TIDMPTEC
RNS Number : 6384L
Playtech PLC
07 September 2023
Playtech plc
("Playtech", the "Company", or the "Group")
Results for the six months ended 30 June 2023
Strong EBITDA growth in H1; FY23 on track to be slightly ahead
of expectations
Playtech (LSE: PTEC), the leading platform, content and services
provider in the online gambling industry, today announces its
results for the six months to 30 June 2023.
Financial summary (continuing operations)(1)
Reported Adjusted (2)
H1 22 H1 22
H1 23 (5) H1 23 (5)
Change Change
EUR'm EUR'm % EUR'm EUR'm %
----------------- ---------- ------- ------- ------- ------- -------
Revenue 859.6 792.3 8% 859.6 792.3 8%
EBITDA 207.3 173.9 19% 219.9 199.1 10%
Post-tax profit
(3) 3.1 71.4 -96% 85.7 94.3 -9%
22.9 27.5 30.2
Diluted EPS 1.0 EURc EURc -96% EURc EURc -9%
Net debt 248.2 494.5 -50%
Summary
-- Record H1 23 performance with H1 Adjusted EBITDA up 10% to EUR219.9 million.
-- Continued strength seen across regulated B2B markets and Snaitech.
-- Comprehensive partnership signed with Hard Rock Digital in Q1
23, establishing Playtech in key US states and with international
expansion to follow.
-- The Group is on course to deliver FY23 Adjusted EBITDA
slightly ahead of current expectations.
Divisional highlights
B2B
-- Strong performance from B2B, with H1 23 revenue up 7% to
EUR334.5 million versus H1 22. B2B Adjusted EBITDA increased 5% to
EUR81.3 million (H1 22: EUR77.2 million).
-- The Americas was the standout region during the period, with
revenue growth of 43% to EUR99.7 million. Caliente remains the key
driver of this growth. Brazil continues to grow strongly as it
moves towards regulating, and the early performance of Galera.bet
is encouraging.
-- Significant progress made on executing the US strategy:
- Landmark agreement signed with Hard Rock Digital in early
2023, including an $85 million (EUR79.8 million) investment in
exchange for a small minority equity ownership stake.
- Ohio, Maryland and West Virginia licences granted so far in
2023, and Playtech is now licensed in 10 states with further
applications progressing.
- Launched with several operators across multiple states,
including 888, Rush Street Interactive and PokerStars, and expanded
our relationships with BetMGM and BetParx as they launch in further
states.
-- Announced an extension of the partnership with NorthStar,
alongside a strategic investment to ensure Playtech is
well-positioned to benefit from the regulation of the Canadian
market.
-- Europe ex-UK revenue grew 5% to EUR96.6 million, with growth
seen across multiple countries including Poland and Spain.
-- Live Casino continued to see healthy revenue growth; the
Company remains focused on regulated markets which saw revenue
growth of 24% in H1 23 versus H1 22.
-- SaaS revenues grew more than 50% in H1 23 versus H1 22,
illustrating our excellent progress towards achieving the
medium-term SaaS revenue target of EUR60 million - EUR80
million.
-- Launched BetBuddy, part of Playtech's safer gambling
technology, with five new brands in H1 23, bringing the total to 15
brands in eight jurisdictions.
B2C
-- Solid B2C performance (including Snaitech, HAPPYBET and Sun
Bingo & Other B2C) with revenue up 9% to EUR532.1 million (H1
22: EUR487.3 million). Adjusted EBITDA up 14% to EUR138.6 million
(H1 22: EUR121.9 million).
-- Snaitech Adjusted EBITDA increased 12% to EUR141.9 million
(H1 22: EUR127.0 million) driven by growth across both retail and
online, as well as pent-up demand following the World Cup.
- Retail Adjusted EBITDA up 13% to EUR73.2 million (H1 22:
EUR64.7 million)
- Online Adjusted EBITDA up 10% to EUR68.7 million (H1 22:
EUR62.3 million)
-- The Snai brand maintained its number one market share
position (retail and online combined measured by GGR) across
Italian sports betting brands in H1 2023.
-- HAPPYBET, now integrated into Snaitech's operations, reported
Adjusted EBITDA of EUR-6.1 million (H1 22: EUR-5.2 million),
although the current period includes a EUR2 million historical
litigation settlement expense. Strategic and operational measures
have been taken across both retail and online, with leading KPIs
showing improvement.
-- Sun Bingo and Other B2C saw 8% revenue growth to EUR34.1
million (H1 22: EUR31.7 million) while Adjusted EBITDA grew to
EUR2.8 million, up from EUR0.1 million in H1 22.
Financial and corporate activity
-- Reported post-tax profit of EUR3.1 million in H1 23, was down
from EUR71.4 million in H1 22, due to an overall reduction in the
fair value of the derivative financial assets recognised in the
income statement, and the derecognition of brought forward deferred
tax assets.
-- Strong cash generation in H1 23, with adjusted operating cashflow (4) of EUR232.8 million.
-- Group net debt as at 30 June 2023 was EUR248.2 million, resulting in leverage of 0.6x.
-- Robust balance sheet following the issuance of a EUR300
million bond due 2028. In July 2023, part of the proceeds were used
to redeem all of the outstanding EUR200 million notes due 2023, and
also to repay outstanding debt under Playtech's revolving credit
facility, such that this facility is now fully undrawn.
Corporate governance
As announced on 17 May 2023, John Krumins advised the Board that
he wished to step down from the Board. At the request of the
Chairman, John agreed to remain as a Non-executive Director of the
Company and Chairman of the Audit Committee until after the
publication of the Group's interim results, ensuring a smooth
transition to his successor as Chairman of the Audit Committee.
Playtech now confirms John Krumins will be stepping down on 29
September 2023.
Playtech has also made the following changes to the Committees
of the Board, effective from 29 September 2023:
-- Ian Penrose will assume the Chair of the Audit Committee and
is appointed to the Nominations Committee, while stepping down from
the ESG Committee.
-- Samy Reeb is appointed to the Audit and ESG Committees along
with assuming the Chair of the Risk Committee, replacing Anna
Massion.
-- Anna Massion will become the Chair of the Remuneration
Committee, replacing Ian Penrose and is also appointed to the ESG
Committee.
Current trading and outlook
-- Following a strong H1 performance, H2 has started well with normal seasonality.
-- On track to deliver FY 2023 Adjusted EBITDA slightly ahead of current expectations.
-- B2B medium term Adjusted EBITDA target of EUR200 - 250
million and B2C medium-term Adjusted EBITDA target of EUR300 - 350
million maintained.
-- Strength of balance sheet further improved by strong cash
generation and bond issuance, giving flexibility to pursue both
organic and inorganic growth opportunities.
-- The Board remains confident in Playtech's ability to execute
on growth opportunities across both B2B and B2C divisions.
Mor Weizer, CEO, said:
"We delivered our highest ever Adjusted EBITDA in the first half
of 2023, demonstrating the benefits of the continued strategic and
operational progress made in recent years. I would like to thank
all our colleagues for their hard work and support in making this
possible.
"Our success in the period was driven by our diversified
portfolio, spanning B2B and B2C, in some of the fastest-growing
regulated markets around the world. Having laid the groundwork in
the US, we are growing our offering across multiple states and are
confident in our future prospects following the landmark agreement
with Hard Rock Digital. Additionally, we further cemented our
leadership in LatAm with Caliente in Mexico and Galera.bet in
Brazil. Snaitech in Italy enjoyed another strong period, with the
management team continuing to leverage their retail presence to
grow the online business.
"We have started the second half of the year well and are on
track to deliver FY23 Adjusted EBITDA slightly ahead of current
expectations. With our proven strategy, robust balance sheet and
our operational expertise, we are confident in our ability to
capitalise on the many growth opportunities we have ahead."
- Ends -
For further information contact:
+44 (0) 20 3805
4822
Playtech plc
Mor Weizer, Chief Executive Officer
Chris McGinnis, Chief Financial Officer
c/o Headland
+44 (0) 20 3805
Sandeep Gandhi, Head of Investor Relations 4822
Headland (PR adviser to Playtech) +44 (0) 20 3805
Lucy Legh, Jack Gault 4822
----------------------------
(1) Totals in tables throughout this statement may not exactly
equal the components of the total due to rounding.
(2) Adjusted numbers relate to certain non-cash and one-off
items, as well as material reorganisation and acquisition-related
costs. 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 10.
(3) Adjusted 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.
(4) Adjusted operating cash flow refers to net cash provided by
operating activities from continuing operations after adjusting for
changes in jackpot balances, client funds, professional fees and
the ADM security deposit in Italy .
(5) H1 2022 numbers have been restated to reflect Snaitech's
online bank charges, which are now being recognised within EBITDA.
Refer to Note 4B for more details.
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/64e31fc09b8a600d00eba947/melgkr
Analysts and investors can also dial into the call using the
following details:
United Kingdom (Local): +44 20 4587 0498
United Kingdom (Toll-Free): +44 800 358 1035
Global Dial-In Numbers
Access Code: 303420
The presentation slides will be available today from 8.30 am
at:
http://www.investors.playtech.com/results-centre/presentations.aspx
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 7,300 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.
Chief Executive Officer's Review
Overview
Playtech has continued to make good progress on its strategic
priorities in the first half of 2023. We delivered record Adjusted
EBITDA in the period, driven by strong performances from both the
B2B and B2C businesses. The growth achieved in the first half of
the financial year gives the Board further confidence in achieving
Playtech's medium-term Adjusted EBITDA targets for B2B (EUR200 -
EUR250 million) and B2C (EUR300 - EUR350 million) , while taking
further strides to capture the exciting market opportunities
ahead.
The strategic focus of Playtech's B2B business remains on
opportunities in regulated or soon to be regulated markets. There
is a particular emphasis on high-growth markets including the US
and Canada, Latin America and certain European markets. These
regions helped the B2B segment to deliver revenue growth of 7% (+5%
on a constant currency basis) to EUR334.5 million (H1 2022:
EUR312.0 million). B2B Adjusted EBITDA increased 5% to EUR81.3
million (H1 2022: EUR77.2 million). This B2B performance absorbed
marketing activities in the period to further promote Playtech's
products, and thus, excluding the impact of these, growth would
have been higher.
Accelerating the Group's presence in the US remains a key
strategic priority for Playtech. In 2022, we laid the groundwork by
signing deals with multiple operators. 2023 is a year where we are
focused on execution and rolling out those deals to multiple
states. In the first half of 2023, we launched with several
operators across multiple states, including 888, PokerStars and
Rush Street Interactive, while also expanding our presence with
BetParx and BetMGM.
In early 2023, we signed a landmark agreement with Hard Rock
Digital to provide Casino and Live, amongst other content, in North
America. Playtech has also invested $85 million (EUR79.8 million)
in exchange for a small minority stake in Hard Rock Digital.
In Latin America, Playtech has continued to see excellent growth
from Caliente, which further cemented its leadership position in
Mexico. Our other strategic agreements in Latin America also
performed well. Sports betting has now been regulated in Brazil,
subject to Congress approval, and Playtech is well positioned to
capitalise on the opportunity given its exciting strategic
agreement with Galera.bet.
In Europe ex-UK, B2B revenue was driven by strong performances
across several countries, including most notably Poland and
Spain.
Playtech remains committed to diversifying its B2B division by
driving growth through our SaaS business model. At the FY 2022
results, we announced a medium-term SaaS revenue target of EUR60
million - EUR80 million, and we are pleased to report that we are
making excellent progress towards achieving this target, with the
SaaS business delivering revenue of EUR23 million in H1 23, up more
than 50% versus H1 22. We continued to see strong customer
acquisition with more than 50 further brands added, bringing the
total to over 400.
B2C revenues rose 9% to EUR532.1 million (H1 2022: EUR487.3
million) and Adjusted EBITDA increased 14% to EUR138.6 million ( H1
2022: EUR121.9 million), as Snaitech delivered another excellent
performance. Both retail betting, which benefitted from pent-up
demand after the football World Cup (given Italy was absent from
the tournament), and the online business performed well. The latter
benefitted from strong brand loyalty, continuous improvements to
apps and technology, and a broadening of its content offering.
None of this would have been possible without our colleagues
around the world, and I would like to thank them for their hard
work and commitment to deliver first-class customer service to all
of our clients. They are our greatest asset and are the key force
behind the results published today.
B2B
Core B2B
Regulated markets
Playtech's B2B business remains focused on opportunities 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.
Regulated markets saw revenue growth of 15% (11% on a constant
currency basis) compared to H1 2022, with strong contributions from
Caliente in Mexico and other regulated markets such as Poland,
Spain, Italy and Canada.
The Americas
The Americas continues to grow rapidly, with H1 2023 revenue up
43% (29% on a constant currency basis) compared to H1 2022. This
was largely driven by another strong performance from Caliente as
well as growing contributions from other customers, including
NorthStar in Canada and Wplay in Colombia.
US
Accelerating the Group's presence in the US remains a key
strategic priority. While the Group has taken significant steps to
capitalise on the favourable regulatory environment in the US,
there remains multiple opportunities ahead. Having signed deals
with multiple operators in 2022, the first half of 2023 has seen
Playtech shift its focus to executing on those agreements.
In the first six months of the year, we launched with several
operators across multiple states. 888 with its SI Casino brand and
PokerStars were launched in Michigan for both Casino and Live. 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, while successfully rolling out Sports
SSBTs for the first time in the state of Ohio.
We continue to expand our presence with BetParx. We successfully
launched Live in New Jersey, featuring 'Adventures Beyond
Wonderland', while also launching the IMS in Ohio and Maryland.
This gives 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.
As announced in March 2023, Playtech signed a landmark strategic
agreement with Hard Rock Digital (HRD), the interactive gaming and
sports betting division of Hard Rock International. 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 the IMS and
services including marketing and operations. Playtech has also
invested $85 million (EUR79.8 million) in exchange for a small
minority equity ownership stake in HRD.
Aside from launching with multiple operators in several states,
the Company is also rolling out its suite of innovative content.
Adventures Beyond Wonderland for Live Casino was launched in the
New Jersey facility in July 2023, delivering the first true game
show experience to the American market. Mega Fire Blaze Roulette, a
Playtech Live Casino hit in multiple countries, has opened in
Michigan, while the Buffalo Blitz Live slot game has also launched
in the US in Michigan. In addition, we will be launching a new
Casino slot game in the US called, 'Gold Rush: Cash Collect', based
on the popular Discovery Channel reality TV show. Gold Rush: Cash
Collect has already launched in multiple European jurisdictions,
proving successful.
Playtech remains committed to further expanding its physical
footprint in the US and other high-growth markets. In addition to
the existing Live studios in New Jersey and Michigan, construction
on another Live facility in Pennsylvania is well underway and is
expected to open before the end of 2023. 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 150 at the end of H1
2023.
The regulatory landscape in the US is ever progressing. 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.
Online casino, which was not subject to PASPA, is allowed at the
discretion of individual states. No new states have authorised
Online casino in 2023 thus far, although there are several states
where iGaming legislation is being considered.
In 2023, Playtech received licences for Ohio, Maryland and West
Virginia, taking the total number of US states where Playtech has a
licence to 10.
Canada
In early 2023, Playtech announced an expansion of its
partnership with NorthStar. 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 the IMS
platform, 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 is in
the process of raising additional capital 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
Fan Duel for Casino and Live in Ontario.
Latin America
In Latin America, Playtech continues to see excellent growth
from Caliente in Mexico. Revenue from Wplay was impacted by certain
activities in the half. Underlying revenues from Wplay continued
its strong performance, and Wplay remains well-positioned to grow
its presence there further in the years ahead.
In 2022, Playtech opened a new Live Casino facility in Peru as
it continues to extend its presence across the region. Several
customers, such as Wplay and Betano, have launched tables in the
new Live facility with positive results so far. Given the strong
demand, we are building a second studio in Lima which is expected
to open in the coming months. This will help 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.
Sports betting has now been regulated in Brazil with the
President signing a Provisional Measure, which is subject to the
approval of Congress. Brazil is anticipated to be a significant,
high-growth market given the large population and love of sports.
Playtech is well positioned to benefit given its exciting strategic
agreement with Galera.bet, which migrated its Sports product onto
Playtech's platform at the end of H1 23. In addition to Galera.bet,
Playtech also has exposure to Brazil via its other B2B partners in
the country.
Europe
In Europe ex-UK, B2B revenue growth of 5% (5% on a constant
currency basis) was driven by strong performances in several
countries including Poland and Spain. This was partly offset by
lower revenue from the Netherlands due to increased competition and
a strict regulatory environment.
There were several launches in Spain in the half, including
DAZNBET going live with Casino and Live, KirolBet with Live, and
both Luckia and Platin Casino with Casino. Playtech saw several
launches with existing customers in expanded territories, such as
Leo Vegas in Italy launching Casino and Live products and Unibet
launching in Romania with Casino. This demonstrates the versatility
and scalability of Playtech's business model and the trend to grow
customer relationships over time.
Following another competitive public tender in 2023, Playtech's
contract with Polish state operator, Totalizator, for the IMS
platform was extended for multiple years, illustrating the strength
of Playtech's offering and our successful strategy of partnering
with leading brands and institutions in newly regulated online
markets.
Elsewhere in Europe, the Company continues to expand its Live
Casino infrastructure with extensions to facilities in Latvia,
Romania, the Netherlands and the UK ongoing, illustrating the
growing demand across the segment.
France saw positive regulatory developments in the first half.
In May 2023, the French government introduced a bill that set out
proposals to regulate the online casino market. A key part of the
bill is for a five-year moratorium, whereby online casino would be
regulated until January 2030, but only for existing land-based
casino licensees. Following this, additional players could enter
the market. At present, in the online segment, only poker, sports
betting and horse race betting are regulated through approved
operators. While it is still early days, Playtech is well
positioned should France regulate the online casino segment, with
multiple B2B customers. Overall B2B revenue from France grew
healthily in the first half of the year.
UK
UK revenues saw declines of 2% (2% growth on a constant currency
basis) compared to H1 2022, where the regulatory climate continues
to have an impact.
In December 2020, the UK Government announced a call for
evidence to review the existing gambling laws in Great Britain.
Following the initial call for evidence, which closed on 31 March
2021, the Government assessed the evidence presented, alongside
other data, and set out its conclusions and proposals for reform in
a White Paper, published in April 2023.
At this point in time, there is still some uncertainty around
the impact of the White Paper on the industry. The proposals have
not resulted in changes to legislation or regulation just yet, and
are subject to consultation with various stakeholders, the timing
of which is unclear. With affordability checks the area where any
impact is most uncertain, the White Paper's message that it
recommends these checks be frictionless is positive. However, 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. In response to the UK
Government review, several operators have been taking pre-emptive
measures in an attempt to show regulators that the industry is able
to self-regulate. So while part of the impact of the White Paper
has already been felt across the industry in the UK, the full
extent of the impact is hard to quantify.
As one of the largest regulated markets in the world, the UK
remains an important market for Playtech and its customers.
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 (excl. Asia)
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 (excluding
Asia) was down 13% (-14% on a constant currency basis) versus H1
2022, with underlying growth in Brazil more than offset by a
decline in South Africa and Canada. In Canada, Ontario transitioned
to being regulated, and as a result, some revenue has shifted to
regulated operators 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 America
market opportunity.
In line with the Company's strategy to target newly regulating
markets through strategic agreements, Playtech announced at the
start of 2023 that it had reached an agreement to expand its
offering to NorthStar in Canada. Playtech now provides strategic
advice, most notably in online operations, managed services and
market expansion in addition to the IMS platform, Casino, Live
Casino, Poker and Bingo technology it already supplied as part of
the software and services agreement agreed in December 2021. This
agreement also extended the existing arrangement with NorthStar for
10 more years, and gives Playtech the right to expand its existing
arrangement beyond Ontario and across the entire Canadian
market.
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. Towards the end of 2022, Playtech launched Casino
and Live products with TsogoSun.
Unregulated Asia
Unregulated Asia saw revenue decline 14% (-10% on a constant
currency basis) compared to H1 2022 due to continued pressures in
the region.
B2B - driving growth through innovation
SaaS
Playtech is committed to diversifying its B2B division by
driving growth through our SaaS business model, which targets the
long tail of providers that don't have access to our IMS platform.
At the FY 2022 results, we announced a medium-term SaaS revenue
target of EUR60 million - EUR80 million, and we are pleased to
report that we are making good progress towards achieving this
target, with the SaaS business seeing revenue growth of more than
50% in H1 2023 versus H1 2022.
While we continue to focus on increasing our wallet share with
existing brands on our SaaS platform, we have also made progress in
attracting new customers in both regulated and regulating markets
to the SaaS offering. Playtech launched over 50 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 400
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
As the online gaming world expands, there is 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. This
game is housed in a studio designed to immerse players in the world
of Jumanji. The studio's attention to detail ensures that the game
replicates the authenticity of the original movie, delivering a
24/7 theme park-like experience.
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.
Playtech continues to invest in branded IP. In the half, the
Company signed the exclusive US rights to Family Feud, one of US
television's longest-running and highest rated gameshows, and
expects to launch a Game Show next year.
Finally, Playtech's Live product has been 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 includes Snaitech, HAPPYBET, and Sun
Bingo and Other B2C operations. Overall B2C revenues grew 9% (9% on
a constant currency basis) to EUR532.1 million (H1 22: EUR487.3
million). Adjusted EBITDA also grew 14%, rising to EUR138.6 million
(H1 22: EUR121.9 million) .
Snaitech
Snaitech revenue saw good growth in H1 2023, up 10% compared to
the same period in the prior year, while Adjusted EBITDA grew 12%
versus H1 2022. This strong performance was driven by both the
retail segment which saw revenue and Adjusted EBITDA growth of 9%
and 13% versus H1 22, respectively, and the online business which
saw revenue and Adjusted EBITDA growth of 12% and 10% versus H1 22,
respectively.
Within the retail segment, retail betting sales were up 24%
versus H1 22 due to pent-up demand after the football World Cup
(given Italy was absent from the tournament). Gaming Machines
revenue was up 3% versus H1 22 as this business normalises
post-pandemic, with the growth being driven mainly by the video
lottery terminal business. At the Adjusted EBITDA level, retail
margins expanded 80 bps versus H1 22, driven by operating leverage
on strong revenue growth.
The online business saw strong growth, with both sports betting
and casino performing well. 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. Adjusted EBITDA margins
remained high at 52% in H1 2023 versus 53% in H1 2022.
Following the regulatory approval to move the racetrack to the
San Siro racecourse, Snaitech has begun the formal sales process of
La Maura Racetrack in Italy, first disclosed at the FY2021 results.
EUR1 million was received on signing in July 2021, with the
remaining EUR19 million now expected to be received in H1 2025.
In March 2023, Snaitech acquired Giove Group for a total
consideration of EUR6.0 million. Giove Group is a well-established
betting operator in the Puglia region (southern Italy), and holds
licences for both retail betting and online, directly managing 18
betting shops.
Snai maintained its number one market share position (retail and
online combined measured by GGR) across Italian sports betting
brands in H1 2023, cementing its reputation for consistent
operational and brand strength.
HAPPYBET
HAPPYBET revenues were down 4% in H1 2023 compared to H1 2022,
driven by a rationalisation of retail sites in Germany, while
Adjusted EBITDA losses expanded to EUR6.1 million in H1 2023,
versus a loss of EUR5.2 million in H1 2022. Excluding a EUR2
million expense related to an historical litigation settlement,
Adjusted EBITDA losses narrowed to EUR4.1 million in H1 2023.
Since the Snaitech management have taken over the operations of
HAPPYBET, they have been implementing a plan to improve the
business's performance in retail and optimise the online
segment.
A process is currently underway to modify the retail footprint
in Germany, improving the quality of their locations. Less
profitable retail stores have been rationalised, while there are
plans to open several retail shops in more attractive areas in
2024, with local licences currently being applied for. The closure
of retail sites in Germany, coupled with new retail shops yet to be
opened is the primary cause of the decline in revenues in HAPPYBET
during the half.
In Austria, revenue increased in H1 2023, partly offsetting the
decline in Germany, due to the expansion in the number of retail
sites in the most profitable federal states of Tyrol and Vienna.
Adjusted EBITDA margins improved as some directly managed shops
transitioned to a franchise model.
The strategy of optimising HAPPYBET's online business has so far
focused on two main areas: optimising the player bonus policy and
implementing a new approach to risk and trading around the
sportsbook. There are signs that the measures put in place are
having a positive impact, with better payouts being seen in Q2 2023
versus Q1 2023, lower bonus to GGR ratios in H1 23 v H1 22 and a
positive trend in revenues, albeit from a low base.
Sun Bingo and Other B2C
Sun Bingo and Other B2C saw 8% revenue growth to EUR34.1 million
(H1 2022: EUR31.7 million) while Adjusted EBITDA grew to EUR2.8
million up from EUR0.1 million in H1 2022. The primary reason 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 H1 2023 at a high
contribution margin.
Safer gambling and sustainability
As a business, the most impactful contribution that Playtech can
make to the industry and in society is through the provision of
technology to advance safer gambling and player protection. We are
committed to supporting our licensees in this journey while growing
our business sustainably and in a way that builds long term value
for all our stakeholders. To meet this ambition we have set out a
five-year strategy and roadmap that moves us towards fully
integrating sustainability and responsible business into our
culture, strategy and operations.
It is easy to forget that the war in Ukraine continues to rage
on, causing untold devastation for countless people. Ukraine
remains front and centre for all of us, not least given the number
of employees we have there. I would like to say a huge thank you to
our colleagues who have devoted significant amounts of time and
resources to maintain contact with those on the ground in Ukraine
and those who have been forced out of their homes.
We remain firmly committed to making progress on all areas
relating to sustainability, including safer gambling, diversity and
climate change. In the first half of the year, we have continued to
take positive steps towards the targets that we set out under our
sustainability framework. Highlights include:
Safer Gambling
-- Launched BetBuddy, part of Playtech's safer gambling
technology, with five new brands in H1 23, bringing the total to 15
brands in eight jurisdictions.
-- Achieved GamCare B2B Safer Gambling Standard at Provisional
Advanced Level 3, the highest award possible.
-- Published and presented two new research papers providing
insights on data analytics for harm prevention and gambling product
risk at the UNLV International Conference on Gambling & Risk
Taking in May.
Climate Change
-- Launched a new, global partnership with the environmental
non-profit, Hubbub, to support employee engagement and action on
climate change.
-- Secured inclusion in the FT Europe Climate Leaders 2023 listing, published in April 2023.
Diversity and Inclusion
-- Increased female representation amongst our senior leadership
population with females representing 28% as of 30 June 2023 (FY
2022: 26%).
-- Recognised for our progress on diversity by winning the
Company of the Year award at the gambling industry's Women in
Gaming Awards.
Chief Financial Officer's review
Overview
Group performance
Overall, Playtech had a strong H1 2023 performance, with
Adjusted EBITDA(1) of EUR219.9 million (H1 2022: EUR199.1 million),
an increase of 10% compared to H1 2022. Total reported revenue from
continuing operations was EUR859.6 million (H1 2022: EUR792.3
million), representing an 8% increase compared to H1 2022.
The strong performance was driven by both the B2C and B2B
divisions. In B2C, Snaitech had an excellent H1 2023 performance
driven by growth across both online and retail divisions, with B2C
Adjusted EBITDA of EUR138.6 million, an increase of 14% compared to
H1 2022.
In B2B, the results were driven by strong growth in regulated
markets, with B2B revenues growing by 7% from EUR312.0 million to
EUR334.5 and Adjusted EBITDA increasing by 5% from EUR77.2 million
in H1 2022 to EUR81.3 million. This B2B performance absorbed
marketing activities in the period to promote the Playtech
products, and thus, excluding the impact of these, B2B growth would
have been higher. Notwithstanding this, the performance is in line
with 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 (EUR79.8
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.
Reported and adjusted profit
Adjusted profit before tax from continuing operations grew by
14% to EUR139.3 million (H1 2022: EUR122.3 million), driven mainly
by the rise in Adjusted EBITDA and decrease in financing costs,
offset partly by the increase in amortisation and depreciation.
Reported profit before tax from continuing operations decreased
to EUR79.6 million (H1 2022: EUR103.7 million) which in addition to
the above also includes the decrease in the unrealised fair value
changes of derivative financial assets. Total post-tax reported
profit from continuing operations was EUR3.1 million (H1 2022:
EUR71.4 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 EUR643.2
million as at 30 June 2023 (31 December 2022: EUR272.4 million).
The increase is a result of the new EUR300.0 million bond issue
which took place in June 2023 (see below), as well as the continued
strong performance of the Group throughout the period. Net debt
decreased to EUR248.2 million as at 30 June 2023 (31 December 2022:
EUR275.2 million), while net debt/Adjusted EBITDA (last 12 months)
improved slightly at 0.6x (31 December 2022: 0.7x).
Playtech has taken a proactive approach to managing its balance
sheet so far this year. In June 2023, the Company acted quickly to
take advantage of a window of relative market calm and secure
favourable interest rates, issuing EUR300 million of senior secured
notes due in 2028 at an interest rate of 5.875%. Part of the
proceeds were used post-period end to redeem all of the outstanding
EUR200.0 million 3.75% senior secured notes due in October 2023.
The Company also used the proceeds to repay outstanding debt under
its existing revolving credit facility in July 2023, which remains
available and undrawn today.
Group summary (continuing operations)(3)
H1 2023 H1 2022
EUR'm EUR'm
----------------------------------------------- ------- -------
B2B 334.5 312.0
B2C 532.1 487.3
Intercompany (7.0) (7.0)
----------------------------------------------- ------- -------
Total Group revenue from continuing operations 859.6 792.3
Adjusted costs(4) (639.7) (593.2)
----------------------------------------------- ------- -------
Adjusted EBITDA from continuing operations 219.9 199.1
----------------------------------------------- ------- -------
Reconciliation from EBITDA to Adjusted EBITDA:
EBITDA 207.3 173.9
Employee stock option expenses 2.9 4.6
Professional fees 4.6 10.1
Ukraine employee support costs - 1.9
Onerous contract - 10.4
Fair value change of redemption liability - (1.8)
Impairment of investment and receivables 5.1 -
----------------------------------------------- ------- -------
Adjusted EBITDA 219.9 199.1
----------------------------------------------- ------- -------
Adjusted EBITDA margin 26% 25%
----------------------------------------------- ------- -------
The Group's total reported EBITDA increased by 19% to EUR207.3
million (H1 2022: EUR173.9 million). The adjusted items between
reported and Adjusted EBITDA are explained in Note 10 of the
interim financial statements.
Divisional performance
B2B
B2B revenue
Constant
H1 2023 H1 2022 Change currency
EUR'm EUR'm % %
---------------------------------- ------- ------- ------ ---------
Regulated - Americas 99.7 69.8 43% 29%
Regulated - Europe (excluding UK) 96.6 92.2 5% 5%
Regulated - UK 62.9 63.9 -2% 2%
Regulated - Rest of the world 3.3 2.9 14% 14%
---------------------------------- ------- ------- ------ ---------
Total regulated B2B revenue 262.5 228.8 15% 11%
Unregulated excluding Asia 42.6 49.2 -13% -14%
---------------------------------- ------- ------- ------ ---------
Total core B2B revenue 305.1 278.0 10% 7%
Asia 29.4 34.0 -14% -10%
---------------------------------- ------- ------- ------ ---------
Total B2Brevenue 334.5 312.0 7% 5%
---------------------------------- ------- ------- ------ ---------
Overall, B2B revenues increased by 7% (5% on a constant currency
basis), largely due to an increase in the regulated B2B
business.
Core B2B revenues(2) increased by 10%, driven by an increase in
regulated markets in the Americas and Europe (excluding the UK) of
43% and 5% respectively (29% and 5% respectively on a constant
currency basis), partly offset by declines in revenues from the UK
and unregulated excluding Asia.
The increase in the Americas was primarily driven by Mexico, due
to revenue growth from Caliente while in Europe (excluding the UK)
growth was driven by several countries including Poland and Spain.
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
H1 2023.
The small decline seen across the UK market was due to the
continued impact of the uncertain regulatory climate, as well as
the marketing activities to push promotion of Playtech products
further. In unregulated markets excluding Asia, most of the decline
is due to revenue shifting from this category to regulated, as
areas such as Ontario in Canada move to a regulated
environment.
The revenue from Asia declined by 14% and 10% on an actual and
constant currency basis respectively, due to the continued
pressures in the region.
B2B costs
H1 2023 H1 2022 Change
EUR'm EUR'm %
---------------------------- ------- ------- ------
Research and Development 51.6 42.9 20%
General and Administrative 42.6 37.4 14%
Sales and Marketing 10.4 8.4 24%
Operations 148.6 146.1 2%
---------------------------- ------- ------- ------
Total B2B Costs 253.2 234.8 8%
---------------------------- ------- ------- ------
Total B2B Revenue and Costs
B2B revenue 334.5 312.0 7%
B2B costs (253.2) (234.8) 8%
---------------------------- ------- ------- ------
Total B2B Adjusted EBITDA 81.3 77.2 5%
Margin 24% 25%
---------------------------- ------- ------- ------
Research and Development ("R&D") costs include, among
others, employee-related costs, and proportional office expenses.
Expensed R&D costs grew by 20% to EUR51.6 million (H1 2022:
EUR42.9 million), driven by the increase in employee-related costs,
due to inflationary rises. Capitalised development costs were 35%
of total B2B R&D costs in H1 2023 (H1 2022: 38%).
General and Administrative costs include employee-related costs,
proportion of office expenses, consulting and legal fees, and
corporate costs such as audit and tax fees and listing expenses.
These costs increased by 14% to EUR42.6 million (H1 2022: EUR37.4
million), mainly due to increases in consulting fees and other
administration costs.
Sales and Marketing costs increased by 24% to EUR10.4 million
(H1 2022: EUR8.4 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 2% to EUR148.6
million (H1 2022: EUR146.1 million), driven mainly by an increase
in employee-related costs mostly due to Playtech's expanding Live
and US operations, as well as increase in costs to support
Playtech's structured agreements. H1 2022 included a provision for
bad debt for Asia with no further provision in H1 2023.
B2B Adjusted EBITDA
Total B2B Adjusted EBITDA increased by 5% to EUR81.3 million (H1
2022: EUR77.2 million), while EBITDA margin dropped slightly to 24%
from 25% in H1 2022, driven by the above period on period movement
in revenue and costs.
B2C
H1 2023 H1 2022
EUR'm EUR'm Change
------------------------ ------- ------- ------
Snaitech
Revenue(*) 488.4 446.0 10%
Costs 346.5 319.0 9%
Adjusted EBITDA 141.9 127.0 12%
Margin 29% 28%
------------------------ ------- ------- ------
Sun Bingo and Other B2C
Revenue 34.1 31.7 8%
Costs 31.3 31.6 -1%
Adjusted EBITDA 2.8 0.1 NA
Margin 8% 0%
------------------------ ------- ------- ------
HAPPYBET
Revenue 10.3 10.7 -4%
Costs(**) 16.4 15.9 3%
Adjusted EBITDA (6.1) (5.2) 17%
Margin NA NA
------------------------ ------- ------- ------
B2C Adjusted EBITDA 138.6 121.9 14%
Margin 26% 25%
------------------------ ------- ------- ------
* Includes intercompany revenue from HAPPYBET of EUR0.7 million (H1 2022: EUR1.1 million).
** Includes intercompany costs from Snaitech of EUR0.7 million (H1 2022: EUR1.1 million).
Snaitech
Snaitech revenues increased 10% from the prior period to
EUR488.4 million (H1 2022: EUR446.0 million), with operating costs
seeing a similar increase of 9% to EUR346.5 million (H1 2022:
EUR319.0 million). These results were driven by both the retail and
online segments, with the former as a result of pent-up demand
following the football World Cup (due to Italy not being a
participant). The online segment continues to see impressive
growth.
Snaitech's Adjusted EBITDA increased by 12%, while revenue
increased by 10%. As a result, Snaitech's Adjusted EBITDA margin
increased to 29% (H1 2022: 28%), mostly due to retail margins by
achieving operating leverage on the very strong revenue growth.
Sun Bingo and Other B2C
Revenue from the Sun Bingo business increased by 8% to EUR34.1
million (H1 2022: EUR31.7 million). Operating costs within Sun
Bingo decreased by 1% to EUR31.3 million (H1 2022: EUR31.6
million), leading to an Adjusted EBITDA of EUR2.8 million (H1 2022:
EUR0.1 million). The increase in Adjusted EBITDA was as a result of
the increase in marketing spend towards the end of 2022 during the
football World Cup, resulting in higher revenue growth in H1 2023
at a high contribution margin.. Adjusted EBITDA still includes the
unwinding of the minimum guarantee prepayment of EUR2.5 million in
the current year (H1 2022: EUR2.7 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 EUR10.4
million in H1 2022 to terminate an onerous contract with a service
provider.
HAPPYBET
Revenue from HAPPYBET decreased by 4% to EUR10.3 million (H1
2022: EUR10.7 million), with costs increasing by 3%. The business
remains loss making, with Adjusted EBITDA loss in the current
period of EUR6.1 million (H1 2022: loss of EUR5.2 million), albeit
H1 2023 includes a EUR2.0 million expense relating to a litigation
settlement.
Below EBITDA items
Depreciation and amortisation
Reported and adjusted depreciation increased by 7% to EUR22.1
million (H1 2022: EUR20.6 million). After deducting amortisation of
acquired intangibles of EUR20.6 million (H1 2022: EUR21.9 million),
adjusted amortisation increased by 27% to EUR36.9 million (H1 2022:
EUR29.0 million) after renewal of certain licenses in Snaitech
during H2 2022, which were previously extended for free until June
2022 (therefore no corresponding amortisation in H1 2022). The
remainder of the balance under depreciation and amortisation of
EUR10.1 million (H1 2022: EUR9.0 million) relates to IFRS 16 Leases
and the recognition of the right-of-use asset amortisation.
Impairment of intangible assets
The prior period impairment of EUR20.6 million related to the
impairments of the Eyecon cash-generating unit (CGU) of EUR13.6
million and Quickspin CGU of EUR7.0 million. There was no
impairment on any of the Group's CGUs in the current period.
Finance income and finance costs
The reported and adjusted finance income of EUR6.0 million (H1
2022: EUR11.7 million) relates to foreign exchange gain of EUR3.0
million (H1 2022: EUR10.5 million) and interest received of EUR3.0
million (H1 2022: EUR1.2 million).
Reported finance costs include interest payable on the 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 25% to EUR20.2
million (H1 2022: EUR26.9 million), mainly due to the partial
repayment of the 2018 Bond in H2 2022. The difference between
adjusted and reported finance costs is the movement in contingent
consideration of EUR1.3 million (H1 2022: EUR0.1 million) relating
to the acquisition of AUS GMTC PTY Ltd.
Unrealised fair value changes of derivative financial assets
The unrealised fair value decrease in derivative financial
assets of EUR25.5 million (H1 2022: increase of EUR48.5 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. Further details on the fair
value of the various call options are disclosed in Note 16C.
Taxation
A reported tax expense from continuing operations of EUR76.5
million (H1 2022: EUR32.3 million) arises on a reported profit
before tax of EUR79.6 million (H1 2022: EUR103.7 million) compared
to an expected charge of EUR18.7 million based on the UK headline
rate of tax for the period of 23.5%. The key items for which the
reported tax charge has been adjusted are UK tax losses on which a
deferred tax asset of EUR23.4 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 EUR53.6 million (H1 2022:
EUR28.0 million) which arises on an adjusted profit before tax of
EUR139.3 million (H1 2022: EUR122.3 million). The total adjusted
tax expense of EUR53.6 million consists of an income tax expense of
EUR21.4 million (H1 2022: EUR10.9 million) and a deferred tax
expense of EUR32.2 million (H1 2022: EUR17.1 million). The total
adjusted deferred tax expense mainly consists of a deferred tax
expense of EUR25.1 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 38.5%. 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) and expenses not deductible for
tax purposes including unrealised fair value changes of derivative
financial instruments.
Discontinued operations
Finalto (formerly TradeTech Group)
Finalto was disposed of in July 2022 with cash proceeds of
$228.1 million (EUR223.9 million) and transaction costs of EUR1.6
million resulting in a profit on disposal of EUR15.1 million.
Adjusted profit
H1 2023 H1 2022
EUR'm EUR'm
--------------------------------------------------------------- ------- -------
Reported profit from continuing operations attributable
to the owners of the Company 3.1 71.4
Employee stock option expenses 2.9 4.6
Professional fees 4.6 10.1
Fair value change and finance cost on contingent consideration
and redemption liability 1.3 (1.7)
Ukraine employee support costs - 1.9
Onerous contract - 10.4
Impairment of investment and receivables 5.1 -
Fair value change of equity instruments (0.3) (0.7)
Fair value change of derivative financial assets 25.5 (48.5)
Amortisation of intangibles arising on acquisitions 20.6 21.9
Impairment of intangible assets - 20.6
Deferred tax on acquisitions (4.0) (4.2)
Deferred tax reversal 23.4 -
Tax related to uncertain provision 3.5 8.5
--------------------------------------------------------------- ------- -------
Adjusted Profit from continuing operations attributable
to the owners of the Company 85.7 94.3
--------------------------------------------------------------- ------- -------
The reconciling items in the table above are further explained
in Note 10 of the interim financial statements. Reported profit
post tax from continuing operations was EUR3.1 million (H1 2022:
EUR71.4 million), due to an overall reduction in the fair value of
the derivatives financial assets and the derecognition of brought
forward deferred tax.
Adjusted EPS (in Euro cents)
H1 2023 H1 2022
------------------------------------------------------ ------- -------
Adjusted basic EPS from continuing operations 28.4 31.5
Adjusted diluted EPS from continuing operations 27.5 30.2
------------------------------------------------------ ------- -------
Basic EPS from profit attributable to the owners of
the Company 1.0 36.8
Diluted EPS from profit attributable to the owners of
the Company 1.0 35.4
------------------------------------------------------ ------- -------
Basic EPS from profit attributable to the owners of
the Company from continuing operations 1.0 23.8
Diluted EPS from profit attributable to the owners of
the Company from continuing operations 1.0 22.9
------------------------------------------------------ ------- -------
Basic EPS is calculated using the weighted average number of
equity shares in issue during H1 2023 of 302.3 million (H1 2022:
299.6 million). Diluted EPS also includes the dilutive impact of
share options and is calculated using the weighted average number
of shares in issue during H1 2023 of 311.3 million (H1 2022: 312.2
million).
Cash flow
Cash conversion
Playtech continues to be cash generative and delivered operating
cash flows of EUR228.1 million (H1 2022: EUR237.2 million)
including cash from discontinued operations which impacts only H1
2022.
H1 2023 H1 2022
EUR'm EUR'm
--------------------------------------------------- ------- -------
Adjusted EBITDA 219.9 232.9
--------------------------------------------------- ------- -------
Net cash provided by operating activities 228.1 237.2
--------------------------------------------------- ------- -------
Cash conversion 104% 102%
--------------------------------------------------- ------- -------
Change in jackpot balances 0.3 1.3
Change in client funds and security deposits 11.0 28.9
Professional fees 4.6 11.7
ADM security deposit (Italian Regulator) (11.2) (0.5)
--------------------------------------------------- ------- -------
Adjusted net cash provided by operating activities 232.8 278.6
--------------------------------------------------- ------- -------
Adjusted cash conversion 106% 120%
--------------------------------------------------- ------- -------
Excluding the impact of discontinued operations, operating
cashflows increase from EUR200.3 million in the prior period to
EUR228.1 million in H1 2023.
H1 2023 H1 2022
EUR'm EUR'm
--------------------------------------------------- ------- -------
Adjusted EBITDA 219.9 199.1
--------------------------------------------------- ------- -------
Net cash provided by operating activities 228.1 200.3
--------------------------------------------------- ------- -------
Cash conversion 104% 101%
--------------------------------------------------- ------- -------
Change in jackpot balances 0.3 1.3
Change in client funds 11.0 4.1
Professional fees 4.6 11.7
ADM security deposit (Italian Regulator) (11.2) (0.5)
--------------------------------------------------- ------- -------
Adjusted net cash provided by operating activities 232.8 216.9
--------------------------------------------------- ------- -------
Adjusted cash conversion 106% 109%
--------------------------------------------------- ------- -------
Adjusted cash conversion of 106% (H1 2022: 109%) 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 EUR189.1
million (H1 2022: EUR64.0 million) of which key items include:
-- EUR79.8 million for the acquisition of a small minority
interest in Hard Rock Digital (refer to Note 16B);
-- EUR41.3 million cash payment in relation to a subcontractor
option redemption (refer to Note 16C); and
-- EUR57.3 million (H1 2022: EUR51.8 million) used in the
acquisition of property plant and equipment, intangibles and
capitalised development costs.
Net cash inflows from financing activities totalled EUR318.9
million (H1 2022: outflow of EUR38.1 million) of which key
movements include:
-- Net RCF withdrawal of EUR48.0 million; and
-- Net proceeds received on the new 2023 Bond issued of EUR297.3 million.
Balance sheet, liquidity and financing
H1 2023 2022
EUR'm EUR'm
----------------------------------------------------- ------- -------
Cash and cash equivalents 786.0 426.5
Cash held on behalf of clients, progressive jackpots
and security deposits (142.8) (154.1)
----------------------------------------------------- ------- -------
Adjusted gross cash and cash equivalents 643.2 272.4
----------------------------------------------------- ------- -------
Loans and borrowings (RCF) 45.9 -
Bonds 845.5 547.6
----------------------------------------------------- ------- -------
Gross debt 891.4 547.6
----------------------------------------------------- ------- -------
Net debt 248.2 275.2
----------------------------------------------------- ------- -------
Last 12 months Adjusted EBITDA 416.2 395.4
----------------------------------------------------- ------- -------
Net debt/Adjusted EBITDA ratio 0.6 0.7
----------------------------------------------------- ------- -------
Cash
The Group continues to maintain a strong balance sheet with
total cash and cash equivalents of EUR786.0 million at 30 June 2023
(31 December 2022: EUR426.5 million). Adjusted gross cash, which
excludes the cash held on behalf of clients, progressive jackpots
and security deposits, increased to EUR643.2 million as at 30 June
2023 (31 December 2022: EUR272.4 million), a result of the new
EUR300.0 million bond issue (see below) and the continued strong
performance of the Group throughout the period.
Financing and net debt
As at 30 June 2023 the Group had the following borrowing
facilities:
-- EUR200.0 million 2018 Bond (31 December 2022: EUR200.0
million), initially issued as a five-year senior secured note of
EUR530 million (3.75% coupon), of which EUR330.0 million was repaid
in H2 2022, with the rest due in H2 2023 and repaid in July
2023;
-- EUR350.0 million 2019 Bond (31 December 2022: EUR350.0
million) (4.25% coupon, maturity 2026) which was raised in March
2019;
-- EUR45.9 million withdrawn from its EUR277.0 million revolving
credit facility (31 December 2022: EURNil); This facility is
available until October 2025, with an option to extend by 12
months; and
-- EUR300.0 million 2023 Bond issued in June 2023, as further discussed below.
Playtech has taken a proactive approach to managing its balance
sheet so far this year. In June 2023, the Company acted quickly to
take advantage of a window of relative market calm and secure
favourable interest rates. Playtech issued EUR300.0 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 EUR200.0 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.
As a result of timing between the Group receiving the proceeds
of the 2023 Bond (June 2023) and settling outstanding debt (July
2023) total gross debt increased to EUR891.4 million as at 30 June
2023 (31 December 2022: EUR547.6 million). Net debt, after
deducting Adjusted gross cash, decreased to EUR248.2 million (31
December 2022: EUR275.2 million), while net debt/Adjusted EBITDA
(last 12 months) decreased slightly to 0.6x (31 December 2022:
0.7x).
Contingent consideration
Contingent consideration increased to EUR4.5 million (31
December 2022: EUR2.9 million) mostly due to the fair value
movement in the contingent consideration related to Aus GMTC PTY
Ltd acquisition. The existing liability as at 30 June 2023
comprised the following:
Payment date (based
on
Maximum payable earnout Contingent consideration maximum payable
Acquisition (per terms of acquisition) as at 30 June 2023 earnout)
----------------- --------------------------- ------------------------ -------------------
Aus GMTC PTY Ltd EUR45.9 million EUR3.4 million Q4 2025
----------------- --------------------------- ------------------------ -------------------
Other EUR1.1 million EUR1.1 million Various
----------------- --------------------------- ------------------------ -------------------
Going concern
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 12
months from the approval of these interim financial statements.
At 30 June 2023, the Group held total cash of EUR786.0 million
(31 December 2022: EUR426.5 million) and Adjusted gross cash, which
excludes the cash held on behalf of clients, progressive jackpots
and security deposits, of EUR643.2 million (31 December 2022:
EUR272.4 million). Net debt, which is debt after deducting Adjusted
gross cash, decreased to EUR248.2 million (31 December 2022:
EUR275.2 million).
The financing and net debt position has been reported and
analysed in the relevant section above. As at the date of this
report (7 September 2023) the Group's facilities include the 2019
Bond of EUR350.0 million and the 2023 Bond of EUR300.0 million,
which are both long term borrowings due in 2026 and 2028
respectively, as well as the fully undrawn RCF of EUR277.0
million.
As disclosed in Note 2 of the interim financial statements,
management concluded that the risk of a covenant breach over the
next 12-month period from the date of releasing this report is low
and as such, has a reasonable expectation that the Group will have
adequate financial resources to continue in operational
existence.
1 Adjusted numbers throughout relate to certain non-cash and one-off items, as well as material reorganisation and acquisition related costs. 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 10 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
4B of the financial statements.
Chris McGinnis
Chief Financial Officer
6 September 2023
Directors' responsibilities
The Directors of Playtech plc confirm that, to the best of their
knowledge:
-- the unaudited condensed consolidated financial statements
have been prepared in accordance with IAS 34 as adopted by the
United Kingdom; and
-- the interim management report as required by rules 4.2.7 and
4.2.8 of the Disclosure Guidance and Transparency Rules, includes a
fair review of:
o important events during the six months ended 30 June 2023 and
their impact on the condensed consolidated financial
statements;
o a description of the principal risks and uncertainties for the
second half of the year; and
o related parties' transactions and changes therein.
The names and functions of the Directors of Playtech plc are
available on the Group's website:
http://www.investors.playtech.com/
INDEPENT REVIEW REPORT TO PLAYTECH PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the consolidated
statement of comprehensive income, the consolidated statement of
changes in equity, the consolidated balance sheet, the consolidated
statement of cash flows and the related notes.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
55 Baker Street, London, W1U 7EU, UK
06 September 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Unaudited consolidated statement of comprehensive income
Six months ended Six months ended
30 June 2023 30 June 2022
----- ------------------ -------------------
Adjusted Actual
Actual EUR'm EUR'm Adjusted
Note EUR'm 1 2 EUR'm 1,2
--------------------------------------- ----- -------- -------- ------- ----------
Continuing operations
Revenue 9 859.6 859.6 792.3 792.3
Distribution costs before depreciation
and amortisation (576.8) (574.8) (536.4) (523.7)
Administrative expenses before
depreciation and amortisation (72.3) (63.0) (65.5) (53.0)
Impairment of financial assets (3.2) (1.9) (16.5) (16.5)
--------------------------------------- ----- -------- -------- ------- ----------
EBITDA 10 207.3 219.9 173.9 199.1
Depreciation and amortisation (89.7) (69.1) (80.5) (58.6)
Impairment of intangible assets 11 - - (20.6) -
Profit on disposal of property,
plant and equipment 1.7 1.7 - -
Finance income 12A 6.0 6.0 11.7 11.7
Finance costs 12B (20.2) (18.9) (26.9) (26.8)
Share of loss from associates 16A (0.3) (0.3) (3.1) (3.1)
Unrealised fair value changes of
equity investments 16B 0.3 - 0.7 -
Unrealised fair value changes of
derivative financial assets 16C (25.5) - 48.5 -
--------------------------------------- ----- -------- -------- ------- ----------
Profit before taxation 79.6 139.3 103.7 122.3
Income tax expense 10,13 (76.5) (53.6) (32.3) (28.0)
--------------------------------------- ----- -------- -------- ------- ----------
Profit from continuing operations 3.1 85.7 71.4 94.3
Discontinued operation
Profit from discontinued operation,
net of tax 8 - - 38.9 41.2
--------------------------------------- ----- -------- -------- ------- ----------
Profit for the period - total 3.1 85.7 110.3 135.5
--------------------------------------- ----- -------- -------- ------- ----------
Other comprehensive income:
Items that are or may be classified
subsequently to profit or loss:
Exchange (loss)/gain arising on
translation of foreign operations (5.0) (5.0) 3.8 3.8
Items that will not be classified
to profit or loss:
Gain on remeasurement of employee
termination indemnities - - 0.7 0.7
--------------------------------------- ----- -------- -------- ------- ----------
Other comprehensive (loss)/income
for the period (5.0) (5.0) 4.5 4.5
--------------------------------------- ----- -------- -------- ------- ----------
Total comprehensive (loss)/income
for the period (1.9) 80.7 114.8 140.0
--------------------------------------- ----- -------- -------- ------- ----------
Profit for the period attributable
to the owners of the Company 3.1 85.7 110.3 135.5
--------------------------------------- ----- -------- -------- ------- ----------
Total comprehensive (loss)/income
attributable to the owners of the
Company (1.9) 80.7 114.8 140.0
--------------------------------------- ----- -------- -------- ------- ----------
Earnings per share attributable
to the ordinary equity holders
of the Company
Profit or loss - total
Basic (cents) 14 1.0 28.4 36.8 45.2
Diluted (cents) 14 1.0 27.5 35.4 43.4
--------------------------------------- ----- -------- -------- ------- ----------
Profit or loss from continuing
operations
Basic (cents) 14 1.0 28.4 23.8 31.5
Diluted (cents) 14 1.0 27.5 22.9 30.2
--------------------------------------- ----- -------- -------- ------- ----------
1 Adjusted numbers relate to certain non-cash and one-off items,
as well as certain reorganisation and acquisition-related costs.
The Board of Directors believe 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 10.
2 Comparative information has been re-stated due to change in
accounting policy. Further details are provided in Note 4B.
Unaudited consolidated statement of changes in equity
Total
attributable
Additional to equity
paid Employee Employee Put/call Foreign holders Non-
in termination Retained Benefit options exchange of controlling Total
capital indemnities earnings Trust reserve reserve Company interests equity
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Balance at 1
January 2023 606.0 0.4 1,113.0 (17.2) - 0.3 1,702.5 - 1,702.5
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
comprehensive
income
for the period
Profit for the
period - - 3.1 - - - 3.1 - 3.1
Other
comprehensive
loss
for the
period - - - - - (5.0) (5.0) - (5.0)
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
comprehensive
income/(loss)
for the
period - - 3.1 - - (5.0) (1.9) - (1.9)
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Transactions
with the
owners
of the Company
Contributions
and
distributions
Exercise of
options - - (9.4) 9.4 - - - - -
Equity settled
share-based
payment
charge - - 2.9 - - - 2.9 - 2.9
Transfer from
treasury
shares
to Employee
Benefit Trust 5.8 - 6.7 (12.5) - - - - -
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
contributions
and
distributions 5.8 - 0.2 (3.1) - - 2.9 - 2.9
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
transactions
with
owners of the
Company 5.8 - 0.2 (3.1) - - 2.9 - 2.9
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Balance at 30
June 2023 611.8 0.4 1,116.3 (20.3) - (4.7) 1,703.5 - 1,703.5
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
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
(Note 4A) - - 1.5 - - - 1.5 - 1.5
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Adjusted
balance at 1
January
2022 606.0 (0.5) 1,026.5 (23.2) (3.7) (22.7) 1,582.4 0.3 1,582.7
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
comprehensive
income
for the period
Profit for the
period - - 110.3 - - - 110.3 - 110.3
Other
comprehensive
income
for the
period - 0.7 - - - 3.8 4.5 - 4.5
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
comprehensive
income
for the
period - 0.7 110.3 - - 3.8 114.8 - 114.8
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Transactions
with the
owners
of the Company
Contributions
and
distributions
Exercise of
options - - (2.3) 2.3 - - - - -
Equity settled
share-based
payment
charge - - 4.9 - - - 4.9 - 4.9
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
contributions
and
distributions - - 2.6 2.3 - - 4.9 - 4.9
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Total
transactions
with
owners of the
Company - - 2.6 2.3 - - 4.9 - 4.9
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Balance at 30
June 2022 606.0 0.2 1,139.4 (20.9) (3.7) (18.9) 1,702.1 0.3 1,702.4
-------------- ---------- ------------ --------- -------- -------- --------- ------------ ----------- -------
Unaudited consolidated balance sheet
At 31 December
At 30 June 2022
2023 EUR'm
Note EUR'm 1
------------------------------------------------------- ------ ---------- --------------
ASSETS
Property, plant and equipment 335.3 341.4
Right of use assets 68.4 71.6
Intangible assets 15 965.7 980.9
Investments in associates 16A 43.8 36.6
Other investments 16B 86.4 9.2
Derivative financial assets 16C 650.3 636.4
Trade receivables 0.7 1.1
Deferred tax asset 23 83.0 114.0
Other non-current assets 122.5 109.6
------------------------------------------------------- ------ ---------- --------------
Non-current assets 2,356.1 2,300.8
------------------------------------------------------- ------ ---------- --------------
Trade receivables 149.5 163.9
Other receivables 90.8 107.6
Inventories 6.3 5.5
Cash and cash equivalents 786.0 426.5
------------------------------------------------------- ------ ---------- --------------
1,032.6 703.5
Assets classified as held for sale 17 19.4 19.6
------------------------------------------------------- ------ ---------- --------------
Current assets 1,052.0 723.1
------------------------------------------------------- ------ ---------- --------------
TOTAL ASSETS 3,408.1 3,023.9
------------------------------------------------------- ------ ---------- --------------
EQUITY
Additional paid in capital 611.8 606.0
Employee termination indemnities 0.4 0.4
Employee Benefit Trust (20.3) (17.2)
Foreign exchange reserve (4.7) 0.3
Retained earnings 1,116.3 1,113.0
------------------------------------------------------- ------ ---------- --------------
Equity attributable to equity holders of the
Company 18 1,703.5 1,702.5
Non-controlling interests - -
------------------------------------------------------- ------ ---------- --------------
TOTAL EQUITY 1,703.5 1,702.5
------------------------------------------------------- ------ ---------- --------------
LIABILITIES
Loans and borrowings 19 45.9 -
Bonds 20 645.6 348.0
Lease liability 45.4 54.0
Deferred revenue 0.8 1.0
Deferred tax liability 23 146.2 124.8
Contingent consideration 22 3.8 2.3
Provisions for risks and charges 21 9.0 10.0
Other non-current liabilities 26.4 24.9
------------------------------------------------------- ------ ---------- --------------
Non-current liabilities 923.1 565.0
------------------------------------------------------- ------ ---------- --------------
Bonds 20 199.9 199.6
Trade payables 58.1 61.2
Lease liability 38.2 31.8
Progressive operators' jackpots and security
deposits 114.0 114.3
Client funds 28.8 39.8
Income tax payable 26.5 17.3
Gaming and other taxes payable 125.4 112.8
Deferred revenue 4.5 5.0
Contingent consideration 22 0.7 0.6
Provisions for risks and charges 21 6.2 3.9
Other payables 178.2 169.1
------------------------------------------------------- ------ ---------- --------------
780.5 755.4
------------------------------------------------------- ------ ---------- --------------
Liabilities directly associated with assets classified
as held for sale 17 1.0 1.0
------------------------------------------------------- ------ ---------- --------------
Current liabilities 781.5 756.4
------------------------------------------------------- ------ ---------- --------------
TOTAL LIABILITIES 1,704.6 1,321.4
------------------------------------------------------- ------ ---------- --------------
TOTAL EQUITY AND LIABILITIES 3,408.1 3,023.9
------------------------------------------------------- ------ ---------- --------------
The condensed consolidated interim financial statements were
approved by the Board and authorised for issue on 6 September
2023.
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 4B.
Unaudited consolidated statement of cash flows
Six
Six months months
ended 30 ended 30
June 2023 June 2022
Note EUR'm EUR'm
-------------------------------------------------- ---- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period 3.1 110.3
Adjustment to reconcile net income to net cash
provided by operating activities (see below) 240.8 132.5
Net taxes paid (15.8) (5.6)
-------------------------------------------------- ---- ---------- ----------
Net cash from operating activities 228.1 237.2
-------------------------------------------------- ---- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans granted (9.1) (12.5)
Acquisition of subsidiaries, net of cash acquired (3.9) -
Acquisition of property, plant and equipment (17.8) (17.6)
Acquisition of intangible assets (11.1) (2.7)
Capitalised development costs (28.4) (31.5)
Subcontractor option redemption 16C (41.3) -
Acquisition of investments at fair value through
profit or loss 16B (79.8) -
Proceeds from the sale of property, plant and
equipment 2.3 0.3
-------------------------------------------------- ---- ---------- ----------
Net cash used in investing activities (189.1) (64.0)
-------------------------------------------------- ---- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid on bonds and loans and borrowings (12.4) (19.5)
Proceeds from loans and borrowings 48.0 -
Proceeds from the issuance of 2023 Bond 20 297.3 -
Payment of contingent consideration (0.1) (4.0)
Principal paid on lease liability (11.4) (11.7)
Interest paid on lease liability (2.5) (2.9)
-------------------------------------------------- ---- ---------- ----------
Net cash from/(used in) financing activities 318.9 (38.1)
-------------------------------------------------- ---- ---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS 357.9 135.1
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 426.5 941.5
Exchange gain/(loss) on cash and cash equivalents 1.6 (3.3)
-------------------------------------------------- ---- ---------- ----------
CASH AND CASH EQUIVALENTS AT OF PERIOD 786.0 1,073.3
-------------------------------------------------- ---- ---------- ----------
Cash and cash equivalents consist of:
Cash and cash equivalents - continuing operations 786.0 681.2
Cash and cash equivalents treated as held for
sale - 392.1
-------------------------------------------------- ---- ---------- ----------
786.0 1,073.3
-------------------------------------------------- ---- ---------- ----------
Six months Six months
ended 30 ended 30
June 2023 June 2022
Note EUR'm EUR'm
---------------------------------------------------- ---- ---------- ----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED FROM OPERATING ACTIVITIES
Income and expenses not affecting operating cash
flows:
Depreciation of property, plant and equipment 22.1 20.6
Amortisation of intangible assets 15 57.5 50.9
Amortisation of right of use assets 11.4 10.5
Capitalisation of amortisation of right of use
assets (0.8) (1.0)
Gain on early termination of lease contracts (0.3) (0.5)
Impairment of intangible assets 11 - 20.6
Impairment of loan receivable 1.5 -
Impairment of investment 1.3 -
Share of loss from associates 16A 0.3 3.1
Changes in fair value of equity investments 16B (0.3) (0.7)
Changes in fair value of derivative financial
assets 16C 25.5 (48.5)
Interest on bonds and loans and borrowings 13.0 20.3
Interest on lease liability 2.5 2.9
Interest income on loans receivable (0.8) (0.6)
Income tax expense 76.5 36.0
Equity settled share-based payment charge 2.9 4.9
Movement in contingent consideration and redemption
liability 1.3 (1.7)
Expected credit loss on trade receivables 0.4 -
Unrealised exchange gain (2.9) (5.7)
(Profit)/loss on disposal of property, plant
and equipment (1.7) 0.3
Changes in operating assets and liabilities:
Change in trade receivables 12.9 22.2
Change in other receivables 7.2 19.5
Change in inventories (0.8) 0.9
Change in trade payables (4.6) (5.4)
Change in progressive operators, jackpots and
security deposits (0.3) (1.3)
Change in client funds (11.0) (28.9)
Change in other payables 27.4 16.4
Change in provisions for risks and charges 1.2 (0.4)
Change in deferred revenues (0.6) (1.9)
---------------------------------------------------- ---- ---------- ----------
240.8 132.5
---------------------------------------------------- ---- ---------- ----------
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.
These are the condensed consolidated interim financial
statements ("interim financial statements") for the six months
ended 30 June 2023 comprising the Company and its subsidiaries
(together referred to as the "Group").
Note 2 - Basis of preparation
These interim financial statements for the six months ended 30
June 2023 have been prepared in accordance with UK adopted IAS
34,"Interim Financial Reporting", and should be read in conjunction
with the Group's last annual consolidated financial statements for
the year ended 31 December 2022 ("last annual financial
statements"). They do not include all the information required for
a complete set of financial statements prepared in accordance with
the IFRS Standards. However, selected explanatory notes are
included to explain events and transactions that are significant to
the understanding of the changes in the Group's financial position
and performance since the last annual financial statements.
These interim financial statements were authorised for issue by
the Company's Board of Directors on 6 September 2023.
Going concern basis
In adopting the going concern basis in the preparation of the
interim 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 12-month period to 30
September 2024.
30 June 31 December
2023 2022
EUR'm EUR'm
----------------------------------------------------- ------- -----------
Cash and cash equivalents 786.0 426.5
Cash held on behalf of clients, progressive jackpots
and security deposits (142.8) (154.1)
----------------------------------------------------- ------- -----------
Adjusted gross cash and cash equivalents 643.2 272.4
----------------------------------------------------- ------- -----------
Loans and borrowings (RCF) 45.9 -
Bonds 845.5 547.6
----------------------------------------------------- ------- -----------
Gross debt 891.4 547.6
----------------------------------------------------- ------- -----------
Net debt 248.2 275.2
----------------------------------------------------- ------- -----------
The increase in adjusted gross cash and cash equivalents from
EUR272.4 million at 31 December 2022 to EUR643.2 million at 30 June
2023 is mainly the result of the new EUR300.0 million bond issue
and continued strong performance of the Group throughout the
period.
The Directors have considered sensitivities in respect of
potential downside scenarios, reverse stress tests and the
mitigating actions available to management. The modelling of
downside 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 impact on cash flow should the share
buyback scheme and other shareholder return options resume.
In June 2023, the Company announced that it successfully issued
new EUR300.0 million senior secured notes at a rate of 5.875%
repayable in June 2028 (the "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 Services Ltd upon issue. Playtech has
served notice and subsequently redeemed at par the outstanding 2018
Bond with a EUR200.0 million balance in July 2023.
Other than the newly raised EUR300.0 million 2023 Bond, the
Group's principal financing arrangements also include an RCF up to
EUR277.0 million, out of which EUR45.9 has been drawn as at 30 June
2023, the balance of the 2018 Bond amounting to EUR200.0 million,
which has been repaid post period end as per the above, and the
2019 Bond amounting to EUR350.0 million, which is repayable in
March 2026. The RCF was restructured in October 2022, reducing the
credit line from EUR317.0 million to EUR277.0 million and is
available until October 2025, with the Group having the option to
extend by 12 months. The RCF amount of EUR45.9 million outstanding
at 30 June 2023 was also repaid in July 2023.
The RCF is subject to certain financial covenants which are
tested every six months on a rolling 12-month basis, as set out in
Note 19. As at 30 June 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 30 June 2023 (12 months ended 31 December 2022:
less than 3.5:1).
-- Interest cover: Adjusted EBITDA/Interest to be over 4:1 for
the 12 months ended 30 June 2023 (12 months ended 31 December 2022:
over 4:1).
The 2018, 2019 and 2023 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 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 12 months from
approval of these financial statements (the "relevant 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 similar to the ones taken
in 2020 and 2021 (including salary and capital expenditure
reductions). It also considers the impact of cash flow should the
share buyback scheme commence again, as well as other shareholder
return options. Under this scenario Adjusted EBITDA could fall on
average by 13% per month compared to the base case over the
relevant going concern period, and the Group would not breach its
covenants.
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 in line with the base case;
-- Adjusted EBITDA would have to fall by 84% in the year ending
31 December 2023 and 85% in the 12 months to September 2024
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 these interim 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 are Euro, United States Dollar, Great
British Pound and Ukraine Hryvnia. All amounts have been rounded to
the nearest million, unless otherwise indicated.
Note 4 - Change in accounting policy
Except as described below, the accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements for the year ended 31
December 2022.
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:
EUR'm
------------------- ------
Assets
Deferred tax asset 1.5
Equity
Retained earnings 1.5
------------------ ---
B. 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:
As previously
reported Adjustments As restated
Six months ended 30 June 2022 EUR'm EUR'm EUR'm
--------------------------------------- ------------- ----------- -----------
Distribution costs before depreciation
and amortisation (531.7) (4.7) (536.4)
Finance costs (31.6) 4.7 (26.9)
Note 5 - Accounting standards issued but not yet effective
A number of new accounting standards and amendments to
accounting standards are effective for annual periods beginning
after 1 January 2023 and earlier application is permitted. The
Group has not early adopted any of the forthcoming new or amended
accounting standards in preparing these condensed consolidated
interim financial statements.
Note 6 - Significant accounting judgements, estimates and
assumptions
In preparing these interim 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 for
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and key sources of estimation and
uncertainty were the same as those described in the last annual
financial statements, except as described below.
Estimates and assumptions
Impairment of non-financial assets
The Group is required to test annually and when an impairment
indicator arises, whether goodwill and indefinite life assets have
suffered any impairment. Impairment exists when the carrying value
of an asset or cash-generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal 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 budget for the next five years and 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 rate used for extrapolation purposes.
CGUs with an indication of impairment as at 30 June 2023 are
disclosed and further explained in Note 15, including a sensitivity
analysis.
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 13.
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 assets are 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 assets. Deferred tax
assets are 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 recognised deferred tax asset amounted to
EUR56.8 million. As at 30 June 2023, an additional deferred tax
asset of EUR2.6 million was recognised. This additional deferred
tax asset has been recognised as the Group's management has
concluded that it is probable the UK entities will generate taxable
profits in the future against which the Group can utilise the tax
deductions for goodwill and intangible assets. During the period,
EUR7.4 million has been utilised and the recognised deferred tax
asset as at 30 June 2023 amounts to EUR52.0 million. In addition, a
total of EUR34.4 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 asset is 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 the period to 30 June 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 EUR23.4
million in the current period of previously recognised deferred tax
assets in respect of UK tax losses and tax attributes relating to
excess interest expense brought forward.
A deferred tax asset of EUR41.1 million has been recognised in
respect of UK tax losses of EUR164.4 million (2022: EUR41.1
million) carried forward at 30 June 2023. Based on the current
forecasts, these losses will be fully utilised over the forecast
period. Remaining UK tax losses and excess interest expense of
EUR162.6 million (2022: Nil) have not been recognised as at 30 June
2023 as expected utilization 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 EUR18.0 million
in respect of tax losses and excess interest expense 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 five years.
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 rating 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.
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. No additional
provision was made in the period ended 30 June 2023 (H1 2022:
EUR15.4 million).
Measurement of fair values of equity investments and equity call
options
The Group's equity investments and, where applicable 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 perform 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 16, 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 and warrants in entities that
are not listed), which are accounted at fair value through profit
or loss under IFRS 9.
The fair value 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 are used to calculate fair values include comparisons
with similar financial instruments for which market observable
prices exist, discounted cash flow 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 16, which includes a
significant judgement relating to the public announcement made by
the Group on 6 February 2023 where Playtech plc is seeking a
declaration from the English Courts to obtain clarification on a
point of disagreement between the Group and Caliplay.
The following table shows the carrying amount and fair value of
non-current assets, as disclosed in Note 16, including their levels
in the fair value hierarchy.
Carrying
amount Fair value
-------- -------------------------
30 June
2023 Level 1 Level 2 Level 3
EUR'm EUR'm EUR'm EUR'm
--------------------------------------- -------- ------- ------- -------
Non-current assets
Other investments (Note 16B) 86.4 1.6 - 84.8
Derivative financial assets (Note 16C) 650.3 - - 650.3
--------------------------------------- -------- ------- ------- -------
736.7 1.6 - 735.1
--------------------------------------- -------- ------- ------- -------
Carrying
amount Fair value
----------- -------------------------
31 December
2022 Level 1 Level 2 Level 3
EUR'm EUR'm EUR'm EUR'm
--------------------------------------- ----------- ------- ------- -------
Non-current assets
Other investments (Note 16B) 9.2 1.4 - 7.8
Derivative financial assets (Note 16C) 636.4 - - 636.4
--------------------------------------- ----------- ------- ------- -------
645.6 1.4 - 644.2
--------------------------------------- ----------- ------- ------- -------
Note 7 - 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
management team including the Chief Executive Officer and the Chief
Financial Officer.
The operating segments identified are:
-- B2B: including Casino, Services, Sport, Bingo, Poker and Other;
-- B2C: including Snaitech, HAPPYBET and Sun Bingo and Other B2C; and
-- Financial: including B2C and B2B CFD (discontinued operations).
The Group-wide profit measures are Adjusted EBITDA and Adjusted
Profit (see Note 10).
Sun Bingo
and Other Intercompany Total
Six months ended B2B Snaitech B2C HAPPYBET B2C B2C Intercompany Total
30 June 2023 EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
------------------ ------- -------- ---------- -------- ------------ ------- ------------ -------
Revenue 334.5 488.4 34.1 10.3 (0.7) 532.1 (7.0) 859.6
Adjusted EBITDA 81.3 141.9 2.8 (6.1) - 138.6 - 219.9
Total assets 2,266.4 1,044.2 97.7 8.7 - 1,150.6 - 3,417.0
Total liabilities 1,064.5 625.7 16.2 7.1 - 649.0 - 1,713.5
------------------ ------- -------- ---------- -------- ------------ ------- ------------ -------
Sun Total
Bingo Gaming Financial
and - -
Six months Other Intercompany Total continuing discontinued
ended B2B Snaitech B2C HAPPYBET B2C B2C Intercompany operations operations Total
30 June 2022 EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
------------ ------- -------- ----- -------- ------------ ------- ------------ ---------- ------------ -------
Revenue 312.0 446.0 31.7 10.7 (1.1) 487.3 (7.0) 792.3 74.5 866.8
Adjusted
EBITDA 77.2 127.0 0.1 (5.2) - 121.9 - 199.1 33.8 232.9
Total assets 2,011.7 1,144.5 91.2 9.4 - 1,245.1 - 3,256.8 523.9 3,780.7
Total
liabilities 841.2 880.5 12.8 5.8 - 899.1 - 1,740.3 339.5 2,079.8
------------ ------- -------- ----- -------- ------------ ------- ------------ ---------- ------------ -------
Note 8 - Discontinued operation
The results of the discontinued operations for the period are
presented below:
Six months ended Six months ended
30 June 2023 30 June 2022
------------------ ------------------
Actual Adjusted Actual Adjusted
EUR'm EUR'm EUR'm EUR'm
-------------------------------------------- ------- --------- ------- ---------
Revenue - - 74.5 74.5
Distribution costs before depreciation
and amortisation - - (34.9) (34.8)
Administrative expenses before depreciation
and amortisation - - (6.2) (4.0)
Impairment of financial assets - - (1.9) (1.9)
-------------------------------------------- ------- --------- ------- ---------
EBITDA - - 31.5 33.8
Finance income - - 11.6 11.6
Finance costs - - (0.5) (0.5)
-------------------------------------------- ------- --------- ------- ---------
Profit before taxation - - 42.6 44.9
Tax expense - - (3.7) (3.7)
-------------------------------------------- ------- --------- ------- ---------
Profit from discontinued operations,
net of tax - - 38.9 41.2
-------------------------------------------- ------- --------- ------- ---------
All of the profit from discontinued operations, net of tax in
the period ended 30 June 2022 relates to the Financial segment,
which was disposed in July 2022, for a cash consideration of $228.1
million (EUR223.9 million).
The following tables provide a full reconciliation between
adjusted and actual results from discontinued operations:
Profit
from
discontinued
operations
attributable
to
the owners
of
Revenue EBITDA the Company
Six months ended 30 June 2022 EUR'm EUR'm EUR'm
------------------------------- ------- ------ -------------
Reported as actual 74.5 31.5 38.9
Employee stock option expenses - 0.3 0.3
Professional fees - 2.0 2.0
------------------------------- ------- ------ -------------
Adjusted measure 74.5 33.8 41.2
------------------------------- ------- ------ -------------
Earnings per share from discontinued operations
Six months ended Six months ended
30 June 2023 30 June 2022
------------------ ------------------
Actual Adjusted Actual Adjusted
---------------- ------- --------- ------- ---------
Basic (cents) - - 13.0 13.7
---------------- ------- --------- ------- ---------
Diluted (cents) - - 12.5 13.2
---------------- ------- --------- ------- ---------
The net cash flows incurred by the Financial segment in the
prior period are as follows:
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
---------------- ---------- ----------
Operating - 36.9
Investing - (3.8)
Financing - (1.1)
---------------- ---------- ----------
Net cash inflow - 32.0
---------------- ---------- ----------
Note 9 - Revenue from contracts with customers
The Group has disaggregated revenue into various categories in
the following table 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
segmental information provided in the segmental information
note.
Set out below is the disaggregation of the Group's revenue:
Revenue analysis by geographical location of licensee, product
type, timing of transfer of performance obligations 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), B2C and Financials are
described in Note 5D in the last annual financial statements.
Six months ended 30 June 2023
B2B B2C Intercompany Total
Primary geographic markets EUR'm EUR'm EUR'm EUR'm
--------------------------- ------ ------ ------------ ------
Italy 17.5 487.7 (5.3) 499.9
UK 63.3 34.1 (1.7) 95.6
Mexico 89.3 - - 89.3
Malta 24.7 - - 24.7
Philippines 21.3 - - 21.3
Spain 15.9 - - 15.9
Poland 14.9 - - 14.9
Curacao 14.1 - - 14.1
Gibraltar 11.2 - - 11.2
Greece 10.7 - - 10.7
Netherlands 8.9 - - 8.9
Germany 0.3 8.3 - 8.6
Colombia 4.2 - - 4.2
Romania 3.2 - - 3.2
Ireland 3.1 - - 3.1
Rest of World 31.9 2.0 - 34.0
--------------------------- ------ ------ ------------ ------
334.5 532.1 (7.0) 859.6
--------------------------- ------ ------ ------------ ------
B2B B2C Intercompany Total
Product type EUR'm EUR'm EUR'm EUR'm
------------------------------ ------ ------ ------------ ------
B2B licensee fee 235.9 - - 235.9
B2B fixed-fee income 6.7 - - 6.7
B2B cost-based revenue 28.1 - - 28.1
B2B revenue received from the
sale of hardware 6.5 - - 6.5
Additional B2B services fee 57.3 - - 57.3
------------------------------ ------ ------ ------------ ------
Total B2B (1) 334.5 - - 334.5
------------------------------ ------ ------ ------------ ------
Snaitech - 488.4 - 488.4
Sun Bingo and Other B2C - 34.1 - 34.1
HAPPYBET - 10.3 - 10.3
Intercompany - (0.7) - (0.7)
------------------------------ ------ ------ ------------ ------
Total B2C - 532.1 - 532.1
------------------------------ ------ ------ ------------ ------
Intercompany - - (7.0) (7.0)
------------------------------ ------ ------ ------------ ------
334.5 532.1 (7.0) 859.6
------------------------------ ------ ------ ------------ ------
Timing of transfer of performance B2B B2C Intercompany Total
obligations EUR'm EUR'm 2 EUR'm EUR'm
---------------------------------- ------ -------- ------------ ------
Recognised over time 328.0 13.5 (7.0) 334.5
Recognised at the point in time 6.5 518.6 - 525.1
---------------------------------- ------ -------- ------------ ------
334.5 532.1 (7.0) 859.6
---------------------------------- ------ -------- ------------ ------
1 SaaS revenue of EUR22.9 million (H1 2022: EUR14.1 million) is
included in revenue earned under B2B licensee fee, B2B fixed-fee
income and B2B cost-based revenue categories above and below.
2 B2C revenue recognised at the point in time is recorded under IFRS 9.
Six months
ended
30 June
2023
EUR'm
---------------------------------- ----------
Regulated - Americas 99.7
Regulated - Europe (excluding UK) 96.6
Regulated - UK 62.9
Regulated - Rest of World 3.3
----------------------------------- ----------
Total regulated B2B revenue 262.5
Unregulated excluding Asia 42.6
----------------------------------- ----------
Total core B2B revenue 305.1
Asia 29.4
----------------------------------- ----------
Total B2B Gambling revenue 334.5
----------------------------------- ----------
Six months ended 30 June 2022
Total Gaming Financial
- continuing - discontinued
B2B B2C Intercompany operations operations Total
Primary geographic markets EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
--------------------------- ------ ------ ------------ ------------- --------------- ------
Italy 16.6 444.9 (4.8) 456.7 1.3 458.0
UK 64.1 31.7 (2.2) 93.6 34.1 127.7
Mexico 60.5 - - 60.5 0.3 60.8
Malta 26.7 - - 26.7 0.1 26.8
Philippines 26.0 - - 26.0 - 26.0
British Virgin Islands - - - - 16.0 16.0
Spain 13.6 - - 13.6 1.0 14.6
Netherlands 12.4 - - 12.4 1.0 13.4
Gibraltar 13.2 - - 13.2 - 13.2
Germany 0.4 9.2 - 9.6 1.0 10.6
Poland 9.7 - - 9.7 0.1 9.8
Greece 9.5 - - 9.5 0.3 9.8
Curacao 9.3 - - 9.3 - 9.3
Ireland 6.5 - - 6.5 0.3 6.8
Colombia 5.5 - - 5.5 0.4 5.9
Rest of World 38.0 1.5 - 39.5 18.6 58.1
--------------------------- ------ ------ ------------ ------------- --------------- ------
312.0 487.3 (7.0) 792.3 74.5 866.8
--------------------------- ------ ------ ------------ ------------- --------------- ------
Total Gaming Financial
- continuing - discontinued
B2B B2C Intercompany operations operations Total
Product type EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
-------------------------- ------ ------ ------------ ------------- --------------- ------
B2B licensee fee 220.1 - - 220.1 - 220.1
B2B fixed-fee income 22.2 - - 22.2 - 22.2
B2B cost-based revenue 28.5 - - 28.5 - 28.5
B2B revenue received from
the sale of hardware 6.8 - - 6.8 - 6.8
Additional B2B services
fee 34.4 - - 34.4 - 34.4
-------------------------- ------ ------ ------------ ------------- --------------- ------
Total B2B 312.0 - - 312.0 - 312.0
-------------------------- ------ ------ ------------ ------------- --------------- ------
Snaitech - 446.0 - 446.0 - 446.0
Sun Bingo and Other B2C - 31.7 - 31.7 - 31.7
HAPPYBET - 10.7 - 10.7 - 10.7
Intercompany - (1.1) - (1.1) - (1.1)
-------------------------- ------ ------ ------------ ------------- --------------- ------
Total B2C - 487.3 - 487.3 - 487.3
-------------------------- ------ ------ ------------ ------------- --------------- ------
Intercompany - - (7.0) (7.0) - (7.0)
-------------------------- ------ ------ ------------ ------------- --------------- --------
Financial - - - - 74.5 74.5
-------------------------- ------ ------ ------------ ------------- --------------- ------
312.0 487.3 (7.0) 792.3 74.5 866.8
-------------------------- ------ ------ ------------ ------------- --------------- ------
Total Gaming Financial
- continuing - discontinued
Timing of transfer of B2B B2C Intercompany operations operations Total
performance obligations EUR'm EUR'm 1 EUR'm EUR'm EUR'm EUR'm
------------------------- ------ -------- ------------ ------------- --------------- ------
Recognised over time 305.2 14.7 (7.0) 312.9 74.5 387.4
Recognised at the point
in time 6.8 472.6 - 479.4 - 479.4
------------------------- ------ -------- ------------ ------------- --------------- ------
312.0 487.3 (7.0) 792.3 74.5 866.8
------------------------- ------ -------- ------------ ------------- --------------- ------
1 B2C revenue recognised at the point in time is recorded under IFRS 9.
Six months
ended 30
June 2022
EUR'm
---------------------------------- ----------
Regulated - Americas 69.8
Regulated - Europe (excluding UK) 92.2
Regulated - UK 63.9
Regulated - Rest of World 2.9
---------------------------------- ----------
Total regulated B2B revenue 228.8
Unregulated excluding Asia 49.2
---------------------------------- ----------
Total core B2B revenue 278.0
Asia 34.0
---------------------------------- ----------
Total B2B Gambling revenue 312.0
---------------------------------- ----------
There were no changes in the Group's revenue measurement
policies and procedures in 2022 and 2023. The vast majority of the
Group's B2B contracts are for the delivery of services within the
next 12 months.
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 revenue as at 30 June 2023 was
EUR5.3 million (31 December 2022: EUR6.0 million).
Note 10 - 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.
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:
Profit
from
continuing
operations Profit
attributable before
to the tax
EBITDA EBITDA owners from
- - of the continuing
Revenue B2B B2C EBITDA Company operations
Six months ended 30 June 2023 EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
------------------------------------------ ------- ------ ------ ------ ------------- -----------
Reported as actual 859.6 69.0 138.3 207.3 3.1 79.6
Employee stock option expenses1 - 2.6 0.3 2.9 2.9 2.9
Professional fees2 - 4.6 - 4.6 4.6 4.6
Impairment of investment and receivables3 - 5.1 - 5.1 5.1 5.1
Fair value change and finance cost
on contingent consideration4 - - - - 1.3 1.3
Fair value change of equity instruments5 - - - - (0.3) (0.3)
Fair value change of derivative financial
assets5 - - - - 25.5 25.5
Amortisation of intangibles arising
on acquisitions6 - - - - 20.6 20.6
Deferred tax on acquisitions6 - - - - (4.0) -
Deferred tax reversal7 - - - - 23.4 -
Tax related to uncertain provision8 - - - - 3.5 -
------------------------------------------ ------- ------ ------ ------ ------------- -----------
Adjusted measure 859.6 81.3 138.6 219.9 85.7 139.3
------------------------------------------ ------- ------ ------ ------ ------------- -----------
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 majority of the professional fees relate to the
acquisition of Hard Rock Digital (Note 16B). These expenses are not
considered ongoing costs of operations and therefore are
excluded.
3 Provision against other receivables and investments that do
not relate to the ordinary operations of the Group.
4 Fair value change and finance costs on contingent
consideration related to the acquisition of Aus GMTC. These
expenses are not considered ongoing costs of operations and
therefore are excluded.
5 Fair value change 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 The reported tax expense has been adjusted for UK tax losses
on which a deferred tax asset of EUR23.4 million. Refer to Notes 6
and 13. 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 period.
8 Change in estimates related to uncertain overseas tax positions in respect of prior years.
Profit
from
continuing
operations Profit
attributable before
to the tax
EBITDA EBITDA owners from
- - of the continuing
Revenue B2B B2C EBITDA Company operations
Six months ended 30 June 2022 EUR'm EUR'm EUR'm (Rested)EUR'm EUR'm EUR'm
--------------------------------------------- ------- ------ ------ -------------- ------------- -----------
Reported as actual 792.3 62.9 111.0 173.9 71.4 103.7
Employee stock option expenses1 - 4.1 0.5 4.6 4.6 4.6
Professional fees2 - 10.1 - 10.1 10.1 10.1
Fair value change and finance cost
on contingent consideration and redemption
liability3 - (1.8) - (1.8) (1.7) (1.7)
Ukraine employee support costs4 - 1.9 - 1.9 1.9 1.9
Onerous contract5 - - 10.4 10.4 10.4 10.4
Fair value change of equity instruments6 - - - - (0.7) (0.7)
Fair value change of derivative financial
assets6 - - - - (48.5) (48.5)
Impairment of tangible and intangible
assets7 - - - - 20.6 20.6
Amortisation of intangibles on acquisitions8 - - - - 21.9 21.9
Deferred tax on acquisitions8 - - - - (4.2) -
Tax related to uncertain positions9 - - - - 8.5 -
--------------------------------------------- ------- ------ ------ -------------- ------------- -----------
Adjusted measure 792.3 77.2 121.9 199.1 94.3 122.3
--------------------------------------------- ------- ------ ------ -------------- ------------- -----------
1 Employee stock option expenses relate to non cash expenses of
the Group and differ from year to year based on the share price and
the number of options granted.
2 Professional fees incurred for: (a) the potential
reorganization of the Group following the exercise of Playtech
M&A Call Option (Note 16) and (b) the potential sale of the
Group. These expenses are not considered ongoing costs of
operations.
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 Ukraine employees. These
expenses are not considered ongoing costs of operations and
therefore are excluded.
5 Payment to terminate an onerous contract with a former service
provider. This expense is not considered ongoing costs of
operations and therefore is excluded.
6 Fair value change of equity investments and derivative
financial assets. These are excluded from the results as they
relate to unrealised profit/loss. Refer to Note 16.
7 Impairment of intangible assets relates to the impairment of Eyecon and Quickspin CGU.
8 Amortisation and deferred tax on intangible assets acquired
through business combinations in prior years. Costs directly
related to acquisitions are not considered ongoing costs of
operations and therefore are excluded.
9 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:
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
------------------------------------- ---------- ----------
Tax on profit or loss for the period 76.5 32.3
Adjusted for:
Deferred tax on acquisitions 4.0 4.2
Deferred tax reversal (23.4) -
Tax related to uncertain positions (3.5) (8.5)
------------------------------------- ---------- ----------
Adjusted tax 53.6 28.0
------------------------------------- ---------- ----------
Note 11 - Impairment of intangible assets
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
-------------------------------- ----------- -----------
Impairment of intangible assets - 20.6
-------------------------------- ----------- -----------
Impairment of intangible assets for H1 2022 relates to the
impairments of Eyecon and Quickspin CGUs of EUR13.6 million and
EUR7.0 million respectively.
Note 12 - Finance income and costs
A. Finance income
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
-------------------------- ---------- ----------
Interest income 3.0 1.2
Net foreign exchange gain 3.0 10.5
-------------------------- ---------- ----------
6.0 11.7
-------------------------- ---------- ----------
B. Finance costs
Six months
Six months ended 30
ended 30 June 2022
June 2023 EUR'm
EUR'm (Restated)
------------------------------------------- ---------- -----------
Interest on bonds (11.7) (18.2)
Interest on lease liability (2.5) (2.7)
Interest on loans and borrowings and other (1.9) (2.8)
Bank facility fees (1.1) (1.0)
Bank charges (1.3) (2.1)
Movement in contingent consideration (1.3) (0.1)
Expected credit loss on loans receivable (0.4) -
------------------------------------------- ---------- -----------
(20.2) (26.9)
------------------------------------------- ---------- -----------
Net finance costs (14.2) (15.2)
------------------------------------------- ---------- -----------
Note 13 - Tax expense
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
---------------------------------------------------- ---------- ----------
Current tax expense
Income tax expense for the current period 13.5 9.1
Income tax relating to prior years 11.1 10.1
Withholding tax 0.3 0.2
---------------------------------------------------- ---------- ----------
Total current tax expense 24.9 19.4
---------------------------------------------------- ---------- ----------
Deferred tax
Origination and reversal of temporary differences 28.2 12.9
Write down of a deferred tax asset in respect of UK
tax losses 23.4 -
---------------------------------------------------- ---------- ----------
Total deferred tax expense 51.6 12.9
---------------------------------------------------- ---------- ----------
Total tax expense from continuing operations 76.5 32.3
---------------------------------------------------- ---------- ----------
Reported tax charge
A reported tax charge of EUR76.5 million from continuing
operations arises on a profit before income tax of EUR79.6 million
compared to an expected charge of EUR18.7 million (2022: a tax
charge of EUR32.3 million on profit before income tax of EUR103.7
million). The reported tax expense includes adjustments in respect
of prior years relating to current tax of EUR13.1 million, which
includes an additional provision of EUR3.5 million relating to
uncertain overseas tax positions in respect of prior years.
The Group's effective tax rate for the current period is 96.1%.
This is higher than the UK headline rate of tax for the period of
23.5%, due mainly to the following factors:
-- 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 EUR23.4 million in
respect of UK tax attributes. Further details of this write down
are included in Note 6.
-- Current year tax losses not recognised for deferred tax
purposes. The tax losses mainly relate to the UK group companies
and amount to EUR51.3 million.
-- Unrealised fair value changes of derivative financial assets
of EUR25.5 million which are not deductible for tax purposes.
Deferred tax should be recognised based on the expected manner of
recovery at the balance sheet date. Due to the nature of the
options and the underlying assets, no tax is expected to arise
while the options are held or when the options are exercised. As
the Group intends to recover the value of the options either by
continuing to hold them or by exercising the option to convert into
shares, and these will have no tax effects, no deferred tax is
recorded in respect of the options.
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,
which has been enacted at the balance sheet date, increases 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.
On 20 June 2023, Finance (No.2) Act 2023 was substantively
enacted in the UK, introducing a global minimum effective tax rate
of 15%. The legislation implements a domestic top-up tax and a
multinational top-up tax, effective for accounting periods starting
on or after 31 December 2023. The Group has applied the exception
allowed by an amendment to IAS 12 to recognising and disclosing
information about deferred tax assets and liabilities related to
top-up income taxes.
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 14 - 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.
Six months ended Six months ended
30 June 2023 30 June 2022
------------------------ ------------------------
Actual Adjusted Actual Adjusted
EUR'm EUR'm EUR'm EUR'm
----------------------------------------- ----------- ----------- ----------- -----------
Profit attributable to the owners of
the Company 3.1 85.7 110.3 135.5
----------------------------------------- ----------- ----------- ----------- -----------
Basic (cents) 1.0 28.4 36.8 45.2
Diluted (cents) 1.0 27.5 35.4 43.4
----------------------------------------- ----------- ----------- ----------- -----------
Six months ended Six months ended
30 June 2023 30 June 2022
------------------------ ------------------------
Actual Adjusted Actual Adjusted
EUR'm EUR'm EUR'm EUR'm
----------------------------------------- ----------- ----------- ----------- -----------
Profit attributable to the owners of
the Company from continuing operations 3.1 85.7 71.4 94.3
----------------------------------------- ----------- ----------- ----------- -----------
Basic (cents) 1.0 28.4 23.8 31.5
Diluted (cents) 1.0 27.5 22.9 30.2
----------------------------------------- ----------- ----------- ----------- -----------
Six months ended Six months ended
30 June 2023 30 June 2022
------------------------ ------------------------
Actual Adjusted Actual Adjusted
Number Number Number Number
----------------------------------------- ----------- ----------- ----------- -----------
Denominator - basic
Weighted average number of equity shares 302,327,498 302,327,498 299,621,116 299,621,116
----------------------------------------- ----------- ----------- ----------- -----------
Denominator - diluted
Weighted average number of equity shares 302,327,498 302,327,498 299,621,116 299,621,116
Weighted average number of option shares 9,013,439 9,013,439 12,597,744 12,597,744
----------------------------------------- ----------- ----------- ----------- -----------
Weighted average number of shares 311,340,937 311,340,937 312,218,860 312,218,860
----------------------------------------- ----------- ----------- ----------- -----------
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 adjusting 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 8.
Note 15 - Intangible assets
Total
EUR'm
---------------------------------------------- ------
Net book value at 1 January 2023 980.9
Additions 34.5
Assets acquired through business combinations 7.8
Amortisation charge for the period (57.5)
---------------------------------------------- ------
Net book value at 30 June 2023 965.7
---------------------------------------------- ------
In accordance with IAS 36, the Group regularly monitors the
carrying value of its intangible assets, including goodwill.
Goodwill is allocated to thirteen cash-generating units (CGUs) (31
December 2022: thirteen).
The allocation of the goodwill in CGUs (excluding CGUs held for
sale) is as follows:
30 June 31 December
2023 2022
EUR'm EUR'm
------------- ------- -----------
Snai(1) 264.1 259.7
Sports B2B 132.5 132.5
Services 109.9 109.9
Casino 50.8 50.8
Quickspin 19.8 19.8
Eyecon 3.0 3.0
Poker 15.6 15.6
Bingo retail 9.5 9.5
Bingo VF - -
VB retail 4.6 4.6
IGS - -
AUS GMTC 4.4 4.4
------------- ------- -----------
614.2 609.8
------------- ------- -----------
(1) During the period, the Group acquired the Giove group for a
total consideration of EUR6.0 million. The Group has prepared a
purchase price allocation and any difference between the cost of
the investment and the identifiable assets and liabilities was
recognised as goodwill (EUR4.4 million).
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. For the units
which management assesses their results are not in line with
expectations, outside of the yearly review, a detailed assessment
is also carried out to ensure that appropriate actions are taken by
management and relevant impairment amounts are recognised, if
any.
A comparison of the year-to-date June 2023 results against the
2023 budget has been carried out for all units and a further
comparison of the 2023 forecast (year to date June 2023 actuals
with July-December 2023 forecast) to 2023 budget, has also been
reviewed, to enable further conclusions to be drawn on the actual
and forecasted performance of each unit.
As a result of the above reviews, management has performed a
detailed assessment on only two units that are behind budget.
The recoverable amounts of these two CGUs have been determined
from value in use calculations based on cash flow projections
covering five years plus a terminal value which have been adjusted
to take into account each CGU's major events as expected in future
periods.
Management has also considered the ongoing economic uncertainty
caused by the Russian invasion in Ukraine and the overall global
recessionary pressures, with a higher level of judgement and
uncertainty implemented in the forecasts. 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.
Management 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%. Management has
included appropriate capital expenditure requirements to support
the forecast growth and assumed the maintenance of the current
level of licences. Finally post-tax discount rates were applied to
the cash flow projections as summarised below.
30 June 2023 CGUs with an indication of impairment
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 planned for launch in early 2023. Given
that new opportunities are arising through the US business, no
impairment has been recognised during H1 2023. The recoverable
amount of this CGU of EUR28.8 million, with a carrying value equal
to EUR20.2 million at 30 June 2023, has been determined using a
cash flow forecast that includes annual revenue growth rates
between 6.0% to 8.0% over the 1-5 year forecast period, 2%
long-term growth rate and a post-tax discount rate of 11.8%. The
recoverable amount would equal the carrying value of the CGU
if:
-- the discount rate applied was higher by 32.4%, i.e. reaching
a post-tax discount rate of 15.6%; or
-- the revenue growth was lower by 1.4% when compared to the
forecasted average five-year growth.
Quickspin CGU
Quickspin CGU suffered an impairment loss of EUR7.0 million
during H1 2022, given the risk the CGU bore from the proportion of
revenues being generated from the CGU's customers choosing to
operate in areas with geopolitical tension, and the resulting 1%
increase on the post-tax discount rate of the CGU to mitigate for
that factor. During H1 2023, the CGU which is still finalising its
restructuring process, has seen lower performance across a few
licensees and negative foreign exchange impact on the revenue from
non-EUR countries. However, given the planned growth expected
through the release of new games, no further impairment has been
recognised for H1 2023. The recoverable amount of this CGU of
EUR53.2 million, with a carrying value of EUR41.3 million at 30
June 2023, has been determined using a cash flow forecast that
includes annual revenue growth rates between 5.0% to 6.9% over the
1-5 year forecast period, 2% long-term growth rate and a post-tax
discount rate of 11.4%. The recoverable amount would equal the
carrying value of the CGU if:
-- the discount rate applied was higher by 24.4%, i.e., reaching
a post-tax discount rate of 14.2%; or
-- the revenue growth was lower by 2.8% when compared to the
forecasted average five-year growth.
Note 16 - Investments and derivative financial assets
Introduction
Below is a breakdown of the relevant assets at 30 June 2023 and
31 December 2022 per the consolidated balance sheet:
30 June 31 December
2023 2022
EUR'm EUR'm
------------------------------- ------- -----------
A. Investments in associates 43.8 36.6
B. Other investments 86.4 9.2
C. Derivative financial assets 650.3 636.4
------------------------------- ------- -----------
780.5 682.2
------------------------------- ------- -----------
The following are the amounts recognised in the statement of
comprehensive income:
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
------------------------------------------------------------- ---------- ----------
Profit or Loss
A. Share of loss from associates (0.3) (3.1)
B. Unrealised fair value changes of equity investments 0.3 0.7
C. Unrealised fair value changes of derivative financial
assets (25.5) 48.5
Other comprehensive income
Foreign exchange movement from the derivative call options
and equity investments held in non-Euro functional currency
subsidiaries (3.6) 10.0
------------------------------------------------------------- ---------- ----------
(29.1) 56.1
------------------------------------------------------------- ---------- ----------
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 30 June 2023, the foreign exchange movement of the
derivative call options held in Caliplay, LSports and NorthStar
(Note 16C) are recorded in the profit or loss as the derivative
call options are held in a Euro functional currency entities. The
foreign exchange movement of the derivative call options held in
Wplay, Onjoc and Tenbet and equity investment in Hard Rock Digital
are recorded through other comprehensive income as the derivative
call options and equity investment are held in a USD functional
currency entities.
A. Investments in associates
Balance sheet
30 June 31 December
2023 2022
EUR'm EUR'm
------------------------------------------------ ------- -----------
Caliplay - -
ALFEA SPA 1.7 1.7
Galera - -
Stats International - -
LSports 34.8 34.9
NorthStar 7.3 -
------------------------------------------------ ------- -----------
Total investment in equity accounted associates 43.8 36.6
------------------------------------------------ ------- -----------
Profit or loss impact
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
----------------------------- ---------- ----------
Share of profit in ALFEA SPA - 0.1
Share of loss in Galera - (3.2)
Share of loss in NorthStar (1.1) -
Share of profit in LSports 0.8 -
----------------------------- ---------- ------------
Total profit and loss impact (0.3) (3.1)
----------------------------- ---------- ----------
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 SAPI ("Caliente"), the majority owner of
Tecnologia en Entretenimiento Caliplay, S. de R.L. de C.V
("Caliplay"), a leading betting and gaming operator in Mexico which
operates the "Caliente" brand in Mexico.
The Group made a EUR16.8 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 becoming the sole shareholder
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 30 June 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 or Caliente 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). If the Playtech Call
Option or the Playtech M&A Call Option are exercised, the Group
would no longer be entitled to receive the additional B2B services
fee (and will cease to provide the related services) which for the
period ended 30 June 2023 was EUR57.3 million (H1 2022: EUR34.4
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, Playtech plc 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 regards to this assumption and the matter is still
unresolved.
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 30 June 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 30 June 2023 and 31 December 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.
-- Whilst they are not members of the board, the Group has the
ability to appoint and change both the Chief Operating Officer
(COO) and Chief Marketing Officer (CMO) who form part of the
management team. The COO and the CMO form part of the wider
management team but not the board and therefore are unable to
control the relevant activities of Caliplay.
-- 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 30 June 2023 and 31 December 2022, the Group has
significant influence over Caliplay because it meets one or more of
the criteria under IAS 28, paragraph 6 as follows:
-- It has the ability to appoint key members of the Caliplay management team.
-- 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 30 June 2023 and 31
December 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 EUR16.8
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 EUR16.8 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 EUR16.8 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 6 of the last annual financial
statements, 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:
30 June 31 December
2023 1 2022 1
EUR'm EUR'm
--------------------------------------- ------- -----------
Current assets 183.5 96.7
Non-current assets 26.5 30.3
Current liabilities (123.9) (78.1)
Non-current liabilities - -
--------------------------------------- ------- -----------
Equity 86.1 48.9
--------------------------------------- ------- -----------
Revenue 362.8 532.1
--------------------------------------- ------- -----------
Profit from continuing operations 29.5 30.4
Other comprehensive income, net of tax 8.7 2.5
--------------------------------------- ------- -----------
Total comprehensive income 38.2 32.9
--------------------------------------- ------- -----------
1 The 2022 balances above have been extracted from Caliplay's
audited 2022 financial statements whereas the 2023 balances have
been from Caliplay's unaudited management accounts.
Investment in ALFEA SPA
The Group has held 30.7% equity shares in ALFEA SPA since June
2018. At 30 June 2023 the Group's value of the investment in ALFEA
SPA was EUR1.7 million (31 December 2022: EUR1.7 million). No share
of profit was recognised in the profit or loss for the period ended
30 June 2023 (H1 2022: EUR0.1 million).
Investment in Galera
In June 2021, the Group entered into an agreement with Ocean 88
Holdings Ltd 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 license, when this becomes available, and will
expand to other gaming and gambling products based on the local
license conditions.
The Group's total consideration paid for the investment in
Galera was $5.0 million (EUR4.2 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 30 June 2023, an
amount of EUR37.5 million (including interest accrued), which is
included in loans receivable under other non-current assets (refer
to Note 24) has been drawn down (31 December 2022: EUR26.9
million). An amount of EUR10.6 million has been loaned in the six
month period ended 30 June 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 EUR1.6 million as
at 30 June 2023 (H1 2022: EUR1.1 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 EUR11.3 million share of loss of associate
would have been recorded in retained earnings since the investment
was made of which, EUR1.9 million would have been recognised in H1
2023 in the profit or loss.
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 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 still considered a
start-up and therefore 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 service fee. The additional B2B services fee was EURNil in the
six month period ended 30 June 2023 (H1 2022: EURNil).
The cost of the investment was deemed to be the price paid for
the option of $5.0 million (EUR4.2 million), which was reduce to
EURNil at 31 December 2022 through the recognition of the Group's
share of losses. The total unrecognised share of loss from Galera
was EUR1.9 million in the six months ended 30 June 2023.
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 2022, the
carrying value of the loan was EUR2.2 million (Note 24). 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 whereas amongst other things, changed the repayment
obligations such that the final repayment date will be 31 December
2026 and the loan agreement to 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 EUR1 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 9. As the business is still a start-up the
additional B2B service fee as at 30 June 2023 was EURNil. 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 startup 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 30 June 2023 in the profit or loss as these were
immaterial.
Investment in LSports
Background
In November 2022, the Group entered into the following
transactions:
-- acquisition of 15% of Statscore for a total consideration of
EUR1.8 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 EUR7.5 million (settled through the
acquisition of LSports in shares) less a novated inter-company loan
of EUR1.6 million, therefore a non-cash net consideration of EUR5.9
million; and
-- acquisition of 31% (on a fully dilutive basis) of LSports for
a total consideration of EUR36.7 million, which also included an
option to acquire further shares (up to 18.11%) in LSports. Of the
total consideration, EUR29.2 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 EUR8.8 million which has been recognised in the
profit or loss for the year ended 31 December 2022 and is made up
as follows:
2022
EUR'm
------------------------------------------------------------- ------
Net asset position as at the date of the disposal (including
goodwill of EUR12.4 million) 14.7
Net consideration (5.9)
------------------------------------------------------------- ------
Loss on disposal 8.8
------------------------------------------------------------- ------
Furthermore, the Group has an option to acquire up to 49% (so an
additional 18.11%) 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 fair value of the option acquired at 31 December 2022 was
EUR1.4 million which was part of the total consideration of EUR36.7
million (refer to part of Note 16C). The fair value of the
derivative remained unchanged as at 30 June 2023.
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 2022 and 30 June
2023, 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 30 June 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 does not have the ability to change any members of
the board or management of LSports; and
-- as at 30 June 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 30 June 2023 and 31 December 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 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
2022
EUR'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 (2.3)
--------------------------------------------------- -------------
Total net assets 17.3
--------------------------------------------------- -------------
Total consideration 35.3
--------------------------------------------------- -------------
Goodwill 18.0
--------------------------------------------------- -------------
Goodwill is not recognised separately but is included as part of
the carrying amount of the investment in associate. A total of
EUR1.2 million and EUR0.2 million was recognised in relation to the
amortisation of intangibles and the release of the deferred tax
liability, arising on acquisition respectively, in the profit or
loss for the period ended 30 June 2023, with a corresponding entry
against the investment in associate. Furthermore, EUR1.8 million
share of profit is recognised as at 30 June 2023 (H1 2022:
EURNil).
Finally, during H1 2023, the Group received a dividend of EUR0.9
million from LSports.
Investment in NorthStar
Background
NorthStar Gaming Inc. (NorthStar) is a Canadian gaming brand
which was incorporated under the laws of Ontario in Q3 2021. In Q1
2022, the Company received its license from the Alcohol and Gaming
Commission of Ontario ("AGCO") and it 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
Canadian growing betting data market segment.
In December 2022, the Group issued NorthStar a convertible loan
of CAD 12.3 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
for shares (i.e. complete an RTO of NorthStar). The fair value of
the loan as at 31 December 2022 was EUR8.4 million.
In March 2023, the RTO was completed and Baden Resources changed
its name to NorthStar Gaming Holdings (NGH). These events triggered
the automatic conversion of the Group's convertible loan into
common shares in NorthStar (effective immediately prior to closing)
and then immediately on closing (i.e. a second later) those shares
were exchanged for NGH shares.
When the loan was converted into equity, the Group received
shares and warrants, resulting in a shareholding of 16% in
NorthStar.
Furthermore, the Group has an option to further increase its
stake potentially beyond 20% of the issued and outstanding common
shares. The holders may exercise the warrants once the share price
is higher than CAD 0.85 for A warrants and 0.90 for B warrants.
Both warrants would expire on the fifth anniversary of their issue.
A warrants and B warrants can each be exercised for one common
share.
The fair value of A and B warrants are EUR0.1 million as at 30
June 2023. The Group realised a profit of EUR0.1 million which has
been recognised in the profit or loss for the six month period
ended 30 June 2023. Refer to Note 16C.
Assessment of control and significant influence
As at the date of acquisition and 30 June 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 the representation on the board of Directors by
Playtech CFO, there is still no ability to control the relevant
activities, as the total number of directors are eight; and
-- Playtech has neither the ability to change any members of the
board or 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 30 June 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 Playtech's CFO 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 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 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
EUR'm
--------------------------------------------------- -------------
Net book value of assets acquired 0.4
Fair value of customer contracts and relationships 1.0
Fair value of brand 0.9
--------------------------------------------------- -------------
Total net assets 2.3
--------------------------------------------------- -------------
Total consideration 8.4
--------------------------------------------------- -------------
Goodwill 6.1
--------------------------------------------------- -------------
Goodwill is not recognised separately but is included as part of
the carrying amount of the investment in associate. A total of
EUR0.1 million was recognised in relation to the amortisation of
intangibles on acquisition in the profit or loss for the six month
period ended 30 June 2023, with a corresponding entry against the
investment in associate. As at 30 June 2023, Playtech was diluted
to 15% due to NorthStar issuing more shares as part of an
acquisition they completed in May 2023. A share of loss of EUR1.0
million is recognised in profit or loss for the period ended 30
June 2023.
Other investment in associates that are fair valued under 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, have 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
30 June 31 December
2023 2022
EUR'm EUR'm
--------------------------------- ------- -----------
Listed investments 1.6 1.4
Investment in Tenlot Guatemala 4.4 4.4
Investment in Tentech Costa Rica 2.3 2.1
Investment in Gameco - 1.3
Investment Hard Rock Digital 78.1 -
--------------------------------- ------- -----------
Total other investments 86.4 9.2
--------------------------------- ------- -----------
Statement of comprehensive income impact
Six months
Six months ended
ended 30 30 June
June 2023 2022
EUR'm EUR'm
------------------------------------------------------ ---------- ----------
Profit or loss
Change in fair value of equity investments 0.3 0.7
Impairment of the investment in Gameco (included in
the impairment of financial assets) 1.3 -
------------------------------------------------------ ---------- ----------
Total profit or loss impact 1.6 0.7
------------------------------------------------------ ---------- ----------
Other comprehensive income
Foreign exchange movement from equity investment held
in a non-Euro functional currency subsidiary (1.7) -
------------------------------------------------------ ---------- ----------
Listed investments
The Group has shares in listed securities. The fair values of
these equity shares are determined by reference to published price
quotations in an active market. For the six month period ended 30
June 2023, the fair value of these listed securities have increased
by EUR0.3 million (H1 2022: increase of EUR0.7 million).
Investment in Tenlot Guatemala
In 2020, the Group entered into an agreement with Tenlot
Guatemala, a member of the Tenlot Group. Tenlot Guatemala commenced
its activity in 2018 and it is currently growing its lottery
business in Guatemala, expanding its distribution network and game
offering.
The Group has acquired a 10% equity holding in Tenlot Guatemala
for a total consideration of $5.0 million (EUR4.4 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 30 June 2023 is $5.0
million (EUR4.4 million) with no movement in fair value from the
prior year.
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
EURNil for the period ended 30 June 2023 (31 December 2022:
EURNil). 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 30 June 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 (EUR2.1 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 30 June 2023 is $2.5
million (EUR2.3 million) with no movement in fair value from the
prior year in the profit or loss.
The foreign exchange movement of the investment held in Tentech
Costa Rica 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 profit of
EUR0.2 million in other comprehensive income as at 30 June 2023 (31
December 2022: EURNil).
Investment in Gameco
In 2021, the Group entered into a convertible loan agreement
with GameCo LLC ("GameCo"), where it provided $4.0 million in the
form of a debt security with 8% interest (2021: EUR3.8 million). In
December 2022, Gameco acquired Green Jade Games and subsequently,
the Playtech debt was converted into equity shares, representing a
7.1% into the newly formed group. Immediately prior to the
conversion, the loan was impaired by EUR3.0 million and this has
been recognised in the profit or loss as at 31 December 2022.
The 7.1% equity holding in the newly formed group is accounted
at fair value through profit or loss under IFRS 9. As at 30 June
2023, the fair value of the equity holding has been impaired down
to EURNil (31 December 2022: EUR1.3 million).
Investment in Hard Rock Digital
On 14 March 2023, the Group invested $85.0 million (EUR79.8
million) in Hard Rock Digital ("HRD") in exchange for a small
minority interest in a combination of equity shares and warrants.
HRD is a global vehicle for interactive gaming and sports betting
for Hard Rock International and Seminole Gaming.
The Group assessed whether the warrants meet the definition of a
separate derivative as per IFRS9. 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 were 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 investments 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 30 June 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 million (EUR78.1 million).
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, that decision is currently being
appealed and, accordingly, it is still too early to assess the
impact to the fair value of the small minority interest Playtech
holds at 30 June 2023.
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 EUR1.7 million in
the statement of other comprehensive income as at 30 June 2023.
C. Derivative financial assets
Balance sheet
30 June 31 December
2023 2022
EUR'm EUR'm
------------------------------------ ------- -----------
Playtech M&A Call Option (Caliplay) 533.8 524.0
Wplay 99.1 93.5
Onjoc 8.8 8.6
Tenbet 7.1 8.9
NorthStar (Note 16B) 0.1 -
LSports (Note 16B) 1.4 1.4
------------------------------------ ------- -----------
Total derivative financial assets 650.3 636.4
------------------------------------ ------- -----------
Statement of comprehensive income impact
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
------------------------------------------------------------ ---------- ----------
Caliplay
Fair value change of Playtech M&A Call Option (22.5) (5.1)
Foreign exchange movement to profit or loss (9.0) 43.3
Wplay
Fair value change in Wplay 7.2 11.6
Foreign exchange movement recognised in other comprehensive
income (1.6) 8.5
Onjoc
Fair value change in Onjoc 0.3 1.2
Foreign exchange movement recognised in other comprehensive
income (0.1) 0.6
Tenbet
Fair value change in Tenbet (1.6) (2.5)
Foreign exchange movement recognised in other comprehensive
income (0.2) 0.9
NorthStar
Fair value change of Warrants in NorthStar 0.1 -
------------------------------------------------------------ ---------- ----------
Total comprehensive income impact (27.4) 58.5
------------------------------------------------------------ ---------- ----------
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 2021, Caliplay was actively negotiating a
merger with a US listed special purpose acquisition corporation
(SPAC), which in turn was expected to enter into a long-term
commercial agreement with a leading media partner. As part of the
transaction, the media partner and certain of its shareholders were
expected to invest a cash amount in the SPAC in exchange for shares
and warrants issued by the SPAC, which was expected to result in
them together holding a material minority equity interest.
Further attempts were made to complete the SPAC transaction
during 2022, however as per the announcement made on 29 July 2022,
with capital market conditions having deteriorated significantly
since the transaction was initially contemplated, the transaction
was no longer being pursued.
For this reason, a decision was taken to change the valuation
methodology used as at 30 June 2023 and 31 December 2022 for the
Playtech M&A Call Option to that of a DCF approach with a
market exit multiple assumption, as opposed to 31 December 2021,
where the Group has assessed the fair value of the Playtech M&A
Call Option based on the proposed term of the expected merger with
the SPAC, including the transaction value.
As already mentioned in part A of Note 16 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 30 June 2023 and 31
December 2022.
Valuation
The Group has assessed the fair value of the Playtech M&A
Option of the derivative financial asset as at 30 June 2023 using a
discounted cash flow (DCF) approach with a market exit multiple
assumption. The Group used a discount rate of 16% (31 December
2022: 16%) reflecting the cash flow risks given the high growth
rates in place, as well as a discount for illiquidity and control
until the expected Group exit date. 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 four-year period, until
December 2027. The Group used a compound annual growth rate of
17.0% (31 December 2022: 17.2%) over the forecasted cash flow
period, an average Adjusted EBITDA margin of 27.8% (31 December
2022: 26.3%) and an exit multiple of 8.6x (31 December 2022: 9.6x).
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 13.8%
(31 December 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 30 June 2023, the fair value of the Playtech M&A Call
Option was $581.0 million (31 December 2022: $560.6 million) which
converted to EUR533.8 million (31 December 2022: EUR524.0 million).
The period-on-period change in the fair value of the Playtech
M&A call option is a combination of an uplift:
-- due to Caliplay's H1 2023 performance which exceeded forecasts; 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 EUR41.3
million redemption payment (the value of such right being deducted
from the fair value of the Playtech M&A Call Option).
These were partially offset by:
-- the reduction in the exit multiple described above;
-- 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 30 June 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 14% to 18% will
result in a fair value of the derivative financial asset in the
range of EUR497.0 million - EUR574.2 million.
-- A 5% fluctuation in the Adjusted EBITDA margin will result in
a fair value of the derivative financial asset within the range of
EUR506.2 million - EUR566.0 million.
-- A 10% fluctuation in the Adjusted EBITDA margin will result
in a fair value of the derivative financial asset within the range
of EUR475.9 million - EUR595.4 million.
-- A 5% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR432.7 million - EUR634.9 million.
-- A 10% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR332.6 million - EUR735.0 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
EUR475.0 million - EUR592.6 million.
-- If the 13.8% DLOM applied for two-year period post exercise
of the Playtech M&A option was removed (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 increase to EUR626.6 million. Conversely, if
we double the applied DLOM to 27.6% the fair value of the
derivative financial asset would decrease to EUR441.0 million.
Wplay
In August 2019, Playtech entered into a structured agreement
with Aquila Global Group SAS ("Wplay"), which has a license to
operate online gaming activities 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 9. 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. 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 EURNil for the six month period
ended 30 June 2023 (H1 2022: EURNil).
The payment of EUR22.4 million made to Wplay in 2019 and 2020
was considered to be the payment made for the option in Wplay. The
Group had contingent commitments totalling $6.0 million, of which
$5.0 million was paid in June 2021 and $1.0 million was paid in
October 2022.
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 of 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 30
June 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 regards 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, we have 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 (EUR1.6 million) and
$0.5 million (EUR0.5 million) respectively. The loans are due for
repayment in December 2023 and December 2024 and their combined
outstanding balance as at 30 June 2023 is $1.3 million (EUR1.2
million). The loans are included in loans receivable from related
parties (refer to Note 24).
Valuation
The fair value of the option at 30 June 2023 has been estimated
using a DCF approach with a market exit multiple assumption. The
Group used a discount rate of 26% (31 December 2022: 25%)
reflecting the cash flow risks given the high growth rates in place
and the relative early stages of the business, as well as a
discount for illiquidity and control until the expected Playtech
exit date of December 2026 (31 December 2022: expected exit date of
December 2026). The Group used a compound annual growth rate of
22.7% (31 December 2022: 24.7%) over the forecasted cash flow
period, an average Adjusted EBITDA margin of 19.1% (31 December
2022: 20.6%) and an exit multiple of 9.6x (31 December 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 30 June 2023, the fair value of the Wplay derivative
financial asset is EUR99.1 million. The difference of EUR5.6
million between the fair value at 31 December 2022 of EUR93.5
million and the fair value at 30 June 2023 has been recognised as
follows:
a. EUR7.2 million derived from the fair value increase of the
derivative call option calculated using the DCF model in the profit
or loss for the six month period ended 30 June 2023.
b. EUR1.6 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 six month
period ended 30 June 2023.
Sensitivity analysis
The assumptions and judgements made in the valuation of the
derivative financial asset as at 30 June 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 20% to 30% will
result in a fair value of the derivative financial asset in the
range of EUR88.1 million - EUR119.1 million.
-- A 5% fluctuation in the Adjusted EBITDA margin will result in
a fair value of the derivative financial asset within the range of
EUR94.1 million - EUR104.1 million.
-- A 10% fluctuation in the Adjusted EBITDA margin will result
in a fair value of the derivative financial asset within the range
of EUR89.2 million - EUR109.0 million.
-- A 5% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR81.0 million - EUR117.9 million.
-- A 10% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR63.4 million - EUR137.4 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
EUR90.7 million - EUR107.5 million.
-- If the expected Playtech exit date fluctuates by one year
later or earlier, the fair value of the derivative financial asset
will change to EUR98.5 million and EUR99.7 million
respectively.
Onjoc
In June 2020, Playtech entered into a framework agreement with
ONJOC CORP. ("Onjoc"), which holds a license 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 9. 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 EURNil in the period ended
30 June 2023 (H1 2022: EURNil). 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 appoint and remove 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 30
June 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 regards 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 appoint and remove 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, we have 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 EUR1.9
million (31 December 2022: EUR1.8 million) which is due for
repayment in October 2025 and is included in loans receivable from
related parties (refer to Note 24).
Valuation
The fair value of the option at 30 June 2023 has been estimated
using a DCF approach with a market exit multiple assumption. The
Group used a discount rate of 32% (31 December 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 (31 December 2022: expected exit date of December
2027). The Group used a compound annual growth rate of 74.3% (31
December 2022: 60.1%) over the forecasted cash flow period and an
average Adjusted EBITDA margin of 15.7% (31 December 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 30 June 2023, the fair value of the Onjoc derivative
financial asset is EUR8.8 million. The difference of EUR0.2 million
between the fair value at 31 December 2022 of EUR8.6 million and
the fair value at 30 June 2023 has been recognised as follows:
a. EUR0.3 million derived from the fair value increase of the
derivative call option calculated using the DCF model in the profit
or loss for the period ended 30 June 2023.
b. EUR0.1 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 period ended
30 June 2023.Sensitivity analysis
The assumptions and judgements made in the valuation of the
derivative financial asset as at 30 June 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 EUR7.1 million - EUR10.1 million.
-- A 5% fluctuation in the Adjusted EBITDA margin will result in
a fair value of the derivative financial asset within the range of
EUR8.3 million - EUR9.2 million.
-- A 10% fluctuation in the Adjusted EBITDA margin will result
in a fair value of the derivative financial asset within the range
of EUR7.8 million - EUR9.7 million.
-- A 5% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR6.4 million - EUR11.3 million.
-- A 10% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR4.2 million - EUR14.1 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
EUR7.6 million - EUR9.9 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 EURNil in the
period ended 30 June 2023 (31 December 2022: EURNil). 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). The call option to acquire 81% equity
holding in Tenbet is exercisable from July 2024 (previously July
2023).
Under the existing agreements, the Group has provided Tenbet
with a credit facility of EUR3.9 million out of which EUR3.6
million (Note 24) had been drawn down as at 30 June 2023 (31
December 2022: EUR2.1 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, or change any
members of the Board of Tenbet; and
-- as at 30 June 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 regards 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, we
have 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 30 June 2023 has been estimated
using a DCF approach with a market exit multiple assumption. The
Group used a discount rate of 34% (31 December 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 2027 (31 December 2022: expected exit date of December
2027). The Group used a compound annual growth rate of 261% (31
December 2022: 135%) over the forecasted cash flow period and an
average Adjusted EBITDA margin within the range of - 335% to 28% in
years 1-5 with an average of -70.6% (31 December 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 30 June 2023, the fair value of the Tenbet derivative
financial asset is EUR7.1 million. The difference of EUR1.8 million
between the fair value at 31 December 2022 of EUR8.9 million and
the fair value at 30 June 2023 has been recognised as follows:
a. EUR1.6 million derived from the fair value decrease of the
derivative call option calculated using the DCF model in the profit
or loss in the period ended 30 June 2023.
b. EUR0.2 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 period ended
30 June 2023.
Sensitivity analysis
The assumptions and judgements made in the valuation of the
derivative financial asset as at 30 June 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 30% to 40% will
result in a fair value of the derivative financial asset in the
range of EUR5.5 million - EUR8.5 million.
-- A 5% fluctuation in the Adjusted EBITDA margin will result in
a fair value of the derivative financial asset within the range of
EUR6.7 million - EUR7.6 million.
-- A 10% fluctuation in the Adjusted EBITDA margin will result
in a fair value of the derivative financial asset within the range
of EUR6.3 million - EUR8.0 million.
-- A 5% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EUR1.1 million - EUR13.5 million.
-- A 10% fluctuation in the revenue growth rate will result in a
fair value of the derivative financial asset within the range of
EURNil - EUR20.3 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
EUR7.6 million - EUR9.9 million.
Note 17 - Assets classified as held for sale
30 June 31 December
2023 2022
EUR'm EUR'm
------------------------------ ------- -----------
Assets
Property, plant and equipment 19.4 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 EUR20.0 million. Accordingly, the real estate was classified as
held for sale. Of the total consideration, EUR1.0 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 18 - Shareholders' equity
A. Share capital
Share capital is comprised of no par value shares as
follows:
30 June 31 December
2023 2022
Number Number
of shares of shares
------------------- ----------- -----------
Authorised1 N/A N/A
Issued and paid up 309,294,243 309,294,243
------------------- ----------- -----------
1 The Company has no authorised share capital, but it is
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 Shares Shares
Number Treasury held by held by
of shares shares 2014 EBT 2021 EBT Total
-------------------- ------------ ----------- --------- ----------- -----------
At 1 January 2022 299,244,326 2,937,550 84,028 7,028,339 309,294,243
Exercise of options 598,666 - (84,028) (514,638) -
-------------------- ------------ ----------- --------- ----------- -----------
At 30 June 2022 299,842,992 2,937,550 - 6,513,701 309,294,243
Exercise of options 1,145,324 - - (1,145,324) -
-------------------- ------------ ----------- --------- ----------- -----------
At 31 December 2022 300,988,316 2,937,550 - 5,368,377 309,294,243
Transfer of shares - (2,937,550) - 2,937,550 -
Exercise of options 2,915,544 - - (2,915,544) -
-------------------- ------------ ----------- --------- ----------- -----------
At 30 June 2023 303,903,860 - - 5,390,383 309,294,243
-------------------- ------------ ----------- --------- ----------- -----------
B. Employee Benefit Trust
2014 EBT
In 2014, the Group established an Employee Benefit Trust (2014
EBT) by acquiring 5,517,241 shares for a total of EUR48.5 million.
As at 30 June 2023, no shares were outstanding under the 2014
EBT.
2021 EBT
In 2021 the Company transferred 7,028,339 shares held by the
Company in treasury to the Employee Benefit Trust (2021 EBT) for a
total of EUR22.6 million. In 2023 the Company transferred 2,937,550
shares held by the Company in treasury to the 2021 EBT for a total
of EUR12.5 million.
During the six month period ended 30 June 2023, 2,915,544 shares
were issued at a cost of EUR9.4 million. As at 30 June 2023, a
balance of 5,390,383 shares remains in the 2021 EBT with a cost of
EUR20.3 million.
C. Share options exercised
During the period 3,058,590 share options were exercised, of
which 143,046 were cash settled (six months ended 2022:
34,904).
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:
Reserve Description and purpose
-------------------------- -----------------------------------------------------
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
Put/call options reserve Fair value of put/call options as part of business
acquisition
Foreign exchange reserve Gains/losses arising on retranslating the net
assets of overseas operations
Employee termination Gains/losses arising from the actuarial remeasurement
indemnities of the employee termination indemnities
Non-controlling interest The portion of equity ownership in a subsidiary
not attributable to the owners of the Company
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income
-------------------------- -----------------------------------------------------
Note 19 - Loans and borrowings
The main credit facility of the Group is a revolving credit
facility (RCF) up to EUR277.0 million and is available until
October 2025, with an option to extend by 12 months. Interest
payable on the loan is based on SONIA based on the currency of each
withdrawal. As at the reporting date the credit facility drawn
amounted to EUR45.9 million (31 December 2022: EURNil).
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 12 months ended 30 June 2023 (12 months ended 31 December 2022:
less than 3.5:1).
-- Interest cover: Adjusted EBITDA/Interest to be over 4:1 for
the 12 months ended 30 June 2023 (12 months ended 31 December 2022:
over 4:1).
As at 30 June 2023 and 31 December 2022 the Group met these
financial covenants.
Note 20 - Bonds
2018 Bond 2019 Bond 2023 Bond Total
EUR'm EUR'm EUR'm EUR'm
-------------------------------- --------- --------- --------- -------
At 1 January 2022 527.6 347.4 - 875.0
Release of capitalised expenses 0.7 0.3 - 1.0
-------------------------------- --------- --------- --------- -------
At 30 June 2022 528.3 347.7 - 876.0
Repayment of bonds (330.0) - - (330.0)
Release of capitalised expenses 1.3 0.3 - 1.6
-------------------------------- --------- --------- --------- -------
At 31 December 2022 199.6 348.0 - 547.6
Issue of new bond - - 297.3 297.3
Release of capitalised expenses 0.3 0.3 - 0.6
-------------------------------- --------- --------- --------- -------
At 30 June 2023 199.9 348.3 297.3 845.5
-------------------------------- --------- --------- --------- -------
30 June 31 December
2023 2022
EUR'm EUR'm
------------ ------- -----------
Split to:
Non-current 645.6 348.0
Current 199.9 199.6
------------ ------- -----------
845.5 547.6
------------ ------- -----------
Bonds
(a) 2018 Bond
On 12 October 2018, the Group issued EUR530.0 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 EUR523.4 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 partially
repaid the 2018 Bond by EUR330 million. Playtech has served notice
and subsequently redeemed at par the outstanding 2018 Bond with a
EUR200.0 million balance in July 2023.
(b) 2019 Bond
On 7 March 2019, the Group issued EUR350.0 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 EUR345.7 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 EUR300.0 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 EUR297.3 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 30 June 2023 and 31 December 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 21 - 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 30 June 2023 are
shown below:
Legal and
regulatory Contractual Other Total
EUR'm EUR'm EUR'm EUR'm
-------------------------------------- ----------- ----------- ------ ------
Balance at 1 January 2023 7.3 4.2 2.4 13.9
Provisions made during the period 0.2 2.2 0.4 2.8
Provisions used during the period (0.2) - (0.2) (0.4)
Provisions reversed during the period (1.1) - - (1.1)
-------------------------------------- ----------- ----------- ------ ------
Balance at 30 June 2023 6.2 6.4 2.6 15.2
-------------------------------------- ----------- ----------- ------ ------
Legal and
regulatory Contractual Other Total
EUR'm EUR'm EUR'm EUR'm
----------------- ----------- ----------- ------ ------
31 December 2022
Non-current 7.3 0.3 2.4 10.0
Current - 3.9 - 3.9
----------------- ----------- ----------- ------ ------
7.3 4.2 2.4 13.9
----------------- ----------- ----------- ------ ------
30 June 2023
Non-current 6.2 0.3 2.5 9.0
Current - 6.1 0.1 6.2
----------------- ----------- ----------- ------ ------
6.2 6.4 2.6 15.2
----------------- ----------- ----------- ------ ------
Provision for legal and regulatory issues
The Group is subject to proceedings and potential claims
regarding complex legal matters (including those related to
previous acquisitions), 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 licenses 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 to 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 22 - Contingent consideration
30 June 31 December
2023 2022
EUR'm EUR'm
------------------------------------------- ------- -----------
Non-current contingent consideration
Acquisition of Aus GMTC PTY Ltd 3.4 2.1
Other acquisitions 0.4 0.2
------------------------------------------- ------- -----------
Total non-current contingent consideration 3.8 2.3
------------------------------------------- ------- -----------
Current contingent consideration
Other acquisitions 0.7 0.6
------------------------------------------- ------- -----------
Total current contingent consideration 0.7 0.6
------------------------------------------- ------- -----------
Total contingent consideration 4.5 2.9
------------------------------------------- ------- -----------
The maximum contingent consideration payable is as follows:
30 June 31 December
2023 2022
EUR'm EUR'm
-------------------------------- ------- -----------
Acquisition of Aus GMTC PTY Ltd 45.9 46.7
Other acquisitions 1.1 0.8
-------------------------------- ------- -----------
47.0 47.5
-------------------------------- ------- -----------
Note 23 - Deferred tax
The movement on the deferred tax is as shown below:
EUR'm
-------------------------------------------------------------- -------
Balance at 1 January 2023 (12.3)
Adjustment on initial recognition IAS 12 (Restated - Note 4A) 1.5
-------------------------------------------------------------- ---------
Balance at 1 January 2023 - as restated (10.8)
On business combinations (0.8)
Charge to profit or loss (Note 13) (51.6)
-------------------------------------------------------------- -------
At 30 June 2023 (63.2)
-------------------------------------------------------------- -------
30 June 31 December
2023 2022
EUR'm EUR'm
----------------------- ------- -----------
Split as:
Deferred tax liability (146.2) (124.8)
Deferred tax asset 83.0 114.0
----------------------- ------- -----------
(63.2) (10.8)
----------------------- ------- -----------
Deferred tax assets and liabilities are offset only when there
is a legally enforceable right of offset, in accordance with IAS
12.
As at 30 June 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
6 and 13 for the assessment performed on the recognition of
deferred tax in the period.
Details of the deferred tax outstanding as at 30 June 2023 and
31 December 2022 are as follows:
30 June 31 December
2023 2022
EUR'm EUR'm
----------------------------------------------- ------- -----------
Deferred tax recognised on Group restructuring 52.0 56.8
Tax losses 51.6 75.9
Other temporary and deductible differences (166.8) (143.5)
----------------------------------------------- ------- -----------
Total (63.2) (10.8)
----------------------------------------------- ------- -----------
Details of the deferred tax, amounts recognised in profit or
loss are as follows:
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
------------------------------------------- ---------- ----------
Accelerated capital allowances (0.8) 0.3
Employee pension liabilities - (0.3)
Other temporary and deductible differences (26.7) (14.9)
Leases - (0.1)
Tax losses (24.1) 2.1
------------------------------------------- ---------- ----------
Total (51.6) (12.9)
------------------------------------------- ---------- ----------
Note 24 - 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 period, Group companies entered into the following
transactions with related parties which are not members of the
Group:
Six months Six months
ended 30 ended 30
June 2023 June 2022
EUR'm EUR'm
-------------------------- ---------- ----------
Revenue
Investments in associates 96.4 63.4
-------------------------- ---------- ----------
Interest income
Investments in associates 0.7 0.3
-------------------------- ---------- ----------
Dividend income
Investments in associates 0.9 -
-------------------------- ---------- ----------
Operating expenses
Investments in associates 0.6 0.1
-------------------------- ---------- ----------
The revenue from investments in associates includes income from
Caliplay, Galera, Wplay, Onjoc and Tenbet. The interest income
relates to the same companies except Caliplay.
The following amounts were outstanding at the reporting
date:
30 June 31 December
2023 2022
EUR'm EUR'm
-------------------------------------------- ------- -----------
Trade receivables
Associates 37.3 20.5
-------------------------------------------- ------- -----------
Loans and interest receivable - current
Associates 1.2 3.4
-------------------------------------------- ------- -----------
Loans and interest receivable - non-current
Associates 45.2 29.0
-------------------------------------------- ------- -----------
Trade payables
Associates 0.1 -
-------------------------------------------- ------- -----------
The loans and interest receivables above do not include the
expected credit losses. For the period ended 30 June 2023, the
Group recognised a provision for expected credit losses of EUR0.1
million relating to amounts owed by related parties in less than
one year (31 December 2022: EUR0.1 million) and EUR1.8 million (31
December 2022: EUR1.1 million) for more than one year.
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 EUR11.2
million (H1 2022: EUR4.5 million).
Note 25 - Reconciliation of movement of liabilities to cash
flows arising from financing activities
Liabilities
-------------------------------------------------------------------------
Interest
on Contingent
loans and consideration
Loans and borrowings and redemption Lease
borrowings Bonds and bonds liability liabilities Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Balance at 1 January 2023 - 547.6 7.3 2.9 85.8 643.6
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Changes from financing
cash flows
Interest paid on bonds
and loans and borrowings - - (12.4) - - (12.4)
Proceeds from loans and
borrowings 48.0 - - - - 48.0
Proceeds from the issuance
of bonds - 297.3 - - - 297.3
Payment of contingent
consideration - - - (0.1) - (0.1)
Principal paid on lease
liability - - - - (11.4) (11.4)
Interest paid on lease
liability - - - - (2.5) (2.5)
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Total changes from financing
cash flows 48.0 297.3 (12.4) (0.1) (13.9) 318.9
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Other changes
Liability related
New leases - - - - 7.2 7.2
Interest on bonds and
loans and borrowings - 0.6 12.4 - - 13.0
Interest on lease liability - - - - 2.5 2.5
Movement in contingent
consideration - - - 1.3 - 1.3
On business combinations - - - 0.4 1.9 2.3
Foreign exchange difference (2.1) - - - 0.1 (2.0)
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Total liability-related
other changes (2.1) 0.6 12.4 1.7 11.7 24.3
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Balance at 30 June 2023 45.9 845.5 7.3 4.5 83.6 986.8
----------------------------- ----------- ------- ----------- --------------- ------------ -------
Liabilities
------------------------------------------------------------------------
Interest
on Contingent
loans and consideration
Loans and borrowings and redemption Lease
borrowings Bonds and bonds liability liabilities Total
EUR'm EUR'm EUR'm EUR'm EUR'm EUR'm
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Balance at 1 January 2022 167.1 875.0 10.4 11.0 95.3 1,158.8
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Changes from financing
cash flows
Interest payable on bonds
and loans and borrowings - - (19.5) - - (19.5)
Payment of contingent
consideration and redemption
liability - - - (4.0) - (4.0)
Principal paid on lease
liability - - - - (11.7) (11.7)
Interest paid on lease
liability - - - - (2.9) (2.9)
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Total changes from financing
cash flows - - (19.5) (4.0) (14.6) (38.1)
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Other changes
Liability related
New leases - - - - 4.4 4.4
On acquisitions - - - 0.7 - 0.7
Interest on bonds, bank
borrowings and other borrowings - 1.0 19.3 - - 20.3
Interest on lease liability - - - - 2.9 2.9
Movement in deferred and
contingent consideration
and redemption liability - - - (1.7) - (1.7)
Foreign exchange difference (3.0) - - 0.1 (0.2) (3.1)
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Total liability-related
other changes (3.0) 1.0 19.3 (0.9) 7.1 23.5
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Balance at 30 June 2022 164.1 876.0 10.2 6.1 87.8 1,144.2
--------------------------------- ----------- ------ ----------- --------------- ------------ -------
Note 26 - Events after the reporting date
In July 2023, the net proceeds from the issue of the 2023 Bond
were used for the repayment of the outstanding RCF amount of
EUR45.6 million and the 2018 Bond amount to EUR200.0 million.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR GZGGLMVZGFZZ
(END) Dow Jones Newswires
September 07, 2023 02:00 ET (06:00 GMT)
Playtech (LSE:PTEC)
Historical Stock Chart
From Jan 2025 to Feb 2025
Playtech (LSE:PTEC)
Historical Stock Chart
From Feb 2024 to Feb 2025
