REG - Playtech PLC - Interim Results
30/09/2024 07:00
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RNS Number : 1274G Playtech PLC 30 September 2024
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 summary(1 )
( )
Reported Adjusted(2)
H1 24 H1 23 H1 24 H1 23
€'m €'m Change % €'m €'m Change %
Revenue 906.8 859.6 5% 906.8 859.6 5%
EBITDA 233.6 207.3 13% 243.0 219.9 11%
Post-tax profit(3) 10.0 3.1 223% 105.4 85.7 23%
Diluted EPS 3.2 €c 1.0 €c 220% 33.6 €c 27.5 €c 22%
Net debt 225.5 248.2 -9%
( )
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
expectations(4).
· 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:
Playtech plc +44 (0) 20 3805 4822
Mor Weizer, Chief Executive Officer
Chris McGinnis, Chief Financial Officer
c/o Headland
Sandeep Gandhi, Head of Investor Relations +44 (0) 20 3805 4822
Headland (PR adviser to Playtech) +44 (0) 20 3805 4822
Lucy Legh, Jack Gault
(1)Totals in tables throughout this statement may not exactly equal the
components of the total due to rounding.
(2)Adjusted numbers relate to certain non-cash and one-off items, as well as
material reorganisation and acquisition-related costs. The Board of Directors
believes that the adjusted results more closely represent the consistent
trading performance of the business. A full reconciliation between the actual
and adjusted results is provided in Note 8.
(3)Adjusted Profit refers to post-tax Profit from continuing operations
attributable to the owners of the Company after the relevant adjustments as
detailed above. Reported Profit refers to post-tax Profit from continuing
operations attributable to the owners of the Company before adjustments.
(4)Including 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
(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
(https://www.netroadshow.com/conferencing/global-numbers?confId=71144)
Access Code: 827736
The presentation slides will be available today from 8.30 am at:
http://www.investors.playtech.com/results-centre/presentations.aspx
(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
H1 2024 H1 2023
€'m €'m
B2B 382.2 334.5
B2C 532.4 532.1
B2B licence fee - intercompany* (7.8) (7.0)
Total Group revenue 906.8 859.6
Adjusted costs (663.8) (639.7)
Adjusted EBITDA 243.0 219.9
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 - 5.1
Adjusted EBITDA 243.0 219.9
Adjusted EBITDA margin 27% 26%
*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
H1 2024 H1 2023 Change Constant
€'m €'m % currency
%
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%
Rest of the World 5.2 3.3 58% 58%
Total regulated B2B revenue 310.6 262.5 18% 16%
Unregulated 71.6 72.0 -1% 1%
Total B2B revenue 382.2 334.5 14% 12%
Overall, B2B revenues increased by 14% (12% on a constant currency basis),
largely due to an increase in the regulated B2B business.
Regulated B2B revenues(2) 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
H1 2024 H1 2023 Change
€'m €'m %
Research and development 60.7 51.6 18%
General and administrative 43.4 42.6 2%
Sales and marketing 10.7 10.4 3%
Operations 155.1 148.6 4%
Total Adjusted B2B costs 269.9 253.2 7%
Total B2B revenue and costs
B2B revenue 382.2 334.5 14%
B2B costs (269.9) (253.2) 7%
Total B2B Adjusted EBITDA 112.3 81.3 38%
Margin 29% 24%
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
H1 2024 H1 2023 Change
€'m €'m %
Snaitech
Revenue* 483.6 488.4 -1%
Costs (348.6) (346.5) 1%
Adjusted EBITDA 135.0 141.9 -5%
Margin 28% 29%
Sun Bingo and Other B2C
Revenue 39.9 34.1 17%
Costs (37.6) (31.3) 20%
Adjusted EBITDA 2.3 2.8 -18%
Margin 6% 8%
HAPPYBET
Revenue 9.6 10.3 -7%
Costs** (16.2) (16.4) -1%
Adjusted EBITDA (6.6) (6.1)
Margin NA NA
B2C Adjusted EBITDA 130.7 138.6 -6%
Margin 25% 26%
* 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
H1 2024 H1 2023
€'m €'m
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 - 3.5
Adjusted Profit 105.4 85.7
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)
H1 2024 H1 2023
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
33.6 27.5
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 3.2 1.0
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.
H1 2024 H1 2023
€'m €'m
Adjusted EBITDA 243.0 219.9
Net cash provided by operating activities 160.2 225.2
Cash conversion 66% 102%
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) (11.7) (11.2)
Adjusted net cash provided by operating activities 150.7 229.9
Adjusted cash conversion 62% 105%
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
30 June 2024 31 December 2023
€'m €'m
Cash and cash equivalents (net of ECL) 569.5 516.2
Cash held on behalf of clients, progressive jackpots and security deposits (148.3)
(152.9)
Adjusted gross cash and cash equivalents 421.2 363.3
Bonds 646.7 646.1
Gross debt 646.7 646.1
Net debt 225.5 282.8
Last 12 months Adjusted EBITDA 455.4 432.3
Net debt/Adjusted EBITDA ratio 0.5 0.7
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:
Acquisition Maximum payable earnout Contingent consideration as at 30 June 2024 Payment date (based on
(per terms of acquisition) maximum payable earnout)
Aus GMTC PTY Ltd €46.7 million €5.7 million Q4 2025
Other €2.5 million €2.5 million Various
Going concern
In adopting the going concern basis in the preparation of the financial
statements, the Group has considered the current trading performance,
financial position and liquidity of the Group, the principal risks and
uncertainties, together with scenario planning and reverse stress tests
completed for a period of 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/ (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
Note Actual Adjusted Actual Adjusted
€'m €'m 1 €'m €'m 1
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 (11.9) (11.9) (3.2) (1.9)
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 14C 51.3 - (25.5) -
Profit before taxation 8 93.5 151.2 79.6 139.3
Income tax expense 8, 11 (83.5) (45.8) (76.5) (53.6)
Profit for the period 10.0 105.4 3.1 85.7
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 5.4 5.4 (5.0) (5.0)
Total comprehensive income/(loss) for the period 15.4 110.8 (1.9) 80.7
Profit for the period attributable to:
Owners of the Company 10.2 105.6 3.1 85.7
Non-controlling interests (0.2) (0.2) - -
10.0 105.4 3.1 85.7
Total comprehensive income/(loss) attributable to:
Owners of the Company 15.6 111.0 (1.9) 80.7
Non-controlling interests (0.2) (0.2) - -
15.4 110.8 (1.9) 80.7
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
Diluted (cents) 12 3.2 33.6 1.0 27.5
1 Adjusted numbers relate to certain non-cash and one-off items. The
Board of Directors believes that the adjusted results more closely represent
the consistent trading performance of the business. A full reconciliation
between the actual and adjusted results is provided in Note 8.
Unaudited consolidated statement of changes in equity
Additional Employee Retained Employee Foreign Total Non- Total
paid in termination earnings Benefit exchange attributable controlling equity
capital indemnities €'m Trust reserve to equity interests €'m
€'m €'m €'m €'m holders of €'m
Company
€'m
Balance at 1 January 2024 611.8 0.4 1,219.2 (17.8) (7.4) 1,806.2 - 1,806.2
Total comprehensive income for the period
Profit for the period - - 10.2 - - 10.2 (0.2) 10.0
Other comprehensive income for the period - - - - 5.4 5.4 - 5.4
Total comprehensive income/(loss) for the period - - 10.2 - 5.4 15.6 (0.2) 15.4
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 - - 1.9 0.7 - 2.6 - 2.6
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 1.9 0.7 2.6 (0.2) 2.4
Balance at 30 June 2024 611.8 0.4 1,231.3 (17.1) (2.0) 1,824.4 (0.4) 1,824.0
Balance at 1 January 2023 606.0 0.4 1,113.0 (17.2) 0.3 1,702.5 - 1,702.5
Total comprehensive income for the period
Profit for the period - - 3.1 - - 3.1 - 3.1
Other comprehensive loss for the period - - - - (5.0) (5.0) - (5.0)
Total comprehensive income/(loss) for the period - - 3.1 - (5.0) (1.9) - (1.9)
Transactions with the owners of the Company
Contributions and distributions
Exercise of options - - (9.4) 9.4 - - - -
Equity-settled share-based payment charge - - 2.9 - - 2.9 - 2.9
Transfer from treasury shares to Employee Benefit Trust 5.8 - 6.7 (12.5) - - - -
Total contributions and distributions 5.8 - 0.2 (3.1) - 2.9 - 2.9
Total transactions with owners of the Company 5.8 - 0.2 (3.1) - 2.9 - 2.9
Balance at 30 June 2023 611.8 0.4 1,116.3 (20.3) (4.7) 1,703.5 - 1,703.5
Unaudited consolidated balance sheet
30 June 2024 31 December 2023
Note €'m €'m
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
Other non-current assets 148.5 137.0
Non-current assets 2,384.9 2,475.9
Trade receivables 295.1 207.1
Other receivables 98.2 100.5
Inventories 8.4 6.8
Cash and cash equivalents 569.5 516.2
971.2 830.6
Assets classified as held for sale 15 19.6 19.3
Current assets 990.8 849.9
TOTAL ASSETS 3,375.7 3,325.8
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)
Retained earnings 1,231.3 1,219.2
Equity attributable to equity holders of the Company 1,824.4 1,806.2
Non-controlling interests (0.4) -
TOTAL EQUITY 16 1,824.0 1,806.2
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 18.7 34.8
Non-current liabilities 910.7 920.9
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
Other payables 244.2 217.5
640.0 597.7
Liabilities directly associated with assets classified as held for sale 1.0 1.0
Current liabilities 641.0 598.7
TOTAL LIABILITIES 1,551.7 1,519.6
TOTAL EQUITY AND LIABILITIES 3,375.7 3,325.8
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
Note Six months Six months
ended 30 June ended 30 June 2023
2024 €'m
€'m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax 10.0 3.1
Adjustments to reconcile net income to net cash provided by operating 161.6 237.9
activities (see below)
Net taxes paid (11.4) (15.8)
Net cash from operating activities 160.2 225.2
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 (1.2) (3.9)
acquired
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 1.0 2.3
Net cash used in investing activities (75.8) (186.2)
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 (2.4) (2.5)
Net cash (used in)/from financing activities (31.6) 318.9
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 0.5 1.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD 569.5 786.0
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 0.6 (0.6)
161.6 237.9
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 17(th) 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.
30 June 31 December
2024 2023
€'m €'m
Cash and cash equivalents 569.5 516.2
Cash held on behalf of clients, progressive jackpots and security deposits (148.3) (152.9)
Adjusted gross cash and cash equivalents 421.2 363.3
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 16(th) 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 17(th) 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.
Carrying amount Fair value
30 June 2024 Level 1 Level 2 Level 3
€'m €'m €'m €'m
Non-current assets
Other investments (Note 14B) 132.4 13.9 - 118.5
Derivative financial assets (Note 14C) 886.3 - - 886.3
1,018.7 13.9 - 1,004.8
Carrying amount Fair value
31 December 2023 Level 1 Level 2 Level 3
€'m €'m €'m €'m
Non-current assets
Other investments (Note 14B) 92.8 15.8 - 77.0
Derivative financial assets (Note 14C) 827.8 - - 827.8
920.6 15.8 - 904.8
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 B2B Snaitech Sun Bingo HAPPYBET Intercompany Total Intercompany Total
€'m €'m and Other €'m B2C B2C €'m €'m
B2C €'m €'m
€'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
Total liabilities 1,049.3 467.0 28.8 6.6 - 502.4 - 1,551.7
Six months ended 30 June 2023 B2B Snaitech Sun Bingo HAPPYBET Intercompany Total Intercompany Total
€'m €'m and Other €'m B2C B2C €'m €'m
B2C €'m €'m
€'m
Revenue 334.5 488.4 34.1 10.3 (0.7) 532.1 (7.0) 859.6
Adjusted EBITDA 81.3 141.9 2.8 (6.1) - 138.6 - 219.9
Total assets 2,266.4 1,044.2 97.7 8.7 - 1,150.6 - 3,417.0
Total liabilities 1,064.5 625.7 16.2 7.1 - 649.0 - 1,713.5
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 B2B Snaitech Sun Bingo HAPPYBET Intercompany Total Intercompany Total
€'m €'m and Other €'m B2C B2C €'m €'m
B2C €'m €'m
€'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
Rest of World 36.9 - - - - - - 36.9
382.2 483.6 39.9 9.6 (0.7) 532.4 (7.8) 906.8
Product type B2B B2C Intercompany Total
€'m €'m €'m €'m
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 54.0 - - 54.0
Total B2B 382.2 - - 382.2
Snaitech - 483.6 (5.8) 477.8
Sun Bingo and Other B2C - 39.9 (2.0) 37.9
HAPPYBET - 9.6 - 9.6
Intercompany - (0.7) - (0.7)
Total B2C - 532.4 (7.8) 524.6
Total 382.2 532.4 (7.8) 906.8
€'m
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 5.2
Total regulated B2B revenue 310.6
Unregulated 71.6
Total B2B revenue 382.2
Six months ended 30 June 2023
Primary geographic markets B2B Snaitech Sun Bingo HAPPYBET Intercompany Total Intercompany Total
€'m €'m and Other €'m B2C B2C €'m €'m
B2C €'m €'m
€'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
Rest of World 30.8 - - - - - - 30.8
334.5 488.4 34.1 10.3 (0.7) 532.1 (7.0) 859.6
Product type B2B B2C Intercompany Total
€'m €'m €'m €'m
B2B licensee fee 235.9 - - 235.9
B2B fixed-fee income 6.7 - - 6.7
B2B cost-based revenue 28.1 - - 28.1
B2B revenue received from the sale of hardware 6.5 - - 6.5
Additional B2B services fee 57.3 - - 57.3
Total B2B 334.5 - - 334.5
Snaitech - 488.4 (5.2) 483.2
Sun Bingo and Other B2C - 34.1 (1.8) 32.3
HAPPYBET - 10.3 - 10.3
Intercompany - (0.7) - (0.7)
Total B2C - 532.1 (7.0) 525.1
Total 334.5 532.1 (7.0) 859.6
€'m
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 3.3
Total regulated B2B revenue 262.5
Unregulated 72.0
Total B2B revenue 334.5
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 Revenue EBITDA - EBITDA - EBITDA Profit Profit
€'m B2B B2C €'m before attributable
€'m €'m tax to the
€'m 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
Adjusted measure 906.8 112.3 130.7 243.0 151.2 105.6
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 Revenue EBITDA - EBITDA - EBITDA Profit Profit
€'m B2B B2C €'m before attributable
€'m €'m tax to the
€'m 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 - - - - - 3.5
Adjusted measure 859.6 81.3 138.6 219.9 139.3 85.7
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 Six months
€'m 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 - (3.5)
Adjusted tax 45.8 53.6
Note 9 - Impairment of property, plant and equipment and intangible assets
Six months ended 30 June 2024 Six months
€'m ended 30 June 2023
€'m
Impairment of property, plant and equipment - -
Impairment of intangible assets (Note 13) 117.2 -
117.2 -
Note 10 - Finance income and costs
A. Finance income
Six months ended 30 June 2024 Six months
€'m ended 30 June 2023
€'m
Interest income 10.7 3.0
Dividend income 1.7 -
Net foreign exchange gain 3.6 3.0
16.0 6.0
B. Finance costs
Six months ended 30 June 2024 Six months
€'m 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 (0.9) (0.4)
(23.4) (20.2)
Net finance costs (7.4) (14.2)
Note 11 - Tax expense
Six months ended 30 June 2024 Six months
€'m 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
Withholding tax 0.1 0.3
Total current tax expense 43.0 24.9
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
Total tax expense 83.5 76.5
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
Actual Adjusted Actual Adjusted
€'m €'m €'m €'m
Profit attributable to the owners of the Company 10.2 105.6 3.1 85.7
Basic (cents) 3.3 34.6 1.0 28.4
Diluted (cents) 3.2 33.6 1.0 27.5
Six months ended 30 June 2024 Six months ended 30 June 2023
Actual Adjusted Actual Adjusted
Number Number Number Number
Denominator - basic
Weighted average number of equity shares 304,830,919 304,830,919 302,327,498 302,327,498
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 9,345,203 9,345,203 9,013,439 9,013,439
Weighted average number of shares 314,176,122 314,176,122 311,340,937 311,340,937
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
€'m
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:
30 June 31 December 2023
2024 €'m
€'m
Snai 1 (#_ftn1) 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
MixZone 2 (#_ftn2) 1.2 -
473.0 529.0
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:
30 June 2024 31 December 2023
€'m €'m
A. Investments in associates 50.0 51.5
B. Other investments 132.4 92.8
C. Derivative financial assets 886.3 827.8
1,068.7 972.1
The following are the amounts recognised in the statement of comprehensive
income:
Six months ended 30 June 2024 Six months ended 30 June 2023
€'m €'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 5.3 (3.6)
investments held in non-Euro functional currency subsidiaries
92.2 (29.1)
Where the underlying derivative call option and equity investments are held in
a non-Euro functional currency entity, the foreign exchange movement is
recorded through other comprehensive income. As at 30 June 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
30 June 2024 31 December 2023
€'m €'m
Caliplay - -
ALFEA SPA 1.7 1.7
Galera - -
LSports 36.1 35.2
Stats International - -
NorthStar 6.8 9.0
Sporting News Holdings Limited 5.4 5.6
Total investment in equity accounted associates 50.0 51.5
Profit and loss impact
Six months ended 30 June 2024 Six months
€'m 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 (0.2) -
Total profit and loss impact (1.5) (0.3)
Movement on the balance sheet
ALFEA SPA LSports NorthStar Sporting Total
€'m €'m €'m News €'m
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 1.7 36.1 6.8 5.4 50.0
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:
30 June 2024 1 31 December
€'m 2023 1
€'m
Current assets 377.6 215.0
Non-current assets 24.6 23.9
Current liabilities (262.0) (123.6)
Equity 140.2 115.3
Six months ended 30 Six months ended 30
June 2024 1 June 2023 1
€'m €'m
Revenue 464.1 759.4
Profit from continuing operations 33.0 58.8
Other comprehensive (loss)/income, net of tax (11.8) 10.4
Total comprehensive income 21.2 69.2
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:
2022
€'m
Net asset position as at the date of the disposal (including goodwill of 14.7
€12.4 million)
Net consideration (5.9)
Loss on disposal 8.8
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
30 June 31 December 2023
2024 €'m
€'m
Listed investments 13.9 15.8
Investment in Tenlot Guatemala - -
Investment in Tentech Costa Rica - -
Investment in Gameco - -
Investment in Hard Rock Digital 118.5 77.0
Total other investments 132.4 92.8
Statement of comprehensive income
Six months ended 30 June 2024 Six months
€'m 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 - 1.3
assets)
37.1 1.6
Other comprehensive income
Foreign exchange movement from equity investments held in a non-Euro 2.5 (1.7)
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
30 June 2024 31 December 2023
€'m €'m
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) - -
LSports (Note 14A) 4.8 4.8
Total derivative financial assets 886.3 827.8
Statement of comprehensive income impact
Six months ended 30 June 2024 Six months
€'m 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) - 0.1
Total comprehensive income impact 54.1 (27.4)
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
30 June 2024 31 December 2023
€'m €'m
Assets
Property, plant and equipment 19.6 19.3
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 31 December 2023
Number Number
of shares of shares
Authorised1 N/A N/A
Issued and paid up 309,294,243 309,294,243
1 The Company has no authorised share capital, but 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/ Treasury shares Shares held by Total
circulation EBT
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 -
Exercise of options 2,915,544 - (2,915,544) -
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
Exercise of options 229,834 - (229,834) -
At 30 June 2024 304,922,641 - 4,371,602 309,294,243
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:
Reserve Description and purpose
Additional paid in capital Share premium (i.e. amount subscribed for share capital in excess of nominal
value)
Employee Benefit Trust Cost of own shares held in treasury by the trust
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
Retained earnings 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
2018 Bond 2019 Bond 2023 Bond Total
€'m €'m €'m €'m
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 0.1 0.3 0.2 0.6
At 31 December 2023/1 January 2024 - 348.6 297.5 646.1
Release of capitalised expenses - 0.3 0.3 0.6
At 30 June 2024 - 348.9 297.8 646.7
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:
Legal and Contractual Other Total
regulatory €'m €'m €'m
€'m
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 - (0.5) (0.2) (0.7)
Balance at 30 June 2024 5.7 0.3 6.2 12.2
Legal and Contractual Other Total
regulatory €'m €'m €'m
€'m
31 December 2023
Non-current 5.7 0.3 2.9 8.9
Current - 0.5 0.1 0.6
5.7 0.8 3.0 9.5
30 June 2024
Non-current 5.7 0.3 4.4 10.4
Current - - 1.8 1.8
5.7 0.3 6.2 12.2
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
30 June 2024 31 December 2023
€'m €'m
Non-current contingent consideration
Acquisition of Aus GMTC PTY Ltd 5.7 5.4
Others 0.3 0.4
Total non-current contingent consideration 6.0 5.8
Current contingent consideration consists of:
Other acquisitions 2.2 0.4
Total current contingent consideration 2.2 0.4
Total contingent consideration 8.2 6.2
The maximum contingent consideration payable is as follows:
30 June 2024 31 December 2023
€'m €'m
Acquisition of Aus GMTC PTY Ltd 46.7 45.3
Other acquisitions 2.5 0.8
49.2 46.1
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:
€'m
Balance at 1 January 2024 99.1
Charge to profit or loss (Note 11) 40.5
At 30 June 2024 139.6
30 June 2024 31 December 2023
€'m €'m
Split as:
Deferred tax liability (164.6) (161.6)
Deferred tax asset 25.0 62.5
(139.6) (99.1)
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:
30 June 31 December 2023
2024 €'m
€'m
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)
Intangible assets (84.2) (88.4)
(139.6) (99.1)
Details of the deferred tax, amounts recognised in profit or loss are as
follows:
Six months ended 30 June 2024 Six months
€'m ended 30 June 2023
€'m
Accelerated capital allowances (6.8) (0.8)
Other temporary and deductible differences (6.5) (26.7)
Tax losses (27.2) (24.1)
(40.5) (51.6)
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 Six months
€'m ended 30 June 2023
€'m
Revenue
Investments in associates 122.4 96.4
Interest income
Investments in associates 1.4 0.7
Operating expenses
Investments in associates 3.0 0.6
Dividend income
Investments in associates 0.1 0.9
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:
30 June 31 December 2023
2024 €'m
€'m
Trade receivables
Investments in associates 196.0 99.1
Other receivables
Investments in associates - 0.3
Loans and interest receivable - current
Investments in associates 2.1 1.3
Loans and interest receivable - non-current
Investments in associates 74.5 60.9
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
Liabilities
Loans and Bonds Interest on Contingent Lease Total
borrowings €'m loans and consideration liabilities €'m
€'m borrowings €'m €'m
and bonds
€'m
Balance at 1 January 2024 - 646.1 5.9 6.2 86.8 745.0
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 - - - - (2.4) (2.4)
Total changes from financing cash flows - - (16.3) (0.2) (15.1) (31.6)
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 - - - 0.3 0.4 0.7
Total liability-related other changes - 0.6 16.2 2.2 12.4 31.4
Balance at 30 June 2024 - 646.7 5.8 8.2 84.1 744.8
Liabilities
Loans and Bonds Interest on Contingent Lease Total
borrowings €'m loans and consideration liabilities €'m
€'m borrowings €'m €'m
and bonds
€'m
Balance at 1 January 2023 - 547.6 7.3 2.9 85.8 643.6
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 - - - - (2.5) (2.5)
Total changes from financing cash flows 48.0 297.3 (12.4) (0.1) (13.9) 318.9
Other changes
Liability related
New leases - - - - 7.2 7.2
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 (2.1) - - - 0.1 (2.0)
Total liability-related other changes (2.1) 0.6 12.4 1.7 11.7 24.3
Balance at 30 June 2023 45.9 845.5 7.3 4.5 83.6 986.8
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
(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
(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.
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