REG - Playtech PLC - Half-year Report <Origin Href="QuoteRef">PTEC.L</Origin> - Part 2
24/08/2017 07:06
- Part 2: For the preceding part double click ID:nRSX8419Oa
currency related to acquisitions (12,103) 39
Underlying adjusted profit for the year - attributable to owners of the parent 133,396 120,935
Underlying adjusted profit increased by 10% compared to H1 2016 in line with
the increase in the underlying adjusted EBITDA.
Adjusted diluted EPS was up 60% and the Adjusted diluted EPS on a constant
currency basis excluding acquisition was up 11%, slightly impacted by the 5.2
million share buyback executed in December 2016. Adjusted diluted EPS is
calculated on the basis of a weighted average number of shares in issue during
2017 of 349.2 million which includes the shares underlying the convertible
bond issued in November 2014.
Total amortisation in the period was E41.7 million (2016: E35.2million), an
increase generated mainly by new acquisitions. When excluding acquisitions,
amortization decreased by a marginal 1%.
Cashflow
Playtech continues to be highly cash generative and once again delivered
strong operating cashflows of E147.3 million.
Cash conversion
2017E'000 2016E'000
Adjusted EBITDA 170,924 143,804
Net cash provided by operating activities 147,321 99,469
Cash conversion 86% 69%
Decrease /(Increase) in Progressive, operators' jackpots, security deposits (11,029) 3,149
Decrease /(Increase) in Client equity (761) 10,093
Adjusted net cash provided by operating activities 135,531 112,711
Adjusted Cash conversion 79% 78%
Operating cash conversion from Adjusted EBITDA remained at the same level as
in H1 2016 when adjusted for jackpots, security deposits and client equity.
Since the timing of cash inflows and outflows for jackpots, security deposits
and client equity only affects operating cashflow for technical accounting
reasons, and not EBITDA, adjusting these cash fluctuations is essential to
truly reflect the quality of revenue and cash collection.
Net cash outflows from investing activities totalled E73.7 million in the
period. E36.2 million which mainly relates to the Eyecon acquisition in the
period and payments for previous years acquisitions. Cash outflows from
financing activities included E68.4 million of annual dividend payment.
Balance sheet and financing
As at 30 June 2017, cash and cash equivalents amounted to E536.4 million, a
slight decrease of E8.4 million compared to the end of 2016, following the
annual dividend payment of E68.4 million and consideration on acquisitions of
E36.2 million.
Progressive, operators' jackpots and security deposits increased by E11.0
million to E57.8 million and client funds and deposits decreased by E3.1
million, to E103.0 million, from the end of 2016. Cash and cash equivalents
net of cash held on behalf of client funds, progressive jackpot and security
deposit is E375.7 million.
Total available-for-sale investments were E241.8 million, an increase compared
to the end of 2016, mainly due to an appreciation in value of holdings in
Plus500 netted of by the depreciation in value of holdings in Ladbrokes and
the exchange rate losses in total of E11.5 million.
Contingent and deferred consideration liability decreased to E205.0 million,
mainly due to earn-out payments, and comprise of:
Acquisition Contingent consideration and redemption liability as of 30.06.17 Maximum payable earnout
Markets E139.6 million E250 million
Quicksipin E24.2 million E26 million
Best Gaming Technology E21.8 million E60 million
Consolidated Financial Holdings E16.0 million $76.6 million
ECM E1.2 million £1.1 million
Eyecon E1.3 million £25.0 million
Others E1.0 million
Dividend
To provide greater certainty and consistency of dividend payments, the Board
adopted a progressive dividend policy in 2016 which allows the Board to
reflect its confidence in the growth and cash generation of the business
without being tied to a fixed percentage payout as one-off items can impact
results, such as the impact from foreign exchange which we saw in 2016 and
2017.
Playtech's intention is to grow dividends from the current level in line with
the underlying performance of the business on a smoothed basis and to continue
to pay the dividend split approximately one-third as an interim dividend and
two-thirds as a final dividend.
Accordingly, the Board has declared an interim dividend of 12.1 Ecents per
share (2016: 11.0 Ecents), an increase of 10% over 2016's interim dividend.
For those shareholders wishing to receive their dividends in Sterling the last
date for currency elections is 29 September 2017.
Dividend timetable:
Ex-dividend date: Thursday 21 September 2017
Record date for dividend: Friday 22 September 2017
Currency election date: Friday 29 September 2017
Payment date: Tuesday 24 October 2017
Principal risks and uncertainties
Risks relating to both the Gaming division and Financials division
§ Regulation - licensing requirements
The Group holds a number of licences for its activities from regulators. Loss
of all or any of these licences may adversely impact on the revenues and/or
reputation of the Group.
§ Regulation - Local requirements
New licensing regimes may impose conditions. For example, introduction of a
requirement to locate significant technical infrastructure within the relevant
territory or to establish and maintain real-time data interfaces with the
regulator. Such conditions present operational challenges and may prohibit the
ability of licensees to offer the full range of the Group's products.
§ Taxation
Given the environment in which the Group operates, the business is exposed to
continuously evolving rules and practices governing the taxation of e-commerce
activity in various jurisdictions. Adverse changes to tax rules and changes
may increase the Group's underlying effective tax rate and reduce profits
available for distribution.
§ Economic Environment
A downturn in consumer discretionary spend or macroeconomic factors outside of
Playtech's control could result in reduced spend by consumers on gambling and
financial trading and the Group's revenues would fall.
§ Cash Management - Acquisitions
Playtech have significant cash balances, which may be used to acquire other
businesses. Such acquisitions may not deliver the expected synergies and/or
benefits and may destroy shareholder value.
§ Cash Management - Cash Balances
Foreign exchange volatility could impact the Group's financial position.
§ Key Employees
The Group's future success depends in large part on the continued service of a
broad leadership team including executive Directors, senior managers and key
personnel. The development and retention of these employees along with the
attraction and integration of new talent cannot be guaranteed.
§ IT Security
The risk of impairment to our operations for example through cyber and
distributed denial of service (DDoS) attacks, technology failure or terrorist
attack continues to be one that the Group considers to be significant. System
failure could significantly affect the services offered to our licensees.
§ Regulatory - Data Protection
The requirements of the new EU General Data Protection Regulations (GDPR) will
come into force in May 2018. This places onerous responsibilities on data
controllers and processors who have users in the EU regardless of where the
data is held or processed.
§ Regulatory - Preventing Financial Crime
New regulations requiring companies to take action in preventing financial
crime are being developed. These include a new Anti-Money Laundering (AML)
directive coming into force on 26th June 2017 and calls for improved
Anti-Bribery and Corruption (ABC) regulations.
§ Intellectual Property Rights
The Group's primary commercial activity is as a licensor of gambling software.
The Group predominantly owns the intellectual property (IP) rights in that
gambling software, including the IMS which is key to maintaining our
competitive advantage. Any claim that the Group doesn't own its IP (by a
licensee or a third party), or any copying of the Group's IP by a third party,
could have a significant effect on revenues. In addition, the Group licenses
intellectual property from third parties, including creation of very
successful branded games. Any loss of such IP rights could lead to a decline
in casino revenues.
§ Business Continuity Planning
Loss of revenue, reputational damage or breach of regulatory requirements may
occur as a result of a business or location disruptive event.
Additional risks relating to the Gaming division
§ Regulatory - Responsible Gambling
Responsible gambling is a material concern to society as well as a regulatory
priority. Licensing requirements are regularly updated to ensure that
companies in the sector provide a safe environment for consumers. Recent
trends have seen an additional regulatory focus on treating customers fairly
and conducting marketing and advertising in a responsible manner.
Additional risks relating to the Financials division
§ Market exposure
The fair value of financial assets and financial liabilities could adversely
fluctuate due to movements in market prices of foreign exchange rates,
commodity prices, equity and index prices.
§ Regulatory - Capital Adequacy
The requirement to maintain adequate regulatory capital may affect the Group's
ability to conduct its business and may reduce profitability.
§ Trading volume
Low volatility within foreign exchange rates, commodity prices, equity and
index prices may reduce profitability.
Directors' responsibility statement
We confirm to the best of our knowledge;
§ The Group and Company financial statements, which have been prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and Article 4 of the IAS Regulation, give a true and
fair view of the assets, liabilities, financial position and profit of the
Group and Company; and
§ The Annual Report includes a fair review of the development and performance
of the business and the financial position of the Group and Company, together
with a description of the principal risks and uncertainties that they face.
A list of current directors is maintained on Playtech's website,
www.playtech.com
By order of the Board,
Mor WeizerChief Executive Officer23 August 2017 Andrew Smith Chief Financial Officer23 August 2017
INDEPENDENT REVIEW REPORT TO PLAYTECH PLC
Introduction
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 2017 which comprises the consolidated income statement, the consolidated
balance sheet, the consolidated statement of changes in equity, the
consolidated statement of cash flows and the related notes.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been
approved by the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, ''Interim Financial
Reporting'', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting its responsibilities in respect of half-yearly
financial reporting in accordance with the Disclosure 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.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'', issued by the Auditing
Practices Board for use in the United Kingdom. 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 Ireland) 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.
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 2017 is not prepared, in all
material respects, in accordance with International Accounting Standard 34, as
adopted by the European Union, and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority
BDO LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
23 August 2017
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended
30 June 2017 30 June 2016
Note Actual Adjusted Actual Adjusted
E'000 E'000 E'000 E'000
Revenue 3 421,580 421,580 337,730 337,730
Distribution costs before depreciation and amortisation (210,438) (208,289) (171,008) (169,337)
Administrative expenses before depreciation and amortisation (46,594) (42,367) (29,445) (24,589)
EBITDA 164,548 170,924 137,277 143,804
Depreciation and amortisation (54,688) (29,347) (44,235) (24,502)
Finance income 5 3,305 3,305 9,689 9,689
Finance cost 5 (22,466) (15,721) (49,743) (45,264)
Share of profit from joint ventures 263 263 81 81
Share of profit (loss) from associates 389 389 (1,720) (1,720)
Profit before taxation 91,351 129,813 51,349 82,088
Tax expenses (2,322) (4,950) (2,368) (3,550)
Profit for the period 89,029 124,863 48,981 78,538
Other comprehensive income for the period:
Items that may be classified to profit or loss:
Change in fair value of available for sale equity instruments 8 15,563 15,563 (1,778) (1,778)
Exchange gains arising on translation of foreign operations (32,436) (32,436) (5,746) (5,746)
Total items that will be classified to profit or loss (16,873) (16,873) (7,524) (7,524)
Total comprehensive income for the period 72,156 107,990 41,457 71,014
Profit for the period attributable to:
Owners of the parent 89,647 125,481 48,772 78,329
Non-controlling interest (618) (618) 209 209
89,029 124,863 48,981 78,538
Total comprehensive income attributable to:
Owners of the parent 74,159 109,993 40,984 70,541
Non-controlling interest (2,003) (2,003) 473 473
72,156 107,990 41,457 71,014
Earnings per share for profit attributable to the owners of the parent during the period:
Basic (cents) 6 28.5 39.9 15.3 24.6
Diluted (cents) 6 27.3 36.2 15.3 22.6
*Adjusted numbers relate to certain non-cash and one-off items including
amortisation of intangibles on acquisitions, professional costs on
acquisitions, finance costs on acquisitions, deferred tax on acquisitions,
change in fair value of available-for-sale investments in the income
statement, non-cash accrued bond interest and additional various non-cash
charges. The directors believe that the adjusted profit represents more
closely the consistent trading performance of the business. A full
reconciliation between the actual and adjusted results is provided in Note 4.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Additional paid in capital Available for sale reserve Retained earnings Employee benefit trust Convertible bond option reserve Call/Put options reserve Foreign exchange reserve Total attributable to equity holders of parent Non-controlling interest Total equity
E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000
Balance at 1 Jan 2017 627,764 (51,057) 498,864 (25,417) 45,392 (34,341) 16,800 1,078,005 21,714 1,099,719
Changes in equity for the period
Total comprehensive income for the period - 14,405 89,647 - - - (29,893) 74,159 (2,003) 72,156
Dividend paid - - (68,404) - - - - (68,404) - (68,404)
Exercise of options - (810) 1,599 - - - 789 - 789
Employee stock option scheme - - 5,103 - - - - 5,103 38 5,141
Acquisition of minority interest - - (498) - - - - (498) (586) (1,084)
Minority interest acquired on business combination - - - - - (252) - (252) 105 (147)
Balance at 30 June 2017 627,764 (36,652) 523,902 (23,818) 45,392 (34,593) (13,093) 1,088,902 19,268 1,108,170
Balance at 1 Jan 2016 638,209 1,964 592,051 (27,495) 45,392 - 3,266 1,253,387 7,308 1,260,695
Changes in equity for the period
Total comprehensive income for the period - (3,012) 48,772 - - - (4,776) 40,984 473 41,457
Dividend paid - - (60,811) - - - - (60,811) - (60,811)
Exercise of options - (214) 324 - - - 110 5 115
Employee stock option scheme - - 5,288 - - - - 5,288 83 5,371
Acquisition of minority interest - - (6,702) - - - - (6,702) (1,356) (8,058)
Minority interest acquired on business combination - - - - - - - - 329 329
Balance at 30 June 2016 638,209 (1,048) 578,384 (27,171) 45,392 - (1,510) 1,232,256 6,842 1,239,098
UNAUDITED CONSOLIDATED BALANCE SHEET
At 30 June 2017 At 30 June 2016 At 31 December 2016
Note E'000 E'000 E'000
(Audited)
NON-CURRENT ASSETS
Property, plant and equipment 78,075 52,965 72,893
Intangible assets 993,254 807,213 1,014,635
Investments in equity accounted associates & joint ventures 38,836 47,455 39,026
Available for sale investments 8 241,759 234,388 230,278
Other non-current assets 29,299 24,452 26,861
1,381,223 1,166,473 1,383,693
CURRENT ASSETS
Trade receivables 99,003 98,540 73,744
Other receivables 78,438 30,037 73,966
Cash and cash equivalents 536,434 777,576 544,843
713,875 906,153 692,553
TOTAL ASSETS 2,095,098 2,072,626 2,076,246
EQUITY
Additional paid in capital 627,764 638,209 627,764
Available-for-sale reserve (36,652) (1,048) (51,057)
Employee Benefit Trust (23,818) (27,171) (25,417)
Convertible bonds option reserve 45,392 45,392 45,392
Put/Call options reserve (34,593) - (34,341)
Foreign exchange reserve (13,093) (1,510) 16,800
Retained earnings 523,902 578,384 498,864
Equity attributable to equity holders of the parent 1,088,902 1,232,256 1,078,005
Non-controlling interest 19,268 6,842 21,714
TOTAL EQUITY 1,108,170 1,239,098 1,099,719
NON CURRENT LIABILITIES
Loans and borrowings - 200,000 200,000
Convertible bonds 271,286 261,298 266,230
Deferred revenues 4,104 4,630 3,454
Deferred tax liability 36,798 19,606 40,443
Contingent consideration and redemption liability 9 50,498 164,361 204,550
Other non-current liabilities 1,829 1,029 1,627
364,515 650,924 716,304
CURRENT LIABILITIES
Loans and borrowings 200,000 - -
Trade payables 21,634 14,428 28,171
Progressive operators' jackpots, security deposits 57,788 60,191 46,759
Client deposits 74,120 - 76,229
Client funds 28,858 33,668 29,863
Tax liabilities 9,972 5,752 9,731
Deferred revenues 10,047 3,880 4,456
Contingent consideration 9 154,505 4,008 4,577
Other payables 65,489 60,677 60,437
622,413 182,604 260,223
TOTAL EQUITY AND LIABILITIES 2,095,098 2,072,626 2,076,246
The financial statements were approved by the Board and authorised for issue
on 23 August 2017.
Mor Weizer Andrew Smith
Chief Executive Officer Chief Financial Officer
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June 2017 Six months ended 30 June 2016
E'000 E'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax 89,029 48,981
Adjustments to reconcile net income to net cash provided by operating activities (see below) 62,254 54,885
Income taxes paid (3,962) (4,397)
Net cash provided by operating activities 147,321 99,469
CASH FLOWS FROM INVESTING ACTIVITIES
Long-term deposits and loan advances (2,427) (3,622)
Acquisition of property, plant and equipment (18,387) (10,524)
Return on investment in joint ventures 644 748
Acquisition of intangible assets (55) (12,321)
Acquisition of subsidiaries (36,240) (41,739)
Cash of subsidiaries on acquisition 326 1,581
Capitalised development costs (18,872) (17,693)
Investment in equity-accounted associates (622) (500)
Return on available for sale investments 2,976 8,919
Proceeds from sale of property, plant and equipment 41 60
Acquisition of minority interest (1,084) -
Net cash used in investing activities (73,700) (75,091)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to the holders of the parent (68,404) (60,811)
Interest payable on loans and bank borrowings (1,408) (1,437)
Exercise of options 767 115
Net cash used in financing activities (69,045) (62,133)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,576 (37,755)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 544,843 857,898
Exchange losses on cash and cash equivalents (12,985) (42,567)
CASH AND CASH EQUIVALENTS AT END OF PERIOD 536,434 777,576
Six months ended 30 Six months ended 30 June 2016
June 2017
E'000 E'000
ADJUSTMENT TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Income and expenses not affecting operating cash flows:
Depreciation 13,030 9,037
Amortisation 41,658 35,198
Share of profit in joint ventures (263) (81)
Share of loss/(profit) in associates (389) 1,720
Interest expenses on convertible bonds 5,056 4,869
Income tax expense 2,322 2,368
Employee stock option plan expenses 5,211 5,371
Movement in deferred and contingent consideration 1,689 (390)
Exchange losses on cash and cash equivalents 12,985 42,567
Return on available for sale investments (2,976) (8,919)
Other (31) 84
Changes in operating assets and liabilities:
Increase in trade receivables (23,991) (22,962)
Increase in other receivables (4,370) (3,794)
Decrease in trade payables (6,622) (3,409)
Increase/(decrease) in progressive, operators jackpot and security deposits 11,029 (3,149)
Increase/(decrease) in client funds 761 (10,093)
Increase in other payables 990 5,965
Decrease in deferred revenues 6,165 503
62,254 54,885
Acquisition of subsidiaries
Six months ended 30 June 2017 Six months ended 30 June 2016
Note E'000 E'000
Acquisitions in the period
A. Acquisition of Eyecon Limited 10a 27,735 -
B. Other acquisitions 10b 1,050 -
Acquisitions in previous years
A. Acquisition of Quickspin AB 11a - 24,461
B. Acquisition of ECM Systems Holdings Ltd 3,061 -
C. Acquisition of Patelle Limited 2,016 -
C. Acquisition of Yoyo Games Limited - 1,372
B. Acquisition of Consolidated Financial Holdings AB 336 -
C. Other acquisitions 2,042 15,906
36,240 41,739
NOTE 1 - GENERAL
A. Playtech plc (the 'Company') is a company domiciled in the Isle of Man.
Playtech and its subsidiaries ('the Group') develop unified software platforms
for the online and land based gambling industry, targeting online and land
based operators. Since May 2015 the Group is also offered an online trading
platform to retail customer which enables them to trade CFD (Contracts For
Differences) on a variety instruments which fall under the general categories
of Foreign exchanges, Commodities, Equities and indices. In the context of
this activity, the Group acts as a market-maker in a predominantly B2C
environment. Following the acquisition of CFH in November 2016, the Group also
provides B2B clients with technology for liquidity and clearing. Playtech's
gaming applications - online casino, poker and other P2P games, bingo, mobile,
live gaming, land-based kiosk networks, land based terminal and fixed-odds
games - are fully inter-compatible and can be freely incorporated as
stand-alone applications, accessed and funded by the operators' players
through the same user account and managed by the operator by means of a
single, powerful management interface.
B. The interim financial statements as at 30 June 2017 and 30 June 2016 and
the six months then ended, respectively, have been reviewed by the Group's
external auditors.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The annual financial statements of the Group were prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union.
These consolidated financial statements have been prepared in accordance with
IAS 34,
"Interim Financial Reporting", as adopted by the European Union. They do not
include all disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the 2016 Annual
Report.
The same accounting policies, presentation and methods of computation are
followed in these consolidated financial statements as were applied in the
Group's latest annual audited financial statements.
The comparative period income statement adjusted results have been restated to
reflect the impact of adjusting for deferred tax on acquisitions. This results
in an increase in the adjusted tax charge and decrease in the resulting
adjusted profit and total comprehensive income of E1.2 million. Actual results
are unaffected. The comparative statements of financial position were restated
to reclassify indirect tax liabilities from the tax liabilities heading to the
other payables heading, this did not impact net assets or other totals.
New standards, interpretations and amendments effective from 1 January 2017
There are no new standards, interpretations or amendments which are effective
for periods beginning on or before 1 January 2017 which have a material effect
on the Group's financial information.
The directors are still considering the potential impact of IFRS 15: Revenue
from contracts with customers, and IFRS 9: Financial Instruments, but do not
expect these standards to have a material effect on the Group's future
financial information. The directors are still considering the potential
impact of IFRS 16: Leases but expect a material adjustment to arise on
transition as the Group has material lease commitments. Other than as noted,
the directors do not expect that any other new standards, interpretations and
amendments which are effective for periods beginning after 1 January 2017 to
have a material effect on the Group's future financial information
The comparative financial information for period ended 31 December 2016
included within this report does not constitute the full statutory accounts
for that period. The Independent Auditors' Report on the Annual Report for the
year ended 31 December 2016 was unqualified, and did not draw attention to any
matters by way of emphasis.
The directors have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the half-yearly consolidated financial statements.
Significant judgements and estimates
There has been no change in the nature of the critical accounting estimates
and judgements as set out in Note 3 to the Group's audited financial
statements for the year ended 31 December 2016.
NOTE 3 - SEGMENT INFORMATION
The Group's reportable segments are strategic business units that offer
different products and services.
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision maker has been identified as the management team including the Chief
Executive Officer and the Chief Financial Officer.
The operating segments identified are:
§ Gaming: including Casino, Services, Sport, Bingo and Poker
§ Financial: including B2C and B2B CFD
The Group-wide profit measures are adjusted EBITDA and adjusted net profit
(see Note 4). Management believes the adjusted profit measures represent more
closely the underlying trading performance of the business. No other
differences exist between the basis of preparation of the performance measures
used by management and the figures in the Group financial information.
There is no allocation of operating expenses, profit measures, assets and
liabilities to individual products within the segments as of 30 June 2017.
Six months ended 30 June 2017
Casino Services Sport Bingo Poker Other Total Gaming Total Financial Consolidated
E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000
Total revenue 225,874 68,996 37,727 13,962 4,707 25,258 376,524 45,056 421,580
Adjusted EBITDA 154,864 16,060 170,924
Adjusted net profit 115,553 9,310 124,863
Total assets 1,769,398 325,700 2,095,098
Total liabilities 655,890 331,038 986,928
Six months ended 30 June 2016
Casino Services Sport Bingo Poker Other Total Gaming Total Financial Consolidated
E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000
Total revenue 186,658 76,475 18,967 8,970 5,043 10,339 306,452 31,278 337,730
Adjusted EBITDA 137,919 5,885 143,804
Adjusted net profit 65,447 13,091 78,538
Total assets 1,862,183 210,443 2,072,626
Total liabilities 669,207 164,321 833,528
As disclosed in the 2016 annual report, the 2016 revenues by product have been
restated to combine 'land based' into the other headings to reflect the
current internal reporting by management. Total revenue remains unchanged.
NOTE 4 - ADJUSTED ITEMS
The following tables give a full reconciliation between adjusted and actual
results:
Six months ended 30 June 2017 Six months ended 30 June 2016
E'000 E'000
Distribution costs before depreciation and amortisation 210,438 171,008
Employee stock option expenses (2,149) (1,671)
Adjusted distribution costs before depreciation and amortisation 208,289 169,337
Administrative expenses before depreciation and amortisation 46,594 29,445
Employee stock option expenses (3,061) (3,700)
Professional fees on acquisitions (786) (1,156)
Cost of fundamental business reorganization (380) -
Total adjusted items (4,227) (4,856)
Adjusted administrative expenses before depreciation and amortisation 42,367 24,589
Depreciation - distribution costs 9,034 8,015
Depreciation - administrative costs 3,996 1,022
Amortisation - distribution costs 41,658 35,198
Total depreciation and amortisation 54,688 44,235
Amortisation of intangibles on acquisitions - distribution costs (25,341) (19,733)
Adjusted depreciation and amortisation 29,347 24,502
Tax expenses 2,322 2,368
Deferred tax on acquisition 2,628 1,182
Corporate tax 4,950 3,550
EBITDA 164,548 137,277
Employee stock option expenses 5,210 5,371
Professional expenses on acquisitions 786 1,156
Cost of fundamental business reorganization 380 -
Adjusted EBITDA 170,924 143,804
Constant currency impact 7,009 -
Adjusted EBITDA on constant currency basis 177,933 143,804
EBITDA related to acquisitions on constant currency basis (17,882) 9
Underlying adjusted EBITDA 160,051 143,813
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