Playtech
plc
("Playtech", the "Company", or the "Group")
Results for the six months
ended 30 June 2024
Excellent H1 2024
performance; B2B on track to meet medium-term target in
FY24
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
2024.
Financial summary1
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Reported
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Adjusted2
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H1 24
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H1 23
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H1 24
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H1 23
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€'m
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€'m
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Change %
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€'m
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€'m
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Change %
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Revenue
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906.8
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859.6
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5%
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906.8
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859.6
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5%
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EBITDA
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233.6
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207.3
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13%
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243.0
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219.9
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11%
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Post-tax profit3
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10.0
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3.1
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223%
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105.4
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85.7
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23%
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Diluted EPS
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3.2
€c
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1.0
€c
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220%
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33.6 €c
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27.5 €c
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22%
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Net
debt
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225.5
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248.2
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-9%
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Summary
· Adjusted EBITDA up 11% to €243.0 million, driven by strong
performance across the B2B business.
· Good execution in B2B led to impressive top-line growth in the
Americas; further benefitted from high operating leverage and tight
cost control.
· Agreement reached on revised strategic agreement with
Caliplay.
· Agreed sale of Snaitech for an enterprise value of €2.3
billion, with €1.7 billion - €1.8 billion to be returned to
shareholders.
· On course to deliver FY 2024 Adjusted EBITDA slightly ahead of
expectations4.
· On
track to be within the B2B Adjusted EBITDA medium-term target range
of €200 million to €250 million in FY 2024, earlier than
anticipated.
Divisional highlights
B2B
· Very
strong B2B performance, with H1 2024 revenue up 14% to €382.2
million (H1 2023: €334.5 million).
· High
operating leverage and a focus on cost control meant B2B Adjusted
EBITDA increased by 38% to €112.3 million (H1 2023: €81.3 million),
with Adjusted EBITDA margins up 510 bps.
· Continued strength within the Americas region, with revenue
growth of 42% to €141.6 million (H1 2023: €99.7 million). Caliplay
remains the key driver of growth, with increasing contributions
from Wplay in Colombia, NorthStar in Canada and Parx in the US.
Brazil continues to grow very strongly as it moves towards
regulating.
· Significant progress made on executing the US and Canada
strategy:
- Revenue within the US and Canada is up over 200% versus H1
2023.
- Expanded relationship with Rush Street and BetMGM as they
launch in further states; launched with DraftKings in multiple
states; successfully migrated Ocean Casino Resorts onto Playtech's
platform.
- Investment continues with headcount now over 270 as at end of
H1 2024; with plans to increase this significantly in H2 2024 to
meet expected demand.
- Increase in the fair value of the equity investment in Hard
Rock Digital to €118.5 million (FY 2023: €77.0 million) due to the
performance of the business, aided by the relaunch of the Florida
operations. Dividends received in H1 2024 of €1.6 million (H1 2023:
€Nil).
· Live
continues to see strong demand across key geographies:
- Revenue from regulated markets up 17% in H1 2024 versus H1
2023.
- Signed a new strategic partnership with MGM Resorts to produce
proprietary, live casino content directly from the gaming floor at
two of its resorts on the Las Vegas Strip
· Further progress diversifying revenue and customer base
through the SaaS business model; revenues grew 44% to €33 million
in H1 2024; on track to be within our medium-term revenue target of
€60 million - €80 million in FY 2024, earlier than
expected.
· Impairment loss of €112.3 million recognised in H1 2024 to
reflect the impact on sports revenue due to the terms of the
revised strategic agreement with Caliplay.
B2C
· Revenue within the B2C division was flat at €532.4 million (H1
2023: €532.1 million). Adjusted EBITDA declined by 6% to €130.7
million (H1 2023: €138.6 million).
·
Snaitech revenue declined by 1%
to €483.6 million (H1 2023: €488.4 million). Good growth in wagers
against a tough comparative in H1 2023; offset by customer-friendly
sporting results at the start of the year.
- Retail revenue down 2% to €351.0 million (H1 2023: €357.0
million)
- Online revenue up 1% to €132.6 million (H1 2023: €131.4
million)
· The Snai brand maintained its number one market share position
(retail and online combined measured by GGR) across Italian betting
brands in H1 2024.
· HAPPYBET reported Adjusted EBITDA loss of €6.6 million (H1
2023: €-6.1 million). Austrian business to be closed in H2
2024.
· Sun Bingo and Other B2C saw 17% revenue growth to €39.9
million (H1 2023: €34.1 million) mainly due to the launch of a new
brand in H2 2023. Adjusted EBITDA was €2.3 million, down from €2.8
million in H1 23, due to higher marketing spend.
Corporate activity
· Agreement reached on revised strategic agreement with
Caliplay, providing clarity on the future relationship and a strong
platform to build on the significant growth delivered over the past
nine years.
· Definitive agreement reached for the sale of Snaitech to
Flutter:
- Cash
consideration of approximately €2,300 million calculated by
reference to a debt and cash-free valuation basis and assuming a
normalised level of working capital, representing an FY 2023 EV /
Adjusted EBITDA multiple of 9x
- Transaction expected to close by Q2 2025 following which
Playtech intends to return €1,700 million - €1,800 million to
shareholders by way of a special dividend with the final amount of
the special dividend to be determined with reference to the capital
needs of the ongoing Playtech business
- From
the proceeds, Playtech also intends to repay the outstanding amount
on the bond due March 2026 of approximately €350 million,
significantly strengthening the go-forward Group's balance
sheet.
Financial activity
· Reported post-tax profit of €10.0 million in H1 2024, up from
€3.1 million in H1 2023, due to the prior period including 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. H1 2024 included an impairment
related to sports, offset by an increase in fair values of equity
investments and derivative financial assets.
· Group net debt as at 30 June 2024 was €225.5 million,
resulting in leverage of 0.5x. On a proforma-basis adjusting for
cash received from Caliplay post-period end, leverage reduces to
0.2x.
Current trading and outlook
· A solid start to H2 with normal seasonality; on track to
deliver FY 2024 Adjusted EBITDA slightly ahead of
expectations 4.
· On track to be within our B2B Adjusted EBITDA medium-term
target range of €200 million to €250 million in FY 2024, earlier
than anticipated.
·
Strength of balance sheet further
improved by strong cash generation and cash received from Caliplay,
giving flexibility to pursue both organic and inorganic growth
opportunities.
· The
Board remains confident in Playtech's ability to execute on
multiple growth opportunities across its key markets.
Mor
Weizer, CEO, said:
"This set of results is further
proof of the excellent progress we've made this year. We've
executed our strategy to grow and improve the B2B business,
delivering broad-based growth with strong contributions across our
key markets, high operating leverage and tight cost control. We're
also delighted to have agreed a revised strategic agreement with
Caliplay, our partner in Mexico, which ensures we are well placed
to capture significant growth in the coming
years.
"Our plan to accelerate our presence
in the US and Canada is already delivering, with revenues trebling
in the period. We see a huge opportunity in this market and are
pleased to have supported multiple customers with their own growth
plans, while also delivering the first major milestone in our
partnership with Hard Rock Digital. With US customers now able to
experience Playtech-powered games in multiple states, soon our
customers outside the US will get the opportunity to play games
streamed direct from Las Vegas as part of our new agreement with
MGM Resorts.
"A couple of weeks ago, we announced
the sale of Snaitech to Flutter for €2.3 billion and our plan to
return €1.7 - 1.8 billion to shareholders. Snaitech has been a key
part of Playtech's growth in recent years and the team delivered
another solid performance in the first half, despite the impact of
customer-friendly sporting results. We are excited about what the
future holds for the remaining Playtech business and we see plenty
of opportunities ahead of us.
"We have started the second half of
the year well and are on track to be within our B2B Adjusted EBITDA
medium-term target range in FY 2024, earlier than expected. With a
clear strategy, a strong balance sheet and a great team behind us,
we remain very confident in Playtech's future
prospects."
- Ends -
For
further information contact:
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Playtech plc
Mor Weizer, Chief Executive
Officer
Chris McGinnis, Chief Financial
Officer
c/o Headland
Sandeep Gandhi, Head of Investor
Relations
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+44 (0) 20 3805 4822
+44 (0) 20 3805 4822
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Headland (PR adviser to Playtech)
Lucy Legh, Jack Gault
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+44 (0) 20 3805 4822
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1Totals in tables throughout this statement may not exactly
equal the components of the total due to rounding.
2Adjusted numbers relate to certain non-cash and one-off items,
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 8.
3Adjusted Profit refers to post-tax Profit from continuing
operations attributable to the owners of the Company after the
relevant adjustments as detailed above. Reported Profit refers to
post-tax Profit from continuing operations attributable to the
owners of the Company before adjustments.
4Including discontinued
operations as for FY 2024 results, Snaitech expected to be included
within discontinued operations. Expectations prior to trading statement issued on 16 September
2024.
Conference call and presentation
A presentation on the earnings will
be held today in person at 9.00am at the London Stock Exchange, 10
Paternoster Square, EC4M 7LS, and accessible via a live audio
webcast using this link:
https://www.investis-live.com/playtech/66e40b5be64efd1200125df9/pster
Analysts and investors can also dial
into the call using the following details:
United Kingdom (Local): +44 20 3936
2999
United Kingdom (Toll-Free): +44 800
358 1035
Global Dial-In Numbers
Access Code: 827736
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 with a listing
in the equity shares (commercial companies) category on the Main
Market of the London Stock Exchange, Playtech is a technology
leader in the gambling industry with over 7,900 employees across 20
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 online and
retail value chain. Playtech provides its technology on a B2B basis
to the industry's leading online and retail operators, land-based
casino groups and government sponsored entities such as lotteries.
The Playtech Group owns and operates Snaitech, one of the leading
sports betting and gaming companies in online and retail in
Italy.
Chief Executive Officer's
Review
Overview
The first half of 2024 saw Playtech
continue to make good progress on its strategic priorities. The
Company delivered Adjusted EBITDA ahead of expectations, driven
mainly by a strong performance in the B2B division.
Playtech's B2B business prioritises
opportunities in regulated or soon-to-be regulated markets, with a
strong focus on high-growth regions such as the US and Canada,
Latin America, and select European markets. A strong performance
across these regions helped the B2B segment to generate revenue of
€382.2 million in H1 2024, up 14% (+12% on a constant currency
basis) vs a year ago (H1 2023: €334.5 million). B2B Adjusted EBITDA
increased considerably, up 38% to €112.3 million (H1 2023: €81.3
million), driven by high operating leverage and tight cost
control.
Strategic progress continues to be
made in the fast-growing US market. Having previously laid the
foundations for future growth by signing deals with multiple
operators, 2024 saw a shift in focus towards execution and
delivery. In H1 2024, we launched with several operators across
multiple states including broadening our relationships with both
Rush Street and BetMGM, and launching with DraftKings, Golden
Nugget and Penn Entertainment in multiple states. Another highlight
was the migration of Ocean Casino Resort's online casino platform
onto Playtech's Player Account Management Plus system
(PAM+).
As announced in June 2024, Playtech
signed a new strategic partnership with MGM Resorts to produce
proprietary, live casino content directly from the gaming floor at
two of its resorts on the Las Vegas Strip. The partnership
demonstrates the attractiveness of Playtech's technology to global
brands, and our ability to bring to market innovative
concepts.
In Latin America, Playtech has
continued to see strong growth from Caliplay, which further
solidified its leadership position in Mexico. Our other strategic
agreements in Latin America also continue to perform well, with
growing contributions from Wplay in Colombia and Galerabet in
Brazil, in particular.
The resolution of the dispute with
Caliplay has been a key priority for us, and we were pleased to
announce earlier this month that we reached an agreement on the
terms of a revised strategic agreement with Caliplay. During the
past nine years, we have worked closely with Caliplay to create a
successful and rapidly growing digital business in Mexico. The new
agreement marks the beginning of an exciting new chapter that will
build on the impressive progress to date, with a view to driving
significant further growth for Caliplay in the future. See note 14
for further detail.
Playtech remains committed to
diversifying its B2B division by driving growth through the SaaS
business model. SaaS revenues grew 44% year on year to reach €33.0
million in H1 2024, as it remains on track to be within the
medium-term goal of €60 - €80 million in annual revenue in 2024,
earlier than expected.
Revenues from Playtech's B2C
business were broadly flat at €532.4 million (H1 2023: €532.1
million) and Adjusted EBITDA decreased by 6% to €130.7 million (H1
2023: €138.6 million) due to the impact of customer-friendly
sporting results in Snaitech, particularly at the start of the
year. On an underlying basis, Snaitech saw good growth in wagers
across both retail betting and online, whilst gaming machines
performance normalised in line with market trends.
As announced earlier this month, a
definitive agreement was reached for the sale of Snaitech to
Flutter for a total enterprise value of €2,300 million. Under
Playtech's ownership, Snaitech has grown into a high-quality
business with a leading position in the Italian sports betting and
gaming market. While Snaitech has been an important part of
Playtech's growth in recent years, the transaction provides a large
value creation event for shareholders following the fundamental
business model transformation achieved since acquiring Snaitech in
2018. It also provides the opportunity for significant further
upside from continued ownership of a pure-play B2B
business.
I'd like to take this moment to
extend my thanks to our talented colleagues around the world,
without whom this strong financial performance would not be
possible. The commitment and dedication they show to delivering
best-in-class customer service is integral to maintaining our
competitive advantage.
B2B
Regulated markets
The strategic focus of Playtech's
B2B business continues to be on opportunities in regulated or
soon-to-be-regulated markets, focusing on high-growth markets such
as the US, Canada, Latin America and certain parts of
Europe.
Regulated markets saw revenue growth
of 18% (16% on a constant currency basis) compared to H1
2023, driven by a
strong performance from Caliplay in Mexico and growing contributions from the US, Canada, Colombia, Italy
and Spain.
The Americas
Revenue from the Americas continued
to grow at an impressive rate, with H1 2024 revenue up 42% (37% at
constant currency) compared to H1 2023, with growth seen across
several operators and countries.
US
Accelerating the Group's presence in
the US remains a key strategic priority. Having laid the
foundations for future growth by signing deals with multiple
operators, in 2024 we have shifted our focus towards execution and
delivery, driving revenue growth and expanding our capacity to meet
the growing demand for our products.
In the first half of the year, we
launched with several operators across multiple states. We launched
with DraftKings and Golden Nugget for Casino and Live in Michigan,
New Jersey and Pennsylvania. Rush Street ("BetRivers" brand)
launched with Live Casino in Michigan, New Jersey and Pennsylvania.
We also expanded our relationship with BetMGM as it launched Casino
in Pennsylvania. Bet365 launched with both Casino and Live Casino
in Pennsylvania, while we also launched Casino and Live with Penn
Entertainment in both Michigan and Pennsylvania.
Ocean Casino Resort migrated its
online casino platform in New Jersey onto Playtech, going live with
both PAM+ and Casino, which marks another important step forward
for Playtech as it is the second operator to use our PAM+ in the
US. Platform deals are especially attractive given the value that
accrues to Playtech when operators use both our PAM+ platform and
content. Ocean Casino Resort is also the first US operator to go
live with our BetBuddy product, Playtech's AI-enabled safer
gambling technology.
We're pleased to report good
progress in our strategic partnership with Hard Rock Digital
("HRD"). Earlier in 2024, we successfully completed the first major
milestone in our partnership by delivering a range of games across
slots, table games and live dealer through HRD's proprietary Hard
Rock Bet platform in New Jersey.
We are working to increase our
capacity in our New Jersey, Michigan and Pennsylvania studios to
meet the rising demand for our products. Behind the Company's
growing physical presence are a growing number of employees, with
headcount now over 270 in the US at the end of H1 2024 and expected
to grow further in the second half of the year.
Canada
We are pleased with the progress of
our partnership with NorthStar, which delivered strong revenue
growth, albeit from a low base. With the help of Playtech's
technology and the strategic investment in 2023, as well as further
short-term funding and strategic marketing contributions in 2024,
NorthStar is well positioned for growth in Ontario and other
Canadian markets in the future.
Playtech has further grown its
exposure to the Canadian market having launched with Penn
Entertainment for Casino and Live Casino and with Rush Street for
Casino, both in Ontario in July 2024.
Latin America
Latin America continues to be a key
market for Playtech due to its strong growth profile. Revenue from
Latin America saw significant growth in the first half of 2024, up
34% (29% on a constant currency basis) to €128.3 million. This was
largely driven by another very strong performance from
Caliplay.
In Colombia, our strategic
partnership with Wplay continues to go from strength to strength,
enabling us to continue to benefit from this fast-growing market,
and we are well positioned to capture further upside as this market
continues to transition towards online.
We continue to see a shift towards
greater regulation across Latin America, including in Brazil, Peru
and Chile.
Brazil continues to advance on the
path towards a regulated market following the presidential signing
of new legislation for online gambling and sports betting at the
end of 2023. Brazil is anticipated to be a significant, high-growth
market given its large population and GDP. The market is set to
launch at the start of 2025, and Playtech is well positioned to
benefit early on given its strategic agreement with a leading
Brazilian operator, Galerabet. In addition to Galerabet, Playtech
has exposure to the Brazil market through supporting multiple B2B
licensees expected to successfully obtain a Brazilian B2C operator
licence.
In Peru, the gaming authority took
another step towards launching by accepting applications for a
licence, with the market set to launch at the end of 2024. Playtech
is well-placed and went live with Betsson for Casino, Live Casino
and Poker in July 2024. Similarly, in Chile, the online gambling
bill passed the Lower Chamber in February 2024 and is currently
awaiting approval from the Chilean Senate.
Europe
In Europe ex-UK, B2B revenue saw
growth of 1% (0% at constant currency), with strong growth in
Spain, Italy and Ireland. This was partly offset by declines in
Greece, due to a contract loss, and in Poland, due to an
EBITDA-neutral change in commercial terms with an
operator.
We continue to see strong uptake for
multiple products across some of our key markets:
· In
Italy, we launched Casino and Live Casino with Betway, Betsson and
NetBet.
· In
Spain, we launched Casino and Live Casino with GoldenPark and
Aupabet. We also launched Live Casino with Wanabet.
· In the
Netherlands, we launched with LeoVegas for both Casino and Live
Casino.
This broad set of agreements
demonstrates the attractiveness of Playtech's range of products,
the versatility and scalability of our business model and our
ability to grow customer relationships over time.
Investment in studio infrastructure
continues to remain a priority for the Live segment, including
within Europe, where additional tables have been added in our
facilities in Latvia, Romania and the UK, as demand for our content
continues to increase.
UK
UK revenues saw an increase of 5%
(+2% on a constant currency basis) compared to H1 2023. We saw good
growth across multiple licensees, partly offset by a decline in
revenue due to the impact of a customer insourcing their
self-service betting terminals.
The UK remains an important market
for Playtech and its customers, as well as being one of the largest
and most mature regulated markets in the world, and we continue to
launch new products with operators. For example, we launched Live
with both Rank and Jumpman in H1 2024.
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 the latest regulatory
developments in the UK. This should further cement Playtech's
reputation as the go-to platform for UK operators.
Unregulated markets
The Group's strategy is to focus on
both regulated and regulating markets, although Playtech continues
to have exposure to unregulated markets, many of which are expected
to regulate in the future. Revenue from these unregulated markets
was €71.6 million, down -1% (+1% on a constant currency basis)
versus H1 2023, with growth in Brazil, partly offset by a decline
in Asia, which is not a strategic market for the
Group.
The Company is excited about the
potential of the South African market, which has begun to regulate.
It is a nascent but fast-growing market, which permits sports
betting and live casino. Playtech has increased its exposure there,
launching with both Betway and another Betway brand, Jackpotcity,
for both Casino and Live Casino in 2024.
B2B
- driving growth through innovation
SaaS
Playtech is also looking to
diversify its revenue base through the SaaS business model, which
targets the long-tail of providers that don't have access to
PAM+.
I'm delighted that we are on track
to reach the lower end of our medium-term SaaS revenue target of
€60 million - €80 million by the end of 2024, earlier than
expected. In H1 2024, SaaS enjoyed strong growth of 44% compared to
H1 2023 to reach €33.0 million. We now have more than 500 brands
live following the launch of our SaaS model in 2019.
As the SaaS model provides a low
friction method of exposing operators to Playtech's technology, the
ability to cross and upsell other Playtech products is enhanced,
while 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
In June 2024, Playtech announced a
partnership with MGM Resorts International to launch Live Casino
content streamed directly from the gaming floors of two iconic Las
Vegas Strip properties: Bellagio and MGM Grand. Live Casino
content, branded as "MGM Live", will be licensed to operators for
end-user play in regulated markets throughout the world outside the
United States. The initial Live Casino offering will include
roulette and baccarat games and allow online players to participate
in the same game as players at the physical game table on the
casino floor. The partnership is set to expand further, with access
to several proprietary Playtech games as well as exclusive branded
TV game shows, celebrity-hosted trivia shows and immersive
entertainment experiences.
As the online gaming world expands,
there is an ever-increasing demand to deliver new, engaging and
immersive entertainment experiences for consumers.
In June 2024, Playtech launched
Football Fiesta to celebrate Euro 2024, incorporating network
leaderboards. This feature, which has proved extremely popular,
allows players across multiple operator sites to compete on a
single network leaderboard for a combined prize pool.
Throughout the first six months of
2024, Playtech designed and launched a number of highly successful
bespoke games for a number of our long-standing brands, including
Paddy Power and Entain. For Paddy Power, Playtech developed
'Paddy's Mansion Heist', an immersive Live gameshow. For Entain, we
partnered with ITV to launch 'The Chase', a fully bespoke Live
gameshow modelled on the popular gameshow.
Other
As a result of the potential impact
on sports revenue due to the revised terms of the strategic
agreement with Caliplay, an impairment loss of €112.3 million has
been recognised in H1 2024.
B2C
Playtech's B2C business includes
Snaitech, HAPPYBET and Sun Bingo and Other B2C operations. Overall,
B2C revenues remained broadly flat at €532.4 million (H1 2023:
€532.1 million). Adjusted EBITDA declined 6%, to €130.7 million (H1
2023: €138.6 million).
Snaitech
Revenue from Snaitech in Italy was
broadly stable at -1% in H1 2024 compared to H1 2023, while
Adjusted EBITDA saw a 5% decline compared to H1 2023. This overall
performance was primarily due to customer-friendly sporting results
at the start of the year.
The retail segment saw revenue and
Adjusted EBITDA decline by 2% and 7%, respectively, versus H1 2023.
The online business saw revenue growth of 1% and Adjusted EBITDA
decline by 3% in the same timeframe.
While retail betting sales were down
versus H1 2023, underlying volumes continue to see strong growth.
Gaming Machines revenue was down 2% versus H1 2023, with growth in
VLT revenue offset by a decline in AWP revenue. At the Adjusted
EBITDA level, retail margins declined by 100 bps versus H1 2023,
again due to the negative impact of the customer-friendly sporting
results.
The online business saw slight
growth in revenues, with casino performing well, offset by the
customer-friendly results seen in sports betting. On an underlying
basis, online saw solid growth in wagers in H1 2024 compared to H1
2023.
The under-penetration of the online
segment continues to be a powerful structural tailwind for the
business, with Snaitech well-placed to benefit given the strength
of the Snai brand, the continuous improvements to apps and
technology and a broadening of its content offering. Adjusted
EBITDA margins remained high at 50% in H1 2024 versus 52% in H1
2023, despite the customer-friendly sporting results at the start
of the year.
Snai maintained its number one
market-leading position (retail and online combined measured by
GGR) across Italian betting brands in H1 2024, reflecting its
reputation for consistent operational and brand
strength.
HAPPYBET
On the disposal of Snaitech,
ownership of HAPPYBET will be transferred from Snaitech to
Playtech. HAPPYBET revenues were down 7% in H1 2024 to €9.6 million
(H1 2023 €10.3 million), driven by the rationalisation of retail
sites in Germany and Austria. Adjusted EBITDA losses expanded to
€6.6 million in H1 2024, versus a loss of €6.1 million in H1 2023,
as a €2 million provision was taken in H1 2024 for
the closure of the Austrian business.
Sun Bingo and Other B2C
Sun Bingo and Other B2C saw 17%
revenue growth to €39.9 million (H1 2023: €34.1 million), mainly
driven by the launch of an additional brand in H2 2023. Adjusted
EBITDA declined by 18% to €2.3 million (H1 2023: €2.8 million), due
to an acceleration in marketing spend in H1 2024.
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.
In the first half of 2024, we
continued to make steady progress towards meeting our 2025
sustainability commitments. Highlights include:
-
Launched BetBuddy, Playtech's AI-enabled safer
gambling technology, with two new brands, bringing the total to 18
brands in 11 jurisdictions.
-
Enhanced Betbuddy's capabilities to track and
evaluate responsible gambling interactions with at risk
players.
-
Extended support for safer gambling research and
education programmes in the US including a new collaboration with
UNLV's International Gaming Institute (IGI), as well as ongoing
support for International Center for Responsible Gaming (ICGR) and
the National Council on Problem Gambling's Agility Grants
programme.
-
Committed to a near-term science-based emissions
target, a 50.4% reduction in scope 1, 2 and 3 emissions by 2032
from a 2022 base year. The Company also committed to reach net-zero
by 2040. In February 2024, both targets were validated by the
Science Based Targets initiative.
-
Recognised in the 4th edition of the Europe
Climate Leaders 2024 listing, published in April 2024.
-
Recognised for our progress in the most recent
FTSE Female Leaders Review as well as at the Women in Gaming
Awards.
Chief Financial Officer's
review
Overview
Group performance
Overall, Playtech delivered strong
financial results in H1 2024, with Adjusted EBITDA1 of €243.0 million (H1 2023: €219.9 million), growing
11% compared to H1 2023. Total reported revenue was €906.8 million
(H1 2023: €859.6 million), representing a 5% increase compared to
H1 2023.
The strong performance was primarily
driven by the B2B division's strong growth in regulated markets,
with B2B revenues growing by 14% from €334.5 million in H1 2023 to
€382.2 million in H1 2024. Adjusted EBITDA increased by 38% from
€81.3 million in H1 2023 to €112.3 million in H1 2024, aided by
high operating leverage and a focus on cost control. Strong growth
was seen in the Americas, with Caliplay remaining a key driver. The
good performance reflects the Group's strategy of focusing on
opportunities in regulated and soon-to-be-regulated markets and is
further analysed in this report.
In B2C, revenues of €532.4 million
remain consistent with the prior year (H1 2023: €532.1 million),
while Adjusted EBITDA of €130.7 million has decreased by 6% from
€138.6 million in H1 2023. Whilst wagers in retail and online in
Snaitech have increased period on period, this has been offset by
sporting results which have been advantageous to customers in the
early part of H1 2024 in particular, impacting both revenue and
Adjusted EBITDA. We also note that H1 2023 is a tough comparable
period, which benefitted from pent-up demand following the Football
World Cup.
In September 2024 the Group made two
significant announcements:
· Playtech entered into a revised strategic agreement with
Caliplay, which is expected to complete in Q1 2025. Under these
revised terms, Playtech will hold a 30.8% equity interest
in Caliente Interactive, Inc. ("Cali Interactive"), which will
be the new holding company of Caliplay, incorporated in the
United States and be entitled to receive dividends alongside other
shareholders. The revised arrangements are conditional upon Mexican
antitrust approval. There is an agreed standstill of all the
existing legal proceedings between Playtech, Caliente and Caliplay
and those proceedings will be dismissed in full once the revised
arrangements come into effect. Caliplay has resumed paying Playtech
its fees, with more than €150 million having been received in
September 2024, which included a settlement of the entirety of the
amount outstanding at 31 December 2023 and a significant portion of
the outstanding receivable relating to H1 2024. The remainder of
the amount due was paid into an escrow account and will be released
following completion of the revised strategic agreement and, in any
event, by the end of 2025.
· The
Group has entered into a definitive
agreement for the sale of Snaitech to Flutter for a total
enterprise value of €2,300 million on a debt and cash-free
valuation basis and assuming a normalised level of working capital.
IFRS 5 criteria has not been met as at 30 June 2024 and hence
Snaitech is included in the continuing business. It is expected to
be reclassified as discontinuing at year end.
Reported and Adjusted
Profit
Adjusted profit before tax grew by
9% to €151.2 million (H1 2023: €139.3 million), driven mainly by
the rise in Adjusted EBITDA and decrease in net financing costs,
partly offset by the increase in amortisation and
depreciation.
Reported profit before tax increased
to €93.5 million (H1 2023: €79.6 million) which, in addition to the
above, also includes the increase in the unrealised fair value of
derivative financial assets and equity investments. This was partly
offset by an impairment of the B2B Sports cash generating unit of
€112.3 million which mostly reflects reduced future sports revenues
from the revised Caliplay agreement and an impairment of €4.9
million in the IGS cash generating unit (H1 2023: no impairment).
Total post-tax reported profit was €10.0 million (H1 2023: €3.1
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 €421.2 million as at 30 June 2024 (31 December 2023:
€363.3 million). Net debt decreased to €225.5 million as at 30 June
2024 (31 December 2023: €282.8 million), and net debt/Adjusted
EBITDA decreased to 0.5x (31 December 2023: 0.7x).
On a proforma basis, adjusting for the cash
received from Caliplay post period end, net debt/adjusted EBITDA
reduces to 0.2x.
Group summary3
|
|
|
|
|
B2B
|
382.2
|
334.5
|
|
B2C
|
532.4
|
532.1
|
B2B licence fee -
intercompany*
|
|
|
|
Total Group revenue
|
906.8
|
859.6
|
|
|
|
|
|
|
|
|
|
Reconciliation from EBITDA to
Adjusted EBITDA:
|
|
|
|
EBITDA
|
233.6
|
207.3
|
|
Employee stock option
expenses
|
2.6
|
2.9
|
|
Professional fees
|
6.8
|
4.6
|
Impairment of investment and
receivables
|
|
|
|
|
|
|
|
|
|
|
*These are the B2B licence fees paid
from the B2C divisions to B2B.
The Group's total Adjusted EBITDA
increased by 11% to €243.0 million (H1 2023: €219.9 million). The
adjusted items between reported and Adjusted EBITDA are explained
in Note 8 of the interim financial statements.
Divisional performance
B2B
B2B revenue
|
|
|
|
|
|
|
Americas
|
141.6
|
99.7
|
42%
|
37%
|
|
- USA and Canada
|
13.3
|
4.0
|
233%
|
233%
|
|
- Latin America
|
128.3
|
95.7
|
34%
|
29%
|
|
Europe excluding UK
|
97.8
|
96.6
|
1%
|
0%
|
|
UK
|
66.0
|
62.9
|
5%
|
2%
|
|
|
|
|
|
|
|
Total regulated B2B
revenue
|
310.6
|
262.5
|
18%
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall, B2B revenues increased by
14% (12% on a constant currency basis), largely due to an increase
in the regulated B2B business.
Regulated B2B revenues2
increased by 18%, driven by an increase in regulated markets in the
Americas of 42% (37% on a constant currency basis).
In the US and Canada, revenue growth
was driven by expansions and the launching of various new licensees
as well as growth in Parx and NorthStar, as we are benefiting from
the signing and launch of multiple brands in recent years. Growth
in Latin America growth has been buoyed by the performance of
Caliplay, as well as contributions from Wplay in Colombia, while
the European market (excluding the UK) remains consistent. The loss
of the OPAP contract in Greece as well as a change in commercial
terms with an operator in Poland have been offset by growth in
Spain, Ireland and Italy as we continue to see an uptake in our
suite of products across key markets.
The UK is showing growth across
existing and new licensees mainly in Live. This growth was slightly
offset by a decline in revenue from Entain, as it continues to
insource its SSBTs.
B2B costs
|
|
|
|
|
|
Research and development
|
60.7
|
51.6
|
18%
|
|
General and
administrative
|
43.4
|
42.6
|
2%
|
|
Sales and marketing
|
10.7
|
10.4
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total B2B revenue and
costs
|
|
|
|
|
B2B revenue
|
382.2
|
334.5
|
14%
|
|
|
|
|
|
|
Total B2B Adjusted EBITDA
|
112.3
|
81.3
|
38%
|
|
|
|
|
|
Research and development ("R&D")
costs include, among others, employee-related costs, and office
expenses for associated staff as well R&D IT costs. Expensed
R&D costs increased by 18% to €60.7 million (H1 2023: €51.6
million), driven by a decrease in capitalized costs as well
as an increase in
employee-related costs. Capitalised development costs were
27% of total B2B R&D costs in H1 2024 (H1 2023: 35%). The
decrease in the ratio of costs capitalised is mostly affected by
the full impairment of the Sports CGU which effectively means the
Group has stopped capitalising costs in H1 2024.
General and administrative costs
include employee-related costs, proportion of office expenses,
consulting and legal fees, as well as corporate costs such as audit
and tax fees and listing expenses. These costs remain broadly flat
at €43.4 million (H1 2023: €42.6 million) as a result of the
Group's cost control strategy.
Similarly, sales and marketing costs
remain broadly in line with the prior period at €10.7 million (H1
2023: €10.4 million).
Operations costs include costs
relating to infrastructure and other operational projects, IT and
security, and general day-to-day operational costs, including
employee and office-apportioned costs and branded content fees.
These costs increased by 4% to €155.1 million (H1 2023: €148.6
million), driven mainly by the Asia bad debt provision of €12.8
million and the increase in costs as the Group continue to expand
its Live studios in North America, Peru, and Romania. These were
offset by lower branded game fees (following changes in commercial
terms with an operator in Poland with no effect on EBITDA), sports
operational costs and reseller commissions.
B2B Adjusted EBITDA
Total B2B Adjusted EBITDA increased
by €31.0 million, 38%, to €112.3 million (H1 2023: €81.3 million),
while EBITDA margin increased to 29% from 24% in H1 2023, driven by
the movement in revenue and costs, as described above.
B2C
|
|
|
|
|
|
Snaitech
|
|
|
|
|
Revenue*
|
483.6
|
488.4
|
-1%
|
|
|
|
|
|
|
Adjusted EBITDA
|
135.0
|
141.9
|
-5%
|
|
|
|
|
|
|
Sun Bingo and Other B2C
|
|
|
|
|
Revenue
|
39.9
|
34.1
|
17%
|
|
|
|
|
|
|
Adjusted EBITDA
|
2.3
|
2.8
|
-18%
|
|
|
|
|
|
|
HAPPYBET
|
|
|
|
|
Revenue
|
9.6
|
10.3
|
-7%
|
|
|
|
|
|
|
Adjusted EBITDA
|
(6.6)
|
(6.1)
|
|
|
|
|
|
|
|
B2C Adjusted EBITDA
|
130.7
|
138.6
|
-6%
|
|
|
|
|
|
* Includes
intercompany revenue from HAPPYBET of €0.7 million (H1 2023: €0.7
million).
** Includes intercompany
costs from Snaitech of €0.7 million (H1 2023: €0.7
million).
Snaitech
Revenues decreased 1% from the prior
period to €483.6 million (H1 2023: €488.4 million), with operating
costs increasing by 1% to €348.6 million (H1 2023: €346.5 million)
resulting in an Adjusted EBITDA decrease of 5% and a margin
decrease of 120 bps.
The Snaitech retail segment revenue
and Adjusted EBITDA declined by 2% and 7% respectively versus H1
2023, while the online business saw revenue growth of 1% and
Adjusted EBITDA decreased by 3%.
The reduction in Adjusted EBITDA
compared to H1 2023 largely stems from adverse sports betting
results and while revenues have marginally decreased, wager volumes
remain robust and grew by 12% in the retail betting segment and 5%
in the online segment compared to H1 2023. In addition, the online
market still provides further opportunity and Snaitech is well
positioned to capitalise as online penetration continues to
increase in Italy.
Sun Bingo and Other B2C
Revenue from the Sun Bingo business
increased by 17% to €39.9 million (H1 2023: €34.1 million).
Operating costs within Sun Bingo increased by 20% to €37.6 million
to promote an additional brand launched in H2 2023 (H1 2023: €31.3
million), leading to an Adjusted EBITDA of €2.3 million (H1 2023:
€2.8 million). The decrease in Adjusted EBITDA is purely attributed
to an acceleration of marketing spend in H1 to fuel further
growth.
Adjusted EBITDA continues to include the unwinding of
the minimum guarantee prepayment of €2.4 million in the current
year (H1 2023: €2.5 million), recognised as an expense over the
revised period of the contract which was renegotiated in
2019.
HAPPYBET
Rationalisation of retail outlets in
Austria and Germany in H1 gave rise to a 7% decrease in revenue to
€9.6 million (H1 2023: €10.3 million), with costs decreasing by 1%.
Adjusted EBITDA loss in the current period of €6.6 million (H1
2023: loss of €6.1 million) includes a €2.0 million provision for
the wind-down of the Austrian business which is expected to
complete in H2 2024 (H1 2023: included a €2.0 million expense for a
historic litigation settlement).
Below EBITDA items
Depreciation and
amortisation
Reported and adjusted depreciation
increased by 19% to €26.3 million (H1 2023: €22.1 million). After
deducting amortisation of acquired intangibles of €19.4 million (H1
2023: €20.6 million), adjusted amortisation increased by 24% to
€45.8 million (H1 2023: €36.9 million) following the renewal of
certain licences in Snaitech during H2 2023. The remainder of the
balance under depreciation and amortisation of €10.9 million (H1
2023: €10.1 million) relates to IFRS 16 Leases and the recognition
of the right-of-use asset amortisation.
Impairment of intangible
assets
The reported impairment of
intangible assets of €117.2 million (H1 2023: Nil) mainly relates
to:
the impairment of the IGS
cash-generating unit (CGU) of €4.9 million, following the
termination of two key contracts; and
· the
impairment of the Sports B2B CGU of €112.3 million, was driven by
the revised strategic agreement with Caliplay, which we expect to
impact the sports revenue generated from 2025, as well as expected
reductions in revenue from other sports licensees (H1 2023: €Nil,
H2 2023: impairment of €72.2 million).
Finance income and finance
costs
The reported and adjusted finance
income of €16.0 million (H1 2023: €6.0 million) relates to net
foreign exchange gain of €3.6 million (H1 2023: €3.0 million),
interest received of €10.7 million (H1 2023: €3.0 million) and
dividend income of €1.7 million, of which €1.6 million was from
Hard Rock Digital (H1 2023: €Nil).
Reported finance costs include
interest payable on bonds and other borrowings, bank facility fees,
bank charges, interest expense on lease liabilities and expected
credit losses on loan receivables. Reported finance costs increased
by 16% to €23.4 million (H1 2023: €20.2 million), mainly due to the
issuance of the 2023 Bond in June 2023. The difference between
adjusted and reported finance costs is the movement in contingent
consideration of €0.1 million (H1 2023: €1.3 million) relating to
the acquisition of AUS GMTC PTY Ltd.
Unrealised fair value changes in
derivative financial assets and equity investments
The unrealised fair value gain in
derivative financial assets of €51.3 million (H1 2023: loss of
€25.5 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, with
the most significant increase being a result of the uplift in the
fair value of the Playtech M&A Call Option in Caliplay of €43.1
million.
The unrealised fair value gain of
equity investments of €37.1 million (H1 2023: gain of €0.3 million)
is mostly driven by the uplift in value of our small minority
interest in Hard Rock Digital.
Further details on the fair value of
the various call options and equity investments are disclosed in
Note 14.
Taxation
A reported tax expense of €83.5
million (H1 2023: €76.5 million) arises on a reported profit before
tax of €93.5 million (H1 2023: €79.6 million) compared to an
expected charge of €23.4 million based on the UK headline rate of
tax for the period of 25%. The key items for which the reported tax
charge has been adjusted are: i) the derecognition of the deferred
tax assets relating to UK tax losses and deferred tax assets
resulting from a group restructuring of €36.5 million. These
deferred tax assets were derecognised as expected utilisation would
fall outside the forecasting period and therefore there is not
sufficient certainty they will be recovered; and ii) Unrealised
fair value changes of equity investments on which a deferred tax
liability is recognised of €6.3 million.
The total adjusted tax expense is
€45.8 million (H1 2023: €53.6 million) which arises on an Adjusted
Profit before tax of €151.2 million (H1 2023: €139.3 million). The
total adjusted tax expense of €45.8 million consists of an income
tax expense of €39.0 million (H1 2023: €21.4 million) and a
deferred tax expense of €6.8 million (H1
2023: €32.2 million).
The Group's effective adjusted tax
rate for the current period is 30.2%. This rate is higher than the
UK headline rate for the period of 25%. The key reasons for the
differences are a mix of profits including subsidiaries located in
territories where the tax rate is higher than the UK statutory tax
rate (which predominately relates to Snaitech based in Italy),
current year tax losses not recognised for deferred tax purposes
and expenses not deductible for tax purposes which include
impairment of intangibles.
Adjusted Profit
|
|
|
|
|
Reported profit
|
10.0
|
3.1
|
|
Employee stock option
expenses
|
2.6
|
2.9
|
|
Professional fees
|
6.8
|
4.6
|
|
Impairment of investment and
receivables
|
-
|
5.1
|
|
Fair value changes and finance costs
on contingent consideration
|
0.1
|
1.3
|
|
Fair value changes of equity
instruments
|
(37.1)
|
(0.3)
|
|
Fair value changes of derivative
financial assets
|
(51.3)
|
25.5
|
|
Amortisation of intangible assets on
acquisitions
|
19.4
|
20.6
|
|
Impairment of intangible
assets
|
117.2
|
-
|
|
Deferred tax on
acquisitions
|
(9.2)
|
(4.0)
|
|
Derecognition of brought forward
deferred tax asset
|
25.8
|
23.4
|
|
Derecognition of brought forward
deferred tax asset on group restructuring
|
10.7
|
-
|
|
Tax on unrealised fair value changes
of derivative financial assets
|
4.1
|
-
|
|
Deferred tax on unrealised fair
value changes of equity investment
|
6.3
|
-
|
Tax related to uncertain
position
|
|
|
|
|
|
|
The reconciling items in the table
above are further explained in Note 8 of the interim financial
statements. Reported post tax profit was €10.0 million (H1 2023:
€3.1 million), mainly due to the increase in the fair value of the
derivative financial assets and equity investments, partly offset
by an increase in CGU impairments.
Adjusted EPS (in Euro
cents)
|
|
|
|
|
Adjusted basic EPS from profit
attributable to the owners of the Company
|
34.6
|
28.4
|
Adjusted diluted EPS from profit
attributable to the owners of the Company
|
|
|
|
Basic EPS from profit attributable
to the owners of the Company
|
3.3
|
1.0
|
Diluted EPS from profit attributable
to the owners of the Company
|
|
|
Basic EPS is calculated using the
weighted average number of equity shares in issue during H1 2024 of
304.8 million (H1 2023: 302.3 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 2024 of 314.2
million (H1 2023: 311.3 million).
Cash flow
Cash conversion
Playtech continues to be
cash-generative and delivered operating cash flows of €160.2
million (H1 2023: €225.2 million.
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
|
|
|
|
|
Change in jackpot
balances
|
(2.9)
|
0.3
|
|
Change in client funds and security
deposits
|
(1.7)
|
11.0
|
|
Professional fees
|
6.8
|
4.6
|
ADM security deposit (Italian
regulator)
|
|
|
Adjusted net cash provided by
operating activities
|
|
|
|
|
|
|
Operating cash flows decreased from
€225.2 million in the prior period to €160.2 million in H1 2024,
with the decline driven by the outstanding Caliplay receivable as
further explained in Note 5 of the interim financial
statements.
Adjusted cash conversion of 62% (H1
2023: 105%) is shown after adjusting for jackpot balances, client
funds, professional fees and ADM security deposit. Again, the
decrease in cash conversion relates to Caliplay.
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 €75 .8 million (H1 2023: €186.2 million), key
items of which include:
• €72.0 million
(H1 2023: €57.3 million) used in the acquisition of property, plant
and equipment, intangibles and capitalised development
costs.
• In H1 2023,
€79.8 million for the acquisition of a small minority interest in
Hard Rock Digital and €41.3 million cash payment in relation to a
subcontractor option redemption.
Net cash outflows from financing
activities totalled €31.6 million (H1 2023: inflow of €318.9
million.)
• H1 2023 includes
net RCF withdrawal of €48.0 million and net proceeds received on
the new 2023 Bond issued of €297.3 million.
Balance sheet, liquidity and
financing
|
|
|
|
|
Cash and cash equivalents (net of
ECL)
|
569.5
|
516.2
|
Cash held on behalf of clients,
progressive jackpots and security deposits
|
|
|
Adjusted gross cash and cash
equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last 12 months Adjusted
EBITDA
|
|
|
Net debt/Adjusted EBITDA
ratio
|
|
|
Cash
The Group continues to maintain a
strong balance sheet with total cash and cash equivalents of €569.5
million at 30 June 2024 (31 December 2023: €516.2 million).
Adjusted gross cash, which excludes the cash held on behalf of
clients, progressive jackpots and security deposits, increased to
€421.2 million as at 30 June 2024 (31 December 2023: €363.3
million). The increase would have been higher, had it not been for
the Caliplay dispute, which was resolved in September 2024,
including a cash receipt of over €150 million (refer to Note
5).
Financing and net debt
As at 30 June 2024, the Group had
the following borrowing facilities:
• €350.0 million
2019 Bond (31 December 2023: €350.0 million) (4.25% coupon,
maturity 2026) which was raised in March 2019;
• Undrawn €277.0
million revolving credit facility (2022: undrawn); this facility is
available until October 2025, with an option to extend by 12
months; and
• €300.0 million
2023 Bond (31 December 2023: €300.0 million) (5.875% coupon,
maturity 2028) which was raised in June 2023.
Net debt, after deducting Adjusted
gross cash, decreased to €225.5 million (31 December 2023: €282.8
million), with net debt/Adjusted EBITDA falling to 0.5x (2022:
0.7x). On a proforma basis adjusting for cash received from
Caliplay in September 2024, net debt/adjusted EBITDA reduces to
0.2x.
Contingent consideration
Contingent consideration increased
to €8.2 million (31 December 2023: €6.2 million), mostly due to the
recognition of deferred consideration payable on the acquisition of
the Tenlot El Salvador option (refer to Note 14C). The existing
liability as at 30 June 2024 comprised the following:
|
|
Maximum
payable earnout
(per terms
of acquisition)
|
Contingent
consideration as at 30 June 2024
|
Payment
date (based on
maximum
payable earnout)
|
|
|
|
|
|
|
|
|
|
|
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 15 months from the approval of these financial
statements.
Given the recent announcement
published on 17 September 2024 on the definitive agreement for the
sale of Snaitech S.p.A. to Flutter Entertainment Holdings Ireland
Limited, the Directors have assessed two base case scenarios: one
where the sale doesn't complete and one where the sale completes
(expected by Q2 2025).
As per the going concern assessment
under Note 2, under both of these scenarios, 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.
1 Adjusted numbers
throughout relate to certain non-cash and one-off items. The Board
of Directors believes that the adjusted results represent more
closely the consistent trading performance of the business. A full
reconciliation between the actual and adjusted results is provided
in Note 8 of the interim 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.
Chris McGinnis
Chief Financial Officer
28 September 2024
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 UK adopted IAS 34 Interim Financial
Reporting; and
· the
interim management report as required by rules 4.2.7R and 4.2.8R of
the Disclosure Guidance and Transparency Rules, includes a fair
review of:
o important events during the six months ended 30 June 2024 and
their impact on the condensed consolidated financial statements;
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/
On behalf of the Board
Chris McGinnis
Chief Financial Officer
28 September 2024
INDEPENDENT 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 2024 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 2024
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 Revised International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK)
2410 (Revised)"). 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
(Revised), 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
28 September 2024
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 30 June 2024
|
|
Six months ended 30
June 2023
|
|
|
|
|
|
|
|
|
|
Revenue
|
7
|
906.8
|
906.8
|
|
859.6
|
859.6
|
|
Distribution costs before depreciation and
amortisation
|
|
(588.8)
|
(587.9)
|
|
(576.8)
|
(574.8)
|
|
Administrative expenses before depreciation and
amortisation
|
|
(72.5)
|
(64.0)
|
|
(72.3)
|
(63.0)
|
Impairment of financial assets
|
|
|
|
|
|
|
|
EBITDA
|
8
|
233.6
|
243.0
|
|
207.3
|
219.9
|
|
Depreciation and amortisation
|
|
(102.4)
|
(83.0)
|
|
(89.7)
|
(69.1)
|
|
Impairment of intangible assets
|
9
|
(117.2)
|
-
|
|
-
|
-
|
|
Profit on disposal of property, plant and
equipment and intangible assets
|
|
-
|
-
|
|
1.7
|
1.7
|
|
Finance income
|
10A
|
16.0
|
16.0
|
|
6.0
|
6.0
|
|
Finance costs
|
10B
|
(23.4)
|
(23.3)
|
|
(20.2)
|
(18.9)
|
|
Share of loss from associates
|
14A
|
(1.5)
|
(1.5)
|
|
(0.3)
|
(0.3)
|
|
Unrealised fair value changes of equity
investments
|
14B
|
37.1
|
-
|
|
0.3
|
-
|
Unrealised fair value changes of derivative
financial assets
|
|
|
|
|
|
|
|
Profit before taxation
|
8
|
93.5
|
151.2
|
|
79.6
|
139.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
Items that are or may be classified
subsequently to profit or loss:
|
|
|
|
|
|
|
|
Exchange gain/(loss) arising on translation of
foreign operations
|
|
5.4
|
5.4
|
|
(5.0)
|
(5.0)
|
Other comprehensive income/(loss)
for the period
|
|
|
|
|
|
|
Total comprehensive income/(loss)
for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period attributable
to:
|
|
|
|
|
|
|
|
Owners of the Company
|
|
10.2
|
105.6
|
|
3.1
|
85.7
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss)
attributable to:
|
|
|
|
|
|
|
|
Owners of the Company
|
|
15.6
|
111.0
|
|
(1.9)
|
80.7
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to
the ordinary equity holders of the Company
|
|
|
|
|
|
|
|
Profit or loss - total
|
|
|
|
|
|
|
|
Basic (cents)
|
12
|
3.3
|
34.6
|
|
1.0
|
28.4
|
|
|
|
|
|
|
|
|
1 Adjusted numbers
relate to certain non-cash and one-off items. The Board of
Directors believes that the adjusted results more closely represent
the consistent trading performance of the business. A full
reconciliation between the actual and adjusted results is provided
in Note 8.
Unaudited consolidated statement of changes in
equity
|
|
Additional
paid in
capital
€'m
|
Employee
termination
indemnities
€'m
|
|
Employee
Benefit
Trust
€'m
|
Foreign
exchange
reserve
€'m
|
Total
attributable
to equity
holders of
Company
€'m
|
Non-
controlling
interests
€'m
|
|
Balance at 1 January 2024
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the
period
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
10.2
|
-
|
-
|
10.2
|
(0.2)
|
10.0
|
Other comprehensive income for the
period
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss)
for the period
|
|
|
|
|
|
|
|
|
|
Transactions with the owners of the
Company
|
|
|
|
|
|
|
|
|
|
Contributions and
distributions
|
|
|
|
|
|
|
|
|
|
Exercise of options
|
-
|
-
|
(0.7)
|
0.7
|
-
|
-
|
-
|
-
|
|
Equity-settled share-based payment
charge
|
-
|
-
|
2.6
|
-
|
-
|
2.6
|
-
|
2.6
|
Total contributions and
distributions
|
|
|
|
|
|
|
|
|
|
Change in
ownership interests
|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary with non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.2)
|
(0.2)
|
|
Total changes
in ownership interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.2)
|
(0.2)
|
|
Total transactions with owners of
the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss)
for the period
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
Total contributions and
distributions
|
|
|
|
|
|
|
|
|
Total transactions with owners of
the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited consolidated balance sheet
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Property, plant and equipment
|
|
339.5
|
350.2
|
|
Right of use assets
|
|
68.7
|
71.0
|
|
Intangible assets
|
13
|
732.5
|
881.2
|
|
Investments in associates
|
14A
|
50.0
|
51.5
|
|
Other investments
|
14B
|
132.4
|
92.8
|
|
Derivative financial assets
|
14C
|
886.3
|
827.8
|
|
Trade receivables
|
|
2.0
|
1.9
|
|
Deferred tax asset
|
21
|
25.0
|
62.5
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
295.1
|
207.1
|
|
Other receivables
|
|
98.2
|
100.5
|
|
Inventories
|
|
8.4
|
6.8
|
Cash and cash equivalents
|
|
|
|
|
|
|
971.2
|
830.6
|
Assets classified as held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Additional paid in capital
|
|
611.8
|
611.8
|
|
Employee termination indemnities
|
|
0.4
|
0.4
|
|
Employee Benefit Trust
|
|
(17.1)
|
(17.8)
|
|
Foreign exchange reserve
|
|
(2.0)
|
(7.4)
|
|
|
|
|
|
|
Equity attributable to equity
holders of the Company
|
|
1,824.4
|
1,806.2
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Bonds
|
18
|
646.7
|
646.1
|
|
Lease liability
|
|
62.3
|
61.9
|
|
Deferred revenues
|
|
2.0
|
1.8
|
|
Deferred tax liability
|
21
|
164.6
|
161.6
|
|
Contingent consideration
|
20
|
6.0
|
5.8
|
|
Provisions for risks and charges
|
19
|
10.4
|
8.9
|
Other non-current liabilities
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
53.6
|
66.9
|
|
Lease liability
|
|
21.8
|
24.9
|
|
Progressive operators' jackpots and security
deposits
|
|
108.1
|
111.0
|
|
Client funds
|
|
40.2
|
41.9
|
|
Income tax payable
|
|
46.2
|
14.0
|
|
Gaming and other taxes payable
|
|
117.1
|
116.1
|
|
Deferred revenues
|
|
4.8
|
4.4
|
|
Contingent consideration
|
20
|
2.2
|
0.4
|
|
Provisions for risks and charges
|
19
|
1.8
|
0.6
|
|
|
|
|
|
|
|
|
|
|
Liabilities directly associated with assets
classified as held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND
LIABILITIES
|
|
|
|
The consolidated financial statements were
approved by the Board and authorised for issue on 28 September
2024.
Mor
Weizer
Chris McGinnis
Chief Executive Officer Chief
Financial Officer
Unaudited consolidated statement of cash
flows
|
|
|
Six
months
ended 30
June
2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
Profit after tax
|
|
10.0
|
3.1
|
|
Adjustments to reconcile net income to net cash
provided by operating activities (see below)
|
|
161.6
|
237.9
|
|
|
|
|
|
Net cash from operating
activities
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
Loans granted
|
|
(13.6)
|
(9.5)
|
|
Loans repaid
|
|
1.7
|
0.4
|
|
Interest received
|
|
9.3
|
2.9
|
|
Dividend income
|
|
1.7
|
-
|
|
Acquisition of subsidiaries/assets under
business combinations, net of cash acquired
|
|
(1.2)
|
(3.9)
|
|
Acquisition of property, plant and
equipment
|
|
(15.6)
|
(17.8)
|
|
Acquisition of intangible assets
|
|
(33.4)
|
(11.1)
|
|
Capitalised development costs
|
|
(23.0)
|
(28.4)
|
|
Acquisition of investments at fair value
through profit or loss
|
14B,C
|
(2.7)
|
(79.8)
|
|
Subcontractor option redemption
|
|
-
|
(41.3)
|
Proceeds from the sale of property, plant and
equipment and intangible assets
|
|
|
|
Net cash used in investing
activities
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
Interest paid on bonds and loans and
borrowings
|
|
(16.3)
|
(12.4)
|
|
Proceeds from loans and borrowings
|
|
-
|
48.0
|
|
Proceeds from the issuance of 2023 Bond, net of
issue costs
|
18
|
-
|
297.3
|
|
Payment of contingent consideration
|
|
(0.2)
|
(0.1)
|
|
Principal paid on lease liability
|
|
(12.7)
|
(11.4)
|
Interest paid on lease liability
|
|
|
|
Net cash (used in)/from financing
activities
|
|
|
|
|
INCREASE IN CASH AND CASH
EQUIVALENTS
|
|
52.8
|
357.9
|
|
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
|
|
516.2
|
426.5
|
Exchange gain on cash and cash
equivalents
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
|
|
|
|
|
|
|
|
|
|
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED FROM OPERATING ACTIVITIES
|
|
|
|
|
Income and expenses not affecting
operating cash flows:
|
|
|
|
|
Depreciation on property, plant and
equipment
|
|
26.3
|
22.1
|
|
Amortisation of intangible assets
|
13
|
65.2
|
57.5
|
|
Amortisation of right of use assets
|
|
12.1
|
11.4
|
|
Capitalisation of amortisation of right of use
assets
|
|
(0.8)
|
(0.8)
|
|
Impact on early termination of lease
contracts
|
|
(0.4)
|
(0.3)
|
|
Share of loss from associates
|
14A
|
1.5
|
0.3
|
|
Impairment of intangible assets
|
13
|
117.2
|
-
|
|
Impairment and expected credit losses on loans
receivable
|
|
0.9
|
1.9
|
|
Impairment of investment
|
14B
|
-
|
1.3
|
|
Changes in fair value of equity
investments
|
14B
|
(37.1)
|
(0.3)
|
|
Changes in fair value of derivative financial
assets
|
14C
|
(51.3)
|
25.5
|
|
Dividend income
|
|
(1.7)
|
-
|
|
Interest on bonds and loans and
borrowings
|
|
16.8
|
13.0
|
|
Interest on lease liability
|
|
2.4
|
2.5
|
|
Interest income
|
|
(10.8)
|
(3.7)
|
|
Income tax expense
|
|
83.5
|
76.5
|
|
Changes in equity-settled share-based
payment
|
|
2.6
|
2.9
|
|
Movement in contingent consideration
|
|
0.1
|
1.3
|
|
Unrealised exchange gain
|
|
(2.8)
|
(2.9)
|
|
Profit on disposal of property, plant and
equipment and intangible assets
|
|
(0.3)
|
(1.7)
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Change in trade receivables
|
|
(88.5)
|
12.9
|
|
Change in other receivables
|
|
8.6
|
7.2
|
|
Change in inventories
|
|
(1.5)
|
(0.8)
|
|
Change in trade payables
|
|
(14.8)
|
(4.6)
|
|
Change in progressive operators, jackpots and
security deposits
|
|
(2.9)
|
(0.3)
|
|
Change in client funds
|
|
(1.7)
|
(11.0)
|
|
Change in other payables
|
|
35.5
|
27.4
|
|
Change in provisions for risks and
charges
|
|
2.9
|
1.2
|
Change in deferred revenues
|
|
|
|
|
|
|
|
|
Notes to the financial statements
Note 1 - General
Playtech plc (the "Company") is an Isle of Man
company. The registered office is located at St George's Court,
Upper Church Street, Douglas, Isle of Man IM1 1EE. Playtech
plc is managed and controlled in the UK and, as a result, is UK tax
resident.
These are the condensed consolidated interim
financial statements ("interim financial statements") for the six
months ended 30 June 2024, 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 2024 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 2023
("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 28
September 2024.
Going concern
basis
In adopting the going concern basis
in the preparation of the financial statements, the Directors have
considered the current trading performance, financial position and
liquidity of the Group, the principal and emerging risks and
uncertainties together with scenario planning and reverse stress
tests. The Directors have assessed going concern over a 15-month
period to 31 December 2025 which aligns with the six-monthly
covenant measurement period.
Given the recent announcement
published on 17th of September 2024 on the definitive
agreement for the sale of Snaitech S.p.A. and some of its
subsidiaries (together "Snaitech B2C segment") to Flutter
Entertainment Holdings Ireland Limited, the above assessment was
completed on a base case scenario, which assumes the deal does not
happen, as well as a supplementary base case scenario with only the
Continuing Group's business following disposal, by assuming
completion of this transaction occurs in H1 2025.
|
|
|
|
|
Cash and cash equivalents
|
569.5
|
516.2
|
Cash held on behalf of clients, progressive
jackpots and security deposits
|
|
|
Adjusted gross cash and cash
equivalents
|
|
|
The increase in adjusted gross cash
and cash equivalents from €363.3 million at 31 December 2023 to
€421.2 million at 30 June 2024 is mainly the result of the
continued strong performance of the Group throughout the year,
partially offset by the uncollected debt from Caliplay, as
the dispute was still ongoing as at period end (refer to Note 5).
Following the post period end announcement released on
16th of September 2024, where both Playtech and Caliplay
have reached a mutual agreement, Caliplay has resumed paying the
Playtech Group its software and service fees with over €150
million of the unpaid fees received in
September 2024, with the remaining amount relating to 30 June 2024
being held in escrow, to be released on the completion of the
transaction (expected in Q1 2025) and, in any event, by the end of
2025.
The Directors have reviewed
liquidity and covenant forecasts for the Group under the base case
and supplementary base case scenario and have also considered
sensitivities in respect of potential downside scenarios, reverse
stress tests and the mitigating actions available to
management.
The modelling of downside stress
test scenarios assessed if there was a significant risk to the
Group's liquidity and covenant compliance position. This includes
risks such as not realising budget/forecasts across certain markets
and any potential implications of changes in tax and other
regulations.
Current financing arrangements
The Group's principal financing
arrangements as at 30 June 2024 include a revolving credit facility
(RCF) up to €277.0 million (which as at 30 June 2024 remains fully
undrawn), the 2019 Bond amounting to €350.0 million and the 2023
Bond amounting to €300.0 million, which are repayable in March 2026
and June 2028 respectively. Under the base case scenario the RCF is
available until October 2025, with the Group having the option to
extend by 12 months. Under the supplementary base case scenario the
current RCF is available until the Snaitech B2C segment deal
completes.
The RCF is subject to certain
financial covenants which are tested every six months on a rolling
12-month basis, as set out in Notes 17 and 18. As at 30 June
2024, 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 2024 (2023: less than 3.5:1).
• Interest
cover: Adjusted EBITDA/Interest to be over 4:1 for the 12 months
ended 30 June 2024 (2023: over 4:1).
The Bonds only have one financial
covenant, being the Fixed Charge Coverage Ratio (same as the
Interest cover ratio for the RCF), which should equal or be greater
than 2:1.
Base case scenario
If the Group's results and cash
flows are in line with its base case projections as approved by the
Board, it would not be in breach of the financial covenants for a
period of no less than 15 months from approval of these financial
statements (the "relevant going concern period"). This period
covers the bank reporting requirements for June 2025 and December
2025. Under the base case scenario, the Group would not need to
utilise its RCF facility over the going concern period.
Furthermore, following receipt of
bank consent for the Snaitech B2C segment deal, the option to
request an extension of the RCF was deferred to December 2024
(previously August 2024). If, on the remote probability this is not
extended or only extended at a reduced facility (ultimately a
decision of the lenders) then the Group is still comfortable that
it has sufficient liquidity to be able to meet its financial
liabilities as they fall due, over the relevant going concern
period, without utilising the RCF.
Base case scenario stress test
The stress test assumes a worst-case
scenario for the entire Group which includes additional
sensitivities around Italy, the Americas and Asia, but with
mitigations available (including salary bonus and capital
expenditure reductions) if needed. Under this scenario, and due to
the mitigation options available, the impact on Adjusted EBITDA is
not material and the Group would still comfortably meet its
covenants. From a liquidity perspective the Group would still not
need to utilise the RCF.
The Group has also considered any
matters outside of the going concern period, such as the renewal of
the Italian licences which will result in a material cash
outflow. This is currently expected to fall outside of the going
concern period; however, should payment be required in the going
concern period or shortly after, this does not give rise to any
concerns over liquidity or covenant compliance.
Base case scenario reverse stress test
The reverse stress test was used to
identify the reduction in Adjusted EBITDA required that could
result in either a liquidity event or breach of the RCF and bond
covenants.
As a result of completing this
assessment, without considering further mitigating actions,
management considered the likelihood of the reverse stress test
scenario arising to be remote. In reaching this conclusion,
management considered the following:
• current
trading is performing above the base case;
• if the
Group continues in its current form Adjusted EBITDA would have to
fall by 85% in the 12 months to 31 December 2024, 83% in the 12
months to 30 June 2025 and 82% in the year ending 31 December 2025,
compared to the base case, to cause a breach of covenants;
and
• in
the event that revenues decline to this point to drive the decrease
in Adjusted EBITDA, additional mitigating actions are available to
management which have not been factored into the reverse stress
test scenario.
Supplementary base case scenario
Given the recent announcement
published on 17th of September 2024 on the definitive
agreement for the sale of Snaitech B2C segment, the Directors have
also assessed a supplementary base case scenario with only the
Continuing Group's business following disposal, considering all
relevant conditions and parameters required, and assuming the deal
completes in H1 2025.
The existing RCF (which is not
expected to be utilised under the supplementary scenario) will be
restructured to a new lower facility, with revised covenants.
Further details on the new facility amount and financial covenants
linked to the new RCF cannot be determined at this preliminary
stage, therefore financial covenants tested under this scenario
include only the Bond financial covenant. The Group is confident
that a new RCF will be established which will become effective
immediately post completion of the sale, with positive initial
conversations being had with existing and potential new lenders
already.
If the Continuing Group's results
and cash flows are in line with its base case projections as
approved by the Board, it would not be in breach of the bond
financial covenants for a period of no less than 15 months from
approval of these interim financial statements. In order for a
breach to occur, the Adjusted EBITDA of the base case Continuing
Group's forecast for the last twelve months ending 31 December
2024, 30 June 2025 and 31 December 2025 would have to drop by 68%,
58% and 56% respectively for a breach to occur, a probability that
is considered remote as it ignores mitigating actions available to
the Group.
Conclusion
Under both scenarios above, 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 in
preparing 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 includes Euro, United
States Dollar and British Pound. All amounts have been rounded to
the nearest million, unless otherwise indicated.
Note 4 - New standards, interpretations and
amendments adopted by the Group
The accounting policies adopted in
the preparation of the interim condensed consolidated financial
statements are consistent with those followed in the preparation of
the Group's annual consolidated financial statements for the year
ended 31 December 2023, except for the adoption of new standards
effective as of 1 January 2024. The Group has not early adopted any
standard, interpretation or amendment that has been issued but is
not yet effective.
Several amendments apply for the
first time in 2024, but do not have an impact on the interim
condensed consolidated financial statements of the
Group.
Amendments to IAS 7 and IFRS 7 - Statement of
Cash Flows and Supplier Finance Arrangements
In May 2023, the IASB issued
amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures to clarify the characteristics of supplier
finance arrangements and require additional disclosure of such
arrangements. The disclosure requirements in the amendments are
intended to assist users of financial statements in understanding
the effects of supplier finance arrangements on an entity's
liabilities, cash flows and exposure to liquidity risk.
The transition rules clarify that an
entity is not required to provide the disclosures in any interim
periods in the year of initial application of the amendments. Thus,
the amendments had no impact on the Group's interim condensed
consolidated financial statements.
Amendments to IFRS 16: Lease Liability in a
Sale and Leaseback
In September 2022, the IASB issued
amendments to IFRS 16 to specify the requirements that a
seller-lessee uses in measuring the lease liability arising in a
sale and leaseback transaction, to ensure the seller-lessee does
not recognise any amount of the gain or loss that relates to the
right of use it retains. The amendments had no impact on the
Group's interim condensed consolidated financial
statements.
Amendments to IAS 1: Classification of
Liabilities as Current or Non-current
In January 2020 and October 2022,
the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to
specify the requirements for classifying liabilities as current or
non-current. The amendments clarify:
• What is meant by a right to defer
settlement
• That a right to defer must exist
at the end of the reporting period
• That classification is unaffected
by the likelihood that an entity will exercise its deferral
right
• That only if an embedded
derivative in a convertible liability is itself an equity
instrument would the terms of a liability not impact its
classification.
In addition, a requirement has been
introduced whereby an entity must disclose when a liability arising
from a loan agreement is classified as non-current and the entity's
right to defer settlement is contingent on compliance with future
covenants within twelve months. The amendments had no impact on the
Group's interim condensed consolidated financial
statements.
Note 5 - Significant accounting judgements,
estimates and assumptions
In preparing these consolidated financial
statements, management has made judgements and estimates that
affect the application of the Group's accounting policies and the
reported amounts of assets, liabilities, income and expenses.
Actual events may differ from these estimates.
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.
Judgements
Update on Caliplay dispute from 31 December
2023
Background
Following the announcement made on 16 September
2024 on the revised Tecnologia en Entretenimiento Caliplay,
S.A.P.I. ("Caliplay") agreement, the following legal proceedings
are on an agreed standstill and will be dismissed in full once the
revised arrangements come into effect:
· As per the public
announcement released by Playtech on 6 February 2023, the Group,
through its subsidiary, PT Services Malta Limited ("PT Malta"), is
seeking a declaration from the English Courts to obtain
clarification on a point of disagreement between Caliplay and PT
Malta in relation to the Caliente Call Option. The Caliente Call
Option is an option held by Caliplay where, for 45 days after the
finalisation of Caliplay's 2021 accounts, Caliplay could redeem PT
Malta's additional B2B services fee or (if the Playtech Call
Option had been exercised at that time) Caliente would have the
option to acquire PT Malta's 49% stake in Caliplay. The Group
believes the Caliente Call Option has expired and first referred to
its expiry having taken place in its interim report for the
six-month period ended 30 June 2022, which was published on 22
September 2022. The Group has not changed its position with regards
expiry. If the Caliente Call Option was declared as being
exercisable and was exercised, this would extinguish the Playtech
Call Option and the Playtech M&A Call Option (refer to Note 14A
for details on these option arrangements).
· From H2 2023 the
dispute with Caliplay also included litigation in relation to the
B2B licensee fees and additional B2B services fees owed by Caliplay
to Playtech under the terms of the Group's licence agreement. The
dispute related to amounts that date back to July 2023 and as at 30
June 2024 still remained outstanding. The details of this dispute
are further explained in Note 7 of the Group's audited financial
statements for the year ended 31 December 2023.
Impact on revenue recognition and recovery of
receivable
At 31 December 2023, the outstanding amount of
the B2B licensee fee was €32.3 million and the outstanding amount
of the additional B2B services fee was €54.2 million. The Group
recognised the full outstanding amount of €86.5 million within its
total revenue for the year ended 31 December 2023 and in line with
its revenue recognition policies. In recognising the entire amount,
the Group assessed that it was highly probable that there will not
be a significant reversal of this revenue in a subsequent period.
Following the entering into of the revised strategic agreement on
15 September 2024, Caliplay has resumed paying Playtech its fees,
with more than €150 million having been received in September 2024,
which included a settlement of the entirety of the amount
outstanding at 31 December 2023 and a significant portion of the
outstanding receivable relating to H1 2024, with the remainder of
the balance due being paid into an escrow account.
Consequently, the Group released €0.7 million from expected
credit losses related to trade receivables as of 30 June
2024.
The Group in 2024 continues to recognise
revenue from Caliplay in line with its current license agreement
(which also includes any amounts held in escrow), as well as its
revenue recognition polices and all of the overdue outstanding
balances at 30 June 2024 were either repaid as part of the fees
received in September 2024, or will be repaid once the funds held
in escrow are released following completion of the revised
strategic agreement (currently expected in Q1 2025) and, in any
event, by the end of 2025. The Group has therefore made a judgement
that the receivable amount at 30 June 2024 is fully recoverable.
Under the terms of the settlement, and pending the revised
strategic agreement coming into effect, Caliplay has agreed to
continue paying its fees under the current license
agreement in accordance with the current payment terms. Finally,
the settlement includes late payment fees of €7.1
million.
Impact of revised arrangements at 30 June
2024
As at 30 June 2024 the revised strategic
agreement was being negotiated with Caliplay and Corporacion
Caliente S.A. de C.V. ("Caliente"), the majority owner of Caliplay.
The Group made a judgement that as at 30 June 2024 it was highly
probable that the parties would agree a settlement including the
entry into of a revised strategic agreement. The revised strategic
agreement was ultimately agreed on 15 September and is conditional
upon Mexican antitrust approvals. This judgement had an impact on
various areas of our interim financial statements
including:
1. Sports CGU
impairment review (refer to Note 13)
2. Valuation of the
Playtech M&A Call Option (refer to Note 14)
3. The recoverability
assessment of the deferred tax asset (see below)
Classification of Snaitech B2C
segment as asset held for sale
An announcement was made on 17
September 2024 that Playtech Services (Cyprus) Limited, a
subsidiary of the Group, has entered into a
definitive agreement for the sale of Snaitech B2C segment (through
a sale of its immediate parent company) to Flutter Entertainment
Holdings Ireland Limited, a subsidiary of Flutter Entertainment plc
("Flutter"), for a total enterprise value of €2,300 million in
cash. Completion of the sale, which is subject to certain
conditions including relevant antitrust, gaming and other
regulatory authority approvals, is currently expected by Q2
2025. The
definition of asset held for sale involves a significant degree of
judgement given that in order for an asset to be classified as held
for sale, it must be available for immediate sale in its present
condition and its sale must be highly probable at the reporting
date. The meaning of 'highly probable' is highly judgmental and
therefore IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations sets out criteria for the sale to be considered as a
highly probable as follows:
· Management must be committed to a plan to sell the
asset;
· An
active program to find a buyer must be initiated;
· The
asset must be actively marketed for sale at a price that is
reasonable to its current fair value;
· The
sale must be completed within one year from the date of
classification;
· Significant changes to be made to the plan must be
unlikely.
In applying the above criteria, it
was determined that Snaitech B2C
segment did not meet the definition of an
asset held for sale at 30 June 2024. As at this date negotiations
and due diligence were still ongoing and there was no certainty
that a definitive agreement would have been reached.
Therefore, Snaitech B2C segment was not classified
as a discontinued operation at 30 June 2024. If it had, the results
of the operations as detailed in Note 6 would have been
reclassified to discontinued operations on the face of the
unaudited consolidated statement of comprehensive income and assets
/ liabilities also reclassified to assets/liabilities held for sale
on the unaudited consolidated balance sheet.
Estimates and assumptions
Impairment of non-financial assets
Cash-generating units
Impairment exists when the carrying value of an
asset or cash-generating unit (CGU) exceeds its recoverable amount,
which is the higher of its fair value less costs to sell and its
value in use. The value in use calculation is based on a discounted
cash flow model (DCF). The cash flows are derived from the
three-year budget, with CGU-specific assumptions for the subsequent
two years. They do not include restructuring activities that the
Group is not yet committed to or significant future investments
that may enhance the performance of the assets of the CGU being
tested. The recoverable amount is sensitive to the discount rate
used for the DCF model as well as the expected future cash inflows
and the growth rates used in years four and five and for
extrapolation purposes. These estimates are most relevant to
goodwill and other intangibles with indefinite useful lives
recognised by the Group. The key assumptions used to determine the
recoverable amount of the different CGUs are disclosed and further
explained in Note 13, including a sensitivity analysis for the CGUs
that have lower headroom.
Investment in associates
In assessing impairment of investments in
associates, management utilises various assumptions and estimates
that include projections of future cash flows generated by the
associate, determination of appropriate discount rates reflecting
the risks associated with the investment, and consideration of
market conditions relevant to the investee's industry. The Group
exercises judgement in evaluating impairment indicators and
determining the amount of impairment loss, if any. This involves
assessing the recoverable amount of the investment based on
available information and making decisions regarding the
appropriateness of key assumptions used in impairment
testing.
Income taxes
The Group is subject to income tax in several
jurisdictions and significant judgement is required in determining
the provision for income taxes. During the ordinary course of
business, there are transactions and calculations for which the
ultimate tax determination is uncertain. As a result, the Group
recognises tax liabilities based on estimates of whether additional
taxes and interest will be due. These tax liabilities are
recognised when, despite the Group's belief that its tax return
positions are supportable, the Group believes it is more likely
than not that a taxation authority would not accept its filing
position. In these cases, the Group records its tax balances based
on either the most likely amount or the expected value, which
weights multiple potential scenarios. The Group believes that its
accruals for tax liabilities are adequate for all open audit years
based on its assessment of many factors including past experience
and interpretations of tax law. This assessment relies on estimates
and assumptions and may involve a series of complex judgements
about future events. To the extent that the final tax outcome of
these matters is different than the amounts recorded, such
differences will impact income tax expense in the period in which
such determination is made. Where management conclude that it is
not probable that the taxation authority will accept an uncertain
tax treatment, they calculate the effect of uncertainty in
determining the related taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits or tax rates. The effect of
uncertainty for each uncertain tax treatment is reflected by using
the expected value - the sum of the probabilities and the weighted
amounts in a range of possible outcomes. More details are
included in Note 19.
Deferred tax asset
In evaluating the Group's ability to recover
our deferred tax assets in the jurisdiction from which they arise,
management considers all available positive and negative evidence,
projected future taxable income, tax-planning strategies and
results of recent operations. Deferred tax asset is recognised to
the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Judgement is required in determining the initial recognition and
the subsequent carrying value of the deferred tax asset. Deferred
tax asset is only able to be recognised to the extent that
utilisation is considered probable. It is possible that a change in
profit forecasts or risk factors could result in a material change
to the income tax expense and deferred tax asset in future
periods.
Deferred tax asset in the UK
As a result of the Group's internal
restructuring in January 2021, the Group is entitled to UK tax
deductions in respect of certain goodwill and intangible assets. A
deferred tax asset was recognised as the tax base of the goodwill
and intangible assets is in excess of the book value base of those
assets. At the beginning of the period, the net recognised deferred
tax asset amounted to €47.2 million. During the period, the Group
derecognised €16.0 million of this deferred tax asset as expected
utilisation would fall outside the forecasting period and therefore
there is not sufficient certainty that the Group would be able to
generate taxable profits which will arise in the next 3 years from
the balance sheet date. As at 30 June 2024, the deferred tax asset
recognised in respect of future tax deductions for goodwill and
intangible assets is €31.2 million. In
addition, a total of €41.0 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 three years after the balance sheet date.
Deferred tax assets are reviewed at each
reporting date. In considering their recoverability, the Group
assesses the likelihood of their being recovered within a
reasonably foreseeable timeframe, which is broadly in line with our
viability assessment and the cash flow forecasts period used in our
CGU impairment assessment. The Group updated its forecasts,
following changes in assumptions made to the forecasts during 2024,
due to certain changes in the current period to the expected profit
profile within its UK business unit that carries significant
losses, including expected changes to profitability based on the
revised arrangements with Caliplay (Note 5). This forms a
change in accounting estimate and resulted in a reversal of €25.8
million in the current year of previously recognised deferred tax
assets in respect of UK tax losses brought forward.
As at 30 June 2024, there is a deferred tax
asset of €6.5 million in respect of UK tax losses and excess
interest expense (31 December 2023: €27.3 million). Based on
the current forecasts, these losses will be fully utilised over the
forecast period. Remaining UK tax losses and excess interest
expense of €96.2 million (31 December 2023:
€67.0 million) have not been recognised as at 30 June 2024 as
expected utilisation would fall outside the forecasting period and
therefore there is not sufficient certainty they will be
recovered.
Any future changes in the tax law or the
structure of the Group could have a significant effect on the use
of the tax deductions, including the period over which the
deductions can be utilised.
Deferred tax assets in Italy
The Group has utilised its tax losses in Italy
and therefore has €Nil deferred tax asset as at 30 June 2024 (31
December 2023: €2.1 million) in respect of tax losses in
Italy.
Impairment of financial assets
The Group undertook a review of trade
receivables and other financial assets, as applicable, and their
expected credit losses (ECLs). The review considered the
macroeconomic outlook, customer credit quality, exposure at
default, and effect of payment deferral options as at the reporting
date. The ECL methodology and definition of default remained
consistent with prior periods. The model inputs, including
forward-looking information, scenarios and associated weightings,
together with the determination of the staging of exposures, were
revised. The Group's financial assets consist of trade and loans
receivables and cash and cash equivalents. ECL on cash balances was
considered and calculated by reference to Moody's credit ratings
for each financial institution, while ECL on trade and loans
receivables was based on past default experience and an assessment
of the future economic environment.
In respect of the Group's Asian licensees'
business model an additional ECL risk was identified due to
increase in collection days and uncertainty over timing of receipt
of funds. An additional provision was made in the period ended 30
June 2024 of €12.8 million (H1 2023: €Nil).
Measurement of fair values of equity
investments and equity call options
The Group's equity investments and, where
applicable (based on the judgements applied above), equity call
options held by the Group, are measured at fair value for financial
reporting purposes. The Group has an established control framework
with respect to the measurement of fair value.
In estimating the fair value of an asset and
liability, the Group uses market-observable data to the extent it
is available. Where Level 1 inputs are not available, the Group
engages third-party qualified valuers to assist in performing the
valuation. The Group works closely with the qualified valuers to
establish the appropriate valuation techniques and inputs to the
model.
As mentioned in Note 14, 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), which are accounted at fair value through
profit or loss under IFRS 9.
The fair values of the equity investments that
are not listed, and of the derivative financial assets, rely on
non-observable inputs that require a higher level of
management judgement to calculate a fair value than those based
wholly on observable inputs. Valuation techniques used to calculate
fair values include comparisons with similar financial instruments
for which market observable prices exist, DCF analysis and other
valuation techniques commonly used by market participants. Upon the
use of DCF method, the Group assumes that the expected cash flows
are based on the EBITDA.
The Group only uses models with unobservable
inputs for the valuation of certain unquoted equity investments. In
these cases, estimates are made to reflect uncertainties in fair
values resulting from a lack of market data inputs; for example, as
a result of illiquidity in the market. Inputs into valuations based
on unobservable data are inherently uncertain because there is
little or no current market data available from which to determine
the level at which an arm's length transaction would occur under
normal business conditions. Unobservable inputs are determined
based on the best information available. Further details on the
fair value of assets are disclosed in Note 14.
The following table shows the carrying amount
and fair value of non-current assets, as disclosed in Note 14,
including their levels in the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Other investments (Note 14B)
|
132.4
|
|
13.9
|
-
|
118.5
|
Derivative financial assets (Note
14C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Other investments (Note 14B)
|
92.8
|
|
15.8
|
-
|
77.0
|
Derivative financial assets (Note
14C)
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6 - Segment information
The Group's reportable segments are strategic
business units that offer different products and
services.
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker has
been identified as the Board including the Chief Executive Officer
and the Chief Financial Officer.
The operating segments identified
are:
• B2B: Providing
technology to gambling operators globally through a revenue share
model and, in certain agreements, taking a higher share in exchange
for additional services;
• B2C - Snaitech:
Acting directly as an operator in Italy and generating revenues
from online gambling, gaming machines and retail
betting;
• B2C - Sun Bingo and
Other B2C: Acting directly as an operator in the UK market and
generating revenues from online gambling; and
• B2C - HAPPYBET:
Acting directly as an operator in Germany and Austria and
generating revenues from online gambling and retail
betting.
The Group-wide profit measure is Adjusted
EBITDA (see Note 8).
Six months ended 30 June
2024
|
|
|
Sun
Bingo
and
Other
B2C
€'m
|
|
|
|
|
|
|
Revenue
|
382.2
|
483.6
|
39.9
|
9.6
|
(0.7)
|
532.4
|
(7.8)
|
906.8
|
|
Adjusted EBITDA
|
112.3
|
135.0
|
2.3
|
(6.6)
|
-
|
130.7
|
-
|
243.0
|
|
Total assets
|
2,090.2
|
1,172.3
|
100.8
|
12.4
|
-
|
1,285.5
|
-
|
3,375.7
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2023
|
|
|
Sun Bingo
and Other
B2C
€'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
|
|
|
|
|
|
|
|
|
|
|
The above net cash inflow does not include the
disposal proceeds.
Note 7 - Revenue from contracts with
customers
The Group has disaggregated revenue into
various categories in the following tables which is intended
to:
• depict how the
nature, amount, timing and uncertainty of revenue and cash flows
are affected by recognition date; and
• enable users to
understand the relationship with revenue segment information
provided in the segmental information note.
Revenue analysis by geographical location of
licensee, product type and regulated vs unregulated by geographical
major markets
The revenues from B2B (consisting of licensee
fee, fixed-fee income, revenue received from the sale of hardware,
cost-based revenue and additional B2B services fee) and B2C are
described in Note 6D of the Group audited financial statements for
the year ended 31 December 2023.
Upon signing a software licence agreement with
a new licensee, the Group verifies its gambling licence
(jurisdiction) and registers it accordingly to the Group's
database. The table below shows the revenues generated from the
jurisdictions of the licensee.
Playtech has disclosed jurisdictions with
revenue greater than 10% of the total Group revenue separately and
categorised the remaining revenue by wider jurisdictions, being
Rest of Europe, Latin America (LATAM) and Rest of World.
Six months ended 30 June 2024
Primary geographic
markets
|
|
|
Sun
Bingo
and
Other
B2C
€'m
|
|
|
|
|
|
|
Italy
|
21.0
|
482.9
|
-
|
-
|
-
|
482.9
|
(5.8)
|
498.1
|
|
Mexico
|
117.3
|
-
|
-
|
-
|
-
|
-
|
-
|
117.3
|
|
UK
|
66.5
|
-
|
39.9
|
-
|
-
|
39.9
|
(2.0)
|
104.4
|
|
Rest of Europe
|
107.7
|
0.7
|
-
|
9.6
|
(0.7)
|
9.6
|
-
|
117.3
|
|
LATAM
|
32.8
|
-
|
-
|
-
|
-
|
-
|
-
|
32.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B licensee fee
|
255.4
|
-
|
-
|
255.4
|
|
B2B fixed-fee income
|
32.4
|
-
|
-
|
32.4
|
|
B2B cost-based revenue
|
36.6
|
-
|
-
|
36.6
|
|
B2B revenue received from the sale of
hardware
|
3.8
|
-
|
-
|
3.8
|
Additional B2B services fee
|
|
|
|
|
|
|
|
|
|
|
|
Snaitech
|
-
|
483.6
|
(5.8)
|
477.8
|
|
Sun Bingo and Other B2C
|
-
|
39.9
|
(2.0)
|
37.9
|
|
HAPPYBET
|
-
|
9.6
|
-
|
9.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated - Americas
|
|
|
- US and Canada
|
13.3
|
|
- Latin America
|
128.3
|
|
Regulated - Europe (excluding UK)
|
97.8
|
|
Regulated - UK
|
66.0
|
Regulated - Rest of World
|
|
|
Total regulated B2B
revenue
|
310.6
|
|
|
|
|
|
|
Six months ended 30 June 2023
Primary geographic markets
|
|
|
Sun Bingo
and Other
B2C
€'m
|
|
|
|
|
|
|
Italy
|
17.5
|
487.7
|
-
|
-
|
-
|
487.7
|
(5.3)
|
499.9
|
|
Mexico
|
89.3
|
-
|
-
|
-
|
-
|
-
|
-
|
89.3
|
|
UK
|
63.3
|
-
|
34.1
|
-
|
-
|
34.1
|
(1.7)
|
95.7
|
|
Rest of Europe
|
116.3
|
0.7
|
-
|
10.3
|
(0.7)
|
10.3
|
-
|
126.6
|
|
LATAM
|
17.3
|
-
|
-
|
-
|
-
|
-
|
-
|
17.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
Snaitech
|
-
|
488.4
|
(5.2)
|
483.2
|
|
Sun Bingo and Other B2C
|
-
|
34.1
|
(1.8)
|
32.3
|
|
HAPPYBET
|
-
|
10.3
|
-
|
10.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated - Americas
|
|
|
- US and Canada
|
4.0
|
|
- Latin America
|
95.7
|
|
Regulated - Europe (excluding UK)
|
96.6
|
|
Regulated - UK
|
62.9
|
Regulated - Rest of World
|
|
|
Total regulated B2B
revenue
|
262.5
|
|
|
|
|
|
|
There were no changes in the Group's revenue
measurement policies and procedures in 2024 and 2023. The vast
majority of the Group's B2B contracts are for the delivery of
services within the next 12 months. For the period ended 30 June
2024, Playtech recognised revenue from a single customer
totalling approximately 11.9% of the Group's total revenue (for the
period ended 30 June 2023: a single customer totalling
approximately 10.3%).
The Group's contract liabilities, in other
words deferred income, primarily include advance payment for
hardware and services and also include certain fixed fees paid
by the licensee in the beginning of the contract. Deferred income
as at 30 June 2024 was €6.8 million (31 December 2023: €6.2
million).
Note 8 - Adjusted items
Management regularly uses adjusted financial
measures internally to understand, manage and evaluate the business
and make operating decisions. These adjusted measures are among the
primary factors management uses in planning for and forecasting
future periods. The primary adjusted financial measures are
Adjusted EBITDA and Adjusted Profit, which management considers are
relevant in understanding the Group's financial performance. The
definitions of adjusted items and underlying adjusted results are
disclosed in Note 6 paragraph U of the Group audited financial
statements for the year ended 31 December 2023.
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:
Six months ended 30 June
2024
|
|
|
|
|
|
Profit
attributable
to
the
owners
of
the
Company
€'m
|
|
Reported as actual
|
906.8
|
103.4
|
130.2
|
233.6
|
93.5
|
10.2
|
|
Employee stock option expenses1
|
-
|
2.3
|
0.3
|
2.6
|
2.6
|
2.6
|
|
Professional fees2
|
-
|
6.6
|
0.2
|
6.8
|
6.8
|
6.8
|
|
Fair value changes and finance costs on
contingent consideration3
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
|
Fair value changes of equity
instruments4
|
-
|
-
|
-
|
-
|
(37.1)
|
(37.1)
|
|
Fair value change of derivative financial
assets4
|
-
|
-
|
-
|
-
|
(51.3)
|
(51.3)
|
|
Amortisation of intangible assets on
acquisitions5
|
-
|
-
|
-
|
-
|
19.4
|
19.4
|
|
Impairment of intangible assets6
|
-
|
-
|
-
|
-
|
117.2
|
117.2
|
|
Deferred tax on acquisitions5
|
-
|
-
|
-
|
-
|
-
|
(9.2)
|
|
Derecognition of brought forward deferred
tax asset7
|
-
|
-
|
-
|
-
|
-
|
25.8
|
|
Derecognition of brought forward deferred
tax asset on group restructuring 8
|
-
|
-
|
-
|
-
|
-
|
10.7
|
|
Tax on unrealised fair value changes of
derivative financial assets9
|
-
|
-
|
-
|
-
|
-
|
4.1
|
|
Deferred tax on unrealised fair value changes
of equity investments10
|
-
|
-
|
-
|
-
|
-
|
6.3
|
|
|
|
|
|
|
|
|
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 vast majority of
the professional fees relate to the Caliplay disputes (Note 5).
These expenses are not considered ongoing costs of operations and
therefore are excluded.
3 Fair value changes and
finance costs on contingent consideration mostly related to the
acquisition of AUS GMTC. These expenses are not considered ongoing
costs of operations and therefore are excluded.
4 Fair value changes of
equity instruments and derivative financial assets. These are
excluded from the results as they relate to unrealised
profit/loss.
5 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.
6 Impairment of
intangible assets mainly relates to the impairment of IGS CGU of
€4.9 million and Sports B2B CGU €112.3 million. Refer to Note
13.
7 The reported tax expense
has been adjusted for the derecognition of a deferred tax asset of
€25.8 million relating to UK tax losses. This was adjusted because
the losses in relation to the derecognised amount were generated
over a number of years and therefore distorts the effective tax
rate for the period. Refer to Notes 5, 11 and 21.
8 The reported tax expense
has been adjusted for the derecognition of a deferred tax asset
relating to the Group reorganisation in January 2021. Of the total
reversal in H1 2024 of €16.0 million, €10.7 million was recognised
in prior periods and therefore adjusted so that it does not distort
the effective tax rate for the period. Refer to Note 5.
9 This current tax charge
relates to unrealised fair value changes of derivative financial
assets which is also adjusted. See Note 11.
10 Tax on unrealised fair value changes
of equity investments is adjusted to match the treatment of the
equity investment fair value movement which is also
adjusted.
Six months ended 30 June 2023
|
|
|
|
|
|
Profit
attributable
to the
owners
of the
Company
€'m
|
|
Reported as actual
|
859.6
|
69.0
|
138.3
|
207.3
|
79.6
|
3.1
|
|
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 changes and finance costs on
contingent consideration4
|
-
|
-
|
-
|
-
|
1.3
|
1.3
|
|
Fair value changes of equity
instruments5
|
-
|
-
|
-
|
-
|
(0.3)
|
(0.3)
|
|
Fair value change of derivative financial
assets5
|
-
|
-
|
-
|
-
|
25.5
|
25.5
|
|
Amortisation of intangible assets on
acquisitions6
|
-
|
-
|
-
|
-
|
20.6
|
20.6
|
|
Deferred tax on acquisitions6
|
-
|
-
|
-
|
-
|
-
|
(4.0)
|
|
Derecognition of brought forward deferred
tax asset7
|
-
|
-
|
-
|
-
|
-
|
23.4
|
Tax related to uncertain positions8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Employee stock option
expenses relate to non-cash expenses of the Group and differ from
year to year based on share price and the number of options
granted.
2 The vast majority of
the professional fees relate to the acquisition of Hard Rock
Digital (Note 14B). These expenses are not considered ongoing costs
of operations and therefore are excluded.
3 Impairment of
investments and other receivables that do not relate to the
ordinary operations of the Group.
4 Fair value changes and
finance costs on contingent consideration mostly related to the
acquisition of AUS GMTC. These expenses are not considered ongoing
costs of operations and therefore are excluded.
5 Fair value changes of
equity instruments and derivative financial assets. These are
excluded from the results as they relate to unrealised
profit/loss.
6 Amortisation and deferred
tax on intangible assets acquired through business combinations.
Costs directly related to acquisitions are not considered ongoing
costs of operations and therefore are excluded.
7 The reported tax
expense has been adjusted for the derecognition of a deferred tax
asset of €23.4 million relating to UK tax losses. This was adjusted
because the losses in relation to the derecognised amount were
generated over a number of years and therefore distorts the
effective tax rate for the year. Refer to Notes 5, 11 and
21.
8 Change in estimates
related to uncertain overseas tax positions in respect of prior
years which have now been settled with the relevant tax
authority.
The following table provides a full
reconciliation between adjusted and actual tax from continuing
operations:
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Tax on profit or loss for the year
|
83.5
|
76.5
|
|
Adjusted for:
|
|
|
|
Deferred tax on intangible assets on
acquisitions
|
9.2
|
4.0
|
|
Derecognition of brought forward deferred tax
asset
|
(25.8)
|
(23.4)
|
|
Derecognition of brought forward deferred tax
asset on group restructuring
|
(10.7)
|
-
|
|
Tax on unrealised fair value changes of
derivative financial assets
|
(4.1)
|
-
|
|
Deferred tax on unrealised fair value changes
of equity investment
|
(6.3)
|
-
|
Tax related to uncertain positions
|
|
|
|
|
|
|
Note 9 - Impairment of property, plant and
equipment and intangible assets
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Impairment of property, plant and
equipment
|
-
|
-
|
Impairment of intangible assets (Note
13)
|
|
|
|
|
|
|
Note 10 - Finance income and costs
A. Finance income
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Interest income
|
10.7
|
3.0
|
|
Dividend income
|
1.7
|
-
|
Net foreign exchange gain
|
|
|
|
|
|
|
B. Finance costs
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Interest on bonds
|
(16.8)
|
(11.7)
|
|
Interest on lease liability
|
(2.4)
|
(2.5)
|
|
Interest on loans and borrowings and
other
|
(0.5)
|
(1.9)
|
|
Bank facility fees
|
(1.1)
|
(1.1)
|
|
Bank charges
|
(1.6)
|
(1.3)
|
|
Movement in contingent consideration
|
(0.1)
|
(1.3)
|
Expected credit loss on loans
receivable
|
|
|
|
|
|
|
|
|
|
|
Note 11 - Tax expense
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Current tax expense
|
|
|
|
Income tax expense for the current
period
|
40.5
|
13.5
|
|
Income tax relating to prior years
|
2.4
|
11.1
|
|
|
|
|
Total current tax expense
|
|
|
|
Deferred tax
|
|
|
|
Origination and reversal of temporary
differences
|
4.0
|
28.2
|
|
Deferred tax movements relating to prior
years
|
36.5
|
23.4
|
|
Total deferred tax
expense
|
40.5
|
51.6
|
|
|
|
|
Reported tax charge
A reported tax charge of €83.5 million arises
on a profit before income tax of €93.5 million compared to an
expected charge of €23.4 million (H1 2023: a tax charge of €76.5
million on profit before income tax of €79.6 million). The reported
tax expense includes adjustments in respect of prior years
relating to current tax and deferred tax of €38.9
million (H1 2023: €34.5 million). The prior year adjustment in
respect of deferred tax of €36.5 million relates to the
derecognition of the deferred tax assets relating to UK tax losses
and deferred tax assets resulting from a group restructuring. These
deferred tax assets were derecognised as expected utilisation would
fall outside the forecasting period and therefore there is not
sufficient certainty they will be recovered. The
Group's effective tax rate for the current period is 89%. This is
higher than the UK headline rate of tax for the period of 25%, 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 €36.5 million in respect of UK tax
attributes. Further details of this write-down are included in Note
5.
• Current year tax
losses and excess interest not recognised for deferred tax
purposes. The tax losses and excess interest mainly relate to the
UK Group companies and amount to €7.5 million.
• Expenses not
deductible for tax purposes including impairment of intangible
assets.
Changes in tax rates and factors affecting the
future tax charge
The most significant elements of the Group's
income arise in the UK where the tax rate for the current period is
25%. Deferred tax balances have been calculated using the tax
rates upon which the balance is expected to unwind.
The Group adopted the amendments to IAS 12
issued in May 2023, which provide a temporary mandatory exception
from the requirement to recognise and disclose deferred taxes
arising from enacted tax law that implements the Pillar Two model
rules, including tax law that implements qualified domestic minimum
top-up taxes described in those rules. Under these amendments, any
Pillar Two taxes incurred by the Group will be accounted for as
current taxes from 1 January 2024. The impact of the Pillar Two
rules for the period ended 30 June 2024 is to increase the current
tax charge by €4.1 million.
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.
Note 12 - 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 30 June 2024
|
|
Six months ended 30
June 2023
|
|
|
|
|
|
|
|
Profit attributable to the owners of
the Company
|
|
|
|
|
|
|
Basic (cents)
|
3.3
|
34.6
|
|
1.0
|
28.4
|
|
|
|
|
|
|
|
|
|
Six
months ended 30 June 2024
|
|
Six months ended 30
June 2023
|
|
|
|
|
|
|
|
|
Denominator - basic
|
|
|
|
|
|
Weighted average number of equity
shares
|
|
|
|
|
|
|
Denominator - diluted
|
|
|
|
|
|
|
Weighted average number of equity
shares
|
304,830,919
|
304,830,919
|
|
302,327,498
|
302,327,498
|
Weighted average number of option
shares
|
|
|
|
|
|
Weighted average number of
shares
|
|
|
|
|
|
The calculation of diluted EPS has been based
on the above profit attributable to ordinary shareholders and
weighted average number of ordinary shares outstanding after
adjustment for the effects of all dilutive potential ordinary
shares. The effects of the anti-dilutive potential ordinary shares
are ignored in calculating diluted EPS.
Note 13 - Intangible assets
|
|
|
|
Net book value at 1 January 2024
|
881.2
|
|
Additions
|
31.0
|
|
Assets acquired through business
combinations
|
2.7
|
|
Amortization charge for the period
|
(65.2)
|
|
Impairment
|
(117.2)
|
|
Net book value at 30 June 2024
|
732.5
|
In accordance with IAS 36, the Group regularly
monitors the carrying value of its intangible assets, including
goodwill. Goodwill is allocated to cash-generating units (CGUs), as
set out below:
|
|
|
|
|
Snai[1]
|
266.5
|
263.4
|
|
AUS GMTC
|
4.4
|
4.4
|
|
Bingo retail
|
9.5
|
9.5
|
|
Casino
|
50.8
|
50.8
|
|
Poker
|
15.6
|
15.6
|
|
Quickspin
|
10.2
|
10.2
|
|
Sports B2B
|
-
|
60.3
|
|
VB retail
|
4.6
|
4.6
|
|
Services
|
109.9
|
109.9
|
|
Sports B2C
|
0.3
|
0.3
|
|
|
|
|
|
|
|
|
[1] The
majority of the increase in goodwill relates to Snai's acquisition
of U4LINE S.r.l. in H1 2024, a small company that carries out AWP
management activities for a total consideration of €0.8 million. As
a result of this transaction, the Group recognised almost €1.5
million of goodwill.
2 In January
2024, the Group acquired 48.32% of MixZone Ltd ('MixZone'). Based
on the agreed terms, Playtech also appointed a director to
MixZone's Board of Directors who also holds shares in MixZone.
Combining Playtech's and the director's shareholding, the total
shareholding in MixZone is 50.71%. The Group assessed that it holds
power over MixZone due to the fact that collectively it holds over
50% of the voting power at both the board and shareholder levels.
Therefore, MixZone is treated as subsidiary of the Group and its
results are consolidated in the Group results since the point of
acquisition.
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.
With the exception of CGUs which have been
fully impaired to date, a comparison of the year-to-date June 2024
results against the 2024 budget has been carried out for all units
and a further comparison of the 2024 forecast (year to date June
2024 actuals with July-December 2024 forecast) to 2024 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 five CGUs that are behind
budget. These include the CGUs affected by material changes to the
cash flows following the revised strategic agreement with Caliplay,
being Sports B2B and Services. The assessment reflects management's
judgment that as at 30 June 2024 there was a high probability that
the negotiations for the revised arrangements were going to
successfully complete (refer to Note 5).
During the detailed review, the recoverable
amount of each CGU is determined from value in use calculations
based on cash flow projections covering five years (using updated
forecasts where needed) plus a terminal value which has been
adjusted to take into account each CGU's major events as expected
in future periods. Beyond this period, management has applied an
annual growth rate of 2%. 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 includes appropriate capital
expenditure requirements to support the forecast growth and assumes
the maintenance of the current level of licences. Management also
applies post-tax discount rates to the cash flow projections
as outlined below.
30 June 2024
CGUs with an indication of impairment
IGS
CGU
The recoverable amount of the IGS CGU, with a
carrying value of €4.9 million, has been determined using a cash
flow forecast that includes annual revenue growth rates ranging
between a decline of 19.9% to an increase of 59.0%, over the one to
five-year forecast period (31 December 2023: annual revenue
growth rates between 5.0% and 26.0%), a 2.0% long-term growth rate
(31 December 2023: 2.0% long-term growth rate) and a post-tax
discount rate of 14.7% (31 December 2023: post-tax discount rate of
20.9%).
Following the termination of two key contracts,
the recoverable amount of this CGU is €Nil and hence the carrying
value of €4.9 million has been impaired in full as at 30 June
2024.
Quickspin CGU
Quickspin CGU which is in the final stages of
its restructuring process, has seen lower performance in the last
few years. Despite the delays in launching of new licensees planned
in the year, it is expected that these would come into play within
the second half of 2024. The recoverable amount of this CGU of
€32.7 million, with a carrying value of €30.0 million at 30 June
2024, has been determined using a cash flow forecast that
includes annual revenue growth rates between 3.1% and 5.0% over the
one to five-year forecast period (31 December 2023: annual revenue
growth rates between 5.0% and 7.2%), 2.0% long-term growth rate (31
December 2023: 2.0% long-term growth rate) and a post-tax discount
rate of 12.2% (31 December 2023: post-tax discount rate of 12.4%).
The recoverable amount would equal the carrying
value of the CGU if:
• the discount rate
applied was higher by 7.6%, i.e. reaching a post-tax discount rate
of 13.1%; or
• the revenue growth
was lower by 0.3% when compared to the forecasted average five-year
growth.
VB
Retail CGU
The recoverable amount of the VB Retail CGU
showed signs of underperformance during H1 2024, mainly due to
delays in new licensee launching, which however are fully planned
to be introduced in the second half of 2024. The recoverable amount
of this CGU of €40.8 million, with a carrying value of
€26.9 million at 30 June 2024, has been determined using
a cash flow forecast that includes annual revenue growth rates
between 4.0% and 8.0% over the one to five-year forecast period (31
December 2023: annual revenue growth rates between 8.0% and 13.0%),
2.0% long-term growth rate (31 December 2023: 2.0% long-term growth
rate) and a post-tax discount rate of 12.4% (31 December 2023:
post-tax discount rate of 12.7%). The recoverable amount would
equal the carrying value of the CGU if:
• the discount rate
applied was higher by 40.1%, i.e. reaching a post-tax discount rate
of 17.4%; or
• the revenue growth
was lower by 2.0% when compared to the forecasted average five-year
growth.
Services CGU
Following the announcement made on the revised
strategic agreement relating to Caliplay, where amongst other
things Playtech is to enter into a revised eight-year B2B
software licence and services agreement, the Playtech Group will no
longer receive the additional B2B services fee from Caliplay and
will cease to be obliged to provide certain services to which those
fees relate. The revised arrangements are conditional upon Mexican
antitrust approval and closing is expected to take place in Q1
2025. However, as per Note 5, a judgement was made that it is
highly probable that the conditions will be met and as such
management has considered the impact of the loss of the additional
B2B services fee has on this CGU. The results of this review
indicated no impairment.
The recoverable amount of the Services CGU,
with a carrying amount of €117.0 million at 30 June 2024, has been
determined using a cash flow forecast that includes annual revenue
growth rates ranging from negative 32.0% and positive 7.0% over the
one to five-year forecast period (31 December 2023: annual revenue
growth rates ranged between negative 7.0% and positive 6.2%), a
2.0% long-term growth rate (31 December 2023: 2.0% long-term growth
rate) and a post-tax discount rate of 15.9% (31 December 2023:
post-tax discount rate of 18.3%).
Sports B2B CGU
The recoverable amount of the Sports B2B CGU,
with a carrying value of €128.9 million, has been determined using
a cash flow forecast that includes annual revenue growth rates
ranging between a decline of 6.5% to an increase 3.0%, over the one
to five-year forecast period (31 December 2023: annual revenue
growth rates ranging from a decline of 20.0% and an increase of
15.0%), a 2.0% long-term growth rate (31 December 2023: 2.0%
long-term growth rate) and a post-tax discount rate of 13.7% (31
December 2023: post-tax discount rate of 13.7%).
Following the announcement of the revised
strategic agreement with Caliplay, which will impact the sports
revenue generated from 2025 (when the conditions are met and the
revised arrangements become effective), in addition to further
expected reductions in revenue from other sports licensees, the
recoverable amount of €16.6 million does not exceed the carrying
value as stated above (pre-impairment) and therefore an impairment
loss of €112.3 million was recognised in the period ended 30 June
2024 (31 December 2023: impairment of €72.2 million due to the
termination of two key contracts). Following the impairment posted,
all assets have been impaired to the recoverable amount.
Note 14 - Investments and derivative financial
assets
Introduction
Below is a breakdown of the relevant assets at
30 June 2024 and 31 December 2023 per the consolidated balance
sheet:
|
|
|
|
|
A. Investments in associates
|
50.0
|
51.5
|
|
B. Other investments
|
132.4
|
92.8
|
C. Derivative financial assets
|
|
|
|
|
|
|
The following are the amounts recognised in the
statement of comprehensive income:
|
|
Six months
ended 30 June 2024
€'m
|
Six months ended 30
June 2023
€'m
|
|
Profit or loss
|
|
|
|
A. Share of loss from associates
|
(1.5)
|
(0.3)
|
|
B. Unrealised fair value changes of equity
investments
|
37.1
|
0.3
|
|
C. Unrealised fair value changes of derivative
financial assets
|
51.3
|
(25.5)
|
|
Other comprehensive
income
|
|
|
Foreign exchange movement from the derivative
call options and equity investments held in non-Euro functional
currency subsidiaries
|
|
|
|
|
|
|
Where the underlying derivative call option and
equity investments are held in a non-Euro functional currency
entity, the foreign exchange movement is recorded through other
comprehensive income. As at 30 June 2024, the foreign exchange
movement of the derivative call options held in Caliplay, LSports
and NorthStar (Note 14C) is recorded in profit or loss as these
options are held in Euro functional currency entities. The foreign
exchange movement of the derivative call options held in Wplay,
Onjoc, Tenbet and Tenlot El Salvador S.A. de C.V ('Tenlot El
Salvador') (Note 14C) and the small minority equity investment in
Hard Rock Digital (Note 14B) are recorded through other
comprehensive income as these are held in USD functional currency
entities.
The recognition and valuation methodologies for
each category are explained in each of the relevant sections below,
including key judgements made under each arrangement as described
in Note 5 of these interim financial statements.
A. Investments in associates
Balance sheet
|
|
|
|
|
Caliplay
|
-
|
-
|
|
ALFEA SPA
|
1.7
|
1.7
|
|
Galera
|
-
|
-
|
|
LSports
|
36.1
|
35.2
|
|
Stats International
|
-
|
-
|
|
NorthStar
|
6.8
|
9.0
|
Sporting News Holdings Limited
|
|
|
Total investment in equity accounted
associates
|
|
|
Profit and loss impact
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Share of profit in LSports
|
0.9
|
0.8
|
|
Share of loss in NorthStar
|
(2.2)
|
(1.1)
|
Share of loss in Sporting News Holdings
Limited
|
|
|
Total profit and loss
impact
|
|
|
Movement on the balance sheet
|
|
|
|
|
Sporting
News
Holdings
Limited
€'m
|
|
|
Balance as at 31 December 2023/1 January
2024
|
1.7
|
35.2
|
9.0
|
5.6
|
51.5
|
|
Share of profit/(loss)
|
-
|
0.9
|
(2.2)
|
(0.2)
|
(1.5)
|
Balance as at
30 June 2024
|
|
|
|
|
|
Caliplay
Background
During 2014, the Group entered into an
agreement with Turística Akalli, S. A. de C.V, which has since
changed its name to Corporacion Caliente S.A. de C.V. ("Caliente"),
the majority owner of Tecnologia en Entretenimiento Caliplay,
S.A.P.I. de C.V ("Caliplay"), which is a leading online betting and
gaming operator in Mexico which operates the "Caliente" brand in
Mexico.
The Group made a €16.8 million loan to
September Holdings B.V. (previously the 49% shareholder of
Caliplay), a company which is 100% owned by Caliente, in return for
a call option that would grant the Group the right to acquire 49%
of the economic interest of Caliplay for a nominal amount (the
"Playtech Call Option").
During 2021, Caliplay redeemed its share at par
from September Holdings, which resulted in Caliente owning
substantially all of the shares in Caliplay. The terms of the
existing structured agreement were varied, with the following key
changes:
• A new additional
option (in addition to the Playtech Call Option) was granted to the
Group which allowed the Group to take up to a 49% equity interest
in a new acquisition vehicle should Caliplay be subject to a
corporate transaction - this additional option is only exercisable
in connection with a corporate transaction and therefore was not
exercisable at 30 June 2024 or 31 December 2023 (the "Playtech
M&A Call Option").
• Caliente received a
put option which would require Playtech to acquire September
Holding Company B.V. for a nominal amount (the "September Put
Option"). This option has been exercised and the parties are in the
process of transferring legal ownership of September Holding
Company B.V. to the Group.
The Group has no equity holding in Caliplay and
is currently providing services to Caliplay including technical and
general strategic support services for which it receives income
(including an additional B2B services fee as described in Note 7 of
the Group audited financial statements for the year ended 31
December 2023). If either the Playtech Call Option or the Playtech
M&A Call Option is exercised, the Group would no longer be
entitled to receive the additional B2B services fee (and will cease
to provide certain related services) which for the period ended 30
June 2024 was €54.0 million (H1 2023: €57.3 million).
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. The COC option was
considered in the valuation of the Playtech M&A Option (refer
to Note 14C).
Finally, for 45 days after the
finalisation of Caliplay's 2021 accounts, Caliplay also had an
option to redeem the Group's additional B2B services fee or
(if the Playtech Call Option had been exercised at
that time) Caliente would have the option to acquire Playtech's 49%
stake in Caliplay (together the "Caliente Call Option"). As
per the public announcement made by the Group on 6 February 2023,
the Group is seeking a declaration from the English Courts to
obtain clarification on a point of disagreement between the parties
in relation to the Caliente Call Option. The Group believes the
Caliente Call Option has expired and referred to its expiry having
taken place in its interim report for the six-month period ended 30
June 2022, which was published on 22 September 2022. If the
Caliente Call Option was declared as being exercisable and was
exercised, this would extinguish the Playtech Call Option and the
Playtech M&A Call Option. The Group had not changed its
position with regard to this assumption as at 30 June 2024 as the
matter was still unresolved with the English litigation still
ongoing.
Post 30 June 2024 and as per the public
announcement made on 16 September 2024, the Group agreed a revised
strategic agreement related to Caliplay. Under these revised terms,
Playtech will hold a 30.8% equity interest in Caliente
Interactive, Inc. ("Cali Interactive"), which will
be the new holding company of Caliplay, incorporated in the
United States and be entitled to receive dividends alongside other
shareholders in Cali Interactive. Playtech will also have the right
to appoint a Director to the Board of Cali Interactive. The revised
arrangements are conditional upon Mexican antitrust approval and
closing is expected to take place in Q1 2025. In the meantime,
there is an agreed standstill of all the existing legal proceedings
between Caliente, Caliplay and Playtech which were disclosed in the
audited accounts for the year ended 31 December 2023 and in Note 5
of these interim financial statements (including the point of
disagreement on the Caliente Call Option), and those proceedings
will be dismissed in full once the revised arrangements come into
effect. The revised arrangements, with discussions well progressed
as at 30 June 2024 have been considered as part of the valuation.
On closing of the revised arrangements, the Playtech Call Option,
the Caliente Call Option and the COC Option will cease to exist and
the Playtech M&A Call Option will have been exercised. Refer to
Note 14C for further details.
Assessment of control and significant
influence
As at 30 June 2024 and 31 December 2023 it was
assessed that the Group did not have control over Caliplay, because
it does not meet the criteria of IFRS 10 Consolidated Financial
Statements, paragraph 7 due to the following:
• Despite the Group
previously having a nominated director on the Caliplay board in
2020 and having consent rights on certain decisions (in each case,
removed in 2021), there was no ability to control the relevant
activities.
• The Playtech Call
Option or the Playtech M&A Call Option, if exercised, would
result in Playtech having up to 49% of the voting rights and would
not result in Playtech having control.
• Whilst the Group
currently does receive variable returns from its strategic
agreement, it does not have the power to direct relevant activities
so any variation cannot arise from such a power.
As at 30 June 2024 and 31 December 2023, the
Group has significant influence over Caliplay because it meets one
or more of the criteria under IAS 28, paragraph 6 as
follows:
• The standard operator
revenue by itself is not considered to give rise to significant
influence; however, when combined with the additional B2B services
fee, this is an indicator of significant influence.
• The material
transaction of the historical loan funding is also an indicator of
significant influence.
Accounting for each of the options
The Playtech Call Option was exercisable at 30
June 2024 and 31 December 2023, although it still had not exercised
the option as at 30 June 2024. As the Group has significant
influence and the option is exercisable, the investment is
recognised as an investment in associate using the equity
accounting method which includes having current access to profits
and losses. The cost of the investment was previously deemed to be
the loan given through September Holdings of €16.8 million, which
at the time was assessed under IAS 28, paragraph 38 as not
recoverable for the foreseeable future and part of the overall
investment in the entity.
In 2021, with the introduction of the September
Put Option, the investment in associate relating to the original
Playtech Call Option was reduced to zero and the €16.8 million
original loan amount was determined by management to be the cost of
the new Playtech M&A Call Option and therefore fully offset the
balance of €16.8 million against the overall fair value movement of
the Playtech M&A Call Option (refer to part C of this
Note).
The Playtech M&A Call Option is not
currently exercisable (although it will become exercisable and will
be exercised in connection with the closing of the revised
strategic agreement) 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 5, the Group did
not consider it appropriate to equity account for the share of
profits as the current 100% shareholder is entitled to any
undistributed profits.
Below is the financial information of
Caliplay:
|
|
|
|
|
Current assets
|
377.6
|
215.0
|
|
Non-current assets
|
24.6
|
23.9
|
|
Current liabilities
|
(262.0)
|
(123.6)
|
|
|
|
|
|
|
Six months
ended 30
June
2024 1
€'m
|
Six
months ended 30
June
2023 1
€'m
|
|
|
|
|
|
Profit from continuing
operations
|
33.0
|
58.8
|
Other comprehensive (loss)/income, net of
tax
|
|
|
Total comprehensive
income
|
|
|
1 The 2024 and 2023
balances above have been provided by Caliplay.
Investment in ALFEA SPA
The Group has held 30.7% equity shares in ALFEA
SPA since June 2018. At 30 June 2024, the Group's value of the
investment in ALFEA SPA was €1.7 million (31 December 2023: €1.7
million). No share of profit was recognised in profit or loss for
the period ended 30 June 2024 (H1 2023: no share of profit was
recognised in profit or loss).
Investment in Galera
In June 2021, the Group entered into an
agreement with Ocean 88 Holdings Ltd (Ocean 88) which is the sole
holder of Galera Gaming Group (together "Galera"), a company
registered in Brazil. Galera offers and operates online and mobile
sports betting and gaming (poker, casino, etc.) in Brazil. They
will continue to do so under the local regulatory licence, when
this becomes available, and will expand to other gaming and
gambling products based on the local licence conditions.
The Group's total consideration paid for the
investment in Galera was $5.0 million (€4.2 million) in the year
ended 31 December 2021, which was the consideration for the option
to subscribe and purchase from Galera an amount of shares equal to
40% in Galera at nominal price.
In addition to the investment amount paid,
Playtech made available to Galera a line of credit up to $20.0
million. In 2022, an amendment was signed to the original framework
agreement to increase the credit line to $45.0 million. As at 30
June 2024, an amount of €42.0 million, which is included in loans
receivable under other non-current assets, has been drawn down (31
December 2023: €39.2 million). A further amount of €1.4 million has
been loaned in the period ended 30 June 2024. The loan is required
to be repaid to Playtech prior to any dividend distribution to the
current shareholders of Galera. Galera has repaid €0.5 million of
the loan in the period ended 30 June 2024. The Group recognised an
allowance for expected credit losses for the loan to Galera of €2.0
million as at 30 June 2024 (H1 2023: €1.6 million, 31 December
2023: €1.6 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 €18.6 million share of loss of
associate would have been recorded in retained earnings since the
investment was made, of which €1.3 million would have been
recognised in 2024 in the profit or loss (2023: if the Group had
determined that the loan was part of the overall investment in
associate, an additional cumulative €17.3 million share of loss of
associate would have been recorded in retained earnings since the
investment was made, of which €1.9 million and €1.7 million would
have been recognised in H1 2023 and H2 2023 in profit or loss
respectively).
On 6 November 2023, Ocean 88 acquired 60% of
F12.bet. Playtech loaned Ocean 88 the amount of $10.1 million (€9.5
million) for the acquisition of F12.bet. As at 30 June 2024, this
amount was €9.8 million and is included in loans receivable under
other non-current assets (31 December 2023: €9.5 million).
The loan is repayable within five years from the disbursement date,
in November 2028. The Group recognised an allowance for expected
credit losses for the additional loan to Galera of €0.5 million as
at 30 June 2024 (H2 2023: €0.4 million).
On 15 May 2024, Playtech loaned an additional
$10.0 million (€9.2 million) to Ocean 88 to acquire 60% of
Luva.bet. that would make Luva.bet part of F12 Group. Luva.bet is a
recently established operator targeting the Brazilian market which
commenced operations in April 2023. As at 30 June 2024, an amount
of €9.2 million is included in loans receivable under other
non-current assets. The loan is repayable within five years from
the disbursement date, in November 2028. The Group recognised an
allowance for expected credit losses for the additional loan to
Galera of €0.4 million as at 30 June 2024.
Playtech has assessed whether it holds power to
control Galera and it was concluded that this is not the case. Even
if the option is exercised, it would only result in a 40%
voting right over the operating entity and therefore no
control.
Under the agreement in place:
• the standard operator
income to be generated from services provided to Galera when
combined with the additional B2B services fee, the loan and certain
other contractual rights, are all indicators of significant
influence; and
• the Group provides
standard B2B services (similar to services provided to other B2B
customers) as well as additional services to Galera that Galera
requires to assist it in successfully running its operations, which
could be considered essential technical information.
Considering the above factors, the Group has
significant influence under IAS 28, paragraph 6 over
Galera.
As the option is currently exercisable and
gives Playtech access to the returns associated with the ownership
interest, the investment is treated as an investment in associate.
Playtech's interest in Galera is accounted for using the equity
method in the consolidated financial statements. Galera is
currently loss-making. If the call option is exercised by Playtech,
the Group will no longer provide certain services and as such will
no longer be entitled to the additional B2B services fee. The
additional B2B services fee was €Nil in the period ended 30 June
2024 (H1 2023: €Nil).
The cost of the investment was deemed to be the
price paid for the option of $5.0 million (€4.2 million), which was
reduced to €Nil through the recognition of the Group's share of
losses.
Investment in LSports
Background
In November 2022, the Group entered into the
following transactions:
• acquisition of 15% of
Statscore for a total consideration of €1.8 million. As a result of
this transaction Statscore became a 100% subsidiary of the
Group;
• disposal of 100% of
Statscore to LSports Data Ltd ("LSports") for a total consideration
of €7.5 million (settled through the acquisition of LSports in
shares) less a novated inter-company loan of €1.6 million,
therefore a non-cash net consideration of €5.9 million;
and
• acquisition of 31% of
LSports for a total consideration of €36.7 million, which also
included an option to acquire further shares (up to 18.11%) in
LSports. Of the total consideration, €29.2 million was paid in cash
with the balance offset against the disposal proceeds of Statscore
as per the above.
As a result of the disposal of 100% of
Statscore, the Group realised a loss of €8.8 million which has been
recognised in profit or loss for the year ended 31 December 2022
and is made up as follows:
|
|
|
|
Net asset position as at the date of the
disposal (including goodwill of €12.4 million)
|
14.7
|
|
|
|
|
|
|
Furthermore, the Group has an option to acquire
up to 49% (so an additional 18%) of the equity of LSports ("LSports
Option"). The LSports Option is exercisable under the following
conditions:
• within 90 days from
the date of receipt of the LSports audited financial statements for
each of the years ending 31 December 2024, 2025 and 2026;
or
• at any time until 31
December 2026 subject and immediately prior to the consummation of
an Initial Public Offering or Merger & Acquisition event of
LSports.
The exercise price of the option will be equal
to the product of:
i. the % of the
aggregate shares purchased upon exercise of the PT option out of
all shares of the company multiplied by
ii. the greater of
either:
a. LSports EBITDA preceding
the time of exercise as reflected in the company's annual audited
financial statements for that year, multiplied by a factor of 7;
or
b. €115.0 million.
The fair value of the option acquired was €1.4
million, which was part of the total consideration of €36.7
million. As at 30 June 2024, the fair value of the LSports
derivative financial asset is €4.8 million (31 December 2023: €4.8
million). The difference between the fair value of the derivative
financial asset better 30 June 2024 and 31 December 2023 is €Nil
(the difference of €3.4 million between the fair value at 31
December 2023 and the fair value at 31 December 2022 has been
recognised in profit or loss for the year ended 31 December
2023).
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, 30 June 2024 and
31 December 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 2024, there is still no ability to
control the relevant activities, as the total number of directors
including the Playtech appointed director is five;
• Playtech has neither
the ability to change any members of the board nor of the
management of LSports; and
• as at 30 June 2024
and 31 December 2023 the option is not exercisable and therefore
can be disregarded in the assessment of power.
Per the above assessment, Playtech does not
hold power over the investee and as such does not have
control.
As at 30 June 2024 and 31 December 2023, 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 was not exercisable
at 30 June 2024, 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. The LSports option
was exercised earlier than the expected exercise date, in September
2024 for €19.8 million. This increased the Group's total
shareholding to 49%.
Purchase Price Allocation (PPA)
On initial acquisition of the investment, the
Group prepared a PPA, 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.
Goodwill is not recognised separately but is
included as part of the carrying amount of the investment in
associate. The total share of profit recognised in profit or loss
in the period ended 30 June 2024 from the investment is LSports was
€0.9 million (H1 2023: €0.8 million, H2 2023: €1.3 million). This
includes the amortisation of intangibles and the release of the
deferred tax liability arising on acquisition, and the share of the
LSports profits, with a corresponding entry against the investment
in associate.
During 2024, the Group did not receive a
dividend from LSports. In 2023, dividend of €1.8 million received
from LSports which reduced the investment in associate value in the
consolidated balance sheet).
Investment in Stats International
Background
In January 2022, the Group provided a $2.3
million loan to Stats International Limited ("Stats"), at an
interest rate of 3.5% and a repayment date of 30 June 2024. As at
30 June 2024, the carrying value of the loan was €2.3 million (31
December 2023: €2.2 million).
The Stats group's business activities are
focused on securing rights in connection with sporting competitions
and the exploitation of the same, typically in exchange for the
payment of certain fees and provision of analytical and statistical
services by the Stats group to the relevant rightsholder. The
initial focus of the Stats group is on Brazilian sports
competitions.
In May 2023, the Group and Stats signed an
amended loan agreement which, amongst other things, changed the
repayment obligations such that the final repayment date will be 31
December 2026 and the loan agreement will be novated from Stats to
Jewelrock (Stats' sole shareholder) in consideration of $1.
Moreover, a framework agreement was signed between Stats and
Playtech whereby Playtech, for a €1 consideration, has been granted
the option to acquire from Jewelrock 36% of the issued share
capital of Stats.
Finally, Playtech entered into a service
agreement whereby Playtech provides Stats its business development
and knowledge-sharing services in connection with the operational
and industry standard procedures of Stats in exchange for
additional B2B services fee as per Note 7. As the business is still
a start-up, the additional B2B services fee as at 30 June 2024 was
€Nil (H1 2023: €Nil). Once the option is exercised, the Group would
no longer provide certain services and, as such, would no longer be
entitled to the additional B2B services fee.
The option may be exercised at any time but
prior to the termination of all sporting rights agreements. It
shall also lapse on the expiry or termination of the Playtech
service agreement in accordance with its terms or at the written
election of Playtech.
Playtech has assessed whether it holds power to
control the investee and it was concluded that this is not the
case. Even if the option is exercised, it would only result in a
36% voting right over the operating entity and therefore no
control.
However, Playtech has assessed whether the
Group has significant influence over Stats and due to the existence
of the service agreement whereby Playtech would be assisting a
start-up business by providing knowledge-sharing services, these
could be considered essential technical information. Considering
this, it was concluded that the Group has significant influence
under IAS 28, paragraph 6, over Stats.
The cost of the option, which was considered to
be the inherent value of Playtech allowing the loan repayment date
to be extended, is considered negligible. No share of
profits/losses have been recognised as at 30 June 2024 and 30 June
2023 in profit or loss as these were immaterial.
Investment in NorthStar
Background
NorthStar Gaming Inc. is a Canadian gaming
brand which was incorporated under the laws of Ontario in Q4 2021.
In Q2 2022, NorthStar Gaming Inc. received its licence from the
Alcohol and Gaming Commission of Ontario (AGCO) and launched its
online gaming site www.northstarbets.ca which offers access to
regulated sports betting markets, and a robust and curated casino
offering, including the most popular slot offerings and live dealer
games. The principal reason of the acquisition is the attractive
opportunity considered by Playtech to increase its footprint in the
growing Canadian betting data market segment.
In December 2022, the Group issued NorthStar
Gaming Inc. a convertible loan of CAD 12.25 million with conditions
being that upon the completion of a reverse takeover (RTO)
transaction the loan could be converted into common shares, A
warrants and B warrants of the post-RTO consolidated entity. Baden
Resources, a company which was listed on the TSX, entered into a
conditional agreement to acquire NorthStar Gaming Inc. for shares
(i.e. complete an RTO of NorthStar Gaming Inc). The fair value of
the loan as at 31 December 2022 was €8.4 million.
In March 2023, the RTO was completed and Baden
Resources changed its name to NorthStar Gaming Holdings
("NorthStar"). These events triggered the automatic conversion of
the Group's convertible loan into common shares in NorthStar Gaming
Inc. (effective immediately prior to closing) and then immediately
thereafter on closing those shares were exchanged for NorthStar
common shares.
When the loan was converted into NorthStar
common shares the Group also became the holder of NorthStar
Warrants (half of which are exercisable at CAD 0.85 per share and
the other half at CAD 0.90 per share) which, if exercised, would
result in the Group further increasing its shareholding in
NorthStar. These warrants expire on the fifth anniversary of their
issue.
In September 2023, the Group entered into a
subscription agreement with NorthStar whereby additional shares and
warrants (half of which are exercisable at CAD 0.36 per share and
the other half at CAD 0.40 per share, in each case expiring on the
fifth anniversary of their issue) were acquired for CAD 5.0
million. At the time of this investment, which closed in October
2023, Playtech also loaned NorthStar an 8% senior convertible
debenture for CAD 5.0 million.
Playtech owns approximately 25.8% as at 30 June
2024 (31 December 2023: 27.5%) of the issued and outstanding common
shares of NorthStar. If the convertible debenture were to be
converted into common shares and all of the Group's warrants were
to be exercised, the Group could potentially further increase its
stake beyond 40% of the issued and outstanding common
shares.
The Group's convertible debenture has been
classified at fair value through profit or loss based on IFRS 9
criteria. As at 30 June 2024, an amount of CAD 5.0 million (€3.6
million), which is included in loans receivable from related
parties, (31 December 2023: €3.4 million). The loan is
required to be repaid to Playtech by October 2026 or upon
conversion (to the extent not fully converted) once conversion
criteria are met.
In April 2024, the Group signed a promissory
note with NorthStar for the amount of CAD 3.0 million (€2.1
million), which is included in current assets as loans receivable
from related parties. The principal and the outstanding interest
under the promissory note are required to be paid the earliest
of:
i. 12 months from April 2024,
ii. the date on which Playtech declares the Indebtedness to
be immediately due and payable following the occurrence of an event
of default (as defined in agreement between Playtech and
NorthStar),
iii. the date on which NorthStar or any of its
subsidiaries complete an offering of debt or equity securities to
one or more third parties that, when aggregated with any other
financing completed, results in gross proceeds to NorthStar and its
subsidiaries of at least CAD 10 million.
The fair value of all of Playtech's warrants is
€Nil as at 30 June 2024 (31 December 2023: €Nil) (refer Note
14C).
Assessment of control and significant
influence
As at the date of acquisition and 30 June 2024
the Group did not have control over NorthStar, even after
additional investment made in H2 2023, because it does not meet the
criteria of IFRS 10 Consolidated Financial Statements, paragraph 7
due to the following:
• despite
representation on the NorthStar board of directors by Playtech's
CFO and one more Playtech employee at 31 December 2023 and 30 June
2024, there is still no ability to control the relevant activities,
as the total number of appointed directors is eight;
and
• Playtech has neither
the ability to change any other members of the NorthStar board nor
the management of NorthStar.
Per the above assessment, Playtech does not
hold power over the investee and as such does not have
control.
As at 30 June 2024 and 31 December 2023, the
Group has significant influence over NorthStar because it meets one
or more of the criteria under IAS 28, paragraph 6, the main one
being that it has two appointed members sitting on the board of
NorthStar, enabling it to therefore participate in policy-making
processes, including decisions about dividends and/or other
distributions. As a result of this assessment NorthStar has been
recognised as an investment in associate.
The NorthStar warrants are fair valued as per
paragraph 14 of IAS 28 and shown as a derivative financial asset in
accordance with IFRS 9 (refer to Note 14C).
In September 2024 a further promissory note to
the valued of CAD 3.0 million was issued to NorthStar to assist the
company with its growth plans whilst the work on establishing more
medium to long term financing.
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.
Goodwill is not recognised separately but is
included as part of the carrying amount of the investment in
associate. Up until October 2023, Playtech's shareholding was
diluted to 15% due to NorthStar issuing more shares as part of an
acquisition they completed in May 2023. Playtech's shareholding for
June 2024 was 25.8% (31 December 2023: 27.5%). The total
share of loss recognised in profit or loss in the period ended 30
June 2024 from the investment in NorthStar was €2.2 million (H2
2023: €1.7 million and H1 2023: €1.1 million). This includes the
amortisation of intangibles, arising on acquisition, and the share
of NorthStar's losses, with a corresponding entry against the
investment in associate.
Investment in Sporting News Holdings
Limited
Background
In August 2023, the Group acquired 12.6% of
Sporting News Holdings Limited ("TSN"), for a total consideration
of $6.3 million (€5.8 million).
TSN's principal activities are the sale of
digital advertising and the offering of media services, the
provision of multimedia sports content across internet-enabled
digital platforms and the distribution directly to customers and
business clients around the world. The company is incorporated in
the Isle of Man. The principal reason of the acquisition is the
attractive opportunity considered by Playtech to increase its
footprint in the growing sports and media market
segment.
Assessment of control and significant
influence
As at the date of acquisition and 30 June 2024
it was assessed that the Group did not have control over TSN,
because it does not meet the criteria of IFRS 10 Consolidated
Financial Statements, paragraph 7 due to the following:
• despite Playtech
having the right to appoint a director on the TSN board, as at 30
June 2024 and 31 December 2023, one had not yet been appointed.
Playtech has preferred to only appoint an observer to the
board. Moreover, once Playtech appoints a director, there is still
no ability to control the relevant activities, as the total
number of directors including potentially one Playtech appointed
director will be five; and
• Playtech has neither
the ability to change any members of the board nor of the
management of TSN.
Per the above assessment, Playtech does not
hold power over the investee and as such does not have
control.
As at 30 June 2024, the Group has significant
influence over TSN because it meets one or more of the criteria
under IAS 28, paragraph 6, the main one being Playtech having the
ability to appoint a member on the board of TSN, enabling it to
therefore participate in policy-making processes, including
decisions about dividends and/or other distributions. As a result
of this assessment TSN has been recognised as an investment in
associate.
The cost of the investment was deemed to be the
consideration paid for the shares of $6.3 million (€5.8 million),
which was reduced by €0.2 million by 31 December 2023 through
the recognition of the Group's share of losses. The total share of
loss recognised in profit or loss in the period ended 30 June 2024
from the investment in TSN was €0.2 million.
Other investments in associates that are fair
valued under IFRS9 per IAS 28, paragraph 14
The following are also investments in
associates where the Group has significant influence but where the
option is not currently exercisable. As there is no current
access to profits, the relevant option is fair valued under IFRS 9,
and disclosed as derivative financial assets under part C
of this Note:
• Wplay;
• Tenbet (Costa
Rica);
• Onjoc (Panama);
and
• Tenlot El Salvador
S.A. de C.V
The financial information required for
investments in associates, other than Caliplay, has not been
included here as from a Group perspective the Directors do not
consider them to have a material impact jointly or
separately.
B. Other investments
Balance sheet
|
|
|
|
|
Listed investments
|
13.9
|
15.8
|
|
Investment in Tenlot Guatemala
|
-
|
-
|
|
Investment in Tentech Costa Rica
|
-
|
-
|
|
Investment in Gameco
|
-
|
-
|
Investment in Hard Rock Digital
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Profit and loss
|
|
|
|
Change in fair value of equity
investments
|
37.1
|
0.3
|
Impairment of investment in Gameco (included in
the impairment of financial assets)
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
Foreign exchange movement from equity
investments held in a non-Euro functional subsidiary
|
|
|
Listed investments
The Group has shares in listed securities,
noting that new shares in listed securities were purchased during
the year ended 31 December 2023 for €14.3 million. The fair values
of these equity shares are determined by reference to published
price quotations in an active market. For the period ended 30 June
2024, the fair values of these listed securities decreased by €1.9
million (H1 2023: increase of €0.3 million, H2 2023: decrease of
€0.2).
Investment in Tenlot Guatemala
In 2020, the Group entered into an agreement
with Tenlot Guatemala, a member of the Tenlot Group. Tenlot
Guatemala, which is in the lottery business in Guatemala, commenced
its activity in 2018.
The Group acquired a 10% equity holding in
Tenlot Guatemala for a total consideration of $5.0 million (€4.4
million) in 2020, which has been accounted at fair value through
profit or loss under IFRS 9.
The fair value of the equity holding as at 30
June 2024 and 31 December 2023 was €Nil because of changes to
market conditions which led to changes in its original business
plans. The fair value of the equity holding has decreased by €4.4
million in the year ended 31 December 2023.
In addition, the Group was granted a 10% equity
holding in Super Sports S.A. at no additional cost. The Group also
has an option to acquire an additional 80% equity holding in Super
Sports S.A. If the option is exercised, the Group would no longer
provide certain services and, as such, would no longer be entitled
to the additional B2B services fee. The additional B2B services fee
was €Nil for the period ended 30 June 2024 (2023: €Nil). There are
no conditions attached to the exercise of the option.
The right of exercising the call option at any
time and the acquisition of the additional 80% in Super Sports S.A.
give Playtech:
• power over the
investee;
• exposure, or rights,
to variable returns from its involvement with the investee;
and
• the ability to use
its power over the investee to affect the amount of the investor's
returns.
It therefore satisfies all the criteria of
control under IFRS 10, paragraph 7 and, as such, at 30 June 2024
Super Sports S.A. has been consolidated in the consolidated
financial statements of the Group, noting that this is not material
from a Group perspective.
Investment in Tentech Costa Rica
In 2020, the Group entered into an agreement in
Costa Rica with the Tenlot Group. The Group acquired a 6% equity
holding in Tentech CR S.A., a member of the Tenlot Group, for a
total consideration of $2.5 million (€2.1 million). Tentech CR S.A.
sells printed bingo cards in accordance with article 29 of the Law
of Raffles and Lotteries of Costa Rica (CRC - Costa Rican Red Cross
Association).
The 6% equity holding in Tentech CR S.A. is
accounted at fair value through profit or loss under IFRS
9.
The fair value of the equity holding as at 30
June 2024 and 31 December 2023 was €Nil because of changes to
market conditions which led to changes in its original business
plans. The fair value of the equity holding has decreased by €2.3
million in the year ended 31 December 2023.
Investment in Gameco
In 2021, the Group entered into a convertible
loan agreement with GameCo LLC ("Gameco"), where it provided $4.0
million (€3.8 million) in the form of a debt security with 8%
interest. In December 2022, Gameco acquired Green Jade Games and,
subsequently, the Playtech debt was converted into equity shares,
representing a 7.1% interest in the newly formed group. Immediately
prior to the conversion, the loan was impaired by €3.0 million, and
this has been recognised in profit or loss in the prior
year.
The 7.1% equity holding in the newly formed
group was accounted at fair value through profit or loss under IFRS
9 at 31 December 2022. As at 30 June 2024 and
31 December 2023, the fair value of the equity holding has
been impaired down to €Nil.
Investment in Hard Rock Digital
In March 2023, the Group invested $85.0 million
(€79.8 million in March 2023, €77.0 million at 31 December 2023) in
Hard Rock Digital (HRD) in exchange for a small minority interest
in a combination of equity shares and warrants. HRD is the
exclusive Hard Rock International and Seminole Gaming vehicle for
interactive gaming and sports betting on a global basis. During
late 2023 and 2024 positive outcomes were received in respect of
claims made in both the Federal and Supreme Courts. Following
this, sports betting was re-launched in Florida.
The Group assessed whether the warrants
meet the definition of a separate derivative as per IFRS 9. A
financial instrument or other contract should have all three of the
following characteristics:
• its value
changes in response to the change in a specified interest rate,
financial instrument price, commodity price, foreign exchange rate,
index of prices or rates, credit rating or credit index, or other
variable, provided, in the case of a non-financial variable, that
the variable is not specific to a party to the contract (sometimes
called the "underlying");
• it requires no
initial net investment or an initial net investment that is smaller
than would be required for other types of contracts that would be
expected to have a similar response to changes in market factors;
and
• it is settled
at a future date.
Management made a judgement that the warrants
do not meet the definition of a separate derivative asset as: (i)
the value of the warrants is part of the total investment and
cannot be distinguished between the two and therefore the value of
the warrants was deemed to be equal to the equity shares value; and
(ii) the consideration was paid at the time of the
transaction.
Furthermore, the equity investment 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. The investment was therefore classified as an
investment held at fair value through profit or loss with initial
and subsequent recognition at fair value, with any subsequent
gain/loss recognised in profit or loss.
In H1 2024, we received a dividend of €1.6
million (H1 2023: €Nil), recognised in finance income.
Valuation
The Group has assessed the fair value of the
investment at 30 June 2024 by applying a DCF approach with a market
exit multiple assumption to the two CGUs within the investment. The
discount rate and exit multiples used were within the range of
19-25% and 7.7x - 10.0x respectively. Due to the small minority
interest and the limited influence Playtech has over HRD, the Group
included a discount for lack of control of 10%, as well as a
15%-20% discount for lack of marketability due to the shares not
being publicly traded.
As at 30 June 2024, the fair value of the
equity investment in HRD increased to €118.5 million ($127.0
million). The difference of €41.5 million between the fair value at
31 December 2023 of €77.0 million and the fair value at 30 June
2024 has been recognised as follows:
a. €39.0 million derived from
the fair value increase of the equity investment calculated using
the DCF model in profit or loss for the period ended 30 June 2024.
The increase was mainly driven by the performance of the business,
which was aided by the relaunch of the Florida
operations.
b. €2.5 million derived from
the fair value increase due to the exchange rate fluctuation of USD
to EUR (as the equity investment is under a foreign subsidiary of
the Group whose functional currency is USD) in other comprehensive
income for the period ended 30 June 2024.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the equity investment as at 30 June 2024 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 plus or minus
shift of 5% to the discount rates used will result in a fair value
of the equity investment in the range of €73.7 million - €150.2
million.
· A 5% fluctuation
in the Adjusted EBITDA margin will result in a fair value of the
equity investment within the range of €103.6 million - €133.4
million.
· A 10% fluctuation
in the Adjusted EBITDA margin will result in a fair value of the
equity investment within the range of €88.6 million - €139.0
million.
· A 5% fluctuation
in the revenue growth rate will result in a fair value of the
equity investment within the range of €71.8 million - €151.2
million.
· A 10% fluctuation
in the revenue growth rate will result in a fair value of the
equity investment within the range of €61.6 million - $178.2
million.
· A 1.0 fluctuation
on the market exit multiple will result in a fair value of the
equity investment within the range of €91.4 million - €137.2
million.
C. Derivative financial assets
Balance sheet
|
|
|
|
|
Playtech M&A Call Option
(Caliplay)
|
773.3
|
730.2
|
|
Wplay
|
99.7
|
88.0
|
|
Onjoc
|
3.7
|
3.1
|
|
Tenbet
|
0.4
|
1.7
|
|
Tenlot El Salvador S.A. de C.V
|
4.4
|
-
|
|
NorthStar warrants (Note 14A)
|
-
|
-
|
|
|
|
|
Total derivative financial
assets
|
|
|
Statement of comprehensive income
impact
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Caliplay
|
|
|
|
Fair value change of Playtech M&A Call
Option
|
21.7
|
(22.5)
|
|
Foreign exchange movement to profit or
loss
|
21.4
|
(9.0)
|
|
Wplay
|
|
|
|
Fair value change in Wplay
|
9.0
|
7.2
|
|
Foreign exchange movement recognised in other
comprehensive income
|
2.7
|
(1.6)
|
|
Onjoc
|
|
|
|
Fair value change in Onjoc
|
0.5
|
0.3
|
|
Foreign exchange movement recognised in other
comprehensive income
|
0.1
|
(0.1)
|
|
Tenbet
|
|
|
|
Fair value change in Tenbet
|
(1.3)
|
(1.6)
|
|
Foreign exchange movement recognised in other
comprehensive income
|
-
|
(0.2)
|
|
LSports
|
|
|
Fair value change of call option (Note
14A)
|
|
|
Total comprehensive income
impact
|
|
|
Caliplay
As already disclosed in section A of this note,
the Playtech M&A Call Option was 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 further disclosed in Note 14A, at 30 June
2024 Playtech was well progressed in negotiating a revised
strategic agreement with Caliente in which the Playtech M&A
Call Option currently held by Playtech would be revised and
ultimately resulting, on closing of the revised arrangements,
in Playtech holding a 30.8% equity shareholding pursuant to
the exercise of the Playtech M&A Call Option in the newly
incorporated US holding company of Caliplay (the "Equity Right"),
with the 30.8% shareholding being achieved after taking account of
the rights of its service providers. The completion of these
revised arrangements, which were announced on 16 September 2024, is
conditional upon Mexican antitrust approval and closing is expected
to take place in Q1 2025. Furthermore, there is currently an agreed
standstill of all current legal proceedings between Caliente,
Caliplay and Playtech, and those proceedings will be dismissed in
full once the revised arrangements come into effect. Under the
Equity Right scenario, Playtech would no longer be entitled to the
additional B2B services fee, but will have certain customary
shareholder rights, including the right to appoint a Director to
the Board of Cali Interactive for so long as Playtech's equity
interest is at least 15% of Cali Interactive. Subject to available
cash and applicable law, Playtech and all other Cali Interactive
stockholders will receive dividends, at least quarterly, pursuant
to an agreed dividend policy. Whilst the resultant 30.8%
shareholding on closing of the revised arrangements is less than
the percentage interest (after taking account of the rights of the
Playtech Group's service providers) which the Playtech Group would
have held in Caliplay were it to have exercised the Playtech
M&A Call Option, the Playtech Group was willing to accept this
reduced interest in the context of the terms of these revised
arrangements taken as a whole which include (i) the resultant
settlement and dismissal of all legal proceedings between Caliente,
Caliplay and Playtech; (ii) the receipt (and/or payment into
escrow) of the entirety of the outstanding fees owing to the
Playtech Group; (iii) Playtech holding shares in a newly
incorporated US holding company of Caliplay; and (iv) the Caliente
Call Option and the COC Option (and the Playtech Call Option)
ceasing to exist with the Playtech M&A Call Option having been
exercised.
As at 30 June 2024, the Group assessed that it
was highly probable that the revised arrangements are agreed and
signed and as such valued both scenarios being:
1. The value of the
existing Playtech M&A Option, which similar to the 31 December
2023 valuation, used a discounted cash flow (DCF) approach with a
market exit multiple assumption; and
2. The value of the
Equity Right, which relied on broadly the same methodology (i.e. a
DCF approach with a market exit multiple assumption) and set of
cash flows as the Playtech M&A Call Option with key differences
discussed further below.
As at 30 June 2024, the valuation methodology
used for the overall value of the Playtech M&A Call Option was
weighted between the resulting values above.
Valuation
The Group has assessed the overall fair value
of the Playtech M&A Option as at 30 June 2024 by allocating a
75% weighting to the Equity Right value as it was more likely than
not at 30 June 2024 that the revised arrangements would be agreed
and announced (although still subject to completion), with the
other 25% weighting being allocated to the Playtech M&A Call
Option under the same existing terms.
Existing
Playtech M&A Call Option
The discount rate used at 30 June 2024 was 19%
(31 December 2023: 20%). This includes the same company-specific
risk premium to capture the ongoing risk due to the legal
proceedings with Caliplay, which would remain under this scenario.
The decrease in the discount rate from 31 December 2023 was due to
movements in market factors.
The Group also made assumptions on the
probability of a possible transaction that may be completed on a
number of exit date scenarios over a five-year period, until
December 2028 (and ignoring the Equity Right scenario). Management
did not model a scenario of no exit as this is considered highly
remote. The Group used a compound annual growth rate of 16.4% (31
December 2023: 17.0%) on revenue over the forecasted cash flow
period, an average Adjusted EBITDA margin of 31.8% (31 December
2023: 31.3%) and an exit multiple of 7.7x (31 December 2023: 7.7x).
It was deemed appropriate to keep the exit multiple at the lower
end of expected range due to the fact that the dispute was still
ongoing at 30 June 2024. Due to the uncertainty at 30 June 2024 as
to how the exercise of the Playtech M&A Call Option may occur
and the potential for the shares to be held on any exercise to not
be immediately realisable, the Group included an additional
discount for lack of marketability (DLOM) for two years of 10% (31
December 2023: 10.0%).
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.
Equity Right
valuation
The Group has removed the additional
company-specific risk premium in the discount rate used for the
valuation of the Equity Right as under the completion of this
scenario there will no longer be a dispute and therefore used a
market participant base discount rate of 15%. In arriving at the
DCF/exit multiple value of the Equity Right, the same business plan
used as that for the valuation of the Playtech M&A Call Option,
however, excluding the cash flows for H2 2024, as the equity right
can only be effective from 1 January 2025. The Group included a
DLOM/ DLOC (discount for lack of control) of 15% to reflect the
terms of the equity holding.
As at 30 June 2024, the fair value of the
Playtech M&A Call Option using the weighted Playtech M&A
Call option and Equity Right was $828.8 million (2023: $805.8
million) which converted to €773.3 million (2023: €730.2
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 the favorable
movement in the USD to EUR foreign exchange rate; and
• due to rolling the
valuation forward by six months, decrease in the discount rate and
updated balance sheet position.
These were partially offset by:
• the small updates to
the cash flow forecasts;
• the changes in the
assumed exercise dates and associated DLOMs; and
• the change in the
methodology (75% weighting to Equity Right).
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 30 June 2024
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 plus or minus
5% in the discount rate under each scenario would result in a fair
value of the derivative financial asset in the range of €751.1
million - €792.2 million.
· A 5% fluctuation
in the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €736.2 million -
€810.8 million.
· A 10% fluctuation
in the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €697.9 million -
€848.1 million.
· A 5% fluctuation
in the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €660.6 million -
€901.3 million.
· A 10% fluctuation
in the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €562.6 million -
€1,047.8 million.
· A plus or minus
1.0 fluctuation on the market exit multiple will result in a fair
value of the derivative financial asset within the range of €710.0
million - €836.9 million.
· A plus or minus
2.0 fluctuation on the market exit multiple will result in a fair
value of the derivative financial asset within the range of €646.6
million - €899.5 million.
· If the
incremental annual DLOM on option fluctuates by 2.5% (to 2.5% and
7.5% instead of 5%) it will result in a fair value of the
derivative financial asset within the range of €762.3 million -
€784.7 million.
· A 5% fluctuation
on the DLOM of 10% applied post the exercise date under each
scenario to reflect an assumed lock-in period after the option is
exercised will result in a fair value of the derivative financial
asset within the range of €764.2 million - €782.8
million.
Wplay
In August 2019, Playtech entered into a
structured agreement with Aquila Global Group SAS ("Wplay"), which
has a licence to operate online gaming products and services in
Colombia. Under the agreement, the Group provides Wplay its
technology products, where it receives standard operator revenue
and additional B2B services fee as per Note 7. 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 30 June 2024 the option
exercise date was February 2025 or earlier if an M&A event
takes place. 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 €Nil million for the period ended 30 June 2024 (H1
2023: €Nil million, H2 2024 :€1.2 million).
The payment of €22.4 million made to Wplay in
2019 and 2020 was considered to be the payment made for the option
in Wplay.
Assessment of control and significant
influence
The Group concluded that it does not control
Wplay but has significant influence over it. Refer to Note 21 in
the Group audited financial statements for the year ended 31
December 2023 for the assessment. As the option is not currently
exercisable, the Group has an investment in associate but with no
access to profits. As such, the option is fair valued as per
paragraph 14 of IAS 28 and shown as a derivative financial asset in
accordance with IFRS 9.
The Group has given two loans to Wplay, with an
outstanding balance at 31 December 2023 of €1.3 million, included
in loans receivable from related parties. The loans were repaid
during H1 2024.
Valuation
The fair value of the option at 30 June 2024
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 21% (31 December
2023: 22%), a decrease reflecting the maturity stage of the Wplay
business, as well as a discount for illiquidity and control until
the expected Playtech exit date of February 2025 (31 December 2023:
expected exit date of February 2025). The Group used a compound
annual growth rate of 6.7% (31 December 2023: 8.2%) over the
forecasted cash flow period, an average Adjusted EBITDA margin of
27.9% (31 December 2023: 28.5%) and an exit multiple of 10.8x (31
December 2023: 10.2x). 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 2024, the fair value of the Wplay
derivative financial asset is €99.7 million. The difference of
€11.7 million between the fair value at 31 December 2023 of €88.0
million and the fair value at 30 June 2024 has been recognised as
follows:
a. €9.0 million derived from the
fair value increase of the derivative call option calculated using
the DCF model in profit or loss for the period ended 30 June 2024.
The increase was due to the decrease in the discount rate and
increase of the exit multiple as the business is more mature.
Moreover, Wplay's net debt position has improved as at 30 June 2024
compared to 31 December 2023 and the assumed exercise date of
February 2025 is getting closer.
b. €2.7 million derived from
the fair value increase 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 2024.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 30 June 2024
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 16% to 26% will result in a fair value of
the derivative financial asset in the range of €86.3 million -
€116.1 million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €94.9 million -
€104.5 million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €90.1 million -
€109.2 million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €95.3 million -
€104.1 million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €91.0 million -
€108.6 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 €92.5 million -
€106.8 million.
• If the expected
Playtech exit date is extended by one year, the fair value of the
derivative financial asset will decrease to €94.5
million.
Onjoc
In June 2020, Playtech entered into a framework
agreement with ONJOC CORP. ("Onjoc"), which holds a licence to
operate online sports betting, gaming and gambling activities in
Panama. The Group has no equity holding in Onjoc but has an option
to acquire 50%. Under the agreement the Group provides Onjoc its
technology products, where it receives standard operator revenue
and additional B2B services fee as per Note 7. If the option is
exercised, the Group would no longer provide certain services and,
as such, would no longer be entitled to the additional B2B services
fee. The additional B2B services fee was €Nil in the period ended
30 June 2024 (H1 2023: €Nil, H2 2023: €Nil). The option can be
exercised any time subject to Onjoc having $15.0 million of Gross
Gaming Revenue (GGR) over a consecutive 12-month period.
Assessment of control and significant
influence
The Group concluded that it does not control
Onjoc but has significant influence over it. Refer to Note 21 in
the Group audited financial statements for the year ended 31
December 2023 for the assessment. As the option is not
currently exercisable, the Group has an investment in associate but
with no access to profits. As such, the option is fair valued as
per paragraph 14 of IAS 28 and shown as a derivative financial
asset in accordance with IFRS 9.
The Group has given an interest-bearing loan to
Onjoc of €2.4 million (31 December 2023: €2.3 million) which is due
for repayment in October 2025 and is included in loans receivable
from related parties.
Valuation
The fair value of the option at 30 June 2024
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 33% (31 December
2023: 32%) reflecting the cash flow risk given the high growth
rates in place and the early stages of the business, as well as a
discount for illiquidity and control until the expected Playtech
exit date of December 2028 (31 December 2023: expected exit date of
December 2028). The Group used a compound annual growth rate of
49.2% (31 December 2023: 49.2%) over the forecasted cash flow
period and an average Adjusted EBITDA margin of 26.3% (31 December
2023: 24.2%). 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 2024, the fair value of the Onjoc
derivative financial asset is €3.7 million. The difference of €0.6
million between the fair value at 31 December 2023 of €3.1 million
and the fair value at 30 June 2024 has been recognised as
follows:
a. €0.5 million derived from
the fair value increase of the derivative call option calculated
using the DCF model in profit or loss in the period ended 30 June
2024. This increase is mostly due to Tenbet's improved net debt
position as at 30 June 2024 compared to 31 December 2023 and the
assumed exercise date getting closer.
b. €0.1 million derived from
the fair value increase 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 2024.
Sensitivity analysis
The assumptions and judgements made in the
valuation of the derivative financial asset as at 30 June 2024
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 €3.0 million - €4.4
million.
• A 5% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €3.5 million - €3.9
million.
• A 10% fluctuation in
the Adjusted EBITDA margin will result in a fair value of the
derivative financial asset within the range of €3.3 million - €4.1
million.
• A 5% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €2.8 million - €4.6
million.
• A 10% fluctuation in
the revenue growth rate will result in a fair value of the
derivative financial asset within the range of €1.9 million - €5.6
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 €3.0 million - €4.4
million.
Tenbet Costa Rica
In addition to the 6% equity holding in Tentech
CR S.A as per section B of this Note, the Group has an option to
acquire 81% equity holding in Tenbet. Tenbet, which is another
member of the Tenlot Group, operates online bingo games and casino
side games. Playtech provides certain services to Tenbet in return
for its additional B2B services fee. The Group has no equity
holding in Tenbet but has an option to acquire 81% equity. If the
option is exercised, the Group would no longer provide certain
services to Tenbet and, as such, would no longer be entitled to the
additional B2B services fee. The additional B2B services fee was
€Nil in the period ended 30 June 2024 (H1 2023: €Nil, H2 2023:
€Nil). In H1 2023, the Group signed an amendment to the Tenbet
agreement in which the option can be exercised at any time from
July 2024 (previously 35 months of Tenbet going live). In H2 2023,
the Group signed an amendment to the Tenbet agreement in which the
option can be exercised at any time from 1 January 2025 based on
the condition that Tenbet has generated at least once, prior to the
exercise, accumulative GGR (as defined in the agreement) of at
least $10.0 million, in a consecutive 12-month period.
Under the existing agreements, the Group has
provided Tenbet with a credit facility of €5.0 million, out of
which €4.7 million had been drawn down as at 30 June 2024 (31
December 2023: €4.2 million).
Assessment of control and significant
influence
The Group concluded that it does not control
Tenbet but has significant influence over it. Refer to Note 21 in
the Group audited financial statements for the year ended 31
December 2023 for the assessment. As the option is not currently
exercisable, the Group has an investment in associate but with no
access to profits. As such, the option is fair valued as per
paragraph 14 of IAS 28 and shown as a derivative financial
asset in accordance with IFRS 9.
Valuation
The fair value of the option at 30 June 2024
has been estimated using a DCF approach with a market exit multiple
assumption. The Group used a discount rate of 34% (31 December
2023: 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 2028 (31 December 2023: expected exit date of
December 2028). The Group used a compound annual growth rate of 91%
(31 December 2023: 96.2%) over the forecasted cash flow period and
an average Adjusted EBITDA margin of 1.1% (31 December 2023:
average of 0.9%). 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 2024, the fair value of the
Tenbet derivative financial asset is €0.4 million. The difference
of €1.3 million between the fair value at 31 December 2023 of €1.7
million and the fair value at 30 June 2024 has been recognised as
follows:
a. €1.3 million derived from
the fair value decrease of the derivative call option calculated
using the DCF model in profit or loss in the period ended 30 June
2024. This decrease is mostly due to the revised cash flow
forecasts used in the valuation which have been downgraded based on
Tenbet's current performance.
b. €Nil 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 2024.
Tenlot El Salvador S.A. de C.V
During the period, the Group entered
into a new structured agreement with Tenlot El Salvador S.A. de
C.V. (Tenlot El Salvador), which has a license to operate online
betting and gaming on behalf the national lottery of El Salvador.
Under the agreement the Group will provide Tenlot El Salvador its
technological platform, as well as operational and other related
services, where it will receive in return standard operator revenue
and additional B2B services fee as per Note 7. The additional B2B
services fee was €Nil in the period ended 30 June 2024.The Group
has no shareholding in Tenlot El Salvador.
Under the structured agreement,
Playtech has paid Tenlot El Salvador an amount of $2.9 million with
an additional $1.9 million to be paid in instalments upon certain
conditions being met, in exchange for an option to acquire 70% of
the shares in Tenlot El Salvador. The option can be exercisable at
any time after 18 months from February 2024 subject to Tenlot El
Salvador generating at least once prior to the exercise, a
cumulative gross gaming revenue of at least $10.0 million in any
consecutive period of 12 months.
Playtech also made available to
Tenlot El Salvador a $5.5 million line of credit out. As at 30 June
2024, the amount remains undrawn.
Assessment of control and significant
influence
The Group assessed whether it holds power over
Tenlot El Salvador (in accordance with IFRS 10, paragraph 7) with
the following considerations:
• Playtech does not
have the ability to direct Tenlot El Salvador's activities as it
has no voting representation on the board of directors (or
equivalent) or people in managerial positions;
• Playtech has neither
the ability to appoint, nor change, any members of the board of
Tenlot El Salvador; and
• as at 30 June 2024,
the option is not exercisable and therefore can be disregarded in
the assessment of power.
Per the above assessment, Playtech does not
hold power over the investee and as such does not have
control.
With regard to the assessment of significant
influence, the standard operator revenue alone is not considered to
give rise to significant influence. However, when combined with the
additional B2B services fee, this is an indicator of significant
influence. Furthermore, the Group will provide additional services
to Tenlot El Salvador which Tenlot El Salvador 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 Tenlot El Salvador.
However, as the option is not currently exercisable, the Group has
an investment in associate but with no access to profits. As such,
the option is fair valued as per paragraph 14 of IAS 28 and
shown as a derivative financial asset in accordance with IFRS
9.
Valuation
As at 30 June 2024, the fair value of the
Tenlot El Salvador derivative financial asset is €4.4 million.
Since the date the derivative was acquired until 30 June 2024,
there have been no changes in the operations of Tenlot El Salvador
that would indicate that the fair value of the derivative financial
asset would be different to the original arm's length price payable
of $4.8 million (€4.4 million).
Note 15 - Assets held for sale
|
|
|
|
|
Assets
|
|
|
Property, plant and equipment
|
|
|
During 2021, the Group entered into a binding
agreement for the disposal of a real estate area in Milan for a
total consideration of €20.0 million. Accordingly, the real estate
was classified as held for sale. Of the total consideration, €1.0
million was received during the year ended 31 December 2021.
The advance received was classified as part of the liabilities
directly associated with assets classified as held for
sale.
The sale has been finalised but the disposal is
expected to complete in H1 2025 with the movement of the trot track
from La Maura area to San Siro (previously it was expected
that the sale would be completed during 2024).
Note 16 - Shareholders' equity
A. Share capital
Share capital is comprised of no par value
shares as follows:
|
|
30 June
2024
Number
of
shares
|
31 December
2023
Number
of shares
|
|
Authorised1
|
N/A
|
N/A
|
|
|
|
|
1 The Company has no
authorised share capital, but the Directors are authorised to issue
up to 1,000,000,000 shares of no par value.
The table below shows the movement of the
shares:
|
|
Shares in
issue/
circulation
Number of
shares
|
|
|
|
|
At 1 January 2023
|
300,988,316
|
2,937,550
|
5,368,377
|
309,294,243
|
|
Transfer from treasury shares to EBT
|
-
|
(2,937,550)
|
2,937,550
|
-
|
|
|
|
|
|
|
|
At 30 June 2023
|
303,903,860
|
-
|
5,390,383
|
309,294,243
|
|
Exercise of options
|
788,947
|
-
|
(788,947)
|
-
|
|
At 31 December 2023/1 January 2024
|
304,692,807
|
-
|
4,601,436
|
309,294,243
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Employee Benefit Trust
In 2014, the Group established an Employee
Benefit Trust by acquiring 5,517,241 shares for a total of €48.5
million.
In 2021, the Company transferred 7,028,339
shares held by the Company in treasury to the Employee Benefit
Trust for a total of €22.6 million.
In 2023, the Company transferred 2,937,550
shares held by the Company in treasury to the Employee Benefit
Trust for a total of €12.5 million.
During the year period ended 30 June 2024,
229,834 shares (for the year ended 31 December 2023: 3,704,491)
were issued at a cost of €0.7 million (2023: €11.9 million). As at
30 June 2024, a balance of 4,371,602 shares (31 December 2023:
4,601,436 shares) remains in the EBT with a cost of €17.1 million
(31 December 2023: €17.8 million).
C. Share options exercised
During the period ended 30 June 2024 269,442
(for the year ended 31 December 2023: 3,880,633) share options were
exercised, of which 39,608 were cash settled (31 December 2023:
176,142).
D. Distribution of dividends
During 2024 the Group did not pay any
dividends.
E. Reserves
The following describes the nature and purpose
of each reserve within owners' equity:
|
|
|
|
Additional paid in capital
|
Share premium (i.e. amount subscribed for share
capital in excess of nominal value)
|
|
Employee Benefit Trust
|
Cost of own shares held in treasury by the
trust
|
|
Foreign exchange reserve
|
Gains/losses arising on retranslating the net
assets of overseas operations
|
|
Employee termination indemnities
|
Gains/losses arising from the actuarial
remeasurement of the employee termination indemnities
|
|
Non-controlling interest
|
The portion of equity ownership in a subsidiary
not attributable to the owners of the Company
|
|
|
Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income
|
Note 17 - Loans and borrowings
The main credit facility of the Group is a
revolving credit facility (RCF) up to €277.0 million and is
available until October 2025, with an option to extend by 12
months. Interest payable on the loan is based on SONIA depending on
the currency of each withdrawal. As at the reporting date the
credit facility drawn amounted to €Nil (31 December 2023:
€Nil).
Under the RCF, the covenants are monitored on a
regular basis by the finance department, including modelling future
projected cash flows under a number of scenarios to stress-test any
risk of covenant breaches, the results of which are reported to
management and the Board of Directors. The covenants are as
follows:
• Leverage: Net
Debt/Adjusted EBITDA to be less than 3.5:1 for the 12 months ended
30 June 2024 (31 December 2023: less than 3.5:1).
• Interest cover:
Adjusted EBITDA/Interest to be over 4:1 for the 12 months ended 30
June 2024 (2023: over 4:1).
As at 30 June 2024 and 31 December 2023 the
Group met these financial covenants.
Note 18 - Bonds
|
|
|
|
|
|
|
At 1 January 2023
|
199.6
|
348.0
|
-
|
547.6
|
|
Issue of new bond
|
-
|
-
|
297.3
|
297.3
|
|
Release of capitalised expenses
|
0.3
|
0.3
|
-
|
0.6
|
|
30 June 2023
|
199.9
|
348.3
|
297.3
|
845.5
|
|
Repayment of bonds
|
(200.0)
|
-
|
-
|
(200.0)
|
Release of capitalised expenses
|
|
|
|
|
|
At 31 December 2023/1 January
2024
|
-
|
348.6
|
297.5
|
646.1
|
Release of capitalised expenses
|
|
|
|
|
|
|
|
|
|
|
Bonds
(a) 2018 Bond
On 12 October 2018, the Group issued €530.0
million of senior secured notes (the "2018 Bond") maturing in
October 2023. The net proceeds of issuing the 2018 Bond after
deducting commissions and other direct costs of issue totalled
€523.4 million.
Commissions and other direct costs of issue
have been offset against the principal balance and are amortised
over the period of the 2018 Bond.
The issue price was 100% of its principal
amount and bears interest from 12 October 2018 at the rate of 3.75%
per annum payable semi-annually, in arrears, on 12 April and 12
October commencing on 12 April 2019.
During the year ended 31 December 2022, the
Group made a partial repayment towards the 2018 Bond of €330.0
million. It was then fully repaid in 2023.
(b) 2019 Bond
On 7 March 2019, the Group issued €350 million
of senior secured notes (the "2019 Bond") maturing in March 2026.
The net proceeds of issuing the 2019 Bond after deducting
commissions and other direct costs of issue totalled €345.7
million.
Commissions and other direct costs of issue
have been offset against the principal balance and are amortised
over the period of the 2019 Bond.
The issue price is 100% of its principal amount
and bears interest from 7 March 2019 at a rate of 4.25% per annum
payable semi-annually, in arrears, on 7 September and 7 March
commencing on 7 September 2019.
(c) 2023 Bond
On 28 June 2023, the Group issued €300.0
million of senior secured notes (the "2023 Bond") maturing in June
2028. The net proceeds of issuing the 2023 Bond after deducting
commissions and other direct costs of issue totalled €297.2
million.
Commissions and other direct costs of issue
have been offset against the principal balance and are amortised
over the period of the 2023 Bond.
The issue price is 100% of its principal amount
and bears interest from 28 June 2023 at a rate of 5.875% per annum
payable semi-annually, in arrears, on 28 December and 28 June
commencing on 28 December 2023.
As at 30 June 2024 and 31 December 2023, the
Group met the required interest cover financial covenant of 2:1
Adjusted EBITDA/Interest ratio, for the combined 2019 and 2023
Bonds.
Note 19 - 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 2024 are shown below:
|
|
|
|
|
|
|
Balance at 1 January 2024
|
5.7
|
0.8
|
3.0
|
9.5
|
|
Provisions made during the year
|
-
|
-
|
3.6
|
3.6
|
|
Provisions used during the year
|
-
|
-
|
(0.2)
|
(0.2)
|
Provisions reversed during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2023
|
|
|
|
|
|
Non-current
|
5.7
|
0.3
|
2.9
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2024
|
|
|
|
|
|
Non-current
|
5.7
|
0.3
|
4.4
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for legal and regulatory
issues
The Group is subject to proceedings and
potential claims regarding complex legal matters which are subject
to a different degree of uncertainty. Provisions are held for
various legal and regulatory issues that relate to matters arising
in the normal course of business including, in particular, various
disputes that arose in relation to the operation of the various
licences held by the Group's subsidiary Snaitech. The uncertainty
is due to complex legislative and licensing frameworks in the
various territories in which the Group operates. The Group also
operates in certain jurisdictions where legal and regulatory
matters can take considerable time for the required local processes
to be completed and the matters to be resolved.
Contractual claims
The Group is subject to historic claims
relating to contractual matters that arise with customers in the
normal course of business. The Group believes they have a robust
defence to the claims raised and has provided for the likely
settlement where an outflow of funds is probable.
The uncertainty relates to complex contractual dealings with a
wide range of customers in various jurisdictions, and because, as
noted above, the Group operates in certain jurisdictions where
contractual disputes can take considerable time to be resolved in
the local legal system.
Given the uncertainties inherent, it is
difficult to predict with certainty the outlay (or the timing
thereof) which will derive from these matters.
It is therefore possible that the value of the provisions
may vary further based on future developments. The Group monitors
the status of these matters and consults with its advisers and
experts on legal and tax-related matters in arriving at the
provisions recorded. The provisions included represent the
Directors' best estimate of the potential outlay and none of the
matters provided for are individually material to the financial
statements.
Accounting for uncertain tax
positions
The Group is subject to various forms of tax in
a number of jurisdictions. Given the nature of the industry and the
jurisdictions within which the Group operates, the tax, legal and
regulatory regimes are continuously changing and subject to
differing interpretations. As such, the Group is exposed to a small
number of uncertain tax positions and open audits/enquiries.
Judgement is applied in order to adequately provide for uncertain
tax positions where it is believed that it is more likely than not
that an economic outflow will arise. The Group has provided for
uncertain tax positions which meet the recognition threshold and
these positions are included within tax liabilities. There is a
risk that additional liabilities could arise. Given the uncertainty
and the complexity of application of international tax in the
sector, it is not feasible to accurately quantify any possible
range of liability or exposure, and this has therefore not been
disclosed.
Note 20 - Contingent consideration
|
|
|
|
|
Non-current contingent
consideration
|
|
|
|
Acquisition of Aus GMTC PTY Ltd
|
5.7
|
5.4
|
|
|
|
|
Total non-current contingent
consideration
|
|
|
|
Current contingent consideration
consists of:
|
|
|
|
|
|
|
Total current contingent
consideration
|
|
|
Total contingent
consideration
|
|
|
The maximum contingent consideration payable is
as follows:
|
|
|
|
|
Acquisition of Aus GMTC PTY Ltd
|
46.7
|
45.3
|
|
|
|
|
|
|
|
|
On 30 August 2022, the Group acquired 100% of
the share capital of Aus GMTC PTY Ltd ("Aus GMTC") which creates
content and online games.
The Group paid a total cash consideration of
€2.9 million ($3.0 million), with an additional consideration
(capped at $50.0 million) in cash payable in 2025 based on a
pre-defined EBITDA calculation resulting from the performance of
the developed games active during the year ending 30 September
2025. The consideration is calculated based on four times the
pre-defined EBITDA for that year, less the cash consideration
already paid, plus the €1.8 million loan provided to the acquired
company pre-acquisition.
The fair value of the contingent consideration
at the acquisition date was €6.8 million made up from €2.9 million
being cash consideration and €3.9 million non-current contingent
consideration. Subsequent changes in fair value are primarily due
to changes in the projected EBITDA as at 31 December 2023 and 30
June 2024. The fair value measurement of the contingent
consideration is categorized within Level 3 of the fair value
hierarchy. The future consideration is €5.7 million as at 30 June
2024, was discounted using a rate of 12% based on Damodaran's
latest valuation methodology and parameters and is calculated based
on the estimated future EBITDA of the studio. The €1.8 million loan
provided to the company pre-acquisition has been deducted against
the future consideration, in line with the purchase
agreement.
Note 21 - Deferred tax
The movement on the deferred tax is as shown
below:
|
|
|
|
Balance at 1 January 2024
|
99.1
|
|
Charge to profit or loss (Note 11)
|
40.5
|
|
|
|
|
|
|
|
|
Split as:
|
|
|
|
Deferred tax liability
|
(164.6)
|
(161.6)
|
|
|
|
|
|
|
|
|
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 2024, 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 5 and 11 for the assessment performed on the recognition
of deferred tax in the period.
Details of the deferred tax outstanding as at
30 June 2024 and 31 December 2023 are as follows:
|
|
|
|
|
Deferred tax recognised on Group
restructuring
|
31.2
|
47.2
|
|
Tax losses
|
2.5
|
29.7
|
|
Other temporary and deductible
differences
|
(17.1)
|
(6.4)
|
|
Deferred tax on acquisitions
|
(72.0)
|
(81.2)
|
|
|
|
|
|
|
|
|
Details of the deferred tax, amounts recognised
in profit or loss are as follows:
|
|
Six months
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Accelerated capital allowances
|
(6.8)
|
(0.8)
|
|
Other temporary and deductible
differences
|
(6.5)
|
(26.7)
|
|
|
|
|
|
|
|
|
Note 22 - 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
ended 30 June 2024
€'m
|
Six months
ended 30 June
2023
€'m
|
|
Revenue
|
|
|
Investments in associates
|
|
|
|
Interest income
|
|
|
Investments in associates
|
|
|
|
Operating expenses
|
|
|
Investments in associates
|
|
|
|
Dividend income
|
|
|
Investments in associates
|
|
|
The revenue from investments in associates
includes income from Caliplay, Galera, Wplay, Onjoc, Tenbet and
NorthStar. The interest income relates to the same companies except
Caliplay and including Stats.
The following amounts were outstanding at the
reporting date:
|
|
|
|
|
Trade receivables
|
|
|
Investments in associates
|
|
|
|
Other receivables
|
|
|
Investments in associates
|
|
|
|
Loans and interest receivable -
current
|
|
|
Investments in associates
|
|
|
|
Loans and interest receivable -
non-current
|
|
|
Investments in associates
|
|
|
The loans and interest receivables above do not
include the expected credit losses. For the period ended 30 June
2024, the Group recognised a provision for expected credit losses
of €Nil million relating to amounts owed by related parties in less
than one year (31 December 2023: €0.1 million) and €3.4
million for more than one year (31 December 2023: €2.4
million).
The loans due from related parties are further
disclosed in Note 14.
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 €1.6 million
(Six months ended 30 June 2023: €11.2 million).
Note 23 - Reconciliation of movement of
liabilities to cash flows arising from financing
activities
|
|
|
|
|
|
|
Interest on
loans and
borrowings
and bonds
€'m
|
Contingent
consideration
€'m
|
|
|
Balance at 1 January 2024
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Interest payable on bonds and loans and
borrowings
|
-
|
-
|
(16.3)
|
-
|
-
|
(16.3)
|
|
Payment of contingent consideration
|
-
|
-
|
-
|
(0.2)
|
|
(0.2)
|
|
Principal paid on lease liability
|
-
|
-
|
-
|
-
|
(12.7)
|
(12.7)
|
Interest paid on lease liability
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
|
Other changes
|
|
|
|
|
|
|
|
Liability related
|
|
|
|
|
|
|
|
New leases
|
-
|
-
|
-
|
-
|
9.6
|
9.6
|
|
Contingent consideration on acquisition of
investments
|
-
|
-
|
-
|
2.4
|
-
|
2.4
|
|
Interest on bonds and loans and
borrowings
|
-
|
0.6
|
16.2
|
-
|
-
|
16.8
|
|
Interest on lease liability
|
-
|
-
|
-
|
-
|
2.4
|
2.4
|
|
Movement in contingent consideration
|
-
|
-
|
-
|
0.1
|
|
0.1
|
|
Payment of contingent consideration related to
investments
|
-
|
-
|
-
|
(0.6)
|
-
|
(0.6)
|
Foreign exchange difference
|
|
|
|
|
|
|
Total liability-related other
changes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on
loans
and
borrowings
and
bonds
€'m
|
Contingent
consideration
€'m
|
|
|
Balance at 1 January 2023
|
|
|
|
|
|
|
|
Changes from financing cash
flows
|
|
|
|
|
|
|
|
Interest payable 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
|
|
|
|
|
|
|
Total changes from financing cash
flows
|
|
|
|
|
|
|
|
Other changes
|
|
|
|
|
|
|
|
Liability related
|
|
|
|
|
|
|
|
New leases
|
-
|
-
|
-
|
-
|
7.2
|
7.2
|
|
On business combinations
|
-
|
-
|
-
|
0.4
|
1.9
|
2.3
|
|
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
|
Foreign exchange difference
|
|
|
|
|
|
|
Total liability-related other
changes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 24 - Events after the reporting
date
On 17 September 2024, the Group announced that
it had entered into a definitive agreement to sell the Snaitech B2C
CGU. The potential sale is subject to certain regulatory conditions
and is expected to complete by Q2 2025. The full announcement can
be found here:
https://otp.tools.investis.com/clients/uk/playtech2/rns/regulatory-story.aspx?newsid=1864850&cid=263
In September 2024 the Group announced that it
had reached an agreement on the terms of its strategic agreement
with Caliplay. Under the amended terms, Playtech will:
· Hold a 30.8%
equity interest in Caliente Interactive,
Inc. ("Cali
Interactive"), which will be the new holding company of Caliplay
(the "Caliplay Group"), incorporated in the United
States
· Be entitled to
receive dividends alongside other shareholders in Cali Interactive.
Playtech will also have the right to appoint a Director to the
Board of Cali Interactive
· Enter into a
revised eight-year B2B software licence and services
agreement
· Receive from Cali
Interactive an additional US$140.0 million paid in cash,
phased over a four-year period
The full announcement can be found here:
https://otp.tools.investis.com/clients/uk/playtech2/rns/regulatory-story.aspx?newsid=1864339&cid=263
. The revised arrangements are conditional upon Mexican antitrust
approval and closing is expected to take place in Q1 2025. There is
an agreed standstill of all current legal proceedings between
Caliente, Caliplay and Playtech, and those proceedings will be
dismissed in full once the revised arrangements come into effect.
In addition, Caliplay has resumed paying the Playtech Group its
software and services fees (refer to Note 5).
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 Note14C. The LSports option was
exercised earlier than the expected exercise date, in September
2024 for €19.8 million. This increased the Group's total
shareholding to 49%.
In September 2024, Playtech gave Northstar a
further promissory note to the valued of CAD3.0 million to assist
the company with its growth plans whilst the work on establishing
more medium to long term financing.
