REG - Playtech PLC - Full Year Results <Origin Href="QuoteRef">PTEC.L</Origin> - Part 4
25/02/2016 07:12
- Part 4: For the preceding part double click ID:nRSY0878Qc
capital)
Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income
NOTE 20 - LOANS AND BORROWINGS
The loan balance as of 31 December 2015 is E200 million. The loan is a revolving credit facility available until July
2018.Interest payable on the loan is based on a margin on Euro Libor rates.
The Group has undrawn committed borrowing facilities available at 31 December 2015 of E40.0 million.
NOTE 21 - CONVERTIBLE BONDS
On 12 November 2014 the Group issued E297.0 million of senior, unsecured convertible bonds due 2019 and convertible into
fully paid Ordinary Shares of Playtech plc (the "Bonds"). The net proceeds of issuing the Bonds, after deducting
commissions and other direct costs of issue, totaled E291.1 million.
The Bonds were issued at par and will be redeemed (if not converted before) on 19 November 2019 at their principal amount.
The Bonds bear interest at 0.5% per annum, payable annually in arrears on 19 November.
Upon conversion, Bondholders are entitled to receive Ordinary Shares at the conversion price of E10.1325 per Ordinary
Share, subject to adjustment in respect of (i) any dividend or distribution by the Company, (ii) a change of control and
(iii) customary anti-dilution adjustments for, inter alia, share consolidations, share splits and rights issues.
The fair value of the liability component, included in non-current borrowings, at inception was calculated using a market
interest rate for an equivalent instrument without conversion option of 4%.
The fair value of the liability component, which is immateriality different to the amortised cost, of the Bonds (including
accrued interest) at 31 December 2015 amounted to E256.4 million (2014: E247.0 million), which was calculated using cash
flow projections discounted at 4%.
The fair value at inception of the equity component of the bonds at 31 December 2015 was E45.4 million (2014: E45.4
million).
NOTE 22 -CONTINGENT CONSIDERATION
2015 2014
E'000 E'000
Non-Current contingent consideration consists:
Acquisition of Markets Limited (Note 26b) 138,196 -
Other acquisitions (Note 26c) 3,151 1,088
141,347 1,088
Current contingent consideration consists:
Acquisition of Yoyo Games Limited (Note 26a) 2,036 -
Other acquisitions (Note 26c) 2,455 1,823
4,491 1,823
NOTE 23 - TRADE PAYABLES
2015 2014
E'000 E'000
Suppliers 14,907 10,934
Customer liabilities 1,292 2,467
Related parties (Note 28) 200 1,630
Other 1,012 1,395
17,411 16,426
NOTE 24 - DEFERRED TAX LIABILITY
The deferred tax liability is due to temporary differences on the acquisition of certain businesses.
The movement on the deferred tax liability is as shown below:
2015 2014
E'000 E'000
At the beginning of the year 4,904 5,083
Arising on the acquisitions during the year (Note 26) 11,258 851
Reversal of temporary differences, recognised in the consolidated statement of comprehensive income (Note 8) (2,113) (1,030)
14,049 4,904
NOTE 25 - OTHER PAYABLES
2015 2014
E'000 E'000
Payroll and related expenses 35,147 24,351
Accrued expenses 15,955 8,882
Related parties (Note 28) 353 -
Other payables 4,600 3,579
56,055 36,812
NOTE 26 - ACQUISITIONS DURING THE YEAR
A. Acquisition of Yoyo Games Limited
On 13 February 2015, the Group acquired 100% of the shares of Yoyo Games Limited ("Yoyo"). Yoyo is the home of Game Maker:
Studio ("GMS"), a mobile driven cross-platform casual game development technology that enables developers to create games
using a single programming code and then publish them to run natively across most common platforms.
The Group paid total cash consideration of E14.4 million ($16.4 million) and additional consideration capped at E2.2
million ($2.5 million) in cash will be payable subject to achieving target EBITDA.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as
follows:
Fair value on acquisition
E'000
Property, plant and equipment 168
Intangible assets 4,650
Trade receivables 52
Cash and cash equivalent 219
Trade payables (836)
Deferred tax liability (930)
Net identified assets 3,323
Goodwill 13,241
Fair value of consideration 16,564
E'000
Cash consideration 14,423
Current contingent consideration 2,204
Finance cost arising on discounting of contingent consideration (63)
Fair value of consideration 16,564
Cash purchased (219)
Net cash payable 16,345
Adjustments to fair value include the following:
Amount Amortisation
E'000 %
IP Technology 4,650 17
The main factor leading to the recognition of goodwill is the database of users and time to market benefit. In accordance
with IAS36, the Group will regularly monitor the carrying value of its interest in Yoyo.
The key assumptions used by management to determine the value in use of the IP Technology within Yoyo are as follows:
§ The income approach, in particular, the excess earnings.
§ The discount rate assumed is equivalent to the WACC for the IP Technology.
§ The growth rates and attrition rates were based on market analysis.
Management has not disclosed Yoyo contribution to the Group profit since the acquisition nor has the impact the acquisition
would have had on the Group's revenue and profits if it had occurred on 1 January 2015 been disclosed, because the amounts
are not material.
B. Acquisition of Markets Limited (previously named TradeFX Limited)
On 8 May 2015, the Group acquired 95.05% of the shares of Markets Limited ("Markets"), 91.1% on fully diluted basis. The
sellers included a company related to the significant shareholder, Telesphere services Limited.
Markets is online CFDs broker and trading platform provider, operates a platform for CFDs trading across multiple channels.
In addition, Markets provides a turnkey offering, including a white-label solution, for B2B clients, in return for a
revenue share.
The Group paid total cash consideration of E208 million, and additional consideration capped at E250 million in cash will
be payable subject to achieving target EBITDA.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as
follows:
Fair value on acquisition
E000
Property, plant and equipment 954
Intangible assets 129,814
Investments in equity accounted associates & joint ventures 439
Other non-current assets 1,839
Accounts receivables 486
Other receivables 2,159
Cash and cash equivalent 48,945
Other non-current liabilities (2,228)
Trade payables (6,827)
Client funds (45,206)
Other liabilities (9,748)
Deferred tax liability (10,192)
Net identified assets 110,435
Goodwill 240,593
Non-controlling interest (5,473)
Fair value of consideration 345,555
E'000
Cash consideration 207,987
Current contingent consideration 154,693
Finance cost arising on discounting of contingent consideration (17,125)
Fair value of consideration 345,555
Cash purchased (53,945)
Net cash payable 291,610
Adjustments to fair value include the following:
Amount Amortisation
E'000 %
IP Technology 11,085 20
Customer lists 81,536 6-25
Domains 31,333 7
The main factor leading to the recognition of goodwill is the time to market benefit. In accordance with IAS36, the Group
will regularly monitor the carrying value of its interest in these acquisitions.
The key assumptions used by management to determine the value in use of the IP Technology, Customer lists and Domains
within these acquisitions are as follows:
§ The income approach, in particular, the multi period excess earnings method.
§ The royalty rate was based on a third party market participant assumption for use of the IP Technology and Domains,
considering market competition, quality, absolute and relative profitability.
§ The discount rate assumed is equivalent to the WACC for the IP Technology, Customer lists and Domains.
§ The growth rates and attrition rates were based on market analysis.
The non-controlling interest calculation was based on the net identified assets, and also included fair value adjustment
due to unvested share options as of the date of acquisition. This adjustment has increased the goodwill.
Following the acquisition of Markets Limited (formerly TradeFX Limited) on 7 May 2015, the Group recognised the provisional
fair value of certain intangible assets (including goodwill) in the interim accounts at 30 June 2015. Subsequently,
additional information became available which impacted the provisional fair values recognised on the acquisition date and,
in accordance with IFRS3, the Group has taken the additional information into account in computing the final fair value of
the related assets recognised in these financial statements.
The effect of amending the provisional fair values as described above was to: (i) decrease intangible assets (including
goodwill) by E95m; and (ii) decrease contingent consideration by E95m. Accordingly, there was no impact on net assets.
Since the acquisition date, Markets has contributed E60.0 million to the Group revenue in the period, E14.2 million to the
adjusted net profits and E15.9 million and adjusted EBITDA. The combined Group revenues as if the Markets acquisition had
occurred on 1 January 2015 would have been higher by E90.2 million, the combined Group adjusted EBITDA and adjusted net
profit would have been higher by E25.9 million and E19.1 million respectively.
C. Other acquisitions
During the period the Group acquired 100% of the shares of various companies for a total initial consideration of E3.5
million and additional consideration capped at E4.9 million in cash will be payable subject to the achievement of certain
operational targets.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as
follows:
Fair value on acquisition
E000
Intangible assets 682
Trade and other receivables 110
Cash and cash equivalent 323
Trade and other payables (160)
Deferred tax liability (136)
Net identified assets 819
Goodwill 7,310
Total fair value of consideration 8,129
E'000
Cash consideration 3,535
Current contingent consideration 4,943
Finance cost arising on discounting of contingent consideration (349)
Fair value of consideration 8,129
Cash purchased (323)
Net cash payable 7,806
Adjustments to fair value include the following:
Amount Amortisation
E'000 %
IP Technology 682 17
The main factor leading to the recognition of goodwill is the unique workforce and time to market benefit. In accordance
with IAS36, the Group will regularly monitor the carrying value of its interest in these acquisitions.
The key assumptions used by management to determine the value in use of the IP Technology within these acquisitions are as
follows:
§ The income approach, in particular, the multi period excess earnings method.
§ The discount rate assumed is equivalent to the WACC for the IP Technology.
§ The growth rates and attrition rates were based on market analysis.
Management has not disclosed other acquisitions contribution to the Group profit since these acquisitions nor has the
impact the acquisition would have had on the Group's revenue and profits if it had occurred on 1 January 2015 been
disclosed, because the amounts are not material.
NOTE 27 - ACQUISITIONS IN PREVIOUS YEAR
A. Acquisition of Aristocrat Lotteries
On 30 September 2014, the Group entered into share and assets purchase agreement with various subsidiaries of Aristocrat
Leisure Limited, provider of TruServ Video Lottery Terminal ("VLT"). The Group acquired the IP Technology and 100% of the
issued share capital of Aristocrat Lotteries AB and Aristocrat Lotteries Italia S.r.l. ("Aristocrat Lotteries"). Aristocrat
Lotteries provide a server-based gaming platform for VLTs and Casino (Class III) markets to two leading retail VLT
operators in Norway and Italy, marketed under the 'TruServTM brand.
The Group paid total cash consideration of E11.7 million, including working capital adjustment.
Up to E1.0 million may be repaid to the Group subject to the number of VLT's on the first anniversary.
B. Other acquisitions
During 2014 the Group acquired the shares of various companies for a total cash consideration of E4.2 million and
additional consideration capped at E7.5 million in cash will be payable subject to the achievement of certain operational
targets or achieving target EBITDA.
NOTE 28 - RELATED PARTIES AND SHAREHOLDERS
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.
Skywind Holdings Limited ("Skywind"), SafeCharge Limited, Crossrider Technologies Ltd ("Crossrider"), Royalfield Limited,
Easydock Investments Ltd. ("Easydock"), Selfmade Holdings, Anise Development Limited and Anise Residential Limited
(together "Anise") are related by virtue of a common significant shareholder.
Jean-Pierre Houareau, a long standing industry specialist, who is married to Hilary Stewart-Jones, is the ultimate
beneficiary of a trust that owns PT Games Limited, a supplier to the Group, and Niceidea Investments Limited ("Niceidea"),
to which the Group advanced a loan of E1.5 million, with a Euribor+3% per annum interest which is repayable on or before
July 2019. Jean-Pierre also provides the Group with consultancy services for an annual fee of £150,000.
Hillary resigned as a director on 31 December 2015.
International Terminal Leasing ("ITL") is a joint venture and the structured agreements are associates of the Group by
virtue of the Group's significant influence over those arrangements.
The following transactions arose with related parties:
2015 2014
E'000 E'000
Revenue including revenue from associates
Skywind 1,562 680
Structured agreements and associates 35,531 21,655
Share of profit (loss) in joint venture 229 (92)
Share of loss in associates 5,856 695
Operating expenses/(credit)
SafeCharge Limited 6,674 1,599
Skywind, net of capiltalised cost 3,438 6,444
Crossrider 2,472 2,079
Structured agreements 1,910 833
Anise 1,174 1,008
Easydock 358 -
PT Games 220 507
Selfmade Holdings 52 -
Glispa 6 -
Royalfield Limited (272) (42)
Interest payable
Niceidea 46 52
The following are year-end balances:
Intangible assets
Skywind 1,037 2,043
Cash and cash equivalent
Safecharge Limited 5,341 -
Niceidea 1,596 1,511
Structured agreements and associates 1,965 -
Total non-current related party receivables 3,561 1,511
Structured agreements and associates 1,435 3,964
Skywind 582 -
Crossrider 266 -
PT Games Limited 8 -
Total current related party receivables 2,291 3,964
SafeCharge Limited 200 400
Skywind 353 666
Crossrider - 400
PT Games Limited - 164
Total related party payables 553 1,630
Revenue from related parties was made at an arm's length basis at the Group's usual royalty rate. Operating expenses and
interest were charged on an arm's length basis at market price.
In 2014 the Group established an Employee Benefit Trust by acquiring 5,517,241 shares from Brickington Trading Limited
("Brickington"), the Company's largest shareholder, for a total consideration of E48.5 million.
On 31 December 2015, Brickington held 33.61% (31 December 2014: 33.61%) of Playtech plc shares.
Mr. Teddy Sagi, the ultimate beneficiary of a trust that owns Brickington, provides advisory services to the Group for a
total annual consideration of E1.
Step by step was acquired during the year as part of Markets acquisition and therefore the comparable amount was removed.
The details of key management compensation (being the remuneration of the directors) are set out in Note 6.
NOTE 29 - SUBSIDIARIES
Details of the Group's principal subsidiaries as at the end of the year are set out below:
Playtech Software Limited British Virgin Islands 100% Main trading company of the Group, owns the intellectual property rights and licenses the software to customers.
OU Playtech (Estonia) Estonia 100% Designs, develops and manufactures online software
Techplay Marketing Limited Israel 100% Marketing and advertising
Video B Holding Limited British Virgin Islands 100% Trading company for the Videobet software, owns the intellectual property rights of Videobet and licenses it to customers.
OU Videobet Estonia 100% Develops software for fixed odds betting terminals and casino machines (as opposed to online software)
Playtech Bulgaria Bulgaria 100% Designs, develops and manufactures online software
PTVB Management Limited Isle of Man 100% Management
Evermore Trading Limited British Virgin Islands 100% Holding company
Playtech Services (Cyprus) Limited Cyprus 100% Activates the ipoker Network in regulated markets. Owns the intellectual property of GTS, Ash and Geneity businesses
VB (Video) Cyprus Limited Cyprus 100% Trading company for the Videobet product to Romanian companies
Techplay S.A. Software Limited Israel 100% Develops online software
Technology Trading IOM Limited Isle of Man 100% Owns the intellectual property rights of Virtue Fusion business
Gaming Technology Solutions Limited UK 100% Holding company of VS Gaming and VS Technology
VS Gaming Limited UK 100% Develops software and casino games
VS Technology Limited UK 100% Develops EdGE platform
Virtue Fusion (Alderney) Limited Alderney 100% Online bingo and casino software provider
Virtue Fusion CM Limited UK 100% Chat moderation services provider to end users of VF licensees
Playtech Software (Alderney) Limited Alderney 100% To hold the company's Alderney Gaming license
Intelligent Gaming Systems Limited UK 100% Casino management systems to land based businesses
VF 2011 Limited Alderney 100% Holds license in Alderney for online gaming
PT Turnkey Services Limited British Virgin Islands 100% Holding company of the Turnkey Services group
PT Turnkey EU Services Limited Cyprus 100% Turnkey services for EU online gaming operators
PT Entertenimiento Online EAD Bulgaria 100% Poker & Bingo network for Spain
PT Marketing Services Limited British Virgin Islands 100% Marketing services to online gaming operators
PT Operational Services Limited British Virgin Islands 100% Operational & hosting services to online gaming operators
Tech Hosting Limited Alderney 100% Alderney Hosting services
Paragon International Customer Care Limited British Virgin Island & branch office in the Philippines 100% English Customer support, chat, fraud, finance, dedicated employees services to parent company
CSMS Limited Bulgaria 100% Consulting and online technical support, data mining processing and advertising services to parent company
TCSP Limited Serbia 100% Operational services for Serbia
S-Tech Limited British Virgin Islands & branch office in the Philippines 100% Live games services to Asia
PT Advisory Services Limited British Virgin Islands 100% Holds PT processing Advisory Ltd
PT Processing Advisory Limited British Virgin Islands 100% Advisory services for processing & cashier to online gaming operators
PT Processing EU Advisory Limited Cyprus 100% Advisory services for processing & cashier for EU online gaming operators
PT Network Management Limited British Virgin Islands 100% Manages the ipoker network
Playtech Mobile (Cyprus) Limited Cyprus 100% Holds the IP of Mobenga AB
Playtech Holding Sweden AB Limited Sweden 100% Holding company of Mobenga AB
Mobenga AB Limited Sweden 100% Mobile sportsbook betting platform developer
Ash Gaming Limited UK 100% Develops interactive gambling and betting games
Geneity Limited UK 100% Develops Sportsbook and Lottery software
Factime Limited Cyprus 100% Holding company of Juego
Juego Online EAD Bulgaria 100% Gaming operator. Holds a license in Spain.
PlayLot Limited British Virgin Islands 100% Distributing lottery software
PokerStrategy Ltd. Gibraltar 100% Operates poker community busiess
Videobet Interactive Sweden AB Sweden 100% Trading company for the Aristocrat Lotteries VLT's
V.B. Video (Italia) S.r.l. Italy 100% Trading company for the Aristocrat Lotteries VLT's
PT Entertainment Services LTD Antigua 100% Holding gaming license in the UK
Markets Limited British Virgin Islands 95.044% Owns the intellectual property rights and marketing and technology contracts of the financial division
Safecap Limited Cyprus 95.044% Primary trading company of the financial division. Licensed investment firm and regulated by Cysec
TradeFXIL limited Israel 95.044% Financial division sales, client retention, R&D and marketing
ICCS BG Bulgaria 95.044% Financial division back office customer support
Stronglogic Services Limited Cyprus 95.044% Maintains the financial division marketing function for EU operations
Yoyo Games UK 100% Casual game development technology
Yoyo Games
UK
100%
Casual game development technology
NOTE 30 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group is exposed to a variety of financial risks, which results from its financing, operating and investing activities.
The objective of financial risk management is to contain, where appropriate, exposures in these financial risks to limit
any negative impact on the Group's financial performance and position. The Group's financial instruments are its cash,
available-for-sale financial assets, trade receivables, loan receivables, bank borrowings, accounts payable and accrued
expenses. The main purpose of these financial instruments is to raise finance for the Group's operation. The Group actively
measures, monitors and manages its financial risk exposures by various functions pursuant to the segregation of duties and
principals. The risks arising from the Group's financial instruments are credit risk and market price risk, which include
interest rate risk, currency risk and equity price risk. The risk management policies employed by the Group to manage these
risks are discussed below.
A. Market risk
Market risk changes in line with fluctuations in market prices, such as foreign exchange rates, interest rates, equities
and commodities prices. These market prices affect the Group's income or the value of its holding in financial
instruments.
Exposure to market risk
In the financial trading division, the Group has exposure to market risk to the extent that it has open positions. The
Group's exposure to market risk at any point in time depends primarily on short-term market conditions and client
activities during the trading day. The exposure at each reporting date is therefore not considered representative of the
market risk exposure faced by the Group over the year.
The Group's exposure to market risk is mainly determined by the clients' open position. The most significant market risk
faced by the Group on the CFD products it offers changes in line with market changes and the volume of clients'
transactions.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest
rates. The Group's income and operating cash flows are substantially independent of changes in market interest changes. The
management monitors interest rate fluctuations on a continuous basis and acts accordingly.
Where the Group has generated a significant amount of cash, it will invest in higher earning interest deposit accounts.
These deposit accounts are short term and the Group is not unduly exposed to market interest rate fluctuations.
During the year the group advanced loans to affiliates and customers for a total amount of E2.3 million (2014: E3.1
million). The average interest on the loans is 5%.
A 1% change in deposit interest rates would impact on the profit before tax by E23 thousands.
B. Credit risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash
inflows from financial assets on hand at the balance sheet date.
The Group closely monitors the activities of its counterparties and controls the access to its intellectual property which
enables it to ensure the prompt collection of customers' balances.
The Group's main financial assets are cash and cash equivalents as well as trade and other receivables and represent the
Group's maximum exposure to credit risk in connection with its financial assets. Trade and other receivables are carried on
the balance sheet net of bad debt provisions estimated by the Directors based on prior year experience and an evaluation of
prevailing economic circumstances.
Wherever possible and commercially practical the Group invests cash with major financial institutions that have a rating of
at least A- as defined by Standard & Poors. While the majority of money is held in line with the above policy, a small
amount is held at various institutions with no rating. The Group also holds small deposits in Cypriot and Spanish financial
institutions, as required by the respective gaming regulators that have a rating below A-. The Group holds approximately 2%
of its funds (2014: 3%) in financial institutions below A- rate and 3% in payment methods with no rating.
Total Financial institutions with A- and above rating Financial institutions below A- rating and no rating
E'000 E'000 E'000
At 31 December 2015 857,898 813,164 44,734
At 31 December 2014 692,347 674,925 17,422
The Group has no credit risk to clients since all accounts have an automatic margin call, which relates to a guaranteed
stop such that the client's maximum loss is covered by the deposit. The Group has risk management and monitoring processes
for clients' accounts and this is achieved via margin calling and close-out process.
The ageing of trade receivables that are past due but not impaired can be analysed as follows:
Total Not past due 1-2 months overdue More than 2 months past due
E'000 E'000 E'000 E'000
At 31 December 2015 74,632 47,945 12,849 13,838
At 31 December 2014 45,056 30,605 8,423 6,028
The above balances relate to customers with no default history and management estimate full recoverability given the
provision below.
A provision for doubtful debtors is included within trade receivables that can be reconciled as follows:
2015 2014
E'000 E'000
Provision at the beginning of the year 908 932
Charged to income statement - -
Utilised (822) (24)
Provision at end of year 86 908
Related party receivables included in Note 16 are not past due.
C. Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Foreign exchange risk arises because the Group has operations located in various parts of the world. However, the
functional currency of those operations is the same as the Group's primary functional currency (Euro) and the Group is not
substantially exposed to fluctuations in exchange rates in respect of assets held overseas.
Foreign exchange risk also arises when Group operations are entered into, and when the Group holds cash balances, in
currencies denominated in a currency other than the functional currency.
The Group's policy is not to enter into any currency hedging transactions.
D. Equity price risk
The Group's balance sheet is exposed to market risk by way of holding some investments in other companies on a short term
basis (Note 14). Variations in market value over the life of these investments have or will have an impact on the balance
sheet and the income statement.
The directors believe that the exposure to market price risk is acceptable in the Group's circumstances.
The Group's balance sheet at 31 December 2015 includes available-for-sale investments with a value of E237.1 million (2014:
E24.2 million) which are subject to fluctuations in the underlying share price.
A change of 1% in shares price will have an impact of E23.7 million on the consolidated statement of comprehensive income
and the fair value of the available for sale investments will change by the same amount.
E. Capital disclosures
The Group seeks to maintain a capital structure which enables it to continue as a going concern and which supports its
business strategy. The Group's capital is provided by equity and debt funding. The Group manages its capital structure
through cash flow from operations, returns to shareholders primarily in the form of dividends and the raising or repayment
of debt.
F. Liquidity risk
Liquidity risk arises from the Group's management of working capital and the financial charges on its debt instruments.
Financial division liquidity risk
Positions can be closed at any time by clients and can also be closed by the Group, in accordance with the Group's
margining rules. If after closing a position a client is in surplus, then the amount owing is repayable on demand by the
Group. When client positions are closed, any corresponding positions relating to the hedged position (if applicable) are
closed with brokers.
Liquidity risk arises if the Group encounters difficulty in meeting obligations which arise following profitable positions
being closed by clients. This risk is managed through the Group holding client funds in separately segregated accounts
whereby cash is transferred to or from the segregated accounts on a daily basis to ensure that no material mismatch arises
between the aggregate of client deposits and the fair value of open positions, and segregated cash. Through this risk
management process, the Group considers liquidity risk to be low.
2015
E'000
Client deposits 64,875
Open position (21,114)
Client funds 43,761
The following are the contractual maturities (representing undiscounted contractual cash flows) of the Group's financial
liabilities:
2015
Trade payables 17,411 17,411 - -
Other accounts payable 56,055 56,055 - -
Loans and borrowings 200,000 - 200,000
Progressive and other operators' jackpots 63,340 63,340 - -
Client funds 43,761 43,761 - -
Contingent consideration 145,838 4,491 141,347 -
Other non-current liabilities 1,175 - - 1,175
2014
Trade payables 16,426 16,426 - -
Other accounts payable 36,812 36,812 - -
Progressive and other operators' jackpots 57,637 42,367 15,000 -
Client funds 3,195 3,195
Contingent consideration 2,911 1,823 - 1,088
Other non-current liabilities 1,284 - - 1,284
Contingent consideration
2,911
1,823
-
1,088
Other non-current liabilities
1,284
-
-
1,284
G. Total financial assets and liabilities
The fair value together with the carrying amount of the financial assets and liabilities shown in the balance sheet are as
follows:
2015 2015 2014 2014
E'000 E'000 E'000 E'000
Fair Value Carrying amount Fair Value Carrying Amount
Cash and cash equivalent 857,898 857,898 692,347 692,347
Available-for-sale investments 237,100 237,100 24,219 24,219
Other assets 123,268 123,268 84,096 84,096
Deferred and contingent consideration 145,838 145,838 2,911 2,911
Convertible bonds 256,429 256,429 247,040 247,040
Loans and borrowings 200,000 200,000 - -
Other liabilities 102,190 102,190 70,256 70,256
Available for sale investments are measured at fair value using level 1. Refer to Note 14 for further detail. These are the
Group's only financial assets and liabilities which are measured at fair value.
NOTE 31 - CONTINGENT LIABILITIES
As part of the Board's ongoing regulatory compliance process, the Board continues to monitor legal and regulatory
developments and their potential impact on the Group.
Management is not aware of any contingencies that may have a significant impact on the financial position of the Group.
NOTE 32 - OPERATING LEASE COMMITMENT
The Group has a variety of leased properties. The terms of property leases vary from country to country, although they tend
to be tenant repairing with rent reviews every 2 to 5 years and many have break clauses. Total operating lease cost in the
year was E13.8 million (2014: E8.9 million).
The total future value of minimum lease payments is due as follows:
2015 2014
E'000 E'000
Not later than one year 15,846 11,122
Later than one year and not later than five years 44,001 27,738
Later than five years 8,370 9,121
68,217 47,981
This information is provided by RNS
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