.3
|
-
|
3.3
|
3.3
|
3.3
|
|
Onerous contract5
|
-
|
-
|
10.4
|
10.4
|
10.4
|
10.4
|
|
Fair value changes of equity
instruments6
|
-
|
-
|
-
|
-
|
0.3
|
0.3
|
|
Fair value changes of derivative financial
assets6
|
-
|
-
|
-
|
-
|
(6.0)
|
(6.0)
|
|
Fair value loss on convertible
loans7
|
-
|
-
|
-
|
-
|
3.0
|
3.0
|
|
Amortisation of intangible assets on
acquisitions8
|
-
|
-
|
-
|
-
|
42.0
|
42.0
|
|
Impairment of property, plant and equipment and
intangible assets9
|
-
|
-
|
-
|
-
|
38.5
|
38.5
|
|
Loss on disposal of subsidiary10
|
-
|
-
|
-
|
-
|
8.8
|
8.8
|
|
Deferred tax on acquisitions8
|
-
|
-
|
-
|
-
|
-
|
(8.3)
|
Tax related to uncertain positions11
|
|
|
|
|
|
|
|
Adjusted measure
|
1,601.8
|
160.2
|
235.2
|
395.4
|
215.4
|
160.5
|
1 Employee stock option
expenses relate to non-cash expenses of the Group and differ from
year to year based on share price and the number of options
granted.
2 The vast majority of
the professional fees relate to the potential sale of the Group.
These expenses are not considered ongoing costs of operations and
therefore are excluded.
3 Fair value change and
finance costs on redemption liability related to the acquisition of
Statscore. These expenses are not considered ongoing costs of
operations and therefore are excluded.
4 Financial support provided
to the employees based in Ukraine. These expenses are not
considered ongoing costs of operations and therefore are
excluded.
5 One-off payment to
terminate an onerous contract with a former service provider made
in H1 2022. This expense is not considered an ongoing cost of
operations and therefore is excluded.
6 Fair value changes of
equity instruments and derivative financial assets. These are
excluded from the results as they relate to unrealised
profit/loss.
7 Fair value loss on
convertible loans relates to Gameco. This write off is not
considered an ongoing cost of operations and is excluded. Refer to
Note 21B.
8 Amortisation and deferred
tax on intangible assets acquired through business combinations.
Costs directly related to acquisitions are not considered ongoing
costs of operations and therefore are excluded.
9 Impairment of
property, plant and equipment and intangible assets mainly relates
to the impairment of Eyecon €13.6 million, Quickspin €7.0 million,
Bingo VF €12.5 million and IGS €5.6 million.
10 Loss arising on the disposal of
Statscore, previously a subsidiary of the Group. Even though
Statscore was a separate CGU which was tested for impairment
biannually up to the date of disposal, it didn't meet the criteria
of IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations of being a separate major line of business for the
Group. As such, it was not presented separately as discontinued
operations as at 31 December 2022. This loss is not considered an
ongoing cost of operations and therefore is excluded. Refer to Note
21A.
11 Change in estimates related to
uncertain overseas tax positions in respect of prior
years.
The following table provides a full
reconciliation between adjusted and actual tax from continuing
operations:
|
|
|
|
|
Tax on profit or loss for the year
|
130.7
|
55.0
|
|
Adjusted for:
|
|
|
|
Deferred tax on intangible assets on
acquisitions
|
8.2
|
8.3
|
|
Derecognition of brought forward deferred tax
asset
|
(37.2)
|
-
|
Tax related to uncertain positions
|
|
|
|
|
|
|
Note 12 - Auditor's remuneration
|
|
|
|
|
Group audit and Parent Company (BDO)
|
3.0
|
2.3
|
|
Audit of subsidiaries (BDO)
|
1.4
|
1.4
|
Audit of subsidiaries (non-BDO)
|
|
|
|
|
|
|
|
Non-audit services provided by
Parent Company auditor and its international member
firms
|
|
|
|
|
|
|
|
|
|
|
Note 13 - Impairment of property, plant and
equipment and intangible assets
|
|
|
|
|
Reversal of impairment of property, plant and
equipment (Note 18)
|
-
|
(0.2)
|
Impairment of intangible assets (Note
20)
|
|
|
|
|
|
|
Impairment of intangible assets for 2023 mainly
relates to the impairment of Eyecon €7.8 million, Quickspin €9.6
million and Sports B2B €72.2 million. Refer to Note 20.
Impairment of intangible assets for 2022 relates
to the impairment of Eyecon €13.6 million, Quickspin €7.0 million,
Bingo VF €12.5 million and IGS €5.6 million.
Note 14 - Finance income and costs
A. Finance income
|
|
|
|
|
Interest income
|
10.0
|
2.4
|
|
Dividend income
|
0.1
|
-
|
Net foreign exchange gain
|
|
|
|
|
|
|
B. Finance costs
|
|
|
|
|
Interest on bonds
|
(29.5)
|
(35.7)
|
|
Interest on lease liability
|
(5.2)
|
(5.5)
|
|
Interest on loans and borrowings and
other
|
(2.2)
|
(6.0)
|
|
Bank facility fees
|
(2.3)
|
(7.0)
|
|
Bank charges
|
(2.8)
|
(3.9)
|
|
Movement in contingent consideration
|
(3.3)
|
(0.1)
|
|
Fair value loss on convertible loans
|
-
|
(3.0)
|
Expected credit loss on loans
receivable
|
|
|
|
|
|
|
|
|
|
|
Note 15 - Tax expense
|
|
|
|
|
Current tax expense
|
|
|
|
Income tax expense for the current
year
|
26.4
|
19.3
|
|
Income tax relating to prior
years1
|
16.1
|
9.1
|
|
|
|
|
Total current tax expense
|
|
|
|
Deferred tax
|
|
|
|
Origination and reversal of temporary
differences
|
85.4
|
23.5
|
|
Deferred tax movements relating to prior
years
|
1.8
|
8.1
|
Impact of changes in tax rates
|
|
|
Total deferred tax
expense
|
|
|
Total tax expense from continuing
operations
|
|
|
1 The majority of this relates to charges arising from the
change in estimate of income tax in relation to prior
years.
A reconciliation of the reported income tax
charge of €130.7 million (2022: €55.0 million) applicable to profit
before tax of €235.8 million (2022: €95.6 million) at the UK
statutory income tax rate of 23.5% is as follows:
|
|
|
|
|
Profit for the year
|
105.1
|
40.6
|
|
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax rate
(23.5% in 2023 and 19% in 2022)
|
55.4
|
18.2
|
|
Tax effect of:
|
|
|
|
Non-taxable fair value movements on call
options
|
(36.1)
|
(1.1)
|
|
Tax exempt income
|
-
|
(4.3)
|
|
Non-deductible expenses
|
35.6
|
19.8
|
|
Deferred tax asset in respect of Group
restructuring
|
(5.2)
|
(5.4)
|
|
Difference in tax rates applied in overseas
jurisdictions
|
1.2
|
13.8
|
|
Impact of changes in tax rates
|
0.2
|
(5.3)
|
|
Increase in unrecognised tax losses
|
24.5
|
2.1
|
|
Write-down of previously recognised deferred
tax assets
|
37.2
|
-
|
|
Adjustment in respect of previous
years:
|
|
|
|
- Deferred tax
|
1.8
|
8.0
|
|
|
|
|
|
|
|
|
Reported tax charge
A reported tax charge of €130.7 million from
continuing operations arises on a profit before income tax of
€235.8 million compared to an expected charge of €55.4 million
(2022: a tax charge of €55.0 million on profit before income tax of
€95.6 million). The reported tax expense includes adjustments in
respect of prior years relating to current tax and deferred tax of
€17.9 million. The prior year adjustment in respect of current tax
of €16.1 million includes an additional provision of €5.6 million
relating to uncertain overseas tax positions in respect of prior
years which have now been settled with the tax
authorities.
The Group's effective tax rate for the current
period is 55.4%. The key reasons for the differences
are:
• Profits of
subsidiaries located in territories where the tax rate is higher
than the UK statutory tax rate, this includes Snaitech profits in
Italy.
• The write-down of a
deferred tax asset of €37.2 million in respect of UK tax
attributes. Further details of this write-down are included in Note
7.
• Current year tax losses and
excess interest not recognised for deferred tax purposes. The tax
losses and excess interest mainly relate to the UK Group companies
and amount to €108.3 million.
• Expenses not
deductible for tax purposes including professional fees and
impairment of intangible assets.
Changes in tax rates and factors affecting the
future tax charge
The most significant elements of the Group's
income arise in the UK where the tax rate for the current period is
23.5%. Legislation was enacted in the UK which increased the
standard rate of UK corporation tax from 19% to 25% from 1 April
2023. Deferred tax balances have been calculated using the tax
rates upon which the balance is expected to unwind.
The Group adopted the amendments to IAS 12
issued in May 2023, which provide a temporary mandatory exception
from the requirement to recognise and disclose deferred taxes
arising from enacted tax law that implements the Pillar Two model
rules, including tax law that implements qualified domestic minimum
top-up taxes described in those rules. Under these amendments, any
Pillar Two taxes incurred by the Group will be accounted for as
current taxes from 1 January 2024. Based on an initial analysis of
the current year financial data, most territories in which the
Group operates are expected to qualify for one of the safe harbour
exemptions such that top-up taxes should not apply. In territories
where this is not the case, there is the potential for Pillar Two
taxes to apply; however, based on an initial assessment these are
not expected to be significant. The Group continues to refine this
assessment and analyse the future consequences of these rules and,
in particular, in relation to the fair value movements as to how
future fair value movements, should these arise, may impact the tax
charge.
Deferred tax
The deferred tax asset and liability are
measured at the enacted or substantively enacted tax rates of the
respective territories which are expected to apply to the year in
which the asset is realised or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date. The deferred tax balances within
the financial statements reflect the increase in the UK's main
corporation tax rate from 19% to 25% from 1 April 2023.
Note 16 -
Earnings per share
The calculation of basic earnings per share
(EPS) has been based on the following profit attributable to
ordinary shareholders and weighted average number of ordinary
shares outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to the owners of
the Company
|
|
|
|
|
|
|
Basic (cents)
|
34.7
|
51.7
|
|
29.2
|
67.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to the owners of
the Company from continuing operations
|
|
|
|
|
|
|
Basic (cents)
|
34.7
|
51.7
|
|
13.5
|
53.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator - basic
|
|
|
|
|
|
Weighted average number of equity
shares
|
|
|
|
|
|
|
Denominator - diluted
|
|
|
|
|
|
|
Weighted average number of equity
shares
|
303,279,998
|
303,279,998
|
|
300,059,994
|
300,059,994
|
Weighted average number of option
shares
|
|
|
|
|
|
Weighted average number of
shares
|
|
|
|
|
|
The calculation of diluted EPS has been based on
the above profit attributable to ordinary shareholders and weighted
average number of ordinary shares outstanding after adjustment for
the effects of all dilutive potential ordinary shares. The effects
of the anti-dilutive potential ordinary shares are ignored in
calculating diluted EPS.
EPS for discontinued operations is disclosed in
Note 9.
Note 17 - Employee benefits
Total staff costs comprise the
following:
|
|
|
|
|
Salaries and personnel-related costs
|
438.2
|
427.0
|
|
Cash-settled share-based payments
|
0.2
|
(0.3)
|
Equity-settled share-based payments
|
|
|
|
|
|
|
|
Average number of
personnel:
|
|
|
|
Distribution
|
6,868
|
6,269
|
General and administration
|
|
|
|
|
|
|
The Group has the following employee share
option plans (ESOP) for the granting of non-transferable options to
certain employees:
• the Long Term
Incentive Plan 2012 (LTIP). Awards (options, conditional share
awards, cash-settled awards, or a forfeitable share award) granted
under this plan vest on the first day on which they become
exercisable, which is typically between 18 and 36 months after
grant date; and
• the Long Term
Incentive Plan 2022 (LTIP22). Awards (options, conditional share
awards, restricted shares, cash-settled awards) granted under this
plan vest on the first day on which they become exercisable, which
is typically after 36 months.
The overall term of the ESOP is ten years. These
options are settled in equity or cash once exercised. Option prices
are denominated in GBP.
During 2023 the Group granted 3,023,945 nil cost
options under its LTIP22 which are subject to EPS growth, relative
total shareholder return (TSR) against constituents of the FTSE 250
but excluding the investment trusts index, and relative TSR against
a sector comparator group of peer companies. The fair value per
share according to the Monte Carlo simulation model is between
£3.84 and £5.85. Inputs used were as follows:
|
|
Share price
at
grant date
|
|
|
Projection
period
(years)
|
|
|
|
|
|
|
|
|
During 2022 the Group granted 492,765 nil cost
options under its LTIP22 which are subject to EPS growth, relative
total shareholder return (TSR) against constituents of the FTSE 250
but excluding the investment trusts index, and relative TSR against
a sector comparator group of peer companies. The fair value per
share according to the Monte Carlo simulation model is between
£2.71 and £4.58. Inputs used were as follows:
|
|
Share price
at
grant date
|
|
|
Projection
period
(years)
|
|
|
|
|
|
|
|
|
At 31 December 2023 and 2022 the following
options were outstanding:
|
|
|
|
|
Shares vested on 1 March 2018 at nil
cost
|
72,596
|
72,596
|
|
Shares vested between 1 September 2016 and 1
March 2018 at nil cost
|
12,411
|
20,890
|
|
Shares vested on 1 March 2019 at nil
cost
|
21,820
|
21,820
|
|
Shares vested between 1 September 2017 and 1
March 2019 at nil cost
|
23,344
|
39,021
|
|
Shares vested on 21 December 2019 at nil
cost
|
9,779
|
9,779
|
|
Shares vested on 1 March 2020 at nil
cost
|
77,326
|
98,444
|
|
Shares vested on 1 March 2021 at nil
cost
|
612,618
|
1,047,782
|
|
Shares vested between 1 March 2022 and 1 August
2022 at nil cost
|
1,260,489
|
2,218,735
|
|
Shares will vest by 19 December 2024 at nil
cost
|
1,400,000
|
1,900,000
|
|
Shares vested between 1 March 2023 and 26
October 2023 at nil cost
|
3,323,693
|
6,392,073
|
|
Shares will vest by 18 August 2025 at nil
cost
|
351,724
|
351,724
|
Shares will vest by 5 May 2026 at nil
cost
|
|
|
|
|
|
|
The total number of shares exercisable as of 31
December 2023 is 6,114,076 (2022: 4,729,067).
The total number of outstanding shares that will
be cash settled is 570,545 (2022: 561,385). The total liability
outstanding for the cash-settled options is €2.2 million (2022:
€3.1 million).
The following table illustrates the number and
weighted average exercise prices of share options for the
ESOP.
|
|
|
|
|
2023
Weighted
average
exercise price
|
2022
Weighted
average
exercise
price
|
|
Outstanding at the beginning of the
year
|
12,172,864
|
13,882,774
|
|
-
|
-
|
|
Granted
|
3,023,945
|
492,765
|
|
-
|
-
|
|
Forfeited
|
(1,137,717)
|
(408,237)
|
|
-
|
-
|
|
|
|
|
|
|
|
Outstanding at the end of the
year
|
|
|
|
|
|
Included in the number of options exercised
during the year are 176,142 options (2022: 50,448) which were cash
settled.
The weighted average share price at the date of
exercise of options was £5.39 (2022: £5.30).
Share options outstanding at the end of the year
have the following exercise prices:
|
|
|
|
|
|
21 December 2025
|
Nil
|
85,007
|
93,486
|
|
Between 21 December 2026 and 31 December
2026
|
Nil
|
54,943
|
70,620
|
|
Between 1 March 2027 and 28 June
2027
|
Nil
|
77,326
|
98,444
|
|
23 July 2028
|
Nil
|
609,607
|
1,044,771
|
|
Between 27 February 2029 and 19 December
2029
|
Nil
|
2,663,500
|
4,121,746
|
|
Between 17 July 2030 and 26 October
2030
|
Nil
|
3,323,693
|
6,392,073
|
|
18 August 2032
|
Nil
|
351,724
|
351,724
|
|
|
|
|
|
|
|
|
|
|
Note 18 - Property, plant and
equipment
|
|
Computer
software
and
hardware
€'m
|
|
Office
furniture
and
equipment
€'m
|
Buildings,
leasehold
buildings and
improvements
€'m
|
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2023
|
142.5
|
115.2
|
49.0
|
274.4
|
581.1
|
|
Additions
|
19.5
|
23.1
|
6.2
|
8.8
|
57.6
|
|
Acquisitions through business
combinations
|
-
|
0.1
|
0.1
|
-
|
0.2
|
|
Disposals
|
(6.2)
|
(2.8)
|
(1.1)
|
(3.8)
|
(13.9)
|
|
Reclassifications
|
-
|
1.9
|
(1.9)
|
-
|
-
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and
impairment losses
|
|
|
|
|
|
|
At 1 January 2023
|
104.1
|
78.0
|
28.2
|
29.4
|
239.7
|
|
Charge
|
17.5
|
16.1
|
6.1
|
6.8
|
46.5
|
|
Disposals
|
(6.1)
|
(2.6)
|
(0.7)
|
(3.6)
|
(13.0)
|
|
Reclassifications
|
-
|
1.9
|
(1.9)
|
-
|
-
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer
software
and
hardware
€'m
|
|
Office
furniture
and
equipment
€'m
|
Buildings,
leasehold
buildings
and
improvements
€'m
|
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2022
|
132.1
|
96.2
|
41.1
|
270.1
|
539.5
|
|
Prior year adjustment
|
(2.8)
|
5.5
|
1.1
|
(1.4)
|
2.4
|
|
Adjusted balance at 1 January
20221
|
129.3
|
101.7
|
42.2
|
268.7
|
541.9
|
|
Additions
|
19.8
|
15.8
|
8.8
|
9.2
|
53.6
|
|
Disposals
|
(6.3)
|
(2.3)
|
(2.0)
|
(3.8)
|
(14.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and
impairment losses
|
|
|
|
|
|
|
At 1 January 2022
|
95.3
|
61.4
|
24.5
|
28.6
|
209.8
|
|
Prior year adjustment
|
(1.1)
|
4.1
|
0.4
|
(1.0)
|
2.4
|
|
Adjusted balance at 1 January
20221
|
94.2
|
65.5
|
24.9
|
27.6
|
212.2
|
|
Charge
|
16.0
|
14.5
|
5.4
|
5.6
|
41.5
|
|
Impairment loss
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The comparative opening cost and
accumulated depreciation at 1 January 2022 on each class of
property, plant and equipment were restated to correct legacy
classification errors. The overall correction resulted in a total
increase in the opening cost of property, plant and equipment of
€2.4 million, with the same increase in total accumulated
depreciation on 1 January 2022. There was no impact to the total
net book value of the property, plant and equipment both at 1
January 2022 and 31 December 2022.
Note 19 - Leases
Set out below are the carrying amounts of right
of use assets recognised and the movements during the
year:
|
|
|
|
|
|
|
At 1 January 2023
|
60.5
|
11.1
|
-
|
71.6
|
|
Additions/modifications
|
14.2
|
6.8
|
1.4
|
22.4
|
|
On business combinations
|
1.9
|
-
|
-
|
1.9
|
|
Amortisation charge
|
(15.1)
|
(7.8)
|
(0.4)
|
(23.3)
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
67.8
|
6.0
|
73.8
|
|
Additions/modifications
|
7.4
|
12.1
|
19.5
|
|
Disposal of subsidiary
|
(0.2)
|
-
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
Set out below are the carrying amounts of lease
liabilities and the movements during the year:
|
|
|
|
|
At 1 January
|
85.8
|
90.1
|
|
Additions/modifications
|
22.0
|
18.8
|
|
On business combinations
|
1.9
|
-
|
|
Disposal of subsidiary
|
-
|
(0.2)
|
|
Accretion of interest
|
5.2
|
5.5
|
|
Payments
|
(28.3)
|
(27.1)
|
Foreign exchange movement
|
|
|
|
|
|
|
|
Current
|
24.9
|
31.8
|
|
|
|
|
|
|
|
|
The maturity analysis of lease liabilities is
disclosed in Note 39B.
The following are the amounts recognised in
profit or loss:
|
|
|
|
|
Amortisation expense of right of use
assets
|
23.3
|
21.5
|
|
Interest expense on lease
liabilities
|
5.2
|
5.5
|
|
Impact of early termination of lease
contracts
|
(0.4)
|
(0.7)
|
Variable lease payments (included in
distribution costs)
|
|
|
|
|
|
|
Note 20 - Intangible assets
|
|
Patents,
domain
names and licence
€'m
|
|
|
Customer
list and
affiliates
€'m
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2023
|
222.4
|
79.7
|
428.4
|
523.5
|
676.6
|
1,930.6
|
|
Additions
|
51.0
|
-
|
58.4
|
-
|
-
|
109.4
|
|
Assets acquired through business
combinations1
|
0.4
|
-
|
-
|
3.0
|
4.2
|
7.6
|
|
Disposal
|
(0.2)
|
-
|
(3.4)
|
-
|
(0.4)
|
(4.0)
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and
impairment losses
|
|
|
|
|
|
|
|
At 1 January 2023
|
133.8
|
72.4
|
300.3
|
376.4
|
66.8
|
949.7
|
|
Charge
|
43.5
|
3.0
|
49.4
|
30.8
|
-
|
126.7
|
|
Impairment loss
|
0.4
|
-
|
3.6
|
0.8
|
85.0
|
89.8
|
|
Disposals
|
-
|
-
|
(3.4)
|
-
|
(0.4)
|
(3.8)
|
Foreign exchange movement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents,
domain
names and
licence
€'m
|
|
|
Customer
list and
affiliates
€'m
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2022
|
191.4
|
86.5
|
363.6
|
526.9
|
773.6
|
1,942.0
|
|
Prior year adjustment2
|
(1.2)
|
(4.9)
|
11.1
|
(2.9)
|
(90.0)
|
(87.9)
|
|
Adjusted balance at 1 January 2022
|
190.2
|
81.6
|
374.7
|
524.0
|
683.6
|
1,854.1
|
|
Additions
|
32.2
|
-
|
59.4
|
-
|
-
|
91.6
|
|
Assets acquired through business
combinations
|
-
|
2.9
|
-
|
-
|
5.4
|
8.3
|
|
Disposal of subsidiary
|
-
|
(3.0)
|
(1.4)
|
(0.5)
|
(12.4)
|
(17.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and
impairment losses
|
|
|
|
|
|
|
|
At 1 January 2022
|
110.6
|
72.7
|
241.3
|
346.2
|
125.1
|
895.9
|
|
Prior year adjustment2
|
(1.1)
|
(0.5)
|
6.2
|
(2.5)
|
(90.0)
|
(87.9)
|
|
Adjusted balance at 1 January 2022
|
109.5
|
72.2
|
247.5
|
343.7
|
35.1
|
808.0
|
|
Charge
|
24.3
|
2.9
|
49.7
|
32.9
|
-
|
109.8
|
|
Impairment loss
|
-
|
-
|
7.0
|
-
|
31.7
|
38.7
|
|
Disposal of subsidiary
|
-
|
(0.9)
|
-
|
(0.2)
|
-
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 During the year, the Group acquired
the Giove group for a total consideration of €6.0 million. As a
result of this transaction, the Group recognised €7.3 million as
the fair value of the intangible assets, of which €3.9 million is
goodwill.
2 The comparative opening cost and
accumulated amortisation at 1 January 2022 on each class of
intangible assets were restated to correct legacy errors
principally arising on disposal of the Financials CGU, when it was
reclassified as held for sale in the year ended 31 December 2020.
There was no impact to the net book value of the intangible assets
both at 1 January 2022 and 31 December 2022.
During the year, the research and development
costs net of capitalised development costs were €101.2 million
(2022: €88.3 million). The internal capitalisation for the year was
€56.7 million (2022: €57.5 million).
Out of the total amortisation charge of €126.7
million (2022: €109.8 million), an amount of €42.6 million (2022:
€42.0 million) relates to the intangible assets acquired through
business combinations.
In accordance with IAS 36, the Group regularly
monitors the carrying value of its intangible assets, including
goodwill. Goodwill is allocated to 13 cash-generating units (CGUs)
(2022: 13).
The allocation of the goodwill to CGUs is as
follows:
|
|
|
|
|
Snai
|
263.4
|
259.7
|
|
AUS GMTC
|
4.4
|
4.4
|
|
Bingo retail
|
9.5
|
9.5
|
|
Casino
|
50.8
|
50.8
|
|
Poker
|
15.6
|
15.6
|
|
Eyecon
|
-
|
3.0
|
|
Quickspin
|
10.2
|
19.8
|
|
Sports B2B
|
60.3
|
132.5
|
|
VB retail
|
4.6
|
4.6
|
|
Services
|
109.9
|
109.9
|
|
Sports B2C
|
0.3
|
-
|
|
|
|
|
Management reviews CGUs for impairment
bi-annually with a detailed assessment of each CGU carried out
annually and whenever there is an indication that a unit may be
impaired. During the annual detailed review, the recoverable amount
of each CGU is determined from value in use calculations based on
cash flow projections covering five years (using the Board approved
three year plan along with a remaining two-year forecasted period)
plus a terminal value which have been adjusted to take into account
each CGU's major events as expected in future periods. A potential
risk for future impairment exists should there be a significant
change in the economic outlook versus those trends management
anticipates in its forecasts due to the occurrence of these
events.
With the exception of CGUs which have been fully
impaired to date and CGUs deemed sensitive to impairment from a
reasonably possible change in key assumptions as reviewed in
further detail below, management has used the Group's three-year
plan, however extended it to five years and calculated the growth
estimates for years one to five by applying an average annual
growth rate for revenue based on the underlying economic
environment in which the CGU operates and the expected performance
over that period. Beyond this period, management has applied an
annual growth rate of 2.0%. Management has included appropriate
capital expenditure requirements to support the forecast growth and
assumed the maintenance of the current level of licences.
Management has also applied post-tax discount rates to the cash
flow projections as summarised below.
2023 CGUs not sensitive to changes in
assumptions:
|
|
Average
revenue
growth
rate
2024-2028
|
|
|
Snai
|
3.1%
|
15.2%
|
|
AUS GMTC
|
15.8%
|
13.1%
|
|
Bingo retail
|
4.9%
|
13.8%
|
|
Casino
|
4.7%
|
13.1%
|
|
|
|
|
2022 CGUs not sensitive to changes in
assumptions:
|
|
Average
revenue
growth
rate
2023-2027
|
|
|
Snai
|
9.4%
|
17.3%
|
|
Services
|
22.2%
|
16.2%
|
|
Casino
|
5.5%
|
13.9%
|
|
Poker
|
6.2%
|
17.4%
|
|
|
|
|
In relation to the Eyecon, Quickspin and Sports
B2B CGUs, following impairment tests completed as at 31 December
2023, impairments have been recognised as disclosed below. Certain
other CGUs, which are specifically referred to below but not
impaired, are considered sensitive to changes in assumptions used
for the calculation of value in use.
Eyecon
CGU
The Eyecon CGU underperformed in 2022, mainly
due to the fact that its operations are highly concentrated in the
UK online market which has seen a slowdown due to the uncertain
regulatory climate, with an impairment loss of €13.6 million
recognised in the year ended 31 December 2022. Even though the unit
is making considerable efforts to expand to new markets, this has
yet to take effect. As a result, it continues to see declining
revenues and has been unable to meet budgets set, which led to a
further impairment of €7.8 million recognised in the current year,
which impairs the assets down to the recoverable amount. The
impairment is writing down €3.0 million of goodwill, €0.4 million
of brands, €0.8 million of customer lists and €3.6 million of
development costs. The recoverable amount of this CGU of €9.7
million, with a carrying value equal to €17.5 million
(pre-impairment) at 31 December 2023, was determined using a cash
flow forecast that includes annual revenue growth rates between 2%
and 11.0% over the one to five-year forecast period (2022: annual
revenue growth rates between 0% and 10.0%), 2.0% long-term growth
rate (2022: 2.0% long-term growth rate) and a post-tax discount
rate of 15.1% (2022: post-tax discount rate of 15.6%). Following
the impairment posted, all assets have been impaired down to the
recoverable amount.
Quickspin CGU
The recoverable amount of the Quickspin CGU was
impaired in 2022 by €7.0 million, given the risk the CGU bore from
the proportion of revenues being generated from the Group's B2B
customers choosing to operate in areas with geopolitical tension
and the overall decrease in the CGU performance which went through
organisational updates. The unit is still going through a
transitional period and has seen a decline in revenue in the last
three years, which led to an additional €9.6 million impairment
being recognised in the current year. The recoverable amount of
this CGU of €32.1 million, with a carrying value of €41.7 million
(pre-impairment) at 31 December 2023, has been determined using a
cash flow forecast that includes annual revenue growth rates
between 5.0% and 7.2% over the one to five-year forecast period
(2022: annual revenue growth rates between 5.0% and 15.1%), 2.0%
long-term growth rate (2022: 2.0% long-term growth rate) and a
post-tax discount rate of 12.4% (2022: post-tax discount rate of
12.1%).
If the revenue growth rate per annum is lower by
1%, then an additional impairment of €6.2 million would be
recognised. Similarly, if the discount rate increases by 1% to a
post-tax discount rate of 13.4%, this would result in a further
impairment of €2.9 million.
Sports B2B CGU
The recoverable amount of the Sports B2B CGU,
with a carrying value of €236.2 million, has been determined using
a cash flow forecast that includes annual revenue growth rates
ranging from a decline of 20.0% to an increase of 15.0%, over the
one to five-year forecast period (2022: annual revenue growth rates
between negative 6.1% and 20% positive), a 2.0% long-term growth
rate (2022: 2.0% long-term growth rate) and a post-tax discount
rate of 13.7% (2022: post-tax discount rate of 14.9%). As a result
of two major retail licensees terminating their contracts during
the current year, the recoverable amount of €164.0 million
does not exceed the carrying value as stated above (pre-impairment)
and therefore an impairment loss of €72.2 million was
recognised in the year ended 31 December 2023.
If the revenue growth rate per annum is lower by
1.0%, then an additional impairment of €20.2 million would be
recognised. Similarly, if the discount rate increases by 1.0% to a
post-tax discount rate of 14.7%, this would result in a further
impairment of €16.4 million.
Bingo VF
CGU
The recoverable amount of the Bingo VF CGU was
impaired by €12.5 million during the year ended 31 December 2022 as
a result of a contract termination with a significant licensee and
also the decrease in the CGU's performance. Since last year the CGU
has started to generate organic growth by expanding into new
geographies. No further impairment has been recognised in the
current year. The recoverable amount of the CGU of €12.9 million,
with a carrying value of €12.6 million, has been determined using a
cash flow forecast that includes annual revenue growth rates
between 9.0% and 10.0% over the one to five-year forecast period
(2022: annual revenue growth rates between negative 1.0% and
positive 10.0%), a 2.0% long-term growth rate (2022: 2.0% long-term
growth rate) and a post-tax discount rate of 15.1% (2022: post-tax
discount rate of 15.8%). The recoverable amount would equal the
carrying value of the CGU if:
• the discount
rate applied reached a post-tax discount rate of 15.4%. If the
discount rate increases by 1.0% to a post-tax discount rate of
16.1%, this would result in an impairment of €0.9 million;
or
• the revenue
growth was lower by 0.1% when compared to the forecasted average
five-year growth. If the revenue growth was lower by 1% when
compared to the forecasted average five-year growth, this would
cause an impairment of €4.1 million.
VB
Retail CGU
The recoverable amount of the VB Retail CGU
showed signs of underperformance during H1 2023, mainly due to the
cancellation of an important licensee deal that had been expected
to launch in early 2023. Given that new opportunities are arising
through the US business, no impairment has been recognised as at 31
December 2023. The recoverable amount of this CGU of €31.9 million,
with a carrying value of €25.2 million at 31 December 2023,
has been determined using a cash flow forecast that includes annual
revenue growth rates between 8.0% and 13.0% over the one to
five-year forecast period (2022: annual revenue growth rates
between 8.0% and 18.0%), 2.0% long-term growth rate (2022: 2.0%
long-term growth rate) and a post-tax discount rate of 12.7% (2022:
post-tax discount rate of 12.4%). The recoverable amount would
equal the carrying value of the CGU if:
• the discount rate applied was higher by 20.7%,
i.e. reaching a post-tax discount rate of 15.3%; or
• the revenue growth was lower by 2.2% when
compared to the forecasted average five-year growth.
Services CGU
The recoverable amount of the Services CGU, with
a carrying value of €283.9 million, which has not been impaired,
has been determined using a cash flow forecast that includes annual
revenue growth rates ranging from negative 7.0% and positive 6.2%
over the one to five-year forecast period (2022: annual revenue
growth rates between 5.0% and 38.0%), a 2.0% long-term growth rate
(2022: 2.0% long-term growth rate) and a post-tax discount rate of
18.3% (2022: post-tax discount rate of 16.2%).
The recoverable amount would equal the carrying
value of the CGU if:
• the discount rate
applied was higher by 41.4%, i.e. reaching a post-tax discount rate
of 25.9%; or
• the revenue growth was
lower by 4.5% when compared to the forecasted average five-year
growth.
General
Whilst our current contract with Caliplay under
which we are entitled to receive our fees (including the B2B
licensee fees and the additional B2B services fees) is expiring in
2034, and this was our base assumption in our CGU impairment
reviews, should there be material changes to the cash flows arising
from the contract this could potentially lead to impairments in
certain CGUs of the Group including Casino, Sports B2B, Services,
Quickspin and Eyecon. However, given the headroom in the Casino CGU
and relatively low levels of goodwill, there would need to be a
number of other factors impacting the CGU before an impairment is
apparent, and hence it is not considered sensitive and the
additional disclosures given for the other more sensitive CGUs are
not required for this CGU.
Note 21 - Investments and derivative financial
assets
Introduction
Below is a breakdown of the relevant assets at
31 December 2023 and 2022 per the consolidated balance
sheet:
|
|
|
|
|
A. Investments in associates
|
51.5
|
36.6
|
|
B. Other investments
|
92.8
|
9.2
|
C. Derivative financial assets
|
|
|
|
|
|
|
The following are the amounts recognised in the
statement of comprehensive income:
|
|
|
|
|
Profit or loss
|
|
|
|
A. Share of loss from associates
|
(0.8)
|
(3.8)
|
|
B. Unrealised fair value changes of equity
investments
|
(6.6)
|
(0.3)
|
|
C. Unrealised fair value changes of derivative
financial assets
|
153.4
|
6.0
|
|
|
|
|
|
Other comprehensive
income
|
|
|
Foreign exchange movement from the derivative
call options and equity investments held in non-Euro functional
currency subsidiaries
|
|
|
|
|
|
|
Where the underlying derivative call option and
equity investments are held in a non-Euro functional currency
entity, the foreign exchange movement is recorded through other
comprehensive income. As at 31 December 2023, the foreign exchange
movement of the derivative call options held in Caliplay, LSports
and NorthStar (Note 21C) is recorded in profit or loss as these
options are held in Euro functional currency entities. The foreign
exchange movement of the derivative call options held in Wplay,
Onjoc and Tenbet and the small minority equity investment in Hard
Rock Digital are recorded through other comprehensive income as
these are held in USD functional currency entities.
The recognition and valuation methodologies for
each category are explained in each of the relevant sections below,
including key judgements made under each arrangement as described
in Note 7.
A. Investments in associates
Balance sheet
|
|
|
|
|
Caliplay
|
-
|
-
|
|
ALFEA SPA
|
1.7
|
1.7
|
|
Galera
|
-
|
-
|
|
LSports
|
35.2
|
34.9
|
|
Stats International
|
-
|
-
|
|
NorthStar
|
9.0
|
-
|
Sporting News Holdings Limited
|
|
|
Total investment in equity accounted
associates
|
|
|
Profit and loss impact
|
|
|
|
|
Share of profit in ALFEA SPA
|
0.1
|
0.1
|
|
Share of loss in Galera
|
-
|
(3.6)
|
|
Share of profit/(loss) in LSports
|
2.1
|
(0.3)
|
|
Share of loss in NorthStar
|
(2.8)
|
-
|
Share of loss in Sporting News Holdings
Limited
|
|
|
Total profit and loss
impact
|
|
|
Movement on
the balance sheet
|
|
ALFEA
SPA
|
LSports
|
NorthStar
|
Sporting
News Holdings Limited
|
Total
|
|
|
€'m
|
€'m
|
€'m
|
€'m
|
€'m
|
|
Balance as at 31 December 2022 / 1 January
2023
|
1.7
|
34.9
|
-
|
-
|
36.6
|
|
Additions
|
-
|
-
|
3.4
|
5.8
|
9.2
|
|
Conversion of convertible loan to
shares
|
-
|
-
|
8.4
|
-
|
8.4
|
|
Share of profit/(loss)
|
0.1
|
2.1
|
(2.8)
|
(0.2)
|
(0.8)
|
|
Dividend income
|
(0.1)
|
(1.8)
|
-
|
-
|
(1.9)
|
Balance as at 31 December 2023
|
|
|
|
|
|
Caliplay
Background
During 2014, the Group entered into an agreement
with Turística Akalli, S. A. de C.V, which has since changed its
name to Corporacion Caliente S.A. de C.V. ("Caliente"), the
majority owner of Tecnologia en Entretenimiento Caliplay, S.A.P.I.
de C.V ("Caliplay"), which is a leading online betting and gaming
operator in Mexico which operates the "Caliente" brand in
Mexico.
The Group made a €16.8 million loan to September
Holdings B.V. (previously the 49% shareholder of Caliplay), a
company which is 100% owned by Caliente, in return for a call
option that would grant the Group the right to acquire 49% of the
economic interest of Caliplay for a nominal amount (the "Playtech
Call Option").
During 2021, Caliplay redeemed its share at par
from September Holdings, which resulted in Caliente owning
substantially all of the shares in Caliplay. The terms of the
existing structured agreement were varied, with the following key
changes:
• A new additional
option (in addition to the Playtech Call Option) was granted to the
Group which allowed the Group to take up to a 49% equity interest
in a new acquisition vehicle should Caliplay be subject to a
corporate transaction - this additional option is only exercisable
in connection with a corporate transaction and therefore was not
exercisable at 31 December 2023 or 31 December 2022 (the "Playtech
M&A Call Option").
• Caliente received a
put option which would require Playtech to acquire September
Holding Company B.V. for a nominal amount (the "September Put
Option"). This option has been exercised and the parties are in the
process of transferring legal ownership of September Holding
Company B.V. to the Group.
The Group has no equity holding in Caliplay and
is currently providing services to Caliplay including technical and
general strategic support services for which it receives income
(including an additional B2B services fee as described in Note 10).
If either the Playtech Call Option or the Playtech M&A Call
Option is exercised, the Group would no longer be entitled to
receive the additional B2B services fee (and will cease to provide
certain related services) which for the year ended 31 December 2023
was €111.7 million (2022: €66.3 million). In addition, for 45 days
after the finalisation of Caliplay's 2021 accounts, Caliplay also
had an option to redeem the Group's additional B2B services fee or
(if the Playtech Call Option had been exercised at that time)
Caliente would have the option to acquire Playtech's 49% stake in
Caliplay (together the "Caliente Call Option").
As per the public announcement made by the Group
on 6 February 2023, the Group is seeking a declaration from the
English Courts to obtain clarification on a point of disagreement
between the parties in relation to the Caliente Call Option. The
Group believes the Caliente Call Option has expired and referred to
its expiry having taken place in its interim report for the
six-month period ended 30 June 2022, which was published on 22
September 2022. If the Caliente Call Option was declared as being
exercisable and was exercised, this would extinguish the Playtech
Call Option and the Playtech M&A Call Option. The Group has not
changed its position with regard to this assumption and the matter
is still unresolved with the English litigation still
ongoing.
In addition to the above, from 1 January 2025,
if there is a change of control of Caliplay or any member of the
Caliente group which holds a regulatory permit under which Caliplay
operates, each of the Group and Caliente shall be entitled (but not
obligated), within 60 days of the time of such change of control,
to require that the Caliente group redeems the Group's additional
B2B services fee or (if the Playtech Call Option had been exercised
at that time) acquires Playtech's 49% stake in Caliplay (together
the "COC Option''). If such change of control were to take place
and the right to redeem/acquire were to occur, this would
extinguish the Playtech Call Option (to the extent not exercised
prior thereto) and the Playtech M&A Call Option. As regards the
COC Option, the Group made a judgement that as at 31 December 2022
this had no impact on the fair value calculation of the Playtech
M&A Call Option (i.e. allocated a 0% probability that Playtech
would realise any value from the exercise of the COC Option). As at
31 December 2023, the Group allocated a low probability that it
would realise value from this option, instead of the Playtech
M&A Call Option. This is discussed further in part C of this
note.
Assessment of control and significant
influence
As at 31 December 2023 and 2022 it was assessed
that the Group did not have control over Caliplay, because it does
not meet the criteria of IFRS 10 Consolidated Financial Statements,
paragraph 7 due to the following:
• Despite the Group
previously having a nominated director on the Caliplay board in
2020 and having consent rights on certain decisions (in each case,
removed in 2021), there was no ability to control the relevant
activities.
• The Playtech Call
Option or the Playtech M&A Call Option, if exercised, would
result in Playtech having up to 49% of the voting rights and would
not result in Playtech having control.
• Whilst the Group does
receive variable returns from its structured agreement, it does not
have the power to direct relevant activities so any variation
cannot arise from such a power.
As at 31 December 2023 and 2022, the Group has
significant influence over Caliplay because it meets one or more of
the criteria under IAS 28, paragraph 6 as follows:
• The standard operator
revenue by itself is not considered to give rise to significant
influence; however, when combined with the additional B2B services
fee, this is an indicator of significant influence.
• The material
transaction of the historical loan funding is also an indicator of
significant influence.
Accounting for each of the options
The Playtech Call Option was exercisable at 31
December 2023 and 2022, although it still has not been exercised.
As the Group has significant influence and the option is
exercisable, the investment is recognised as an investment in
associate using the equity accounting method which includes having
current access to profits and losses. The cost of the investment
was previously deemed to be the loan given through September
Holdings of €16.8 million, which at the time was assessed under IAS
28, paragraph 38 as not recoverable for the foreseeable future and
part of the overall investment in the entity.
In 2021, with the introduction of the September
Put Option, the investment in associate relating to the original
Playtech Call Option was reduced to zero and the €16.8 million
original loan amount was determined by management to be the cost of
the new Playtech M&A Call option and therefore fully offset the
balance of €16.8 million against the overall fair value movement of
the Playtech M&A Call Option (refer to part C of this
note).
The Playtech M&A Call Option is not
currently exercisable and therefore in accordance with IAS 28,
paragraph 14 has been recognised as derivative financial asset, and
disclosed separately under part C of this note.
As per the judgement in Note 7, the Group did
not consider it appropriate to equity account for the share of
profits as the current 100% shareholder is entitled to any
undistributed profits.
Below is the financial information of
Caliplay:
|
|
|
|
|
Current assets
|
|
96.7
|
|
Non-current assets
|
|
30.3
|
|
Current liabilities
|
|
(78.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing
operations
|
|
30.4
|
Other comprehensive income, net of
tax
|
|
|
Total comprehensive
income
|
|
|
1 The 2022
balances above have been extracted from Caliplay's draft 2022
financial statements.
2
The Group has been unable to obtain the full 2023 financial
information from Caliplay. However, based on information provided
by Caliplay, the estimated revenue is €700.4 million and estimated
profit from continuing operations before tax (which takes account
of the deduction of the Group's unpaid B2B licensee fees and
additional B2B services fees) is €80.0 million.
Investment in ALFEA SPA
The Group has held 30.7% equity shares in ALFEA
SPA since June 2018. At 31 December 2023, the Group's value of the
investment in ALFEA SPA was €1.7 million (2022: €1.7 million). A
share of profit of €0.1 million was recognised in profit or loss
for the year ended 31 December 2023 (2022: a share of profit of
€0.1 million was recognised in the profit or loss).
Investment in Galera
In June 2021, the Group entered into an
agreement with Ocean 88 Holdings Ltd (Ocean 88) which is the sole
holder of Galera Gaming Group (together "Galera"), a company
registered in Brazil. Galera offers and operates online and mobile
sports betting and gaming (poker, casino, etc.) in Brazil. They
will continue to do so under the local regulatory licence, when
this becomes available, and will expand to other gaming and
gambling products based on the local licence conditions.
The Group's total consideration paid for the
investment in Galera was $5.0 million (€4.2 million) in the year
ended 31 December 2021, which was the consideration for the option
to subscribe and purchase from Galera an amount of shares equal to
40% in Galera at nominal price.
In addition to the investment amount paid,
Playtech made available to Galera a line of credit up to $20.0
million. In 2022, an amendment was signed to the original framework
agreement to increase the credit line to $45.0 million. As at 31
December 2023, an amount of €39.2 million, which is included in
loans receivable under other non-current assets (refer to Note 22),
has been drawn down (2022: €26.9 million). An amount of €12.3
million has been loaned in the year ended 31 December 2023. The
loan is required to be repaid to Playtech prior to any dividend
distribution to the current shareholders of Galera. The Group
recognised an allowance for expected credit losses for the loan to
Galera of €1.6 million at 31 December 2023 (2022: €1.1
million).
In respect of the loan receivable from Galera,
even though the framework agreement does not state a set repayment
term, management has assessed that this should still be recognised
as a loan as opposed to part of the overall investment in associate
in line with IAS 28. The Directors have made a judgement that the
loan will be settled from operational cash flows as opposed to
being settled as part of an overall transaction. If the Group had
determined that the loan was part of the overall investment in
associate, an additional cumulative €17.3 million share of loss of
associate would have been recorded in retained earnings since the
investment was made, of which €3.6 million would have been
recognised in 2023 in the profit or loss (2022: if the Group had
determined that the loan was part of the overall investment in
associate, an additional cumulative €13.7 million share of loss of
associate would have been recorded in retained earnings since the
investment was made, of which €11.6 million would have been
recognised in 2022 in the profit or loss).
On 31 October 2023, Ocean 88 acquired 60% of
F12.bet. Playtech has loaned Ocean 88 the amount of $10.1 million
(€9.5 million) for the acquisition of F12.bet which is included in
loans receivable from related parties (refer to Note 22). The loan
is repayable within five years from the disbursement date. The
Group recognised an allowance for expected credit losses for the
additional loan to Galera of €0.4 million as at 31 December 2023
(2022: €Nil).
Playtech has assessed whether it holds power to
control Galera and it was concluded that this is not the case. Even
if the option is exercised, it would only result in a 40% voting
right over the operating entity and therefore no
control.
Under the agreement in place:
• the standard
operator income to be generated from services provided to Galera
when combined with the additional B2B services fee, the loan and
certain other contractual rights, are all indicators of significant
influence; and
• the Group
provides standard B2B services (similar to services provided to
other B2B customers) as well as additional services to Galera that
Galera requires to assist it in successfully running its
operations, which could be considered essential technical
information.
Considering the above factors, the Group has
significant influence under IAS 28, paragraph 6 over
Galera.
As the option is currently exercisable and gives
Playtech access to the returns associated with the ownership
interest, the investment is treated as an investment in associate.
Playtech's interest in Galera is accounted for using the equity
method in the consolidated financial statements. Galera is
currently loss-making. If the call option is exercised by Playtech,
the Group will no longer provide certain services and as such will
no longer be entitled to the additional B2B services fee. The
additional B2B services fee was €Nil in the year ended 31 December
2023 (2022: €Nil).
The cost of the investment was deemed to be the
price paid for the option of $5.0 million (€4.2 million), which was
reduced to €Nil through the recognition of the Group's share of
losses.
Investment in LSports
Background
In November 2022, the Group entered into the
following transactions:
• acquisition of 15% of
Statscore for a total consideration of €1.8 million. As a result of
this transaction Statscore became a 100% subsidiary of the
Group;
• disposal of 100% of
Statscore to LSports Data Ltd ("LSports") for a total consideration
of €7.5 million (settled through the acquisition of LSports in
shares) less a novated inter-company loan of €1.6 million,
therefore a non-cash net consideration of €5.9 million;
and
• acquisition of 31% of
LSports for a total consideration of €36.7 million, which also
included an option to acquire further shares (up to 18.11%) in
LSports. Of the total consideration, €29.2 million was paid in cash
with the balance offset against the disposal proceeds of Statscore
as per the above.
As a result of the disposal of 100% of
Statscore, the Group realised a loss of €8.8 million which has been
recognised in profit or loss for the year ended 31 December 2022
and is made up as follows:
|
|
|
|
Net asset position as at the date of the
disposal (including goodwill of €12.4 million)
|
14.7
|
|
|
|
|
|
|
Furthermore, the Group has an option to acquire
up to 49% (so an additional 18%) of the equity of LSports ("LSports
Option"). The LSports Option is exercisable under the following
conditions:
• within 90 days from
the date of receipt of the LSports audited financial statements for
each of the years ending 31 December 2024, 2025 and 2026;
or
• at any time until 31
December 2026 subject and immediately prior to the consummation of
an Initial Public Offering or Merger & Acquisition event of
LSports.
The exercise price of the option will be equal
to the product of:
i. the % of the aggregate shares purchased upon
exercise of the PT option out of all shares of the company
multiplied by
ii. the greater of either:
a. LSports EBITDA preceding the
time of exercise as reflected in the company's annual audited
financial statements for that year, multiplied by a factor of 7;
or
b. €115 million.
The fair value of the option acquired was €1.4
million, which was part of the total consideration of €36.7
million. As at 31 December 2023, the fair value of the LSports
derivative financial asset increased to €4.8 million. The
difference of €3.4 million between the fair value at 31 December
2023 and the fair value at 31 December 2022 has been recognised in
profit or loss for the year ended 31 December 2023 (refer to part
of Note 21C).
LSports is a company whose principal activity is
to empower sportsbooks and media companies with the highest quality
sports data on a wide range of events, so they can build the best
product possible for their business. The company is based in
Israel. The principal reason of the acquisition is the attractive
opportunity considered by Playtech to increase its footprint in the
growing sports data market segment.
Assessment of control and significant
influence
As at the date of acquisition, 31 December 2023
and 2022, it was assessed that the Group did not have control over
LSports, because it does not meet the criteria of IFRS 10
Consolidated Financial Statements, paragraph 7 due to the
following:
• despite the
appointment and representation on the board of directors by a
Playtech employee as at 31 December 2023, there is still no ability
to control the relevant activities, as the total number of
directors including the Playtech appointed director is
five;
• Playtech has neither
the ability to change any members of the board nor of the
management of LSports; and
• as at 31 December 2023
and 31 December 2022 the option is not exercisable and therefore
can be disregarded in the assessment of power.
Per the above assessment, Playtech does not hold
power over the investee and as such does not have
control.
As at 31 December 2023 and 2022, the Group has
significant influence over LSports because it meets one or more of
the criteria under IAS 28, paragraph 6, the main one being the
Playtech employee appointed on the board of LSports, enabling it to
therefore participate in policy-making processes, including
decisions about dividends and/or other distributions. As a result
of this assessment, LSports has been recognised as an investment in
associate.
The LSports option, which is not currently
exercisable, is fair valued as per paragraph 14 of IAS 28 and shown
as a derivative financial asset in accordance with IFRS 9 and
disclosed separately under part C of this note.
Purchase Price Allocation (PPA)
The Group has prepared a PPA following the
acquisition of the investment, where any difference between the
cost of the investment and Playtech's share of the net fair value
of the LSports identifiable assets and liabilities results in
goodwill.
Details of the fair value of identifiable assets
and liabilities acquired, investment consideration and goodwill are
as follows:
|
|
Playtech's
share
of
net fair value
of
the identifiable
assets and
liabilities acquired
2022
€'m
|
|
Net book value of liabilities
acquired
|
(1.3)
|
|
Fair value of customer contracts and
relationships
|
7.8
|
|
Fair value of technology - internally
developed
|
11.5
|
|
Fair value of brand
|
1.6
|
Deferred tax arising on acquisition
|
|
|
|
|
|
|
|
|
|
|
Goodwill is not recognised separately but is
included as part of the carrying amount of the investment in
associate. The total share of profit recognised in profit or loss
in the year ended 31 December 2023 from the investment is LSports
was €2.1 million (2022: €0.3 million). This includes the
amortisation of intangibles and the release of the deferred tax
liability, arising on acquisition, and the share of the LSports
profits, with a corresponding entry against the investment in
associate.
During 2023, the Group received a dividend of
€1.8 million from LSports (2022: €Nil), which reduced the
investment in associate value in the consolidated balance
sheet.
Investment in
Stats International
Background
In January 2022, the Group provided
a $2.3 million loan to Stats International Limited ("Stats"), at an
interest rate of 3.5% and a repayment date of 30 June 2024. As at
31 December 2023 and 2022, the carrying value of the loan was €2.2
million (Note 22). The Stats group's
business activities are focused on securing rights in connection
with sporting competitions and the exploitation of the same,
typically in exchange for the payment of certain fees and provision
of analytical and statistical services by the Stats group to the
relevant rightsholder. The initial focus of the Stats group is on
Brazilian sports competitions.
In May 2023, the Group and Stats
signed an amended loan agreement which, amongst other things,
changed the repayment obligations such that the final repayment
date will be 31 December 2026 and the loan agreement will be
novated from Stats to Jewelrock (Stats' sole shareholder) in
consideration of $1. Moreover, a framework agreement was signed
between Stats and Playtech whereby Playtech, for a €1
consideration, has been granted the option to acquire from
Jewelrock 36% of the issued share capital of Stats.
Finally, Playtech entered into a service
agreement whereby Playtech provides Stats its business development
and knowledge-sharing services in connection with the operational
and industry standard procedures of Stats in exchange for
additional B2B services fee as per Note 10. As the business is
still a start-up, the additional B2B services fee as at 31 December
2023 was €Nil (2022: €Nil). Once the option is exercised, the Group
would no longer provide certain services and, as such, would no
longer be entitled to the additional B2B services fee.
The option may be exercised at any
time but prior to the termination of all sporting rights
agreements. It shall also lapse on the expiry or termination of the
Playtech service agreement in accordance with its terms or at the
written election of Playtech.
Playtech has assessed whether it holds power to
control the investee and it was concluded that this is not the
case. Even if the option is exercised, it would only result in a
36% voting right over the operating entity and therefore no
control.
However, Playtech has assessed whether the Group
has significant influence over Stats and due to the existence of
the service agreement whereby Playtech would be assisting a
start-up business by providing knowledge-sharing services, these
could be considered essential technical information. Considering
this, it was concluded that the Group has significant influence
under IAS 28, paragraph 6, over Stats.
The cost of the option, which was considered to
be the inherent value of Playtech allowing the loan repayment date
to be extended, is considered negligible. No share of
profits/losses have been recognised as at 31 December 2023 in
profit or loss as these were immaterial.
Investment in NorthStar
Background
NorthStar Gaming Inc. is a Canadian gaming brand
which was incorporated under the laws of Ontario in Q4 2021. In Q2
2022, NorthStar Gaming Inc. received its licence from the Alcohol
and Gaming Commission of Ontario (AGCO) and launched its online
gaming site www.northstarbets.ca which offers access to regulated
sports betting markets, and a robust and curated casino offering,
including the most popular slot offerings and live dealer games.
The principal reason of the acquisition is the attractive
opportunity considered by Playtech to increase its footprint in the
growing Canadian betting data market segment.
In December 2022, the Group issued NorthStar
Gaming Inc. a convertible loan of CAD 12.25 million with conditions
being that upon the completion of a reverse takeover (RTO)
transaction the loan could be converted into common shares, A
warrants and B warrants of the post-RTO consolidated entity. Baden
Resources, a company which was listed on the TSX, entered into a
conditional agreement to acquire NorthStar Gaming Inc. for shares
(i.e. complete an RTO of NorthStar Gaming Inc.). The fair value of
the loan as at 31 December 2022 was €8.4 million.
In March 2023, the RTO was completed and Baden
Resources changed its name to NorthStar Gaming Holdings
("NorthStar"). These events triggered the automatic conversion of
the Group's convertible loan into common shares in NorthStar Gaming
Inc. (effective immediately prior to closing) and then immediately
thereafter on closing those shares were exchanged for NorthStar
common shares.
When the loan was converted into NorthStar
common shares the Group also became the holder of NorthStar
Warrants (half of which are exercisable at CAD 0.85 per share and
the other half at CAD 0.90 per share) which, if exercised, would
result in the Group further increasing its shareholding in
NorthStar. These warrants expire on the fifth anniversary of their
issue.
In September 2023, the Group entered into a
subscription agreement with NorthStar whereby additional shares and
warrants (half of which are exercisable at CAD 0.36 per share and
the other half at CAD 0.40 per share, in each case expiring on the
fifth anniversary of their issue) were acquired for CAD 5.0
million. At the time of this investment, which closed in October
2023, Playtech also loaned NorthStar an 8% senior convertible
debenture for CAD 5.0 million.
After the additional investment in October 2023,
Playtech owns approximately 27.5% of the issued and outstanding
common shares of NorthStar. If the convertible debenture were to be
converted into common shares and all of the Group's warrants were
to be exercised, the Group could potentially further increase its
stake beyond 40% of the issued and outstanding common
shares.
The Group's convertible debenture has been
classified at fair value through profit or loss based on IFRS 9
criteria. As at 31 December 2023, an amount of CAD 5.0 million
(€3.5 million), which is included in loans receivable from related
parties (refer to Note 22), has been drawn down (2022: €Nil). The
loan is required to be repaid to Playtech by October 2026 or upon
conversion (to the extent not fully converted) once conversion
criteria are met.
The fair value of all of Playtech's warrants is
€Nil as at 31 December 2023 (refer Note 21C).
Assessment of control and significant
influence
As at the date of acquisition and 31 December
2023, it was assessed that the Group did not have control over
NorthStar, because it does not meet the criteria of IFRS 10
Consolidated Financial Statements, paragraph 7 due to the
following:
• despite
representation on the NorthStar board of directors by Playtech's
CFO from the initial investment and later on, with the additional
investment made, a further Playtech employee also being appointed,
there is still no ability to control the relevant activities, as
the total number of directors is eight; and
• Playtech has
neither the ability to change any other members of the NorthStar
board nor the management of NorthStar.
Per the above assessment, Playtech does not hold
power over the investee and as such does not have
control.
As at 31 December 2023, the Group has
significant influence over NorthStar because it meets one or more
of the criteria under IAS 28, paragraph 6, the main one being that
it has two appointed members sitting on the board of NorthStar,
enabling it to therefore participate in policy-making processes,
including decisions about dividends and/or other distributions. As
a result of this assessment NorthStar has been recognised as an
investment in associate.
The NorthStar warrants are fair valued as per
paragraph 14 of IAS 28 and shown as a derivative financial asset in
accordance with IFRS 9 (refer to Note 21C).
Purchase Price Allocation (PPA)
The Group has prepared a PPA following the
acquisition of the investment, where any difference between the
cost of the investment and Playtech's share of the net fair value
of NorthStar's identifiable assets and liabilities results in
goodwill.
Details of the provisional fair value of
identifiable assets and liabilities acquired, investment
consideration and goodwill are as follows:
|
|
Playtech's
share
of
net fair value
of
the identifiable
assets and
liabilities acquired
2023
€'m
|
|
Net book value of assets acquired
|
0.4
|
|
Fair value of customer contracts and
relationships
|
1.0
|
|
Fair value of brand
|
0.9
|
|
|
|
|
|
|
|
|
|
Goodwill is not recognised separately but is
included as part of the carrying amount of the investment in
associate. Up until October 2023, Playtech's shareholding was
diluted to 15% due to NorthStar issuing more shares as part of an
acquisition they completed in May 2023. Playtech's shareholding for
November and December 2023 was 27.5%. The total share of loss
recognised in profit or loss in the year ended 31 December 2023
from the investment in NorthStar was €2.8 million (2022: €Nil).
This includes the amortisation of intangibles, arising on
acquisition, and the share of NorthStar's losses, with a
corresponding entry against the investment in associate.
Investment in Sporting News Holdings
Limited
Background
In August 2023, the Group acquired 12.6% of
Sporting News Holdings Limited ("TSN"), for a total consideration
of $6.3 million (€5.8 million).
TSN's principal activities are the
sale of digital advertising and the offering of media services, the
provision of multimedia sports content across internet-enabled
digital platforms and the distribution directly to customers and
business clients around the world. The company is incorporated in
the Isle of Man. The principal reason of the acquisition is the
attractive opportunity considered by Playtech to increase its
footprint in the growing sports and media market
segment.
Assessment of control and significant
influence
As at the date of acquisition and at 31 December
2023 it was assessed that the Group did not have control over TSN,
because it does not meet the criteria of IFRS 10 Consolidated
Financial Statements, paragraph 7 due to the following:
• despite Playtech
having the right to appoint a director on the TSN board, as at 31
December 2023, one had not yet been appointed. Playtech has
preferred to only appoint an observer to the board. Moreover, once
Playtech appoints a director, there is still no ability to control
the relevant activities, as the total number of directors including
potentially one Playtech appointed director will be five;
and
• Playtech has neither
the ability to change any members of the board nor of the
management of TSN;
Per the above assessment, Playtech does not hold
power over the investee and as such does not have
control.
As at 31 December 2023, the Group has
significant influence over TSN because it meets one or more of the
criteria under IAS 28, paragraph 6, the main one being Playtech
having the ability to appoint a member on the board of TSN,
enabling it to therefore participate in policy-making processes,
including decisions about dividends and/or other distributions. As
a result of this assessment TSN has been recognised as an
investment in associate.
The cost of the investment was deemed to be the
consideration paid for the shares of $6.3 million (€5.8 million),
which was reduced by €0.2 million on 31 December 2023 through the
recognition of the Group's share of losses.
Other investments in associates that are fair
valued under IFRS9 per IAS 28, paragraph 14
The following are also investments in associates
where the Group has significant influence but where the option is
not currently exercisable. As there is no current access to
profits, the relevant option is fair valued under IFRS 9, and
disclosed as derivative financial assets under part C of this
note:
• Wplay;
• Tenbet (Costa Rica);
and
• Onjoc
(Panama).
The financial information required for
investments in associates, other than Caliplay, has not been
included here as from a Group perspective the Directors do not
consider them to have a material impact jointly or
separately.
B. Other investments
Balance sheet
|
|
|
|
|
Listed investments
|
15.8
|
1.4
|
|
Investment in Tenlot Guatemala
|
-
|
4.4
|
|
Investment in Tentech Costa Rica
|
-
|
2.1
|
|
Investment in Gameco
|
-
|
1.3
|
Investment in Hard Rock Digital
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
|
|
|
Profit and
loss
|
|
|
|
Change in fair value of equity
investments
|
(6.6)
|
(0.3)
|
Impairment of investment in Gameco (included in
the impairment of financial assets)
|
|
|
|
|
(7.9)
|
(0.3)
|
|
Other comprehensive
income
|
|
|
|
Foreign exchange movement from
equity investments held in a non-Euro functional
subsidiary
|
(2.6)
|
-
|
Listed investments
The Group has shares in listed securities,
noting that new shares in listed securities were purchased during
the year for €14.3 million. The fair values of these equity shares
are determined by reference to published price quotations in an
active market. For the year ended 31 December 2023, the fair values
of these listed securities have increased by €0.1 million (2022:
decrease of €0.3 million).
Investment in Tenlot Guatemala
In 2020, the Group entered into an agreement
with Tenlot Guatemala, a member of the Tenlot Group. Tenlot
Guatemala, which is in the lottery business in Guatemala, commenced
its activity in 2018.
The Group acquired a 10% equity holding in
Tenlot Guatemala for a total consideration of $5.0 million (€4.4
million) in 2020, which has been accounted at fair value through
profit or loss under IFRS 9.
The fair value of the equity holding as at 31
December 2023 was reduced to €Nil because of changes to market
conditions which led to changes in its original business plans
(2022: €4.4 million). The fair value of the equity holding has
decreased by €4.4 million in the year ended 31 December
2023.
In addition, the Group was granted a 10% equity
holding in Super Sports S.A. at no additional cost. The Group also
has an option to acquire an additional 80% equity holding in Super
Sports S.A. If the option is exercised, the Group would no longer
provide certain services and, as such, would no longer be entitled
to the additional B2B services fee. The additional B2B services fee
was €Nil for the year ended 31 December 2023 (2022: €Nil). There
are no conditions attached to the exercise of the
option.
The right of exercising the call option at any
time and the acquisition of the additional 80% in Super Sports S.A.
give Playtech:
• power over the
investee;
• exposure, or rights,
to variable returns from its involvement with the investee;
and
• the ability to use its
power over the investee to affect the amount of the investor's
returns.
It therefore satisfies all the criteria of
control under IFRS 10, paragraph 7 and, as such, at 31 December
2023 Super Sports S.A. has been consolidated in the consolidated
financial statements of the Group, noting that this is not material
from a Group perspective.
Investment in Tentech Costa Rica
In 2020, the Group entered into an agreement in
Costa Rica with the Tenlot Group. The Group acquired a 6% equity
holding in Tentech CR S.A., a member of the Tenlot Group, for a
total consideration of $2.5 million (€2.1 million). Tentech CR S.A.
sells printed bingo cards in accordance with article 29 of the Law
of Raffles and Lotteries of Costa Rica (CRC - Costa Rican Red Cross
Association).
The 6% equity holding in Tentech CR S.A. is
accounted at fair value through profit or loss under IFRS
9.
The fair value of the equity holding as at 31
December 2023 was reduced to €Nil (2022: €2.1 million) because of
changes to market conditions which led to changes in its original
business plans. The fair value of the equity holding has decreased
by €2.3 million in the year ended 31 December 2023.
Investment in
Gameco
In 2021, the Group entered into a convertible
loan agreement with GameCo LLC ("Gameco"), where it provided $4.0
million (€3.8 million) in the form of a debt security with 8%
interest. In December 2022, Gameco acquired Green Jade Games and,
subsequently, the Playtech debt was converted into equity shares,
representing a 7.1% interest in the newly formed group. Immediately
prior to the conversion, the loan was impaired by €3.0 million, and
this has been recognised in profit or loss in the prior
year.
The 7.1% equity holding in the newly formed
group was accounted at fair value through profit or loss under IFRS
9 at 31 December 2022. As at 31 December 2023, the fair value of
the equity holding has been impaired down to €Nil (2022: €1.3
million).
Investment in Hard Rock
Digital
On 14 March 2023,
the Group invested $85.0 million (€79.8 million) in Hard Rock
Digital (HRD) in exchange for a small minority interest in a
combination of equity shares and warrants. HRD is the exclusive
Hard Rock International and Seminole Gaming vehicle for interactive
gaming and sports betting on a global basis.
The Group assessed
whether the warrants meet the definition of a separate derivative
as per IFRS 9. A financial instrument or other contract should have
all three of the following characteristics:
· its
value changes in response to the change in a specified interest
rate, financial instrument price, commodity price, foreign exchange
rate, index of prices or rates, credit rating or credit index, or
other variable, provided, in the case of a non-financial variable,
that the variable is not specific to a party to the contract
(sometimes called the "underlying");
· it
requires no initial net investment or an initial net investment
that is smaller than would be required for other types of contracts
that would be expected to have a similar response to changes in
market factors; and
· it is
settled at a future date.
Management made a
judgement that the warrants do not meet the definition of a
separate derivative asset as: (i) the value of the warrants is part
of the total investment and cannot be distinguished between the two
and therefore the value of the warrants was deemed to be equal to
the equity shares value; and (ii) the consideration was paid at the
time of the transaction.
The equity
investment in HRD does not meet the definition of held for trading,
as the investment was acquired for long-term investment purposes
and with no current intention for sale. In this respect, the
investment will be classified as an investment at fair value
through profit or loss with initial and subsequent recognition at
fair value. Any subsequent gain/loss will be recognised in profit
or loss.
Since the date the investment was
made until 31 December 2023, there have been no changes in the
operations of HRD that would indicate that the fair value of the
investment would be different to the original arm's length price
paid of $85.0 million (€79.8 million). This continues to be the
case, despite the positive outcome of the federal appeals court
overturning a ruling that prevented HRD from relaunching its
operations in support of The Seminole Tribe of Florida's mobile and
retail sports books in Florida, a decision that is currently being
appealed.
The foreign exchange movement of the investment
held in HRD is recorded through other comprehensive income as the
investment is held in a USD functional currency entity. The impact
of the foreign exchange movement of the investment is a loss of
€2.8 million in other comprehensive income for the year ended 31
December 2023.
C.
Derivative financial assets
Balance sheet
|
|
|
|
|
Playtech M&A Call Option
(Caliplay)
|
730.2
|
524.0
|
|
Wplay
|
88.0
|
93.5
|
|
Onjoc
|
3.1
|
8.6
|
|
Tenbet
|
1.7
|
8.9
|
|
NorthStar warrants (Note 21A)
|
-
|
-
|
|
|
|
|
Total derivative financial
assets
|
|
|
Statement of comprehensive income
impact
|
|
|
|
|
Caliplay
|
|
|
|
Fair value change of Playtech M&A Call
Option
|
180.9
|
(13.3)
|
|
Playtech Call Option
|
-
|
-
|
|
Foreign exchange movement to profit or
loss
|
(16.0)
|
30.6
|
|
Wplay
|
|
|
|
Fair value change in Wplay
|
(2.7)
|
(9.4)
|
|
Foreign exchange movement recognised in other
comprehensive income
|
(2.8)
|
5.7
|
|
Onjoc
|
|
|
|
Fair value change in Onjoc
|
(5.3)
|
1.3
|
|
Foreign exchange movement recognised in other
comprehensive income
|
(0.2)
|
0.4
|
|
Tenbet
|
|
|
|
Fair value change in Tenbet
|
(6.9)
|
(3.2)
|
|
Foreign exchange movement recognised in other
comprehensive income
|
(0.3)
|
0.7
|
|
LSports
|
|
|
Fair value change of call option (Note
21A)
|
|
|
Total comprehensive income
impact
|
|
|
Caliplay
As already disclosed in section A of this note,
the Playtech M&A Call Option is not currently exercisable and
therefore in accordance with IAS 28, paragraph 14 has been
recognised as a derivative financial asset and fair valued under
IFRS 9.
As at 31 December 2023 and 2022, the valuation
methodology used for the Playtech M&A Call Option was that of a
discounted cash flow (DCF) approach with a market exit multiple
assumption.
As already mentioned in part A of Note 21, the
Group is seeking a declaration from the English Courts to obtain
clarification on a point of disagreement between the parties in
relation to the Caliente Call Option and, in particular, whether
Caliplay still holds this option which permits it to redeem the
additional B2B services fee element. Should it be declared that
Caliplay still has the Caliente Call Option and Caliplay then
exercises said option, this would cancel both the Playtech M&A
Call Option and the Playtech Call Option. The Group believes the
Caliente Call Option has expired and whilst Caliplay has not sought
to exercise the option to date, Caliplay has made it clear that it
considers the option has not yet expired.
In arriving at the fair value of the Playtech
M&A Call Option, the Group has made a judgement that the
Caliente Call Option has expired and therefore no probability
weighted scenarios have been modelled that include an assumption
that the Caliente Call Option is exercisable. Should the English
Courts determine that the option is exercisable and Caliplay
chooses to exercise the option, the amount payable by Caliplay to
the Group upon exercise would either be agreed between the parties
or, failing which, determined by an independent investment bank
valuing the Group's remaining entitlement to receive the additional
B2B services fee until 31 December 2034. There is therefore the
potential that, should the Caliente Call Option be exercisable and
then subsequently exercised, the proceeds received by the Group may
be materially different (positive or adverse) to the fair value of
the Playtech M&A Call Option recorded as at 31 December 2023
and 31 December 2022.
Furthermore, and as disclosed in further detail
under Note 7, the disputes with Caliplay now also include a dispute
in relation to the additional B2B services fees and B2B licensee
fees. The dispute relates to amounts that date back to the summer
of 2023 and remain outstanding from Caliplay today. The impact of
this dispute has been considered below by including a higher
specific risk premium in the discount rate used for the DCF, to
reflect what a willing third-party buyer would pay for the rights
to this option, as things stand with the ongoing
dispute.
Valuation
The Group has assessed the fair value of the
Playtech M&A Option as at 31 December 2023 using a DCF approach
with a market exit multiple assumption.
The Group's view of a reasonable
market participant base discount rate for the 31 December 2023
valuation is unchanged since last year. However, due to the ongoing
legal proceedings and the dispute with Caliplay as described above,
the Group has adjusted the fair value of the Playtech M&A Call
Option to reflect this risk, by including an additional
company-specific risk premium in the discount rate, which overall
increased it to 20% (2022: 16%).
The Group also made assumptions on the
probability of a possible transaction that may be completed on a
number of exit date scenarios over a five-year period, until
December 2028. Management did not model a scenario of no exit
as this is considered highly remote. The Group used a compound
annual growth rate of 17.0% (2022: 17.2%) on revenue over the
forecasted cash flow period, an average Adjusted EBITDA margin of
31.3% (2022: 26.3%) and an exit multiple of 7.7x (2022: 9.6x). The
decrease in the exit EBITDA multiple is supported by the
observed median EV/EBITDA multiple of the publicly listed
peers as at 31 December 2023 and share price declines. Due to
the uncertainty as to how the exercise of the Playtech M&A Call
Option may occur and the potential for the shares held to not be
immediately realisable, the Group included an additional discount
for lack of marketability (DLOM) for two years of 10.0% (2022:
13.8%). Furthermore, Playtech's share in Caliplay was adjusted to
reflect the rights to Caliplay shares that a service provider has
under its services agreement with the Group. Finally, taking
account of matters arising in the period, Playtech has included
some probability weighted scenarios to consider the impact of the
COC Option as explained in part A of this Note, noting that the
probabilities assigned to this scenario are above zero but low, as
compared to the 31 December 2022 valuation where it was assumed
that there was no impact (i.e. 0% probability
scenarios).
As at 31 December 2023, the fair value of the
Playtech M&A Call Option was $805.8 million (2022: $560.6
million) which converted to €730.2 million (2022: €524.0 million).
The period-on-period change in the fair value of the Playtech
M&A call option is a combination of an uplift:
· in the forecasts
which consider Caliplay's strong 2023 performance which exceeded
previous expectations; and
· following the
reduction of the right to Caliplay shares that a service provider
of Playtech had under its services agreement which was partly
redeemed during the period through a €41.3 million redemption
payment (the value of such right being previously deducted from the
fair value of the Playtech M&A Call Option).
These were partially offset by:
· the reduction in
the exit multiple as explained above;
· the increase in
the discount rate to reflect the ongoing litigation
risk;
· unfavourable
movement in the USD to EUR foreign exchange rate; and
· the impact of
including scenarios whereby there is a small probability that the
COC Option will be exercised.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 31 December 2023
include the following sensitivities, noting that factors and
circumstances may arise that are outside the Group's control which
could impact the option value:
• A different
discount rate within the range of 18% to 22% will result in a fair
value of the derivative financial asset in the range of €679.6
million - €785.6 million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €691.3
million - €769.3 million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €652.4
million - €808.2 million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €598.9
million - €885.3 million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €487.5
million - €1,066.5 million.
• A 1.0 fluctuation on
the market exit multiple will result in a fair value of the
derivative financial asset within the range of €666.9
million - €793.7 million.
• If the 10% DLOM
applied for the two-year period post exercise of the Playtech
M&A Option fluctuates by 5% (i.e. in the event that an M&A
transaction included the acquisition of Playtech's shares
immediately post exercise) the fair value of the derivative
financial asset would be within the range of €694.1 million -
€766.6 million.
• If the incremental
annual DLOM on option fluctuates by 2.5% (to 2.5% and 7.5% instead
of 5%) this will result in a fair value of the derivative financial
asset within the range of €690.4 million - €769.3
million.
• If the M&A call
option weighted at 100% probability of exercise relative to the
standalone COC option payment, regardless of the exit date
scenario, the fair value of the derivative financial asset would be
€811.0 million.
• If the M&A call
option weighted at even 50% between the probability of exercise of
the standalone Playtech M&A Call Option and the standalone COC
option payment, the fair value of the derivative financial asset
would be €621.6 million.
Wplay
In August 2019, Playtech entered into a
structured agreement with Aquila Global Group SAS ("Wplay"), which
has a licence to operate online gaming products and services in
Colombia. Under the agreement, the Group provides Wplay its
technology products, where it receives standard operator revenue
and additional B2B services fee as per Note 10. The Group has no
shareholding in Wplay.
Playtech has a call option to acquire a 49.9%
equity holding in the Wplay business. As at 31 December 2022 this
option was exercisable in August 2023. In 2023, the option exercise
date was deferred to February 2024, however management was in
active discussions with Wplay to further extend the option exercise
date pre-year end. The extension was signed in February 2024, and
the option exercise date was deferred to February 2025, or earlier
if an M&A event takes place. For the call option valuation as
at 31 December 2023, Playtech assumed that the call option cannot
be exercised any date before February 2025. If the call option is
exercised by Playtech, the Group would no longer provide certain
services and as such will no longer be entitled to the additional
B2B services fee. The additional B2B services fee was €1.2 million
for the year ended 31 December 2023 (2022: €Nil).
The payment of €22.4 million made to Wplay in
2019 and 2020 was considered to be the payment made for the option
in Wplay.
Assessment of control and significant
influence
The Group assessed whether it holds power over
the investee (in accordance with IFRS 10, paragraph 7) with the
following considerations:
• Playtech does not have
the ability to direct Wplay's activities as it has no voting
representation on the executive committee or members of the
executive committee.
• Whilst they are not
members on the executive committee, Playtech has the ability to
appoint and change both the COO and CMO who form part of the
management team (albeit this right has never been exercised). The
COO and the CMO are part of the wider management team but would not
be able to control the relevant activities of Wplay.
• If the option is
exercised it would result in Playtech acquiring 49.9% of the voting
rights of the operating entity and therefore would not result in
having control. Furthermore, as at 31 December 2023, the option is
not exercisable and therefore can be disregarded in the assessment
of power.
Per the above assessment Playtech does not hold
power over the investee and as such does not have
control.
With regard to the assessment of significant
influence, the following facts were considered:
• Playtech has the right
to appoint and remove the COO and CMO, which is a potential
indicator of significant influence given their relative positions
and involvement in the day-to-day operations of Wplay.
• The standard operator
revenue is not considered to give rise to significant influence.
However, when combined with the additional B2B services fee, this
is an indicator of significant influence.
• The Group provides
additional services to Wplay which Wplay requires to assist it in
successfully running its operations, which could be considered
essential technical information.
The Group therefore has significant influence
under IAS 28, paragraph 6 over Wplay. However, as the option is not
currently exercisable, the Group has an investment in associate but
with no access to profits. As such, the option is fair valued as
per paragraph 14 of IAS 28 and shown as a derivative financial
asset in accordance with IFRS 9.
The Group has given two loans to Wplay, an
interest-bearing and a non-interest-bearing one, of $1.7 million
(€1.6 million) and $0.5 million (€0.5 million) respectively. The
combined outstanding balance as at 31 December 2023 is $1.3 million
(€1.3 million) and is due for repayment within the next 12 months.
The loans are included in loans receivable from related parties
(refer to Note 24).
Valuation
The fair value of the option at 31 December 2023
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 22% (2022: 25%), the
decrease reflecting the maturity stage of the Wplay business, as
well as a discount for illiquidity and control until the expected
Playtech exit date of February 2025 (2022: expected exit date of
December 2026). The Group used a compound annual growth rate of
8.2% (2022: 24.7%) over the forecasted cash flow period, an average
Adjusted EBITDA margin of 28.5% (2022: 20.6%) and an exit multiple
of 10.2x (2022: 9.6x). As part of the agreement, there is a lock-in
mechanism that contractually might prevent Playtech from selling
the resulting shares, however an assumption was made that if the
exit date assumed in the model is earlier, then both parties would
be in agreement to this earlier exit point, therefore no further
discounts were applied post transaction. Furthermore, Playtech's
share in Wplay was adjusted to reflect the rights to shares that a
service provider has under its services agreement with the
Group.
As at 31 December 2023, the fair value of the
Wplay derivative financial asset is €88.0 million. The difference
of €5.5 million between the fair value at 31 December 2022 of €93.5
million and the fair value at 31 December 2023 has been recognised
as follows:
a. €2.7 million derived from the
fair value decrease of the derivative call option calculated using
the DCF model in profit or loss for the year ended 31 December
2023. The decrease was due to downgrading the forecasts because of
the new marketing regulations becoming effective in Colombia from
January 2024, which restrict the amounts that can be spent on
marketing each year by operators, and offset by the decrease in the
discount rate and the increase in the exit multiple.
b. €2.8 million derived from
the fair value decrease due to the exchange rate fluctuation of USD
to EUR (as the derivative call option is under a foreign subsidiary
of the Group whose functional currency is USD) in other
comprehensive income for the year ended 31 December
2023.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 31 December 2023
include the following sensitivities, noting that factors and
circumstances may arise that are outside the Group's control which
could impact the option value:
• A different discount
rate within the range of 17% to 27% will result in a fair value of
the derivative financial asset in the range of €74.3 million -
€105.1 million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €83.6 million -
€92.4 million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €79.2 million -
€96.8 million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €83.1 million -
€93.0 million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €78.3 million -
€98.0 million.
• A 1.0 fluctuation on
the market exit multiple will result in a fair value of the
derivative financial asset within the range of €81.2 million -
€94.9 million.
• If the expected
Playtech exit date is extended by one year, the fair value of the
derivative financial asset will decrease to €82.9
million.
Onjoc
In June 2020, Playtech entered into a framework
agreement with ONJOC CORP. ("Onjoc"), which holds a licence to
operate online sports betting, gaming and gambling activities in
Panama. The Group has no equity holding in Onjoc but has an option
to acquire 50%. Under the agreement the Group provides Onjoc its
technology products, where it receives standard operator revenue
and additional B2B services fee as per Note 10. If the option is
exercised, the Group would no longer provide certain services and,
as such, would no longer be entitled to the additional B2B services
fee. The additional B2B services fee was €Nil in the year ended 31
December 2023 (2022: €Nil). The option can be exercised any time
subject to Onjoc having $15.0 million of Gross Gaming Revenue (GGR)
over a consecutive 12-month period.
Assessment of control and significant
influence
The Group performed an analysis for Onjoc to
assess whether it holds power over Onjoc (in accordance with IFRS
10, paragraph 7) with the following considerations:
• Playtech can propose
an independent member to the board of directors, who has to be
independent to both Playtech and Onjoc, and as such does not have
the ability to direct Onjoc's activities as it has no voting
representation on the board;
• Playtech has the right
to propose the COO, CTO and CMO, which although would form part of
the wider management team, would not be able to control the
relevant activities of Onjoc by themselves; and
• if the option is
exercised it would result in Playtech acquiring 50% of the voting
rights of the operating entity and therefore would not result in
having control. Furthermore, as at 31 December 2023, the option is
not exercisable and therefore can be disregarded in the assessment
of power.
Per the above assessment Playtech does not hold
power over the investee and as such does not have
control.
With regard to the assessment of significant
influence, the following facts were considered:
• Playtech can propose
an independent member to the board of directors and has the right
to propose the COO, CTO and CMO, which are potential indicators of
significant influence given their relative positions and the
involvement in day-to-day operations of Onjoc;
• the standard operator
revenue is not considered to give rise to significant influence.
However, when combined with the additional B2B services fee, this
is an indicator of significant influence; and
• the Group provides
additional services to Onjoc which Onjoc requires to assist it in
successfully running its operations which could be considered
essential technical information.
The Group therefore has significant influence
under IAS 28, paragraph 6 over Onjoc. However, as the option is not
currently exercisable, the Group has an investment in associate but
with no access to profits. As such, the option is fair valued as
per paragraph 14 of IAS 28 and shown as a derivative financial
asset in accordance with IFRS 9.
The Group has given an interest-bearing loan to
Onjoc of €2.3 million (2022: €1.8 million) which is due for
repayment in October 2025 and is included in loans receivable from
related parties (refer to Note 22).
Valuation
The fair value of the option at 31 December 2023
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 32% (2022: 33%)
reflecting the cash flow risk given the high growth rates in place
and the early stages of the business, as well as a discount for
illiquidity and control until the expected Playtech exit date of
December 2027 (2022: expected exit date of December 2027). The
Group used a compound annual growth rate of 49.2% (2022: 60.1%)
over the forecasted cash flow period and an average Adjusted EBITDA
margin of 24.2% (2022: 20.4%). As part of the agreement, there is a
lock-in mechanism that contractually might prevent Playtech from
selling the resulting shares, however an assumption was made that
if the exit date assumed in the model is earlier, then both parties
would be in agreement to this earlier exit point, therefore no
further discounts applied post transaction. Furthermore, Playtech's
share in Onjoc was adjusted to reflect the rights to shares that a
service provider has under its services agreement with the
Group.
As at 31 December 2023, the fair value of the
Onjoc derivative financial asset is €3.1 million. The difference of
€5.5 million between the fair value at 31 December 2022 of €8.6
million and the fair value at 31 December 2023 has been recognised
as follows:
a. €5.3 million derived from
the fair value decrease of the derivative call option calculated
using the DCF model in profit or loss in the year ended 31 December
2023. This decrease is mostly due to the revised cash flow
forecasts used in the valuation which have been downgraded based on
Onjoc's current performance.
b. €0.2 million derived from
the fair value decrease from the exchange rate fluctuation of USD
to EUR (as the derivative call option is under a foreign subsidiary
of the Group whose functional currency is USD) in other
comprehensive income in the year ended 31 December 2023.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 31 December 2023
include the following sensitivities, noting that factors and
circumstances may arise that are outside the Group's control which
could impact the option value:
• A different discount
rate within the range of 27% to 37% will result in a fair value of
the derivative financial asset in the range of €2.4 million - €4.0
million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €2.9 million - €3.3
million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €2.7 million - €3.6
million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €2.2 million - €4.1
million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €1.3 million - €5.1
million.
• A 1.0 fluctuation on
the market exit multiple will result in a fair value of the
derivative financial asset within the range of €2.5 million - €3.7
million.
Tenbet Costa Rica
In addition to the 6% equity holding in Tentech
CR S.A as per section B of this Note, the Group has an option to
acquire 81% equity holding in Tenbet. Tenbet, which is another
member of the Tenlot Group, operates online bingo games and casino
side games. Playtech provides certain services to Tenbet in return
for its additional B2B services fee. The Group has no equity
holding in Tenbet but has an option to acquire 81% equity. If the
option is exercised, the Group would no longer provide certain
services to Tenbet and, as such, would no longer be entitled to the
additional B2B services fee. The additional B2B services fee was
€Nil in the year ended 31 December 2023 (2022: €Nil). In H1 2023,
the Group signed an amendment to the Tenbet agreement in which the
option can be exercised at any time from July 2024 (previously 35
months of Tenbet going live). In H2 2023, the Group signed
an amendment to the Tenbet agreement in which the option can be
exercised at any time from 1 January 2025 based on the condition
that Tenbet has generated at least once, prior to the exercise,
accumulative GGR (as defined in the agreement) of at least $10.0
million, in a consecutive 12-month period.
Under the existing agreements, the Group has
provided Tenbet with a credit facility of €4.5 million, out of
which €4.2 million (Note 22) had been drawn down as at 31 December
2023 (2022: €2.1 million).
Assessment of control and significant
influence
The Group assessed whether it holds power over
Tenbet (in accordance with IFRS 10, paragraph 7) with the following
considerations:
• Playtech does not have
the ability to direct Tenbet's activities as it has no voting
representation on the board of directors (or equivalent) or people
in managerial positions;
• Playtech has neither
the ability to appoint, nor change, any members of the board of
Tenbet; and
• as at 31 December
2023, the option is not exercisable and therefore can be
disregarded in the assessment of power.
Per the above assessment, Playtech does not hold
power over the investee and as such does not have
control.
With regard to the assessment of significant
influence, the standard operator revenue alone is not considered to
give rise to significant influence. However, when combined with the
additional B2B services fee, this is an indicator of significant
influence. Furthermore, the Group provides additional services to
Tenbet which Tenbet requires to assist it in successfully running
its operations that could be considered essential technical
information. Playtech therefore has significant influence under IAS
28, paragraph 6 over Tenbet. However, as the option is not
currently exercisable, the Group has an investment in associate but
with no access to profits. As such, the option is fair valued as
per paragraph 14 of IAS 28 and shown as a derivative financial
asset in accordance with IFRS 9.
Valuation
The fair value of the option at 31 December 2023
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 33% (2022: 35%)
reflecting the cash flow risk given the high growth rates in place
and the early stages of the business, as well as a discount for
illiquidity and control until the expected Playtech exit date of
December 2028 (2022: expected exit date of December 2027). The
Group used a compound annual growth rate of 96.2% (2022: 135%) over
the forecasted cash flow period and an average Adjusted EBITDA
margin of 0.9% (2022: average of -59.8%). As part of the agreement,
there is a lock-in mechanism that contractually might prevent
Playtech from selling the resulting shares, however an assumption
was made that if the exit date assumed in the model is earlier,
then both parties would be in agreement to this earlier exit point.
Furthermore, Playtech's share in Tenbet was adjusted to reflect the
rights to shares that a service provider has under its services
agreement with the Group.
As at 31 December 2023, the fair value of the
Tenbet derivative financial asset is €1.7 million. The difference
of €7.2 million between the fair value at 31 December 2022 of €8.9
million and the fair value at 31 December 2023 has been recognised
as follows:
a. €6.9 million derived from
the fair value decrease of the derivative call option calculated
using the DCF model in profit or loss in the year ended 31 December
2023. This decrease is mostly due to the revised cash flow
forecasts used in the valuation which have been downgraded based on
Tenbet's current performance.
b. €0.3 million derived from
the fair value decrease from the exchange rate fluctuation of USD
to EUR (as the derivative call option is under a foreign subsidiary
of the Group whose functional currency is USD) in other
comprehensive income in the year ended 31 December 2023.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 31 December 2023
include the following sensitivities, noting that factors and
circumstances may arise that are outside the Group's control which
could impact the option value:
• A different discount
rate within the range of 28% to 38% will result in a fair value of
the derivative financial asset in the range of €1.0 million - €2.6
million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €1.4 million - €2.0
million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €1.2 million - €2.2
million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €Nil - €3.9
million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €Nil - €6.3
million.
• A 1.0 fluctuation on
the market exit multiple will result in a fair value of the
derivative financial asset within the range of €1.1 million - €2.3
million.
Note 22 - Other non-current assets
|
|
|
|
|
Security deposits
|
4.3
|
3.3
|
|
Guarantee for gaming licences
|
2.2
|
2.2
|
|
Prepaid costs relating to Sun Bingo
contract
|
58.7
|
63.4
|
|
Loans receivable (net of ECL)
|
3.1
|
1.7
|
|
Loans receivable from related parties (net of
ECL) (Note 37)
|
58.5
|
27.9
|
|
|
|
|
|
|
|
|
The movement of loans and interest receivable is
as follows:
|
|
|
|
Balance as at 1 January 2023
|
45.9
|
|
Net loans granted/repaid
|
23.4
|
|
Non-cash loans granted (transfer from trade
receivables)
|
4.5
|
|
Non-cash loans repayment (transfer from trade
payables)
|
(0.3)
|
|
Conversion of loan to equity investment (Note
21A)
|
(8.4)
|
|
Interest charge for the year
|
1.9
|
|
ECL
|
(0.9)
|
|
Impairment of loans receivable
|
(1.5)
|
Foreign exchange movements
|
|
Balance as at 31 December 2023
|
|
|
Split to:
|
|
|
Non-current assets
|
61.6
|
|
|
|
|
|
|
Note 23 - Trade receivables
|
|
|
|
|
Trade receivables
|
109.9
|
144.5
|
Related parties (Note 37)
|
|
|
|
|
|
|
|
Split to:
|
|
|
|
Non-current assets
|
1.9
|
1.1
|
|
|
|
|
|
|
|
|
Note 24 - Other receivables
|
|
|
|
|
Prepaid expenses
|
23.3
|
23.4
|
|
VAT and other taxes
|
14.8
|
13.6
|
|
Security deposits for regulators
|
24.4
|
24.2
|
|
Prepaid costs relating to Sun Bingo
contract
|
4.4
|
3.6
|
|
Receivable for legal proceedings and
disputes1
|
16.4
|
16.4
|
|
Loans receivable (net of ECL)
|
0.5
|
13.0
|
|
Loans receivable from related parties (net of
ECL) (Note 37)
|
1.2
|
3.3
|
|
Other receivables from related parties (Note
37)
|
0.3
|
-
|
|
|
|
|
|
|
|
|
1 Receivable for legal
proceedings and disputes relates to funds held in escrow, in
relation to a historical and ongoing legal matter. The
corresponding liability is included under gaming and other taxes.
The funds will be released when the case is finally settled, in
accordance with the escrow agreement.
Note 25 - Cash and cash equivalents
Cash and cash equivalents for the purposes of
the statement of cash flows comprises:
|
|
|
|
|
Continuing operations
|
|
|
|
Cash at bank
|
516.6
|
426.8
|
|
|
|
|
|
Cash and cash equivalents in the
statement of cash flows
|
516.6
|
426.9
|
Less: expected credit loss (Note
39A)
|
|
|
|
|
|
|
Out of the total cash at bank, an amount of €9.4
million was held by payment processors as at 31 December 2023
(2022: €6.8 million).
The Group holds cash balances on behalf of
operators in respect of their jackpot games and poker and casino
operations, as well as client funds with respect to B2C.
|
|
|
|
|
Continuing operations
|
|
|
|
Funds attributed to jackpots
|
81.1
|
84.7
|
|
Security deposits
|
29.9
|
29.6
|
|
|
|
|
|
|
|
|
Note 26 - Assets held for sale
|
|
|
|
|
Assets
|
|
|
|
Property, plant and equipment
|
19.3
|
19.6
|
During 2021, the Group entered into a binding
agreement for the disposal of a real estate area in Milan for a
total consideration of €20.0 million. Accordingly, the real estate
was classified as held for sale. Of the total consideration, €1.0
million was received during the year ended 31 December 2021. The
advance received was classified as part of the liabilities directly
associated with assets classified as held for sale.
The sale has been finalised but the disposal is
expected to complete in H1 2025 with the movement of the trot track
from La Maura area to San Siro (previously it was expected that the
sale would be completed during 2024).
Note 27 - Shareholders' equity
A. Share capital
Share capital is comprised of no par value
shares as follows:
1 The Company has no
authorised share capital, but the Directors are authorised to issue
up to 1,000,000,000 shares of no par value.
The table below shows the movement of the
shares:
|
|
Shares in
issue/
circulation
Number of
shares
|
|
|
|
|
At 1 January 2022
|
299,244,326
|
2,937,550
|
7,112,367
|
309,294,243
|
|
|
|
|
|
|
|
At 31 December 2022 / 1 January 2023
|
300,988,316
|
2,937,550
|
5,368,377
|
309,294,243
|
|
Transfer from treasury shares to EBT
|
-
|
(2,937,550)
|
2,937,550
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Employee Benefit Trust
In 2014, the Group established an Employee
Benefit Trust by acquiring 5,517,241 shares for a total of €48.5
million.
In 2021, the Company transferred 7,028,339
shares held by the Company in treasury to the Employee Benefit
Trust for a total of €22.6 million.
In 2023, the Company transferred 2,937,550
shares held by the Company in treasury to the Employee Benefit
Trust for a total of €12.5 million.
During the year ended 31 December 2023,
3,704,491 shares (2022: 1,743,990) were issued at a cost of €11.9
million (2022: €6.0 million). As at 31 December 2023, a balance of
4,601,436 shares (2022: 5,368,377 shares) remains in the EBT with a
cost of €17.8 million (2022: €17.2 million).
C. Share options exercised
During the year 3,880,633 (2022: 1,794,438)
share options were exercised, of which 176,142 were cash settled
(2022: 50,448).
D. Distribution of dividends
During 2023 the Group did not pay any
dividends.
E. Reserves
The following describes the nature and purpose
of each reserve within owners' equity:
|
|
|
|
Additional paid in capital
|
Share premium (i.e. amount subscribed for share
capital in excess of nominal value)
|
|
Employee Benefit Trust
|
Cost of own shares held in treasury by the
trust
|
|
Foreign exchange reserve
|
Gains/losses arising on retranslating the net
assets of overseas operations
|
|
Employee termination indemnities
|
Gains/losses arising from the actuarial
remeasurement of the employee termination indemnities
|
|
Non-controlling interest
|
The portion of equity ownership in a subsidiary
not attributable to the owners of the Company
|
|
|
Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income
|
Note 28 - Loans and borrowings
The main credit facility of the Group is a
revolving credit facility (RCF) up to €277.0 million and is
available until October 2025, with an option to extend by 12
months. Interest payable on the loan is based on SONIA depending on
the currency of each withdrawal. As at the reporting date the
credit facility drawn amounted to €Nil (2022: €Nil).
Under the RCF, the covenants are monitored on a
regular basis by the finance department, including modelling future
projected cash flows under a number of scenarios to stress-test any
risk of covenant breaches, the results of which are reported to
management and the Board of Directors. The covenants are as
follows:
· Leverage: Net
Debt/Adjusted EBITDA to be less than 3.5:1 for the year ended 31
December 2023 (2022: less than 3.5:1).
· Interest cover:
Adjusted EBITDA/Interest to be over 4:1 for the year ended 31
December 2023 (2022: over 4:1).
As at 31 December 2023 and 2022 the Group met
these financial covenants.
Note 29 - Bonds
|
|
|
|
|
|
|
At 1 January 2022
|
527.6
|
347.4
|
-
|
875.0
|
|
Repayment of bonds
|
(330.0)
|
-
|
-
|
(330.0)
|
Release of capitalised expenses
|
|
|
|
|
|
At 31 December 2022 / 1 January
2023
|
199.6
|
348.0
|
-
|
547.6
|
|
Repayment of bonds
|
(200.0)
|
-
|
-
|
(200.0)
|
|
Issue of new bond
|
-
|
-
|
297.2
|
297.2
|
Release of capitalised expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Split to:
|
|
|
|
Non-current
|
646.1
|
348.0
|
|
|
|
|
|
|
|
|
Bonds
(a) 2018 Bond
On 12 October 2018, the Group issued €530.0
million of senior secured notes (the "2018 Bond") maturing in
October 2023. The net proceeds of issuing the 2018 Bond after
deducting commissions and other direct costs of issue totalled
€523.4 million.
Commissions and other direct costs of issue have
been offset against the principal balance and are amortised over
the period of the 2018 Bond.
The issue price was 100% of its principal amount
and bears interest from 12 October 2018 at the rate of 3.75% per
annum payable semi-annually, in arrears, on 12 April and 12 October
commencing on 12 April 2019.
During the year ended 31 December 2022, the
Group made a partial repayment towards the 2018 Bond of €330.0
million. It was then fully repaid in 2023.
(b) 2019 Bond
On 7 March 2019, the Group issued €350 million
of senior secured notes (the "2019 Bond") maturing in March 2026.
The net proceeds of issuing the 2019 Bond after deducting
commissions and other direct costs of issue totalled €345.7
million.
Commissions and other direct costs of issue have
been offset against the principal balance and are amortised over
the period of the 2019 Bond.
The issue price is 100% of its principal amount
and bears interest from 7 March 2019 at a rate of 4.25% per annum
payable semi-annually, in arrears, on 7 September and 7 March
commencing on 7 September 2019.
(c) 2023 Bond
On 28 June 2023, the Group issued €300.0 million
of senior secured notes (the "2023 Bond") maturing in June 2028.
The net proceeds of issuing the 2023 Bond after deducting
commissions and other direct costs of issue totalled €297.2
million.
Commissions and other direct costs of issue have
been offset against the principal balance and are amortised over
the period of the 2023 Bond.
The issue price is 100% of its principal amount
and bears interest from 28 June 2023 at a rate of 5.875% per annum
payable semi-annually, in arrears, on 28 December and 28 June
commencing on 28 December 2023.
As at 31 December 2023 and 2022, the Group met
the required interest cover financial covenant of 2:1 Adjusted
EBITDA/Interest ratio, for the combined 2018, 2019 and 2023
Bonds.
Note 30 - Provisions for risks and charges,
litigation and contingent liabilities
The Group is involved in proceedings before
civil and administrative courts, and other legal or potential legal
actions related to its business, including certain matters related
to previous acquisitions. Based on the information currently
available, and taking into consideration the existing provisions
for risks, the Group currently considers that such proceedings and
potential actions will not result in an adverse effect upon the
financial statements; however, where this is not considered to be
remote, they have been disclosed as contingent
liabilities.
All the matters were subject to a review and
estimate by the Board of Directors based on the information
available at the date of preparation of these financial statements
and, where appropriate, supported by updated legal opinions from
independent professionals. These provisions are classified based on
the Directors' assessment of the progress and probabilities of
success of each case at each reporting date.
Movements of the provisions outstanding as at 31
December 2023 are shown below:
|
|
|
|
|
|
|
Balance at 1 January 2023
|
7.3
|
4.2
|
2.4
|
13.9
|
|
Provisions made during the year
|
0.6
|
1.9
|
0.9
|
3.4
|
|
Provisions used during the year
|
(1.1)
|
(3.7)
|
(0.2)
|
(5.0)
|
Provisions reversed during the year
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
|
|
|
Non-current
|
7.3
|
0.3
|
2.4
|
10.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
|
|
|
|
Non-current
|
5.7
|
0.3
|
2.9
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for legal and regulatory
issues
The Group is subject to proceedings and
potential claims regarding complex legal matters which are subject
to a different degree of uncertainty. Provisions are held for
various legal and regulatory issues that relate to matters arising
in the normal course of business including, in particular, various
disputes that arose in relation to the operation of the various
licences held by the Group's subsidiary Snaitech. The uncertainty
is due to complex legislative and licensing frameworks in the
various territories in which the Group operates. The Group also
operates in certain jurisdictions where legal and regulatory
matters can take considerable time for the required local processes
to be completed and the matters to be resolved.
Contractual claims
The Group is subject to historic claims relating
to contractual matters that arise with customers in the normal
course of business. The Group believes they have a robust defence
to the claims raised and has provided for the likely settlement
where an outflow of funds is probable. The uncertainty relates to
complex contractual dealings with a wide range of customers in
various jurisdictions, and because, as noted above, the Group
operates in certain jurisdictions where contractual disputes can
take considerable time to be resolved in the local legal
system.
Given the uncertainties inherent, it is
difficult to predict with certainty the outlay (or the timing
thereof) which will derive from these matters. It is therefore
possible that the value of the provisions may vary further based on
future developments. The Group monitors the status of these matters
and consults with its advisers and experts on legal and tax-related
matters in arriving at the provisions recorded. The provisions
included represent the Directors' best estimate of the potential
outlay and none of the matters provided for are individually
material to the financial statements.
Accounting for uncertain tax
positions
The Group is subject to various forms of tax in
a number of jurisdictions. Given the nature of the industry and the
jurisdictions within which the Group operates, the tax, legal and
regulatory regimes are continuously changing and subject to
differing interpretations. As such, the Group is exposed to a small
number of uncertain tax positions and open audits/enquiries.
Judgement is applied in order to adequately provide for uncertain
tax positions where it is believed that it is more likely than not
that an economic outflow will arise. The Group has provided for
uncertain tax positions which meet the recognition threshold and
these positions are included within tax liabilities. There is a
risk that additional liabilities could arise. Given the uncertainty
and the complexity of application of international tax in the
sector, it is not feasible to accurately quantify any possible
range of liability or exposure, and this has therefore not been
disclosed.
Note 31 - Contingent consideration
|
|
|
|
|
Non-current contingent
consideration
|
|
|
|
Acquisition of Aus GMTC PTY Ltd
|
5.4
|
2.1
|
|
|
|
|
Total non-current contingent
consideration
|
|
|
|
Current contingent consideration
consists of:
|
|
|
|
|
|
|
Total current contingent
consideration
|
|
|
Total contingent
consideration
|
|
|
The maximum contingent consideration payable is
as follows:
|
|
|
|
|
Acquisition of Aus GMTC PTY Ltd
|
45.3
|
46.7
|
|
|
|
|
|
|
|
|
Note 32 - Trade payables
Note 33 - Deferred tax
The movement on the deferred tax is as shown
below:
|
|
|
|
|
Balance at 1 January
|
(10.8)
|
14.0
|
|
Adjustment on initial recognition of IAS 12
amendment (restated Note 4A)
|
-
|
1.5
|
|
Balance at 1 January (restated)
|
(10.8)
|
15.5
|
|
Charge to profit or loss (Note 15)
|
(87.4)
|
(26.3)
|
|
On business combinations
|
(0.9)
|
-
|
|
|
|
|
|
|
|
|
|
Split as:
|
|
|
|
Deferred tax liability
|
(161.6)
|
(124.8)
|
|
|
|
|
|
|
|
|
Deferred tax assets and liabilities are offset
only when there is a legally enforceable right of offset, in
accordance with IAS 12.
As at 31 December 2023, the Directors continued
to recognise deferred tax assets arising from temporary differences
and tax losses carried forward, with the latter only to the extent
that it is probable that future taxable profit will be available
against which the unused tax losses can be utilised. Please refer
to Notes 7 and 15 for the assessment performed on the recognition
of deferred tax in the period.
Details of the deferred tax outstanding as at 31
December 2023 and 2022 are as follows:
|
|
|
|
|
Deferred tax recognised on Group
restructuring
|
47.2
|
56.8
|
|
Tax losses
|
29.7
|
75.9
|
|
Other temporary and deductible
differences
|
(6.4)
|
30.3
|
|
Deferred tax on acquisitions
|
(81.2)
|
(88.4)
|
|
|
|
|
|
|
|
|
Details of the deferred tax, amounts recognised
in profit or loss are as follows:
|
|
|
|
|
Accelerated capital allowances
|
(2.0)
|
(1.3)
|
|
Employee pension liabilities
|
-
|
(0.3)
|
|
Other temporary and deductible
differences
|
(39.4)
|
(26.6)
|
|
Leases
|
0.1
|
(0.1)
|
|
|
|
|
|
|
|
|
Note 34 - Other payables
|
|
|
|
|
Non-current liabilities
|
|
|
|
Payroll and related expenses
|
30.6
|
23.9
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
Payroll and related expenses
|
99.8
|
99.7
|
|
Accrued expenses
|
76.0
|
48.2
|
|
VAT payable
|
2.7
|
3.0
|
|
Interest payable
|
5.9
|
7.4
|
|
|
|
|
|
|
|
|
Note 35 - Gaming and other taxes
payable
Note 36 - Acquisitions during prior
year
On 30 August 2022, the Group acquired 100% of
the share capital of Aus GMTC PTY Ltd ("Aus GMTC") which creates
content and online games.
The Group paid a total cash consideration of
€2.9 million ($3.0 million), with an additional consideration
(capped at $50.0 million) in cash payable in 2025 based on a
pre-defined EBITDA calculation resulting from the performance of
the developed games active during the year ending 30 September
2025. The consideration is calculated based on four times the
pre-defined EBITDA for that year, less the cash consideration
already paid, plus the €1.8 million loan provided to the acquired
company pre-acquisition.
Note 37 - Related parties
Parties are considered to be related if one
party has the ability to control the other party or exercise
significant influence over the other party's making of financial or
operational decisions, or if both parties are controlled by the
same third party. Also, a party is considered to be related if a
member of the key management personnel has the ability to control
the other party.
During the year, Group companies entered into
the following transactions with related parties which are not
members of the Group:
|
|
|
|
|
Revenue
|
|
|
Investments in associates
|
|
|
|
Interest income
|
|
|
|
Investments in associates
|
1.7
|
0.8
|
|
Operating expenses
|
|
|
|
Investments in associates
|
0.7
|
-
|
|
Dividend income
|
|
|
|
Investments in associates
|
2.0
|
-
|
The revenue from investments in associates
includes income from Caliplay, Galera, Wplay, Onjoc, Tenbet and
NorthStar. The interest income relates to the same companies except
Caliplay and including Stats.
The following amounts were outstanding at the
reporting date:
|
|
|
|
|
Trade receivables (Note
23)
|
|
|
|
|
|
|
|
Other receivables (Note
24)
|
|
|
|
|
|
|
|
Loans and interest receivable -
current (Note 24)
|
|
|
|
|
|
|
|
Loans and interest receivable -
non-current (Note 22)
|
|
|
|
|
|
|
The loans and interest receivables above do not
include the expected credit losses. For the year ended 31 December
2023, the Group recognised a provision for expected credit losses
of €0.1 million relating to amounts owed by related parties in less
than one year (2022: €0.1 million) and €2.4 million for more than
one year (2022: €1.2 million).
The loans due from related parties are further
disclosed in Note 21.
Key management personnel compensation, which
includes the Board members (Executive and Non-executive Directors)
and senior management personnel, comprised the
following:
|
|
|
|
|
Short-term employee benefits
|
16.5
|
13.6
|
|
Post-employment benefits
|
0.1
|
0.1
|
|
Termination benefits
|
0.1
|
1.2
|
|
|
|
|
|
|
|
|
The Group is aware that a partnership in which a
member of key management personnel (who is not a Board member) has
a non-controlling interest provides certain advisory and consulting
services to third-party service providers of the Group in
connection with certain of the Group's structured and other
commercial agreements. The partnership contracts with and is
compensated by the third-party service providers, and the Group has
no direct arrangement with the partnership. The total paid to this
partnership by the third-party service providers was €12.5 million
(2022: €5.9 million).
Note 38 - Subsidiaries
Details of the Group's principal subsidiaries as
at the end of the year are set out below:
|
|
|
Proportion of voting rights and ordinary share
capital held
|
|
Playtech Holdings Limited
|
|
|
Main trading company of the Group up to
December 2020, which owned the intellectual property rights and
licensed the software to customers. From January 2021 onwards,
following the transfer of intellectual property rights to Playtech
Software Limited, the principal activity of this company is the
holding of investment in subsidiaries
|
Playtech Software Limited
|
|
|
Main trading company from 2021 onwards, owns
the intellectual property rights and licenses the software to
customers
|
|
|
|
|
Trading company for the Videobet software, owns
the intellectual property rights of Videobet and licenses it to
customers. From January 2021 onwards, the principal activity is the
holding of investment in subsidiaries
|
Playtech Services (Cyprus) Limited
|
|
|
Manages the iPoker Network in regulated markets
and is a main holding company of the Group
|
VB (Video) Cyprus Limited
|
|
|
Trading company for the Videobet product to
Romanian companies
|
Virtue Fusion (Alderney) Limited
|
|
|
Online bingo and casino software
provider
|
Intelligent Gaming Systems Limited
|
|
|
Casino management systems to land-based
businesses
|
|
|
|
|
Holds licence in Alderney for online gaming and
Bingo B2C operations
|
PT Turnkey Services Limited
|
|
|
Holding company of the Turnkey Services
group
|
PT Entertenimiento Online EAD
|
|
|
Poker and bingo network for Spain
|
PT Marketing Services Limited
|
|
|
|
PT Operational Services Limited
|
|
|
|
PT Network Management Limited
|
|
|
|
Videobet Interactive Sweden AB
|
|
|
Trading company for the Aristocrat Lotteries
VLTs
|
|
|
|
|
Owns video slots intellectual
property
|
Best Gaming Technology GmbH
|
|
|
Trading company for sports betting
|
Playtech BGT Sports Limited
|
|
|
Trading company for sports betting and provider
of development services
|
|
|
|
|
Owns bingo software intellectual property and
bingo hardware
|
|
|
|
|
Develops and provides online gaming
slots
|
|
|
|
|
|
|
|
|
|
Operating shops in Austria
|
|
|
|
|
Italian retail betting market and gaming
machine market
|
|
|
|
|
Designs, develops and manufactures online
software
|
Techplay Marketing Limited
|
|
|
Provider of marketing support services,
software development and support services
|
|
|
|
|
Develops software for fixed odds betting
terminals and casino machines (as opposed to online
software)
|
|
|
|
|
Designs, develops and manufactures online
software
|
|
|
|
|
Management services company
|
Techplay S.A. Software Limited
|
|
|
Software development and operational support
services
|
|
|
|
|
Consulting and online technical support, data
mining processing and advertising services to Group
companies
|
|
|
|
|
Mobile sportsbook betting platform
developer
|
|
|
|
|
Operates poker community business
|
|
|
|
|
Italian retail betting market
|
|
|
|
|
Designs, develops and manufactures
software
|
Trinity Bet Operations Ltd
|
|
|
Retail and digital sports betting
|
Euro live Technologies SIA
|
|
|
Provider of live services to Group
companies
|
Note 39 - Financial instruments and risk
management
The Group has exposure to the following risks
arising from financial instruments:
• credit
risk;
• liquidity risk;
and
• market
risk.
There have been no substantive changes in the
Group's exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used
to measure them from previous periods unless otherwise stated in
this note.
The principal financial instruments of the
Group, from which financial instrument risks arises, are as
follows:
• trade
receivables;
• loans
receivable;
• convertible
loans;
• cash and cash
equivalents;
• investments in equity
securities;
• derivative financial
assets;
• trade
payables;
• bonds;
• loans and borrowings;
and
• contingent
consideration and redemption liability.
Financial instrument by category
The following table shows the carrying amounts
and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
Non-current financial
assets
|
|
|
|
|
|
|
|
|
Equity investments
|
21B
|
FVTPL
|
92.8
|
|
15.8
|
-
|
77.0
|
|
Derivative financial assets
|
21C
|
FVTPL
|
827.8
|
|
-
|
-
|
827.8
|
|
Convertible loans
|
22
|
FVTPL
|
3.5
|
|
-
|
-
|
3.5
|
|
Trade receivables
|
23
|
Amortised
cost
|
1.9
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
Trade receivables
|
23
|
Amortised
cost
|
207.1
|
|
-
|
-
|
-
|
|
Loans receivables
|
24
|
Amortised
cost
|
1.7
|
|
-
|
-
|
-
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Bonds
|
29
|
Amortised
cost
|
646.1
|
|
-
|
-
|
-
|
|
Lease liability
|
19
|
Amortised
cost
|
61.9
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade payables
|
32
|
Amortised
cost
|
66.9
|
|
-
|
-
|
-
|
|
Lease liability
|
19
|
Amortised
cost
|
24.9
|
|
-
|
-
|
-
|
|
Progressive operators' jackpots and security
deposits
|
25
|
Amortised
cost
|
111.0
|
|
-
|
-
|
-
|
|
Client funds
|
25
|
Amortised
cost
|
41.9
|
|
-
|
-
|
-
|
|
Contingent consideration
|
31
|
FVTPL
|
0.4
|
|
-
|
-
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2022
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
Non-current financial
assets
|
|
|
|
|
|
|
|
|
Equity investments
|
21B
|
FVTPL
|
9.2
|
|
1.4
|
-
|
7.8
|
|
Derivative financial assets
|
21C
|
FVTPL
|
636.4
|
|
-
|
-
|
636.4
|
|
Trade receivables
|
23
|
Amortised
cost
|
1.1
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
Trade receivables
|
23
|
Amortised
cost
|
163.9
|
|
-
|
-
|
-
|
|
Convertible loans
|
24
|
FVTPL
|
8.3
|
|
-
|
-
|
8.3
|
|
Loans receivables
|
24
|
Amortised
cost
|
8.0
|
|
-
|
-
|
-
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Bonds
|
29
|
Amortised
cost
|
348.0
|
|
-
|
-
|
-
|
|
Lease liability
|
19
|
Amortised
cost
|
54.0
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Bonds
|
29
|
Amortised
cost
|
199.6
|
|
-
|
-
|
-
|
|
Trade payables
|
32
|
Amortised
cost
|
61.2
|
|
-
|
-
|
-
|
|
Lease liability
|
19
|
Amortised
cost
|
31.8
|
|
-
|
-
|
-
|
|
Progressive operators' jackpots and security
deposits
|
25
|
Amortised
cost
|
114.3
|
|
-
|
-
|
-
|
|
Client funds
|
25
|
Amortised
cost
|
39.8
|
|
-
|
-
|
-
|
|
Contingent consideration
|
31
|
FVTPL
|
0.6
|
|
-
|
-
|
0.6
|
|
|
|
|
|
|
|
|
|
The fair value of the contingent consideration
is calculated by discounting the estimated cash flows. The
valuation model considers the present value of the expected future
payments, discounted using a risk adjusted discount
rate.
For details of the fair value hierarchy,
valuation techniques and significant unobservable inputs relating
to determining the fair value of derivative financial assets, which
are classified as Level 3 of the fair value hierarchy, refer to
Note 21C.
The carrying amount does not materially differ
from the fair value of the financial assets and
liabilities.
The Board has overall responsibility for the
determination of the Group's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it
has delegated the authority for designing and operating processes
that ensure the effective implementation of the objectives and
policies to the Group's Finance function. The overall objective of
the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group's competitiveness and
flexibility.
Further details regarding these policies are set
out below:
A. Credit risk
Credit risk is the risk that a counterparty will
not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to
credit risk from its operating activities (primarily trade
receivables), its investing activities through loans made and from
its financing activities, including deposits with banks and
financial institutions. After the impairment analysis performed at
the reporting date, the expected credit losses (ECLs) are €9.7
million (2022: €6.5 million). As at 31 December
2023, two customers had combined loans and receivables outstanding
of €139.7 million.
Cash and cash equivalents
The Group held cash and cash equivalents (before
ECL) of €516.6 million as at 31 December 2023 (2022: €426.9
million). The cash and cash equivalents are held with bank and
financial institution counterparties, which are rated from Caa- to
AA+, based on Moody's ratings.
Impairment on cash and cash equivalents has been
measured on a 12-month expected credit loss basis and reflects the
short maturities of the exposures. The Group considers that its
cash and cash equivalents have low credit risk based on the
external credit ratings of the counterparties. The Group uses a
similar approach for assessment of ECLs for cash and cash
equivalents to those used for trade receivables. The ECL on cash
balances as at 31 December 2023 is €0.4 million (2022: €0.4
million).
A reasonable movement in the inputs of the ECL
calculation of cash and cash equivalents does not materially change
the ECL to be recognised.
|
|
|
Financial
institutions
with A-
and
above
rating
€'m
|
Financial
institutions
with below A-
rating
and no
rating
€'m
|
|
At 31 December 2023
|
516.6
|
337.0
|
179.6
|
|
|
|
|
|
Trade receivables
The Group's exposure to credit risk is
influenced mainly by the individual characteristics of each
customer. However, management also considers the factors that may
influence the credit risk of its customer base, including the
default risk associated with the industry and country in which
customers operate.
The Group applies the IFRS 9 simplified approach
to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the ECL, trade
receivables have been grouped based on shared credit risk
characteristics and the days past due. The trade balances from
related parties have also been included in the ECL assessment. The
expected loss rates are calculated based on past default experience
and an assessment of the future economic environment. The ECL is
calculated with reference to the ageing and risk profile of the
balances.
As at 31 December 2023, the Group has trade
receivables of €209.0 million (2022: €165.0 million) which is net
of an allowance for ECL of €6.8 million (2022: €4.5
million).
The carrying amounts of financial assets
represent the maximum credit exposure.
Set out below is the movement in the allowance
for expected credit losses of trade receivables:
|
|
|
|
|
More
than
2
months
past
due
€'m
|
|
Expected credit loss rate
|
3.2%
|
4.8%
|
1.0%
|
2.1%
|
|
Gross carrying amount
|
215.8
|
109.3
|
62.9
|
43.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More than
2 months
past due
€'m
|
|
Expected credit loss rate
|
2.7%
|
3.0%
|
1.1%
|
2.9%
|
|
Gross carrying amount
|
169.5
|
124.8
|
27.2
|
17.5
|
|
|
|
|
|
|
|
|
|
|
|
|
A reasonable movement in the inputs of the ECL
calculation of trade receivables does not materially change the ECL
to be recognised.
Impairment losses on trade receivables and
contract assets are presented as net impairment losses within the
impairment of financial assets. Subsequent recoveries of amounts
previously written off are credited against the same line
item.
The movement in the ECL in respect of trade
receivables during the year was as follows:
|
|
|
|
|
Balance at 1 January
|
4.5
|
6.8
|
Charged to profit or loss
|
|
|
|
|
|
|
As of 31 December 2023, the Group has a
significant concentration of trade receivables from a related
party. The balance outstanding from this related party represents
41% of the net trade receivable balance. This concentration of
receivables from a related party exposes the Group to concentration
risk, as any adverse financial performance or inability of the
related party to fulfil its obligations could have a material
adverse impact on the Group's financial position, results of
operations and cash flows. The Group believes that this amount is
recoverable and expects timely payment (refer to Note 7 for
significant judgement made).
Loans receivable
The Group recognised an allowance for expected
credit losses for all debt instruments given to third parties based
on past default experience and assessment of the future economic
environment. For the year ended 31 December 2023, the Group
recognised provision for expected credit losses of €2.5 million in
profit or loss relating to loans receivable (2022: €1.6
million).
|
|
|
|
|
Balance at 1 January
|
1.6
|
-
|
Charged to profit or loss
|
|
|
|
|
|
|
Furthermore, €3.0 million of an existing loan to
Gameco was impaired during the year ended 31 December 2022 (refer
to Note 21B).
B. Liquidity risk
Liquidity risk is the risk that the Group will
encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Group's objective when managing
liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when they are due,
under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group's
reputation.
The following are the remaining contractual
maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted and include contractual interest
payments. Balances due within one year equal their carrying
balances as the impact of discounting is not
significant.
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
646.1
|
762.8
|
32.5
|
730.3
|
-
|
|
Lease liability
|
86.8
|
96.8
|
26.7
|
53.5
|
16.6
|
|
Contingent consideration
|
6.2
|
7.8
|
0.4
|
7.4
|
-
|
|
Trade payables
|
66.9
|
66.9
|
66.9
|
-
|
-
|
|
Progressive operators' jackpots and security
deposits
|
111.0
|
111.0
|
111.0
|
-
|
-
|
|
Client funds
|
41.9
|
41.9
|
41.9
|
-
|
-
|
|
Interest payable
|
5.9
|
5.9
|
5.9
|
-
|
-
|
Provisions for risks and charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
547.6
|
604.6
|
221.1
|
383.5
|
-
|
|
Lease liability
|
85.8
|
110.2
|
34.1
|
43.1
|
33.0
|
|
Contingent consideration
|
2.9
|
7.9
|
0.2
|
7.7
|
-
|
|
Trade payables
|
61.2
|
61.2
|
61.2
|
-
|
-
|
|
Progressive operators' jackpots and security
deposits
|
114.3
|
114.3
|
114.3
|
-
|
-
|
|
Client funds
|
39.8
|
39.8
|
39.8
|
-
|
-
|
|
Interest payable
|
7.4
|
7.4
|
7.4
|
-
|
-
|
Provisions for risks and charges
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Market risk
Market risk is the risk that changes in market
prices, such as foreign exchange rates, interest rates and equity
prices, will affect the Group's income or the value of its holding
of financial instruments.
The objective of market risk management is to
manage and control market risk exposures within acceptable
parameters while optimising the return.
Currency risk
Currency risk is the risk that the value of
financial instruments will fluctuate due to changes in foreign
exchange rates.
Foreign exchange risk arises because the Group
has operations located in various parts of the world. However, the
functional currency of those operations is the same as the Group's
primary currency (Euro) and the Group is not substantially exposed
to fluctuations in exchange rates in respect of assets held
overseas.
Foreign exchange risk also arises when the Group
operations enter into foreign transactions, and when the Group
holds cash balances, in currencies denominated in a currency other
than the functional currency.
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
418.7
|
11.2
|
69.7
|
17.0
|
516.6
|
Progressive operators' jackpots and security
deposits
|
|
|
|
|
|
Cash and cash equivalents less
client funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
338.5
|
5.8
|
60.2
|
22.4
|
426.9
|
Progressive operators' jackpots and security
deposits
|
|
|
|
|
|
Cash and cash equivalents less
client funds
|
|
|
|
|
|
The Group's policy is not to enter into any
currency hedging transactions.
Interest rate risk
Interest rate risk is the risk that the fair
value or future cash flows of a financial instrument will fluctuate
due to changes in market interest rates. The Group's exposure to
the risk of changes in market interest rates relates primarily to
the Group's long-term debt obligations with floating interest
rates. The Group manages its interest rate risk by having a
balanced portfolio of fixed and variable rate bonds and loans and
borrowings. At 31 December 2023, none of the Group's borrowings are
at a variable rate of interest (2022: Nil%).
Any reasonably possible change to the interest
rate would have an immaterial effect on the interest
payable.
Equity price risk
The Group is exposed to market risk by way of
holding some investments in other companies on a short-term basis.
Variations in market value over the life of these investments will
have an immaterial impact on the balance sheet and the statement of
comprehensive income.
Note 40 - Reconciliation of movement of
liabilities to cash flows arising from financing
activities
|
|
|
|
|
|
|
Interest on
loans and
borrowings
and bonds
€'m
|
Contingent
consideration
and redemption
liability
€'m
|
|
|
Balance at 1 January 2023
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Interest payable on bonds and loans and
borrowings
|
-
|
-
|
(31.3)
|
-
|
-
|
(31.3)
|
|
Repayment of loans and borrowings
|
(77.4)
|
-
|
-
|
-
|
-
|
(77.4)
|
|
Proceeds from loans and borrowings
|
79.9
|
-
|
-
|
-
|
-
|
79.9
|
|
Proceeds from the issuance of bonds
|
-
|
297.2
|
-
|
-
|
-
|
297.2
|
|
Repayment of bonds
|
-
|
(200.0)
|
-
|
-
|
-
|
(200.0)
|
|
Payment of contingent consideration
|
-
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
|
Principal paid on lease liability
|
-
|
-
|
-
|
-
|
(23.1)
|
(23.1)
|
Interest paid on lease liability
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
|
Other changes
|
|
|
|
|
|
|
|
Liability related
|
|
|
|
|
|
|
|
New leases
|
-
|
-
|
-
|
-
|
22.0
|
22.0
|
|
On business combinations
|
-
|
-
|
-
|
0.4
|
1.9
|
2.3
|
|
Interest on bonds and loans and
borrowings
|
-
|
1.3
|
29.6
|
-
|
-
|
30.9
|
|
Interest on lease liability
|
-
|
-
|
-
|
-
|
5.2
|
5.2
|
|
Movement in contingent consideration
|
-
|
-
|
-
|
3.3
|
-
|
3.3
|
Foreign exchange difference
|
|
|
|
|
|
|
Total liability-related other
changes
|
|
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on
loans and
borrowings
and bonds
€'m
|
Contingent
consideration
and
redemption
liability
€'m
|
|
|
Balance at 1 January 2022
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Interest payable on bonds and loans and
borrowings
|
-
|
-
|
(36.7)
|
-
|
-
|
(36.7)
|
|
Repayment of loans and borrowings
|
(166.1)
|
-
|
-
|
-
|
-
|
(166.1)
|
|
Repayment of bonds
|
-
|
(330.0)
|
-
|
-
|
-
|
(330.0)
|
|
Payment of contingent consideration and
redemption liability
|
-
|
-
|
-
|
(5.9)
|
-
|
(5.9)
|
|
Principal paid on lease liability
|
-
|
-
|
-
|
-
|
(22.5)
|
(22.5)
|
Interest paid on lease liability
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
|
Other changes
|
|
|
|
|
|
|
|
Liability related
|
|
|
|
|
|
|
|
New leases
|
-
|
-
|
-
|
-
|
19.0
|
19.0
|
|
Interest on bonds, bank borrowings and other
borrowings
|
-
|
2.6
|
33.6
|
-
|
-
|
36.2
|
|
Interest on lease liability
|
-
|
-
|
-
|
-
|
5.7
|
5.7
|
|
Movement in deferred and contingent
consideration and redemption liability
|
-
|
-
|
-
|
(4.3)
|
-
|
(4.3)
|
|
Payment of contingent consideration related to
investments
|
-
|
-
|
-
|
(1.0)
|
-
|
(1.0)
|
|
Additional contingent consideration
|
-
|
-
|
-
|
2.9
|
-
|
2.9
|
|
Disposal of subsidiary/discontinued
operations
|
-
|
-
|
-
|
-
|
(4.7)
|
(4.7)
|
Foreign exchange difference
|
|
|
|
|
|
|
Total liability-related other
changes
|
|
|
|
|
|
|
Balance at 31 December
2022
|
|
|
|
|
|
|
Note 41 - Events after the reporting
date
Post year end, the Group entered into
a new structured agreement with Tenlot El Salvador S.A. de C.V.
("Tenlot El Salvador"), which has a licence to operate online
betting and gaming on behalf of the national lottery of El
Salvador. Under the agreement, the Group will provide Tenlot El
Salvador its technological platform, the operational services and
related services, where it will receive in return standard operator
revenue and additional B2B services fee as per Note 10. The Group
has no shareholding in Tenlot El Salvador. Playtech has paid Tenlot
El Salvador an amount of $2.3 million and will pay an additional
$2.5 million upon certain conditions in exchange for an option to
acquire 70% of the shares in Tenlot El Salvador. The option has
certain exercise conditions. Playtech also made available to Tenlot
El Salvador a $5.5 million line of credit. As of the date of this
report this amount remains undrawn.
Post year end, the Group formally
concluded the extension of the exercise date in respect of the
Wplay option (see Note 21C) to any date after 22 February
2025.
Post year end, the receivable in Note
7 in relation to Caliplay remains unpaid. In addition, further
invoices totalling €35.8 million in relation to B2B licensee fees
and additional B2B services fee for January and February 2024 have
been issued and remain unpaid.